Vanderbilt Journal of Entertainment & Technology Law


Joshua Chao

First Page



Technological innovation is a long-recognized catalyst for economic growth in the United States, and its promotion is an important feature of national economic policy, as evidenced by the presence of various tax incentives for innovation in the US Internal Revenue Code. Tax incentives are an important means by which governments can deliver subsidies to promote such innovation. To be effective, however, any system of tax incentives must be tailored for current economic conditions and competitive landscapes. In the current ecosystem of innovation in the United States, this means that, at the very least, the incentives for innovation in the US Internal Revenue Code should narrowly deliver benefits to entities that create, transfer, and productively use intellectual property (IP). Moreover, there should be no opportunities for nonpracticing entities to misappropriate such benefits. But there currently are. This Article surveys the current regime of tax incentives for technological innovation and other areas of the US Internal Revenue Code affecting the economic choices of entities involved in the creation and dissemination of technological IP. It illustrates instances within the US Internal Revenue Code and its regulations where distinguishing between the "good" guys (operating companies and IP intermediaries) and the "bad" guys (nonpracticing entities) would better tailor the incentives therein to promote innovation in the modern IP ecosystem.