Monthly Archives: September 2018

Decoupling Intellectual Property’s Incentive and Allocation Functions

Daniel J. Hemel & Lisa Larrimore Ouellette, Innovation Policy Pluralism, 128 Yale L. J. __ (forthcoming 2018), available at SSRN.

It’s rare for two JOTWELL editors to choose the same article to review. When that happens, it’s surely a sign of an “instant classic.” So even if you’ve read Kevin Collins’s laudatory jot of Daniel J. Hemel and Lisa Larrimore Ouellette’s superb piece a few months ago, you should read this one, too. And, if you didn’t read that review, you should definitely read this one.

If double coverage weren’t enough, three years ago, my jot reviewed Hemel and Ouellette’s brilliant article, Beyond the Patents-Prizes Debate. Besides explaining the importance of considering the full panoply of tools to incentivize innovation—such as patents, prizes, grants, and tax credits—Hemel and Ouellette showed that these tools could be decoupled and refashioned to create effectively new, mutant-like rights with potentially superior effects than in their “pure” form.

In this follow-up article, Hemel and Ouellette insightfully discern the broad theoretical ramifications of their previous IP reconstructions. Because Kevin Collins’s jot lucidly summarizes the expanse of the article’s exposition, I focus on the article’s most salient insight—namely, that IP’s “incentive” function is separable from its “allocation” function. Specifically, the “incentive” function refers to the market-based financial reward provided to innovators for producing an innovation (and here I elide the distinction between R & D-based “inventions” and commercialized “innovations”). The “allocation” function concerns the payment of a proprietary price by consumers (and intermediaries) to access innovations covered by IP rights. Continue reading "Decoupling Intellectual Property’s Incentive and Allocation Functions"

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