So welcome to Part 3 of introduction to intellectual property law. In this part we're going to talk about the alternatives that exist to the traditional intellectual property law system that you’re going to learn throughout the course. And what we’re going to talk about specifically is we’re going to do a bit of a review about the mechanisms are of electoral property law. How it works, what it's intended to accomplished, what’s steps takes to accomplish that? And then we’re going to walk through some of the three major components of electro property law. Patent, copyright and trademark and talk about the alternatives to them. And whether those alternatives are viable, whether we actually use some of them which we do. And how they related to the intellectual property law that we know with more familiarity. So diving right in as sort of a review here for the mechanisms of intellectual property law. You'll recall that IP rights are based on incentives, the idea here is that we're offering these rights because we're trying to stimulate certain kinds of behavior that we want. In the patent context we're talking about things like invention, new innovations which can range of course from computer software, pharmaceutical drugs, other types of methods. In the copyright context, we typically think of artistic and creative works, books, movies, music, TV shows, those sorts of things are the classic, copyrightable area. Trademarks, of course, incentivizes slightly different things by protecting marks and the goodwill associated with marks, what we're doing is incentivizing companies to invest in their products. To invest in the quality of their products and thereby reduce consumer search costs and create a higher quality marketplace, that has more choice for consumers along the quality that I mentioned. All of things are things that we want, and all of these things are things that we believe that we won't get enough of unless we offer incentives. And so that's where the IP law comes in, is in creating these incentives. And these intangible assets like ideas, artistic creations, good will or what we call public goods. And the idea is unless we have an intervention, some sort of government system, some sort of way of encouraging more of these to be created, we won't get enough of them. So back to what you may recall the lighthouse idea, the idea is that lighthouses would be under produced, under supplied, there wouldn't be enough of them. For optimum efficiency, unless the government built the right houses using tax money, there are several other things that are public goods. Infrastructure is usually considered a public good, and we think that intangible assets like IP, are public goods as well and it therefore justifies a set of laws that creates incentives to create these public goods. And so again the idea of IP is strictly utilitarian, at least in the United States, and that is we want more of these things, so we are creating the law to encourage people to do these things. Copyright is of course is creative works, patents is inventions and innovations, trademarks, we're talking about consumer search cause and creation of higher quality goods. And we overcome this problem, this economic problem of public goods, is to grant what we call property rights. Property rights are rights that basically allow the owner, the holder of the property right, a lot of flexibility in terms of what they want to do with those rights. They can license them to other people, they can even sell them to other people, they can divide them up among people. You can assign your property rights to your employer, the employer can then sell that somebody else. Property rights are enormously flexible system that allows them ultimately to seek what we call above-market returns by raising the prices. So if I have a patent on a widget, I can raise prices on widgets because no one else can build exactly the same widget as I can create. If I have a copyright on my movie, then I can charge a little more than a fully competitive marketplace would allow me to do so, because nobody else can show my movie. And so, that's the idea, this is how we overcome the public goods problem. By granting these property rights and hopefully creating incentives to have these above market returns and thereby have people into the IP system. Now the problem is as you'll remember from Part 1 of the course is that these rights and these higher prices have costs. The costs are ones of dead weight loss, they can cause distortions in the marketplace, they can cause what we call raising people who can try and get these right instead of doing more socially beneficial things. And that means that when we talk about intellectual property law policy, what we're really talking about all the time as a balance. We want to give enough rights to create the incentives that we consider to be important and needed in order to overcome the public goods problem. On the other hand, we don't want to give too many rights because those are going to have high cost and the high cost could potentially at some point overwhelm any of the benefits that we're getting from the incentive effects. And so, the weak rights or rights that are too difficult to obtain are going to be inefficient, not enough people are going to enter the IP system, not enough invention, not enough artistic good creation. Rights that are too strong or too easy to obtain are also going to be inefficient, they're going to cause too many people to create easy inventions, that would otherwise be made without the right. Or too many people to try to make creative works that aren't that important or that meaningful and thereby clog the marketplace for people who have made more important contributions. And so as always we're sort of thinking about this in terms of the curve, which is where on this curve are we? And what we want is to be as high on the yellow curve as we can to have an optimum strength of rights, where we get enough rights to encourage the incentives that we want. But not so many rights that the cost begin to outweigh the benefits to society, and so we always want to be in that central zone. And that is a hard thing to do, because in IP we basically don't know whether or not we have the balance right. There are often seen a lot of theories and lots of people argue about that and there are studies are done by economist, lawyers, academics. Who try to figure out whether we have about the right balance of rights versus social benefit in each area of international property law, but the reality is we don´t really know it very well. So the question then becomes, is this really the only way? Is this mechanism that we have chosen for international property law, these property rights to create incentives to overcome the public goods problem. Is that really the only way we can do this? Or might we be able to stimulate the behavior that we want, without incurring all of the cost and complexity of the IP system, without having all of the potential downsides. And so therefore the question, one that we're going to explore throughout this part, is might there be more efficient alternatives to IP and if so, what are they? Can we generate the incentives we need at lower social costs?