Max Planck Institute for Innovation and Competition

Social-creative metaverses, which foster user creativity and encourage user-generated content, promise a revolution in digital creativity. However, metaverse developers often enforce strict regulations on user-generated content through user terms and conditions, restricting or permitting its reuse. These rules place an artificial barrier between users and their copyright, often waiving moral rights and making economic rights subject to mandatory licences. Using Second Life as a case study, this article demonstrates how metaverse regulations undermine users’ intellectual property rights and control over their creations. Furthermore, it examines emerging intellectual property policies in Japan, South Korea, and China, noting a lack of awareness regarding the impact of these regulatory layers on user creativity. Highlighting the importance of the external regulation of user terms and conditions, the article proposes potential policies and strategies for East Asia and beyond to protect users’ copyright ownership and mitigate the negative effects of restrictive metaverse terms and conditions.

To balance generative AI (GenAI) innovation with the protection of copyright for authors and performers, it is necessary to recalibrate the concept of “public interest.” This recalibration is crucial to ensure that authors and performers receive fair and equitable remuneration for their contributions while facilitating public access to knowledge and cultural expressions. Such a redefinition is also aimed at addressing current challenges, including fair use, open access, and the democratization of information within the AI industry. Drawing on Virginia Held’s typology of public interest theory, this article suggests that adjustments to the notion of public interest should include establishing a balance through either a majority of individual interests or empirical data; aligning with the collective interests that receive societal endorsement; and evaluating public interest based on normative content and moral judgment, utilizing the principle of enjoyment and the public perception test in copyright law. While various theoretical frameworks could be used to conceptualize public interest, the article proposes an approach that explicitly defines copyright objectives and harmonizes the rights of authors and performers with the public’s right to access creative works. Such harmonization could be achieved through an integrative methodology that combines evidence-based analysis, consensus among stakeholders without conflicting interests, and normative evaluations rooted in societal ethics.

Carbon markets play an important role in firms’ and governments’ climate strategies. Carbon crediting mechanisms allow project developers to earn carbon credits through mitigation projects. Several studies have raised concerns about environmental integrity, though a systematic evaluation is missing. We synthesized studies relying on experimental or rigorous observational methods, covering 14 studies on 2346 carbon mitigation projects and 51 studies investigating similar field interventions implemented without issuing carbon credits. The analysis covers one-fifth of the credit volume issued to date, almost 1 billion tons of CO2e. We estimate that less than 16% of the carbon credits issued to the investigated projects constitute real emission reductions, with 11% for cookstoves, 16% for SF6 destruction, 25% for avoided deforestation, 68% for HFC-23 abatement, and no statistically significant emission reductions from wind power and improved forest management projects. Carbon crediting mechanisms need to be reformed fundamentally to meaningfully contribute to climate change mitigation.

Carbon credits feature prominently in corporate climate strategies and have sparked public debate about their potential to delay companies' internal decarbonisation. While industry reports claim that credit purchasers decarbonise faster, rigorous evidence is missing. Here, we provide an in-depth analysis of 89 multinational companies’ historical emissions reductions and climate target ambitions. Based on self-reported sustainability data and more than 400 sustainability reports, we find no significant difference between companies that purchased credits and those that did not. Voluntary offsetting is not a central part of most companies’ climate strategies, and many pass these credits' costs and purchase decisions directly onto their customers. While the companies within our sample retired 1/4th of all carbon credits in 2022, the top five offsetters' expenditures on voluntary emission offsetting are, on average, only 1 percent relative to their capital expenditures. For most companies, carbon credits are, therefore, unlikely to crowd out internal decarbonisation measures. Yet, we document that for large-scale offsetters like Delta Air Lines or easyJet, carbon credit purchases competed with financing internal decarbonisation efforts.

Empirical evidence supports the conventional wisdom that entrepreneurs are more optimistic and overconfident than others. However, the same holds true for (top) managers. In a large incentivized survey (), we directly compare entrepreneurs, managers, and employees on a comprehensive set of measures of optimism and overconfidence. We find that on average entrepreneurs and managers are more optimistic than employees in their dispositional optimism and their explanatory style of past events. However, they do not differ from each other in these respects. For two incentivized measures of overconfidence, we also find no differences between entrepreneurs and managers. Both are equally likely to overestimate their own abilities compared to employees. In terms of overestimating general economic prospects differences with employees are much less pronounced. Exploration of within‐group heterogeneities shows that these observations hold true for various subgroups of entrepreneurs and managers. Together these findings tentatively suggest that optimism and overconfidence characterize strategic decision makers more generally, irrespective of whether they bear the full risk of their strategic decisions.

