Figures 1 Welfare loss of a monopoly

Levin8 prepared a survey for research and development R D heads in which they were asked about the effectiveness of different methods for protecting products and processes patents, industrial secrecy, rapidity in the learning curve and sales efforts. The results showed that product patents were considered to be more effective than process patents, but in general all the other methods were regarded as more effective than the protection provided by patents, in a general survey that was not addressed to any particular sector. 

if we consider that some sort of protection is necessary, the problem is to find out how to establish it in such a way that the alteration of incentives and of the level of competition is manageable. One of the key issues in achieving this is the length and scope of the patent. 

The appropriate period for which an invention should be protected is that which allows the recovery of the costs of the innovative activity adjusting for the risk incurred. But this can only be considered in an ideal situation with a single isolated innovation that does not affect other possible innovations and in which the innovation process cannot be speeded up with additional resources. If a shorter period of protection were given instead of this ideal period in ideal conditions, the innovation would not be developed. And if the period were longer, there would be an unnecessary delay in the supply of innovations that would effectively create a welfare loss. 

for example, Matutes et al.9 show in a formal model that in basic or breakthrough innovations, protection on the basis of scope generates higher levels of welfare than period-based protection. The reason for this is that the period in which rivals can introduce applications is shorter and the patent holder can decide when to exert his or her rights. Nevertheless, it is also true that this can accelerate developments that do not generate additional value if the calculation of the reward given to the second-level innovator is excessive. The concept of the right reward for the two types of innovation is not easy to put into practice. 

Klemperer10 and Gilbert and Shapiro11 follow a similar line. The application of the concept of scope patents in the biotechnology sector is studied by Lemer.12 According to his estimate, broad patents are more valuable when there are multiple substitutes, which confirms theoretical findings. 

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