Modern intellectual property law is built on centuries of legal evolution, economic philosophy, and political theory. At the heart of the patent system—arguably the most complex and debated form of IP—is a foundational question:
Why do patents exist?
While the statutory framework of patent law provides the procedural “how,” its deeper rationale is captured by two philosophical pillars that have guided patent systems across jurisdictions and eras:
Incentive Theory and Disclosure Theory.
Far from being competing explanations, these two doctrines function in tandem, creating a balanced mechanism that encourages the development and dissemination of knowledge. Their roots can be traced to Enlightenment thinkers, early economists, and the architects of modern innovation policy.
The Historical Origins of Patent Philosophy
Early Patent Systems
The concept of granting exclusive rights to inventors predates modern governments. Early forms appeared in Renaissance Italy—most famously the Venetian Patent Statute of 1474. Venice recognized a social need to reward technological contributions while ensuring that information would one day enter the public domain.
These early laws largely mirrored the same principles that govern modern systems:
- A temporary exclusive right
- A requirement to publicly describe the invention
- A belief that society benefits from encouraging and sharing innovation
Over the following centuries, these ideas spread across Europe and into the legal frameworks of England and, eventually, the United States.
The First Pillar: Incentive Theory
The Core Idea
Incentive Theory argues that innovation will be under-produced without a legal mechanism that rewards inventors for their contributions. Put simply:
People innovate more when the law guarantees they can profit from their inventions.
This concept became prominent during the Enlightenment, when philosophers and early economists emphasized the role of incentives in shaping behavior and allocating resources.
The Thinkers Behind Incentive Theory
John Locke (1632–1704)
While Locke is best known for his theory of property rights, his ideas heavily influenced early American patent doctrine. Locke argued that individuals have a natural right to the fruits of their labor—an idea that fit neatly with the emerging perception of inventors as deserving of legal protection because they created something of value.
Jeremy Bentham (1748–1832)
Bentham, the founder of utilitarianism, articulated what is now considered a proto-economic justification for patents:
Exclusive rights create the greatest good for the greatest number by stimulating socially beneficial innovation.
19th-Century Economists
Economists such as Alfred Marshall later reinforced these views by describing innovation as a public good—valuable, but difficult for inventors to monetize without protection.
Modern Application
Today, Incentive Theory underpins arguments for strong patent protection in industries where research and development are expensive, high-risk, and long-term, such as:
- Pharmaceuticals
- Biotechnology
- Advanced manufacturing
- Clean energy
Without patents, many of these industries argue, investors would be reluctant to commit capital to innovations that competitors could immediately copy.
The Second Pillar: Disclosure Theory
The Core Idea
Disclosure Theory addresses a different societal concern: ensuring that knowledge is not locked away in secrecy.
Under this doctrine:
Society grants exclusive rights, and in return, inventors must publicly disclose enough detail to allow others to learn from, replicate, and eventually improve the invention.
This requirement prevents the stagnation that occurs when knowledge is confined to private workshops or guarded as trade secrets indefinitely.
Intellectual Roots of Disclosure Theory
The Republic of Venice (1474)
The Venetian Statute explicitly framed patents as an exchange: “new and ingenious devices… must be disclosed to the Republic.”
The English Statute of Monopolies (1624)
Often cited as the predecessor of modern patent law, the statute limited monopolies to new manufactures disclosed to the Crown—again embedding the idea of public knowledge.
The U.S. Constitution (1787)
The Patent Clause—empowering Congress to promote the “progress of useful arts”—captures a similar spirit: exclusive rights exist to serve public progress, not private power.
Modern Importance
Disclosure Theory is what makes the patent system fundamentally different from trade secret protection. A patent must teach, enable, and describe the invention sufficiently to allow a “person having ordinary skill in the art” (PHOSITA) to practice it.
This results in:
- Public archives of technical knowledge
- Standardized formats for technological communication
- Interoperability and cumulative innovation
- The building blocks for future breakthroughs
Most technological fields—from chemical engineering to software architecture—have advanced because patent disclosures create a continuous chain of publicly available information.
Complementary, Not Contradictory: The Patent Bargain
A common misconception is that Incentive Theory and Disclosure Theory represent competing philosophies. In reality, they are two halves of a single legal and economic bargain:
- Incentive Theory ensures inventions are created.
- Disclosure Theory ensures inventions are shared.
One without the other would produce a system either devoid of innovation (no incentive) or devoid of knowledge flow (no disclosure).
Together, they form a self-reinforcing cycle:
Innovation → Exclusivity → Publication → Further Innovation
This cyclical mechanism is why many scholars describe the patent system not as a monopoly grant, but as a structured engine for scientific progress.
Modern Critiques and Evolving Perspectives
As technologies evolve, the balance between incentive and disclosure is frequently debated.
Arguments for Stronger Incentives:
- High-cost R&D industries argue patents are essential for investment.
- Investors rely on exclusivity for returns.
- Without patents, many life-saving drugs would never be developed.
Arguments for Stronger Disclosure or Reform:
- In software and information technology, innovation cycles are fast and costs lower.
- Some argue that patents in these fields can stifle competition.
- The rise of patent thickets, evergreening, and non-practicing entities (NPEs) challenges the original intent of the system.
These debates do not undermine the underlying theories; instead, they demonstrate how dynamic the balance between incentive and disclosure must remain.
Conclusion: The Patent System as a Philosopher’s Machine
Patents are often discussed in technical or economic terms, but at their core, they are philosophical instruments designed to harmonize individual ambition with collective progress.
- Incentive Theory acknowledges human motivation.
- Disclosure Theory safeguards the public interest.
Together, they form a legal framework that both stimulates innovation and ensures its benefits are shared. Understanding these two pillars—and the centuries of thought behind them—reveals that the patent system is far more than a regulatory structure. It is a carefully engineered mechanism that reflects political theory, economic logic, and the enduring human desire to create.
Looking to Protect Your Intellectual Property?
Please contact Arlen Olsen at Schmeiser, Olsen & Watts LLP at aolsen@iplawusa.com.
About the Author
Mr. Olsen, a former adjunct professor of intellectual property law, has over 30 years of experience in all aspects of intellectual property law. Mr. Olsen is a founding Partner of Schmeiser, Olsen & Watts LLP and a former United States Patent Examiner. Mr. Olsen has prosecuted numerous patents that have been litigated and received damages of over 60 million dollars. Additional activities include teaching seminars, appearing as a guest lecturer on intellectual property matters for corporations and educational institutions, and evaluating and consulting with clients regarding the scope, enforcement, and protection of intellectual property rights.
