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An Introduction to the Law and Economics of Intellectual Property

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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.
... 11 Like other types of IPR, copyrights only have monetary value when exploited to produce some economic benefit for the owner. Copyright owners can exploit UGC given their right to grant a license to reproduce, distribute, perform, or display the copyrighted work to the public and obtain a royalty for granting the right (Besen & Raskind, 1991). On the one hand, a significant amount of productive capabilities (i.e., human capital) in social platforms tend to be inalienable (i.e., must remain in the control of heterogeneous complementors to generate most value), leading the platform to rely on complementors' specific investment in developing original and valuable informational content. ...
... Facing uncertain returns to R&D due to potential IP infringement, they would rather 'delegate' content creation to third-parties and share profits ex post. Because copyrights are enforced through costly litigation for individual IP owners (Liebeskind, 1996;Besen & Raskind, 1991) and because of economies of co-specialization, externalizing content production (i.e., non-core activities) tends to be the default mode of operation for social platforms. ...
... Governance capabilities determine whether the platform firm is able to nurture an environment that is conducive to original content creation. The cost of content creation depends on the extent to which users can borrow from, or build on, earlier works which may well be copyright protected (Besen & Raskind, 1991). Holding decision rights to contents created around the world, MNPs may facilitate local content contributions by allowing complementors to build on those user-generated or licensed works that are otherwise copyright protected (Nagaraj, 2018). ...
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The growing platform economy has revived the debate on the applicability of internalization theory in contemporary contexts. In moving this debate forward, we draw on insights from hybrids research and property rights theory to complement the internalization school. Our core contribution lies in a reconceptualization of platforms as a hybrid organizational form enabling the exchange of property rights between platform owners and complementors. Using social platforms as an example, we propose that improvement in a host country's intellectual property protection will increase the multinational platform's (MNP) level of internalization, and that the platform firm's governance capabilities may weaken the effect of institutions on its operation mode. Our theoretical analysis yields new insights beyond the received view of internationalization that builds on the assumption of internalized proprietary resources. We conclude that internalization theory, as an overarching paradigm in IB, remains adaptable to new organizational forms in the digital economy. Journal of International Business Studies (2022).
... A trademark is valuable because it offers its owners the exclusive right to use the mark and to build customer loyalty and maintain market power based on the mark (Block, Fisch, Hahn, and Sandner (2015)). A trademark also helps consumers limit search costs and differentiates itself from competitors' products/ services (e.g., Landes and Posner (1987), Besen and Raskind (1991)). The prevalence of trademark activities has led Hall et al. (2014) to conclude that trademarking is probably the most widely used form of intellectual property protection, as it is applicable to essentially any product or service. ...
... Other alternative product market data do not have such granular information. Finally, our measure is timely and not subject to strategic choices in financial disclosures, because firms have to file trademarks as soon as possible in order to receive legal protection for their new product lines (Landes and Posner (1987), Besen and Raskind (1991)). Table 1 presents the descriptive statistics for our PRODUCT_MARKET_ CONCENTRATION measure across the 12 Fama-French industries. ...
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Using a new trademark-based product market competition measure and a novel trademark-merger data set over the period 1983–2016, we show that companies facing greater product market competition are more likely to be acquirers. We further show that postmerger, compared to their nonacquiring peers, acquirers consolidate their product offerings by discontinuing more existing product lines and developing fewer new product lines. Using a quasi-experiment based on bids withdrawn due to exogenous reasons helps us establish the causal effect of deal completion on product-market consolidation. We conclude that acquisitions create product market synergies by cutting overlapping product offerings to achieve cost efficiency.
... The contract may stipulate that the claimant has the right to institute mitigation litigation or arbitration, or to predict whether the arbitrator is required to determine whether or not the contract should be amended. It has to be made, to make a decision (Besen & Raskind, 1991;Birks, 1985). ...
