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An Introduction to the Law and Economics of Intellectual Property
Abstract
Although economists have written on topics of intellectual property for a long time, the impact of economics on public policy in this area has been slight, especially as compared to the influence of professional writings in areas such as antitrust and taxation. We believe that too few of the profession's resources have been devoted to these issues and that, of those resources that have been employed, too few have been devoted to empirical analyses. We hope that this introductory essay and the three papers that follow will stimulate interest in this subject. This introductory essay first describes some of the basic economic tradeoffs involved in intellectual property law, and then describes the framework of the law in the six areas described above: patent, copyright, semiconductor protection, trademark, trade secret, and misappropriation. It is intended both to provide thumbnail descriptions of the various intellectual property regimes to economists working in this area and to indicate where additional economic research might be useful.
... According to Landes and Posner (2003), the uncertainty reduction compensates for the higher prices that trademark owners can charge thanks to their monopoly position. The traditional view holds that higher prices are only a temporary cost born by consumers, which in the long run will also benefit from the incentives for trademark owners to innovate and develop new product varieties to maintain the higher quality of their offerings (Besen and Raskind, 1991). Rob and Fishman (2005) developed a formal economic model to predict that reputation incentives are strongest for incumbents that invested in product quality from the start: because consumers (Landes and Posner, 1987) Filing and monitoring costs, litigation costs to avoid trademark dilution (Simonson, 1993) Reputational assets, linked to trademark's function as guarantee schemes (Economides, 1988) Liability regime forcing producers to bear costs if expected quality is not met, to avoid reputational damages (Ramello, 2006) Ownership rights that can be traded in "markets for brands" (Frey et al., 2015;Graham et al., 2018) Exposure to counterfeiting (not only negative substitution effect but also positive advertising effect), including trademark "poaching" for online search (Sayedi et al., 2014) Effective appropriation strategy for innovative companies (Castaldi et al., 2020;Hsu et al., 2022) "Trademark traps" (Davis, 2009) Evidence Econometric evidence of significant positive returns measured in market value, productivity, and survival (Schautschick andGreenhalgh, 2016, Hsu et al., 2022) Evidence of product recall costs and reputational costs on top of product recall costs for cars and drugs (Jarrell and Peltzman, 1985), but not affecting share prices (Hoffer et al., 1988) Evidence of negligible to insignificant net effects for trademark owners of trademark dilution , trademark poaching (Sayedi et al., 2014), and counterfeiting (Qian, 2014) Experimental evidence of worse product recognition in case of trademark dilution (Morrin and Jacoby, 2000) Evidence of trademark traps for large public companies: trademark extensions valued by the market, but not new trademarks (Block et al., 2014a) can only imperfectly observe quality investments, reputation formation requires continuous investment from incumbents, at the benefit of consumers. ...
... Buyers Mechanisms Higher quality of products, given the underlying incentives for sellers (Akerlof, 1970) More product variety and innovation in the long run (Besen and Raskind, 1991) Less transaction costs and less uncertainty in consumer search (Landes and Posner, 1987) Higher prices due to strategic opportunities for premium product differentiation (Reitzig, 2004) Less product variety in the short run due to "trademark monopolies" (Lunney, 1999) Evidence ...
Corporate trademark practices play a key role in the intangible reputation-based economy and are increasingly being scrutinized by societal stakeholders. Yet, research on the effects of trademarks has mostly focused on private returns, while insights on their societal returns are scattered and resting on limited empirical evidence. This study integrates existing research in a framework connecting suggested mechanisms to the available evidence. The integrative framework lays bare clear gaps in our theoretical understanding and the empirical support, with the dark sides of corporate trademark practices being critically under-investigated. Based on this analysis, I propose a research agenda stemming from two broad questions: (i) how do corporate trademark practices deal with societal pressures? and (ii) how do corporate trademark practices enable or hinder competition and innovation? The envisioned research lines bear relevance for organizations, society, and research alike.
... The third is internal IPS, established by the enterprise organization itself, including application, analysis, strategic planning, and other services for the organization's own intellectual property [9,10]. On the other hand, the narrow definition of IPS refers specifically to the service behaviors and activities in the technology, law, economic and other relevant fields involving agency services, information services, legal services, commercialized services, consulting services and training services provided by market-oriented IPS agencies throughout the entire process of intellectual property creation, utilization, protection, and management for their client's innovative achievements [11][12][13]. ...
Existing studies have emphasized the crucial role of intellectual property services (IPS) in the advancement of science and technology, but there was still a lack of a valid scale for assessing IPS. Accordingly, this study aimed to develop a reliable instrument to fill this gap. A three-step process of scale development was described: item generation through grounded theory research (n = 14), scale development through exploratory factor analysis (n = 219) and scale assessment through confirmatory factor analysis (n = 191). By analyzing and coding the interview data drawn from IPS agencies in China, the study verified that IPS could be represented as a three-dimensional construct consisting of vocational skills services (VSS), commercial operation services (COS), and value-added business services (VBS). The subsequent exploratory factor analysis and confirmatory factor analysis were conducted to test and modify the IPS scale with 11 items was shown to have acceptable internal consistency reliability, as well as convergent and discriminant validity. The IPS scale could serve as an operational tool for IPS practitioners to measure and identify the problems of service quality and service mode. Additionally, it held significant theoretical value and practical implications for the advancement of intellectual property services industry in China.
