The penguin's paradox: the political economy of international intellectual property and the paradox of open intellectual property models.

• Author: Opderbeck, David W.

1. INTRODUCTION

   A serious game is underway in which the world's intellectual capital is at stake. On one side of the game, advocates of "open" intellectual property rights (IPR) models suggest that opening the intellectual commons will spur development and promote a more equitable distribution of the world's resources. Developing countries, which lack strong domestic IPR-producing industries, often favor more open IPR systems that allow them to adopt, at minimal cost, technologies and IPR-rich products that are produced in the developed world.

   On the other side, many IPR-rich industries and market economy advocates view policy initiatives in favor of open IPR models with suspicion, if not hostility. For these players in the global IPR game, strong IPRs are the foundation of an economy characterized by growth, prosperity and innovation, and represent the best path forward for both the developed and developing world. Developed countries, such as the United States and the European Union, tend to favor relatively "closed" IPR systems, which reflect the interests of domestic IPR-rich industries, such as the pharmaceutical, biotechnology, and entertainment industries.

   For certain goods, such as medicines and basic scientific research, this disparity becomes more than an arcane question of trade economics. It is, rather, a question basic to human health and dignity. From the "digital divide," to biotechnology, to medical research, open source and open access have become key components in the strategy to boost the fortunes of developing countries) For many open IPR or "access to knowledge" advocates, open models are seen as the means to break the developed world's hegemony over essential information and technology. In contrast, many closed IPR proponents view open models as, at best, potentially useful adjuncts to a strong IPR system in niche markets, which can be voluntarily developed but should not be imposed or supported by government intervention.

   The game plays out in the dusty and remote arena of international IPR treaty negotiations. The history of the international IPR treaty system suggests that it has trended towards a strong requirement of minimum IPR standards, largely in response to the concerns of IPR-rich industries in developed countries. (2) Advocates of open IPR models have recently focused on public policy strategies concerning open source production and open access publishing in an effort to mitigate this trend. (3)

   Open source production seems like a politically attractive option to many open IPR advocates because it could potentially achieve greater openness without eliminating the perceived benefits of IPRs. These advocates seek to portray open source as an alternative means of production that is both economically efficient and more socially equitable than the existing proprietary framework. Their policy proposals focus on incremental changes that would facilitate open source production in ways that are palatable, or at least not nauseating, to strong IPR advocates. (4) Similarly, policy proposals concerning open access publishing have been tied to public funding of scientific research, as a secondary or alternative source of access to research papers published by traditional publishers. (5) Open access advocates argue that the public has a right to free access to research findings resulting from the use of tax dollars, even while commercial publishers retain the right to control copyrights in the articles they publish. (6)

   These seemingly moderate efforts to reform IPR rules, however, have met with only marginal success, despite strong support from other stakeholders such as the scientific research community. (7) What interests are at play in this policy game that seem so consistently to tip the balance towards a strong IPR solution? How does a careful study of these competing interests inform a constructive approach to international IPR policy? Game theoretic political economy models help answer these questions.

   Recent efforts to construct a political economy of intellectual property have focused on the power relationships between intellectual property producers and consumers. (8) The standard narrative is that large corporate interests, such as pharmaceutical companies and the entertainment industry, have been able to capture the lawmaking process such that the law has increasingly come to favor stronger intellectual property protection. This narrative has been extended to the international intellectual property framework with the observation that industrialized developed countries, which are home to most of these large corporate interests, have been able to dominate the trade negotiation process so that intellectual property treaties now largely reflect the interests of the developed countries.

   This account of how intellectual property laws and treaties have developed has significant empirical support. However, it overlooks some important market dynamics. In particular, none of the existing political economies of intellectual property account for the price elasticity of demand of an innovation product, the presence of network effects in some markets, or the potential influence and role of open source production or open access distribution of that product. These factors influence the international IPR treaty game in some unexpected ways. Indeed, when these additional factors are considered, a paradox emerges: the political economy of intellectual property can tend towards "strong" intellectual property rules despite, or perhaps even in some ways because of, a persistent open source ethic. (9) The results of the game in different industries lead to suggestions for how public policy, intended to make the knowledge commons accessible, could be pursued more efficiently and effectively.

   Part II of this Article describes the open source and open access IPR models and summarizes recent proposals and efforts to encode these models into public policy and positive law. Part III sets up a game theory model of international intellectual property rules by identifying the players, strategies, and payoffs. The discussion of payoffs reviews the various factors that can influence a state's choice of strategy during the game. That discussion includes three factors that have been neglected in existing political economies of intellectual property: the importance of price elasticity of demand, the influence of network effects, and the prospect of open source development and/or open access distribution. In Part IV, after a brief historical review that illustrates how the game is played and how the payoffs are calibrated, the international IPR treaty game is played out in six key contexts: entertainment, computer software, computer databases, traditional pharmaceuticals, biotechnology, and scientific publishing. Part V suggests some conclusions and policy approaches drawn from the models presented in Part III.

2. THE MOVE TOWARDS OPEN IPR MODELS

   1. TYPES OF OPEN IPR MODELS

      This Article focuses on two types of open IPR models: open source and open access. Open source, for the purposes of this analysis, refers to a good that is produced by a peer production method and distributed under a "viral" license. (10) The peer production method implies that production, monitoring, and improvement of the product are distributed in relatively small input units across a relatively large, heterogeneous population of workers who are motivated to perform the work largely by non-monetary rewards. (11) A viral license means that anyone who receives the product is free to modify and redistribute it, provided that the good as modified and redistributed is offered to others under the same license terms. (12)

      Open access means that a given set of information is available to the public free of direct charge and with minimal transaction costs. Information made available on an open access basis may or may not be produced via a peer production method, and may or may not carry a viral license. (13) It is possible, for example, for information to be open access and yet to be protected by traditional copyright, such that a user of the information cannot reproduce it except as permitted under copyright law.

      Although the differences between open source production and open access publishing are significant, there is a sense in which they share a common ethos. As John Willinsky has argued, "open source and open access are nothing less than two practical and proven means of resisting [the] constant capitalization of knowledge work." (14) Willinsky notes that both open source and open access include key elements of freedom of entry, free speech, and non-economic motivations. (15) Willinsky draws on Paul David's assessment of the motivations for openness in scholarly work. (16) David locates the motivation for openness in scholarly work in peer approval and the claim to "moral possession" of a discovery or insight based on priority of publication. (17) David notes that "moral possession" "is particularly important, as it connects the incentives for disclosure of findings under the collegiate reputational reward system of open science with the social efficiency of sharing new information." (18)

      This family resemblance between open source and open access models suggests that both could play an important role in international IPR policy. The next Subparts describe efforts to code this ethic of openness, both in terms of open source and open access models, into public policy and positive law.

   2. MOVES TOWARDS OPEN SOURCE MODELS

      The open source movement arguably is as old as innovation itself. According to one narrative of how IPRs developed, innovation was once a communal endeavor, until the notion of the "imperial author" fostered the increasing enclosure of the public domain. (19) According to this narrative, open, commons-based production of ideas and cultural products was the norm, until modern notions of intellectual "property" began to...