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The Principal object of intellectual property is to ensure consumers a varied variety of products at the lowest

possible price. Intellectual property law ensures private property rights enabling individual and business to
appropriate to themselves the value of the information they produce and encourage them to produce more.

Copyright Law attracts investments to the production and distribution by promising authors and artists and
their publisher's exclusive rights for a limited period.

Patent Law uses property rights to stimulate private investment in new and useful and non-obvious
technologies.

Trademarks encourages business to invest in symbolize information signifying the source of their goods and
service and prohibiting competition for using the same symbol.

Information is Intangible and the need for private property rights is comparatively more pressing and equally
important as private property rights for tangible objects such as land and cattle. In Tangible objects a owner can
run a fence and keep his or her property secure, whereas it is unusual for a creator of information to be able to
fence his/her product by keeping it secret and at the same time reap economic rewards from the information in
the market place.

Put somewhat differently investment in information suffers special problems of appropriability. The fact that
information is intangible means that absent property rights, a producer of information will find it difficult to
appropriate the information's value in the market place. While most information will have a little value to its
producer unless he can sell it, sale will expose the information to competitors who with absent of property rights
will be able freely replicate the information and sell it at a lower price than the first producer who must charge to
recoup his investment in producing his information. The critical point is that unable to appropriate the value of his
information, the producer will from the start be disinclined to invest in producing information.

The problem of information as the object of Private property does not end with appropriability. The fact is
intangible also means that it is indivisible; an unlimited number of users can consume a piece of information
without depleting it. For example a a motion picture after been consumed by single person the same would be by
a million but cant be the same with tangible products like loaf of bread. Once the information has been produced
its use may benefit an indeterminate number of users without imposing any additional costs on the producer.
Because information can be used endlessly and by unlimited number of people and because no ones use of the
information will interfere with the owner's physical domain over it, legislatures and courts tend to tolerate more
extensive inroads into intellectual property than they would If land or goods were in issue.

This unique characteristic of informational goods that they are not a scarce resource that anyone can use them
without diminishing their availability to anyone else leads to a powerful moral intuition against intellectual
property law. Since intellectual property law enables information producers to charge for access to their
information, It inescapably withholds information from people who cannot or will not pay the prices of admission,
even though giving them free access would harm no one else. When a cable operator demands more rental fee,
many subscribers who might gladly have paid a smaller sum will choose not to see the film. In the crisp calculus
this is undesirable because it decreases the welfare of one class of consumers, the excluded viewers without
increasing the welfare of another those willing and able to pay the asking price.

It should by now be evident that the intellectual property solution to the problem of inappropriability property
rights as private incentive inevitable conflicts with the social benefits of indivisibility unrestricted public access.
Intellectual property as a solution to inapproriability implies that to recover its investment, an information
producer will use its property rights to charge consumers for access to its work. Yet indivisibility implies that ones
information has been produced, its use may confer a benefit on the consumer without imposing any additional
cost on the producer. If the producer charges for access to the information, consumers who are unable or
unwilling to pay the price will be deprived of the information leaving them worse of then they would be in the
absence of property rights.

The dilemma is that without a legal monopoly not enough information will be produced but with the legal
monopoly too little of the information will be used.
Criticism of intellectual property
Critics of the term "intellectual property" argue that the increased use of this terminology
coincided with a more general shift away from thinking about things like copyright and
patent law as specific legal instruments designed to promote the common good and towards a
conception of ideas as inviolable property granted by natural law.[1] The terminological shift
coincides with the usage of pejorative terms for copyright infringement such as "piracy" and
"theft".

