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Background

We are delighted to announce the annual George Mason University/Microsoft Conference on the Law and Economics of Innovation. This year’s event is the second in a long-running series of annual conferences aimed at the most important and fundamental questions surrounding the unique issues presented by technological innovation. It is our belief that research grounded in the methodology of law and economics—the methodology at the heart of George Mason University School of Law's academic enterprise—can best illuminate the issues and their solutions surrounding these complex issues.

The theme of this year’s conference is “Patents and the Commercialization of Innovation.” Economists and legal scholars agree that innovation plays a critical role in facilitating economic growth. The regulation of innovation, in turn, also plays a fundamental role in economic growth. Regulatory environments have the potential to foster or hinder innovation and generate profoundly productive or disastrous consequences for economic growth and social welfare. However, little is known about how innovation should and can be regulated. The ratio of what is known to unknown with respect to the complex relationships between economic growth, innovation, competition, and regulatory policy is surprisingly low. The papers at this year’s conference are in the spirit of filling that void.

The problems to be addressed by the papers and the discussions at this conference can be broadly grouped into three categories:

  1. Patents and Standard Setting. The design of optimal regulatory responses to the patent holdup problem in the standard setting context has become one of the most important issues in innovation and competition policy. How does one identify an appropriate royalty rate in the standard setting context? What is the appropriate role of antitrust in regulating the ex ante standard setting world and the potential for collusion? How and when should antitrust be used to regulate ex post opportunism of standard setting organization members?
  2. Patents and Property Rights. The question of intellectual property’s “property rights-like” characteristics has become central to the debate over optimal patent policy. In property rights economics, property rights allocate decision-making authority to facilitate exchange. To what extent do patents have this essential quality? What are the implications of the view of patents as economic—and legal—property rights? How does an optimal patent regime appropriately incorporate concepts from the law and economics of property?
  3. The Patent System. Following on the prior panels, our final panel addresses the mechanics of the patent system—the law and economics of patent reform—and its economic implications. What are the design elements of the optimal patent system? Should the patent system confer exclusive rights or non-exclusive rights? How can the patent system account for dynamic, sequential innovation?

Our goal is to bring together economists and law professors to present original research touching on these questions, along with policy makers, regulators and business people to discuss and debate the ideas presented. The papers presented at this conference will be directed to both the academic and policy audiences, and we hope the debates will help to promote scholarly attention to the critical policy implications raised by the research presented here.

The primary institutions responsible for regulating innovation fall within the broad categories of intellectual property and antitrust. Through these twin regimes, nations seek to promote optimal incentives and to curtail inefficient dead weight loss. To this could also be added the broader regulation of property rights-the ability of entrepreneurs effectively to commercialize their innovations. How should a jurisdiction approach its IP and antitrust regimes if it seeks to maximize economic growth?

The papers in this conference will address these questions.

Of note, our keynote presentation by Richard Epstein will set the tone of the conference. His talk will touch on the themes of the conference, with special attention to the controversies surrounding the property-like aspect of intellectual property.