About

The Hoover Project on Commercializing Innovation is directed by professor Stephen H. Haber

The Project on Commercializing Innovation is succeeded by the Hoover IP2 Working Group on Intellectual Property, Innovation, and Prosperity

We focus on market-oriented, property-rights approaches to innovation, including the study of entrepreneurship, corporate governance, banking, finance, economic development, intellectual property, antitrust, bankruptcy, and related areas. We explore the ways in which property rights and private ordering can promote enterprise, research and development, competition, economic growth, and capital formation. In each area, we employ systems-based, comparative analyses of institutions such as laws, rules, and norms, and organizations such as communities, firms, and government agencies. We study theory as well as practice, to develop real world problem-solving strategies and tactics, including tool kits and best practices.

Our joint work, which makes up the Hoover Project on Commercializing Innovation, builds on our individual areas of practice and academic expertise and has the following five core components.

Intellectual Property and Innovation: The first component focuses on the United States intellectual property system and the various ways the private and public sectors can work to facilitate the complex processes of innovation and its commercialization. For example, we explore the ways in which recent Supreme Court patent cases and the recent House and Senate bills on so-called patent reform all inject a greater degree of administrative discretion and flexibility into the patent system. A problem with these changes is that flexibility of this type suffers a fatal Achilles Heel because it leaves the intellectual property system particularly exposed to the powerful influence of lobbyists and regulatory capture. In so doing, it can convert our intellectual property system, which was designed to promote competition and innovation, into one that stifles both.

Corporate Governance and Securities Regulation: The second component focuses on the ways in which individuals can order their private affairs within collective organizations, or firms, and the ways in which governments can regulate securities markets. For example, we explore the ways in which the federal government cracked down on corporate America and Wall Street when it adopted important portions of the Sarbanes-Oxley Act. Recognizing the risk that the U.S. could lose its competitive edge in financial markets because of an overly-burdensome regulatory regime and excessive litigation, we study the actual impact of recent changes in the regulation of capital markets in general as well as several particular areas such as hedge funds, executive compensation, and board-CEO relations.

Property Rights, Finance, and Developing Economies: The third component studies the role of property rights in various intangible assets in the developing world. For example, we explore the ways in which property rights in bank charters, contracts, debt instruments, and shareholder equities have all been eroded in Mexico, resulting in there being practically no banking system in the entire country. As another example, while countries like India, Argentina, and Brazil, which have extensive manufacturing facilities that would require payments to holders of biotechnology patents, are aggressively pushing efforts in the U.N. to attack drug patents, more successful developing countries in Africa, like Botswana and Malawi, are working tirelessly to help strengthen the rule of law by enforcing property rights in intangibles like contracts and IP. Predictable enforcement of property rights in intangibles can be key to fostering economic growth and development, especially in the less developed countries of the world.

Antitrust: The fourth component studies market structure and performance in assessing how antitrust regimes can best promote competition. For example, recent actions in the European Union as well as the United States at the interface between antitrust and intellectual property have demonstrated the way flexible enforcement of antitrust can suffer the Achilles Heel of being too responsive to interest group lobbying, if not fashion. The purpose of antitrust laws is to protect against a large player dominating a market through unreasonable restraints on competition to cause higher prices or lower quality goods and services. But a company’s dominant market share is not, alone, anticompetitive. Sound theory and practice teaches regulators to instead focus on whether the company’s behavior causes actual economic harm to consumers. This requires regulators to consider tough questions of technology and economics.

Bankruptcy: The fifth component studies how the possibility of bankruptcy can influence the way business deals are structured, even at the earliest stages of a venture. For example, bankruptcy proceedings do not compromise fundamentally the value of most tangible assets; tangible assets generally retain their value both during and after bankruptcy proceedings. Intellectual property assets are typically most valuable when they carry a credible threat of injunction. But the delay and coordination problems inherent in the bankruptcy system can leave a debtor’s IP rights under-enforced against infringers, even if the debtor-in-possession or trustee-in-bankruptcy has the proper incentive to pursue actively the enforcement of the debtor’s IP rights in bankruptcy. Further, there is some risk that a major transaction over the debtor’s IP could fail to occur in bankruptcy. Consequently, the bankruptcy process itself potentially can eliminate all, or at least a substantial portion, of the value of IP rights. Our project studies techniques for mitigating these risks, such as through the use of special purpose vehicles to hold title to IP assets, as well as for putting these risks to everyone’s collective advantage, such as through private ordering solutions to the so-called anticommons problems.