Some critics of intellectual property, such as those in the free culture movement, characterize
it as intellectual protectionism, intellectual monopoly or government-granted monopoly, and
argue the public interest is harmed by protectionist legislation such as copyright extension,
software patents and business method patents. A critique against the idea of intellectual
property has been formulated by Eben Moglen in his dotCommunist Manifesto:

Society confronts the simple fact that when everyone can possess every intellectual work of
beauty and utility--reaping all the human value of every increase of knowledge--at the same
cost that any one person can possess them, it is no longer moral to exclude. If Rome
possessed the power to feed everyone amply at no greater cost than that of Caesar's own
table, the people would sweep Caesar violently away if anyone were left to starve. But the
bourgeois system of ownership demands that knowledge and culture be rationed by the
ability to pay.
—Eben Moglen dotCommunist Manifesto[2]

Some critics reject intellectual property altogether. Richard Stallman argues that "the term
systematically distorts and confuses these issues, and its use was and is promoted by those
who gain from this confusion.…[It] operates as a catch-all to lump together disparate laws…
[which] originated separately, evolved differently, cover different activities, have different
rules, and raise different public policy issues." [3] These critics advocate referring to
copyrights, patents and trademarks separately, and warn against conflating disparate laws into
a collective term.

In 2004 the WIPO was criticized in The Geneva Declaration on the Future of the World
Intellectual Property Organization which argues that WIPO should "focus more on the needs
of developing countries, and to view IP as one of many tools for development - not as an end
in itself".[4]

Contents
[hide]
• 1 Overview
• 2 Arguments against the term
o 2.1 Alternative terms
• 3 Controversies
• 4 Expansion in nature and scope of IP laws
• 5 Economic view
• 6 See also
• 7 References

• 8 Further reading

[edit] Overview
In common law jurisdictions, this was historically done to grant a boon to a king's favorite in
the form of letters patent (with some positive advantages to the public, since often these
grants were prerequisites before a merchant would undertake production). Jurisdictions with
written constitutions generally vest the government with power to grant such monopolies or
otherwise provide for the protection of intangible property. For example, Article I, Section 8,
Clause 8 of the United States Constitution accords Congress the power "To promote the
Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors
the exclusive Right to their respective Writings and Discoveries."

The use of the term "intellectual property" is often predicated on considerations such as the
"free rider problem" or rationalized by problematizing the fact that owners of computers have
the ability to produce and distribute perfect copies of digital works. Proponents of the term
tend to address exclusive intellectual property rights policy by valorizing the incentives
afforded to authors and inventors in granting them a right to exact a fee from those who wish
to manufacture their inventions or publish their expressive works. The analysis associated
with the term tend to overlook or even to attempt to defeat the fact, noted by Thomas
Jefferson when he took part in wording the exclusive rights clause under the USA
Constitution, that published information is intrinsically free and that in fact this is the whole
point of such exclusive rights—to publish, to provide information to the public.

By an economic analysis, the incentives granted for patent rights have sometimes served the
public benefit purpose (and promoted innovation) by ensuring that someone who devoted,
say, ten years of penury while struggling to develop vulcanized rubber or a workable
steamship, could recoup his investment of time and energy. Using monopoly power, the
inventor could exact a fee from those who wanted to make copies of his invention. Set it too
high, and others would simply try to make a competing invention, but set it low enough and
one could make a good living from the fees.

In latter years, the public benefit idea has been downplayed in favor of the idea that the
primary purpose of exclusive rights is to benefit the rights holder, even to the detriment of
society at large; and this development has attracted some opponents (Lawrence Lessig, James
Boyle, William Patry). The formulation in the US Constitution (noted above) is specifically
about public benefit.
Intellectual property rights have limitations, including term limits and other considerations
(such as intersections with fundamental rights and the codified or statutory provisions for fair
use for copyright works). Some analogize these considerations to public easements, since
they grant the public certain rights which are considered essential. Different countries may
have subtle or dramatic differences in the scope or protection and permitted uses of different
types of intellectual property. A fair use in one jurisdiction can easily be an infringing use
elsewhere.

