Vanderbilt Law Review

First Page



Patents and copyrights originate from the same constitutional source of law,1 and for this reason they are in some respects similar. Patent and copyright law alike extend to inventors and authors exclusive rights over the fruits of their intellectual labors, enabling owners to extract value from intangible goods that would otherwise not be profitable. Both systems are premised on a utilitarian bargain, allowing inventors and authors to have socially costly monopoly interests in their inventions and works in order to encourage socially beneficial innovative and artistic production. And patents and copyrights both last only for finite periods, in contrast to the perpetuity of most property interests, in order to both enrich the public domain and enable the creation of follow-on inventions and works of authorship.

Yet, in at least one salient respect, patents and copyrights are quite different. Patents vest only after an applicant successfully navigates a cumbersome examination process administered by the federal Patent and Trademark Office ("PTO"). Copyrights, by contrast, arise costlessly and often unintentionally, as soon as an author fixes a work of authorship in a tangible medium of expression. Patents, in other words, are very costly to acquire, while acquiring a copyright costs authors almost nothing at all.

That patents and copyrights vest so differently raises a problem, and presents a puzzle. The problem-at least purportedly-is that each of these vesting systems generates social costs far in excess of its benefits. Critics of the patent system charge that the examination process represents a classic deadweight loss, imposing prohibitive costs on patentees while generating no offsetting benefits by screening out invalid or ineffectual patents. Critics of the copyright system charge that by extending exclusive rights to just about any work of authorship, society suffers from a glut of copyrights that deters future creation by imposing information and transaction costs on would-be authors.

In this Article, we question this conventional wisdom, arguing that the costliness of patents and the costlessness of copyrights have positive, rather than negative, effects on social welfare. The first step of our argument leverages emergent insights from the economic literature about costly screening processes. As scholars have observed in other settings, burdensome processes for vesting legal rights have social costs and benefits apart from the substantive end they are meant to serve. Such processes are costly screens, forcing actors who seek to acquire legal rights to consider whether acquisition of the right will be worth the cost of doing so. Such screens cause actors to self- select against acquisition of rights that will not generate much private value, and limit the vesting of those rights for reasons unrelated to the substantive content of the process itself.