Integrating Law and Economics
Chapter 7: Software, Search and Data
7.1 INTRODUCTION The domain of intellectual property (IP) is of primary importance in the areas of information and software, where consumers can easily access great amounts of data, crawl the web and deploy sophisticated programs to create, calculate and organize new information. Any of these undertakings implicates a wide range of human efforts related to great intellectual creativity and ‘sweat of the brow’, and everything between. Moreover, creative efforts face the considerable problem that the risk of unauthorized taking increases substantially with digital technology, and producer incentives can be gravely harmed if law is not duly protective. However, an overly restrictive regime for intellectual property may overly discourage secondary uses, promulgating a long-run loss in social wealth and intelligence that can be both considerable and nonquantifiable. This chapter will gauge the economic rationality of a number of recent IP cases that involve topics in software interoperability, copyright misuse, antitrust, data protection and search. We judge outcomes by four economic criteria: 1. The market may have the capacity to accommodate the use through licensing or market exchange, reducing the need for courts to take a hand. However, when licensing difficulties are expected, court interference may be necessary to secure rights and enable exchange. 2. The market may have reduced ability to provide for licensing, but may nonetheless compel actors to behave innovatively to ‘win the field’ from competing rivals. Forced exchange or cooperation may appropriate just rewards, and actually dampen the incentive to innovate and improve products. 3. Particularly with regard...
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