Authors and inventors exercise specific rights, and the "property" referred to in "intellectual
property" is the rights, not the intellectual work. A patent can be bought and sold, but the
invention that it covers is not owned at all. This is one of many reasons that some believe the
term intellectual property to be misleading. Using the term "intellectual monopoly" instead
implies that so-called "intellectual property" is actually a government-granted monopoly on
certain types of action. Others object to this usage, because this still encourages a natural
rights notion rather than a recognition that the rights are purely statutory, and it only
characterizes the "property" rather than eliminates the property presupposition. Another
approach is simply to avoid a generic term, because of differences in the nature of copyright,
patent and trademark law, and try to be specific about which they are talking about, or the
term "exclusive rights", which reflects the U.S. Constitutional language.

[edit] Arguments against the term

The term intellectual property has been criticized on the grounds that the rights conferred by
exclusive rights laws are in some ways more limited than the legal rights associated with
property interests in physical goods - chattels or land - real property. The inclusion of the
word property in the term can be seen as favoring the position of proponents of the expansion
of exclusive rights in intellectual products, by helping them draw on concepts associated with
those older forms of property in support of their argument for removing limitations on rights
when those limitations would be generally seen as inappropriate if applied to physical goods.
For example, most nations grant copyrights for only limited terms; all limit the terms of
patents. Additionally, the term is sometimes misunderstood to imply ownership of the copies
themselves, or even the information contained in those copies. By contrast, physical property
laws rarely restrict the sale or modification of physical copies of a work (something that
many copyright laws do restrict).

A common argument against the term intellectual property is that information is


fundamentally different from physical property in that there is no natural scarcity of a
particular idea or information: once it exists at all, it can be re-used and duplicated
indefinitely without such re-use diminishing the original. Stephan Kinsella, in his Journal of
Libertarian Studies article "Against Intellectual Property",[5] details his objection to
intellectual property on the grounds that the word "property" implies scarcity, which may not
be applicable to ideas. Other libertarians, such as Shaun Connell of the Rebirth of Freedom
Foundation, argue that intellectual property doesn't exist on any level, and that no person has
a "right" to all of the rewards of a concept, whether the person created it or not.[6] Thus there
is no direct analogue to "theft"; the closest analogue is to copy or use the information without
permission, which does not affect the original possession (see the tragedy of the commons).
Another, more specific objection to the term, held by Richard Stallman, is that the term is
confusing.[7] Stallman argues that the term implies a non-existent similarity between
copyrights, patents, trademarks, and other forms of exclusive rights, which makes clear
thinking and discussion about various forms difficult.[8] For example, those that pertain to
intellectual content (copyrights and patents) have limited terms, hence differ from
conventional property, whereas trademarks, which have unlimited terms, are merely signs
and lack intellectual content. Furthermore, most legal systems, including that of the United
States, hold that exclusive rights are a government grant, rather than a fundamental right held
by citizens.

Though it is convenient for direct incentive beneficiaries to regard exclusive rights as akin to
"property", items covered by exclusive rights are, by definition, not physical objects
"ownable" in the traditional sense.

Law treats these rights differently than those involving physical property. To give three
examples from US law, copyright infringement is not punishable by laws against theft or
trespass, but rather by an entirely different set of laws with different penalties. Patent
infringement is not a criminal offense although it may subject the infringer to civil liability.
Willfully possessing stolen physical goods is a criminal offense while mere possessing of
goods which infringe on copyright is not. Furthermore, in the United States physical property
laws are generally part of state law, while copyright law is primarily federal.

Likewise in other areas the term "property" is applied to legal rights and remedies of
analogous kinds. For example, in some jurisdictions a lease of land (e.g. a flat or apartment)
is regarded as intangible property in the same way that copyright is. In these cases too the law
accepts that the property cannot be stolen - if someone moves into a flat and prevents the
original residents from living there they are not regarded as 'thieves of the lease' but as
'squatters' and the law provides different remedies. Identity theft is another example of the
adaptation of physical property laws to intangible items, though that term itself is seen as
problematic by some. These examples, however, address the use of the term "property" in a
technical legal context, not the meaning of the term as understood in public discourse.

[edit] Alternative terms

In civil law jurisdictions, intellectual property has often been referred to as intellectual rights,
traditionally a somewhat broader concept that has included moral rights and other personal
protections that cannot be bought or sold. Use of the term intellectual rights has declined
since the early 1980s, as use of the term intellectual property has increased.

