Procuring Knowledge

There is growing public interest in alternatives to intellectual property including, but not limited to, prizes and government grants. We argue that there is no single best mechanism for supporting research. Rather, mechanisms can only be compared within specific creative environments. We collect various historical and contemporary examples of alternative incentives, and relate them to models of the creative process. We give an explanation for why federally funded R&D has moved from an intramural activity to largely a grant process. Finally, we observe that much research is supported by a hybrid system of public and private sponsorship, and explain why this makes sense in some circumstances.

Profit Neutrality in Licensing: The Boundary Between Antitrust Law and Patent Law

From the antitrust case law that governs restrictions on patent licenses, we derive three unifying principles: just reward, profit neutrality and minimalism. The just-reward principle holds that the patentholder's profits should be earned, if at all, from the social value created by his invention. Profit neutrality holds that patent rewards should not depend on the rightholder's ability to work the patent himself. Minimalism holds that licensing contracts should not use more restrictive terms than required for neutrality. We discuss how these principles determine which patent license restrictions should and should not be acceptable from an antitrust perspective. We also compare these principles and the per se rules that follow from them to the potential benefits and drawbacks likely to be encountered under a rule of reason approach.

Open Source Software: The New Intellectual Property Paradigm

Open source methods for creating software rely on developers who voluntarily reveal code in the expectation that other developers will reciprocate. Open source incentives are distinct from earlier uses of intellectual property, leading to different types of inefficiencies and different biases in R&D investment. Open source style of software development remedies a defect of intellectual property protection, namely, that it does not generally require or encourage disclosure of source code. We review a considerable body of survey evidence and theory that seeks to explain why developers participate in open source collaborations instead of keeping their code proprietary, and evaluates the extent to which open source may improve welfare compared to proprietary development.

Beauty is Truth and Truth Beauty : How Intuitive Insights Shape Legal Reasoning and the Rule of Law

Scientists have long recognized two distinct forms of human thought. “Type 1” reasoning is unconscious, intuitive, and specializes in finding complex patterns. It is typically associated with the aesthetic emotion that John Keats called “beauty.” “Type 2” reasoning is conscious, articulable, and deductive. Scholars usually assume that legal reasoning is entirely Type 2. However, critics from Holmes to Posner have protested that unconscious and intuitive judgments are at least comparably important. This Article takes the conjecture seriously by asking what science can add to our understanding of how lawyers and judges interpret legal texts. The analysis is overdue. Humanities scholars have long invoked findings from cognitive psychology, brain imaging, and neural network theory to argue that postmodern interpretations that ignore texts in favor of politics and cultural explanations are hopelessly incomplete. Similar arguments should be a fortiori stronger in law, where judges and scholars routinely stress the detailed wording of texts. The Article begins by reviewing previous attempts to apply literary theory to legal texts. We argue that the main failing of this literature is that it says little or nothing about how judges and advocates choose between competing legal interpretations. Section II argues that the best way to fill this gap is to ask what scientists have learned about the brain. This includes the fundamental insight that most human thought processes rely on both Type 1 and Type 2 methods. The Article also documents the surprising cognitive psychology result that Type 1 judgments show significant universality, i.e. that humans who study subjects for long periods often make similar choices without regard to the societies they were born into. Section III extends these arguments to law by arguing that legal judgment frequently turns on the brain’s Type 1 pattern recognition machinery. The next two Sections build on this foundation to construct an explicit theory of how Type 1 thinking enters into legal reasoning and outcomes. Section IV begins by reviewing nineteenth century theories that claimed a leading role for intuitive reasoning in public policy. Section V updates these theories to accommodate the relatively weak statistical correlations that psychologists have documented, arguing that modern court systems amplify these signals in approximately determinate ways. It also explains why court systems that emphasize close textual analysis are able to resist erosion from competing incentives like cronyism and judicial activism. Section VI builds on these theory insights to suggest specific policy prescriptions

Idea into Practice: How Well Does U.S. Patent Law Implement Modern Innovation Theory, 12 J. Marshall Rev. Intell. Prop. L. 644 (2013)

The U.S. Supreme Court’s decision in Graham v. John Deere (1966) placed neoclassical economic insights at the heart of modern patent law. But economic theory has moved on. Since the 1990s, legal scholars have repeatedly mined the discipline to propose ad hoc rules for individual industries, such as biotech and software. So far, however, they have almost always ignored the literature’s broader lessons for doctrine. This article asks how well today’s patent doctrine follows and occasionally departs from modern economic principles. The analysis begins by reviewing what neoclassical economists have learned about innovation since the 1970s. Legal scholars usually divide this literature into a half-dozen competing and distinct “theories.” Naively, this seems to suggest that any patent doctrines based on these theories must be similarly fragmented. This article offers a way out: far from being in conflict, the putatively separate “theories” share so many common assumptions and mathematical methods that they can usefully be analyzed as special cases of a single underlying theory. Furthermore, much of this theory is known. In particular, it predicts that any economically efficient patent system must accomplish three tasks: (1) limiting reward to non-obvious inventions; (2) choosing patent breadth to balance the benefits of innovation against the costs of monopoly; and (3) prescribing rules for allocating patent rewards where multiple inventors contribute to a shared technology. Remarkably, patent doctrine uses Graham’s PHOSITA concept to address all three principles. This means that doctrinal solutions for one principle can have unintended impacts on the others. This article shows that any doctrinal architecture built on Graham’s PHOSITA test automatically allocates reward among successive inventors. Though reasonable, these default outcomes fall short of the economic ideal. This article analyzes how changes in the Utility, Blocking Patents, Reverse Doctrine of Equivalents, and the Written Description doctrines can mitigate this problem. However, other gaps are inherent and cannot be eliminated without abandoning Graham itself. This radically revised architecture would probably cause more problems than it solves

The Essential Facilities Doctrine: The Lost Message of Terminal Railroad

The growing importance of shared networks, shared platforms and shared standards leads to a renewed discussion of the essential facilities doctrine of antitrust. This is an area where European law and American law have diverged. In Trinko (2007), the U.S. Supreme Court came close to abolishing it. At the same time, it was reinvigorated by the European Commission, which asserted it successfully in E.C. v. Microsoft, and then, facing criticism, clarified the doctrine in a Guidance document. We harmonize the main cases around the doctrine’s original but often forgotten purpose namely, harvesting economic synergies through sharing. We argue that, absent such a doctrine, these synergies could be lost as firms either avoid sharing to avoid antitrust liability, or create sharing arrangements that undermine competition. We show how and why the original purpose of the doctrine has become entangled with other antitrust issues, in particular, leveraging. We systematize the sharing rules that have been imposed or allowed, with an emphasis on how to harvest synergies while mitigating any harm to competition