Intellectual Property Law

Intellectual Property

Article Snapshot


Peter Menell and Suzanne Scotchmer


Harvard Environmental Law Review, Forthcoming Case Legal Studies Research Paper No. 2010-15


This chapter surveys research on the economics of intellectual property.

Policy Relevance

Understanding the real economic effect of intellectual property laws involves the resolution of many complex issues.

Main Points

  • The main forms of intellectual property protection that promote innovation are patents, trade secret law, and copyright. These differ quite widely from one another.

  • Intellectual property in theory can block the diffusion of new ideas as well as encourage their development. How much diffusion is blocked depends in part on whether the owner of the rights to a technology is willing to license it to other producers.

  • Certain aspects of the economic effect of patents depend on whether it is hard or easy to get one, so many scholars consider how patents are screened for novelty and nonobviousness. Many other works address the subject matter of patents, particularly business method patents.

  • Other factors in determining the economic effect of IP rights include their duration and breadth; one key issue is whether an exclusive right can block use of an idea by those who come up with it independently.

  • In considering the effect of copyright, factors of interest to scholars writing on its economic impact include the rights of others, such as fair use, reverse engineering and compulsory licensing.

  • Other scholars examine the administration of the patent office, the courts, and other institutions involved in the enforcement and administration of intellectual property.

  • Many scholars consider the intersection of intellectual property and antitrust, and other competition issues such as whether standards should be “closed” or “open.” 

  • Trademark rights primarily protect consumers from fraud rather than encouraging innovation.

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