On the Importance to Economic Success of Property Rights in Finance and Innovation

This Essay surveys recent developments across the fields of finance and innovation to highlight some common themes concerning the importance of property rights to economic success. Society regularly makes choices when shaping the precise contours of the legal institutions that govern the behavior of market actors, often in response to high profile issues like the collapse of Enron and the patenting of life-saving AIDS drugs. Recognizing that no set of legal institutions or related enforcement mechanisms will be perfect, this Essay explores some particularly helpful institutional features based on property rights that too often are overlooked by policy makers and commentators, even though these property-based institutional features have long been associated with economic success in a number of diverse settings

Comment on Intellectual Property, Concentration and the Limits of Antitrust in the Biotech Seed Industry

This comment was filed with the Department of Justice Antitrust Division on December 31, 2009, as Comments Regarding Agriculture and Antitrust Enforcement Issues in Our 21st Century Economy in response to the DOJ/USDA request for public comments for the agencies\u27 joint workshops on antitrust issues in the agricultural sector. Regarding firm size and integration, it must be kept in mind that the agriculture industry in the U.S. has, for good reasons, moved beyond the historic, pastoral image of small family farms operating in quiet isolation, devoid of big business and modern technologies. The genetic traits that give modern seeds their value - traits that confer resistance to herbicide and high yields, for example - are often developed through processes that are technologically-advanced, time- and money-intensive, risky investments, and subject to various layers of regulation, and, at least for some participants in this market, these processes are likely to be more efficiently and effectively conducted within large agribusiness companies having enormous research and development budgets and significant expertise in managing complex business and legal operations. This short comment discusses the implications for industry structure in the US biotech seed industry of the importance of intellectual property and innovation. Contrary to some commentators and the implicit underpinnings of the DOJ/USDA workshops, neither concentration nor typical licensing practices in the industry are cause for concern, and we counsel caution before intervening in this well-functioning and innovative market. From the public record it appears that the impetus for much of today’s antitrust interest in the biotech seed industry boils down to efforts to intervene into business disputes between large and sophisticated parties. The inherent uncertainty regarding the economic consequences of specific conduct, coupled with competitors’ poor incentives and the huge costs of error, counsel strongly against antitrust intervention without strong empirical evidence that the conduct has reduced competition and harmed consumers in the form of higher prices, lower quality, or reduced innovation

Patents for Environmentalists

The patent system may be good for environmentalists because it increases public access to new technologies, decreases use of environmentally dangerous self-help approaches, and increases the wealth available for all purposes, including helping the custodians of biodiversity. To the extent new technologies are helpful to environmental goals, such as cleaner burning engines, the patent system can be seen as generating environmental good by providing incentives for their commercialization ex ante. To the extent new technologies are harmful to environmental goals, such as poisonous chemicals, the patent system can be seen as at least not causing environmental damage because the patent right to exclude use would not interfere with a regulatory system’s own effort to exclude use. To the extent environmentalists are concerned about ex post ability to gain access to technologies covered by a patent right to exclude use, the patent system’s rules about licensing and price discrimination encourage patentees to seek out and license as many users as possible, even low value users. Moreover, to the extent environmentalists are concerned about dangerous self-help approaches, such as the terminator technologies that might be used by sellers of agricultural products, the patent system provides these sellers with a more attractive option that also poses less potential danger for the environment. Finally, to the extent environmentalists are concerned about helping custodians of biodiversity, the patent system creates economic wealth from such biodiversity that is then available for allocation among its custodians and users according to ordinary market and political mechanisms. Therefore, those who care about the environment ought to care about patents precisely because the present patent system may be so beneficial for the environment

Patents for Environmentalists

This essay, written for the National Association of Environmental Law Societies\u27 (NAELS) annual meeting, explains how patent law operates generally with an emphasis on how it may impact the environment in particular. In so doing, the essay addresses from a patent perspective some representative concerns relating to patents that appear to be prevalent in the environmental literature and shows how the patent system may provide substantial benefit for those favoring the environment

Patents for Environmentalists

This essay, written for the National Association of Environmental Law Societies\u27 (NAELS) annual meeting, explains how patent law operates generally with an emphasis on how it may impact the environment in particular. In so doing, the essay addresses from a patent perspective some representative concerns relating to patents that appear to be prevalent in the environmental literature and shows how the patent system may provide substantial benefit for those favoring the environment

