Monday, July 23, 2007

Smith on IP as Property

Henry E. Smith (Yale Law School) has posted Intellectual Property as Property: Delineating Entitlements in Information on SSRN.  Here's the abstract:

This Article proposes that intellectual property's close relationship to property stems from the role that information costs play in the delineation and enforcement of exclusion rights. As theorists have emphasized, the nonrivalness of information causes exclusive rights to be more costly in terms of forgone use than in the law of tangible property. But if intellectual property does not solve a problem of allocation to information, it can play a role in allowing those who find and develop information to appropriate the return from their rival inputs. It is on the cost side that exclusion emerges as a possible shortcut: exclusive rights in information are simple, indirect, and low-cost devices for solving the problem of appropriating the return from these rival inputs. Building on a framework that identifies exclusion and governance as complementary strategies for defining property rights, the Article derives some propositions about which factors can be expected to push toward and away from exclusion in delineating entitlements to information. The role that exclusion plays in keeping the system of entitlements over information modular - allowing information to be hidden behind metaphorical boundaries - is both its strength and its weakness. Because exclusion is both more costly and potentially more beneficial as interconnected information becomes more valuable, it is an empirical question whether we would expect more exclusion - and whether it would be desirable. The Article uses this information-cost theory to explain some of the basic differences between the more tort-like copyright regime and the more property-like patent law. The information-cost theory also has implications for suggestive sources of empirical evidence on structures of entitlements, such as rules within business organizations. Intellectual property, like property in general, can be seen as (at best) a second-best solution of a complex coordination problem of attributing outputs to inputs.

Ben Barros

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