Introduction: Innovation Incentives vs. Monopolistic Drift

Intellectual property (IP) law was originally conceived as a bargain to promote innovation and public knowledge. By granting inventors a temporary exclusive right, society incentivizes creation while ultimately ensuring new knowledge enters the public domain.^[1] In theory, this aligns with antitrust’s goals of fostering competition and supporting consumer welfare. However, when IP rights become overly broad or hyper-concentrated, they risk flipping from innovation incentives to bottlenecks. As Nobel-winning economist Joseph Stiglitz cautioned, “the broader the patent rights are, the better it is for innovation” is “not always correct” – excessively strong or long exclusivity can stifle follow-on innovation and competition. Beyond a certain point, IP protection stops being a spur for progress and starts becoming a chokehold on it, mirroring the ways in which monopolies curb the dynamism that markets need to thrive.

Today we see disturbing signs of this reversal. Patent portfolios are increasingly concentrated in the hands of a few tech giants and pharmaceutical conglomerates, creating patent “thickets” that rivals must hack through to compete. Instead of the lone inventor’s shield, IP has become the incumbent’s sword and a barrier to entry. This piece will diagnose how hyper-concentrated IP rights can suppress innovation, drawing parallels to monopoly power, and analyze the policy implications. We will explore Big Tech’s defensive patent arsenals that deter startups, Big Pharma’s patent “evergreening” that delays generic drugs, and how an economy overly focused on owning knowledge can tilt from productive capitalism toward a rentier model. The key question is increasingly urgent: Can markets remain truly free and democratic if knowledge itself is locked up as private property? In essence, intellectual property was born to democratize knowledge; it has matured into its enclosure.

Patent Thickets and the Startup Squeeze in Tech

In the technology sector, large corporations have amassed sprawling patent portfolios that function like thickets – dense entanglements of overlapping IP rights. A new entrant with an innovative idea faces not a fair race, but a minefield of existing patents. One commentary illustrates this with a thought experiment: if three big firms each own huge patent libraries in a field and one of them acquires all the others’ IP, a startup “XYZ” would have to navigate three companies’ worth of patents while squaring off against a behemoth of a competitor.^[2] This scenario is not far from reality. Patent thickets raise barriers to entry by making it nearly impossible to develop complex products without infringing somewhere. Small companies may be discouraged from entering industries dominated by patent thickets, such as telecoms or software, due to the high risk and cost of litigation.^[3] In effect, IP rights concentrated in incumbent hands become a moat, deterring competition just as effectively as any monopoly over a physical resource.

Big Tech firms also engage in defensive patenting – filing numerous patents not necessarily to commercialize their inventions, but to block rivals from patenting related innovations and to stockpile legal weapons against lawsuits. This arms race has led to astonishing expenditures. Not long ago, the smartphone industry spent over $20 billion in just two years on purchasing and defending patents, an amount so large that it actually exceeded the industry’s investment in research and development. Similarly, tech giants Google and Apple each spent more on acquiring and litigating patents than on R&D between 2010-2012.^[4] Every dollar diverted to these patent wars is a dollar not spent on engineers, labs, or new products. The opportunity cost is enormous and points to how an overemphasis on IP ownership can undermine real innovation.

The consequences of patent thickets in tech are well documented. They increase litigation frequency and costs, complicate licensing, and even encourage filing of weaker, incremental patents just to thicken portfolios. For consumers, this often means slower product launches (due to legal delays) and higher costs (as companies pass on litigation expenses). For startups, it means facing an uphill battle against entrenched incumbents. Industry analyses note that litigation costs often outweigh actual R&D spending in patent-dense sectors like electronics and software.^[5] A small firm without a large patent stash of its own has little bargaining power – it can neither easily cross-license with competitors nor afford protracted court fights. This dynamic cements the dominance of a few big players. In sum, what was meant as a shield for inventors has, in the tech realm, become a web of privately owned knowledge that others must pay tribute to or risk infringing. The innovation ecosystem suffers as rivalry gives way to rent-seeking, echoing the very monopolistic stagnation antitrust law guards against.

