Coordination, Property & Intellectual Property: An Unconventional Approach to Anticompetitive Effects & Downstream Access

Countless high profile cases like the recent patent litigation threatening to shut down the BlackBerry® service have long drawn sharp criticism; and in response, most of the intellectual property (IP) literature argues for the use of weaker, or liability rule, enforcement as a tool for solving the problems of anticompetitive effects and downstream access while still providing sufficient rewards to IP creators. This paper takes an unconventional approach under which rewards don't matter much, but coordination does matter a great deal. The paper shows how stronger, or property rule, enforcement facilitates the good type of coordination that increases competition and access. The paper further shows how, paradoxically, the reforms urged by IP critics end up facilitating the different, bad type of coordination that decreases competition and access. Simply put, the paper shows how policy debates would be radically improved by consideration of these two different coordination effects. The paper follows the general approach of the field called New Institutional Economics ("NIE"), which has explored many problems that are triggered by different institutions of laws and norms. Because no institution is perfect, the NIE approach suggests that our choices among institutions must be informed by our views of the solutions we most want and the problems we can best mitigate or bear. The paper explores a theory of the institution of property rights backed up by property rules as playing a particular, good role in facilitating coordination among many diverse complementary users of an asset in a way that increases competition and access. Under this view, coordination is offered as an alternative to other goals that have been suggested including internalizing externalities, mitigating rent dissipation, or providing direct incentives, and property is offered as an alternative to other institutions or organizations that also can facilitate this coordination goal, including, norm communities such as open source projects, firms, and government. The paper also shows how property rights backed up by weaker, or liability rule, enforcement can play a particular, bad role in facilitating the kind of coordination among large, established players that decreases competition and access. The shift in focus towards the link between property rule treatment and coordination has several practical effects. First, it explains why many of reform proposals of yesterday and today that do not use the coordination approach should be expected to exacerbate the two key persistent problems of anticompetitive effect and reduced downstream access. Second, it explains why certain aspects of IP regimes may be working well and why others may be candidates for change or elimination. Third, it elucidates factors that cut against changing IP regimes in ways that likely will exacerbate the two key persistent problems of anticompetitive effect and reduced downstream access. Providing one example of how the coordination approach could inform practical policy discussions, the paper frames a discussion for evaluating a case against the present copyright regime.