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Intellectual property rights in a knowledge-based economy

Author

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  • Cowan, Robin
  • Harison, Elad

    (MERIT)

Abstract

Intellectual property rights (IPR) have been created as economic mechanisms to facilitate ongoing innovation by granting inventors a temporary monopoly in return for disclosure of technical know-how. Since the beginning of 1980s, IPR have come under scrutiny as new technological paradigms appeared with the emergence of knowledge-based industries. Knowledge-based products are intangible, non-excludable and non-rivalrous goods. Consequently, it is difficult for their creators to control their dissemination and use. In particular, many information goods are based on network externalities and on the creation of market standards. At the same time, information technologies are generic in the sense of being useful in many places in the economy. Hence, policy makers often define current IPR regimes in the context of new technologies as both over- and under-protective. They are over-protective in the sense that they prevent the dissemination of information which has a very high social value; they are under-protective in the sense that they do not provide strong control over the appropriation of rents from their invention and thus may not provide strong incentives to innovate. During the 1980s, attempts to assess the role of IPR in the process of technological learning have found that even though firms in high-tech sectors do use patents as part of their strategy for intellectual property protection, the reliance of these sectors on patents as an information source for innovation is lower than in traditional industries. Intellectual property rights are based mainly on patents for technical inventions and on copyrights for artistic works. Patents are granted only if inventions display minimal levels of utility, novelty and non-obviousness of technical know-how. By contrast, copyrights protect only final works and their derivatives, but guarantee protection for longer periods, according to the Berne Convention. Licensing is a legal aid that allows the use of patented technology by other firms, in return for royalty fees paid to the inventor. Licensing can be contracted on an exclusive or non-exclusive basis, but in most countries patented knowledge can be exclusively held by its inventors, as legal provisions for compulsory licensing of technologies do not exist. The fair use doctrine aims to prevent formation of perfect monopolies over technological fields and copyrighted artefacts as a result of IPR application. Hence, the use of patented and copyrighted works is permissible in academic research, education and the development of technologies that are complimentary to core technologies. Trade secrecy is meant to prevent inadvertent technology transfer to rival firms and is based on contracts between companies and employees. However, as trade secrets prohibit transfer of knowledge within industries, regulators have attempted to foster disclosure of technical know-how by institutional means of patents, copyrights and sui-generis laws. And indeed, following the provisions formed by IPR regulation, firms have shifted from methods of trade secrecy towards patenting strategies to achieve improved protection of intellectual property, as well as means to acquire competitive advantages in the market by monopolization of technological advances.

Suggested Citation

  • Cowan, Robin & Harison, Elad, 2001. "Intellectual property rights in a knowledge-based economy," Research Memorandum 026, Maastricht University, Maastricht Economic Research Institute on Innovation and Technology (MERIT).
  • Handle: RePEc:unm:umamer:2001026
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    References listed on IDEAS

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    1. Kenneth Arrow, 1962. "Economic Welfare and the Allocation of Resources for Invention," NBER Chapters, in: The Rate and Direction of Inventive Activity: Economic and Social Factors, pages 609-626, National Bureau of Economic Research, Inc.
    2. Giovanni Dosi, 2000. "Sources, Procedures, and Microeconomic Effects of Innovation," Chapters, in: Innovation, Organization and Economic Dynamics, chapter 2, pages 63-114, Edward Elgar Publishing.
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    Cited by:

    1. Ulf Petrusson & Henrik Rosén & Tobias Thornblad, 2010. "Global Technology Markets," Review of Market Integration, India Development Foundation, vol. 2(2-3), pages 333-392, August.
    2. Maria Isabella Leone & Keld Laursen, 2011. "Patent Exploitation Strategies and Value Creation," Chapters, in: Federico Munari & Raffaele Oriani (ed.), The Economic Valuation of Patents, chapter 4, Edward Elgar Publishing.

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