Are you using "adverse influence on competition" in the Brunswick "effect on competition, not competitors" sense or in the strategic gaming sense in the distribution of consumer or supplier surplus? Are you talking product patents, process patents, or use patents? I cannot make any categorical statements about overall welfare, although I have an intuition, but I feel pretty strongly about strategic behavior. Nevertheless, both are related.

There are no test cases in commercial patent litigation; every litigation is strategic behavior. Moreover, the game is in the parsing and construction of patent language, and it is very, very much like the issues of contract or statutory interpretation. More difficult perhaps because language is always being used to describe something that is probably better represented visually or mathematically or symbolically. I will give an example from a case with which I am familiar (it is still pending but this is all public information anyway). A chemical process patent makes a claim for a method of making a brominated organic compound called deca-DPE, in which the DPE is "brominated in bromine" (i.e., there is a bromine broth, and the DPE is dumped into it.) The specification in the patent makes it clear that the broth is intended to be something called methylene bromide, and indeed, there are counter-examples in the patent specifications that expressly disclaim bromination in elemental bromine. Nevertheless, the formal four corners claim covers literally a process of bromination in elemental bromine.

P, the patent holder, sues D, its competitor for patent infringement. D makes deca-DPE by brominating in elemental bromine. The method for dealing with this is to get the judge to interpret the patent language at a Markman hearing, and then file a motion for summary judgment. But you can almost guarantee that no federal judge will hold the Markman hearing until discovery is completed several millions of dollars in legal fees later. And, lo and behold, when it comes time for the Markman hearing, P has some theory why it is that elemental bromine is covered by the patent.

So let's go back to the macro and micro issues.

1. Competition as a whole. Assume deca-DPE constitutes a product market under, say, the DOJ merger guidelines (a non-transitory 5% price increase would stick). It seems to me a matter of first semester microeconomics that any expansion of the monopoly granted by patent beyond the narrowest possible construction has to have an adverse effect on welfare. The issue then is the offsetting benefits of innovation granted by the patent system. And I think you will find there are very few perfect markets, consumer or industrial, particularly in the short run. Yes, an iRiver is something of a competitor to an iPod, but not in the short run. Yes, there are substitute polymers to avoid the use of deca-DPE, but it takes months or years to change them out.

2. Strategic behavior. Oddly enough, P never seeks an injunction, perhaps because the patent construction issue would come to the fore, the injunction would be denied, and P would lose leverage. Instead, P and D are competing for a long-term deca-DPE supply contract, and the pendency of the litigation is valuable. P's salesperson walks into customer's office and without saying a word, puts a copy of the complaint on the customer's desk. I could give other examples. The point is I can't imagine a circumstance in which patent litigation is anything other than strategic behavior.

By their very definition patents are designed to have an adverse affect on competition. If you give someone a 20 year monopoly on an invention, the consumer is going to have to pay more for that invention. Does IP ever increase competition? Patents increase competition in the research and development arena, and from a general public standpoint, they are good for little else.

There is no doubt that many have used the patent system to unscrupulously extort money from legitimate businesses. My opinion is that there should be a tougher stance taken on whether or not an invention is actually reduced to practice before it should be enforceable. However, if you put a commercialization requirement in play, you suck millions of dollars of licensing fees out of universities, other similar entities, and affect their respective research budgets. Why in the world would a university present an innovation to prospective licensors with no protection that they will take the technology with no remuneration?

There is definitely a trade off between supporting innovation and restricting general technological advances in a way that negatively affects the consumer, but I guess that argument gives IP lawyers and legislators something to do. In my opinion, there are problems with the current system, but if you water down patent protection too much, you have a detrimental affect on innovation.