Alternative terms monopolies on information and intellectual monopoly have emerged


among those who argue against the "property" or "intellect" or "rights" assumptions, notably
Richard Stallman - see below. The backronyms intellectual protectionism and intellectual
poverty, whose initials are also IP, have found supporters as well, especially among those
who have used the backronym digital restrictions management.[citation needed]

The argument that an intellectual property right should (in the interests of better balancing of
relevant private and public interests) be termed an intellectual monopoly privilege (IMP) has
been advanced by several academics including Birgitte Andersen[9] and Thomas Alured
Faunce.[10]
One issue concerning such proposals is that if intellectual property exists there must be a
parallel concept of intellectual capital - capital being the property that permits more property
to be created. This, and the related term instructional capital that applies to the proper subset
of patents and non-fiction copyright, are controversial notions that economists have no clear
agreement on, so one refers to the "intellectual capital debate" rather than thinking of it as an
actual capital asset. See more in the "Economic view" section below.

The fact that the three most common forms of intellectual property law concern different
subject matter with different histories and purposes — copyright concerns original creative or
artistic works, patent concerns new and useful inventions, and trademarks concerns signs
which uniquely identify the commercial origin of products or services — is seen by some as
countering what they consider to be the dogma of the United Nations' World Intellectual
Property Organisation on intellectual property as the "creations of the mind: inventions,
literary and artistic works, and symbols, names, images, and designs used in commerce".[11]
These critics see this assertion as propaganda for a "property view", and suggest alternative
terms such as individual capital, instructional capital and social capital over the term
"intellectual capital", which has an ambiguous status, even among believers in neoclassical
economics. Indeed, recent historical and econometric research has begun to "challenge the
positive description of previous models and the normative conclusion that monopoly through
copyright and patent is socially beneficial".[12]

[edit] Controversies

The basic public policy rationale for intellectual property laws is that they, in some way,
provide rights to the inventor, author, or creator. The rationale for patent law is that it grants
the right to exclude others from making, using, offering for sale, selling, or importing the
invention in(to) the country where it was patented. The public policy rationale for trademark
rights are that they may be used to prevent others from using a confusingly similar mark, but
not to prevent others from making the same goods or from selling the same goods or services
under a clearly different mark. The public policy rationale for copyright law is that it is a
form of protection provided to the authors of "original works of authorship" including
literary, dramatic, musical, artistic, and certain other intellectual works, both published and
unpublished.

Many people believe that intellectual property provides a temporary monopoly that protects
the use or exploitation of that good, supported by legal enforcement mechanisms.[13] The
United States Supreme Court frequently refers to a patent as providing a "limited monopoly."
This is not, however, appropriate usage of the term monopoly in the economic sense. In fact,
intellectual property protection cannot properly be thought of as providing an economic
monopoly, at least in part, because a monopoly can only exist in the presence of a market and
the ability of an actor to manipulate the market to a point where higher than competitive
prices are able to be maintained, which is something that is rarely achievable by an owner of
intellectual property.[14]

However, various schools of thought are critical of the concept and treatment of "intellectual
property". Some characterise IP laws as intellectual protectionism. There is an ongoing
debate as to whether IP laws truly operate to confer the stated public benefits, and whether
the protection they are said to provide is appropriate in the context of innovation derived
from such things as traditional knowledge and folklore, and patents for software and business
methods. Manifestations of this controversy can be seen in the way different jurisdictions
decide whether to grant intellectual property protection in relation to subject matter of this
kind, and the North-South divide on issues of the role and scope of intellectual property laws.

Furthermore, due to the non-rivalrous nature of goods covered by intellectual property laws,
comparing the unauthorized use of those goods to the crime of theft presents its own unique
problems. In common law, theft requires deprivation of the rightful owner of his or her rights
to possess, use, or destroy property. Example: When Joe steals Jane's bicycle, Jane cannot use
or have access to it. Since the objects of intellectual property rights (for example, ideas and
various transcriptions into written words, audible sounds, or electronic media) are so easily
reproduced, no such deprivation to the owner occurs. Example: When Joe makes a copy of
the music Jane recorded, Jane is not denied access to her original copy. In this sense, many of
the goods governed by intellectual property laws meet the non-rival test for public goods: the
use of the good by one individual does not reduce the use of that good by others.

