Friday, March 29, 2013

Do the connotations of "property" influence the "intellectual property" debate?

Tim Taylor has a great post on the history of the term "intellectual property" and the way wording may be shaping our thinking. (via Thoma)
Mark Lemley offers a more detailed unpacking of the concept of "intellectual property" in a 2005 article he wrote for the Texas Law Review called "Property, Intellectual Property, and Free Riding" Lemley writes: ""My worry is that the rhetoric of property has a clear meaning in the minds of courts, lawyers and commentators as “things that are owned by persons,” and that fixed meaning will make all too tempting to fall into the trap of treating intellectual property just like “other” forms of property. Further, it is all too common to assume that because something is property, only private and not public rights are implicated. Given the fundamental differences in the economics of real property and intellectual property, the use of the property label is simply too likely to mislead."

As Lemley emphasizes, intellectual property is better thought of as a kind of subsidy to encourage innovation--although the subsidy is paid in the form of higher prices by consumers rather than as tax collected from consumers and then spent by the government. A firm with a patent is able to charge more to consumers, because of the lack of competition, and thus earn higher profits. There is reasonably broad agreement among economists that it makes sense for society to subsidize innovation in certain ways, because innovators have a hard time capturing the social benefits they provide in terms of greater economic growth and a higher standard of living, so without some subsidy to innovation, it may well be underprovided.

But even if you buy that argument, there is room for considerable discussion of the most appropriate ways to subsidize innovation. How long should a patent be? Should the length or type of patent protection differ by industry? How fiercely or broadly should it be enforced by courts? In what ways might U.S. patent law be adapted based on experiences and practices in other major innovating nations like Japan or Germany? What is the role of direct government subsidies for innovation in the form of government-sponsored research and development? What about the role of indirect government subsidies for innovation in the form of tax breaks for firms that do research and development, or in the form of support for science, technology, and engineering education? Should trade secret protection be stronger, and patent protection be weaker, or vice versa?

These are all legitimate questions about the specific form and size of the subsidy that we provide to innovation. None of the questions about "intellectual property" can be answered yelling "it's my property."
You could go further and argue that copyrights and patents actually restrict property rights. since they limit what people can make and sell. This aspect has caused some notable libertarians to voice concerns about the seemingly inexorable expansion of these government-granted monopolies.

Some similar issues are raised by the different meanings of the term "rational." "Rational" means something very specific when used in the context of economics. All sorts of behavior we would normally consider rational is irrational in the economics sense. Unfortunately, some economists have used the negative connotation we associate with "irrationality" in its general usage to argue against decisions that are irrational only in the strict technical sense..


  1. “My worry is that the rhetoric of property has a clear meaning in the minds of courts, lawyers and commentators as ‘things that are owned by persons,’ and that fixed meaning will make all too tempting to fall into the trap of treating intellectual property just like ‘other’ forms of property.”

    Methinks you might expand on your worry: I personally believe that clear meanings are intentional, and that without clear meanings we are lost to the whims of politics and the propaganda of powerful corporations, who use billions of lobbying to change the public perceptions.

    We may have empirical evidence that the current IP regime is not efficient, given the rate of change, and the ability to turn a “short-term” monopoly into a permanent market advantage.

    As yet, the empirical studies *I* have seen, claim nothing of the sort: the good work that I have seen merely reinforces the idea that yes, IP monopoly grants have the intended result of rewarding R&D spending; the studies suggest that the monopolies may in fact accelerate R&D spending.

    The broad social question of how the world, or the USA, finances R&D is of course not testable empirically. However, I see no evidence that current political trends support broad financing of IP; that means that if we want R&D investment, we must provide some reasonable compensation for it.

    The irony of the broadside attack on IP is that that it is most obvious to me, in the very industry — computing, especially mobile devices — that have HUGE R&D expenditures and likewise have made HUGE advances in technology. There could be no better evidence of trying to kill the golden goose.

    The reason why some corporations are happy to attack others' spending is obvious, but why sensible economists would support such attacks on investment returns is beyond me.

    1. Walt,

      The antecedent for "my" in this case is Mark Lemley, but I'll try to serve as proxy.

      Overly weak IP laws reduce the incentive to develop new ideas and (perhaps more importantly) encourage innovators to keep processes secret, but overly strong IP laws can also stifle innovation. Excessively broad patents can impose a heavy toll on the people who actually develop new products. Walls of patents can block small players from entering a field.

      On the arts side, perpetually extended copyrights strongly favor a handful of huge companies. It's no coincidence that Disney and Marvel made extensive use of public domain properties and weak IP laws when starting out then shifted to lobbying for stronger laws once they became established.

      Considering that we've reached the stage of patent trolls and lawyers actually clawing movies back from the public domain once they become sufficiently popular, I think there's a good case to be made that we've overshot the optimal point, but even if we're not there yet, the term 'property' probably doesn't help the discussion. It's rhetorically loaded and it makes for a poor analogy.