The Law and Economics of Intellectual Property in the Digital Age

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1 The Law and Economics of Intellectual Property in the Digital Age The limits of analysis Niva Elkin-Koren and Eli M. Salzberger ij Routledge j j ^ Taylor & Francis Group LONDON AND NEW YORK

2 Contents Table of cases Table of legislation Acknowledgments ix xi xiii PARTI Intellectual property, law and economics 1 Introduction. 3 1 Introduction to law and economics The historical roots of law and economics What is economic analysis of law? What is economics? The economic analysis of law Shortcomings and challenges of the economic analysis of law The overemphasis on normative analysis and the internal fallacy of law and economics The assumptions of rationality and exogenous preferences Law and economics in a changing global environment Conclusion 36 2 The rise of intellectual property The rising significance of intellectual property What is intellectual property? Is intellectual property a property right? The normative sources of intellectual property law The law and economics of intellectual property 50

3 vi Contents PART II Normative analysis 55 3 The incentives paradigm Market failure ofpublic goods as the foundation of intellectual property law Public goods analysis Are incentives necessary? Incentives to create the individual level The need for incentives the organization level The rise of alternative modes ofproduction and monetary incentives Technological change and the need for incentives Summary Incentives for what? Incentives to create or incentives to produce? Incentives to create or incentives to improve? Incentives to create or incentives to disclose? Summary Central intervention in the form of intellectual property rights Generating incentives by intellectual property rights Alternative forms of incentives Tailoring intellectual property rights Conclusion The proprietary model of intellectual property The rise of the proprietary approach in the law and economics literature of "IPR The economic foundations of the proprietary approach: the 'tragedy of the commons' The theory of Harold Demsetz From the 'tragedy of the commons' in land to intellectual property The proprietary paradigm of intellectual property sources and main arguments The shift from incentives to proprietary regime as an escape From incentives ex ante to incentives ex post and managing improvements The shift to proprietary model by the founding fathers of law and economics 128

4 Contents vii The normative analysis of the proprietary paradigm A critical view of the proprietary approach Can information be over-consumed? Propertization of the commons and the anti-commons Managing informational commons The proprietary model and large scale collaborations Deconstructing traditional property and the proprietary paradigm of IP The 'tragedy of the commons' and positive analysis of intellectual property Conclusion 145 PART III Central intervention and private ordering Intellectual property and the rise of private ordering The rise of private ordering for governing informational goods The canonic position of law and economics towards private ordering From social norms to private ordering Private ordering and the limits of central intervention The contract-as-product approach Implications of the law and economics position Private ordering: a critical view The contract-as-product re-examined Markets cannot be trusted to secure optimal access to creative works The inconsistency of the law and economics approach Viral contracts and the new property Is it a contract? Blurring distinctions: private/public, contracts/property Private ordering and the social web The dual nature of users and platforms Governance The social web between a market and a community Private ordering and social production Conclusions 180

5 viii Contents 6 Intellectual property in the digital era: economic analysis and governance by technology The rise of digital locks What are DRMs? Regulation by code and the theory of law The economic analysis of information in the digital environment Is information still a public good? Digital networks and the economic analysis of information The anti-circumvention legal regime Legal background The economic rationale of anti-circumvention legislation The nature of regulation by technology Post-purchase control and consumer protection DRMs and competition The virtues of interoperability Legal impediments to interoperability: the new IPR regime Interoperability and competition in information markets Can the market take care of the problems on its own? Anti-circumvention legislation and the economics of innovation Conclusions: designing regulations for regulation by design 219 PART IV Positive analysis A positive analysis of intellectual property law The pluralist view of legislation The republican view of legislation The public choice view of legislation The intra-national and international dimensions in the positive analysis of IP Positive analysis of the role of courts 248 References 251 Index 275

Intellectual property governance and strategic value creation:

Intellectual property governance and strategic value creation: some evidence from European organizations in, pharmaceutical and public research fields Dr. Federica Rossi (rossi.federica@unito.it) Universita