The Likely Mismatch Between Federal R&D Funding and Optimal Innovation

Joshua Sarnoff

For the Innovation Law Beyond IP 2 conference, March 28-29 at Yale Law School

I am attending and presenting at the Innovation Law Beyond IP 2 conference hosted by the Yale Information Society Project.  As the conference website notes, IP is only one of many legal institutions that can help promote, stifle, or govern knowledge production.  The website then lists some of the categories of measure that national (or sub-national) governments can use to promote innovation production and dissemination, in part reproducing a taxonomy of measures that I developed in a prior work.  These are:

1. subsidies of different forms (which could include intellectual property rights as a wealth transfer in the form of a grant of property rights)
2. procurement by the government, with various kinds of risk sharing and timing considerations
3. direct development by government institutions
4. creation or promotion of different forms of commons
5. various forms of product or market regulation (in which category I place IP rights, and which affects market returns and thus private investment and innovation behaviors). 

The focus of the conference is on the role that states should play in innovation law, and how to design state institutions to meet the challenge of innovating effectively (based in part on successful past experiences with “state-led innovation”).

Although such theoretical analyses are helpful and long overdue, they may prove useless unless accompanied by changes to actual determinants of innovation policies in practice.  As my current presentation will discuss, eight general factors that are not related to optimal innovation theories actually determine how we make our government funding decisions that affect innovation.  These factors are:

1. politics, which includes bureaucratic missions and strength of incumbents
2. regulatory factors and liability
3. globalization, including fragmentation of value chains
4. networks, power, and institutions
5. economics and psychological motivations
6. option and portfolio approaches to funding
7. stability (or not) of funding streams, which affects levels and timing of efforts
8. ideology, particularly beliefs in the relative value of government or market-based action.

There is thus---and will likely remain---a mismatch between our innovation theories and the actual determinants of our innovation funding practices.A great start for the analysis of the actual causes of dysfunction in our innovation infrastructure and what we may do to improve the situation is the recently published book The Science of Science Policy. I have some additional ideas in this regard, which I will present, but much more needs to be done.   Hopefully, the conference will help to further identify particular circumstances where these mismatches between optimal innovation and actual practice occur and how to get our political economy more in line with our innovation goals.


Joshua D. Sarnoff is Professor of Law at DePaul University and a faculty member in and former director of the Center for Intellectual Property Law & Information Technology. He can be reached at jsarnoff at depaul.edu.