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The Economics of Intellectual Property Protection for Software: The Proper Role for Copyright

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  • Frederick R. Warren-Boulton

    (MiCRA, 1875 I Street, N.W., Washington, D.C. 20006; 202-296-6331)

  • Kenneth C. Baseman

    (MiCRA)

  • Glenn A. Woroch

    (University of California)

Abstract

This paper provides an economic analysis of the proper role of copyright protection for computer software. We begin by identifying key economic conditions in the software market. Besides its public good characteristics, software generates network externalities through increased sales of programs and through production of complementary hardware and software. Assignment of intellectual property rights should be limited to take full advantage of the efficiencies available in this market. First, we demonstrate that copyright protection of de facto standards should not be granted to the original developer of a software package. Next, we argue that software interface specifications also should not be copyrightable since it would permit extension of market power to complementary software and to later improvements. Finally, we favor reverse engineering for the purpose of achieving interoperability since it enables firms to efficiently design compatible programs and to guard against unwarranted abuse of copyright protection. We discuss recent case law consistent with these principles, including the "merger doctrine" that denies protection whenever a product is the (nearly) unique expression of uncopyrightable idea.

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Bibliographic Info

Paper provided by EconWPA in its series Industrial Organization with number 9411004.

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Date of creation: 23 Nov 1994
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Handle: RePEc:wpa:wuwpio:9411004

Note: 37pp; postscript file, compressed; keywords: intellectual property rights, computer software
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Web page: http://128.118.178.162

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  1. Church, Jeffrey & Gandal, Neil, 1992. "Network Effects, Software Provision, and Standardization," Journal of Industrial Economics, Wiley Blackwell, vol. 40(1), pages 85-103, March.
  2. Joseph Farrell and Garth Saloner., 1989. "Converters, Compatibility, and the Control of Interfaces," Economics Working Papers 89-130, University of California at Berkeley.
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  8. Richard Gilbert and Carl Shapiro., 1989. "Optimal Patent Length and Breadth," Economics Working Papers 89-102, University of California at Berkeley.
  9. Stanley M. Besen & Leo J. Raskind, 1991. "An Introduction to the Law and Economics of Intellectual Property," Journal of Economic Perspectives, American Economic Association, vol. 5(1), pages 3-27, Winter.
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Citations

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Cited by:
  1. Hal R. Varian, 2005. "Copying and Copyright," Journal of Economic Perspectives, American Economic Association, vol. 19(2), pages 121-138, Spring.
  2. Sebastian von Engelhardt & Sushmita Swaminathan, 2008. "Open Source Software, Closed Source Software or Both: Impacts on Industry Growth and the Role of Intellectual Property Rights," Discussion Papers of DIW Berlin 799, DIW Berlin, German Institute for Economic Research.
  3. Sanders, Anselm Kamperman, 2006. "Limits to database protection: Fair use and scientific research exemptions," Research Policy, Elsevier, vol. 35(6), pages 854-874, July.

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