Controlling the Means of Innovation: The Centrality of Private Ordering Arrangements for Innovators and Entrepreneurs
Sean M. O'Connor
University of Washington - School of Law
September 29, 2010
HANDBOOK ON LAW, INNOVATION AND GROWTH, Robert Litan, ed., Edward Elgar Publishing, 2010
Much of the literature on innovation law and policy focuses on how much the public sector should be involved in an innovation economy. The debate often comes down to whether innovators and entrepreneurs should be largely left alone to create their own private ordering arrangements, or whether government agencies should be actively involved in regulating those relationships. Legal academics may tend to favor the latter in part because the former seems to be at the edges of their bailiwick. “Private ordering” does not appear to have much need for active law and policy discourse, other than for defining the boundaries of that space and deciding which public sector regulator gets to referee the activities there. But the private ordering space has developed into a robust and fertile area in which practicing lawyers play a central role in establishing key structures and deals that enable innovation and entrepreneurship to flourish. The chapter first sets out a useful taxonomy and description of the critical features of these structures and deals, before arguing that law and policy makers (including judges) must understand the general features and role of these kind of structures and arrangements in innovation and entrepreneurship. Statutes, policy, or case law based on misunderstandings of these structures and deals can have deep impact on the innovation and entrepreneurship ecosystem, as illustrated by examples in the chapter. At the same time, lawyers who do not understand the structure and law underlying the various deals can risk creating both bad outcomes for their clients and confusing case law that often arises from “bad facts” cases. Ultimately, the chapter provides a starting point to spur academics and others to focus on the nature and details of the established private ordering ecosystem in the innovation economy.
Number of Pages in PDF File: 39
Keywords: law, innovation, entrepreneurship, private ordering, contracts, legal profession
Date posted: October 1, 2010 ; Last revised: July 30, 2011
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