How long should welfare-optimal copyrights and patents be?

It is a common place that knowledge is power, but it should be added that this power resides in the possibility of excluding others from gaining it.

Restricting access to information used to be easy: copying a book required investments in terms of resources and labor, and it got cheaper per unit when many books were produced (economy of scales), making publishing companies as “knowledge brokers” a natural organizational unit. In the digital age, however, copies of a book can be created by anyone, at virtual no costs, in any number. The necessity of a physical medium for transportation had made many types of information rival before, but this is no longer the case in the digital age.

The absence of physical barriers to sharing information, however, does not exclude the possibility to create virtual barriers through laws that grant ownership to ideas, including the possibility to restrict their access or use for other people (making ideas a club good). I see two lines of argument for doing so

  1. The creator of an idea has a fundamental moral right that allows him restricting access for other people (categorical justification)
  2. By giving the creator a property right, we encourage the creation of new ideas (utilitarian justification)

I will argue that only the second case is valid – on that premise, however, economic analysis concludes that much shorter copyright* periods that currently installed would be optimal for societal welfare.

Why do I believe that there is no categorical moral justification for assigning property rights to the creator of an idea? First of all, ideas are not created out of nothing. Of course, there is often a certain amount of labor involved in creating an intellectual work, but is the fundamental idea of a novel really created when an author brings an idea to paper, or was it created during his life, and often, essentially through other people? I do think that recognition for intellectual work is justified, and I as I say later, I also think that incentives for creating ideas are in order, but I am unconvinced that there is a categorical moral obligation to grant the creator of an idea the right to exclude others from its benefits, may it be by reading a novel, or having access to an antiviral drug.

Of course, this argument shares the weakness of all utilitarian justifications – if someone categorically believes that the first person to think of a square “owns” the idea of a square and can forbid other people to talk about squares for all eternity, what can you say? However, the case against a natural property right on ideas is also supported by the fact that this is a relatively new invention, with a general copyright being introduced first in the beginning of the 18th century in England, and often much later in most other countries. Sophisticated societies have been creating ideas for millennia before without even conceiving the concept that they belong to their creator. Those societies have produced works of art and technology that are still widely read, viewed, played, or applied; considering population densities during the classic Greek and Roman ages, one may even think that the amount of ideas created per capita has flourished during that time. Famously, also Thomas Jefferson had his problems to understand the sense of copyright laws, as is being documented by an exchange of letters starting in the early 19th century (Source: see here):

It has been pretended by some, (and in England especially,) that inventors have a natural and exclusive right to their inventions, and not merely for their own lives, but inheritable to their heirs. But while it is a moot question whether the origin of any kind of property is derived from nature at all, it would be singular to admit a natural and even an hereditary right to inventors. […] If nature has made any one thing less susceptible than all others of exclusive property, it is the action of the thinking power called an idea, which an individual may exclusively possess as long as he keeps it to himself; but the moment it is divulged, it forces itself into the possession of every one, and the receiver cannot dispossess himself of it.

Jefferson goes on hinting towards the non-rivalry of ideas, and the fact that, once information has been created by a process that potentially involved some sort of intellectual achievement or artistic inspiration, we would like to distribute this information to the widest possible number, maximizing social welfare:

Its peculiar character, too, is that no one possesses the less, because every other possesses the whole of it. He who receives an idea from me, receives instruction himself without lessening mine; as he who lights his taper at mine, receives light without darkening me. That ideas should freely spread from one to another over the globe, for the moral and mutual instruction of man, and improvement of his condition, seems to have been peculiarly and benevolently designed by nature, when she made them, like fire, expansible over all space, without lessening their density in any point, and like the air in which we breathe, move, and have our physical being, incapable of confinement or exclusive appropriation. Inventions then cannot, in nature, be a subject of property.

