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UW-Madison ECON 522 - Lecture 7 - Property Law 4

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Econ 522 – Lecture 7 (Sept 27 2007)Tuesday, we discussed the question of what can be privately owned, and listed four ways for people to claim property rights over information:- patents- copyrights- trademarks- trade secretsWe talked about patents, which protect ideas and innovations by granting the inventor a temporary legal monopoly to use their idea.Copyrights are property rights over “original expressions” – writing, music, or other artistic creations. Creations like this tend to fit the definition of a public good:- nonrivalrous – one more person reading a book, or listening to a song, or using a piece of software, doesn’t impose any costs on the creator or on other users- nonexcludable – this isn’t quite as literally true; but technology has made it very cheap, often free, to copy and share music or software, so in some instances it’s very difficult to prevent people from accessing it. (This has become more dramatically true in recent years, with Napster and other file-sharing programs/venues – once something is available digitally, it’s very hard to limit access to it.)So it is natural to think of creations like these in terms of public goods. As with any public good, if they are privately supplied, we would expect them to be undersupplied – that is, without any specific sort of reward system, creators could not capture the full social benefit of their creations, and so the free market would likely produce an inefficiently low level of “original expressions.”However, there are several possible ways to remedy this problem:- Have the government subsidize it, that is, have it publicly supplied. This happens with scientific research, since scientific knowledge can also be thought of as a public good; and it happens with art.- Another is for these activities to be paid for with charitable donations. This is implicitly what happens with shareware – you download it for free, but are asked to pay for it voluntarily if you use it. (Of course there’s the usual freerider problem.) And a lot of art is supported by private foundations and donations.- Finally, the creator of a song, or of a computer program, can be given legal rights to it, which make it illegal for others to disseminate it, so that in order to use it legally, people have to buy it from the creator (or from someone else who pays fees to the creator)This last one is the case of copyright – exclusive legal rights to written material.Copyright law is less rigid than patent law – patents serve as injunctions against any unauthorized use of the idea, while certain exceptions are recognized for copyrights. For example, the Posner article I distributed the first day of class is copyrighted, but I wasn’t breaking the law by handing out copies of it – educational use is recognized as “fair use” of copyrighted material, and is therefore exempt. Similarly, small selections from a book can legally be quoted in reviews, or used in satires, and pieces of songs can be sampled inother songs.On the other hand, copyrights last much longer than patents – the lifetime of a copyright has been extended several times. Copyrights currently expire 70 years after the death of the creator.Unlike patents, you don’t have to apply for a copyright – it automatically applies to anything you’ve written or created.Copyrights are generally more narrow than patents – they cover the specific text, not the general idea, although the line is sometimes a bit vague. In 2001, Alice Randall published the book “The Wind Done Gone,” which was meant as a retelling of “Gone With The Wind” from the point of view of a slave on Scarlett’s plantation. The estate of Margaret Mitchell sued the book’s publisher; an injunction was initially issued, halting publication, but was later overturned; in the end, a settlement was reached.In this case, though, even if the book did violate the copyright, it’s hard to see any financial damage to Mitchell’s estate. That is, it’s hard to imagine there are many people who would see an “unauthorized parody” as a substitute for the original; hard to imagine a lot of people who planned to buy a copy of Gone With The Wind, then read the parody and felt they no longer needed to.In my own opinion, copyright holders sometimes defend their copyright aggressively as areflex, without giving much thought to whether the activity they’re opposing actually hurts their interests. Lots of book publishers were opposed to Google Print (now called Google Book Search), which would allow people to search the text of books, but would only return the relevant paragraph, not the whole work. Again, it’s hard to imagine that searching for a phrase or an idea, and finding it contained in a book you didn’t know about, would make you less likely to buy that book; yet the publishers felt some instinctive need to oppose the idea. (Google Print is now mostly limited to books in the public domain, that is, works whose copyrights have expired or which are not protected by copyright for other reasons.)A similar argument could be made about the well-publicized RIAA lawsuits against music downloaders. (There is little doubt that unlicensed copying of music does violate copyright; there is less clarity that treating potential customers as criminals is the best long-term strategy for the music and movie industries.)(Commenting on the lengthening of copyright life, Cooter and Ulen comment that technology has made it easier to avoid paying copyright royalties, and that the lengthening of copyright therefore “allows creators a longer time to recoup their just royalties.” I wince at the use of the word “just”. They seem to be implying that intellectual property protection is somehow the natural state of the world, or a moral imperative, that these rights are somehow inherent and deserved. People forget sometimes that the protection of intellectual property is artificial, a man-made legal creation. Copyright holders lobby for strengthening copyright law because that’s in their own financial interest, just like patentholders lobby for stronger patent protection becauseit’s in their interest. There may be many good reasons for an author to have certain exclusive rights to their own work, but these rights are a calculated invention, not a natural or moral entitlement.Separate from that, one could wonder whether the royalties received between, say, year 40 and year 70


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UW-Madison ECON 522 - Lecture 7 - Property Law 4

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