Does Innovation Mean Patent Licensing Demands?
11 Pages Posted: 21 Jan 2016 Last revised: 12 Apr 2016
Date Written: January 20, 2016
In response to Robin Feldman & Mark A. Lemley, Do Patent Licensing Demands Mean Innovation?, 101 Iowa Law Review 137 (2015).
In their recent article, Do Patent Licensing Demands Mean Innovation?, Professors Robin Feldman and Mark Lemley take on an important empirical question: do patent holders function as effective middlemen in facilitating innovation (i.e., the so-called “middleman” hypothesis)? Or in other words, when patent holders initiate patent licensing discussions with others, do the resulting patent licenses ultimately translate into new innovation? As Feldman and Lemley point out, defenders of certain patent licensing business models often cite this function of patents as a justification for those business models. So-called “patent trolls,” for instance, though much maligned, may actually benefit society if they facilitate technology transfer through their patent licensing activities. More generally, a growing body of scholars argues that patent rights increase the commercialization of inventions by facilitating beneficial technology transfers between inventors and those in a better position to put the inventions into commercial use. Hence, as Feldman and Lemley put it, both patent law theory and the healthy functioning of the patent system depend in part on figuring out whether patents actually serve this “intermediation” purpose.
In order to answer this question, Feldman and Lemley survey those in the patent licensing trenches, asking in-house lawyers a number of questions meant to find out whether patent license requests from third parties actually result in new innovation at their companies. The study’s results, if representative, overwhelmingly cut against those who argue that patent license requests facilitate technology transfer and innovation more generally. Indeed, the results of their study suggest that patent licensing requests fail to promote innovation across the board, regardless of whether a patent troll, competitor, non-competitor, university, or some other entity initiates the licensing request. Instead, such patent licenses ultimately function as a “tax” on innovation that is already occurring.
This brief response to the Feldman/Lemley study comes in two parts. Part I assesses the Feldman/Lemley project’s focus on patentee-initiated license requests. It concludes that, while reasonable given the project’s objectives, this focus may tend to mask the importance of licensee-initiated licensing activities in some industries. The focus may also fail to adequately capture patentee-initiated discussions that survey respondents do not characterize as a license request. Part II then articulates some concerns with only surveying lawyers, as well as the nature of some of the questions presented to those lawyers. It then provides some possibilities for addressing those concerns.
Keywords: Patent, Patents, Patent Licensing, Innovation, Patent Trolls
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