Property As Process: How Innovation Markets Select Innovation Regimes

Abstract: Empirical inquiries can neither confirm nor deny the assertion that innovation markets suffer from excessive intellectual property. Assuming we cannot assess directly whether intellectual property coverage is excessive, an alternative query is proposed: can the market make this assessment and then undertake actions to reach a preferred outcome? This approach envisions that innovator populations make rent-seeking investments that select among a range of innovation regimes that trade off securing innovation gains against reducing transaction costs and associated losses. If we can identify conditions under which these private investments in lobbying, enforcement and transactional technologies are likely to yield socially-interested levels of intellectual-property coverage, then the underlying datum at issue—whether there is “too much” intellectual property—can be determined indirectly at some reasonable approximation. This approach identifies circumstances where privately-interested regime selection is likely to coincide approximately with the social interest: assuming sufficiently low coordination costs, adversely-affected entities that rely substantially on outside sources for innovation inputs have incentives and capacities to undertake actions that weaken property rights, including constrained enforcement, forming cooperative arrangements, or even voluntary forfeiture of intellectual property.