Infringement as Nuisance: Intellectual Property Rights and the Problem of Social Cost

Abstract

In The Problem of Social Cost, Ronald Coase demonstrates that economic efficiency does not require that those acting in a market should be legally responsible for all the harm they cause. He offers numerous examples from nuisance law, and this essay argues that intellectual property infringement can be similarly viewed as addressing a species of nuisance, which only sometimes requires the legal allocation of rights to diminish a social cost. As with Coasean nuisances, the imposition of liability on an infringer of intellectual property may, in fact, impose a cost on society. Both descriptive and normative examples illustrate the application of Coase’s analysis to intellectual property.