A contrary view is that the deprivation of possession occurs at the outset - when an inventor,
author, composer, etc. has a new idea, he or she has the choice of keeping that idea private
and using it solely for personal benefit, or sharing that idea with the public in the form of a
new invention, book, song, etc. In this context, the grant of limited rights is a "bargain" that
the public uses to induce the creator to give up possession at the time the rights are granted,
and in this sense, there is a voluntary and irretrievable surrender of possession of the property
of the creator. The unauthorized use of intellectual property is then seen as a violation of the
fundamental bargain (in the foregoing example, Joe buys Jane's bicycle but pays with a bad
check), making the original deprivation of possession wrongful and requiring the public to act
to make the good on the bargain by enforcing the rights it originally granted.

The global harmonisation of intellectual property legislation under the World Trade
Organization (WTO) has also been criticized, for example by the alter-globalisation
movement. The exclusive rights granted by intellectual property laws are generally negative
in nature, and therefore only grant the holder of IP the ability to exclude third parties from
infringing on their monopoly. For example, the owner of a registered trademark has an
exclusive right to use their mark in relation to certain products or services, and can exclude
others from using that mark in relation to those products or services (sometimes marks which
are recognised as "famous" or "well known" are deemed to have developed sufficient
goodwill and reputation to be protected across unrelated classes of products and services).

The exclusive rights conferred by intellectual property laws can generally be transferred (with
or without consideration), licensed (or rented), or mortgaged to third parties. Like other forms
of property, intellectual property (or rather the exclusive rights which subsist in the IP) can be
transferred (with or without consideration) or licensed to third parties. In some jurisdictions it
may also be possible to use intellectual property as security for a loan.

Exclusive rights are generally divided into two categories: those that grant exclusive rights
only on copying/reproduction of the item or act protected (e.g. copyright) and those that grant
a right to prevent others from doing something. The difference between these is that a
copyright would prevent someone from copying the material form of expression of an idea,
but could not stop them from expressing the same idea in a different form, nor from using the
same form of expression if they had no knowledge of the original held by the copyright
holder. Patents and trade marks on the other hand, can be used to prevent that second person
from making the same design even if they had never heard of or seen the claimed "property".
Those rights must be applied for or registered and are more expensive to enforce.

There are also more specialized varieties of sui generis exclusive rights, such as circuit
design rights (called mask work rights in USA law, protected under the Integrated Circuit
Topography Act in Canadian law, and in European Union law by Directive 87/54/EEC of 16
December 1986 on the legal protection of topographies of semiconductor products), plant
breeders' rights, plant variety rights, industrial design rights, supplementary protection
certificates for pharmaceutical products and database rights (in European law).

Exclusive rights differ by subject matter, the actions they regulate with respect to the subject
matter, the duration of particular exclusions, and the limitations on those rights. Policies are
conventionally categorized according to subject matter, including inventions, artistic
expression, secrets, and industrial designs.

Generally, the activity regulated by exclusive rights is unauthorized reproduction or


commercial exploitation. However, as indicated above, some rights go beyond this to grant a
full suite of exclusive rights on a particular idea or product. Generally, it is true to say that
exclusive rights grant the holder the ability to stop others doing something (i.e. a negative
right), but not necessarily a right to do it themselves (i.e. a positive right). For example, the
holder of a patent on a pharmaceutical product may be able to prevent others selling it, but (in
most countries) cannot sell it themselves without a separate license from a regulatory
authority.

