The Several Lives of Mickey Mouse: The Expanding Boundaries of Intellectual Property Law

Abstract:     
This article develops a theory of legal evolution that links private property right allocations in intellectual property goods to changes in economic values arising from developing technology. Rather than simply resulting from interest group pressure and rent-seeking, the emergence of intellectual property rights is best described as a response to increasing economic value and diminishing transaction costs, resulting from synergies between new technologies and intellectual content. In this process of legal change in intellectual property, the inherent uncertainty as to the usefulness of technology in protecting content leads to increased efforts of legislative and judicial capture by both content providers and consumers. The resulting social mechanism predicts a back and forth of the legal allocation of use rights between producers and users. As a matter of allocative efficiency, however, there exists considerable friction between the "multi-component" or complementary nature of works and the continued extension of property right-protection to increasingly smaller units of intellectual and scientific creation. As an economic model of fragmentation demonstrates, the uncoordinated exercise by right holders of their exclusion rights might lead to sub-optimal levels of production. In light of this, doctrines of fair use, blocking patents, equivalent patents, and generic trademarks serve as important points of moderation of the deadweight losses that might ensue when dealing with the uncoordinated exercise of control rights over complementary property rights.

Keywords: intellectual property rights, legal evolution, complementary goods

JEL Classifications: K11, K41

Accepted Paper Series