The Anti-Commons

The basic premise of creating an intellectual property regime is to allow innovation and give incentives to these innovators but at the same time balancing these private interests with the need for the advancement and free use of information of the people.

Hence a person creates a new literary work or invents a new technology, obtains rights over its reproduction and/or exclusive use albeit for a limited time to get back their investment, and when the right expires the work or technology can now be freely used by anyone.

The logic seems impeccable, the private party is given incentives to create and innovate but at the same time the public also benefits first because of the new work or technology and second, in the long run, because the information is now available to the people.

Michael Heller, author of Gridlock Economy, thinks otherwise. Observing a new phenomenon he calls anti-commons, he argues that intellectual property rights particularly patents create a situation which deters innovation and leads to the loss of new drugs and medicines.

The term anti-commons is derived from the tragedy of the commons wherein because no property rights are defined and resources are free for everyone to use, the consumers end up abusing the resource and destroying it eventually. In an anti-commons scenario, the opposite happens, too much property rights lead to stagnation and underutilization of the resource.

Heller gives as an example the pharmaceutical industry wherein because different companies own different patents advancement in medicines is stifled since for a company to develop a new drug, it must first obtain all the licences for the different patents it will be using and failure to do so might lead to a protracted litigation or a huge settlement. The transaction cost of developing new drugs skyrockets and companies are disincentivized from pursuing further research.

Clearly, a property rights regime though at first sparks innovation and development by giving incentives can lead to stagnation when the very building blocks of further innovation and development are stuck in a gridlock.

Paul Obmina- entry no. 6