Law and Economics-Charles W. Upton Intellectual Property Rights

Three Categories Patents Copyrights Trademarks

Intellectual Property Rights Patents Congress, using its constitutional powers, allows the granting of patents. A patent gives the owner the exclusive license for the product for a term of 20 years.

Intellectual Property Rights Patents Congress, using its constitutional powers, allows the granting of patents. A patent gives the owner the exclusive license for the product for a term of 20 y ears. –Prior to 1995, it was 17 years, but it was extended as part of the WTO deal.

Intellectual Property Rights Patents Congress, using its constitutional powers, allows the granting of patents. A patent gives the owner the exclusive license for the product for a term of 20 y ears. –Prior to 1995, it was 17 years, but it was extended as part of the WTO deal. Without an exclusive right to profit, there is no incentive to invent.

Intellectual Property Rights Two Issues Breadth –Just how broad should the patent be? Rubik’s cube, for instance, has been ruled not to infringe on a similar 2 x 2 device.

Intellectual Property Rights Two Issues Breadth –Suppose I come up with a drug that cures the common cold. Others come up with a new molecular structure, close enough that it also cures the common cold. If they can get a patent on their drug, it will cut the market for my product.

Intellectual Property Rights Two Issues Breadth –Suppose I come up with a drug that cures the common cold. Others come up with a new molecular structure, close enough that it also cures the common cold. If they can get a patent on their drug, it will cut the market for my product. I know all of this before I begin researching the new molecule, and it affects my incentives for research and development

Intellectual Property Rights Two Issues Breadth –Suppose I come up with a drug that cures the common cold. Others come up with a new molecular structure, close enough that it also cures the common cold. If they can get a patent on their drug, it will cut the market for my product. I know all of this before I begin researching the new molecule, and it affects my incentives for research and development Another example: should Underdeveloped Countries be required to respect American Patents on AIDS drugs?

Intellectual Property Rights Two Issues Durability.

Intellectual Property Rights Two Issues Durability. –The longer the patent, the longer the period of monopoly pricing and the greater the profits and the incentive to innovate.

Intellectual Property Rights Two Issues Durability. –The longer the patent, the longer the drug sells above MC and the longer the inefficiencies of monopoly pricing.

Intellectual Property Rights Copyrights Very similar to patents.

Intellectual Property Rights Copyrights Very similar to patents. Breadth –Fair use. I can quote a book in a review, and I can tape a program for later private viewing. –What about MP3?

Intellectual Property Rights Copyrights Very similar to patents. Breadth Durability –Copyrights do not run forever.

Intellectual Property Rights End ©2004 Charles W. Upton