Cultivating the Genetic Commons: Imperfect Patent Protection and the Network Model of Innovation

This Article enters this debate and argues the following position. Assuming that antitrust authorities persist in certain strategies to impede patent consolidation, the recent introduction of patent rights for certain biotechnological innovations is likely to encourage private investment in the genetic commons and reduce (or, at least, not enhance) the accessibility costs that could stunt technological advance. To reach this conclusion, this Article shows that the two leading theories of patent protection, the incentive theory7 and the prospect theory,8 do not explain private industry\u27s willingness to sink significant investment capital into highly uncertain biopharmaceutical projects. These theories offer insufficient explanations because patent protection for biopharmaceutical innovations is substantially incomplete and generally covers only a small portion of a particular innovation\u27s technological yield. Both the incentive and prospect theories falsely predict that the appropriability gap would drive away private investors from biotechnology projects that appear to generate a large stream of unprotected, or giveaway, benefits. In contrast, this Article argues that this imperfect form of patent protection attracts private investment in uncertain research projects by reducing two information asymmetries that impede interfirm ventures capable of efficiently spreading the high risk of biopharmaceutical product development. At the same time, the imperfect character of patent protection reduces (or, at least, does not enhance) accessibility costs by encouraging individual firms to capture the unprotected portion of an innovation project\u27s expected yield by entering into interfirm research, marketing, or production alliances

“Killer Acquisitions” Reexamined: Economic Hyperbole in the Age of Populist Antitrust

Major competition regulators, and substantial portions of the scholarly community, have rapidly adopted the view that “killer acquisitions” and “kill zones” constitute significant sources of competitive risk arising from incumbent acquisitions of emerging firms in digital markets. Based on this view, policymakers in the United States, European Union, and other jurisdictions have advocated for, and in some cases have taken, substantial changes to merger review policies that would erect significant obstacles to incumbent/startup acquisitions. A review of the relevant body of evidence finds that these widely-held views concerning incumbent/startup acquisitions rest on meager support, confined to ambiguous evidence drawn from a small portion of the total universe of acquisitions in the pharmaceutical market and theoretical models of acquisition transactions in information technology markets. Moreover, the emergent regulatory and scholarly consensus fails to take into account the rich body of evidence showing the critical function played by incumbent/startup acquisitions in supplying a monetization mechanism that induces venture-capital investment and promotes startup entry in technology markets. The prospect of an acquisition transaction in the case of technical and commercial success generally promotes innovation and competition by providing a transactional device that expands startups’ access to the capital inputs required to undertake R&D and the commercialization services required to convert R&D outputs into commercially viable products. At the same time, these acquisitions enable incumbents to access the specialized innovation capacities of smaller firms. Proposed changes to merger review standards would disrupt these efficient transactional mechanisms and are likely to have counterproductive effects on competitive conditions in innovation markets

Antitrust Overreach: Undoing Cooperative Standardization in the Digital Economy

Information technology markets in general and wireless communications markets, in particular, rely on standardization mechanisms to develop interoperable devices for data processing, storage, and transmission. From 2G through the emergent 5G standard, wireless communications markets have largely achieved standardization through cooperative multi-firm arrangements that likely outperform the historically dominant alternatives of government monopoly, which is subject to informational deficits and regulatory capture, and private monopoly, which suffers from pricing and other distortions inherent to protected market positions. This cooperative process has successfully relied on three key legal elements: reasonably secure patents, quasi-contractual licensing commitments supplemented by reputation effects, and targeted application of antitrust safeguards against collusion risk. Over approximately the past decade, antitrust agencies and courts in the U.S., Europe and Asia have taken actions that threaten this legal infrastructure by limiting patentees’ ability to seek injunctive relief, adopting rigid understandings of “fair, reasonable and non-discriminatory” licensing principles, and addressing collusion risk among licensors-innovators while overlooking (and even exacerbating) collusion risk among licensees-implementers. These judicial and regulatory interventions in IP licensing markets shift value from firms and economies that specialize in generating innovations to firms and economies that specialize in integrating innovations into end-user products. These entity-level and country-level redistributive effects are illustrated by lobbying activities in the wireless communications markets and antitrust actions against IP licensors in jurisdictions that have substantial net IP deficits and are principally populated by IP licensees. Current antitrust policy promotes producers’ narrow interests in lower input costs while ignoring the broader public interest in preserving the cooperative standardization structures that have supported innovation and commercialization in the digital economy

