Local Commercialization Incentives
49 Pages Posted: 6 Mar 2014 Last revised: 29 Jan 2015
Date Written: March 29, 2014
Some patent law scholars have proposed introducing new forms of patents to promote commercialization of inventions that would not otherwise be commercialized, or at least not within a reasonable period of time. In this Article I suggest that so-called commercialization patents are unnecessary because the United States already has a system for promoting commercialization of inventions that does not require creating unprecedented exclusive rights: direct government financing. Drawing on statutes and administrative codes, I provide an in-depth account of the major commercialization financing options for inventors and entrepreneurs at both the federal and the state levels. I then compare these incentives, called commercialization awards, to newly proposed commercialization patents. I show that, like commercialization patents, commercialization awards create strong incentives to commercialize inventions in the near future, and that award administrators employ a variety of strategies, such as strict investment matching requirements, to reduce the risk of wasting public money on projects that are not commercially viable.
Based on the insight that non-patent commercialization incentives exist and may be as efficient or more efficient than commercialization patents, I make a novel argument regarding the institutional structure of U.S. patent and innovation policy from the perspective of federalism. I assert that, when the field of commercialization incentives is expanded to include non-patent options such as commercialization awards, state and local governments may be better suited to design and administer these programs. The reason is that – unlike generation of new technological information, which is thought to produce significant geographic spillovers justifying federal intervention in the form of patents – commercialization of inventions produces relatively localized benefits, including not only near-term political benefits like job creation, but also long-term productivity gains as a result of new information derived from the actual practice, production, and marketing of inventions that, at least for a time, remains geographically bound to its place of origin. Thus, according to theories of economic federalism, state and local governments should have superior incentives and superior information to promote commercialization of inventions in their own jurisdictions than the federal government.
Keywords: commercialization, patents, awards, state, local, innovation, clusters, collective, action, federalism
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