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The future of the nation depends in no small part on the efficiency of industry, and the efficiency of industry depends in no small part on the protection of intellectual property.[1]


Intellectual property (IP) is

a category of legal rights that grants owners certain exclusive rights to intangible assets or products of the human intellect, such as inventions; literary and artistic works; and symbols, names, images, and design.[2]
any innovation, commercial or artistic, or any unique name, symbol, logo, or design used commercially. Intellectual property rights protect the economic interests of the creators of these works by giving them property rights over their creations. Generally, individual countries grant and enforce these rights.[3]
creations of the mind — creative works or ideas embodied in a form that can be shared or can enable others to recreate, emulate, or manufacture them. There are four ways to protect intellectual property — patents, trademarks, copyrights or trade secrets.[4]
[c]reations of the mind such as musical, literary, and artistic works; inventions; and symbols, names, images, and designs used in commerce, including copyrights, trademarks, patents, and related rights. Under intellectual property law, the holder of one of these abstract 'properties' has certain exclusive rights to the creative work, commercial symbol, or invention by which it is covered.[5]

It is an umbrella term for various legal entitlements which attach to certain names, words and phrases, expressions stored in written and recorded media, and inventions. The holders of these legal entitlements may exercise various exclusive rights in relation to the subject matter of the intellectual property.


The adjective "intellectual" reflects the fact that this term concerns a process of the mind. The noun "property" implies that ideation is analogous to the construction of tangible objects.

Intellectual property can be distinguished from other forms of property in that it is a bundle of rights attached to the intangible form of an intellectual, scientific, or artistic creation. While personal property law determines ownership over things, intellectual property law secures ownership in the particular form or expression embodied in things.

"The U.S. 'intellectual property system' is a mixture of Federal and State law. Laws concerning copyright, patent, trademark, and the protection of semiconductor chip mask works are under Federal jurisdiction. Laws concerning trade secrets and the misappropriation of confidential business information, and certain limited kinds of 'unfair competition,' are under State jurisdiction. Trademarks may be federally registered and/or registered with an individual State; trademark rights may also accrue based on common-law usage. Computer software is distinguished from most other intellectual creations protected by intellectual property law in that it is eligible for protection by patent, copyright, and trade secret laws. Each kind of protection possesses certain strengths and weaknesses, and each protects certain aspects of software in specific ways."[6]

Intellectual property laws and enforcement vary widely from jurisdiction to jurisdiction. There are inter-governmental efforts to harmonize them through international treaties such as the 1994 World Trade Organization (WTO) Agreement on Trade-related Aspects of Intellectual Property Rights (TRIPs), while other treaties may facilitate registration in more than one jurisdiction at a time. Disagreements over such issues as software patents and the appropriate level of copyright enforcement have prevented consensus on a cohesive international system.

A number of rationales explain the intellectual property laws. Some legal experts assert that intellectual property laws are needed to encourage individuals to create new works of authorship, inventions, and other innovative subject matter. It is believed that absent a system of proprietary rights, free riders could readily exploit these works without having to bear the costs of creating them. Individuals would in turn possess diminished incentives to devote their efforts to being authors or inventors.[7] In addition, intellectual property rights are said to facilitate market mechanisms by creating discrete, well-defined property interests that decrease transaction costs and encourage commercial exchanges.[8]

On the other hand, intellectual property laws have been subject to criticism. Some assert that intellectual property rights are unnecessary due to market forces that already suffice to create an optimal level of creative activity. The desire to become famous, or to gain a lead time advantage over competitors, may well provide sufficient inducement to write or to invent without the need for further incentives.[9] In an era where information can be readily transmitted around the globe, the notion that an innovation can be an object of possession has also been challenged.[10]

Emergence of the concept of intellectual property rights[]

The birth of the idea of intellectual property itself demanded certain social conditions. It required a centralized political authority and a government that intervened in economic affairs; the development of trade and commerce; a market for literature, art, and invention; and the growth of the idea of, and respect for, the individual as creator. Only in the late Middle Ages did such conditions develop, and only then did the concept of intellectual property rights, as we know it today, emerge.[11]

In addition to these societal changes, technological change — and in particular, the development and widespread deployment of the printing press — also created the need for intellectual property protection. Before the development of printing, inventors, embodying their ideas within their own persons, did not need to concern themselves with the prospect of others reaping the financial rewards of their work. They simply went from town to town selling their intellectual wares. However, once their ideas were recorded and widely distributed in print, the inventors lost this control and, hence, their economic bargaining power. The problem created by the printing press was even greater for authors whose profits were derived not from their ideas but from what subsequently was even more easily duplicated, the written word itself.

