2004 · 35 citations · 0 references
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LawInformation TechnologyIntellectual Property LawInnovationIntellectual PropertyPatent LawIntellectual Property PolicyIntellectual Property ProtectionIntellectual Property RightsHardware Intellectual Property ProtectionIntellectual Capital ProtectionIntellectual Property EconomicsIntellectual Property LimitationsIntellectual Property RegulationLimitations To Intellectual Property RightsProtection Of Third PartiesSoftware Patent Policy
Over the past few decades, the software industry has emerged as one of the most important sectors of the economy. Performance gains in computer hardware, advances in software functionality, and the growth of the Internet into an established communications and commercial medium have fueled the integration of software into nearly every aspect of modern life. Broad-based investments in information technology (IT) have helped the United States achieve impressive levels of productivity growth and have made the software industry one of the most vibrant segments of the global economy. Intellectual property (IP) laws have had an important impact on the software industry's success. IP protection has given software developers the incentive to invest in developing and marketing new programs by providing a legal mechanism through which developers can capture at least some of their software's value-whatever that may be-in the marketplace. Without IP protection, second-comers could simply copy the innovation and thereby appropriate at least some portion of its economic value, without having to bear any related development costs. The possibility that third parties might free ride on the original inventor's investment in this manner increases the risk that the developer might be unable to earn a competitive return on this investment in the marketplace, thereby diminishing or even eliminating the inventor's incentive to invest in future innovations.' Software developers typically confront two distinct types of freeriding risks. The first risk is that third parties will make wholesale, literal copies of a program, then further copy or distribute these pirate copies in a manner that suppresses demand for genuine product from the original developer. The second free-riding risk is that later firms will copy specific elements, features, or technologies embodied in an original software program, but without engaging in the kind of wholesale or literal copying that characterizes piracy. Such follow-on copying involves replicating the functionality or appearance of the