1. Digital Sustainability
in the Knowledge Society
Fundamentals of »Intellectual Property (IP)«
Dr. Marcus M. Dapp
Board OKF Germany / IT Strategist, City Government Munich
10.10.2011

2. Problem with knowledge as a public good
• Non­excludable
• difficult to exclude people from access
• Non­rival
• Used not consumed
• Problem
• No incentive
to create?!
By avatar-1 (Flickr CC-BY-SA)

3. Solution: »Intellectual Property (IP, IPR)«
• = time­limited exclusive rights, granted
to author/inventor
• Exclusive right
• To exploit invention/work
• To control production/distribution
• Time­limited
• Rights expire after some time
• Exclusive right = monopoly status

4. What's a monopoly?
By Mike_fleming
(Flickr, CC-BY)

5. Monopoly?
• Only one provider of a product/service
• Greek: monos = one, polein = to sell
• Characteristics
• No economic competition
• No product substitution
• High barriers for new market players
• Examples?

6. »Intellectual Property« wants to solve 2 problems
• Incentive problem
• Now/instant
• Give exclusive rights on creation
• Monopoly problem
• Later
• Let excl. rights expire after ‘some time’
• Both create new problems...
• How many rights?
• How long?

7. »Framing« the IP debate: Words promote intentions
• »Property« or »Rights«?
• »Property« advocates promote that
protection should provide rights akin
to physical property.
• »Right« advocates promote that
protection should provide rights in
temporary, limited form.
• Who uses which terms? Why?
• e.g., »piracy«, »unauthorized copy«, ...
WP(en): Intellectual rights (25.11.05)

8. »Intellectual Property« needs balance
• Balance of public and private interests
• Balance of efficiency
• Dynamic (over time)
• Static (in space)
• Analysis
• Legal: utilitarism
• Economic: incentive+allocative function

9. Balance private and public interests
• Creation • Diffusion
• Private/Individual • Public benefit/
benefit social welfare
• Foster investment • Optimal resource
in R&D allocation
• »Dynamic • »Static efficiency«
efficiency«

10. Dynamic Efficiency: Protection over time
Who invests,
gets the rights.
»future«
rationing of consumption, free access
loss for public gain for public
PD Monopoly Rights Public Domain
time
exclusive rights to individual »may prevent innovations«
to commercially exploit loss of royalties
0 ∞
optimal duration?
non-rival non-exclusive
public benefit private benefit

11. Static Efficiency: Protection in space
Who pays, gets
the rights.
Boundaries of IP
- Unclear for inventions
- Clear for creations
PD exclusive
usable collectively, free of charge protection
Crossing the »fence«
- get exclusive rights
- expiration of rights

12. Legal Analysis of »IP«
• Why risk monopolies?
• Society wants/needs technical
progress/arts » utilitarism
• Assumption: »nobody invents/creates
without incentives«
• Aim
• Balance private benefit & public benefit
• Deal between society and individual

13. Economic analysis of »IP«
• Incentive function
• To counter public good nature
• Balance dynamic and static efficiency
• Allocative function
• Efficiency (transaction costs)
• Marketability
• »Who values them most, gets them«

14. Example: US constitution, section 8, clause 8
• »Congress shall have 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;«
• Think about it:
• Congress does not have to.
• Are there alternative ways?

15. Possible alternatives to »IP«
• Aim
• Let new knowledge for society be
created
• Situation
• Knowledge is Non­rival & hard to
exclude
• Question
• How to foster its creation without using
the concept of »IP«?
Interaction

16. Alternative solutions to »IP«
• Subsidies or prizes (awards)
• By government, how to finance them?
• »culture flat rate«
• Paid by all, used by all. Fairness?
• Trade secrets
• Hide discoveries, erect physical barriers
• How useful is non­diffusion for society?

17. Literature on »IP« (freely available)
• Lévêque & Ménière, The Economics of Patents
and Copyright
• www.cerna.ensmp.fr/PrimerForFree.htm
• Y. Benkler, Coase’s Penguin, or Linux and the
Nature of the Firm
• www.benkler.org/CoasesPenguin.html
• P. Menell, Intellectual Property: General Theories
(Encyclopedia of Law & Economics)
• users.ugent.be/~gdegeest/tablebib.htm
• W. Fisher, Theories of Intellectual Property
• cyber.law.harvard.edu/people/tfisher/iptheory.pdf