The Inequalities of Innovation

• Jurisdiction: United States,Federal
• Publication year: 2022
• Citation: Vol. 72 No. 1

The Inequalities of Innovation

Colleen V. Chien
Columbia Law School, colleenchien@gmail.com

THE INEQUALITIES OF INNOVATION

Colleen V. Chien^*

ABSTRACT

Over the last few decades, the United States has become more innovative, but the gains have been distributed unequally. In 2020, over 50% of new U.S. patents went to the top 1% of patentees, and more than 50% of all patents of U.S. origin were generated by just five states, all coastal. Less than 13% of inventors were women. The economic, geographic, and demographic concentration of innovation highlight how the intersections between two traditionally discrete topics—innovation and inequality—have become increasingly relevant. But rather than any single inequality, this Article argues, multiple inequalities—of income, opportunity, and access—have relevance to innovation. Examining the inequalities of innovation, separately and together, exposes the tensions, at times surprising, between notions of equity. When mapped onto patent law, an inequalities framework also reveals how patent law can exacerbate inequality by providing enhanced returns to "invention capital"—the role models, trust, know-how, and networks required to take advantage of inventing. But an inequalities framework also shows how patented innovation can improve conditions for the worst-off, by providing paths to prosperity and hastening the creation and diffusion of innovation across classes, even as it makes the rich richer.

Building on the "inequalities" framework described above, this Article offers a set of legal and administrative proposals grounded in patent law for addressing inequality concerns. To ensure equal opportunities to participate, this Article proposes the creation of an Independent Office of the Small Inventor Advocate, akin to the National Taxpayer Advocate, that would have responsibility for outreaching to and increasing invention capital and know-how among first-time, underrepresented, and under-resourced inventors, and leveling up the inventing playing field, for example through universally

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accessible patent-quality technology. To expand access to innovation through partnerships and expand public understanding and oversight of the patent system, by other agencies, for example, this Article proposes the introduction of an independent Office of Public Interest and Partnerships in Innovation. Finally, introducing and centering equity metrics, like the number of first-time innovators and gaps in the rates, can support equitable growth in innovation.

TABLE OF CONTENTS

INTRODUCTION......................................................................................4

I. THE INEQUALITIES OF INNOVATION............................................7

A. The Three Inequalities of Innovation...................................9

1. Inequality of Wealth/Income..........................................9
2. Inequality of Opportunity to Innovate .......................... 12
3. Inequality of Access to Innovation: Affordability and Availability ................................................................. 14

B. Three Patents and a Century of Innovation ....................... 17

1. A "Steam Engine" (1905) and the Golden Age of Opportunity to Innovate .............................................. 18
2. "Naloxone" (1966) and Access to Innovation..............20
3. "Database Automation" (2015) and Income Inequality....................................................................22

C. Tensions Within and Among Inequalities...........................23

1. Income Inequality: Independent Versus. Corporate Inventors, Skilled Versus. Unskilled Bias.....................24
2. Equality of Opportunity to Innovate: Global Versus Domestic.....................................................................26
3. Equality of Access to Innovation: Availability Versus Affordability ................................................................ 28

II. HOW THE PATENT LAW ALLEVIATES AND INTENSIFIES THE INEQUALITIES OF INNOVATION .................................................30

A. How Patents Alleviate the Inequalities of Innovation.........32

1. Reducing Economic Inequality Through Validation and "Invention Capital" Creation ....................................... 33
2. Expanding Equality of Opportunity Through the Currency of Invention.................................................................35
3. Expanding Access to Innovation Through Diffusion via Incentives for Follow-On Innovation and Commercialization, Price Discrimination, and Spillovers....................................................................38

a. Incentives to Comercialize and Diffuse, Enhancing Availability...........................................................39

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b. By Enabling Price Discrimination, Boosting Affordability.........................................................40
c. By Supporting Spillovers and Generic Entry, Enhancing Access to Knowledge and Innovation .. 40