Evergreening in Pharmaceuticals: Innovation Bottlenecks and “Monopoly Without End”

If the tech sector shows how too much IP can block new entrants, the pharmaceutical industry provides a stark example of how excessive patent protection can slow down follow-on innovation and harm consumers. Drug patents are supposed to reward novel treatments with a temporary monopoly (typically 20 years from filing) after which generics enter to drive prices down. In practice, however, Big Pharma has mastered the art of “evergreening” – extending monopolies on profitable drugs through secondary patents and other exclusivities on minor modifications, new formulations, delivery mechanisms, or even dosing schedules. The result is an “innovation bottleneck” where the breakthrough might be decades old, yet competition is kept at bay by a fortress of ancillary IP rights.

The scale of this strategy is illustrated by recent investigations. A 2021 U.S. House Oversight Committee report found that major drug companies systematically extend exclusivity far beyond 20 years as a deliberate strategy to preserve profits rather than to develop truly new products.^[6] In the report’s words, the current system in pharma is “Schumpeter gone wrong; it’s monopoly power without end.” Instead of a cycle where one monopolist’s breakthrough eventually yields to new innovators, we get monopoly without end, with incumbents entrenching themselves. The report noted that the entry of upstart competitors becomes “simply out of the question” when incumbents have the dubious ability to perpetuate their legal monopolies.

Patent Thickets and Delayed Generics: Case Studies

Evergreening is not just a theoretical concern – it has very tangible consequences for patients and payers. A few high-profile examples underscore how hyper-concentrated patenting around blockbuster drugs delays competition and extracts enormous rents:

• Humira (adalimumab) – an anti-inflammatory drug and once the world’s best-selling medicine was protected by a thicket of over 100 patents, which effectively delayed any biosimilar (the generic equivalent for biologics) competition in the U.S. for years.^[7] AbbVie, Humira’s manufacturer, filed more than 300 patent applications over time on various aspects of Humira and obtained roughly 165 patents, with 94% of those patents filed after the drug’s initial FDA approval.^[8] This evergreening strategy helped block competitors and enabled Humira to generate nearly $200 billion in global revenue during its two decades of exclusivity. In fact, as of 2022 (over 20 years since launch) Humira still yielded $21 billion in annual sales for AbbVie, more than the combined 2022 revenue of all 32 NFL teams. Such outsized returns were only possible because cheaper biosimilars were kept off the market far beyond the life of Humira’s original patent.
• Keytruda (pembrolizumab) – a breakthrough immunotherapy for cancer – has seen Merck file 129 patent applications on it, of which 53 patents have been granted. Many of these are secondary patents (e.g. on new formulations or uses) that together extend Keytruda’s exclusivity by an estimated 8 additional years beyond the primary patent term. No direct competition is expected until at least 2028, and Americans are projected to spend at least $137 billion on Keytruda in the interim due to the delayed entry of lower-cost alternatives. Tellingly, Merck has even sought to patent a new injection method (under-the-skin delivery) for Keytruda purely to edge the patent clock further out – not an improvement in the drug’s medical efficacy, but a legal maneuver to shield its revenue stream.

These cases are not outliers. On average, the top 10 selling drugs in America each have around 74 patents protecting them, with more than half of those patent applications filed after the drug’s initial approval.^[9] This shows that initial innovation is often followed by a flood of “me-too” patents aimed at extending monopoly rents. The public pays the price: for example, three top-selling drugs (Humira, Enbrel, and Eliquis) saw generics launched in Europe 7.7 years earlier on average than their expected U.S. launch, because U.S. patentees stalled competition – during those extra monopoly years, Americans spent around $66.99 billion on just these three drugs in FY2023.^[10] When even a single generic competitor finally enters the market, drug prices can fall dramatically (often by 80% or more) highlighting how much patent-driven delays cost consumers and health systems.

Beyond patent tactics, pharmaceutical firms have also leveraged regulatory exclusivities and legal strategies (like FDA “citizen petitions” or strategic litigation settlements) to fend off competition. The net effect is a rent-extraction machine: companies invest relatively modestly in truly novel R&D while maximizing revenue from older products under prolonged exclusivity. A telling statistic: over a recent five-year period, 14 large drug companies spent $577 billion on stock buybacks and dividends which amounted to $56 billion more than they spent on R&D. In other words, a significant share of cash flows, bolstered by extended monopoly pricing, is going to shareholders rather than scientific innovation. Similarly, during the COVID-19 pandemic, most big pharma firms spent more on marketing and sales than on R&D, underscoring that their primary focus has shifted from innovation to monetizing existing assets and defending market share. IP law, in principle, trades temporary high profits for long-term public domain benefits; but evergreening upends that balance, creating a perpetual patent rent that enriches incumbents while delaying the very competition that drives prices down and pushes innovation forward.