IP Transactions: On the Theory & Practice of Commercializing Innovation

All too often within organizations and communities, innovations are not generated or put to use as rapidly or as broadly as they could be. Chief targets for blame include the problems of transaction costs, agency costs, lack of coordination, and improper incentives. Borrowing from the rich literature in the field generally known as new institutional economics, which has studied these types of problems more broadly, this Article elucidates how some practical tools might be expected to mitigate such problems. Particular arrangements of formal law and informal practice may help reach across the valley of death between early stage technologies and their downstream commercial deployment. Depending on the circumstances of a given situation, different practices and different aspects of the legal regimes of intellectual property, antitrust, business associations, bankruptcy, property, and contract may prove most helpful. Elucidating at least as many questions for further empirical research as answers in the form of practical tips for structuring transactions, this Article focuses on the particular mechanisms by which the problems and proposed solutions might actually operate

The Case Against Copyright: A Comparative Institutional Analysis of Intellectual Property Regimes

Contemporary debates over intellectual property ( IP ) generally evidence positions that appear to line up at opposite ends of the same axis, with one side arguing for more rights for IP owners under each major regime - patent, trademark, and copyright - and the other side arguing for fewer. Approaching from what some may see as a more IP view, this paper offers the counterintuitive suggestion to consider abolishing one of these IP regimes - copyright, at least with respect to the entertainment industry, which represents one of that regime\u27s most commercially significant users. This realization is in fact consistent with the underlying view because the view is not accurately seen as even being directed to the more or less debate; and instead is focused on means as much as ends. In keeping with this means-directed approach, the paper provides the first comprehensive analysis of IP regimes using the set of tools from the field of new institutional economics. In so doing the paper offers the first normative case for IP that connects the path breaking literature on the theory of property rights generally with the seminal theories of the firm, transaction costs, and agency costs. Underlying this paper\u27s stark departure from both the more and less bodies of the IP literature is the realization that the institutional structure of the present copyright regime may make the social costs of the present copyright regime too high, for at least the entertainment industry, while at the same time preventing it from providing the coordination benefits an IP regime normatively should provide. Building on this, the paper begins to explore for the first time whether the recent patent and trademark regimes have institutional structures that may allow them to provide these coordination benefits better, and with lower social costs. The paper thereby suggests how the patent and trademark regimes of yesterday may obsolete the copyright system of today

On the Importance to Economic Success of Property Rights in Finance and Innovation

This Essay surveys recent developments across the fields of finance and innovation to highlight some common themes concerning the importance of property rights to economic success. Society regularly makes choices when shaping the precise contours of the legal institutions that govern the behavior of market actors, often in response to high profile issues like the collapse of Enron and the patenting of life-saving AIDS drugs. Recognizing that no set of legal institutions or related enforcement mechanisms will be perfect, this Essay explores some particularly helpful institutional features based on property rights that too often are overlooked by policy makers and commentators, even though these property-based institutional features have long been associated with economic success in a number of diverse settings

Property Rights and Property Rules for Commercializing Inventions

Several recent commentators have criticized trends in the patent system by suggesting that the goals of the system can be better achieved through a variety of approaches that avoid or mitigate the monopoly-type impact of property rights. Suggested alternatives include the use of cash rewards, buy-outs, and liability rules, as distinct from property rules. This paper uses the important contributions made by these commentators to reveal shortcomings in any view of the patent system that focuses only on incentives to engage in inventive activity. The paper offers a new view of the patent system that embraces property rights and property rules as core elements of the patent system. According to this view, property treatment is essential for the subsequent commercialization activity that is necessary to get embodiments of nascent inventions into the hands of consumers and for efficiently identifying which inventions are worth the costs of government intervention in the first instance. The recently suggested alternatives fail to address these important goals of the patent system and would actually frustrate them. In addition, the current system already addresses many of the concerns raised by such commentary. The paper reveals how property rights and commercialization motivated the creation of our current patent system and explains many controversial trends in the system, including those that sparked the recent critical commentary, as well as those in other intellectual property regimes such as trademark

Facilitating Scientific Research: Intellectual Property Rights and the Norms of Science - A Response to Rai and Eisenberg

Arti Rai\u27s article in the Fall 1999 issue of the Northwestern University Law Review explores the proper use of both legal rules and prescriptive norms to shape behavior in the basic biological research community. Rai\u27s article builds upon the extensive work in this area by Rebecca Eisenberg, which first attained prominence through Eisenberg\u27s article in the December 1987 issue of the Yale Law Journal. Eisenberg concludes that the use of patents in the area of basic biological research may frustrate central norms of the community. Rai prescribes concerted public and private action as the best tools for avoiding patents and the problems Eisenberg attributes to them. This essay responds to patent critics like Rai and Eisenberg by showing how patents are essential for promoting the central norms of the basic biological research community