Transaction Costs and Patent Reform
Paul J. Heald
University of Illinois College of Law
Santa Clara Computer & High Technology Law Journal, Vol. 23, 2007
UGA Legal Studies Research Paper No. 07-009
This article considers current proposals for patent law reform in light of a simple theory about intellectual property law: In a world without transaction costs, the assignment of property rights is not necessary to stimulate the optimal production of creative goods. Because potential users of inventions could contract for their creation, a compelling justification for granting property rights in these intangibles is the reduction of real-world transaction and information costs that hinder, or make impossible, contract formation between users and creators. Proposals for patent law reform, therefore, should be evaluated by whether a change in legal rights, or in the regulatory process increases or lowers these costs.
Number of Pages in PDF File: 17
Keywords: patents, inventions, coase, transaction costs, ebay, reform
JEL Classification: I01, K12, K19Accepted Paper Series
Date posted: April 5, 2007
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