Innovation Policy Pluralism

71 Pages Posted: 26 Feb 2018 Last revised: 2 Feb 2019

See all articles by Daniel J. Hemel

Daniel J. Hemel

New York University School of Law

Lisa Larrimore Ouellette

Stanford Law School

Date Written: February 18, 2018


When lawyers and scholars speak of “intellectual property,” they are generally referring to a combination of two distinct elements: an innovation incentive that promises a market-based reward to producers of knowledge goods, and an allocation mechanism that makes access to knowledge goods conditional upon payment of a proprietary price. Distinguishing these two elements clarifies ongoing debates about intellectual property and opens up new possibilities for innovation policy. Once intellectual property is disaggregated into its core components, each element can be combined synergistically with non-IP innovation incentives such as prizes, tax preferences, and direct spending on grants and government research, or with non-IP allocation mechanisms that promote broader access to knowledge goods.

In this Article, we build a novel conceptual framework for analyzing combinations of IP and non-IP policy mechanisms and present a new vocabulary to characterize those combinations. Matching involves the pairing of an IP incentive with a non-IP allocation mechanism—or, vice versa, the pairing of a non-IP incentive with IP as an allocation strategy. Mixing entails the use of IP and non-IP tools on the same side of the incentive/allocation divide: i.e., the use of both IP and non-IP innovation incentives, or of IP and non-IP allocation mechanisms. Layering refers to the use of different policies at different jurisdictional levels, such as using non-IP innovation incentives and allocation mechanisms at the domestic level within an international legal system oriented around IP. After setting forth this framework, we identify reasons why different combinations of IP and non-IP tools may be optimal in specific circumstances.

Our project is not merely theoretical: we argue that “pluralism”—the combination of IP and non-IP policies—provides a more descriptively accurate account of the innovation policy landscape than those that dominate the existing literature. Governments routinely, though often unwittingly, incorporate strategies of matching, mixing, and layering into their innovation policies. Even in the pharmaceutical industry—a sector sometimes described as the poster child for the pure IP patent system—the United States and other countries rely on complex combinations of IP and non-IP elements at the domestic level, all layered within an international IP system that apportions the costs of knowledge production across countries. Dissecting and reassembling the elements of this knowledge-production system reveals a richer menu of possibilities for IP reform, with potential applications to property law more broadly.

Keywords: intellectual property, innovation policy, prizes, grants, R&D tax credits

JEL Classification: K11, K34, K39, O30, O34, O38

Suggested Citation

Hemel, Daniel J. and Ouellette, Lisa Larrimore, Innovation Policy Pluralism (February 18, 2018). Yale Law Journal, Vol. 128, p. 544 (2019), Stanford Public Law Working Paper, Stanford Law and Economics Olin Working Paper No. 516, U of Chicago, Public Law Working Paper No. 664, University of Chicago Coase-Sandor Institute for Law & Economics Research Paper No. 849, Available at SSRN:

Daniel J. Hemel (Contact Author)

New York University School of Law ( email )

40 Washington Square South
New York, NY 10012-1099
United States


Lisa Larrimore Ouellette

Stanford Law School ( email )

559 Nathan Abbott Way
Stanford, CA 94305
United States


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