The Independent-Invention Defense in Intellectual Property 1

Patents di®er from other forms of intellectual property in that inde- pendent invention is not a defense to infringement. We argue that the patent rule is inferior in any industry where the cost of independently inventing a product is not too much less than (no less than half) the inventor's cost. First, the threat of entry by independent invention would induce patentholders to license the technology, lowering the market price. Second, a defense of independent invention would reduce the waste- ful duplication of R&D e®ort that occurs in patent races. In either case, the threat of independent invention creates a mechanism that limits patentholders' prots to levels commensurate with their costs of R&D.