Most exclusive rights are nothing more than the right to sue an infringer, which has the effect
that people will approach the rightsholder for permission to perform the acts to which the
rightsholder has exclusive right. The granting of this permission is termed licensing, and
exclusive rights licenses stipulate the extent of the licensee's ability to perform the acts the
rightsholder may control. Other kinds of licenses attempt to establish additional conditions
beyond the acts the rightsholder may control, and these licenses are governed by general
contract principles. In many jurisdictions the law places limits on what restrictions the
licensor (the person granting the license) can impose. In the European Union, for example,
competition law has a strong influence on how licenses are granted by large companies.

Copyright licenses grant permission to do something. A patent license is a declaration not to


do some things, under certain conditions. Exclusive rights policies in certain countries
provide for certain activities which do not require any license, such as reproduction of small
amounts of texts, sometimes termed fair use. Many countries' legal systems afford
compulsory licenses for particular activities, especially in the area of patent law.

Most exclusive rights are awarded by a government for a limited period of time. Thus by
increasing rewards for authors, inventors and other producers of intellectual works, overall
efficiency might be improved. On the other hand, granting exclusive rights is by no means
the only viable method to finance "intellectual property" production in a market system.[15]
"Intellectual property" law creates transaction costs that could in some circumstances
outweigh these gains. Another consideration is that restricting the free reuse of information
and ideas will also have costs, where the use of the best available technique for a given task
or the creation of a new derived work is prevented. Equally important, granting monopoly
rights on production introduces a deadweight loss into the economy, and encourages rent
seeking behavior.

What the patent or copyright protects is not the physical object as such, but the idea which it
embodies. By forbidding an unauthorized reproduction of the object, the law declares, in
effect, that the physical labor of copying is not the source of the object's value, that that value
is created by the originator of the idea and may not be used without his consent. Ayn Rand,
founder of Objectivism, supported copyrights and patents, noting in Capitalism: The
Unknown Ideal:

Patents and copyrights are the legal implementation of the base of all property
“ rights: a man's right to the product of his mind. Every type of productive work
involves a combination of mental and of physical effort: of thought and of
physical action to translate that thought into a material form. The proportion of
these two elements varies in different types of work. At the lowest end of the
scale, the mental effort required to perform unskilled manual labor is minimal. At
the other end, what the patent and copyright laws acknowledge is the paramount
role of mental effort in the production of material values; these laws protect the
mind's contribution in its purest form the origination of an idea. The subject of
patents and copyrights is intellectual property. ... Thus the law establishes the
property right of a mind to that which it has brought in existence. ”
Although she argued that the term should be limited:

If it were held in perpetuity, it would lead to the opposite of the very principle on
“ which it is based: it would lead, not to the earned reward of achievement, but to
the unearned support of parasitism. It would become a cumulative lien on the
production of unborn generations, which would ultimately paralyze them.
Consider what would happen if, in producing an automobile, we had to pay
royalties to the descendants of all the inventors involved, starting with the
inventor of the wheel and on up. Apart from the impossibility of keeping such
records, consider the accidental status of such descendants and the unreality of
their unearned claims. ”
[edit] Expansion in nature and scope of IP laws
In recent times there has been a general expansion in intellectual property laws. This can be
seen in the extension of laws to new types of subject matter such as databases, in the
regulation of new categories of activity in respect of subject matter already protected, in the
increase of terms of protection, in the removal of restrictions and limitations on exclusive
rights, and in an expansion of the definition of "author" to include corporations as the
legitimate creators and owners of works. The concept of work for hire has also had the effect
of treating a corporation or business owner as the legal author of works created by
employees.

The American film industry helped to change the social construct of intellectual property by
giving rise to a shrewd and well-funded trade organization, the Motion Picture Association of
America. In amicus briefs in important cases, in lobbying before Congress, and in its
statements to the public, the MPAA consistently advocated strong protection of intellectual-
property rights. In framing its presentations, the association has capitalized on lawmakers'
receptivity to labor-desert theory - that is that people are entitled to the property that is
produced by their labor. Additionally Congress's awareness of the position of the United
States as the world's largest producer of films has made it convenient to expand the
conception of intellectual property. This strategy has been highly effective; with remarkable
frequency, the positions the association has supported have prevailed.[16] These doctrinal
reforms have further strengthened the industry, lending the MPAA even more power and
authority.[17]

The increase in terms of protection is particularly seen in relation to copyright, which has
recently been the subject of serial extensions in the United States and in Europe, such that it
is unclear when subsisting copyright protection will eventually expire.

