The informational effects of patent pledges

Traditional patent law theories teach that a patent’s rights of exclusion are a patent’s key benefit to the patentee and are necessary to make the patent system work. Yet patentees are increasingly giving away such rights, in whole or in part, as part of a growing phenomenon: patent pledges. In these scenarios, patentees voluntarily commit limit enforcement of their rights. This phenomenon seems to contradict traditional patent law theories. After all, if exclusive rights are necessary, why are patentees increasingly sacrificing some or all of those rights? This chapter argues that they do so because in patent pledging contexts, patents entail a different value proposition than traditional patent law theories posit. That is, patent pledgers use patents as informational tools to signal to the relevant public their development preferences and activities. This information may then facilitate a variety of economic motives behind such pledges. This chapter reviews several patent law features that make patents valuable as informational tools, as well as others that limit their informational potencies. It concludes by assessing some implications of this informational account of patents, in particular with respect to “open innovation.”