Risk Aversion and Rights Accretion in Intellectual Property Law

Abstract:     
Intellectual property's road to hell is paved with good intentions. Because liability is difficult to predict and the consequences of infringement are dire, risk-averse intellectual property users often seek a license when none is needed. Yet because the existence (vel non) of licensing markets plays a key role in determining the breadth of rights, these seemingly sensible licensing decisions eventually feed back into doctrine, as the licensing itself becomes proof that the entitlement covers the use. Over time, then, public privilege recedes and rights expand, moving intellectual property's ubiquitous gray areas into what used to be virgin territory -- where risk aversion again creates licensing markets, which causes further accretion of entitlements, which in turn pushes the gray areas even farther afield, and so on. This "doctrinal feedback" is not a result of changes in the positive law but is instead rooted in longstanding, widely accepted doctrine and prudent behavior on the part of everyone involved. And because feedback is so ingrained in established law and practice, its various cures tend to create more problems than they solve. In the end, however, subtle changes in doctrine's use of licensing information provide a normatively neutral solution.

Keywords: copyright, trademark, patent, intellectual property, market, licensing, licenses, risk, risk aversion, persuasion knowledge, fair use, confusion, nonobviousness, sponsorship, feedback, doctrinal, accretion

JEL Classifications: D81, K41, K42, K39

Accepted Paper Series