On the Shoulders of Giants or the Road Less Traveled? An Experimental Appraoch to Sequential Innovation in Intellectual Property

Authors: Stefan Bechtold (ETH Zurich), Christopher Buccafusco (Chicago-Kent College of Law) and Christopher Sprigman (NYU School of Law)

Abstract
All creativity and innovation build on existing ideas. Authors and inventors adapt, improve, interpret, and refine the ideas that have come before them. The central task of intellectual property (IP) law is regulating this sequential innovation to ensure that initial creators and subsequent creators receive the appropriate sets of incentives. Somewhat surprisingly, patent and copyright law provide different solutions to this task: While copyright law assigns property rights over original and subsequent creativity to the original author, patent law splits property rights over inventions and their improvement between the original and subsequent inventors. Although many scholars have applied the tools of economic analysis to consider whether IP law is successful in encouraging cumulative innovation, that work has rested on a set of untested assumptions about creators’ behavior. This Article reports three novel creativity experiments that begin to test those assumptions. In particular, we study how creators decide whether to borrow from existing ideas or to innovate around them.

Our data suggest that creators do not consistently behave the way that economic analysis assumes. Instead of rationally weighing the objective costs and benefits of different courses of action, creators instead were influenced by decision-making biases and individual preferences that often led to suboptimal and inefficient creative behavior. Many of our subjects chose to borrow when innovating was the optimal strategy, and even more chose to innovate when borrowing was the optimal strategy. We propose that these results may arise from strong personality differences that lead some people towards pioneering innovation and others towards tweaking innovation. Ultimately, we explain the implications of our data for innovation markets, IP doctrine, and the theory of the firm.

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