Coordination-Focused Patent Policy

IntroductionFor its first two centuries, the U.S. patent system had a mission that was clear and well understood. Courts and commentators long agreed that the purpose of offering patent protection was to reward invention.1 According to this view, the patent system addresses a free-rider problem, subsidizing activities that would otherwise occur below the socially optimal level. In this way, the patent system is designed to effect a kind of decentralized tax-andspend policy, with consumers bearing higher prices so that inventors may be compensated for inventive contributions they would not otherwise have adequate incentives to make.2In recent years, this consensus has broken. Scholars have since observed a variety of purposes the patent system may serve beyond simply rewarding inventive accomplishment.3 For example, commentators have suggested that patents may play an important role in reducing transaction costs around information, allowing for more open communication, mitigating the need for trade secret protection, and facilitating technology transfer.4 Expanding this theory slightly, they have also noted that patents can be used to encourage public disclosure, reduce the costs of identifying potential collaborators, and enable smoother intra- and inter-firm cooperation.5 Picking up on this theme of collaboration, another group of commentators has investigated the role that patents may play in the formation, operation, and dissolution of joint ventures.6 This emerging work suggests that a view of patents as merely rewards for invention may oversimplify their function in facilitating the development of new technology-that patents may also serve an important role in allowing firms to coordinate their efforts after patenting has occurred.This movement is controversial. Other commentators have questioned these coordination-related justifications for patent rights, suggesting that the patent system is ill-equipped to play these roles, is outmatched by superior approaches to these problems, or is otherwise best left to its traditional rewards-focused responsibilities.7 But a purely rewards-focused understanding of the patent system has its challenges as well.8 As others have noted, there are a variety of nonpatent alternatives that may be able to solve rewards problems as well as (or even better than) the patent system.9 Perhaps for this reason, a growing group of commentators now invoke theories related to coordination when seeking to explain or justify our patent laws.10Despite extensive discussion about the legitimacy of these coordination roles for the patent system, very little has been said about the consequences of this debate for patent policy itself. The incongruity is often striking. For example, in their much-cited book, The Economic Structure of Intellectual Property Law, William Landes and Richard Posner conclude that the strongest arguments for the patent system have nothing to do with the traditional story about rewarding invention, instead justifying the system with theories that fall soundly within the coordination function.11 But just a few pages later they conclude that these justifications-while "compelling in the aggregate"-tell them nothing about what patent policy should actually look like.12 And this admission is indicative of a much larger problem. Although a number of scholars have embraced an entirely different justification for the patent system than the one that has been assumed for over two hundred years, no one has thoroughly examined the consequences of this shift in purported mission.13 Instead, commentators have simply assumed that coordination-focused policy would look exactly the same as rewards-focused policy, or that, if there were any differences, coordination policy would require awarding earlier, broader patent grants.14 As a result, the debate about these novel justifications for the patent system has proceeded without a well-developed understanding of what would be required for the patent system to serve these roles effectively. …