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Paths to Downstream Innovation

Janet Freilich

Vol. 55

April 2022

Page 2209

All innovation is “downstream innovation” — research that builds on prior discoveries. Patent law has an outsized influence on downstream innovation because such innovation often falls within the scope of an in-force upstream patent. In these cases, innovators cannot conduct even the most basic research towards downstream technologies without addressing the upstream patent. Because upstream patents block downstream research, and it is often impractical to license the upstream patent, downstream researchers frequently exploit a group of doctrines that permit research to proceed even in the presence of an otherwise blocking patent.

This Article presents the first systematic review of the paths to downstream research. These paths — avenues by which downstream research can proceed without permission of the upstream patentee — have accumulated haphazardly over the years, often accidentally through legal doctrines intended to apply to other situations. As a whole, they exert a powerful influence on the direction of downstream innovation by exempting certain projects, people, and institutions from patent infringement. However, they do so in ways that are unplanned and not always beneficial. Paths to downstream research therefore shift the course of scientific development — for example, favoring foreign research over domestic research, computer modelling over physical testing, and research on new methods of using products over research on new methods of making products.

This Article makes two contributions to patent policy. First, it advocates for fixing incentives for downstream research with a broad research exception. Second, an array of policy efforts are founded on the assumption that upstream patents block downstream research. By arguing that patents do not block downstream research — they shift it — this Article re-sets the baseline for these policies. Beyond policy, this Article provides new theoretical perspectives on the interactions between patents and research, which undergirds much scholarship on innovation in both law and economics.

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