Monday, 6 July 2020

Intellectual property and consumer welfare

Intellectual property laws exist as an exception to the basic principle that monopolies are bad. Well, that's how they found their way into English and UK law, starting with a carve-out from the Statute of Monopolies (1624) that allowed patents to be granted ‘for the term of 14 years or under hereafter to be made of the sole working or making of any manner of new manufactures within this Realm to the true and first inventor’. That being the case, shouldn't intellectual property laws be justified exclusively in competition law terms?

Competition or antitrust laws continually grapple with justifications for restrictions on competition, and therefore are a logical place to look for justifications for intellectual property - legally-granted monopolies of greater (patents) or lesser (copyright) potency. The problem is that competition law is a set of legal rules that embodies economic principles, and the two mix like oil and water: legal rules are ideally certain, while economic principles vary according to who is expounding them.

Recently, by which I mean for the last several decades, competition law has sought to maximise consumer welfare, as this article* explains: it explains this in order to criticise alternative populist approaches to competition law, but I'm not planning to get into that here, I'll save it for another day. The point is that when seeking justifications for intellectual property laws, and when considering the policy that should inform changes in the law (and the application and enfordement of the existing law), should the sole guiding principle be consumer welfare?

Framing the law protecting inventions and creations as part of the law of property muddies the waters. If copyright law were framed as a right to prevent unfair competition arising from copying of one's own creations (short-circuiting the creative process), or patent law as a right to prevent unfair competition by working a protected invention, there might be no such conceptual problem: but by founding these important rights in property theory we have lost sight of the consumer welfare justification. Perhaps we are in the realm of natural rights and John Locke rather than that of Jeremy Bentham and Utilitarianism (which seems to my mind very closely related to the consumer welfare model).

*Dorsey, Elyse and Manne, Geoffrey and Rybnicek, Jan and Stout, Kristian and Wright, Joshua D., Consumer Welfare & the Rule of Law: The Case Against the New Populist Antitrust Movement (May 1, 2020). Pepperdine Law Review, Vol. 47, No. 861, 2020, Available at SSRN:

No comments:


blogger templates | Make Money Online