Edited by Ariel Ezrachi
Chapter 18: Innovation, IPRs and EU competition law: cross currents in the EU/US debate
The studies of the process of innovation in the legal and economic literature on both sides of the Atlantic all point to the complexity of the innovation process. Innovation, as distinct from entrepreneurial activity generally, results in a flow of new products and processes for making and delivering new products and services. It has been described as a multi-stage process from invention and discovery, to placing new products and processes on markets and creating new markets, to further diffusion of invention and discovery. The ‘causes’ of innovation identified in the economic research have included factors such as education, the entrepreneurial culture in large and small firms, private and government investment in R & D, science policy, taxation and government subsidies. Among these factors two spheres of legal regulation have been given particular prominence: intellectual property rights (‘IPRs’) and competition law. Patents and industrial copyright play an important role in encouraging the flow of invention of new products. The award of an exclusive right to make, use and sell to a novel invention, whether process or product, acts as an incentive to disclose information about the invention to those engaged in parallel experimentation during the period of exclusive use (rather than keeping it a ‘trade secret’). Indeed, this ‘disclosure effect’ can be as important to innovation as the incentive effect of the reward of exclusivity for inventive activity to the ‘pioneer’ inventor and its sponsors. Furthermore, the licensing process not only ensures diffusion of the patent rights but also disclosure of industrial information.
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