The Externalization of Domestic Regulation

Abstract

Intellectual property rights (IPR) issues in the semiconductor, software, and biotechnology industries exemplify the pressure that new technologies and international competition are placing on domestic and international regulatory systems. Traditional patent and copyright rules cannot easily accommodate any of these technologies. At the same time, the high costs of research and development, relative ease of replication, and global markets characteristic of these technologies heighten the importance of both domestic and foreign IPR protection. In the context of rapidly changing technological conditions, borderless markets, and inflexible international regimes, national policymakers face a political dilemma: how to accommodate new technologies at home, encourage similar accommodation abroad, and do both without undermining either long-standing domestic IPR arrangements or the international patent and copyright regimes. This article reviews the different strategies of externalization associated with IPR reform in the software, biotechnology, and semiconductor industries. Variations across these cases indicate that fundamentally different technological, market, and political conditions can lead to different strategies for equilibrating incompatible and highly contested domestic and international regulatory rules.