Edited by Robert E. Litan
Ted M. Sichelman* and Stuart J.H. Graham** 9.1 INTRODUCTION The classical theory of patents posits that society grants, in Thomas Jefferson’s words, ‘the embarrassment of an exclusive patent,’ because doing so provides socially beneficial economic incentives to invent what would be lacking in a free market.1 In particular, if there were not an exclusionary right protecting intellectual creations, again in Jefferson’s words, ‘the moment [the creation] is divulged, it [would] force itself into the possession of every one,’ and the creator would have no means to earn a suitable profit from the creation.2 Moving one step backwards, without the profit afforded by a patent right, creators – at least ones driven by money – would not have an incentive to invent. Beginning in the early 20th century, however, economists began to perceive other important uses for patents. For example, in the early 1900s, the economist A.T. Hadley argued that the patent system ‘has established itself, not primarily as a stimulus for invention or disclosure’, but as a driver of the investment of capital in the use and development of pre-existing inventions.3 In this view, patents provide ex post incentives to commercialize inventions, rather than ex ante incentives to invent.4 * Assistant Professor, University of San Diego, School of Law & Affiliated Scholar, Berkeley Center for Law and Technology (BCLT), University of California, Berkeley, School of Law. ** Assistant Professor, Georgia Institute of Technology, College of Management & Affiliated Scholar, Berkeley Center for Law and Technology (BCLT), University of California, Berkeley, School of Law. 1...
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