B. How Patents Intensify the Inequalities of Innovation .........42

1. Increasing Economic Inequality Through Lobbying, Tax Avoidance, and the Importance of Invention Capital........................................................................44

a. At the Firm Level: Lobbying ..................................44
b. At the Firm Level: Patent "Rent Keeping" to Avoid Taxes....................................................................45
c. At the Individual Level: A Lack of Knowledge, Role Models, Hostility, and Cultural Factors................47

2. Increasing Inequality of Opportunity Via Unequal Access to Patenting and High Costs ............................51

a. At the Firm Level: Strategic Lawyering to Extend Patent Term and Scope ......................................... 51
b. At the Individual Level: Knowledge of Patenting and Access to Trusted, Trustworthy, and High-Quality Patent Attorneys...................................................56
c. At the Firm and Individual Level: By Leveraging High Litigation Costs and Large Patent Portfolios .............................................................59

3. Decreasing Access by Avoiding Government Oversight ....................................................................61

III. PATENT REFORMS TO EXPAND INNOVATION AND EQUITY.........63

A. Expanding Opportunity to Innovate By Leveling Up the Patenting Playing Field .................................................... 66

1. By Reducing the Success Gap in Patenting Through Patent-Quality Technology..........................................66
2. By Reducing the Enforcement and Defense Gaps Through a Patent Small Claims Court? .......................70
3. By Increasing Invention Capital .................................. 71
4. Through an Independent Office of the Small Inventor Advocate ..................................................................... 73

B. Increasing Access and Accountability Through an Independent Office of the Public Interest and Partnerships ..................................................................... 75
C. Measuring and Tracking Equity in Invention through Invention Equity Metrics................................................... 79

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1. Does Patenting Reflect Innovation Entry or Increasing Firms' Dominance? (Investing in Identity Efforts) ....... 81

D. Enriching and Collecting Data to Track Inclusion .........82

CONCLUSION.......................................................................................84

APPENDIX...........................................................................................86

INTRODUCTION

On January 21, 2021, the Centers for Disease Control and Prevention ("CDC") reported two grim milestones: nearly twenty-five million cases of COVID-19 and over 400,000 deaths in the United States.¹ Days earlier, another federal agency, the U.S. Patent and Trademark Office ("USPTO"), released data showing that, despite a global recession due to the pandemic and record unemployment,² published patent applications had reached an all-time high.³ Increased reliance on vaccines, tests, and technology put intellectual property-intensive industries on the upward-sloping part of the "K-shaped recovery curve," the divided path of the economic recovery.⁴ While many tech workers were told they could work from home indefinitely,⁵ thousands of small businesses closed permanently.⁶

What is the connection between inequality, innovation, and patents? Distributional questions like this have historically received scant attention, for a few reasons.⁷ First, the purpose of the patent system is, as stated in the U.S.

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Constitution, to "promote the Progress of Science and useful Arts."⁸ As such, the U.S. patent system is "unashamedly utilitarian."⁹ Second, distributional concerns have traditionally been the domain of public law.¹⁰ Within what Martha McCluskey has called the "maximization first and redistribution second"¹¹ division in law, the role of patent law, it would seem, is simply to encourage maximal innovation. Finally, while the literature regarding the relationship between technology and inequality is vast,¹² little of it has considered the role of the law.¹³

But who gets to benefit from and participate in innovation has increasingly been the subject of heated debate. That an estimated one-third of uninsured Americans do not take their medications as prescribed because of cost¹⁴ has led lawmakers to call for the use of reforms to both "take back" drug patents¹⁵ and reform practices that may be contributing to their unwarranted issuance in the

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first place.¹⁶ Starkly unequal access to COVID-19 vaccines¹⁷ has led to the unprecedented approval by the World Trade Organization of a partial vaccine patent waiver to combat the COVID-19 pandemic.¹⁸

Those who seek to reduce inequality tend to focus on welfare policies like tax and education. Though patent law may not seem like a natural extension, this Article offers a framework...