Week 8 PSW Reading - Amy Kapczynski
Anjali Motgi
In IP scholarship, patents are commonly understood as more efficient than other approaches to innovation policy. This is primarily because patents are understood to have an advantage over more directly government-led strategies when it comes to picking the right set of information goods to develop. As a form of property rights, patents act as a conduit between market signals and potential innovators, ostensibly guiding them toward inventions with the most social value. This account has been criticized before. The most salient internal line of criticism shows that transaction costs interfere with the signals sent by markets, attenuating the strength of the signal received by innovators. The implication of that argument is that, other things being equal, we should strengthen patents, to make the signal more robust. In this Article, we describe a different problem with the prevailing view. When patents act as a messenger between markets and inventors, the signal in question is not just attenuated, but distorted. This is because patents will direct research not towards goods with the most social value, but towards goods that are more easily excluded. This has to some degree been recognized in the literature, but the importance of the point has not been well developed. Patents, we show, consistently value certain kinds of solutions over others – technological fixes rather than structural ones, new machines rather than new ideas. That is because norms, institutions, and technology all work together to make it difficult to exclude others from highly immaterial inventions, even when legal rights of exclusion are available. For example: Heart disease can be addressed with designs for more walkable neighborhoods or with pills. A patent system will push us toward the latter, though the former may be cheaper and more effective. Using examples such as these, we describe the continuum of excludability, and show that if patents distort rather than attenuate, then strengthening patents will exacerbate rather help the problem. We advance an important new justification for alternatives to patents such as government funding, and offer a new conceptualization that can help us allocate such funding. Our argument also reinforces the need for a comparative institutional approach to innovation policy, and to incorporate into our debates currently unrecognized implications that patents may have for values such as privacy and free speech.