Transaction Costs and Patent Reform

17 Pages Posted: 5 Apr 2007

See all articles by Paul J. Heald

Paul J. Heald

University of Illinois College of Law


This article considers current proposals for patent law reform in light of a simple theory about intellectual property law: In a world without transaction costs, the assignment of property rights is not necessary to stimulate the optimal production of creative goods. Because potential users of inventions could contract for their creation, a compelling justification for granting property rights in these intangibles is the reduction of real-world transaction and information costs that hinder, or make impossible, contract formation between users and creators. Proposals for patent law reform, therefore, should be evaluated by whether a change in legal rights, or in the regulatory process increases or lowers these costs.

Keywords: patents, inventions, coase, transaction costs, ebay, reform

JEL Classification: I01, K12, K19

Suggested Citation

Heald, Paul J., Transaction Costs and Patent Reform. Santa Clara Computer & High Technology Law Journal, Vol. 23, 2007, UGA Legal Studies Research Paper No. 07-009, Available at SSRN:

Paul J. Heald (Contact Author)

University of Illinois College of Law ( email )

504 E. Pennsylvania Avenue
Champaign, IL 61820
United States
706-372-2567 (Phone)


Do you have negative results from your research you’d like to share?

Paper statistics

Abstract Views
PlumX Metrics