The US Supreme Court’s decision in Graham v. John Deere (1966) placed neoclassical economic insights at the heart of modern patent law. But economic theory has moved on. Since the 1990s, legal scholars have repeatedly mined the discipline to propose ad hoc rules for individual industries like biotech and software. So far, however, they have almost always ignored the literature’s broader lessons for doctrine. This article asks how well today’s patent doctrine follows and occasionally departs from modern economic principles.

The article starts by reviewing what innovation economists have learned since the 1970s. While it is conventional for legal scholars to divide the neoclassical literature into multiple competing “theories,” shared mathematical methods and modeling assumptions (e.g. profit-maximization) guarantee that the neoclassical literature’s various strands cannot disagree in any fundamental way. For this reason, whatever differences exist in the neoclassical literature are more accurately seen as special cases of a single underlying theory. We argue that this underlying theory must include at least three principles. The first limits reward to non-obvious inventions and explicitly entered the law through Graham’s PHOSITA standard. The second principle holds that patent breadth should be chosen to balance the benefits of innovation against the costs of monopoly. Though widely recognized by judges and scholars, the principle’s influence on doctrine remains remarkably incoherent. The final principle prescribes rules for allocating patent rewards where multiple inventors contribute to a shared technology. Unlike the first two principles, this insight was unknown in the 1960s and has yet to enter the law.

Remarkably, patent doctrine uses a single concept – Graham’s “Person Having Ordinary Skill in the Art” or “PHOSITA” – to address all three principles. This means that doctrinal solutions for one principle can have unintended impacts on the others. In some cases, this link is optional. For example, the article shows how the PHOSITA concept could be generalized to provide separate and distinct tests for, say, non-obviousness and patent breadth. However, other links are mandatory. In particular, the article shows that any doctrinal architecture built on Graham’s PHOSITA test automatically allocates reward among successive inventors. Though reasonable, these default outcomes fall short of the economic ideal. The article analyzes how changes in the Utility, Blocking Patents, Reverse Doctrine of Equivalents, and the Written Description doctrines can mitigate this problem. However, other gaps are inherent and cannot be eliminated without abandoning Graham itself. This radically revised architecture would probably cause more problems than it solves.

Synthetic biologists have vigorously debated the need for community-wide biosecurity standards for the past decade. Despite this, the US government’s official response has been limited to weak and entirely voluntary Guidelines. This article describes attempts by journal editors, academic scientists, and commercial firms to organize private alternatives at the grassroots level. Private commercial standards, in particular, are significantly stronger than federal Guidelines and currently operate across more than eighty percent of the synthetic DNA industry. The paper generalizes from these examples by asking when strong private standards are both feasible and likely to produce outcomes that are comparably democratic to conventional agency regulation. It closes by describing interventions that government can use to promote and manage grassroots standards initiatives.

Improving security of tenure over agricultural land has recently been the focus of a number of large land certification programs. While the main justification for these efforts was to increase productive investments and facilitate land rental transactions, we show that if access rights were tied to actual land use in the previous regime, these programs can also lead to increased outmigration from agrarian communities. We analyze the Mexican ejido land certification program which, from 1993 to 2006, awarded ownership certificates to 3.6 million farmers on about half the country’s agricultural land. Using the program rollout over time and space as an identification strategy, we show that households obtaining land certificates were 30% more likely to have a migrant member. The effect was larger for households with ex-ante weaker property rights and with larger off-farm opportunities. At the community level, certificates led to a 4% reduction in population. We show evidence of certificates leading to sorting, with larger farmers staying and land-poor farmers leaving in high productivity areas. We use satellite imagery to determine that, on average, cultivated land was not reduced because of the program, consistent with increases in agricultural labor productivity. Furthermore, in high productivity areas, the certification program led to an increase in cultivated land compared to low productivity areas.

What is the impact on voting behavior of strengthening property rights over agricultural
land? To answer this question, we use the 14 year nationwide rollout of Mexico’s land
certification program (Procede) and match affected communities (ejidos) before and after
the change in property rights with voting outcomes in corresponding electoral sections
across six federal election cycles. We find that, in accordance with the investor class
theory, granting complete property rights induced a conservative shift toward the promarket party equal to 6.8 percent of its average share of votes over the period. This shift was strongest where vested interests created larger expected benefits from marketoriented policies as opposed to public-transfer policies. We also find that beneficiaries failed to reciprocate through votes for the benefactor party. We conclude that, in the
Mexican experience, engaging in a land reform that strengthened individual property
rights over agricultural land was politically advantageous for the right-wing party.