The first intellectual property rights were granted as patents. Characterized by one author as being “the idea of progress appearing in the law, patents were associated with technological development from the start."[12] Offered by sovereigns and local governments as part of their overall economic policies to stimulate commerce and technological advance, they were, essentially, monopolies designed to entice artisans and inventors into their States or localities.

Copyrights — or the granting of rights in literary property — did not develop in either concept or practice until the 15th century. Even more than patent rights, copyright can be identified with one specific technology, the printing press. The printing press brought about major social, economic, and political changes.

By greatly increasing the speed and reducing the costs of reproduction, printing made it much easier to disseminate ideas. By increasing the general level of literacy, it also made more people susceptible to, and eager to partake of, such ideas. As a result, the market for information products and literary works grew, and their economic value was greatly enhanced. In fact, one might say that printing was the growth industry of the time. Later, as books and manuscripts ceased to be isolated on monestary shelves, and became available to many people simultaneously, they began to serve as an important forum for public discussion.

Occurring at the time of religious and political turmoil, printing presented the monarchs of Europe with both a political threat and an economic opportunity. The law of copyright was developed to deal with this threat, as well as to take advantage of this opportunity. The shape the law took reflects its dual purpose: censorship of the press and regulation of trade.

Intellectual property systems[]

Theoretical models and actual systems often differ significantly. In the real world, the form and structures of intellectual property systems are worked out in the political arena. Seldom is a system a well-conceived and well-designed construct; it is more likely to take shape haphazardly, reflecting the political compromises and historical events that went into its making. The American intellectual property system is a product of such compromises, and strong forces are still shaping it today. Those involved in the debate often define issues narrowly, in terms limited to their own interests and world views. But, given the magnitude of the technological changes occurring, and their potential impact on the intellectual property system, it is extremely important to view the entire situation as a whole, in terms of the interrelationships of its parts.

In looking at how technology might affect the intellectual property system, it is useful to conceive of the system as a set of incentives and rewards designed to affect the behavior of individuals or organized groups engaged in creative or inventive activities. This system is divided into five interrelated parts:

  1. policy goals that it seeks to accomplish
  2. property rights that provide incentives and rewards
  3. operating rules
  4. mechanisms by which policy goals are achieved, and
  5. the realm of people and activities that the system is designed to influence.

The outputs of the system provide feedback about how effectively the system is working.

Policy goals are the ends towards which the intellectual property system is directed; they mirror the goals of the society. Time and social change may alter intellectual property goals. As the goals change, other parts of the system are likely to change in response.

Property rights are granted as incentives and rewards. A property right might include, for example, one or any number of the following rights:

  1. the right to possess or physically control something
  2. the right to use or enjoy its benefits
  3. the right to manage or decide how it is to be used
  4. the right to receive income from it
  5. the right to consume or destroy it
  6. the right to modify it
  7. the right to transfer it
  8. the right to distribute it, and
  9. the right to exclude others from using it.

Rights may be granted only under certain conditions, or they maybe limited in their application. For example, to claim a patent in the United States, an inventor must demonstrate that his or her invention is useful, nonobvious, and novel. To receive a copyright, an author’s work must be original and fixed. Neither right offers permanent protection. Patent rights generally last for 20 years from the date of filing, and copyrights are granted to individuals for life plus 70 years and to corporations for 95 years.