The “License as Tax” Fallacy

Intellectual property licenses are commonly portrayed as a “tax” that limits access to technology assets, which in turn stunts innovation by intermediate users and inflates prices for end-users. Renewed skepticism toward IP licensing, and associated judicial and regulatory interventions that apply per se-like liability rules under patent and antitrust law to IP licensing, overlook the fact that IP licenses typically play a “positive-sum” enabling function, rather than a “zero-sum” exclusionary function, by mitigating expropriation risks that would otherwise frustrate transactions between the holders of complementary specialized IP and non-IP assets. As illustrated by paradigm examples of licensing and other IP-dependent arrangements in content and technology markets, these transactional structures facilitate value-creating exchanges of knowledge assets, promote the division of labor among innovation and production specialists, and lower entry costs for firms that have strong innovation capacities but weak production and distribution capacities. An analytical framework that overlooks the enabling function of IP licensing is prone to recommend “false positive” policy actions that undermine the formation of markets in IP assets and, more generally, induce organizational distortions and reduce competitive intensity by disadvantaging R&D-specialist entities that rely on licensing-based monetization mechanisms while favoring integrated firms that maintain end-to-end commercialization structures

The Case for Noncompetes

Scholars and other commentators widely assert that enforcement of contractual and other limitations on labor mobility deters innovation. Based on this view, federal and state legislators have taken, and continue to consider, actions to limit the enforcement of covenants not to compete in employment agreements. These actions would discard the centuries-old reasonableness standard that governs the enforcement of these provisions, often termed “noncompetes,” in all but four states (notably, California). We argue that this zero-enforcement position lacks a sound basis in theory or empirics. As a matter of theory, it overlooks the complex effects of contractual limitations on labor mobility in innovation markets. While it is frequently asserted that noncompetes may impede knowledge spillovers that foster innovation, it is frequently overlooked that noncompetes may encourage firms to invest in cultivating intellectual and human capital. As a matter of empirics, we show that two commonly referenced bodies of evidence fail to support zero enforcement. First, we revisit the conventional account of the rise of Silicon Valley and the purported fall of the Boston area as innovation centers, showing that this divergence cannot suitably be explained by differences in state law regarding noncompetes. Second, we show that widely cited empirical studies fail to support a causal relationship between non-competes, reduced labor mobility, and reduced innovation. Given these theoretical and empirical complexities, we propose an error-cost approach that provides an economic rationale for the common law’s reasonableness approach toward contractual constraints on the circulation of human capital

Adaptive foveated single-pixel imaging with dynamic super-sampling

As an alternative to conventional multi-pixel cameras, single-pixel cameras enable images to be recorded using a single detector that measures the correlations between the scene and a set of patterns. However, to fully sample a scene in this way requires at least the same number of correlation measurements as there are pixels in the reconstructed image. Therefore single-pixel imaging systems typically exhibit low frame-rates. To mitigate this, a range of compressive sensing techniques have been developed which rely on a priori knowledge of the scene to reconstruct images from an under-sampled set of measurements. In this work we take a different approach and adopt a strategy inspired by the foveated vision systems found in the animal kingdom - a framework that exploits the spatio-temporal redundancy present in many dynamic scenes. In our single-pixel imaging system a high-resolution foveal region follows motion within the scene, but unlike a simple zoom, every frame delivers new spatial information from across the entire field-of-view. Using this approach we demonstrate a four-fold reduction in the time taken to record the detail of rapidly evolving features, whilst simultaneously accumulating detail of more slowly evolving regions over several consecutive frames. This tiered super-sampling technique enables the reconstruction of video streams in which both the resolution and the effective exposure-time spatially vary and adapt dynamically in response to the evolution of the scene. The methods described here can complement existing compressive sensing approaches and may be applied to enhance a variety of computational imagers that rely on sequential correlation measurements.Comment: 13 pages, 5 figure

Angular two-photon interference and angular two-qubit states

Using angular-position-orbital-angular-momentum entangled photons, we study angular two-photon interference in a scheme in which entangled photons are made to pass through apertures in the form of double angular slits, and using this scheme, we demonstrate an entangled two-qubit state that is based on the angular-position correlations of entangled photons. The entanglement of the two-qubit state is quantified in terms of concurrence. These results provide an additional means for preparing entangled quantum states for use in quantum information protocols

Comment on "Measuring the Orbital Angular Momentum of a Single Photon"

Optical modes with different orbital angular momentums (OAMs) per photon may be sorted by Mach-Zehnder interferometers incorporated with beam rotators, without resorting to OAM mode converters.Comment: 1 page, 1 figur