Removing Property from Intellectual Property and (Intended?) Pernicious Impacts on Innovation and Competition

doi:10.1017/CBO9780511974984.015

14 - Removing Property from Intellectual Property and (Intended?) Pernicious Impacts on Innovation and Competition

Published online by Cambridge University Press: 05 June 2012

F. Scott Kieff

Edited by

Geoffrey A. Manne and

Joshua D. Wright

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F. Scott Kieff: Affiliation:
George Washington University School of Law
Geoffrey A. Manne: Affiliation:
International Center for Law and Economics (ICLE) and Lewis and Clark Law School
Joshua D. Wright: Affiliation:
George Mason University School of Law

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Summary

Commentators have poured forth a loud and sustained outcry over the past few years that sees property rule treatment of intellectual property (IP) causing excessive transaction costs, thickets, anticommons, holdups, holdouts, and trolls unduly taxing and retarding innovation, competition, and economic growth. The popular response has been to seek a legislative shift toward some limited use of weaker, liability rule treatment, usually portrayed as “just enough” to facilitate transactions in those special cases where the bargaining problems are at their worst and where escape hatches are most needed. This chapter is designed to make two contributions. First, it shows how, through a set of changes in case law over just the past few years, the patent system has been hugely re-shaped from a system having several major, and helpful, liability-rule-pressure-release-valves into a system that is fast becoming almost devoid of significant property rule characteristics, at least for those small entities that would most need property rule protection. The chapter then explores some harmful effects of this shift, focusing on the ways liability rule treatment can seriously impede the beneficial deal-making mechanisms that facilitate innovation and competition. The basic intuition behind this bad effect of liability rules is that they seriously frustrate the ability for a market-challenging patentee to attract and hold the constructive attention of a potential contracting party (especially one that is a larger, more established party) while preserving the option to terminate the negotiations in favor of striking a deal with a different party.

Type: Chapter
Information: Competition Policy and Patent Law under Uncertainty
Regulating Innovation
, pp. 416 - 440

DOI: https://doi.org/10.1017/CBO9780511974984.015 [Opens in a new window]

Publisher: Cambridge University Press

Print publication year: 2011

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