Together, these rights, incentives, and the conditions under which they are granted constitute the operating rules of the intellectual property system. The rules make demands on everyone involved in the system. The granting of a right to one party, for example, may in effect create a corresponding obligation or liability on the part of another. Structuring the way the parties relate to and depend on one another, these rights and incentives serve as the rules governing the behavior of individuals involved in the creation, production, distribution and use of works, products, and services designated as intellectual properties.

Different intellectual property systems may define intellectual properties differently, and each may attach different rights, responsibilities, and benefits to them. The structure of rights will be determined, in part, by the policy goals of the system, and by the mechanisms chosen to achieve them. Thus, a system designed primarily to encourage learning and invention, as is American patent law, may require inventors to disclose information. In contrast, a system designed principally to regulate economic relationships, such as trade secret law may, in fact, prohibit disclosure. Similarly, a copyright system with the chief goal of fostering the dissemination of information might grant rights only in published works; whereas one aiming to reward authorship might protect [[work]s before they are made publicly available.

Similarly, the mechanisms used to achieve policy goals — the way in which the system operates — can vary among and within systems, depending on the kind of work to be protected, the nature of the activities to be influenced, the kinds of rights to be granted, and the policy goals to be achieved. For example, a system that grants rights on the condition of an act such as publication, or on the condition of qualities such as usefulness or novelty, might require a very different administrative apparatus than a system with no such conditions. For example, because patents are granted under more stringent conditions than copyrights, the Patent and Trademark Office historically has had more resources and administrative responsibilities than the Copyright Office has had.

The people, institutions, and activities that the intellectual property laws aim to influence are also crucial elements in the system. What activities these people do, as well as the socio-economic constraints under which they operate, determine whether a particular incentive or reward might achieve its intended policy goal. To be most effective, rewards and incentives must match the motivations, needs, and perceptions of the people they are designed to influence, and they must accurately reflect the kinds of activities that they pursue. If an incentive miscalculates the economics of creating, producing, and distributing an intellectual property, it will not motivate people to keep creating. In addition, because people creating different forms of intellectual property operate in different environments and have varying concerns, they may respond best to different kinds of inducements.

The outputs of the intellectual property system — such as the amount, quality, and diversity of works — reveal, in part, how well it is working. But a number of difficulties arise in any effort to evaluate a system’s performance. First, there are problems in selecting criteria that best measure effectiveness — that is, which results to note and which to ignore. Second, one cannot easily determine whether these criteria are being met. Finally, evaluating and assessing the accuracy and independence of the information needed to analyze the system is fraught with difficulty. At present, most of the information about such things as the extent of infringement, the potential economic damages of infringement, or the uses made of information-based products and services is available only from the stakeholders themselves.

Intellectual property system as a dynamic system: The impact of technology[]

The dynamic nature of the intellectual property system further complicates its analysis. It exists within society, and shifts in response to social, political, and economic circumstances. Thus, when society values change, so may the motives and attitudes of creators, inventors, and users of intellectual properties. Similarly, changes in economic conditions can alter relationships and positions between and among individuals and groups in the system, redistributing their shares of financial obligations and rewards.

Of the many factors that might affect the intellectual property system, technological change is likely to have the greatest impact. We can see this clearly in examining the effects of new technologies on the intellectual property system.

Electronic information technologies are fundamentally different from print technology in a number of ways. For example, broadcasting technologies (radio, television) make a work simultaneously available in the homes of so many users that arrangements for payments for the transfer of works to them is often prohibitively expensive. Other technological advances, such as photocopiers and audiotape and videotape machines, have so reduced the cost and decentralized the process of copying works that rights holders are no longer assured that they have control over the production and integrity of their intellectual property. As information technologies become computerized, the copy, transfer, and manipulation of works are becoming even more decentralized, speedy, and inexpensive.

At a basic level, the very definitions on which intellectual property rights are based take on new meanings, or become strained and even irrelevant, when applied to the context created by new technologies. They raise questions, for example, about what constitutes a "derivative work" when works are made available through intangible electronic waves or digital bits; about what constitutes a “work”; and about who owns the right to it when it is interactive, and when creators have combined their efforts to produce it.

