State Patents as a Solution to Underinvestment in Innovation
62 Pages Posted: 7 Mar 2013 Last revised: 9 Jul 2015
Date Written: January 1, 2014
It is an assumption of modern U.S. patent law that states cannot grant patents. Indeed, the Supreme Court has effectively preempted them from doing so. This Article argues that full preemption of state patents may be inefficient because sometimes state patents (exclusive rights granted by state governments for patentable or unpatentable innovations) might be more effective than state tax credits or direct subsidies for promoting investment in spatially localized innovations, such as agricultural techniques or energy production methods that have yet to be successfully commercialized. Building on work by scholars who argue that U.S. patents can be designed to promote commercial risk-taking and market experimentation, the Article argues that state patents could serve this function if they were re-introduced today in a form similar to their historical iteration. First, they have a lower standard of novelty, so that foreign inventions can be imported into the jurisdiction from abroad and given localized protection. Second, they have a higher standard of social utility, meaning the local government can select only those technologies it wishes to be introduced into the jurisdiction to support local goals or industries. Third, they have strict reduction to practice requirements, while information disclosure requirements are limited only to the practical information needed to work the invention. Fourth, they are tailored rather than uniform incentives, with term length and scope based on the level needed to induce commercialization. The Article concludes that the Supreme Court’s current approach to patent preemption is too restrictive. It proposes a revised approach based on direct conflict analysis and a political process theory of judicial review under the dormant Commerce Clause.
Keywords: patents, federalism, innovation, preemption, intellectual property, incentives, Bonito
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