Innovation in Adversity

Adverse experiences, like long-term poverty, can inhibit innovation. But as much research and many real-world examples show, adversity can also stimulate innovation in some circumstances. Indeed, the COVID-19 pandemic provides a number of recent examples where adverse conditions have led individuals, firms, and governments to innovate in the hopes of benefiting society. Despite the fact that some forms of adversity undermine innovation while others stimulate it, legal scholars have largely failed to distinguish between the two or even account for adversity’s relationship to innovation when assessing innovation law and policy, including intellectual property (IP) laws. Yet given adversity’s significant role in affecting the pace and direction of innovation, doing so is crucial. In this Article, we undertake that task. Our analysis shows that adversity is most likely to stimulate innovation when it satisfies what we call the Goldilocks principle: the adversity is neither too intense nor too mild, too fleeting nor too enduring, too all-encompassing nor too confined, too commonly experienced nor too isolated, too severe nor too insignificant, but instead is “just right.” Hence, for adversity to have the best chance of stimulating innovation, it should be (1) a relatively discrete experience; (2) of moderate intensity; (3) experienced collectively rather than in isolation; and (4) significant enough that, left unaddressed, the adversity could result in severe consequences for large groups of people. To be clear, these conditions are not necessary for innovation—adversity, or some other trigger, might spur innovation even if each of these conditions is not met. Neither are they sufficient—innovation will not necessarily occur even if all of these conditions are present. Indeed, individual and organizational characteristics often play a role in determining whether a party will respond to adversity with innovation. But existing research suggests that these are some of the adverse conditions most conducive to, and thus most likely to inspire, innovation. Conversely, adverse conditions falling outside of these parameters are more likely to inhibit innovation, or at least fail to stimulate it. We then assess what this means for IP laws and innovation policy more generally. Predominant theories suggest that IP laws are meant to incentivize parties to benefit society through innovation and creativity. Yet over the years, commentators have pointed out that IP rights are often unnecessary to inspire these activities and thus at times impose unnecessary costs on society by restricting access to those innovations. We contribute to this important discussion by highlighting the role that adverse conditions frequently play in affecting the pace and direction of innovation. First, we argue that the role of adversity in stimulating certain innovations provides another reason to doubt the efficacy of IP rights as applied to many of those innovations. Other policy levers, such as grants and prizes, may often be preferable in such cases. Second, we explore possible solutions to innovation-inhibiting adversity, including bolstering IP rights in certain situations and a greater societal commitment to basic research funding. Finally, we examine the role that adversity can play in creating innovation path dependencies, and we briefly explore some possible solutions to this dilemma.