Before I do that, however, it is worthwhile to go back to first principles and ask some fundamental questions, such as: why do we have intellectual property (IP) laws; what are we trying to achieve with them; and are these laws sufficiently robust to keep up with the rapid pace of change in various high-tech industries? Answers to these questions will give us the base with which to assess the decision in Harvard.
The Economics of Knowledge
In order to understand the rationale and role of IP laws, it is necessary to appreciate that tangible assets, such as land/real estate and goods (in legal parlance, "goods" are tangible personal property) are fundamentally different from information-based assets. The central economic fact governing the traditional assets of land (and buildings) and goods (such as tables, chairs and automobiles) is natural scarcity. There is a finite amount of land in the world. Similarly, natural resources such as minerals are inherently scarce commodities.
In a world characterized by finite physical assets, economics can be understood as the study of the allocation within society of scarce resources. As for the legal system, an economy based on land and goods that recognizes private property need only have a criminal law prohibiting trespass (for land) and theft (for goods). Once the law provides that non-owners cannot occupy someone else's land and cannot take someone else's goods, the economic rules of supply and demand will operate to determine how much of a particular asset is bought and sold, and at what price.
Moreover, it is fairly easy to ascertain whether a car owner has been deprived of that good: if you wake up in the morning, and your car is not in your driveway where you left it the evening before, it has been stolen. In essence, tangible, physical goods lend themselves to simple property ownership regimes.
Information-based Assets
Information-based assets differ radically from land and goods. The fundamental difference is that today information can be reproduced at virtually no cost. This was not always true. Prior to the printing press, copying a book by hand in monasteries in Europe in the Middle Ages was as laborious a task as writing the original copy. Gutenberg changed all this with his invention of the moveable type printing press. More recently, the photocopier has driven the marginal cost of reproduction even lower. The printing press and the photocopier did not, however, reduce the still significant cost of transporting books, newspapers and other paper-based media on which information has traditionally resided.
Today, digital-based content can be reproduced by computers and transmitted around the world by telecommunication networks at no cost and with no degradation in the quality of the work. Indeed, in many respects, it is no longer appropriate to talk about scarcity of information in the current technological environment.
The fact that information can be copied and transmitted at no incremental cost leads to the second fundamental aspect of information and knowledge, that it is capable of universal possession. A touchstone of traditional, physical assets is that at any one time only one person is capable of possessing a particular table, chair or automobile. Indeed, exclusive possession, and the ability to exclude others from the asset, are the hallmarks of ownership for traditional assets like land and goods. An ownership regime based on exclusion gave rise to the old legal adage that "possession is nine-tenths of the law", which is a pithy way of saying that with traditional assets ownership and possession are usually synonymous, because possession of tangible assets tends to be exclusive. This turn-of-phrase clearly pre-dates the Information Age.
Exclusive possession becomes fiendishly difficult with information-based assets, where multiple, simultaneous or near-simultaneous possession is the norm. And, the evanescent nature of information, combined with the ability to reproduce and transmit it at extremely low cost, seriously affects the legal ownership regimes applicable to information-based assets.
The Rationale for Intellectual Property Laws
Given the ease with which information can be reproduced and transmitted, how should society implement a private property ownership regime for elusive information-based assets? This question assumes, of course, that a system of private property protection is both desirable and required in order that sufficient amounts of information be created. If cars were not protected by the criminal offence of theft, they would not be produced because they would be stolen from factories, thus denying the manufacturer a return on effort. In short, for markets to operate efficiently, a private property regime is required in order that producers be able to recoup economic rewards for their work. Put another way, laws impose barriers to free consumption so that manufacturers and distributors can earn a return.
It is no different for information and intellectual property. If there were no means of capturing some economic returns for investing in the human and other capital required to create, say, software (or a transgenic mouse), a great deal less software (and useful biotech tools) would be produced. This point is particularly salient for creators of information-based assets, like software or movies (and transgenic mice), because these assets typically are extremely expensive to produce but, once created, are incredibly inexpensive to reproduce.
Why Criminal Law is Not Enough
One option for protecting information in a free-market system is simply to draw on the legal regime associated with goods, and to make the theft of information a criminal offence. The problem with this approach, however, is that the criminal law is too blunt an instrument.
