Regulatory Property: The New IP

Abstract

For thirty years, a new form of intellectual property has grown up quietly beneath the surface of societal observation. It is a set of government-granted rights that have the quintessential characteristic of intellectual property and other forms of property — that is, the right to exclude others from the territory. The impact of this form of IP on the US health care system, in particular, is enormous. In 2014, more than 40% of all new drugs approved by the FDA came through just one of these portals, with the companies collecting regulatory property rights along the way. Some forms of this regulatory property are quasi-patent. Other forms are quasi-trade secret. Finally, some forms of this regulatory property are more like pure personal property, in that these benefits can be sold or traded on the open market. Sprawling and incremental, the system has grown by accretion as various groups have succeeded in making good arguments that they, too, should have a benefit. When accidental property combines with a system that is largely hidden from view, the danger is great. Treating regulatory property in its rightful place among the pantheon of intellectual property rights allows appropriate analysis of the interactions among these powerful forces. It isn’t just a matter of labelling these phenomena as forms of property. It is a matter of understanding and making sense out of them as a coherent whole, as well as making sense of how they interact with other types of rights to exclude, such as patent and trade secret.