After finishing reading the book, I still don’t get it. I am still convinced that the strongest foundations of Intellectual Property (“IP”), and the most unquestionable ones, are economics and maximization of social welfare (utilitarianism). The basic principles and necessary limitations proposed by Professor Merges can be found in those foundations and in other commonly agreed morality principles that are part of the society’s utility function.
Even though the author defends a solid philosophical foundation for IP, I think that his main weapons are utilitarian. In an important part of his argumentation, the solid principles where he bases his proposals are efficiency, use of incentives, and avoidance of free riding. The author recognizes efficiency as a “Midlevel Principle”, but, from my point of view, he applies it as a foundation.
Nevertheless, the creative proposition of the author is that even this kind of strong divergences on foundations do not matter, as long as we agree on the basic principle “that IP policy should be about rewarding creative professionals while reducing transaction costs”[1] of complete waivers and exchange of rights[2] (seems utilitarian to me…). The good news is that we agree on this basic principle, so I can forget the philosophical differences and focus on a value that was strongly attacked in our last class: freedom.
Freedom was attacked from two very different points of view: from the state interventionism (social planner proposition) and from the Anti IP movement (don’t attack me yet, let me explain).
State interventionism, or the idea of a social planner that can maximize social welfare, sounds promising but it is unfeasible or at least even more imperfect than the “market”. The amount of information that the social planner needs to manage in order to maximize social welfare (and not only welfare of a political party or government officials) is unmanageable[3].
The example of China[4] is useful. Even if we assume that the planning is in some way doable and in some degree successful, the sole fact that the “the government decides something is desirable” shocks the essence of freedom. Someone can sustain that freedom as a valuable principle is overrated (certainly not me), but in this case the restraint on freedom also implies inefficiencies. On the one hand, the inefficiency on allocating resources due the unmanageability of consumers’ information (desires, tastes, willingness to pay, etc.). If the consumers’ valuation is not perfectly known and managed, it is going to produce overinvestment or underinvestment in certain industries and products. On the other hand, government intervention is also inefficient because of the dead weight loss produced by the taxation necessary for collecting “unlimited resources” for research and development. Finally, I think that this model also restricts personal freedom of the creative professionals and harms their personal welfare, by eliminating any kind of market for their services and forcing them to a full-on state patronage (“recognized as perhaps the worst of all possible worlds"[5]).
The other attack on freedom was in terms of an Anti IP movement. At first, this movement appears as a warden of freedom ("information wants to be free"[6]), but I think that this view is not completely true. For exercising freedom we need choices. As a consumer I am free to choose between an inexpensive and simple cell phone, and a hi-tech Iphone 4s; between watching a free movie on YouTube and paying to see a Hollywood style movie on the theaters; or between using an open source word processor and buying Microsoft Office. As long as we have options of different qualities and prices we can exercise our freedom. In this sense, eliminating IP rights or reducing its enforcement to a minimum restricts the choices available on the market.
Maybe it is true that without IP rights innovation and creativity will flourish, choices may increase in quantity, but not always in quality. Innovation and creativity in products that require enormous investments or full-time dedication will disappear[7].
If companies know that they will not recoup their investments without an IP protection because they will be forced by the competitive market to charge their marginal costs, they are not going to invest in the first place. Without those investments, consumers will be unjustifiably limited in their choices, even when they were willing to pay the corresponding price. If I want to pay for a Hollywood style movie or I want to pay for the most effective antihistamine, why shouldn’t I have access to it?
The same will occur with those creative or innovative works that require a full-time dedication and are not protected by a physical unique output. Without IP rights we may have millions of bloggers, but are we going to have serious literature? We may have millions of homemade science experiments with Mentos and Coke, but are we going to have serious scientists looking for new medications?
If we think that as lawyers we deserve to get paid, why shouldn’t creative professionals deserve the profits of their work? “The ability to make a real living from creative works is what IP is all about”[8]. Without creating a market for creativity and innovation, full-time creative professionals will disappear or they will be forced to look for employments in organizations that are willing to get the non-pecuniary benefits of their creations in exchange of a salary (patronage?).
Even though I disagree with the Anti IP movement, I should recognize that freedom can be enhanced in the IP market. After all, freedom for the creative professionals also means an effective and cost efficient waiver system. Instead of suppressing IP as a whole, with the abovementioned consequences, maybe we can follow Merges’s idea and create a “waiver mechanism directly into copyright (and patent) law, and to create a central online registry that would record waivers and allow them to be searched and verified easily”[9], facilitating collaborative creativity when the right holders agree.
[1] Robert P. Merges, Justifying Intellectual Property, Kindle Edition., 2011, Kindle Location 3175.
[2] Ibid., Kindle Locations 3309–3311.
[3] Friedrich A. von (Friedrich August) Hayek and Institute for Humane Studies, The use of knowledge in society, vol. 5, Reprint (Menlo Park, Calif.: Institute for Humane Studies, Inc., 197AD).
[4] http://picker.typepad.com/picker_seminar/2012/01/lesser-bloggers-address-great-bloggers-pontificate-1.html
[5] Merges, Justifying Intellectual Property, Kindle Location 2976.
[6] Ibid., Kindle Locations 3482–3483.
[7] Ibid., Kindle Locations 3250–3252.
[8] Ibid., Kindle Location 3221.
[9] Ibid., Kindle Locations 3347–3348.
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