Consider the theft of a book. If someone physically removes a book from a store without paying for it, that person has stolen the book, the physical medium on which the information resides, and the person would be guilty of theft, but only of the paper-based good that is the book. Thus, the criminal law works well enough for the physical containers into which information is poured, the units of tangible media on which information is imprinted or electronically stored.
Matters become more complicated, however, when that which is taken is not the physical medium. For example, what if the thief reads the book, with the intention of writing his or her own book on a similar subject? If the thief copies each sentence, word for word, so that his or her book is the same as the author's book, and the thief sells multiple copies of "his or her" resulting book, one may still envisage a role for the criminal law.
What should happen, however, if the thief merely copies a few sentences from the existing book into his or her own manuscript? Or what if he or she merely writes, in his or her own work, about ideas also articulated in the first book? And what if the thief had not stolen the first book, but bought it from a retailer who in turn acquired it from the authorized publisher?
These questions are more problematic from a legal perspective, and they raise a host of additional issues. Is it clear the author of the previous book was the first to describe a particular idea, or even use the particular words he or she used to describe it? Many ideas and information-based works and the form of expression found in them are, to a greater or lesser degree, derivative in their form and/or content. Sir Isaac Newton articulated this concept well when, in paying homage to the authors of the great scientific works that preceded him and their influence upon his own thinking, exclaimed: "If I have seen further it is by standing on ye sholders of Giants."
The criminal law is not well suited to this enquiry with information-based assets because the parameters of criminal offences should be very well delineated, given the serious consequences that flow from a conviction. The certainty of the physical parameters of tangible goods permits the criminal law to determine the ownership of such assets. The ephemeral nature of information requires the legal system to look beyond the criminal law for a regime to perform the same function.
IP Laws to the Rescue
Given the shortcomings of applying the criminal law of theft to information the way it is applied to physical assets, but cognizant of the need to protect at least certain aspects of information-based assets, the legal system has devised several specific regimes in order to afford protection to the creators and owners of intellectual properties, assets that emanate from the mind. The major regimes are: trade secrecy/breach of confidence-to protect secret information; patents-to protect certain non-secret ideas that are implemented in inventions; and copyright-to protect the expression of ideas. Each of these regimes, in its own particular manner, affords creators the right to limit the copying, use and economic exploitation of specific aspects of information created by them. In economic terms, these intellectual property legal regimes exist to maintain artificial scarcity in information and knowledge assets, thereby compensating for the lack of natural scarcity in information. To counteract the elusive nature of information, intellectual property regimes have been crafted to give legal substance and form to certain aspects of information; that is, they cut down certain trees from the forest of ideas and with these trees build legal fences around certain creative content and inventions.
The exercise is more daunting, though, because the better analogy is trying to carve chunks of air out of the atmosphere. Once this difficult task is accomplished-once the forest of ideas is subdued-the regimes that relate to publicly available information, namely patent and copyright, also recognize that the legal scarcity they establish should not continue indefinitely because society has a long-term interest in the wide dissemination and use of information. Therefore, these regimes protect for periods of time that are considered sufficient to provide adequate economic returns to creators, after which the protection ceases. In some cases, there are even limited exceptions to the exclusivity during the term of protection, as in the case of fair dealing with a copyright work for private study or research.
In short, ensuring that adequate amounts of information and knowledge are created, and guaranteeing the appropriate allocation of information resources within the economy and society at large, given their critical importance to the economy and society, require the establishment of sophisticated intellectual property law regimes that carefully regulate the exploitation and disclosure of information so as to balance the needs of creators and users of these important assets. This involves a delicate balancing act among diverse and competing interests, an exercise the criminal law simply is incapable of fulfilling, and that the intellectual property law regimes strive to achieve. Next month we examine how one such regime-the patent system-fared with the novel invention of a transgenic mouse.
George S. Takach is the head of the technology, communications and intellectual property group at McCarthy Tétrault LLP, the author of Computer Law, and an adjunct professor in computer law at Osgoode Hall Law School. This column is intended to convey brief, timely but only general information and does not constitute legal advice; readers are encouraged to speak with legal counsel to understand how the general issues noted above apply to their particular circumstances.