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February 19, 2010


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Michael F. Martin

First, I love Barnett's conception of the benefit of IP as a substrate for collaboration. Very similar to Lincoln's in his lecture on discoveries and inventions.

Regarding the suggestion that parties privately contract for arbitration of IP disputes: That is already the case. Arbitration clauses are a standard term in many technology and IP license agreements. Arbitrators and parties operate in the shadow of the law. The larger point is that there is already the opportunity for parties to opt out of the patent system; it doesn't happen more often because it's too expensive to write the contracts and establish a redundant mechanism for arbitrating disputes.

Regarding vertical integration: There are too many other economic reasons for integration for the trade secrets to be a decisive factor. One has to look for the cases where these other factors are in equipoise to see the influence of weak/strong IP rights. At the moment, for example, the prospect of rapid inflation has caused many corporations to scramble to integrate their supply chains.

The case of university-industry relations is perhaps one worthy of further study in this regard. In what instances have universities done licensing of inventions themselves versus assigning to a spin-off or established corporation for product development and/or licensing? The university-industry case is of interest because it eliminates some of the variables: universities don't themselves sell any products.

Who asked whether a system that further promotes innovation is desirable? Really? Come on.

Hanna Chung

First, thanks for the comment, which further elaborated on a lot of similar concerns that workshop participants had raised last Tuesday. To be fair to the participant(s) who discussed whether we want to pursue policies that maximize innovation, I just wanted to clarify that the general context of the conversation did imply that more innovation is good. The question seemed more directed at exploring the opportunity costs of incentivizing innovation, if it comes at the expense of other good results, such as effective commercialization of the innovation. For example, one participant raised the possibility that having strong IP rights could be a policy choice of favoring innovation by “first movers” (i.e., firms that generate the idea) over innovation by “second movers” (I.e., firms that work further down the line in product development). I think the rough takeaway from that segment of the conversation was simply that innovation competes with other values and that different types/methods of innovation may even compete against each other.

My apologies for any misunderstandings or mischaracterization.

Michael F. Martin

I was too flip, it's a valid point:


But it's also clear that we will have to continue to innovate to deal with scarcity as our resource use and population growth continues at current rates.

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