Knowledge Ownership and the Future of Democratic Markets

Can democratic capitalism thrive when core knowledge assets are locked behind private gates? Markets depend on competition and the flow of ideas. New entrants build on existing knowledge, and consumers benefit from rivalry. But when IP becomes enclosure rather than incentive, markets risk morphing into permission economies.^[11] Power shifts from the many to the few: startups stall, innovators need licenses from incumbents, and consumers face fewer choices. A system meant to reward creativity begins to punish it.

Modern IP law still pays lip service to openness (i.e. time limits, fair use, research exemptions), but in practice, lobbying and loopholes increasingly allow perpetual privatization. As monopoly pricing stretches on, consumers effectively pay a private tax on access to knowledge. Meanwhile, the prospect of upward mobility shrinks: innovation gets boxed in, not scaled out.

And with economic power comes political clout. When a handful of firms control access to vital technologies or medicines, they often shape the rules in their favor. We’ve seen this in debates over drug pricing, platform governance, and privacy, where IP rights are wielded as tools of exclusion, not progress.

Rebalancing is overdue. Legal scholars and policymakers are debating reforms: stricter scrutiny of patent-heavy mergers; curbs on secondary patents and evergreening; and stronger guardrails around compulsory licensing, patent pools, and standards-essential patents. In tech, some propose limits on patent injunctions that handicap new entrants. In pharma, others call for tighter review of follow-on patents and broader use of public licensing tools. More ambitiously, we should ask whether decades-long copyrights or trade secrets that extend indefinitely make sense in an era of rapid innovation.

At its core, IP exists “to promote the Progress of Science and useful Arts.” Today, that constitutional purpose is at risk. Hyper-concentrated IP increasingly resembles the monopolies that antitrust law was built to dismantle. Only this time, the resource being hoarded is knowledge itself.

The road back starts with restoring the balance between ownership and access, reward and renewal. If we want democratic markets that are open, fair, and innovative, we can’t afford to let IP drift into feudalism. Knowledge must remain a wellspring: not a walled garden. That means designing an IP regime that catalyzes innovation, rather than caging it.

 

 

 

 

^[1]https://www.ftc.gov/news-events/news/speeches/intellectual-property-antitrust-divergent-paths-same-goal#:~:text=I%20am%20pleased%20to%20be,2

^[2]https://www.niskanencenter.org/antitrust-problems-in-patents-and-copyrights-a-primer-for-policymakers/#:~:text=other%20tangible%20asset,letter%20behemoth%2C%20too

^[3]https://www.upcounsel.com/patent-thicket-example#:~:text=,incentive%20for%20businesses%20to%20innovate

^[4]https://www.phonearena.com/news/Apple-and-Google-spent-more-on-patents-than-on-R-D-for-the-first-time-in-2011_id35290

^[5] https://www.upcounsel.com/patent-thicket-example#:~:text=balance%20a%20challenge

^[6]https://www.niskanencenter.org/antitrust-problems-in-patents-and-copyrights-a-primer-for-policymakers/#:~:text=What%E2%80%99s%20more%2C%20these%20monopolies%20are,53%20younger%2C%20more%20innovative

^[7]https://www.upcounsel.com/patent-thicket-example#:~:text=,navigation%2C%20and%20connected%20car%20technology

^[8]https://www.csrxp.org/second-opinion-big-pharma-once-again-tries-to-defend-the-patent-abuse-status-quo/#:~:text=Humira

^[9]https://www.i-mak.org/wp-content/uploads/2022/09/Overpatented-Overpriced-2022-FINAL.pdf#:~:text=%E2%96%A0%20On%20average%2C%20there%20are,to%20keep%20generic%20and%20biosimilar

^[10]https://www.i-mak.org/wp-content/uploads/2022/09/Overpatented-Overpriced-2022-FINAL.pdf#:~:text=%E2%96%A0%20On%20average%2C%20there%20are,to%20keep%20generic%20and%20biosimilar

^[11] Permission economy describes a market structure in which innovation or market entry depends on authorization from incumbent rights holders due to concentrated control over intellectual property or essential platforms. This favours incumbents over new entrants.