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News Link • Economy - Economics USA

Get Ready For The Tidal Wave Of Drug Patent Expirations

•,The Daily Reckoning
The words above were penned 70 years ago by an economist named Joseph Schumpeter in his book Capitalism, Socialism and Democracy. In that book, Schumpeter describes how transformational innovation disrupts the businesses of established market players in a capitalist economy.

Of course, our own legal framework serves to protect innovations made by existing companies. Enshrined in the US Constitution is the authority granted to Congress to “promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.”

Often called the “Copyright and Patent Clause,” the patent protections granted are time limited. The inventor enjoys a period of virtual monopoly, and then anyone else can use the technology described in the patent. If the inventor, however, fails to engage in new patent-protected innovation, the business is at risk of falling apart after the term comes to an end.

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