Intellectual Liability in Context

Abstract

In Intellectual Liability, Daniel Crane reemphasizes that a “right to exclude” is only one part of a Hohfeldian package of rights, privileges, powers, or immunities that government can grant an intellectual property (IP) owner. Crane points out that an overly vigorous right to exclude, one backed up by a strong presumption of injunctive relief against continued infringement, could result in a suboptimal IP package even from the IP owner’s perspective. Drawing on examples of antitrust-influenced behavior of collective-rights organizations and standard-setting organizations, Crane argues that forgoing property-rule treatment in the Calabresi–Melamed sense can be more than compensated, socially and possibly even privately, by IP owners’ gains of privileges and powers to participate in one or more practices of “bundling,” as through a collective-rights organization or standard-setting organization, or through acquisition of large numbers of patents in the manner of a so-called “patent troll.” Crane’s bottom line thus expands on the prescription underlying Louis Kaplow’s “ratio test” of more than a quarter century ago: the optimal package to be granted IP owners should be developed by providing “those rights that grant just enough reward to induce... inventive or creative activity at the lowest social cost possible.”