Engineering a Deal: Toward a Private Ordering Solution to the Anticommons Problem

37 Pages Posted: 30 Nov 2006  

F. Scott Kieff

George Washington University - Law School; Stanford University - Hoover Institution on War, Revolution and Peace

Troy A. Paredes

Washington University in St. Louis - School of Law

Date Written: November 2006

Abstract

The problems of the intellectual property ("IP") anticommons are infamous. Many people fear that the potential for vast numbers of IP rights to cover a single good or service will prevent an enterprise from even attempting to launch a business for fear of being unduly taxed or retarded or simply held up. This Article offers a solution based on private ordering within the context of existing laws. This approach uses a limited liability entity structured so that IP owners are given an actual stake in the operating business and thus an incentive to participate in the enterprise; and yet at the same time, the IP owners face a number of constraints that mitigate their interest in acting opportunistically by holding out. Through careful attention to IP owner payoffs and self-restraint, the proposed structure is designed to coordinate behavior among relevant IP owners, thus overcoming the anticommons problem. This approach is designed to help lawyers serve their role as transaction cost engineers who can structure relationships in ways that get deals done.

Keywords: Intellectual Property, Anticommons, Patent

JEL Classification: A12, B15, B25, D23, D29, D61, K11, K20, K29, K39

Suggested Citation

Kieff, F. Scott and Paredes, Troy A., Engineering a Deal: Toward a Private Ordering Solution to the Anticommons Problem (November 2006). Stanford Law and Economics Olin Working Paper No. 330; Washington University School of Law Working Paper No. 06-12-01. Available at SSRN: https://ssrn.com/abstract=948468 or http://dx.doi.org/10.2139/ssrn.948468

F. Scott Kieff (Contact Author)

George Washington University - Law School ( email )

2000 H Street, N.W.
Washington, DC 20052
United States
202-994-4644 (Phone)

Stanford University - Hoover Institution on War, Revolution and Peace ( email )

434 Galvez Mall
Stanford, CA 94305-6010
United States
650-723-3678 (Phone)

Troy A. Paredes

Washington University in St. Louis - School of Law ( email )

Campus Box 1120
St. Louis, MO 63130
United States
314-935-8216 (Phone)
314-935-5356 (Fax)

Paper statistics

Downloads
287
Rank
86,104
Abstract Views
1,956