This post is part of a series of evidence summaries for the 21 for 2021 project, a CREATe project within the AHRC Creative Industries Policy and Evidence Centre (PEC). The 21 for 2021 project offers a synthesis of empirical evidence catalogued on the Copyright Evidence Portal, answering 21 topical copyright questions for the 21st century. In this post, Raffaele Danna (Research Fellow, Institute of Economics of Scuola Superiore Sant’Anna), Arianna Martinelli (Associate Professor in Applied Economics, Institute of Economics of Scuola Superiore Sant’Anna) and Alessandro Nuvolari (Professor of Economic History and Director of the Institute of Economics at Scuola Superiore Sant’Anna) explore the empirical evidence on negative intellectual property spaces.
The literature on negative intellectual property (IP) spaces investigates how innovation and creativity are incentivized in sectors where IP law does not apply, or is not enforced. This contribution seeks to offer an introduction to the concept of negative IP, the debates surrounding it, and the case studies of negative IP developed so far, with particular attention to those concerning copyright.
The concept of negative IP spaces was introduced by Sprigman and Raustiala in 2006, who borrowed it from the visual arts (Raustiala and Sprigman (2006); (2009); (2012)). The negative space can be defined as the space which is not occupied by a form, and which can be used to add meaning to the main figure (a striking example being the Rubin’s vase). The authors argued that studying innovation and creativity in contexts which do not fall under the domain of standard formalized intellectual property rights regimes (IPRs) could advance our understanding of the drivers of creative processes. In this respect, negative IP space provides an intriguing setting to investigate innovation and creativity in a sort of natural experiment, without the influence of the incentives provided by IP law (Sprigman (2017), 588–90).
According to the standard economic framework, IP law incentivises innovation by providing creators and inventors with exclusive rights on their creations. The rationale is that, if creators can anticipate that they will profit through these exclusive rights, they will invest in inventive activity. It follows that exclusive rights provide an effective set of incentives to promote innovation and creativity (Rosenblatt (2010), 318). According to this view, copying is detrimental to creativity because it crowds out the appropriate incentives by infringing the author’s exclusive rights. The case study on the US fashion industry presented by Sprigman and Raustiala in 2006 raised a theoretical conundrum. First, the authors showed that US IP law does not provide effective protection to the core innovation of the fashion industry, i.e. fashion designs. Second, they argued that the fashion industry thrives not despite the fact that its core innovation is not protected by IP law, but, on the contrary, because this lack of IP protection leads to unrestrained copying. For the standard economic theory of IP law, this is a glaring paradox.
Debates and recent evolutions
By documenting that creativity can also flourish outside the incentives provided by formal IP law in general, and by copyright in particular, literature from law and economics has contributed to the debate on whether IPRs effectively promote innovation and creativity. This is an open debate that spans across several research fields and touches upon key issues of copyright regulation.
Empirical attempts to estimating the effects of IPRs on innovation and creativity did not yield clear-cut results. For example, the introduction of copyright law in Lombardy and the Venetian state in 1801 changed the incentives for composers to publish new operas. Giorcelli and Moser found that the introduction of copyrights increased the number, success, and durability of operas. Still, they also found no evidence that extending copyrights beyond the composer’s life led to significant benefits (Giorcelli and Moser (2020)). In the case of patents, methodological difficulties in identifying the effect of changes in patent systems on R&D activities led to mixed evidence (Levin et al. (1987); Bessen (2008); Budish, Roin, and Williams (2016)). Moreover, the literature also documents that innovative firms do not necessarily use patents in the ways that incentive theory would expect, such as signalling or defensive strategies (Hall and Ziedonis (2001); Moser (2016); (2018)).
Historians have documented that important technological breakthroughs were achieved through collective invention, i.e. a process where incremental technical improvements, instead of being protected by exclusive rights, are systematically shared among the community of innovators (Lane (2019); Bessen and Nuvolari (2019); Allen (1983); Nuvolari (2004); Frenken and Nuvolari (2004); Meyer (2003)). Furthermore, there is evidence that collective invention settings are indeed a feature of the development of significant contemporary technological developments, either by means of network of inventors or of firms (Powell and Giannella (2010)).
