Proxy Signals: Capturing Private Information for Public Benefit
Gregory N. Mandel
Temple University - James E. Beasley School of Law
March 28, 2012
Washington U. Law Review, Vol. 90, No. 1, 2012
Temple University Legal Studies Research Paper No. 2012-15
This Article presents an original empirical methodology to identify which patent laws will best promote optimal incentives to innovate for society. Vociferous debates over patent reform pit the United States’ largest innovation industries against each other in a dispute concerning whether stronger or weaker patent rights are necessary to promote innovation. Past efforts to answer this question have been thwarted by an inability to parse the impossibly complex social and legal relationship between innovation and patent law. Rather than considering such problems directly, the proxy technique introduced here offers a new framework to leverage indirect signals that capture better information than previously available concerning how best to promote incentives to innovate. In certain contexts, it is possible to use empirical information about the trade-off between the incentives and exclusivity costs of patent law to identify particular private industries that (1) face trade-offs equivalent to those that society faces, and (2) possess far superior information concerning how best to balance such trade-offs. Where industries satisfy both criteria, their private preferences will happen to align with social innovation objectives and can be mined for previously untapped, socially beneficial information. The proxy signal approach provides a new public choice methodology, designed to leverage the strength of collective private industry and market knowledge, in a manner that can be applied to other legal domains beyond patent law.
Number of Pages in PDF File: 62
Keywords: intellectual property, patent, innovation, law and economics
JEL Classification: K10, K20, K30, O30, O31, O32, O33, O34
Date posted: March 29, 2012 ; Last revised: March 23, 2013
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