Funders and publishers should roll out policies in ways to support their evaluation

As technology-assisted decision-making is becoming more widespread, it is important to understand how the algorithmic nature of the decision maker affects how decisions are perceived by those affected. We use an online experiment to study the preference for human or algorithmic decision makers in redistributive decisions. In particular, we consider whether an algorithmic decision maker will be preferred because of its impartiality. Contrary to previous findings, the majority of participants (over 60%) prefer the algorithm as a decision maker over a human—but this is not driven by concerns over biased decisions. However, despite this preference, the decisions made by humans are regarded more favorably. Subjective ratings of the decisions are mainly driven by participants’ own material interests and fairness ideals. Participants tolerate any explainable deviation between the actual decision and their ideals but react very strongly and negatively to redistribution decisions that are not consistent with any fairness principles.

Rapid digital innovation has promoted a broad range of welfare aspects and created a myriad of new business models. While these benefits are uncontentious, the special characteristics of digital markets, such as strong network effects, have led to a substantial concentration of power among a few corporate actors. The increasing complexity of these market dynamics has rendered antitrust enforcement more challenging, particularly with regard to assessing the abuse of market dominance (Art. 102 TFEU). Particularly the European Commission has been confronted with criticism relating to its previously propagated “more economic approach”, which has led to a lack of timely and effective antitrust enforcement. While there is a consensus that a new approach to ascertaining the abuse of dominance is pertinent – which the Commission endorses – the underlying assessment parameters are still contentious. This article argues for a standard of dominance to notably reflect the digital transformation and include a comprehensive framework. While the predominant intervention aim must be based on sufficient innovation, a notion of economic fairness and sustainability considerations gain momentum in antitrust enforcement.

Scientific conferences are an underexplored channel by which firms can learn from science. We provide empirical evidence that firms learn from scientific conferences in which they participate but also that this is conditional on intense participation. Using data from conference papers in computer science since the 1990s, we show that corporate investments in participation are both frequent and highly skewed, with some firms contributing to a given conference scientifically, some as sponsors, and some doing both. We use direct flights as an instrumental variable for the probability that other scientists participate in the same conference as a firm, altering the knowledge set to which the firm is exposed. We find that a firm’s use of scientists’ knowledge increases when they participate in the same conferences. Greater participation efforts, where the firm seeks the spotlight by both sponsoring the conference and contributing to its scientific discourse, foretell research collaborations and a stronger learning effect. Such learning is disproportionately concentrated among the most prominent firms and scientists rather than benefitting those without alternative interaction channels. Therefore, on average, firms learn from scientists that they encounter at conferences, but the substantial heterogeneity of the effect reflects the influence of reputation mechanisms in social interactions. This paper was accepted by Ashish Arora, entrepreneurship and innovation. Funding: S. Baruffaldi acknowledges financial support from the Swiss Science National Foundation (Reference No.: P2ELP1-161847). Supplemental Material: The online appendix and data files are available at https://doi.org/10.1287/mnsc.2022.01373 .

We study the blocking effect of patents on follow-on innovation by others. We posit that follow-on innovation requires freedom to operate (FTO), which firms typically obtain through a license from the patentee holding the original innovation. Where licensing fails, follow-on innovation is blocked unless firms gain FTO through patent invalidation. Using large-scale data from post-grant oppositions at the European Patent Office, we find that patent invalidation increases follow-on innovation, measured in citations, by 16% on average. This effect exhibits a U-shape in the value of the original innovation. For patents on low-value original innovations, invalidation predominantly increases low-value follow-on innovation outside the patentee’s product market. Here, transaction costs likely exceed the joint surplus of licensing, causing licensing failure. In contrast, for patents on high-value original innovations, invalidation mainly increases high-value follow-on innovation in the patentee’s product market. We attribute this latter result to rent dissipation, which renders patentees unwilling to license out valuable technologies to (potential) competitors. This paper was accepted by Ashish Arora, entrepreneurship and innovation. Funding: This work was supported by the Deutsche Forschungsgemeinschaft [Collaborative Research Center TRR 190]. F. Gaessler acknowledges financial support from the Spanish Agencia Estatal de Investigación through the Severo Ochoa Programme for Centres of Excellence in R&D [Barcelona School of Economics CEX2019-000915-S]. Supplemental Material: The online appendices and data files are available at https://doi.org/10.1287/mnsc.2019.02294 .