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After the conclusion of any contract, the parties are bound by its provisions, this basic principle is recognized in all countries of the world, and any obligations under it are bound by the obligation. But as long as the pledge refuses to fulfill the obligation, world legal systems treat the plaintiff in a number of different ways. In Iranian law it is the rule that when a pledgee refuses to fulfill his obligations, the pledgee has no right to terminate the contract first, but must first go to the court and request the pledgee to execute the pledge, and only if the pledge petitioner It may terminate the Contract at the expense of the pledgee and is not possible by another. As can be seen, in Iranian law, following the jurisprudence of the Imamiyyah, the legislator accepts the obligation to enforce the obligation and exempts it only in exceptional cases. In countries that follow the Common law system, the first priority is compensation and then, in exceptional cases, the obligation to comply with the same obligation has been considered. In the former system, the principle of enforcement was the same, meaning that the courts, by legal means, obliged them to carry out the action that had been committed, and other guarantees of enforcement were subsequently put in place, but over time this system changed. Approaches and adjustments to the laws tended to be the same width with the payment of damages. However, in the face of numerous factors where the relationship between commitment and commitment is altered by the theme of commitment and performance, there are significant developments in legal systems. But there are obstacles and obstacles along the way that make it difficult to implement the same commitment.
... The accelerating importance of knowledge and innovation has attracted tremendous academic attention to IPRs and raised the need to examine how IPRs interface with development in different socioeconomic contexts. From the traditional legal perspective, disputes mostly happen over the progressive standardization of IPRs regimes (Dutfield, 2000) in three dimensions: (1) which works should be legally protected (which is associated with the widening of protectable subject matters such as non-traditional marks, plant varieties, and topographies); (2) how long; and (3) to what extent they should be protected (Besen & Raskind, 1991). To promote harmonization and cooperation among nations, national IPRs systems have been through substantial changes, and a variety of international treaties and agreements have been signed, such as TRIPS. ...
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In the knowledge economy, intangible assets and intellectual property rights are increasingly recognized as a substance of competencies. As an emerging market of the world, Asian developing countries experience various issues related to intellectual property rights protection. Meanwhile, the current literature on intellectual property rights with an emphasis placed on Asia is quite scarce. Therefore, this study explores the determinants of the strength of intellectual property rights in 25 Asian developing countries during the 11-year period from 2006 to 2016. Using the fixed effects model (FEM) and random effects model (REM) with the Hausman test, the paper discovers the positive impacts of economic growth, trade openness, and WTO participation on the protection level of intellectual property rights. Unexpectedly, education is a negative determinant of intellectual property rights protection. This study aims to demonstrate the overall status quos of intellectual property rights regimes across Asian developing countries, so provide an important theoretical background for innovators, governments, and policymakers to design optimal intellectual property rights strategies.
... To overcome this under-investment problem in the community of science, institutional arrangements such as public patronage and direct public procurement have been employed ( Dasgupta and David, 1994;David, 1993 ). On the other hand, the same problem in the community of technology is dealt with maintaining exclusive control rights over the knowledge, which takes many forms, e.g. , patents, copyrights, trade secrets, and even noncompete covenants ( Besen and Raskind, 1991;Elkin-Koren and Salzberger, 2004;Fisk, 2014;Scotchmer, 2004 ). E-mail address: ozgur.aydogmus@asbu.edu.tr ...
This paper analyzes pro-competitive patent pools using basic premises of knowledge creation and their reflections for modern patent pools in the presence of intellectual property rights (IPR). We argue that cumulativeness and combinatorial nature of knowledge production correspond to path dependence and increasing returns in the realm of the knowledge economy. This correspondence allows us to model dynamics of modern patent pools using nonlinear Polya urns. We show that increasing the number of firms contributing to a patent pool of complementary patents or increasing the rate of having infringing patents favor the contributing firms' coexistence chance. On the other hand, increasing these parameters negatively affects the non-contributing firm's relative number of patents. In particular, the probability that the frequency of the latter firm's patents vanishes asymptotically increases as these parameters grow. As a result, we conclude that the probability that the market will be dominated by the firms contributing to pro-competitive patent pool increases as the pool enlarges.
