Competition Within Intellectual Property Regimes – The Instance of Patent Rights

ABSTRACT: This chapter describes an emergent jurisprudence and a residual economics that converge to support the reconceptualization of U.S. patent policy as a competition regime. Its approach is inspired by an opinion that Justice Sandra Day O’Connor wrote for a unanimous Supreme Court some twenty years ago. The Court’s recent patent jurisprudence sounds an echo of the opinion, which described the foundation of patent policy this way: “[F]ree exploitation of ideas will be the rule, to which the protection of a federal patent is the exception.” There is, Justice O’Connor explained, a “baseline of free competition upon which the patent system’s incentive to creative effort depends.”The chapter develops this proposition in three sections. The first explicates the economics of incentive theory, both its limits and its residual value. The second analyzes the jurisprudence of recent decisions by the Supreme Court and Federal Circuit Court of Appeals – the speciality court for patent and trademark. The third section presents some instances of progressive change that would come of extending the re-conception of the patent system as fundamentally a competition regime, an extension inspired by Justice O’Connor’s image but informed by the failure of incentive theory as the economic logic for patent protection.