Economic justification of the possibility to limit patent monopoly

Abstract

The protection of intellectual property is mainly realized with legal monopolies. There are some circumstances when the law permits exclusion. In the area of industrial property law, these are compulsory licenses and the activities of standardization organizations. The social grounds of their existence are obvious. However, it is necessary to indicate their economic legitimacy because they weaken the motivation for inventive activities. Therefore, compulsory licenses and the activities of the standardization organizations could deny the fundamental purpose of the existence of patents. The aim of this text is to analyze compulsory licenses – both their basic form, which is created by the decisions of administrative authorities (mostly in the pharmaceutical branch) and the variant where the compulsory license is the result of a standardization organization’s activities (e.g., in telecommunications and informatics). This research is done within the legal and economics framework.