Commercial property consultant
One of the first indications of the changing landscape of industrial firms is the large increase in the volume and sophistication of commercial transactions that have an intellectual property component. Why has intellectual property become the subject of an increasing volume of transactions? Why are so many firms exchanging intellectual property rights now? The answer, as we will see, revolves at least partly around the growing diversity in the organizations and hence an increase in what might loosely be termed Patent-Acquisition Activities .
There are essentially three inter-related reasons for the growth in intellectual property commercial transactions. First, there is more intellectual property than there used to be, and it is worth more because it is more readily enforced by the courts. The United States Congress and, to a lesser extent, the state legislatures, are creating more intellectual property each year, and where the United States leads in this area other countries tend to follow. Second, the growth in intellectual property has increased awareness in the business community of the intellectual property aspects of traditional transactions . Now there is often an intellectual property dimension to transactions that in the past were conducted without mention of these rights. Third, and perhaps most interesting, intellectual property rights make more feasible the organizational structures that are increasingly being used to produce goods and services . Since these organizations are at least partially based on contracts, they provide a growing source of commercial transactions that necessarily include an intellectual commercial property consultant component.
II. Intellectual Property Rights:
Intellectual commercial property consultant rights appear to enhance and, in some cases, enable these contract-based organizations, which run the gamut from consulting arrangements to outsourcing agreements in which firms purchase components they formerly manufactured themselves, to joint ventures and franchising less risky and hence more frequently feasible, because they make it easier for the licensor . often the supplier of a productive input to police the activities of the licensee. The strong policy favoring injunctions is one example of how licensor's can use intellectual property rights to police licensee's activities. Another example is courts strict adherence to the field-of-use limitations contained in many licensing agreements. In these and other ways intellectual property rights give the input supplier greater control over the activities of the licensee, which makes the external production of inputs and the concomitant transfer by contract more feasible. To put it another way, intellectual property rights reduce the licensee's opportunistic possibilities and thereby lower transaction costs.
While it is important not to overstate the significance of intellectual property rights in the emergence of these new organizational forms, it is also important to point out some likely casual links, all of which turn on the potential for tighter contractual control, at lower cost, that comes with property rights . The most obvious illustration of how property rights confer tight control is the example alluded to above, the availability of quick injunctions in the event of a breach. Since injunctions are much more easily obtained in intellectual property infringement cases than in run-of-the-mill commercial contract disputes, the inclusion of intellectual property in a commercial property consultant arrangement gives the owner of that property right much more leverage with which to police the licensee's behavior. It follows that, at the margin at least, the availability of intellectual property will make a supplier more likely to rely on contracts, as opposed to integration or some other transactional form. In this way property rights, including intellectual property rights, contribute to the growth of contract-based exchange .
It is difficult to argue that contract terms can substitute fully for the enhanced control conferred by the strong injunction policy of intellectual property law. It is well established, for example, that courts do not necessarily enforce contractual provisions stipulating to specific performance or other injunctive remedies. In addition, even if an enforceable contractual provision to this effect were assumed, such a clause would be expensive to draft and negotiate, and someone would have to establish its enforceability.
III. Property Rights And The Propertisation Of Labor:
A simple but increasingly common relationship that shows how important intellectual property rights have become in structuring the firm is the consulting agreement. Because the consultant can control the use and dissemination of her work product by contract, she has an incentive to enter into a consulting agreement rather than an outright employment agreement. This partly explains why employees find it feasible to become consultants.
A commercial property consultant can generally only sell a given unit of labor once, and can sell it only to a single firm. Intellectual property in effect Properties her labor, making it possible to sell the same unit of output multiple times to multiple firms. Of course, for this to work the consultant must produce something that intellectual property law protects, and she must retain ownership of her work product, typically by contract. If we assume ownership of a protected work, however, intellectual property rights allow her to transform her efforts from a one-time service into a multiple-use commodity . This conversion of services into an asset that the producer can trade many times of course enhances the potential economic returns from such work.
Thus, the property right, or rather, the transaction it enables may actually create value in some cases. In addition, once intellectual property rights are introduced into a transactional setting, they open up the possibility for another type of exchange altogether. In some cases, the property right is actually the motivating force behind the transaction. Just as the property right in fishing techniques creates a market for those techniques qua techniques, intellectual property rights create the possibility for certain transactions that would not otherwise be feasible. These transactions, in the aggregate, comprise new markets. In this sense, the introduction of intellectual property rights, in some cases at least, offers the potential to affect the organization of production in industries that commonly employ techniques and know-how. Of course, simply creating property rights does not guarantee such benign effects. If other factors, especially the transaction costs of integrating intangible inputs such as techniques into the production process, militate against the success of such specialized firms, property rights alone will not make them viable.
Furthermore, if property rights create more transaction costs than they eliminate, they will soon become associated with extortion and rent-seeking rather than with enhanced production possibilities. But, property rights do make feasible some experiments in specialization, as well as other organizational innovations. As recent economic history suggests, some of these experiments work. As long as this continues to happen, and as long as intellectual property rights are part of the experimental mix, firms will continue to generate new types of intellectual-property-related transactions and the organizational forms that grow out of them.
IV. Conclusion:
Intellectual property rights facilitate organizational diversity and efficient transacting in a variety of ways. The implication of the theory is that the ideal degree of intellectual property rights protection should vary in accordance with the efficiencies arising from the expanded scope for contractual and organizational arrangements. The next is that the increase in intellectual property rights also creates more opportunities for tactical or strategic misuse. Those opportunities for misuse are important in determining how much protection for intellectual property rights is desirable.
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