... The limiting effects of TMs are further amplified when copyright and TMs are applied simultaneously and create high transaction costs and cause royalty stacking (Farrell et al., 2007;Spulber, 2017;Galetovic and Gupta, 2020). 9 On the other hand, TMs can enable the creation of new products and business opportunities (Besen and Raskind, 1991;Lechner et al., 2016), effectively establishing markets for brands (Castaldi, 2020). The practice of using both copyrights and TMs to control the creative reuse of original works in franchise movies and video games is prevalent. ...
We study how trademarks affect reuse of creative works in the comics industry. As a creative industry, the comics industry systematically relies on copyrights. But trademark protection can also be exploited to generate income from the reuse of comic characters or to strategically exclude others from reuse. Our unique data set combines US trademark records of comic characters with information on reuse in print media and franchise products from 1990 to 2017. We find that, on average, additional trademark protection is associated with a reduction in reuse in printed comic books of about 19%. We highlight three mechanisms: first, the negative relationship between trademarking and reuse has been especially pronounced since the early 2000s, when the arrival of digital technologies lowered the costs of entry, promotion, and distribution. Second, our results are driven by less reuse by third parties, not trademark holders. Third, reuse is higher when trademark owners license comic characters to third parties. The negative association between trademarking and reuse carries over to franchise products, but it is weaker and tied to the era of digitization, with a 2% decline in reuse in franchise movies and 9% lower reuse in video games.
... So, our paper contributes to this literature. Our paper also adds to the wider literature on economic impacts of regulation, ranging from intellectual property laws (e.g., Besen & Raskind, 1991;Merges, 1995;Handke & Towse, 2007;Towse et al., 2008) to land use and housing laws (e.g., Needham & Lie, 1994;Grout et al., 2014;Kim et al., 2017;Severen & Plantinga, 2018), and embracing also the effects of the antitrust laws Content courtesy of Springer Nature, terms of use apply. Rights reserved. ...
Since 1939, an artwork in Italy can be subject to an “export veto” if it was created more than 50 years before the date of sale by an artist who is no longer living at the time of the sale. When the Italian bureau decides to exercise its right to veto exportation, these artworks cannot circulate outside the territory of Italy. Using original data from a hand-collected dataset covering all artworks made by non-living modern and contemporary Italian artists, auctioned at Christie’s and Sotheby’s in London and Milan between 2012 and 2016, we estimate a threshold model to consider the effect of the export veto law on price while controlling for the potential presence of a sample selection bias. We found that, while artwork prices are increasing in the time span between the year of creation and the date of sale, this effect reverses for artworks sold in Italy and created more than 50 years before the sale date. A similar pattern is also found in pre-sale estimates fixed by the auction houses, suggesting they exhibit rational behaviour in anticipating the export veto effect.
This paper explores the complex world of international intellectual property rights. It delves into the legal protection of intangible assets, including patents, copyrights, and trademarks, highlighting their importance in today's economy and culture. The discussion revolves around the philosophical concept of property as a bundle of rights, emphasizing the role of knowledge, scarcity, and utility in valuing intellectual property. Additionally, the paper addresses the need for a delicate balance between individual rights and the common good, showcasing how international legal regimes aim to achieve fairness, innovation, and widespread access to creativity. Understanding these principles is crucial in navigating the intricate landscape of intellectual property protection on a global scale.
This paper explores the complex world of international intellectual property rights. It delves into the legal protection of intangible assets, including patents, copyrights, and trademarks, highlighting their importance in today's economy and culture. The discussion revolves around the philosophical concept of property as a bundle of rights, emphasizing the role of knowledge, scarcity, and utility in valuing intellectual property. Additionally, the paper addresses the need for a delicate balance between individual rights and the common good, showcasing how international legal regimes aim to achieve fairness, innovation, and widespread access to creativity. Understanding these principles is crucial in navigating the intricate landscape of intellectual property protection on a global scale.
This paper explores the complex world of international intellectual property rights. It delves into the legal protection of intangible assets, including patents, copyrights, and trademarks, highlighting their importance in today's economy and culture. The discussion revolves around the philosophical concept of property as a bundle of rights, emphasizing the role of knowledge, scarcity, and utility in valuing intellectual property. Additionally, the paper addresses the need for a delicate balance between individual rights and the common good, showcasing how international legal regimes aim to achieve fairness, innovation, and widespread access to creativity. Understanding these principles is crucial in navigating the intricate landscape of intellectual property protection on a global scale.
From 1790 to 1891, the United States prevented foreign authors from obtaining domestic copyright protection, implicitly subsidizing a domestic reprinting industry. With foreign works a “free” and unprotected resource, American publishers created a system of voluntary norms, known as “trade courtesy” to create and enforce pseudo-property rights in uncopyrighted foreign works, simulating the effects of legal copyright protection. This paper analyzes this system using the Bloomington School’s institutional design principles to understand its effectiveness and pitfalls in managing the commons of unprotected foreign works in nineteenth Century America.
The Uneasy Case for Copy-right: A Study of Copyright in Books, Photo-I:I(1rv(1.r(l 9! copies, and Computer Programs
- S Breyer
Breyer, S., “The Uneasy Case for Copy-right: A Study of Copyright in Books, Photo-I:I(1rv(1.r(l 9! copies, and Computer Programs, Law R(. Ul(’Zl’, 1970, 84, 281-351
Trade-marked Ceneric Words
- R H Folsom
- R H Teply
Folsom, R. H., and R. H. Teply, “Trade-marked Ceneric Words,” Yale Lazu journal, 1980, 89, 1323-1359