The Emergence of the Innovative Entity : Is the Patent System Left Behind?

This Article is concerned with the question whether the patent system achieves its goal, set by policymakers, to promote innovation. The patent system provides incentives to inventors and innovators by providing a limited time monopoly. The focus of this Article is the United States patent system. The Article provides a systematic review of two bodies of literature and how each of them perceives the process of innovation and the identity of the innovator. First, a review of the development of U.S. patent system, from pre-legislation England to the U.S. federal system, alongside the developments of the classical reasoning for property rights allocation, revealing that as the Anglo-American patent system is rooted in the privileges system, it views innovation as the creation of an individual inventor. Second, a review of the “evolution” of innovation production theories, and how their focus has shifted from the individual innovator at the center of the innovation process, to the sole firm, focusing these days on cross-organizational collaborations as an innovation generator. The review revels a gap between how innovation is actually produced and how it is viewed by the Patent Act. This lack of congruence raises concerns regarding the ability of the Patent Act to fulfill its goal to foster innovation and provide the appropriate incentives to that end. The Article asserts policymakers should view innovation as the result of an intellectual effort by an ‘innovative entity’, as oppose to a single inventor. The Article analyzes where the Patent Act falls short of incentivizing the establishment of such innovative entity, discussing in detail the sections regulating inventorship and ownership and the Act’s libertarian property regime. The Article concludes that current U.S. Patent Act does not provide sufficient incentives required for the initiation of cross-organizational research and development (R&D) collaboration and the establishment of the innovative entity, essential to the advancement of innovation. It calls policymakers to address these issues in order to ascertain the Act’s ability to promote innovation and provide signals to actors operating in the innovation ecosystem that cross-organizational R&D collaborations are desired. The Article is innovative in the sense it adds a new dimension to the discussion of inventorship and ownership that so far has been focused on the subject of correct joint inventorship while ignoring wider aspects of innovation production