An Introduction to Intellectual Property & Economics Class Notes: January 15, 2004 Law 507 |...
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Transcript of An Introduction to Intellectual Property & Economics Class Notes: January 15, 2004 Law 507 |...
An Introduction to An Introduction to Intellectual Property & Intellectual Property &
EconomicsEconomics
Class Notes: January 15, 2004Class Notes: January 15, 2004
Law 507 | Intellectual Property | Spring Law 507 | Intellectual Property | Spring 20042004
Professor WagnerProfessor Wagner
1/15/041/15/04 22Law 507 | Spring 2004Law 507 | Spring 2004
Today’s AgendaToday’s Agenda
1. An Overview of Intellectual Property
2. The Basic Economics of Intellectual Property
3. Intellectual Property & the Information Economy
4. Thoughts on Economic Analysis of IP
1/15/041/15/04 33Law 507 | Spring 2004Law 507 | Spring 2004
An Overview of Intellectual PropertyAn Overview of Intellectual Property
1.1. CopyrightsCopyrights Works of authorship - literary and artistic
expression
2.2. PatentsPatents Inventions - innovative ideas embodied in
goods or services
3.3. Trademarks / Trade DressTrademarks / Trade Dress Protects advertising or marketing effortso Why would we want to stimulate this?
4.4. Trade Secrets (or unfair competition)Trade Secrets (or unfair competition) Protect against ‘unfair’ appropriation of
commercial informationo Why would you want to do this?
1/15/041/15/04 44Law 507 | Spring 2004Law 507 | Spring 2004
An Overview of Intellectual PropertyAn Overview of Intellectual Property
CopyrightCopyright PatentPatent TrademarkTrademark
WorksWorks Literary & artistic Literary & artistic worksworks
Process, machine, Process, machine, composition of mattercomposition of matter
Distinctive ‘marks’ or Distinctive ‘marks’ or appearanceappearance
StandardStandard Originality, authorship, Originality, authorship, fixationfixation
Novelty, Novelty, Nonobviousness, Nonobviousness,
UtilityUtility
Distinctiveness, Distinctiveness, secondary meaningsecondary meaning
AcquisitioAcquisitionn
Automatic; Automatic; registration for registration for
remediesremediesApplication processApplication process Registration + use at Registration + use at
Federal levelFederal level
LawLaw17 U.S.C. et seq;17 U.S.C. et seq;
exclusively federalexclusively federal
35 U.S.C. et seq; 35 U.S.C. et seq; exclusively federal;exclusively federal;
Appeals to Fed CirAppeals to Fed Cir
15 U.S.C. et seq; 15 U.S.C. et seq; plusplus state lawsstate laws
TermTerm Life of author + 70 Life of author + 70 yearsyears
20 years from 20 years from application for patentapplication for patent
Perpetual, subject to Perpetual, subject to abandonmentabandonment
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The Economic Basis of IPThe Economic Basis of IP
U.S. Constitution, article I, § 8, cl. 8:U.S. Constitution, article I, § 8, cl. 8:[to] promote the Progress of Science and useful Arts by securing for limited Times to Authors and Inventors the exclusive right to their respective Writings and Discoveries.
Ours is a Utilitarian approach: granting Ours is a Utilitarian approach: granting rights as a means to achieve social rights as a means to achieve social benefits.benefits.
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First Question: Why Economics?First Question: Why Economics?
IP rights: rights in intangible goodsIP rights: rights in intangible goods
How are these rights justified?How are these rights justified?
• Natural Rights / Lockean RightsNatural Rights / Lockean Rights• Labor-mixing justification
• Personhood TheoryPersonhood Theory• Ownership / use of property as the basis of
one’s person
• Utilitarian TheoryUtilitarian Theory• IP rights as a means to promote overall
welfare
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The Utilitarian / Economic Basis of IP The Utilitarian / Economic Basis of IP RightsRights
Why do we need IP rights?Why do we need IP rights?• Innovation/expression are public goods
o Non-rivalo Non-extinguishable
• Absent protection, will be underproduced (why?)
o Do you agree? Does it depend upon the type of intellectual good?
o Does this suggest that ‘more is better’? That more protection = more goods? Always?
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The Economic Basis of IPThe Economic Basis of IP
But why give rights in information, But why give rights in information, invention, or expression?invention, or expression?• IP is intended to solve a public goods problem
INS v APINS v AP, 248 U.S. 215 (1918) redux:, 248 U.S. 215 (1918) redux:[ Note: technological change interferes with
established proprietary rights ]
Protection of “hot news” as quasi-property (why?)
Hot news as a public good:1. Non-rival2. Non-extinguishable
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The Economic Basis of IPThe Economic Basis of IP
INS v APINS v AP, 248 U.S. 215, 248 U.S. 215• What are the benefits of granting a property
right in hot news?• What are the costs?• What is the “net”? (Benefits - costs = Net)
o What else would you want to know?
• What are the boundaries of the right established by the majority?
o Can you read the early paper and call the West Coast to discuss the news?
o Can you read the early paper and follow-up on the story?
• Consider institutions: is the judiciary the best institution (or an adequate one) to conduct this analysis?
1/15/041/15/04 1010Law 507 | Spring 2004Law 507 | Spring 2004
Intellectual Property and the Information Intellectual Property and the Information EconomyEconomy
Barlow: Barlow: The Economy of IdeasThe Economy of Ideas, Wired, Mar. , Wired, Mar. 19941994• Why is the shift from tangible ‘containers’ to
intangible ones critical to Barlow? (What changes, exactly?)
• Does the justification/need for IP rights increase or decrease with:
o Lower costs of distribution and communicationo Increasing velocity of information diffusion
• How does Barlow suggest artists/inventors get paid? (Hint, think about his experience?)
o Will it work systematically, or only under certain conditions?
o In Barlow’s regime, who is vulnerable?
1/15/041/15/04 1111Law 507 | Spring 2004Law 507 | Spring 2004
Intellectual Property and the Information Intellectual Property and the Information EconomyEconomy
Barlow: Barlow: The Economy of IdeasThe Economy of Ideas, Wired, , Wired, Mar. 1994Mar. 1994
• What does Barlow suggest will (and should) replace intellectual property law?
o Encryption: law? Or something else?o Anything ironic about this?
• Is he right: are IP laws a “sinking ship” in the Internet context?
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Economic Analysis of Intellectual Economic Analysis of Intellectual PropertyProperty
The Economic mechanism:The Economic mechanism:• IP rights => rights to exclude others• Allows price to be set above marginal cost
o Note that marginal cost of information = 0
• Returns allow recovery of investments, incentives
Economic costs:Economic costs:• Deadweight loss (reduced production)• Less diffusion of information• Races and rent-seeking
Note that IP rights are not often Note that IP rights are not often “monopolies”“monopolies”• In some circumstances, perhaps
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Economic Analysis of Intellectual Economic Analysis of Intellectual PropertyProperty
The Basic Economic Challenge: Balancing The Basic Economic Challenge: Balancing Benefits vs CostsBenefits vs Costs
1/15/041/15/04 1414Law 507 | Spring 2004Law 507 | Spring 2004
Next ClassNext Class
Copyright ICopyright ICopyright BasicsCopyright Basics
Requirements for CopyrightabilityRequirements for Copyrightability