... The ability to build a sustainable brand on social media through trademarks can be one of the most crucial success factors for a firm (Aaker 2004). Also, trademarks assist firms in attaining a competitive advantage by differentiating their products or services from their competitors (Besen and Raskind 1991). ...
Article
Firms of all sizes are “joining the conversation” on social media platforms and increasingly trademarking hashtags related to their products and brands. This added effort to protect intellectual property and its impact on social media engagement have not been investigated in the literature. In this study, we find that trademarking hashtags plays a pivotal role in increasing social media audience engagement and information dissemination. More importantly, this positive effect is stronger for firms with fewer Twitter followers. Digging deeper into the underlying mechanisms, we find that trademarking hashtags makes composing tweets with certain linguistic styles more critical: It can amplify the positive effects of trademarking hashtags on social media audience engagement. Our findings highlight important managerial implications of trademarking hashtags. First of all, we examine whether trademarking a hashtag helps or hurts a firm in terms of its social media audience engagement. Further, we show, to maximize the effectiveness of trademarking hashtags, how firms should develop the right social media engagement strategies by taking specific communication and linguistic styles into account. Our results provide useful insights to firms in understanding the key benefits of signaling through trademarking hashtags on social media engagement.
Article
This paper estimates simultaneously the supply and the demand determinants of the trademark adoption decision made by start‐ups. We use a partial observability econometric model, as non‐adoption is unobserved. Estimation is by maximum likelihood using the partial observability bivariate probit (POBP) model for an unbalanced longitudinal panel of surviving US start‐ups (2004–2011). Our model is shown to provide a good explanation of supply and demand determinants of trademark adoption. For example, size, incorporation and expenditure on R&D are important on the supply side; and copyrights, licensing out and being in a high knowledge information sector are important on the demand side.
Chapter
According to the French terroir theory, natural milieus play an essential role in the formation of a Geographical Indication (GI). However, it has always been unclear what the human contributions are? As such, the European Union (EU) introduces only a vague concept of human factors under the Regulation (EU) No. 1151/2012 on quality schemes for agricultural products and foodstuffs. Along with the unclearness of the human’s role, battles are frequently arising among competing stakeholders with some giant food companies lobbying for a simpler regime that would allow innovation without triggering a complicated amending procedure. Small producers and consumer organizations are in opposition to such developments and are appealing to save traditions. In response, the European Commission proposed to amend the definition of the Protected Designation of Origin, one of the GI categories in 2018. According to the proposal, human factors are no longer indispensable but optional underpinning factors. Though the European Parliament opposes such change, it narrowly defines human factors and leaves the traditional processing know-how out of the underpinning factors of GIs. In order to solve the conflicts, this Chapter explores the human’s role in GI protection by tracing the transformation of the meaning of terroir in France and analyzing the rational bases of GIs as a kind of intellectual property. The French experience demonstrates that humans’ contribution and traditions they create are indispensable underpinning factors of GIs. Notwithstanding the importance of tradition and heritage, innovation as a way of pursuing desirable qualities for consumers is also allowed under GIs. Different from patent and trademark law, the direction of innovation under GIs should adapt to and express the natural factors that make the product distinctive and typical for the geographic location without forcing producers to ensure natural restrictions and hardships that can be overcome through innovation as long as overcoming such natural restrictions does not undermine the typicity and special origin-linked characteristics. Finally, suggestions about amending the EU Regulation relating to GI’s definition, product’s specification, and amending procedures are proposed.
