Coase-Sandor Working Paper Series in Law and Economics
When lawyers and scholars speak of “intellectual property,” they are generally referring to a combination of two distinct elements: an innovation incentive that promises a market based reward to producers of knowledge goods, and an allocation mechanism that makes access to knowledge goods conditional upon payment of a proprietary price. Distinguishing these two elements clarifies ongoing debates about intellectual property and opens up new possibilities for innovation policy. Once intellectual property is disaggregated into its core components, each element can be combined synergistically with non-IP innovation incentives such as prizes, tax preferences, and direct spending on grants and government research, or with non-IP allocation mechanisms that promote broader access to knowledge goods.
In this Article, we build a novel conceptual framework for analyzing combinations of IP and non-IP policy mechanisms and present a new vocabulary to characterize those combinations. Matching involves the pairing of an IP incentive with a non-IP allocation mechanism—or, vice versa, the pairing of a non-IP incentive with IP as an allocation strategy. Mixing entails the use of IP and non-IP tools on the same side of the incentive/allocation divide: i.e., the use of both IP and non-IP innovation incentives, or of IP and non-IP allocation mechanisms. Layering refers to the use of different policies at different jurisdictional levels, such as using non-IP innovation incentives and allocation mechanisms at the domestic level within an international legal system oriented around IP. After setting forth this framework, we identify reasons why different combinations of IP and non-IP tools may be optimal in specific circumstances.
Our project is not merely theoretical: we argue that “pluralism”—the combination of IP and non-IP policies—provides a more descriptively accurate account of the innovation policy landscape than those that dominate the existing literature. Governments routinely, though often unwittingly, incorporate strategies of matching, mixing, and layering into their innovation policies. Even in the pharmaceutical industry—a sector sometimes described as the poster child for the pure IP patent system—the United States and other countries rely on complex combinations of IP and non-IP elements at the domestic level, all layered within an international IP system that apportions the costs of knowledge production across countries. Dissecting and reassembling the elements of this knowledge-production system reveals a richer menu of possibilities for IP reform, with potential applications to property law more broadly.
Daniel Hemel & Lisa Larrimore Ouellette, "Innovation Policy Pluralism," Coase-Sandor Working Paper Series in Law and Economics, No. 849 (2018).