Research Handbooks in Intellectual Property series
Edited by Irene Calboli and Edward Lee
Chapter 1: Incentives, contracts, and intellectual property exhaustion
This chapter examines the claim that the exhaustion doctrine reduces incentives for the creation of new works and inventions. In order to make the strongest argument in favor of intellectual property exhaustion, I will be working solely within the incentives-based justification for intellectual property. Since the claims for evisceration of incentives are ost often made for copyright and patent, I will focus on copyright and patent exhaustion in the last section of this chapter. The positive conclusion is that intellectual property exhaustion is consistent with incentives-based justifications for intellectual property rights. For the purposes of this chapter, I define incentives-based rationale for intellectual property rights1 as the view that rights of exclusivity are needed in order to promote creativity and invention and their dissemination. This exclusivity allows the creator to sell rights of access or use to he work. With this ability to commercialize rights in a creative work, the creator can develop a market, and possibly an industry, within which the works can propagate under the control and management of the rights holder. Through these mechanisms, exclusivity creates incentives for the creative person (who harnesses the legally provided exclusivity to exploit the work) and the public (who can benefit from the work through market exchange).