The development of the computer has provided several success stories where innovations were openly shared, which eventually transitioned into the proprietary model (Freiberger and Swaine (1984); Potts (2019)). The open-source software model provides a clear example of thriving innovation and creativity without the incentives set by exclusive rights (Benkler (2002); (2007); Osterloh and Rota (2007)). Since copyright applies to software code, specific licences were developed to prevent the appropriation of open-source software and safeguard its accessibility. These licences, such as the GNU General Public Licence, or the Creative Commons Licence, use the standard logic of IPRs, but reverse their functioning (‘copyleft’).
From a niche phenomenon, the open-source model has gained importance until eventually becoming an integral part of the software industry (Lerner and Tirole (2005); Schrape (2019)). Moreover, the open model is not restricted to the software sector (Carpentier (2021); Benkler (2007); (2013)). For example, the literature on user innovation argues that users – who generally do not claim IP rights and openly share their progress – play a key role in fostering innovation at the aggregate level (von Hippel (2005); Baldwin, Hienerth, and von Hippel (2006); von Hippel (2007); Gault and von Hippel (2009); Baldwin and von Hippel (2011); von Hippel, de Jong, and Flowers (2012)).
Legal and economic studies on the commons have documented how communities address the challenge of managing resources which are not subject to exclusive rights (Ostrom (1990); (2000); (2010); Marciano, Frischmann, and Ramello (2019)). The literature on knowledge and innovation commons has applied the economics of the commons to the study of shared intellectual goods (Madison, Frischmann, and Strandburg (2010); (2014); (2017); Safner (2016); Potts (2018); Allen and Potts (2016)). Other scholars have engaged in criticisms of the foundations of IP law, arguing that the exclusionary model curbs the development of knowledge commons (Lessig (2001); Boldrin and Levine (2008)).
The literature on the so-called “optimal IP design” recognises that, while exclusive rights can provide creators with the incentives to invest in research and creativity, a monopolistic power over their creations can be detrimental to competition. This literature discusses how to balance the trade-off between dynamic (i.e. innovation) and static efficiency (i.e. access to new ideas and techniques) (Granstrand (1999); Scotchmer (2006); Pollock (2009)).
Existing evidence and research agendas
Against the backdrop of this ongoing debate, the literature on negative IP spaces has investigated how innovation and creativity develop and thrive outside the scope of formal IP law, providing a series of case studies. These studies cover a variety of creative industries, and mainly address the Fundamental issue number 1 of this evidence portal, i.e. the relationship between IP protection and economic performance.
In the US, the so-called ‘useful article’ exemption makes it impossible to claim protection for fashion designs under copyright law. Apparel designs are widely copied, to the point that some brands have a line-up consisting mostly of designs copied from other brands and that fashion magazines have entire sections dedicated to comparing the original to its ‘knockoff’. An industry that couples thriving levels of creativity and innovation with both the lack of IP protection on its core innovation and widespread copying practices is a glaring paradox for standard IP theory. To solve the paradox, Sprigman and Raustiala put forward the hypothesis that copying, rather than an obstacle to the development of the fashion industry, can be considered an integral part of its business model. Copying, they claimed, is key to the fashion industry because it is the engine that accelerates the fashion cycle. If they were not free to copy, apparel designs would go in and out of fashion at a much slower pace, curbing the business cycle. In other words, Sprigman and Raustiala argued that imitation can spark innovation, especially in industries whose business is based on trends (Raustiala and Sprigman (2006); (2009); (2012)).
In a seminal study on haute cuisine chefs, Fauchart and von Hippel offered an alternative explanation to the question of how creativity and innovation can thrive without formal IP protection (Fauchart and von Hippel (2008)). While it is possible to copyright the specific text in which a recipe is written, it is not possible to copyright the recipe itself. This is because US copyright law does not protect concepts and procedures independently of their tangible medium of expression (Raustiala and Sprigman (2012), 63–69; Fauchart and von Hippel (2008), 188). Relying on grounded research and a survey, Fauchart and von Hippel found that haute cuisine chefs address the limited propertisation of their core innovations (i.e. new recipes) through a system of informal social norms. These implicit norms are shared among the community of accomplished chefs, ensuring that copying is policed and restricted across the community. Fauchart and von Hippel argued that their findings documented the existence of norms-based IP systems, discussing the benefits and limits of such solutions.
