The chapter discusses the importance of patent law in balancing the incentives for innovation and the widespread diffusion of benefits. It highlights that while patents theoretically provide perfect appropriability for a limited time, in practice, their effectiveness is limited due to circumvention, stringent legal requirements, and the need for public disclosure. The chapter also notes that other methods of appropriation, such as lead time and learning curve advantages, are often more effective in certain industries. The authors conducted a survey of high-level R&D executives to gather insights on the effectiveness of different means of appropriation, finding that patents were generally rated as less effective than other methods, particularly for processes. The survey results suggest that patents are particularly effective in chemical industries due to clearer standards for assessing patent validity. The chapter concludes by discussing the limitations on the effectiveness of patents, such as the ability of competitors to "invent around" patents and the lack of patentability for new processes.The chapter discusses the importance of patent law in balancing the incentives for innovation and the widespread diffusion of benefits. It highlights that while patents theoretically provide perfect appropriability for a limited time, in practice, their effectiveness is limited due to circumvention, stringent legal requirements, and the need for public disclosure. The chapter also notes that other methods of appropriation, such as lead time and learning curve advantages, are often more effective in certain industries. The authors conducted a survey of high-level R&D executives to gather insights on the effectiveness of different means of appropriation, finding that patents were generally rated as less effective than other methods, particularly for processes. The survey results suggest that patents are particularly effective in chemical industries due to clearer standards for assessing patent validity. The chapter concludes by discussing the limitations on the effectiveness of patents, such as the ability of competitors to "invent around" patents and the lack of patentability for new processes.