Network Effects of the International Intellectual Property System


  • Alexander Peukert


This Article provides a novel explanation for the global intellectual property (IP) paradox,i.e. the consistent growth of the multilateral IP system in spite of mounting evidence that its effectsare at best neutral, if not disadvantageous, for low-income and most middle-income countries andthus the majority of contracting states. It demonstrates that the multilateral IP system is deliberatelystructured as a virtual network that exhibits network effects similar to a social media platform. Themore members an IP treaty has, the more IP protection acceding states can secure for their nationals.Conversely, every accession enlarges the territory in which nationals of previous members can enjoyprotection. Due to these increasing returns to adoption, signing up to and remaining part of theglobal IP network is attractive, irrespective of the immediate effects of a treaty. After introducing the global IP paradox in Part I, Part II of the Article summarizes coreconcepts of the economic theory of network effects. Part III lays out the basic structure of the globalIP network: its nodes, their complementarity, how the nodes are being connected, the openboundaries of the network, and its ownership. Part IV presents five legal measures that were takento cultivate the multilateral IP system and its network effects. It describes how rights acquisitionthroughout the network was improved, how the path of the system was set towards ever higher levelsof protection, how free-riders have been kept out, how the emergence of competing IP systems wasprevented, and how the IP system was attached to other networks in times of crises, in order to benefitfrom their legitimacy and pull-effects. The conclusion, Part V, highlights that since the conclusion ofthe TRIPS Agreement, the world has been locked into the multilateral IP system. It finally addressesthe question what, if anything, can be done to rein in the network effect of the system and possiblyroll back today’s acquis.