The nature and scope of what constitutes "intellectual property" has also expanded. In the
context of trademarks, this expansion has been driven by international efforts to harmonise
the definition of "trademark", as exemplified by the Agreement on Trade-Related Aspects of
Intellectual Property Rights. Pursuant to TRIPs, any sign which is "capable of distinguishing"
the products or services of one business from the products or services of another business is
capable of constituting a trademark. Under this definition, trademarks such as Microsoft's
slogan "Where do you want to go today?" are generally considered registrable. Furthermore,
as the essential function of a trademark is to exclusively identify the commercial origin of
products or services, any sign which fulfills this purpose may be registrable as a trademark.
However, as this concept converges with the increasing use of non-conventional trademarks
in the marketplace, harmonisation may not amount to a fundamental expansion of the
trademark concept.

In the context of patents, the grant of patents in some jurisdictions over certain life forms,
software algorithms, and business models has led to ongoing controversy over the appropriate
scope of patentable subject matter.

Some consider that the expansion of intellectual property laws upsets the balance between
encouraging and facilitating creativity and innovation, and the dissemination of new ideas
and creations into the public domain for the common good. They consider that as most new
ideas are simply derived from other ideas, intellectual property laws tend to reduce the
overall level of creative and scientific advancement in society. They argue that innovation
and competition is in effect stifled by expanding IP laws, as litigious IP rights holders
aggressively or frivolously seek to protect their portfolios. Opposition to expansion of
intellectual property laws is strongly supported by the general economic arguments against
monopolies. Others, e.g. Federal Judge and prolific legal scholar Richard Posner and
Economist William Landes in the co-authored, The Economic Structure of Intellectual
Property Law (Harvard Univ. Press 2003), argue that artists can get still ideas from
copyrighted works as long as they don't plagiarise - that copyright only protects the
expression of ideas and not the ideas themselves.

The electronic age has seen an increase in the attempt to use software-based digital rights
management tools to restrict the copying and use of digitally based works. This can have the
effect of limiting fair use provisions of copyright law and even make the exhaustion of
exclusive distribution rights after the first sale of a product moot. This would allow, in
essence, the creation of a book which would disintegrate after one reading. As individuals
have proven adept at circumventing such measures in the past, many copyright holders have
also successfully lobbied for laws such as the Digital Millennium Copyright Act, which uses
criminal law to prevent any circumvention of software used to enforce digital rights
management systems. Equivalent provisions, to prevent circumvention of copyright
protection have existed in EU for some time, and are being expanded in, for example, Article
6 and 7 the Copyright Directive. Other examples are Article 7 of the Software Directive of
1991 (91/250/EEC), and the Conditional Access Directive of 1998 (98/84/EEC).

At the same time, the growth of the Internet, and particularly distributed search engines like
Kazaa and Gnutella, represents a challenge for exclusive rights policy. The Recording
Industry Association of America, in particular, has been on the front lines of the fight against
what it terms "piracy". The industry has had victories against some services, including a
highly publicized case against the file-sharing company Napster, and some people have been
prosecuted for sharing files in violation of copyright. However, the increasingly decentralized
nature of such networks makes legal action against distributed search engines more
problematic.

[edit] Economic view


Exclusive rights such as copyrights and patents secure their holder an exclusive right to sell,
or license rights. As such, the holder is the only seller in the market for that particular item,
and the holder is often described as having a monopoly for this reason.

However, it may be the case that there are other items of "intellectual property" that are close
substitutes. For example, the holder of publishing rights for a book may be competing with
various other authors to get a book published. This is one reason to prefer the term exclusive
rights over monopoly rights. Of course, there may not be close substitutes in particular cases
(for instance, a patent on the only known drug to treat a particular illness), making the term
monopoly rights more appropriate.

