Author(s)
Source
Northwestern University Law Review, Vol. 106, No. 1, pp. 103-156, 2012
Summary
The author analyzes the Market Correction Hypothesis using an ethnographic study and finds reality differs from theory.
Policy Relevance
The Market Correction Hypothesis posits that private self-governed communities can overcome the glut of patents that result in patent gridlock. However, closer study reveals that the hypothesis is not entirely correct, but there are beneficial opportunities in Communities of Innovation.
Main Points
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There is a current theory that “self-governed” communities of patent holders are navigating around excess patent rights to increase innovation by utilizing patent sharing.
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To date there has not been a study to test the realities of the theory. This article seeks to apply theoretical insights to an ethnographic study to test the market self-regulation theory.
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Some argue that the U.S. patent system is too big. The increase in patent filings has been due to an attempt to increase the reach and size of the patent holdings and not from innovation.
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“Patent Gridlock” results from patent coverage, which happens when research and development projects infringe on multiple patents held by multiple owners—thus discouraging innovation.
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This article studies what is known as the “Market Correction Hypothesis” by studying technological communities that share inventions, also known as Communities of Innovation.
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Current and historical examples reveal three important themes about Communities of Innovation:
1) Government often plays a significant role in encouraging Communities of Innovation;
2) Some patent sharing is more focused on short-term goals of avoiding or settling litigation than on research and development; and
3) Some Communities of Innovation have charitable natures and are driven by social goals rather than private profits.
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This study looked at ideal test cases and examples to investigate the Market Correction Hypothesis and found that the reality is different in several significant ways.
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A key finding is that Communities of Innovation must be thought of as creatures of policy and not purely market forces.
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The article concludes with recommendations for how policymakers can establish useful communities of innovation.