Econ 201 Definitions: Intellectual Property Rights

Why the Government created monopoly power:

1. Firms compete by innovating

2. allows firms to recoup costs of innovation (if firms don’t have the chance to recover fixed costs they won’t innovate)

Patents

Applies to inventions and technical processes

*last for 20 years starting at the time the request is filed

Patents have to be:

1. for something new/novel

2. usually non-obvious/useful (applies to changes in a product that you’re trying to get a patent for)

3. non-fundamental (invention can’t be so important that it would be unethical to monopolize it)

Copyright

Applies to creative works by authors, artists, composers

Can’t copyright for plot, only expression (words/wording)

*length is for life of the author + 70 years, and works for hire are 95 years

Fair Use Doctrine

You can use short clips from copyrighted products for the purpose of reviews

*beneficial as it can make consumers willingness to pay in a certain market go up

Another copyright exception is parody/satire

Trademarks

Applies to distinctive commercial marks, symbols, logos, slogans, and catchphrases

*lasts for 15 years but are renewable forever

Trademarks and Differentiated Products

Extremely important for differentiated product markets

When quality is unobservable at point of purchase, firm reputation can help consumers determine quality and prevent knockoffs