The case for "intellectual property" in economic theory notes certain substantial differences
from the case for tangible property. Consumption of tangible property is rivalrous. For
example, once one person eats an apple, no one else can eat it; if one person uses a plot of
land on which to build a home, that plot is unavailable for use by others. Without the right to
exclude others from tangible resources, a tragedy of the commons can result.

The subjects of intellectual property do not share this feature of rivalness. For example, an
indefinite number of copies can be made of a book without interfering with the use of the
book by owners of other copies. When combined with a lack of exclusive intellectual
property rights, this nonrivalrousness and nonexcludability combine to make them public
goods and susceptible to the free rider problem. A rationale for "intellectual property"
therefore rests on incentive effects to overcome the "free rider problem". This case asserts
that without a subsidy that is afforded by exclusive rights, there is no direct financial
incentive to create new inventions or works of authorship. However, as Wikipedia and Free
software demonstrate, works of authorship can be written without the incentive of such
exclusive rights. Moreover, many important works were created before copyright was
invented. One might argue that much more invention occurred after patents came into
existence; however, one could also argue that patents were brought into law as the power and
influence of industrial interests grew.

A more recent notion, proposing to expand the scope of exclusive rights to include databases,
has been introduced by the EU in 1996. This is the idea of protecting the information
contained in a database against re-utilisation and extraction of substantial parts. This would
be an additional right predicated on a substantial investment, that would exist alongside the
copyright in the database structure. This notion was opposed by the United States Supreme
Court in 1991 in the Feist Publications, Inc., v. Rural Telephone Service Co. finding, which
said that exclusive rights cannot cover the factual elements of any copyrighted work, that
copyright does not derive from the effort expended in the production of the work, and that in
the case of a collection of information, only the originality that may be found in the selection
and arrangement of the information is governed by copyright. This case holds that the
purpose of exclusive rights policy is to provide information to the public, and this
consideration takes priority over concerns such as investment. A study[specify] has found that the
introduction of exclusive rights to databases in the EU did not do any good to the economy.

The direct incentive beneficiaries of exclusive rights have an interest in expanding their rights
and benefits: this is known in economic terms as rent-seeking, and is generally considered a
bad thing by economists. Many beneficiaries pool their resources to form organizations that
attempt this. Such examples include the Business Software Alliance (BSA), which purports
to represent the interests of the commercial software industry or the Recording Industry
Association of America (RIAA), which represents the interests of the commercial music
publishing industry. As policy expands in accordance with the notion of "intellectual
property", in the interests of those who benefit directly from its economic incentives,
"intellectual property" tends to reduce the rights of its primary beneficiaries, the general
public.

Under the notion of "intellectual property" the public is increasingly prevented by law from
benefiting from the use of published information without complying with the conditions set
by the rightsholder. The cost for this to the public is not easy to quantify. The cost is
distributed widely and unequally based on the need for the product. Ironically the direct
incentive beneficiary organizations are a good source for such data. The BSA reports a study
that claims "while over $100 billion in software was installed on computers worldwide in
2006, only $65 billion was legally purchased".[18] The BSA says "software pirates" avoided a
cost of over $35 billion while the rest that obey the policy and do not purchase or make use of
the work bear a real and substantial opportunity cost that is yet uncounted.

It is important to note that there are many other functioning, alternative economic models to
the IP model in use, including the service model, the broadcast model, the advertising model,
and the tariff model. As pointed out by Ram Samudrala,[19] none of the alternative models
abridge the freedom of copying, use, distribution, and modification of published information,
but yet compensate and attribute authors. Ram Samudrala also emphasizes that the economic
situation when copying intellectual property is unrestricted is analogous to a situation where
exists a product X whose cost is $x, and a product another Y (very similar or identical to X)
whose cost is $y, where $y << $x ($y is much less than $x). These situations occur frequently
in the marketplace, and people marketing X routinely triumph (economically) over people
marketing Y.