Welcome to part two of Intellectual Property Law, I'm Polk Wagner and I'm still your instructor. So for part two we're going to do three basic things. We're going to talk about why we have IP rights, some of the philosophy underlying IP rights, the reasons for them. The bulk of the lecture for this one is going to be about the basic economics of intellectual property rights. Once we've decided that we want IP rights, how do we get them? How do we get what we desire, and how do they work? And then finally we're going to talk about the central debate in intellectual property law, which, to give you a bit of a preview, is really all about balance. IP rights, as we'll talk throughout this lecture, is really about striking the right balance between the amount of protection we're offering versus what society gets back from that protection. Those two things have to be balanced in a way that benefits overall society, or the system doesn't work right. So we'll talk about that towards the end of the lecture. So let's dive right in, to why we should have intellectual property rights. And we need to start here, I think, with a little bit of philosophy. And we're not going to do too much here, but just to give you a sense of the underlying theories that animate intellectual property law. So there are really sort of three separate ways that IP rights have been justified from a philosophical perspective over the generations. The first is what might be described as a natural rights theory. This is the John Lockean Theory, some of you who've taken philosophy courses or have had some exposure to philosophy might know this. So the Lockean theory is one that would locate intellectual property rights as part of a person's natural rights, because they have used their intellectual labor, they've worked on something, they've created something. They have then a natural right, to use the Lockean language, in the returns on their labor, right? Their labor makes it their natural right. So that's one possible reason for justifying intellectual property rights. A second reason, a more modern approach, has been primarily espoused by Professor Peggy Radin, who's actually currently a law professor at Michigan. This is the personhood theory. It's a little bit similar to the Lockean theory, and the idea here is that the justification for IP rights is that you have created this, you as a person, and that part of your human flourishing, part of you being a real person, a complete person, is to have the ability to control the fruits of intellectual your product. So your intellectual work product, your IP rights, then, are essentially part of your personhood and therefore we justify giving you, the creator of those assets, the rights to control them. The third approach, and the one that is overwhelmingly dominant especially in the United States, is the utilitarian theory. Many utilitarian theories exist, but JS Mill is probably the most widely known one. And the idea here is that we are giving intellectual property rights as a means to an end. It's not that we think that either you will have a natural right to it or it's part of your personhood that we give intellectual property rights under this theory, because intellectual property rights give to the society as a whole something that we want. It creates an incentive, right? It's all about incentives. The utilitarian theory is really what animates intellectual property rights, at least in the US. You see some slightly different ways of justifying it, more natural rights-oriented or personhood-oriented, in other countries, particular in France, but in the US we're really all about utilitarianism. So what is that really mean? So in the utilitarian theory is really embedded in the US Constitution. So Article 1, Section 8, Clause 8 establishes the power of the federal government to create intellectual property rights, and it says exactly there why it's doing so. To promote the progress of science and the useful arts, by securing for limited times to authors and inventors, the exclusive right for their respective writings and discoveries. So this, in a nutshell, is the utilitarian theory. We are promoting the progress of science and useful arts, how we're doing so? We're doing so by securing to the authors and inventors the exclusive rights to their writings and discoveries, right? This is the basic way that we think utilitarian approach to intellectual property law works. So once you get to sort of this idea that IP is utilitarian, you need to understand then what we're trying to do, right? So if it's utilitarian, it must be what we call functionalist, there must be a means to an end. The reason for having IP rights is not just for having them, it's because we want something, right? So what are the ends here? And we need to keep our eye on exactly what the ends are, as we're evaluating IP law and policy. So in the copyright context, the ends are creative works of expression. We want more music, we want more art, and we want people to spend more time writing novels. Those sorts of things are what we want more of, and that's what we're trying to get. That's the functionalist reason for having intellectual property rights, and the utilitarian approach gives incentives for those things to operate. In patent law, we want more inventions and innovation. We want people to be spending money, time, effort in inventing things, new inventions, new technologies, new processes, new devices, that it's going to make the world better. That's what we want as a society. We're going to try to stimulate that through this utilitarian approach, by giving incentives to do so. Trademarks I'm going to set aside for just a minute, because trademarks have a little bit of a different underlying approach. It's a little more complicated than copyright and patents, and we'll talk about that in just a minute. So the ends of copyrights and patents are basically more stuff, we want more of something, right? And we're going to try and get there through giving out intellectual property rights. So the grant of rights, then, to exclude other people from the scope of the right, is the mechanism, and I'm going to talk more about this later on in the lecture. But the mechanism is really to give a property right, to give some right to the person who has created the intellectual asset, and allow them, then, the ability to control its use. Which we think is going to create the incentives to make that property right in the first place, or make that intangible asset in the first place. So the other thing to understand, and this is really, really important, is that IP rights are an interference with the free market, right? They are not themselves the free market. If we had a free market, you wouldn't have intellectual property rights. They try to support the market, so the utilitarian theory suggests that we are using market incentives, right, market-based economic incentives, to get people to do the things that we want them to do. In copyright and patent, it's more stuff. But it is an interference in the free market, so we must justify them, and we have to understand why we're doing this and how we're doing this. And this, of course, is not a foregone conclusion. Is it really true that without the IP rights that we offer, the creative works wouldn't happen? You might say in many cases they would be, so people who are very interested in creating music, they may make music anyway. People who are naturally born, or who are interested in inventing things, they may do so anyway. Won't we have a lot of the kinds of things that we want, even absent intellectual property rights? Do we really need these intellectual property rights? There are already very powerful incentives to innovate. If you work, for example for a university, like I do, you want to innovate notwithstanding there's not a lot of economic return to the innovation. But instead, you do it because it's what you do, it's in your blood, this is the way that you work. Many musicians or visual artists will say the same thing. So the question then, if you're going to intervene in a marketplace, is what economists would ask is, where's the market failure? If these things would happen anyway, if we would have enough creative works of expression, if we would have enough innovations and invention, what's the point? Why should we have this system in intellectual property rights? And so that´s where we need to be asking our questions and thinking about, as we go through the analysis.