When are IP Rights Necessary? Evidence from Innovation in IP’s Negative Space

The law and economics of intellectual property has long rested on a foundational, if implicit, premise: that IP law is best understood by studying how legal rules operate in actual markets for creative work. The assumption that we best understand a body of legal rules by looking at the fields they directly address is eminently reasonable and seemingly so obvious that, until recently, it was almost never questioned. Yet this way of analyzing IP is incomplete. IP rules are purposive; the core goal and rationale of IP is to incentivize creative and innovative production. Looking only at the creative fields that IP law addresses leaves open, or at least incomplete, a host of important and fascinating questions. Can innovation flourish in the absence of IP protection? Can market incentives, psychological factors, social norms, first-mover advantages, or any number of other causes, including path-dependency or even happenstance, serve as whole or partial substitutes for IP rights? And is it possible that, under some conditions and in some industries, IP protection is counterproductive — that is, it inhibits more innovation than it promotes? To begin to answer these questions, we look here at the emerging literature that has grown around what we have previously called the “negative space” of IP: innovative fields that, for historical, doctrinal, or other reasons, are not addressed by IP law, such as fashion, cuisine, tattoo artistry, professional magic, financial services, and sports.

Kal Raustiala and Christopher Jon Sprigman

Research Handbook on the Economics of Intellectual Property Law

September 2016

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