Informal IP systems based on social norms have also been identified for other creative sectors to which copyright does not apply. As copyright only covers a specific material expression of an idea, stand-up comedians are similar to haute-cuisine chefs. As it is possible to claim copyright on the specific formulation of a joke, but not on its underlying funny idea, a new joke is not effectively protected by US copyright law. Oliar and Sprigman found that the community of US stand-up comedians developed a bespoke system of social norms to regulate copying in the community. This system has met the specific needs of its community and evolved together with changing forms of humour (Oliar and Sprigman (2008)). Similar norms-based IP systems have been documented in several other creative communities, such as street artists, magicians, tattoo artists, game developers, and roller derby players (Iljadica (2016); (2017); Perzanowski (2013); (2017); Loshin (2010); Fagundes (2012); (2017); van Roessel and Katzenbach (2018)). TV-show formats offer another interesting example which combines social norms with a complexity of other strategies (Singh and Kretschmer (2012); Bechtold (2013)).
While the previous cases illustrate how creativity flourishes when “… intellectual property law provides minimal, if any, protection for the core product or process that supports the industry…” (Rosenblatt (2010), 325), there are cases when “… traditional intellectual property protection is available to creators, but those creators commonly opt either to forego protection, or not to pursue infringers” (Rosenblatt (2010), 330). A peculiar example is the early 20th-century US publishing industry. A protectionist copyright legislation made it difficult for foreign authors to claim copyrights over their works, which entered the US public domain and could be appropriated by commercial publishers. This led to the emergence of bottom-up practices to prevent aggressive appropriation and to secure some sort of remuneration for foreign authors. Some of them, like Joyce, Pound, and Wilde, proved their creativity in navigating the system (Spoo (2013)). Fan fiction is a thriving literary genre that develops between the fair use exemption to copyright and the tolerance of rightsholders (Tushnet (2007); Schwabach (2011)). Even though copyright fully applies to video content, videos are shared without significant prosecution from rightsholders in the adult entertainment industry. This recent trend has been triggered by contents digitalisation and the advent of streaming platforms. Rather than prosecuting pirates, the industry has incorporated the new context of free contents in its business model and has shifted from selling contents to offering other services, such as personalised experiences (Darling (2014); (2017); Raustiala and Sprigman (2019)).
Future directions for research
The literature on negative IP spaces has provided fresh insights into the multifaceted drivers of innovation and creative activities, focussing on creativity and innovation outside the scope of formal IP law. By highlighting the dialectical tension between novelty creation and imitation, the role of intrinsic motivation and selfless contributions, and of credit and attribution, this literature has highlighted some significant limits of the standard utilitarian theory in accounting for the role of IP in incentivising innovation and creativity.
Moreover, this research stream helps to bring to the fore the fact that, in some cases, imitation can spark innovation, and that digitisation and sharing platforms are determining the emergence of new business models which incorporate the new technological environment of illimited access to information. Additionally, this literature helps to appreciate the rich web of social norms and bottom-up processes which characterise all creative endeavours, and which should be taken into consideration when drafting IP regulations (Katzenbach (2018)).
In terms of directions for further research, most case studies on negative IP are focussed on the US. Therefore, more research would be needed to document the functioning of negative IP spaces in a more diverse range of legislative contexts. Given its complex entwining of national and supra-national IP regulations, Europe can provide a particularly interesting setting in which to develop new case studies of negative IP, as is currently in progress within the reCreating Europe project (Danna, Martinelli, and Nuvolari (2021)). Moreover, as the literature on negative IP spaces is mainly empirical, the field would benefit from new theoretical contributions. These could be in the direction of a systematic assessment of the evidence provided so far, seeking new taxonomies of the available research, and new explanations of why negative IP spaces emerge.
Furthermore, the current literature has mainly been developed by law scholars, but the determinants of creativity and innovation are fundamental questions also for the study of economics. On the one hand, economists could contribute to the empirical studies of negative IP spaces with new case studies, or by studying negative IP spaces with broad datasets. On the other hand, economists could contribute to the theoretical grounding of the debate, for example by providing formal models of negative IP spaces. With regards to copyright, changes or misalignments in regulatory frameworks could provide promising areas of research. By reconstructing how authors navigated the cracks between European and US copyright law, Spoo’s book offers an instructive example of a similar direction of research (Spoo (2013)). A stimulating context to investigate could be the increasing variety of digital platforms where content is shared by users. More generally, more research could be pursued to investigate how creativity is affected by the architecture of digital platforms, how users navigate the sharing possibilities opened up by digitisation, and how they resort to attribution, licensing and fair use exemptions. By further exploring the complex interplay of formal rules and spontaneous processes, the research on negative IP spaces has the potential to pave the way for a grounded theory of copyright.
List of additional sources (beyond core scope of the Copyright Evidence Portal)
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