Changing technology may influence each part of the system directly, or it may affect it indirectly by modifying the larger social environment in which the intellectual property system operates. New technologies, for example, may affect the boundaries of the system and the nature of the rights that it provides. In doing so, they may change the “rules of the game” by which it operates. Each new technology has brought questions about whether and where it should fit into the existing system. For example, Congress, borrowing from both copyright and patent law, adopted a new sui generis law, that established a separate niche for computer chip technology in the intellectual property system.

Technological developments may also change the mechanisms used to achieve intellectual property goals. Demonstrating "authorship" or "originality" as a condition for receiving property rights, while relatively straightforward in a print culture, is much more complicated in an age of electronic technology. A system that assumes copyright holders can enforce their own rights against infringement may operate unsuccessfully if decentralized reproduction and electronic transmission prevents identifying where and when infringements take place.

Because technology brings about new kinds of interactions between people, as well as new technological apparatus and new processes and techniques, it is also likely to affect the people, institutions, and activities that are part of the realm of the intellectual property system. New technologies not only affect what people do and how and why they do it, they also may restructure the socioeconomic opportunities available to them and the constraints under which they operate. And, in creating a multitude of new opportunities for application, use, and profit-making, issues may arise among the parties in the system the resolution of which, over the long run, may prompt changes in the goals, the boundaries, and the structure of the system itself.

Types of intellectual property rights[]

Intellectual property laws confer a bundle of exclusive rights in relation to the particular form or manner in which ideas or information are expressed or manifested, and not in relation to the ideas or concepts themselves. The term "intellectual property" denotes the specific legal rights which authors, inventors and other IP holders may hold and exercise, and not the intellectual work itself.

Intellectual property laws are designed to protect different forms of subject matter, although in some cases there is a degree of overlap. These include

Some lawyers also would include the right of publicity as an IP right as well.

United States[]

In the United States, the intellectual property system is a mixture of federal and state law. Laws concerning copyright, patent, trademark, and the protection of semiconductor chip mask works are under federal jurisdiction. Laws concerning trade secrets and the misappropriation of confidential business information, and certain limited kinds of unfair competition are under state jurisdiction. Trademarks may be federally registered and/or registered with an individual State; trademark rights may also accrue based on common law usage.

Intellectual property policy[]

Which policy goal a particular intellectual property system is designed to serve depends, in large measure, on the history, circumstances, and overriding needs of a society at the time the system is first set up. Developing countries, for example, which must import most cultural and scientific materials, have often been unwilling to extend protection to foreign works. This was true of the United States during its first 100 years, and is the case in many Third World countries today.

By providing individuals with exclusive rights to their inventive products and processes, the intellectual property laws allows authors and inventors to secure the economic benefits of their discoveries. Absent the a system of intellectual property, competitors might readily be able to appropriate the benefits of an innovator's research and development efforts. Aware of these potential "free riders," firms might devote few, if any resources towards innovation. Copyrights, patents and trade secrets solve this market failure problem by providing economic incentives for individuals and institutions to engage in research and development.[13]

Intellectual property rights may also facilitate market mechanisms by creating discrete, well-defined property interests that are readily subject to commercial exchanges.[14] Absent patent rights, for example, an inventor may have no tangible asset to sell or license. In addition, an inventor might otherwise be unable to police the conduct of a contracting party. Any technology or know-how that has been disclosed to a prospective buyer might be appropriated without compensation to the inventor. The availability of patent protection decreases the ability of contracting parties to engage in opportunistic behavior. By lowering such transaction costs, the patent system may make technology-based transactions more feasible.[15]

Some commentators have identified natural rights as an additional rationale for the intellectual property laws, and in particular copyright law. Under this view, individuals enjoy a natural right of property in the works they have created through their own labors.[16] Intellectual property law may also encourage marketplace behavior that is both ethical and efficient. As a matter of fairness and justice, this view holds, one individual should not be allowed to profit from another's labor and goodwill.[17] In economic terms, intellectual property laws may also stimulate socially desirable activities that create wealth, including innovation, and discourage costly acts that merely redistribute existing wealth, such as industrial espionage.[18]

