Innovation Policy Pluralism

61 Pages Posted: 26 Feb 2018 Last revised: 2 Jul 2018

Daniel Jacob Hemel

University of Chicago - Law School

Lisa Larrimore Ouellette

Stanford Law School

Date Written: February 18, 2018

Abstract

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 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 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”—as defined by 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 nation-states. Dissecting and reassembling the elements of this knowledge-production system reveals a richer menu of possibilities for intellectual property reform, with potential applications to and connections with 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 Jacob and Ouellette, Lisa Larrimore, Innovation Policy Pluralism (February 18, 2018). 128 Yale Law Journal (Forthcoming); 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: https://ssrn.com/abstract=3125784

Daniel Jacob Hemel (Contact Author)

University of Chicago - Law School ( email )

1111 E. 60th St.
Chicago, IL 60637
United States

Lisa Larrimore Ouellette

Stanford Law School ( email )

559 Nathan Abbott Way
Stanford, CA 94305
United States

HOME PAGE: http://law.stanford.edu/profile/lisa-larrimore-ouellette

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