However, he also recognizes the fact that creators of ideas may be encouraged in doing so if there are benefits connected with such creations that are widely used:

Society may give an exclusive right to the profits arising from them, as an encouragement to men to pursue ideas which may produce utility, but this may or may not be done, according to the will and convenience of the society, without claim or complaint from anybody. Accordingly, it is a fact, as far as I am informed, that England was, until we copied her, the only country on earth which ever, by a general law, gave a legal right to the exclusive use of an idea. In some other countries it is sometimes done, in a great case, and by a special and personal act, but, generally speaking, other nations have thought that these monopolies produce more embarrassment than advantage to society; and it may be observed that the nations which refuse monopolies of invention, are as fruitful as England in new and useful devices.

He then ends with a conclusion that I would still support:

Considering the exclusive right to invention as given not of natural right, but for the benefit of society, I know well the difficulty of drawing a line between the things which are worth to the public the embarrassment of an exclusive patent, and those which are not. As a member of the patent board for several years, while the law authorized a board to grant or refuse patents, I saw with what slow progress a system of general rules could be matured.

Thus, having rejected the idea of copyright being a natural right that is dictated by a moral obligation, we arrive at the problem of defining copyrights and patents as a part of a societal contract that is established for the greater good, recognizing two diametrically opposed consequences of copyright

  1. Copyright or patents decrease the access to existing ideas, decreasing social welfare
  2. Copyright or patents increase the creation of new ideas, increasing social welfare

The second point is clear, but I believe that the first point is often overlooked in the copyright debate. For example (I admit, this is a bit on the speculative side), historian Eckhard Höffner suggested that the virtual absence of copyright in the patchwork of German states was at least in part causal for the period of strong economic growth in towards during the later 19th century in this region (good summary here) as compared to England which has the most restrictive copyright laws.

So, how restrictive should we be when we try to balance the societal costs of intellectual property rights with their benefits? A quick scan of the literature reveals that economists have examined this problem in length, see for example “The optimal patent length and breath” by Richard Gilbert and Carl Shapiro, “On the Complex Economics of Patent Scope” by Robert P. Merges and Richard R. Nelson, the “The Anticommons in Biomedical Research” by Michael A. Heller and Rebecca S. Eisenberg, or “When Should We Use Intellectual Property Rights?” by Paul Romer. Without going into any detail here, the conclusion seems to be pretty much the same what common sense and a back of an envelope would tell you as well: it is hardly conceivable that the creators of ideas are more motivated to do so if the protection of their property right is extended from 40 to 70 years after their dead. In fact, there is probably little incentive beyond a 20-30 year period after creating a work (who is writing a book with the idea of raising income in 40 years?), and given that there are societal costs of extending the length of the property right, I would think that it is common sense that the optimal length of intellectual property rights should probably be somewhere around 10 to 30 years. The lengths of most patents is in this range (what should probably be discussed though is what can be patented, most of the software patents are simply ridiculous). Copyright, however, is granted way beyond this time in most countries, which I would argue is a societally inefficient subsidy to the copyright owners, which are, in most cases, large enterprises.

In conclusions, I think the economic/utilitarian argument is recklessly neglected in most of the discussion about copyrights. When we look at scientific works in particular, there is no moral case for copyrights at all, because authors hardly ever hold the copyrights themselves and they are also not getting any reward from signing them over to publishing companies (see also my previous posts on academic publishing). From the utilitarian viewpoint, however, the current length of copyrights is utterly inefficient. It is hardly conceivable that anything would change in the way academic publishers go about their business if we would restrict copyrights to, say, 15 years after publication – they sell journal packages to fixed prices anyways, and I don’t think any institution would cancel their subscription and rely on 15+ year old knowledge only. That we should switch to an open access system anyways is another point, but even if this would be done, it would also be desirable to remove copyrights on older works.

* I use patents and copyright synonymously – I understand the legal and historical difference, but I don’t see a fundamental one.

One thought on “How long should welfare-optimal copyrights and patents be?

  1. Pingback: The future of academic publishing – a new page* | theoretical ecology

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