The intellectual property system has long been subject to criticism, however. Some observers believe that intellectual property rights encourage industry concentration and create barriers to market entry.[19] Others have suggested that intellectual property rights can actually slow the pace of innovation in some circumstances, as competitors are discouraged from pursuing certain research pathways due to existing proprietary interests.[20]

When analyzing these contending views, it is important to note the lack of rigorous analytical methods available for determining the effect of the intellectual property rights upon the U.S. economy as a whole. The relationship between innovation and intellectual property rights remains poorly understood. Concerned observers simply do not know what market impacts would result from changing the patent term from its current 20-year period, for example.[21] Consequently, current economic and policy tools do not allow us to calibrate the intellectual property system precisely in order to produce an optimal level of investment in innovation.

Impact of new technologies on intellectual property policy[]

In designing new laws or policies on intellectual property, governments must contend with a number of uncertainties. These include:

  • The peculiar characteristics of information as a commodity: Information has special characteristics that distinguish it from other economic commodities and confound our understanding of how information markets work. Information is, for example, simultaneously an economic commodity and a societal resource. Since it is inherently leaky; it is hard to own or control. And although costly to produce, information is inexpensive to copy. Given these unique properties, economists are only beginning to understand the role of information in the market place. They have yet to determine, for example, how to measure value or identify when value is added to an information-based product or service — both needed to resolve issues of derivative use. Moreover, the few available data are fragmentary, non-quantitative, and often subjective.
  • The increased complexity of the intellectual property system: The new technologies are increasing the complexity of the intellectual property system, and so creating new uncertainties for policy makers. The number and variety of information providers, kinds of information-based products and services, ways of using information, and types of information users are proliferating, giving rise to new relationships among the parties involved. These changes are occurring in very unpredictable ways. Thus, in the future, policy makers will need to have more information about the intellectual property system.
  • The changing nature of the technology: The electronic age has just begun. Today, new technologies are multiplying the kinds of media that can be used to package, store, deliver, and use intellectual works. Over the long run, however, the increased convergence of information and communication technologies may reverse this trend. Packaged, stored, and delivered electronically, text, sound, and images will all be interchangeable. Our understanding of these changes, and of how they might affect the intellectual property system, is replete with uncertainty.

Policies involving the use and flow of information[]

Despite their varying goals, however, all intellectual property systems basically concern policies involving the use and flow of information. This is especially true of the copyright system, which was established specifically to deal with the social and economic changes brought about by what, historically, has proved one of the most “world shaking” information technologies — the printing press. Characterizing copyright's role in structuring information flow, Edward Plowman and L. Clark Hamilton wrote:

In a wider perspective, a number of basic dimensions of the nature and function of copyright may be distinguished. In an overall, cultural perspective, the stated purpose of copyright is to encourage intellectual creation by serving as the main means of recompensing the intellectual worker and to protect his moral rights. In an economic sense, copyright can be seen as a method for the regulation of trade and commerce.

Copyright thus serves as a mechanism by which the law brings the world of science, art, and culture into relationship with the world of commerce. In a social sense, copyright is an instrument for the cultural, scientific and technological organization of society. Copyright is thus used as a means to channel and control flows of information in society.[22]

The patent and trade secret systems also involve the flow of information. The patent system is designed primarily to foster scientific and technical information. Although patent law permits only the inventor or patent holder to make, use, or sell his invention, it also requires that the inventor disclose to the world the information necessary to enable others to reconstruct the invention after the statutory period of protection has elapsed. Patent law, therefore, seeks to encourage the distribution of information by making disclosure a condition of protection. The trade secret system, in contrast to the patent system, is designed to discourage the widespread flow of certain types of information. Secrecy is maintained in order to give the holder of the trade secret a competitive advantage in the marketplace.

