Intellektuelles Eigentum? (IH)

Mark A. Lemley: Property, Intellectual Property, and Free Riding lokale Version

On this long-standing view, free competition is the norm. Intellectual property rights are an exception to that norm, and they are granted only when – and only to the extent that – they are necessary to encourage invention. The result has historically been intellectual property rights that are limited in time, limited in scope, and granted only to authors and inventors who met certain minimum requirements. This fundamental principle is under sustained attack. Congress, the courts and commentators increasingly treat intellectual property as simply a species of real property rather than as a unique form of legal protection designed to deal with public goods problems. They rely on the economic theory of real property, with its focus on the creation of strong rights in order to prevent congestion and overuse and to internalize externalities. They rely on the law of real property, with its strong right of exclusion. And they rely on the rhetoric of real property, with its condemnation of “free riding” by those who imitate or compete with intellectual property owners. The result is a legal regime for intellectual property that increasingly looks like the law of real property, or more properly an idealized construct of that law, one in which courts seek out and punish virtually any use of an intellectual property right by another. In this article, I suggest that the shift to property rights and the rhetoric of free riding is fundamentally misguided. The economic theory of real property is quite properly concerned primarily with the imposition of negative externalities – the imposition of costs on another. This is because real property tends to be a zero-sum environment – if I use a piece of land, you can’t use it.. If I overgraze a commons, that overgrazing imposes costs on anyone else who might use the commons. Property rights prevent the creation of those negative externalities by internalizing the effects of the use of real property. But invention and creation are not zero-sum; far from it. Applying property theory to intellectual property involves the internalization not of negative externalities, but of positive externalities – benefits conferred on another. Real property theorists have not generally confronted the issue of positive externalities. I argue that internalizing positive as opposed to negative externalities is not a proper goal of tangible property rights except in unusual circumstances, for several reasons: because there is no need to fully internalize benefits as there is with harms, because efforts to capture positive externalities may actually reduce them, leaving everyone worse off, and because the effort to capture such externalities invites rent-seeking.

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If the goal of creating property rights is to equate private and social costs and benefits by having the property owner internalize the social costs and benefits, those who “free ride” – obtain a benefit from someone else’s investment – are undermining the goals of the property system. The professed fear is that property owners won’t invest sufficient resources in their property if others can free ride on that investment. To be efficient, logic would seem to suggest, we must eliminate free riding. If one concludes that this logic applies to intellectual property as well, as some (but by no means all) law and economics scholars apparently have, the implications are obvious. The way to get private parties to invest efficiently in innovation is to give them exclusive ownership rights in what they produce. The lessons from the economics of property rights seem clear: confer strong property rights on intellectual property creators, encouraging them to invest efficiently in identifying, developing, and commercializing new inventions and managing the inventions they have already made. If the social value of innovation exceeds the private value, as apparently it does (or at least did in the early 1980s), that simply means we don’t have strong enough property rights, and too many people are free riding on the investments of innovators. Further, if one postulates that transactions involving intellectual property are costless, society as a whole should benefit, since the owners of intellectual property rights will license those rights to others whenever it is economically efficient to do so. And so it has gone. By virtually any measure, intellectual property rights have expanded dramatically in the last three decades. Terms of protection are longer, the number of things that are copyrightable has increased, it is easier to qualify for copyright protection, copyright owners have broader rights to control uses of their works, and penalties are harsher.

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Multiple users of a common impose costs on each other; giving control of the common to a single owner ensures that that owner pays the full cost of her use of the property. Similarly, environmental and land use regulations are – at least if done properly – designed to force a property owner to internalize the full cost of a particular use of that property. Ensuring that the owner pays the full cost in turn promotes market efficiency. A competitive market is premised on the assumption that participants will produce goods up until the point that the price they can obtain for those goods drops below the cost of production. If a property owner isn’t paying the full cost of production – if she can raise animals on someone else’s land, or make computers more cheaply by dumping toxic waste products elsewhere – she will overproduce the good in question.

At first glance, free riding seems to be the flip side of the tragedy of the commons – one party benefits from another’s use of land without compensating the other for that benefit. It does not follow, however, that because we are right to try to internalize negative externalities we should be similarly preoccupied with internalizing positive externalities. In a market economy, we care only that producers make enough return to cover their costs, including a reasonable profit. So long as that cost is covered, the fact that consumers value the good for more than the price, or that others also benefit from the goods produced, is not considered a problem. Indeed, it is an endemic part of the market economy. The very concept of “consumer surplus” in economics presupposes uncompensated positive externalities in the market for production. I may be willing to pay $100 for a copy of “Hamlet,” but I don’t have to – producers will compete to sell it to me for far less. That discrepancy isn’t a problem, because so long as the price stays above marginal cost producers will still make the good. The externality comes not with respect to the marginal consumer, but the higher-value consumer.

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In intellectual property, unlike real or personal property, virtually all of the externalities are positive. The idea of a tragedy of the information commons is fundamentally flawed because it misunderstands the nature of information. A tragedy of the commons occurs when a finite natural resource is depleted by overuse. Information cannot be depleted, however. Information is a “public good,” which means both that its consumption is nonrivalrous – my use of an idea does not impose any direct cost on you – and that it is not something from which others can easily be excluded. Precisely because its consumption is nonrivalrous, information does not present any risk of the tragedy of the commons. It simply cannot be “used up.” Indeed, copying information actually multiplies the available resources, not only by making a new physical copy but by spreading the idea and therefore permitting others to use and enjoy it. The result is that rather than a tragedy, an information commons is a “comedy” in which everyone benefits. The notion that information will be depleted by overuse simply ignores basic economics. The lessons of the previous section suggest that we should not therefore be particularly worried about free riding in information goods. It is not that free riding won’t occur with information goods; to the contrary, it is ubiquitous. Everyone can use E=mc2, the words of Shakespeare, or the idea of the tragedy of the commons without compensating their creators. Rather, because the use of those ideas or words does no harm to their creator, it does not create the sort of negative externality with which property theory tells us we should be concerned.

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