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Analyzing the Production of the Law of Cyberspace
Unformatted Document Text:  13 Firms tend to restrict the dissemination of code. Firms seek to disseminate code to potential customers and not the general public. To ensure that only their customers use their code, firms use a variety of legal protections including intellectual property protection. Firms argue that society must allow for such legal protection or else they will lack the incentives to produce new technological products that require significant research and development costs. Without protection, other firms can "free ride" by copying or developing similar products. Intellectual property protection allows firms to protect, control, and license out their knowledge to other firms. 45 IV. C ONSORTIA The production of code is not done entirely by firms or by the government to the exclusion of the other. Often these entities cooperatively conduct research and development on code, because collaboration can foster the creation, support, and promotion of new knowledge. This cooperation can take many forms, such as a short-term contract, joint venture, university- industry relationships, or a consortium. 46 In this section, we focus on the consortium form of cooperation, because of its significance in developing standards for code. A consortium consists of a number of participants engaged in cooperative research and development. 47 Their rationale 45 Nancy Gallini & Suzanne Scotchmer, Intellectual Property: When Is It the Best Incentive System?, in I NNOVATION P OLICY AND THE E CONOMY , V OL 2, (Adam Jaffe et al. eds., 2002), available at http://socrates.berkeley.edu/~scotch/G_and_S.pdf (reviewing the economic literature on the use of intellectual property as an incentive); Roberto Mazzoleni & Richard R. Nelson, Economic Theories about the Benefits and Costs of Patents, 32 J. E CON . I SSUES 1031 (1998) (noting several economic theories for patents). 46 See W ILLIAM J. M URPHY , R&D C OOPERATION A MONG M ARKETPLACE C OMPETITORS 5 (1991) (discussing various forms of cooperative research). 47 Carl F. Cargill, The Role of Consortia Standards in Federal Government Procurements in the Information Technology Sector: Towards a Re-Definition of a Voluntary Consensus Standards Organization, June 28, 2001, available at http://www.sun.com/standards/HouseWhitePaper_ver2_Final.PDF (defining the elements of a “good” consortium). To overcome antitrust liability, while encouraging innovation and commercialization, the government enacted legislation providing a legal basis for consortia. National Cooperative Research and Production Act of 1993, 15 U.S.C. § 4301 (2001). See also John T. Scott, Historical and Economic Perspectives of the National Cooperative Research Act, in C OOPERATIVE R ESEARCH AND D EVELOPMENT : T HE I NDUSTRY —U NIVERSITY —

Authors: Shah, Rajiv. and Kesan, Jay.
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13
Firms tend to restrict the dissemination of code. Firms seek to disseminate code to
potential customers and not the general public. To ensure that only their customers use their
code, firms use a variety of legal protections including intellectual property protection. Firms
argue that society must allow for such legal protection or else they will lack the incentives to
produce new technological products that require significant research and development costs.
Without protection, other firms can "free ride" by copying or developing similar products.
Intellectual property protection allows firms to protect, control, and license out their knowledge
to other firms.
45
IV. C
ONSORTIA
The production of code is not done entirely by firms or by the government to the
exclusion of the other. Often these entities cooperatively conduct research and development on
code, because collaboration can foster the creation, support, and promotion of new knowledge.
This cooperation can take many forms, such as a short-term contract, joint venture, university-
industry relationships, or a consortium.
46
In this section, we focus on the consortium form of
cooperation, because of its significance in developing standards for code. A consortium consists
of a number of participants engaged in cooperative research and development.
47
Their rationale
45
Nancy Gallini & Suzanne Scotchmer, Intellectual Property: When Is It the Best Incentive System?, in
I
NNOVATION
P
OLICY AND THE
E
CONOMY
, V
OL
2, (Adam Jaffe et al. eds., 2002), available at
http://socrates.berkeley.edu/~scotch/G_and_S.pdf (reviewing the economic literature on the use of intellectual
property as an incentive); Roberto Mazzoleni & Richard R. Nelson, Economic Theories about the Benefits and Costs
of Patents,
32 J. E
CON
. I
SSUES
1031 (1998) (noting several economic theories for patents).
46
See W
ILLIAM
J. M
URPHY
, R&D C
OOPERATION
A
MONG
M
ARKETPLACE
C
OMPETITORS
5 (1991) (discussing
various forms of cooperative research).
47
Carl F. Cargill, The Role of Consortia Standards in Federal Government Procurements in the Information
Technology Sector: Towards a Re-Definition of a Voluntary Consensus Standards Organization, June 28, 2001,
available at http://www.sun.com/standards/HouseWhitePaper_ver2_Final.PDF (defining the elements of a “good”
consortium). To overcome antitrust liability, while encouraging innovation and commercialization, the government
enacted legislation providing a legal basis for consortia. National Cooperative Research and Production Act of
1993, 15 U.S.C. § 4301 (2001). See also John T. Scott, Historical and Economic Perspectives of the National
Cooperative Research Act, in
C
OOPERATIVE
R
ESEARCH AND
D
EVELOPMENT
: T
HE
I
NDUSTRY
—U
NIVERSITY


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