Intellectual Property as Property Rights: Lessons from Property Rights Dynamics.

• Author: Porrini, Donatella
• Position: Critical essay

1. Introduction

   Property Rights Dynamics is a collection of essays edited by Donatella Porrini and Giovanni Ramello on various topics in property rights theories from notable scholars of the field. The chapters are grouped into three parts. Part I concerns some new theories of property rights, Part II is about various aspects of extending the property paradigm to human body and intellectual property, and Part III covers related issues such as competition law, marital property and sleeping owners. The focus on the dynamics of property rights offers a useful reference point for those interested in studying the evolving boundaries of property rights.

   The book opens with an introductory chapter by Donatella Porrini and Giovanni Ramello titled "Property rights dynamics: Current issues in law and economics" which provides an overview of property rights theories and the research questions discussed in the collection. Porrini and Ramello note that in many human societies de facto property rights predate de jure property rights, and property rights appear regularly whenever the problem of rival uses is manifested. However despite the regular occurrences of a property rights concept, the actual nature of property rights varies widely across different social groups and time periods, and thus no single universal definition for property rights exists. Indeed, the design, allocation and enforcement of property rights often involve a complex set of issues that different societies managed in a variety of ways. Changes over time in the demands of society require corresponding redefining of the nature of property rights. As such, the history of property rights is a dynamic and ever-changing one. To study and understand the precise functions of property rights, the best we could accomplish is to take snapshots of a given time and socio-economic condition.

   In Western society, property rights are seen as necessary devices for preserving individual liberties and for facilitating market exchanges. Following Coase (1960), property rights are generally acknowledged to play an important role in attaining efficiency by correcting market failures and making private and public interests meet. Coase's discovery has also led to the belief that property rights is the "right", and probably the only solution for tackling any market failures in whatever context they might appear.

   Nevertheless, some critics point out that this interpretation of Coase has given rise to rent-seeking opportunities, particularly in the context of intellectual property, with the consequence of an overall negative impact on social welfare. Therefore, it is important to pay a greater attention to the nature of the new subject matters of property rights, the economic context in which they are enforced, as well as how they affect the market structure and behaviours of the relevant economic agents. A proper understanding of the various idiosyncratic features of property rights can bear great insights on the divergence between theory and real-world economic implications.

2. Functional Property and Entropy

   The second chapter, "The fall and rise of functional property", by Francesco Parisi retraces the history of property rights from ancient to modern times. According to him, in the beginning all properties were in the commons. When human population increased and resources became scarce, conflicts among competing resource use happened more frequently. Hence, the concept of property rights was born to overcome such conflicts. Parisi argues that the property rights regime in land was not uniform throughout history, but changes from a functional regime to a spatial regime, and back and forth again. When property rights first arose, the rights were functional. For example, overlapping uses of land are allowed, depending on the use and the person using it. Thus the hunter holds hunting privileges and the livestock breeder holds grazing rights over the same parcel of land. As time passed, in an agricultural economy, the functional property regime was abandoned in favour of a spatial property regime, where a single owner holds all rights pertaining to a defined piece of land. During the feudal era, property rights in land were not absolute, but dependent upon one's position in the feudal hierarchy of the claimant. Only the tenant in demesne had possessory rights of the land, while all the other parties served as intermediaries in the collection of fees and granting of services and protection. In the eighteenth century, with the rise of industrialisation and the closing of the feudal era, fragmentation of property rights came to an end. The codified civil law ensures unity in functional, physical and legal aspects of land property. Only those property rights that are recognised by the legal system may be created and transacted, even though this restriction conflicted and curtailed the freedom to contract. Parisi's explanation for this rise of unity in property rights is that it is to prevent entropy in property rights--a topic which is covered by the same author in another chapter in this book.

   Although Parisi's account deals with real property, the historical lesson of the functional property regime should not be lost, since it could shed much light even on intellectual property rights. It can be said that intellectual property exhibits less unity in property rights compared to real property. Apart from having...