New Book on Innovation: Rules for Growth

An impressive array of authors have put out a new book, Rules for Growth: Promoting Innovation and Growth Through Legal Reform (free download), funded and organized by the Kauffman Foundation. The book covers a dizzying array of topics, from immigration to tort reform. Although the length (494 pages) is daunting, those who just want the take-home message can look at Table 1.1 on pp. 17-22 for the specific policy recommendations. For example, in terms of PTO reform, the book recommends (1) a second-pair-of-eyes review to weed out bad patents; (2) changing incentives for patent examiners; (3) a tiered review process; and (4) a post-grant opposition process.

Here is the Table of Contents, along with notes about what struck me during my brief skim:

1. The Importance of Law in Promoting Innovation and Growth (Robert Cooter, Aaron Edlin, Robert Litan, and George Priest). The law and economics literature has not tackled dynamic efficiency. This book's goal is to pin down the connection between legal rules and growth.
2. Producing Law for Innovation (Gillian Hadfield). We should have "competitive private providers of legal rules and procedures."
3. Universities and Economic Growth: The Importance of Academic Entrepreneurship (Robert Litan and Robert Cook-Deegan). Bayh-Dole increased efficiency but has problems. Knowledge transfer, not licensing revenue, should be the metric of success. TTOs are underresourced; standardized/centralized licensing might help. Faculty should be able to choose their licensing agent or even have IP rights in their inventions.
4. U.S. Policy Regarding Highly Skilled Immigrants: Change Whose Time Has Come (John Tyler with input from Peter Schuck). We should encourage more highly skilled immigrants, such as by allowing foreign graduates of U.S. universities to stay.
5. How to Improve Five Important Areas of Financial Regulation (Hal Scott). Discusses "control of systemic risk, the use of cost-benefit analysis, the revitalization of the private securitization market, the preservation of Fed independence, and the use of securities class actions. The first four subjects have been dealt with in the Dodd-Frank Act but often in a non-optimal fashion."
6. How Financial Regulation Might Harness the Power of Markets (Frank Partnoy). Regulators should (1) require "'real' market-value based balance sheets," (2) "revitalize reliance on private enforcement of legal claims," and (3) "rely on market measures of risk."
7. Tax Policy and Growth (Alan Viard). We should adopt a VAT or a progressive consumption tax and should make a redesigned research tax credit permanent.
8. Advancing Antitrust Law to Promote Innovation and Economic Growth (George Priest). Modern antitrust law is an "admirable achievement" over 1940s-70s policies, but it "could more fully recognize the opportunities of innovation." Rapid market changes and global competition should diminish antitrust prosecutions, and Chicago antitrust views should be applied to the IP/antitrust intersection.
9. Contract, Uncertainty, and Innovation (Ronald Gilson, Charles Sabel, and Robert Scott). Courts should support innovative contracts that "braid" formal and informal elements to promote innovation.
10. Torts, Innovation, and Growth (Gideon Parchomovsky and Alex Stein). Tort liability rules are biased against innovation. Possible solutions: (1) replace the "custom" criterion with a "result" criterion that weighs risks and benefits of each technology; (2) form special tribunals to give new technologies a seal of approval; (3) require tort plaintiffs to show that the technology responsible for the damage is inferior to the customary technology.
11. The Effects of Modern Tort Law on Innovation and Economic Growth (George Priest). The previous chapter is misguided; tort law has bigger problems, and first-party accident insurance would be much more efficient.
12. Land Use Regulation, Innovation, and Growth (Nicole Garnett). Efforts to slow suburban growth will negatively affect innovation. Instead, we should (1) price growth; (2) promote interjurisdictional competition; and (3) replace zoning with a system of regulatory prices.
13. Growth-Oriented Law for the Networked Information Economy: Emphasizing Freedom to Operate Over Power to Appropriate (Yochai Benkler). "Variation, selection, adaptation, and survival/replication through user adoption, rather than planning and high investment, have repeatedly offered the more robust approach in this new complex and chaotic environment." Copyrights and patents lead to the wrong result in the networked information environment. We should emphasize exemptions and liability rules that create freedom to operate; cap risks of liability; revise Grokster back to Sony; eliminate business method patents; etc.
14. Digital Firm Formation (Oliver Goodenough). We should encourage the process of creating and operating firms through media like the web, as is now possible in Vermont.
15. Can the Patent Office Be Fixed? (Mark Lemley). What won't work: preventing fee diversion; fee-setting authority; retaining patent examiners; outsourcing search. What might work: "second pair of eyes" review; changing examiner incentives; tiered review; post-grant oppositions.
16. Digital Innovation in Governance: New Rules for Sharing and Protecting Private Information (John Clippinger). A market solution to privacy won't work. The Fair Information Practice Principles (FIPP) are dated. NSTIC is developing a good trust framework.
17. Innovation and Growth through Open Access to Scientific Research: Three Ideas for High-Impact Rule Changes (Victoria Stodden). Government funding agencies should require openness. Data and software should be made available under the Reproducible Research Standard (RRS).
18. Innovating Our Way to Disasters? Incentivizing Secure Platforms for Growth’s Future (Benjamin Wittes). The private sector has developed technologies that could be misused to create extreme harm that the government is unable to prevent. We need (1) clear liability rules for recklessly introduced technologies; (2) comfort with a degree of surveillance; and (3) an understanding that some companies "may have unique affirmative obligations to the security of platforms."
19. Legal Process and the Discovery of Better Policies for Fostering Innovation and Growth (Henry Butler and Larry Ribstein). The authors "suggest harnessing the power of jurisdictional competition among the states through a federal law enforcing contracting parties' choice of law except to the extent that states legislatively override the choice of law and regulate local transactions."
20. The Political Economy of Reform: Some Concluding Thoughts (Robert Litan). This book is meant to "put still more ideas on the policy shelf." The immigration and tax suggestions might be implemented in times of major legislative reform; the other suggestions are more incremental.

These short notes are necessarily incomplete, so feel free to add more details or point out places where you think I have missed the main point in the comments.