Abstract
With their “tragedy of the commons” paradigm for intellectual property, Landes and Posner argue that the most important benefit of intellectual property rights is not that they generate incentives to create new works, but that they ensure the efficient exploitation of existing intellectual works. This alternative economic case for IP notably relies on the argument that allowing the copyright on certain massively popular works to expire could lead to their overexploitation, generating negative externalities similar to congestion externalities. This article will assess in detail the plausibility of this effect, by reviewing its most plausible interpretations: a boredom effect, a “blurring” or “tarnishment” effect, a snob effect, or a decrease in product diversity. I will argue that while Landes and Posner’s argument is ultimately inconclusive and unverified by the current state of empirical research, it also raises greater challenges than has usually been thought. Moreover, taking their argument seriously can also contribute to a better understanding of the purposes and limits of an intellectual property regime.
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Notes
Here I will use the expression “intellectual property” to denote only the exclusive rights in information such as copyright, patents and trademarks, and not the subject-matter itself.
Let us note that the various chapters of the Economic Structure of Intellectual property make no particular mention of Posner’s controversial wealth maximization theory, but borrows from on a more conventional welfarist language, which I shall likewise adopt in this paper for the sake of the discussion.
Cf. Posner (1998, 37) citing W. Blackstone, Commentaries on the Laws of England (1766), p. 7: «who would be at the pains of tilling [the earth], if another might watch an opportunity to seize upon and enjoy the product of his industry, art, and labour? Had not therefore a separate property in lands, as well as moveables, been vested in some individuals, the world must have continued a forest, and men have been mere animals of prey».
In his seminal article “Toward a Theory of Property Rights”, Demsetz introduce the idea that the primary function of property rights is to guide incentives to internalize of externalities, and develops a positive theory of the emergence of property rights, based on the anthropological account of the link between the development of property rights and the emergence of the fur trade among the Montagnais-Naskapi native people in the North of Québec.
In this landmark case, the US Supreme court famously upheld the constitutionality of the 1998 Copyright Term Extension Act: US Supreme Court, Eldred v. Ashcroft, 537 U.S. 186.
Besides from the congestion externalities, they also put forward a second argument, which I will not discuss here, arguing that IP rights can be useful generate proper incentives for the maintenance of existing works.
Somewhat surprisingly, Landes and Posner also argue that public domain works could also suffer from the opposite phenomenon, namely under-exploitation. We will not consider this argument in this paper, as it has already been more than adequately discussed in previous works. See e.g. Heald (2008), or Lemley (2004), p. 136: “Is there some greater need to subsidize the making of more copies Ulysses than the making of more paper clips? It is hard to see why; in both cases, once an intellectual property right expires, many companies can compete to make the good, and they will do so only so long as they can manufacture and distribute it for less money than people will pay to buy it. This doubtless means that some inefficient manufacturers will stop selling Ulysses (or paper clips), but that should not worry us. Indeed, if we believe in the market economy, it should delight us”.
In the same sense, cf. also Buccafusco and Heald (2013, 32).
Although individual patterns often largely differ from this average pattern (Hunter 2011, 49), but these variations are not directly relevant from the perspective of aggregate welfare.
Admittedly, such adjustment will be less immediate than the “good husbandry” of the IP owner, but this only underlines the difference in output planning under competition or under monopoly.
This point is emphasized by Karjala (2005, 1072).
See above, Sect. 3.
Cf. references in Landes and Posner (2003, 223 p. 226 and p. 159, note 24).
Such as the famous Air Pirates comic strips, at the center of the US case “Walt Disney Productions v. Air Pirates”, 581 F.2d 751 (9th Cir. 1978).
This argument has been made to criticize the ruling (against) Air Pirates: “Air Pirate Funnies is an adult magazine with a clearly different purpose and audience than Disney’s. Someone interested in reading a Disney comic book would not turn to Air Pirate Funnies instead, and vice versa. Both publications perform different functions and have different markets. Therefore, the fair use defense should be permitted” (Totah 1987). Cf. also Hughes (1998, 985).
Although it is unclear whether these illustrations are intended to exemplify the tarnishment effect or the boredom effect.
This is inspired by an argument made by Buccafusco and Heald (2013, 45).
Liebowitz and Margolis (2005, 450).
Let us note that they also discuss the converse underuse hypothesis made by Landes and Posner, but as we already stated supra, note 9, this paper is only interested in the “overgrazing” argument.
Cf. Landes and Posner (2003, pp. 16–21).
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Acknowledgments
The author wishes to thank Alain Marciano for his precious feedback on an earlier draft of this article, Tim Meijers and Thomas Ferretti for their helpful comments and careful reading, and the anonymous peer reviewers for their constructive criticisms and excellent suggestions.
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Lambrecht, M. The time limit on copyright: an unlikely tragedy of the intellectual commons. Eur J Law Econ 43, 475–494 (2017). https://doi.org/10.1007/s10657-016-9538-z
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DOI: https://doi.org/10.1007/s10657-016-9538-z
Keywords
- Intellectual property
- Copyright extension
- Richard Posner
- Indefinitely renewable copyright
- Tragedy of the commons
- Congestion externalities
- Overexploitation
- Overgrazing
- Blurring
- Tarnishment