SSRN Abstract: Lemley's "Property, Intellectual Property, and Free Riding"

By Robert Link, published at 2 August 2009 - 12:18pm, last updated 8 years 15 weeks ago.

From the text: "...copying information actually multiplies the available resources, not only by making a new physical copy but by spreading the idea and therefore permitting others to use and enjoy it. The result is that rather than a tragedy, an information commons is a “comedy” in which everyone benefits. The notion that information will be depleted by overuse simply ignores basic economics...It is not that free riding won’t occur with information goods; to the contrary, it is ubiquitous. Everyone can use E=mc2, the words of Shakespeare, or the idea of the tragedy of the commons without compensating their creators."" Rather, because the use of those ideas or words does no harm to their creator, it does not create the sort of negative externality with which property theory tells us we should be concerned."

The obvious Disney or Microsoft rejoinder is that, despite such academic speculations, in the current system, those holding IP rights have financial interests which are injured by free riders to the extent that each free rider, minimally, represents a possible financial transaction lost, and that juxtaposing E=mc2 with the financial interests of a best selling playwright is perhaps not an apples-to-apples comparison.

Also from the text: "Nonetheless, intellectual property is a form of government subsidy, designed to influence supply in the market away from the competitive norm..."

This is an appealing perspective, although there may be value in deconstructing just what is meant by "the competitive norm", which seems to presuppose some of the "IP as analogous to real property" perspective against which Lemley argues.

Lemley, Mark A.,Property, Intellectual Property, and Free Riding. Texas Law Review, Vol. 83, p. 1031, 2005. Available at SSRN: or DOI: 10.2139/ssrn.582602

Courts and scholars have increasingly assumed that intellectual property is a form of property, and have applied the economic insights of Harold Demsetz and other property theorists to condemn the use of intellectual property by others as “free riding.” In this article, I argue that this represents a fundamental misapplication of the economic theory of property. The economics of property is concerned with internalizing negative externalities – harms that one person’s use of land does to another’s interest to it, as in the familiar tragedy of the commons. But the externalities in intellectual property are positive, not negative, and property theory offers little or no justification for internalizing positive externalities. Indeed, doing so is at odds with the logic and functioning of the market. From this core insight, I proceed to explain why free riding is desirable in intellectual property cases except in limited circumstances where curbing it is necessary to encourage creativity. I explain why economic theory demonstrates that too much protection is just as bad as not enough protection, and therefore why intellectual property law must search for balance, not free riders. Finally, I consider whether we would be better served by another metaphor than the misused notion of intellectual property as a form of tangible property.