Mechanisms to Enable Follow-On Innovation: Liability Rules vs. Open Innovation Models

The patent system is based on "one—patent—per—product" presumption and therefore fails to sustain complex follow—on innovations that contain a number of patents. The book explains that follow—on innovations may be subject to market failures such as hold—ups and excessive royalties. For decades, scholars have debated whether the market problems can be solved with voluntary licensing i.e., open innovation, or with compulsory liability rules. The book concludes that neither approach is suffici...