Intellectual Property Bargain in U.S. Law

Overview
Intellectual property law recognizes that for certain goods, market forces will not necessarily produce the most desirable outcomes from the perspective of society as a whole. These goodsa will tend to be produced in insufficient quantity or variety because producers are unable to fully realize the gains from investments in creating them. In granting a limited monopoly via copyright or patent, government attempts to compensate for distortions arising from this market imperfection.

The linkage between intellectual property rights and economic benefits to society as a whole has traditionally followed the logic that: 1) intellectual property rights increase innovators’ ability to appropriate returns from their intellectual labors; 2) the resulting potential for increased private gains to innovators induces additional innovation; 3) because of increased innovation, additional benefits accrue to society as a whole. The U.S. system of patents and copyrights is intended to strike a balance between holders of intellectual property rights and the public at large. This balance involves benefits and costs on both sides: legal protection for intellectual property imposes costs on a society, as well as benefits. These costs and benefits can be monetary (e.g., increased or decreased costs or royalties), or less tangible (e.g., social consequences of stimulated or stifled technological advances). The specifics of how this balance is maintained--the exact form, scope, and duration of intellectual property rights—may evolve in response to changes in technology, markets, or social values.