Coordination-Focused Patent Policy
52 Pages Posted: 17 Aug 2014 Last revised: 1 Mar 2017
Date Written: August 15, 2015
This Article explores the practical consequences of an important shift that has recently taken place in patent theory. Although it was long agreed that the purpose of granting patents is to reward invention, today many scholars instead attempt to justify the patent system based on its role in facilitating information exchange and enabling technical coordination among firms. This change in justification is controversial, and its viability remains a fiercely contested question. But despite intense attention at the level of theory, little has been said about the consequences of this debate for patent policy itself. This Article addresses that void, developing a set of mid-level principles from coordination theory and showing how these principles affect a wide range of policy questions.
This analysis has a number of implications. For example, it has long been thought that the coordination function requires granting broader patent rights and doing so at an earlier point in time than the traditional rewards function. Based on this assumption, many scholars have concluded that a coordination-focused system would inevitably be more expensive than a rewards-focused one. But upon closer examination, the coordination function could potentially flourish with just the opposite policies—narrower patents granted later in time—and so might actually be cheaper to implement. This illustrates the importance of bringing coordination theory down to details. In many ways, current patent law reflects the long-assumed constraints of rewards theory; a move towards coordination goals opens a number of degrees of policymaking freedom that have not been previously recognized. Moreover, coordination theory can sometimes inform patent policymaking in cases where the conventional rewards theory proves ambiguous, and so merits further exploration regardless of whether coordination is ultimately accepted as a principal justification for the patent system.
Keywords: patent law, patent theory, prospect theory, IP theory, transactions costs
JEL Classification: O30, O31, O32, O33, O34, O38, K11
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