Intellectual Contract and Intellectual Law

Intellectual Property, Patents and Innovation and Economic Growth

Article Snapshot


Daniel Spulber


Journal of Technology Law & Policy, Vol. 23, pp. 1-67 (2018)


Technological change is increasing the importance of intangible assets. A new legal concept, the “Intellectual Contract” (IC), would better support innovation, as current Intellectual property (IP) rules are limited.

Policy Relevance

Consistent interpretation of ICs would advance the analysis of intangible assets related to innovation.

Main Points

  • Technological shifts involving connectivity and interoperability are driving a Fourth Industrial Revolution; key technologies include the Internet of Things, artificial intelligence, cloud computing, data analytics, mobile communications, and virtual reality.
  • Traditionally, with property rights, the owner's consent to sell is necessary to transfer the right, but with torts, the taker's consent to buy is sufficient for a transfer.
    • Legal rules for intangible assets involve inconsistent application of tort and property rules.
    • A patent owner's consent is needed to sell a patent, but courts limit patent owners’ rights to enjoin infringement, converting the property rule into a tort rule.
  • An IC is an agreement to develop, share, or apply intangible technology-related assets; ICs differ from traditional contracts.
    • ICs address the simultaneous use of intangible assets by multiple parties (“non-rivalrous use”), which is not possible with tangible assets.
    • ICs address problems of uncertainty and risk characteristic of innovation markets.
  • Intellectual Tort (IT) rules determine liability for the taking or infringement of intangible assets, such as the misappropriation of trade secrets, patent infringement, and copyright violations; courts can use ICs as a framework for calculating royalty damages in IT cases.
  • ICs help untangle IP law from IT law, compensating for the limitations of IP enforcement; courts should enjoin IP infringement, so that both parties have reason to negotiate an IC.
  • Traditional IP and IT rules are weak and provide inconsistent support for innovation.
    • Traditional IP rights are of limited duration compared with rights to tangible assets.
    • Enforcement of traditional IP is weak.
    • ICs can define and address any type of knowledge, discovery, and invention, as well as traditional IP assets such as trade secrets, copyrights, and patents.
    • IP rights require government recognition or approval, but rights defined by an IC do not.
  • ICs are of five main types, as follows:
    • employment contracts for scientific and technical personnel;
    • outsourcing contracts with specialist firms or firms elsewhere in the supply chain;
    • joint ventures and consortia between firms, to conduct joint research;
    • licensing contracts;
    • innovation platform contracts, which bring together providers and adopters of technology.

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