Law in Contemporary Society

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JustinColannino-FirstPaper 6 - 12 Feb 2008 - Main.JustinColannino
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Seizure as a solution to the tragedy of the anticommmons in intellectual property

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Benefits of the forced pooling scheme

The forced pooling scheme is not very different from the liability scheme proposed by Bar-Gill and Parchomovsky (CITE). In both schemes the right to exclude is taken and replaced with some monetary compensation. The major differences, and benefits of our forced pooling scheme, are the lower transaction costs, greater predictability of damages and the greater incentive for the industry to consolidate their rights independent of government interference.
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Lower transaction costs and predictability

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Lower transaction costs and greater predictability

The liability scheme relies on courts to set the price of the patent to the infringer ex post. Presumably, the threat of lawsuit would then lead to negotiations about how valuable the patent was to the new invention. However, this could open the infringer to crippling litigation. Imagine a the manufacturer of a dvd player, which uses thousands of patents. Under the liability scheme, the manufacturer will need to plan on thousands of negotiations and lawsuits to bring their product to market, an unpredictable task and a deterrent to innovation.

The forced pooling scheme, on the other hand, has a capped percentage of gross income to go back to the pool, so the liability is predictable, and there is no need to go to the courts or deal with many different actors.

 

Incentive for rights consolidation independent of government interference

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>		The liability scheme offers no incentive for the rights holders to break their anticommons. If bargaining breaks down, they may simply subject the infringer to a law suit. This tips the scales towards the rights holder, giving them no reason to consolidate their rights into a system favorable to innovation.

The threat of the forced pooling scheme may encourage private bargain making to break anticommons. Forced with a choice to be unable to exclude anyone from use of their patents may force actors to the bargaining table, to overcome their conflicting goals and be realistic about the relative value of their contribution. Thus, a benefit of such a system may be its threat more than its actual use.

 

References


Revision 6r6 - 12 Feb 2008 - 02:13:04 - JustinColannino
Revision 5r5 - 11 Feb 2008 - 19:22:23 - JustinColannino
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