Yale’s ISP has a call for papers for “Innovation Law Beyond IP:”
Intellectual property law is only one of many legal institutions that can help promote, stifle, or govern knowledge production. For example, government also transfers rewards to innovators through tax incentives, grants, and prizes; regulates innovation through the administrative state (the EPA, FTC, SEC, CFPB etc.); creates legal rules and infrastructures that can help sustain or undermine commons-based production; and influences innovation through law and institutions related to immigration, tort law, education, and more. How do forms of law and governance beyond IP promote innovation, as well as values such as equity, privacy, and democracy? How should these systems be combined, both with one another and with IP law?
I really like the mention of the FTC, SEC, and CFPB, because I assume they’re there to remind us that innovation can be a bad thing, to be shaped and restrained in accord with public values. Or, more ambitiously, that innovation should be shaped in certain directions (say, designing in privacy) and away from others (avoiding new malware).
For example, both Saule T. Omarova and Glen Weyl & Eric Posner have proposed the licensing financial Innovation. Both mention the Food & Drug Administration as a possible model. As Weyl/Posner put it:
We propose that when firms invent new financial products, they be forbidden to sell them until they receive approval from a government agency designed along the lines of the FDA, which screens pharmaceutical innovations. The agency would approve financial products if they satisfy a test for social utility that focuses on whether the product will likely be used more often for insurance than for gambling. Other factors may be addressed if the answer is ambiguous.
In health care regulation, the government’s goals are relatively clear: raise quality, cut costs, and increase access. These goals are often in tension, but they provide guidance for policymakers. Weyl and Posner argue that Dodd-Frank is an “empty vessel,” and finance policymakers need substantive guidance (not just more abstract powers) to do their job well. They also note three similarities between finance and drug regulation:
1) Expertise is key to good decisionmaking.
2) There is delayed and uncertain feedback on the wisdom of decisionmaking.
3) Decisions have high stakes.
These are very interesting parallels. However, I’d say the fundamental discontinuity is that while finance orders capital allocation for an entire society, health is merely one of many sectors ordered by finance. That means broad social considerations should be far greater in the finance sector than in health. Presently, nothing seems to be further from the case. I hope the Yale conference will feature a paper or two on positive financial innovation, such as the “good derivatives” Richard Sandor describes.