"R&D is the cost of doing business. It should never be passed on the customer."
Uhm, absolutely ALL costs are passed on to the consumer, otherwise you're operating a business at a loss.
An example:
Right. So I spend my life's savings. I build a smart thing, and show a compelling reason why it works. You want it. So I sell it, at a price that will replenish my life's savings and make me some money, ie materials cost + R&D cost offset + profit.
Then Eve comes along, sees my idea, figures out how it works by spending a few afternoons tinkering, since she has a working prototype at marginal cost. She has no R&D costs, and can immediately start undercutting me.
You don't give a monkey's toss who made it, so you buy from Eve, and I end up poorer than I was for being foolish enough to invent something.
Knowing this in advance, I'll save myself from researching it and making myself poorer.
With patent law, I know I have, say, 12 years to make money off the patent. So I know that if I spend $12000 on R&D, I need to make at least $1000/yr margin just to break even from sales, plus some actual profit. If I license the tech out to Alice, Bob and Carol, and I don't want to set up manufacturing, I can license it for $4000 and be in the clear and still sell the product. Each of them has an R&D investment of $4000, so the product becomes cheaper (in a more crowded marketplace).