Copyrights and economic efficiency

As anyone who had me for a class last semester knows, I've recently developed a renewed interest in questions of intellectual property, patents, and copyrights.  This topic is at the forefront of the news in the tech world this week as the fallout from the Apple vs. Samsung case is beginning to sort itself out and Google is preparing for their inevitable court case. 

There are some really strong economic arguments both in favor and against strong intellectual property protection. The basic case is as follows:  Those in favor of strict protection and copyrights insist they are needed to encourage innovation.  Imagine that you spent years of your life and all your money to develop the next great invention and the day you finally finished it your neighbor took one look at it, went in her garage, and came back out with an exact copy of your invention 15 minutes later with $10 worth of parts.  You'd be bankrupt and unlikely to ever try to invent something again.  So, it seems plausible that we need to have some kind of system in place to allow people to recoup their investments and encourage more innovation in the future, right?

On the other hand, is it really benefiting society if we let you have a total monopoly over your life-changing invention so that only a few uber-rich people can afford it?  Suppose you invented a cancer cure and wanted to charge $1,000,000,000 per dose - you would certainly have an incentive to develop it, but does it matter if none of us can afford to buy it?  And what if someone else independently invents something using many of the same ingredients but is forbidden from selling it because it is too similar to your product?  Is that fair or efficient? 

Basically, the argument for intellectual property rights, patents, and copyrights comes down to striking the right balance between incentives for creation and dissemination of ideas/innovations.  The degree to which we want to slide in either direction generally depends on the type of innovation.  Something like a cancer cure we might really want to ensure is available for everyone, whereas something like an iPhone or a Harry Potter book we might be more willing to err on the side of rewarding the inventor/author.

I showed a great series of four short web documentaries on this topic in class last semester that I encourage you to check out called "Everything is a Remix"which can be found for free here: http://www.everythingisaremix.info/watch-the-series/
Part 1 is imbedded below:


Everything is a Remix Part 1 from Kirby Ferguson on Vimeo.

I'm also in the midst of reading a book called "Remix" by Lawrence Lessig that is really interesting so far, and read a review today for a book called "The Knockoff Economy" that is coming next month and I'll be pre-ordering today.  I'll give you a review of that in an upcoming post hopefully. 

The Freakonomics blog also had a story on the trademarking of different plant strains and brands that I suspect some of my students may find interesting.