protections have some but not all of the attributes of property rights in the sense that economists use that term.

The economic definition of a property right is the exclusive right to determine how a specific resource is used. The right must be anonymous, that is, it must be the same right who ever owns it. The trouble arises, for patents and copyrights, at “exclusive,” “anonymous,” and “specific.” The purpose of having property rights in the economy means that those modifiers must hold in a strong sense in non-obvious circumstances.

The mechanism by which property rights support economic efficiency is indirect. With property rights, resources can be directed to high value uses by trade. The essential idea of property rights is that buyers and sellers in a potential contract of any level of complexity know who owns what -- in all contingencies -- and thus move resources efficiently to the right uses. $ ^{5} $

That purpose tells us why “exclusive,” “anonymous” and “specific” must have sharp definitions. Property rights are incomplete when the exclusive right to use a resource is lessened if there is a transaction involving the resource, or if the strength of the right to use the resource changes if the ownership of the resource changes. Property rights are incomplete when there are multiple rights and the rights are partially overlapping. Related problems arise in connection with the evolution of property rights over time (especially when efficient use of the property rights involves sinking costs.) Property rights that may move as a result of government action ex post a transaction are incomplete property rights.

The reason I adduce these ancient definitions of property rights is merely to point out that modern “intellectual property rights” fall short of being property rights in the economic sense. It is often uncertain what legal rights are conferred on an intellectual property holder in the sense of to what specific things exclusive rights are granted, the strength of the legal rights is often dependent on who holds them, and the resolution of what the scope of the legal rights is often delayed into the future.

Are patents and copyrights property rights? The specific resource they would give exclusive control to is an invention or creation. There are two problems. First, the scope is often unclear at the time of invention or creation. Rights overlap with those of other complementary inventors and creators, including future improvers. It is important to emphasize that some degree of this overlap is not anyone’s fault. It is difficult to clearly define the boundary between what is invented and created today and what will be invented and created tomorrow. Nonetheless, the overlaps are there.

Second, rights to control inventions and creations are often uncertain because it is difficult to forecast with a high degree of precision how courts will enforce them. To be complete property rights, they would have to make clear to all interested parties specifically what the scope of the protection is, and specifically what the scope of protection for other inventors and creators will be. That clarity would have to be available at the time of invention or creation – the time when contracting is most valuable.

In practice, patents and copyrights give the patent holder the right to bring a lawsuit against an alleged infringer. The lawsuits are expensive for the participants, running into the millions of dollars, and difficult to resolve for courts, with the