Vol ## THE PROBLEM OF UNIFORMITY COST an optimal uniform scheme of protection will provide protection that will leave some desirable innovative products unprofitable To illustrate the point, imagine four innovations, A, B, C, and D These could be musical compositions, types of business software biotechnological inventions, or chemical compounds with pharmacological uses. Society places a value of 50 on each of these if it is available for use and is free from any intellectual property rights. Assume that intellectual property rights apply uniformly to all covered forms of information and can be calibrated to yield levels of protection ranging from 0 to 3. Innovations B-D will require a level of protection above to be created and distributed. so that a alone will be created and distributed at 0. A and b will be created and distributed at level 1. and so on. as protection increases, however, social value decreases because some users are priced out of desired uses for which they would pay more than marginal cost. Assume that each increase in the level of protection reduces the social value of each innovation by 10. Sliding the protection lever upward yields the following distribution of social values Table 1 Level of Protection Innovations Created Total Social Value and Distributed B A,B.C A,B,C,D a policymaker interested in maximizing social value from intellectual property rights but bound by the uniformity condition would set the level of protection at 2, leaving innovation D unprofitable even though society places a net positive value of 20 on having it created. Within this highly stylized example, it is easy to see that if the uniformity condition could be relaxed, it would be possible to adjust rights to entice the creation of A-D by, for example, eliminating protection for A and reducing the scope or duration of rights granted to B See lunney, Quiet Revolution,, supra note XX, at 50-51 Some empirical data suggests that innovations such as A are more than hypothetical Edwin Mansfield interviewed research and development managers from 100 randomly selected firms to ask what percentage of the firms inventions would have been developed and brought to market in the absence of patent protection. See Edwin Mansfield, Patents and Innovation: An Empirical Study, 32 MGMT SCIENCE 173(1986)Vol. ##] THE PROBLEM OF UNIFORMITY COST 9 . . . . an optimal uniform scheme of protection will provide protection that will leave some desirable innovative products unprofitable.” 23 To illustrate the point, imagine four innovations, A, B, C, and D. These could be musical compositions, types of business software, biotechnological inventions, or chemical compounds with pharmacological uses. Society places a value of 50 on each of these if it is available for use and is free from any intellectual property rights. Assume that intellectual property rights apply uniformly to all covered forms of information and can be calibrated to yield levels of protection ranging from 0 to 3. Innovations B-D will require a level of protection above 0 to be created and distributed, so that A alone will be created and distributed at 0, A and B will be created and distributed at level 1, and so on. As protection increases, however, social value decreases because some users are priced out of desired uses for which they would pay more than marginal cost. Assume that each increase in the level of protection reduces the social value of each innovation by 10. Sliding the protection lever upward yields the following distribution of social values: Table 1 Level of Protection Innovations Created and Distributed Total Social Value 0 A 50 1 A, B 80 2 A,B,C 90 3 A,B,C,D 80 A policymaker interested in maximizing social value from intellectual property rights but bound by the uniformity condition would set the level of protection at 2, leaving innovation D unprofitable even though society places a net positive value of 20 on having it created. Within this highly stylized example, it is easy to see that if the uniformity condition could be relaxed, it would be possible to adjust rights to entice the creation of A-D by, for example, eliminating protection for A and reducing the scope or duration of rights granted to B.24 23 See Lunney, Quiet Revolution,, supra note XX, at 50-51. 24 Some empirical data suggests that innovations such as A are more than hypothetical. Edwin Mansfield interviewed research and development managers from 100 randomly￾selected firms to ask what percentage of the firm’s inventions would have been developed and brought to market in the absence of patent protection. See Edwin Mansfield, Patents and Innovation: An Empirical Study, 32 MGMT SCIENCE 173 (1986)