The Paradox of IP
- Author(s): Tun-Jen Chiang
- Date Posted: 2016
- Law & Economics #: 16-13
- Availability: Full text (most recent) on SSRN
A central assumption in the theory of intellectual property is that no government actor calibrates IP rewards. That is, no judge calculates the social value of a patented invention or copyrighted work and then determines the corresponding amount of reward; the IP system is supposed to automatically match reward to contribution through market valuation. This assumption is important because, if judges had sufficient information to calculate the correct amount of reward, then it would be more efficient to give rewards in the form of taxpayer-funded prizes than in the form of monopoly rents.
Yet judges in fact routinely calibrate IP rewards based on judicial estimations of the value of a creator’s contribution. In copyright, decisions about the idea/expression dichotomy, fair use, and remedies routinely turn on explicit or implicit judgments about the social value of a work. In patents, the same thing happens with decisions surrounding claim construction, enablement, and remedies. The contradiction between these two points is what I call the “paradox of IP.”
This Essay does not offer a solution to this paradox. Instead, my argument is that the paradox underlies and explains the contrasting positions of opposing sides in many IP debates, ranging from claim construction to injunctive relief. At a deeper level, understanding the IP paradox gives theoretical substance to the longstanding debate between those who regard IP as a form of public regulation versus those who regard IP as a form of private property. From the perspective of the IP paradox, the property/regulation debate is about how much fine-tuned calibration the government can and should do. The property/regulation debate is intense and unsettled because it mirrors the conflict between the founding anti-calibration premises of the IP system and the empirical reality that our actual IP systems feature routine calibration by judges. Without resolving the underlying paradox, we cannot resolve the property/regulation debate.