The availability of punitive awards varies across different common law jurisdictions. In recent years, China, as a civil law jurisdiction, has progressively introduced a comprehensive punitive damages system in Intellectual Property (IP) law in recent years. To investigate how this common law product functions in the civil law system, this paper scrutinizes the evolution and functions of punitive damages and depicts the map of punitive damages in Chinese IP law. Then this paper reports and analyses 657 IP judgments involving the application of punitive damages that were tried and decided in all parts of mainland China by all levels of courts from June 1, 2021, to May 31, 2022. Our empirical data shows that punitive damages are frequently sought by claimants, yet courts are reluctant to award them due to the complexities in determining the basis for calculation and judges' reluctance towards detailed legal reasoning. Furthermore, a critical analysis of the application of punitive damages in IP trials is provided, critiquing the court's preference for statutory damages, the complexity in determining the basis and multipliers for calculation, and the strict standard of proof, which accounted for the small portion of punitive damages awarded in judicial practices.

A “verdict” on the economic value of the patent system of the US economist Fritz Machlup published in 1958 still has an important impact on assessing the economic effects of the patent system on economic development by academic intellectual property (IP) scholars worldwide. This contribution analysis Machlup’s study as is and in the light of subsequent US and global legal and economic developments. Based on empirical data, it pays attention to the impact of the US Bayh-Dole type legislation on the translation of basic research into innovative products and processes, as well as to the impact of the new world economic order under the auspices of the World Trade Organization (WTO) on economic development of developing and emerging economies. All largely ignored in critical academic writings, discussing, e.g. the specific problem of patenting human genes. The case of China, which adopted its first Patent Law in 1984, addressed in the context of Machlup’s verdict and in light of the subsequent economic, scientific and technological development of that country. Concluding thoughts consider today’s value of Machlup’s “verdict.”

Market failure is an all-time favourite of legal scholars dealing with economic law. It is used to express a sentiment of discomfort with economic reality, often without any consciousness of the fact that markets are just a reflection of our own aggregate preferences. The following pages are an attempt to assess whether the sociological analysis of economic systems can be employed to add another dimension to the concept of market failure—with no claim whatsoever to having correctly interpreted the sociological theories referred to.

Climate change poses a significant challenge to humanity. Spurring innovation in Europe is critical to the revitalisation of the European economy to create long-term sustainable prosperity. Providing incentives for innovation is one of the key priorities of the EU climate policy. Yet, it is crucial to determine, which legal measures provide the right incentives for developing technology that supports the transition to a low-carbon economy. Market-based incentive mechanisms enabled by patent law and maintained by competition law may foster innovation. Does this hold true for a required green and resilient transition of the European economy currently proclaimed under the EU climate policy? What are the drawbacks and the limits? What guideposts should the EU follow in order to meet its climate goals? This contribution sheds light on those questions. It argues that the reasons that hold back patent and competition laws’ potential in accelerating ‘green’ innovation are rather old wine in new bottles. The multiple crises do not require a specific redesign of patent and competition law and its dogmatic foundations in order to attain the EU climate goals. One needs action and must address the still existing legal issues. This contribution outlines specific recommendations in this regard.

This chapter examines the impact of plastic waste on the environment in Türkiye, a major importer and generator of plastic waste. Poor waste management exacerbates the harmful effects of plastic waste on the land, the seas, and the air. We analyze whether waste management litigation and practices in Türkiye are in conformity with the country’s obligations under the Basel Convention. We further evaluate the impact of Türkiye’s waste management on plastic waste in Turkish seas according to regional sea regimes in the Mediterranean and the Black Sea. Lastly, we consider the emissions from plastic waste in Türkiye and argue that they are detrimental for air quality and for the achievement of the objectives of the United Nations climate change regime. Türkiye struggles to manage the large amount of plastic waste it generates and imports. This chapter indicates that Türkiye’s plastic waste management practices have serious environmental consequences. These practices also raise concerns about the country’s ability to fulfill its commitments and obligations under the aforementioned multilateral environmental agreements. Considering the country’s position in ongoing Plastic Treaty negotiations, a significant improvement in plastic waste management seems unlikely. We suggest that Türkiye withdraws itself from being a subject of the transfer of plastic waste pollution and improves its waste management practices by focusing on the execution of domestic regulations that comply with international standards.