Thesis
Depuis une trentaine d’années, le mouvement des communs numériques milite pour un renforcement du pouvoir d’agir citoyen via la mutualisation, l’égalité d’accès et l’autogouvernement de dispositifs numériques. Ce mouvement remet en cause les logiques du marché et de l’État dans l’administration de certaines ressources partagées et propose d’établir un troisième paradigme politique. Pourtant, chose étonnante, depuis une date que l’on peut situer autour de 2008-2009, des acteurs publics en appellent à des formes de commun numérique pour transformer l’État et des expérimentations sont à l’œuvre. La littérature semble divisée entre une lecture techno-optimiste qui avance que cette transformation va réellement entraîner un renforcement démocratique et une lecture critique qui postule que l’adoption de dispositifs numériques va être récupérée pour mettre en œuvre un projet d’État néolibéral. Le propos de cette thèse est d’explorer une voie intermédiaire en répondant à la problématique suivante. Pourquoi, comment et avec quels effets des acteurs publics investissent des formes de communs numériques, qui sont construites à l’origine en opposition à la puissance publique, pour imaginer et mettre en œuvre de nouvelles figures d’État ? Notre recherche s’inscrit dans la sociologie pragmatique, et en particulier la sociologie des épreuves d’État (Linhardt, 2012). Dans un premier temps, nous avons mené une enquête historique pour savoir comment le mouvement des communs numériques constitue l’État en problème et la manière dont cette mise à l’épreuve influence les différentes conceptualisations des communs numériques. Nous empruntons ici à la sociologie de la critique, la sociologie des sciences et à l’histoire sociale des idées pour analyser un corpus constitué par la production académique sur les communs numériques, une vaste littérature grise (programme de conférences, discours, billets de blog, etc.) et une dizaine d’entretiens semi-directifs. Dans un second temps, nous avons étudié la manière dont des entrepreneurs bureaucratiques se saisissent des communs numériques pour construire un projet réformateur dans quatre pays en particulier : France, États-Unis, Équateur et Espagne (Barcelone). Nous utilisons les outils de la sociologie des réformes de l’administration pour étudier un corpus constitué d’une littérature grise (rapports publics) et quinze entretiens semi-directifs. Dans un troisième temps, nous avons plongé dans l’épreuve d’État et ses tentatives de clôtures en explorant ses différents foyers dans une perspective ancrée dans la sociologie de l'innovation, la sociologie du travail institutionnel et la sociologie de l'État. Nous procédons ici par étude de cas - Base Adresse National, Openfisca et Decidim - à travers une centaine d’entretiens semi-directifs, l’analyse de littérature grise (listes de diffusion, licences juridiques, rapports, etc.) et une éthnographie en ligne des plateformes numériques de travail (Github, Slack).Nous montrons qu’un ensemble d’acteurs, dans des contextes nationaux différents, prennent appuient à partir du trouant des années 2000 sur des pratiques et des représentations du monde numérique pour dessiner une figure d’État, qui ne s’articule pas centralement aux catégories traditionnelles d’individu, de propriété privée, de marché d'un côté, et de société, de propriété publique, de bureaucratie de l'autre, mais à celle de communauté, de propriété partagée et d'autogouvernance. Nous montrons que cela entraîne des transformations sur l’État qui ne sont pas univoques, qui se déploient centralement autour du droit et qui redistribuent du pouvoir d’agir au sein et à l’extérieur de l’espace étatique en fonction de certains paramètres politiques, juridiques et institutionnels que nous mettons à jour
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In this article, tacit knowledge, which is one of the factors that affects knowledge production and dissemination is examined by using game theory. Information as a public good approach advocates government intervention or intellectual property to achieve Pareto efficiency in information production. Under tacit knowledge, Pareto efficiency can be achieved without any intervention. As argued by researchers such as Joseph Schumpeter and Friedrich Hayek, the entrepreneur's function is important in the production and dissemination of tacit knowledge. While discussing the assumptions of approaches that model tacit knowledge, we also summarize the policy implications of them. The article develops a game theoretic framework to understand the nature of tacit knowledge, and provides a strategic perspective to examine the relationships between actors and institutions (universities, firms, and entrepreneurs) involved in knowledge production.
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