In Milan, Professor Pascal Salin of the Universite Paris Dauphine delivered a challenging talk going to the fundamentals of intellectual property--asking, in effect, how can one in principle support IP at all? For it conflicts with physical property rights; it raises the troubling question of rights in ideas. He suggested in closing that protection for innovation could be established by contract, by being first-to-market, or other practices. Other IP scholars on the free-market side have from time to time raised similar fundamental arguments with the whole idea of IP.

It is possible, of course, to endlessly philosophize about this subject, and, believe me, I would do so if given the slightest encouragement... One way to slice this Gordian knot is by thinking about practicalities. What would it mean, in practice, for contract to substitute for intellectual property?

The usual quick rejoinder is that this is not possible; contracts are not enforceable against third parties. So if one wanted protection to appropriate investments in, say, a medicine, it would not be sufficient to bind buyers not to mimic the chemical formula, one would have to somehow bind those to whom the buyer might pass the substance along to as well. The counterargument is that one could draft the contract in such a way that the buyer was prohibited from passing it along. So of course then the contract would also have to cover a wide variety of possible situations in which third parties might possibly acquire the innovation in question.

Essentially what this would mean in practice (absent a complete revolution in business models in a wholly unimaginable direction) is that books, art objects, photographs, software, and so on could only be acquired accompanied by a lengthy standardized contract, with the legal system troubled by all sorts of questions about who this contract might be enforceable against, and equally troubling questions about remedies. The scope of the protection granted by the contract would also be constantly at issue. If the idea of rights in ideas is a troubling and vague one, it is surely just as troublesome in interpreting a contract as it would be for a statute. (This is an insight for which Professor Richard Epstein should be given credit, as I happened across it in an article of his).

In short, it is not clear that a world in which contract were relied upon as a substitute for IP to protect incentives to innovate would be one that is easier for consumers to navigate or more free of troubling conceptual questions about the proper scope of protection for ideas. In addition, the protections that the first amendment gives for free speech in theory would not come into play at all, for with a contract there is no state action. Finally, there would need to be a set of default rules for situations that the contracting parties did not address.

So where does this leave us? The argument that IP should be only a matter of contract is an appealing one from a purist standpoint. But the potential problems with contractual rights in IP seem to be as great or greater than the problems with statutory rights in IP.

At this fundamental level of the debate, try this thought on for size: Statutory IP rights are the legal system's effort to address the problems with contractual IP rights. Indeed, one might think of statutory IP simply as a set of default rules laid down to provide guidance as a substitute for the cumbersome practice of attaching hundred-page contracts to every book, song, pill, machine, and so on that is sold. If one doesn't like the standard set of rights provided by IP, one may always contract out of them. IP can be analogized to physical property, but it can also be analogized to the Uniform Commercial Code or any other set of default rules for contract. The main difference is of course that IP is enforceable against third parties without going through the gyrations that one would have to go through to contrive such protection by contract.

So my partial answer to the excellent questions raised by Professor Salin: In a sense, intellectual property law is contract law already... just as in another sense it functions like property law. If this is right, we are staying closer to purist ideas about the legal system than we think we are.

posted by Solveig Singleton @ 1:05 PM | Digital Europe, General

Link to this Entry | Printer-Friendly | Email a Comment | Post a Comment(0)