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Speaking volumes
Reviewed by James D. Nguyen and Elke F. Suber
An argument for eliminating the IP protection system
Against Intellectual Monopoly
By Michele Boldrin and David K. Levine
Cambridge University Press
2008, 312 pages, $30.00
Available in eBook format
ISBN 9780521879286

Intellectual property rights have long been balanced against the desire to promote fair competition in the U.S. marketplace. Some IP owners have come under criticism for using their lawfully obtained patent, copyright, or trademark rights in ways that may inhibit free competition. But what if the United States' entire system of intellectual property created inherent monopoly power that stifled innovation and creation? What if the pure notion of IP rights in America should be eliminated?

These sound like radical ideas, but they are the argument advanced in the intriguing new book Against Intellectual Monopoly, written by two professors of economics from Washington University in St. Louis, Michele Boldrin and David K. Levine. As Boldrin and Levine introduce their theories, they question (this is a book about economic theory, not law) whether the U.S. system of granting IP rights ultimately yields societal benefits, and whether it should be discarded. Given that the authors prefer to call intellectual property rights the granting of an "intellectual monopoly" (including in their book title), their final conclusion is not surprising. It is, however, a bold statement: "intellectual property is an unnecessary evil." To support this thesis, Boldrin and Levine review a lengthy history of examples and research. They conclude that "[b]ecause there is no evidence that intellectual monopoly achieves the desire[d] purpose of increasing innovation and creation, it has no benefits." The authors call for the dismantling of the patent and copyright systems as they currently exist in the United States.

To IP owners, the authors' hypothesis is radical and likely borders on the blasphemous--as it indicts the entire U.S. system of granting patents, copyrights, and trademarks. But that doesn't mean the book isn't worth a read, especially for IP, antitrust, and business lawyers.

The authors do a thorough job of examining innovations from as far back as the fifteenth century and intellectual property laws in Europe dating to the seventeenth and eighteenth centuries. That results in a book rich with historical examples to support the authors' theories. For example, Boldrin and Levine argue that most innovations have historically taken place without the benefit of IP rights being granted. As support, they cite the proliferation of Shakespeare before the Statute of Anne was adopted in England in 1710 (giving authors an exclusive right of publication for 14 years), the nineteenth-century practice of English authors selling books in the United States (during a time in which U.S. law allowed free reprinting of foreign publications), and the robust world of open-source software development. Another interesting example noted by the authors is the blockbuster sales success of the 9/11 Commission Report, a government report that is not protected by copyright law and was available for free download on the Internet—but the published version still sold millions of copies.

Boldrin and Levine also aim their sights on taking the U.S. patent system to task. One prime example they give is the development of the steam engine in the late 1700s and early 1800s; analyzing the history of the steam engine's development, they argue that productive innovations in steam engine technology really happened in the competitive market after the first patents expired in 1810—rather than being the product of patent protection. In fact, the authors argue that IP laws have actually delayed rather than advanced "the development of the steam engine, the automobile, the airplane, and innumerable other useful things." This story, among others, serves as the basis for Boldrin and Levine's assertion that intellectual property—patents and copyright—are monopolies that hinder innovation. Also of note, the authors focus on several specific subject areas covered by patent and copyright law and do not address every conceivable idea that may be patented, or work that may be subject to copyright.

There is, of course, much more to the book, including challenges against Microsoft, Guglielmo Marconi's patent for radio technology, and the Recording Industry Association of America's current litigation battles against online music piracy.

Readers will find interesting the authors' historical examples of the tension between those seeking to enforce patent law (e.g., Edison, who provided equipment used to make films) and those who sought to avoid licensing fees (e.g., filmmakers). The authors also embrace the open-source software model as one that seeks to "relinquish their monopoly right." But because this is a book about economic theory at its heart, the authors spend little time discussing how open-source licenses operate within the bounds of copyright law, or about open-source software license provisions that reserve patent rights.

Certain topics merit their own chapters in Against Intellectual Monopoly. The pharmaceutical industry gets its own chapter for the authors to argue that "patent laws do not play a helpful role in pharmaceutical innovation." And one entire chapter is even titled "The Devil in Disney"—it's not an attack aimed at just the Walt Disney Co. but a metaphor to argue about the evils of copyright law especially as used by the entertainment industry. The authors take particular pleasure in disputing what economic sense there is in continually extending the term of copyright protection.

Boldrin and Levine's arguments will likely strike most IP owners as misguided. But they certainly are well-researched with historical and modern examples (albeit selective specimens meant to advance the authors' conclusion). This being an economics book, the authors also go to great detail to analyze the economic and market impact of their chosen examples of "intellectual monopoly."

For lawyer readers, the economic analysis is perhaps the most illuminating part of the book--providing financial and market context for the IP legal system that governs us. For example, in discussing the "Evils of Intellectual Property," Boldrin and Levine focus on four main reasons one should be wary of monopolies created by patent and copyright law: (1) the welfare triangle, (2) loss of efficiency, (3) the rent-seeking nature of monopoly, and (4) the transfer of wealth away from society. The authors weave together their economic theories and the means intellectual property owners use to protect and enforce their rights—comparing in one instance the use of digital rights management to price discrimination. For readers, whether you agree with the authors' theories or not, it brings a new perspective on the application and enforcement of patent and copyright law.

Despite the book's level of detail, Against Intellectual Monopoly does suffer from one weakness—which is a focus on patents and copyrights, leaving trademarks to get relatively short shrift. In fact, trademarks get a couple of paragraphs in one chapter and only a few other mentions here or there. Perhaps that is because it is more difficult to advocate that trademark rights inhibit innovation. (Indeed, the authors acknowledge that trademarks "serve to identify rather than to monopolize.") It would be interesting to see whether the authors could make an argument about trademarks being evil as equally detailed as their treatise against patents and copyrights. In addition, readers with a background in intellectual property also will be surprised to find very little discussion of the impact of independent development or intelligent observation in relation to copyright, or consideration of the use of trade secret law versus patent law to protect ideas. Despite these omissions, readers will walk away having learned a thing or two about economic theory.

The authors handle the challenge of applying economic theory to the realities of business and long-standing intellectual property law principles. While the authors may be against "intellectual monopoly," they do realize that a sudden elimination of intellectual property laws may be unrealistic. For anyone who has questioned the wisdom (or lack thereof) of retroactive copyright term extensions, the problem of orphan works, or the expansion of patents to areas like databases and software, Against Intellectual Monopoly will illuminate how economic theory impacts patent and copyright law.

So, Against Intellectual Monopoly remains worth a read for lawyers. It is unlikely to persuade major IP owners or the lawyers who represent them that the U.S. IP system is evil. But it is thought provoking, and just might make at least some IP owners and their attorneys question whether their work is for good . . . or for evil.

Nguyen is a partner in the Beverly Hills office of Wildman, Harrold, Allen & Dixon LLP. He can be reached at jnguyen@wildman.com. Suber is a senior attorney, Legal & Corporate Affairs, at Microsoft Corporation in Redmond, Washington. She can be reached at esuber@microsoft.com.

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