Should we abolish our patent systems?

Holland, a most remarkable country!

In the Netherlands, in 1869 it was decided by the then residing government to abolish the entire Dutch patent system. The wave of a liberal spirit through Western Europe came to full expression in this courageous act of folly. In that time, patents were thought to delimit the free trade, to counteract innovation and to provide an unfair position to the holder of the patent. The patent system was believed to reduce economic prosperity [1].

Well did it really? Let us study some statistics to find some answers! 

Only in 1910, again a new Dutch patent law was adopted, which entered into force in 1912, 43 years after its abolision. Let us study the GDP per capita of the Netherlands and of its neighboring countries in this "patent absent era" to find some indicators: These GDP per capita data are meticulously collected by Gapminder [2]:

  

 In 1860, the GDP/cap in the Netherlands was 10% higher that that of Belgium and 20% higher that that of Germany. In 1913, the GDP/cap in Belgium had surpassed that of the Netherlands by 14%, and the German GDP/cap surpassed that of the Netherlands by 29%. In this period, in the Netherlands GDP/cap grew about 47%, whereas it grew 85% in Belgium and 122% in Germany. 

During the Dutch "patent absent era", the Netherlands had missed a tremendous growth in wealth in comparison to it neighbors. From leading in wealth, it became lagging in wealth.  

Conclusion

So those advocating abolishment of the patent system proved wrong, very wrong indeed! 

Sources

[1] "Nederland, een Volk van Struikrovers?", F. Gerzon, den Haag, (1986), p.10-25

[2] Gap Minder: http://www.gapminder.org/data/  Data on GDP/cap in PPP US$ 2005: Gross Domestic Product per capita by Purchasing Power Parities (in international dollars, fixed 2005 prices). The inflation and differences in the cost of living between countries has been taken into account.