Academic journal article Boston University Law Review

Unbundling Copyright from Patents to Inform the Analysis of Notice Costs and Monopoly

Academic journal article Boston University Law Review

Unbundling Copyright from Patents to Inform the Analysis of Notice Costs and Monopoly

Article excerpt

Copyright and patent law are often treated as two peas in a pod. Perhaps economists are more guilty than are lawyers of conflating the two, but I am not so certain. Yet, we all know that there are differences between these two fundamental components of intellectual property. Nevertheless, when critics of intellectual property use a particular brush (say, monopoly) to tar one, it is the rare critic who is able to keep from claiming that the same brush can be used to tar the other. At least that has been my experience.

This is not to say that some important differences between copyright and patent have not been noted. But it is my belief that even when noted, the differences are not well understood in the literature.

In this paper I wish to focus on what I believe to be two crucial differences between copyright and patents that, to my mind, require very different analyses and conclusions.

The first consideration is the treatment of notice costs, which I believe are of much more import in the case of patents then they are in the case of copyright. The second and older difference is in the claim that intellectual property creates a monopoly. This claim, while possibly correct for patents, is not at all correct for copyright.

The reason that these two fundamental components of intellectual property discourse differ from one another is that copyright, while preventing copying, does not prevent independent creation, whereas patent law prevents both copying and independent creation.

Because independent creation is allowed by copyright law, creators have a simple rule for avoiding infringement-do not copy other works.1 This renders notice costs irrelevant for the large class of creative works that do not literally copy any prior works. The real-world limitations on the copyright "property right" (such as duration and fair-use) raise information costs. Contrary to some claims in the literature, however, it is still not clear that notice costs for copyright are particularly high relative to other types of property. Patents, by not allowing independent creation, impose much higher notice costs on potential users of patented inventions than those imposed by copyright on users of creative works.2

Copyrights and patents provide ownership rights to the creators of works and innovations. Analysts, and particularly critics of intellectual property, often refer to these ownership rights as "monopolies," but doing so is erroneous in the case of copyright. Because copyright does not prevent independent creation, it does not create a monopoly. That does not mean that a copyrighted good cannot have a monopoly in a market. If such a monopoly exists, however, the monopoly must be due to some other aspect of the work, not to copyright. Because patents prevent independent creation, they can create monopolies. Therefore, a patent is more than merely a property right over a particular innovation whereas copyright is mere ownership over a creative work.

I. THE KEY DIFFERENCE BETWEEN PATENT AND COPYRIGHT

There are some terminological issues that are best dealt with upfront. Copyrights provide ownership over creative works. Patents provide ownership over innovations. in principle, either ownership right could endure for as long or as short as society would wish. in principle, either could allow exceptions under certain conditions, restricting the owner's ability to contract (as is the case with compulsory licenses).

The economic argument for copyright and patent is based on promoting conditions that allow creators or innovators to reap financial rewards for producing works and innovations.3 One potential problem occurs when free1 riding in the market prevents creators or innovators from covering the costs of invention or creation. Those who would copy an innovation or artistic work (i.e., free riders not paying for the costs of creation) can produce their copies at lower average cost than the producers from whom they copy, because these free riders do not have the burden of incurring the costs of creation. …

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