Like the printing press, the new information technologies also affect society. They are changing the way people work and conduct their business; how they interact and relate to one another; the way they learn, create, and process information, and their needs and expectations. In fact, these new technologies are altering the way man views himself and his place in the world.[23]

Together, the development and widespread use of these new technologies have helped to usher in what some social observers characterize as a “post-industrial,” or “information” society. In this society, the creation, use, and communication of information plays a central role. Not only will the amount of information continue to increase, but people will also rely on it in more and in different circumstances. The changes brought on by the new technologies will generate new social, economic, and cultural opportunities and choices, which will bring with them the need for major policy decisions.

Because intellectual property policy, and especially copyright policy, serve as a policy tool that structures the use and flow of information, it is likely to play a major role in an information age. How the intellectual property system is structured will determine not only which individuals and groups benefit from the new opportunities afforded by the new technologies, but also in what ways and the extent to which, as a society, we might take advantage of them. Furthermore, if the enhanced value of information creates conflicts between economic, political, and cultural goals, the structure of the system will establish some of the rules that determine whether information will be treated as an economic commodity or a societal resource.

Given the relationship between intellectual property goals and social change, and the probable influence of the copyright system in an information age, the question arises of whether the policy goals of the intellectual property system, established in an agrarian society and when print technology dominated, are still appropriate for today.


  1. Rockwell Graphic Sys., Inc. v. DEV Indus., Inc., 925 F.2d 174, 180 (7th Cir. 1991) (full-text).
  2. Information Security: Cyber Threats and Vulnerabilities Place Federal Systems at Risk, at 1 n.1.
  3. Internet Pharmacies: Federal Agencies and States Face Challenges Combating Rogue Sites, Particularly Those Abroad, at 6 n.13.
  4. USPTO, Glossary (full-text).
  5. Report on Securing and Growing the Digital Economy, at 90.
  6. Finding a Balance: Computer Software, Intellectual Property, and the Challenge of Technological Change, at 12.
  7. See, e.g., Rebecca S. Eisenberg, “Patents and the Progress of Science: Exclusive Rights and Experimental Use,” 56 Univ. of Chi. L. Rev. 1017 (1989).
  8. See, e.g., Henry H. Perritt, Jr., “Property and Innovation in the Global Information Infrastructure,” 1996 Univ. of Chi. Legal Forum 261 (1996).
  9. See Frederic M. Scherer & David Ross, Industrial Market Structure and Economic Performance (3d ed. 1990).
  10. John Perry Barlow, “The Economy of Ideas,” Wired 2.03 (Mar. 1994).
  11. Bruce W. Bugbee, Genesis of American Patent and Copyright Law (1967).
  12. Id. at 12, 167.
  13. Simone Rose, "Patent 'Monopolyphobia': A Means of Extinguishing the Fountainhead?," 49 Case Western Reserve L. Rev. 509 (1999).
  14. Jonathan Eaton & Samuel J. Kortum, "Trade in Ideas: Patenting and Productivity in the OECD,"40 J. Int'l Economics 251 (1996).
  15. Robert P. Merges, "Intellectual Property and the Costs of Commercial Exchange: A Review Essay," 93 Mich. L. Rev. 1570 (1995).
  16. Wendy J. Gordon, "A Property Right in Self Expression: Equality and Individuality in the Natural Law of Intellectual Property," 102 Yale L.J. 1533 (1993).
  17. See Justin Hughes, "The Philosophy of Intellectual Property," 77 Georgetown L.J. 287 (1988).
  18. David D. Friedman, et al., "Some Economics of Trade Secret Law," 5 J. Econ. Perspectives 61 (1991).
  19. John R. Thomas, "Collusion and Collective Action in the Patent System: A Proposal for Patent Bounties," Univ. of Ill. L. Rev. 305 (2001).
  20. Mark A. Haynes, "Commentary: Black Holes of Innovation in the Software Arts," 14 Berkeley Tech. L.J. 567 (1999).
  21. See F. Scott Kieff, "Property Rights and Property Rules for Commercializing Inventions," 85 Minn. L. Rev. 697 (2001).
  22. Edward W. Plowman & L. Clark Hamilton, Copyright: Intellectual Property in the Information Age 25 (1980) (emphasis added).
  23. Sherri Turkel, The Second Self: Computers and the Human Spirit (1984).

See also[]

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