Entrepreneurship, the Patent Law, and Scale of Firms

I’m at a wonderful summer program hosted by the Kauffman Foundation on Law, Innovation, and Growth. They’ve convened a truly interdisciplinary crowd interested in how law can affect rates of innovation and growth. Many, though by no means all, of the conversations are about innovation in technology-related fields. All the papers presented will be posted to the web site, which (great news) seems to be open for public view as of now.

The conversation about the proper role of intellectual property — patents, especially — in promoting growth, innovation, and entrepreneurship brought to mind a recent post by Jim Moore about the Allied Security Trust. Jim and I have been working together for several years on various entrepreneurial and scholarly projects. In the past few years, he’s been digging in on this question of how the patent law can work to promote start-ups and other entrepreneurs pursuing innovations in the information technology space. He points here to the extent to which large players in the IT sector are working together to develop strong patent pools to keep smaller entrants from competing effectively against them.

This theme resonates with many of the key themes here at the Kauffman Foundation’s event. One of those themes is scale. Many presentations have implicitly or explicitly dealt with whether and how scale effects innovation. From the perspective of entrepreneurs who start and build businesses, this question of the effect of the patent law and how it’s used is crucial. If we stipulate that small-scale entrepreneurs are a key driver of economic growth and innovation generally, and that large firms are (at least) not the only home of socially beneficial innovation, then this issue of patent pools and how they are used is crucial.

I’ve been thinking a lot about what we’re studying actively at the Berkman Center, which I’ve just left as executive director. We’ve not yet done enough serious work on this question of patents and the effect on innovation, growth, and other social concerns. A few scholars at the Center have got a forthcoming paper on patents, but it’s not been an area of focused research. Over time, I think we should get more serious exploring multiple points of view about how the patent system should work in the Internet space. And plainly, the intersection between patent and competition law (or antitrust in the United States) is an essential one to understand, as Mark Lemley and his co-authors, Phil Malone, Francois Leveque and others have been. The new executive director might profitably think about how we could contribute more to this discussion.