Empirical evidence on patents and data protection: Response to the Productivity Commission's Issues Paper on Intellectual Property Arrangements

Government intervention in markets is generally undesirable as there are substantial costs to such interference. What then is the rationale for the patent intervention? If R&D costs are high and imitation times are relatively speedy, then an innovating company may not have sufficient exclusive time in the market to recoup R&D costs through higher prices. Where such innovation has substantial positive spillover benefits, society would wish to provide an incentive for this to occur.