The Essential Role of Courts for Supporting Innovation

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  • August 3, 2015

Recent studies tend to show that parties to innovative contracts and those operating in innovative environments rely more heavily on lawyers and contract documents than parties in other non-innovative environments. Despite this reliance, many of these parties still express a strong commitment against resolving disputes through the use of the court system. However, a significant number of contracting parties continue to demand that their right to resolve particular claims through the court system be preserved in their innovative contracts. In this article, Professors O’Connor and Drahozal explore party use of contract terms to express a preference for courts for the enforcement of rights surrounding innovation. They then explain the advantages of using courts over arbitration in protecting innovation. They describe the empirical findings that prove private parties demand courts for the protection of their innovation. The article concludes by exploring the implications of these findings for the applicable rules applied by courts.