Reasserting the Property Rights Source of IP

by

Randolph J. May * and Seth L. Cooper **

Economic prosperity generated by and through intellectual property is dependent upon the existence of the same conceptual and legal framework applicable to property rights more generally. Of course, such framework may be adapted in certain appropriate ways to take into account the advances of the Information Age. But there is no justification for excluding intellectual property from fundamental principles of property law that government is charged with enforcing.

"The entire U.S. economy relies on some form of IP, because virtually every industry either produces or uses it." A March 2012 report released by the U.S. Commerce Department contains the foregoing remarkable statement. According to the Commerce Department report, "IP-intensive industries directly accounted for 27.1 million American jobs, or 18.8 percent of all employment in the economy, in 2010." And "IP-intensive industries accounted for about $5.06 trillion in value added, or 34.8 percent of U.S. gross domestic product (GDP), in 2010."

Despite the dramatic rise in intellectual property as a source of value and a key driver of economic progress, intellectual property rights have come under fire. Wrongly in our view, some academics and public policy analysts have called into question the institutional legitimacy of intellectual property.

Intellectual property and physical property share the same conceptual foundations. Thus, attacks on intellectual property are in large measure attacks on property itself, even though they may not be characterized as such or even recognized as such by those attacking IP. The foundational source of property rights and the status of intellectual property therefore need to be reasserted and defended.

The comprehensive understanding of property that informed the framing and ratifying of the U.S. Constitution includes both intellectual and physical property. As James Madison, often described as "the Father of the Constitution," once explained, individuals by nature have rights to "their persons," "their faculties," "their actual possessions," and "the labor that acquires their daily subsistence." Intellectual property and physical property share this common grounding in natural right.

Similarly, both intellectual property and physical property play a critical institutional role in defining and limiting the powers of government while, concomitantly, securing individual freedom and promoting individual initiative. Article I, Section 8 of the U.S. Constitution delegates to the federal government a responsibility for securing the exclusive rights of authors and inventors for limited times. It also confers on government a role in adjudicating disputes between private parties and in clarifying the boundaries of ownership and use of property, including intellectual property.

A property rights approach to copyrights and patents necessarily must reflect, and be true to, government's primary purpose - protecting property. Regardless of how intellectual property and tangible property differ, the rights claims of intellectual property are on par with those of physical property. Any adjustments to intellectual property rules must ultimately respect the right of an individual to the fruits of his or her own labors. This means rejecting any notion that government can denigrate the idea of property in intangibles or reduce intellectual property to second-class status.

** Seth L. Cooper is a Research Fellow of the Free State Foundation.