Tuesday, March 11, 2014

Comparative Analysis of Failures and Institutions in Context

Guest Blogger

Brett M. Frischmann & Mark McKenna

To follow-up on Lisa’s opening post, we’ll start with a simple question:  Why do people believe patent law is our primary tool for promoting innovation? We have a hard time imagining that, out of all the possible ways of promoting innovation, patent law is the best mechanism across the board. But let’s take that position seriously for a moment and consider what it would require.  It would have to be based on (1) a Nirvana-like vision of a patent law system that does not and could not exist in the real world; (2) an incredibly myopic vision of innovation, in terms of what constitutes innovation, what innovation society needs/wants/demands, and how innovation systems work (or how innovation is actually produced); and/or (3) a systematic, comprehensive comparative analysis of various institutions that concluded that, among imperfect institutions, patent law was the best.

Obviously, given our tone, we don’t give much weight to (1) and (2).  We do, however, believe that (3) would provide a reasonable basis for believing that patent law is the best way to promote innovation.  But to our knowledge, a systematic, comprehensive comparative analysis of various innovation institutions hasn’t been done.  Accordingly, in our paper, we make the following prediction (perhaps, really just a plea):

We think that many of the most significant contributions in the coming years in the field of intellectual property / information / innovation law and policy will be made by scholars engaged in comparative institutional analysis.  One of the most significant lessons of the last decade’s work is the importance of context, and empirical work continues to show significant variation in the need for, and effect of, intellectual property laws across industries, types of actors, etc. The best work going forward will necessarily involve interdisciplinary collaboration, mixed methods, and humility - the latter precisely because grand theories are unlikely to reflect the context-sensitivity necessary.

As Lisa noted in her post, she and others have done some excellent work in this vein.  We expect/hope that there will be much more in the next decade.  Accordingly, in our draft paper for the conference, we identify and seek to remedy two shortcomings of the existing body of work—or at least, two obstacles to doing comprehensive comparative institutional analysis.  

The first shortcoming we consider is the persistent ambiguity in IP scholarship about the normative baseline. Comparative institutional analysis requires a basis for comparison.  It presumes some objective and evaluates different institutions in terms of their success at achieving that objective. Yet many existing comparative institutional analyses are either silent on the underlying basis for comparison or depend on incredibly abstract and ambiguous normative baselines, such Progress or optimal innovation.  Silence usually implies adoption of one of the latter baselines.  We explain how these abstract and ambiguous normative baselines are open to a wide range of interpretations and how this undermines the comparative analysis.  We tentatively propose some approaches to dealing with the seemingly intractable nature of the normative baseline problem.

The second shortcoming we consider is that existing comparative institutional analyses are prone to suffer from myopia—for example, we identify a particular dilemma (type of market failure), ignore or assume away others, and then compare institutions in terms of effective resolution of the chosen dilemma.  We explain how distorting myopia creeps into analyses of institutions aimed at promoting innovation and how the distortions dramatically limit what we can learn from the comparative studies. The bulk of our paper then is devoted to our argument for a more inclusive approach that involves comparative analysis of failures and institutions in context. We particularly emphasize the role of comparative failure analysis in this process.  We begin with a preliminary diagnosis of failures and, in particular, develop the distinction between system-independent and system-dependent failures.  System-independent failures occur across all (or at least a wide range of) provisioning systems (market, government, community) and are not a product of the system. In essence, they are a function of the resource-environment or of human nature. We discuss three examples:  shortsightedness (human nature), nonrivalrousness (resource), externalities (product of interdependence among humans and resources).  System-dependent failures – market failures and political system failures and community system failures –occur within a given system and are a product of that system.  In essence, they derive from societal use of the system as a means.  We then discuss the relationships between institutions and these various failures, noting particularly the ways some system independent failures can be ameliorated or exacerbated by institutional design.

We conclude with a discussion of some existing studies and examples (climate change, neglected diseases), though at this stage our discussion is cursory. 

Brett M. Frischmann is a professor of law and the director of the Cardozo Intellectual Property & Information Law Program at Cardozo. He can be reached at frischma at

Mark McKenna is a professor of law at Notre Dame. He can be reached at markmckenna at

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