In his Spring 2025 Regulation article “The Perils of ‘Free’ Information,” University of Southern California law professor Jonathan Barnett argues that weakening intellectual property (IP) rights threatens innovation and competition. The article, based on Barnett’s 2024 Oxford University Press book The Big Steal: Ideology, Interest, and the Undoing of Intellectual Property, acknowledges that free or cheap access to innovations such as pharmaceuticals, artistic content, and technologies does have short-term appeal, especially in this age of the digital economy and the sharing economy. But, he argues, those benefits are offset by grim long-term consequences.

Since a large part of the case for a weaker IP regime can be traced to libertarian arguments, it is worthwhile to review where those arguments come from and see if they stand up to economic reasoning and empirical scrutiny.

Weak vs. strong rights / The incentives for both the creators and users of IP are easy to understand. Users of content and new technological advances tend to favor weak IP rights because they prefer to access that property at low or no cost. The creators and innovators tend to favor stronger IP protection because it allows them to get a market return on their investment of time and resources into developing content, innovations, and technological advancements. Weak IP rights generally lower costs for users of content and innovations, at least in the short term. But over time, Barnett explains, the weakening of IP rights disrupts the funding models necessary for technological and creative innovation.

A robust patent regime is essential for fostering innovation, economic growth, and technology transfer. But it must strike a careful balance to avoid excessive market power that could stifle competition and access to innovation. Balancing strong versus weak is the key tradeoff.

Too-weak IP risks undermining innovation and investment and encouraging free riding. In such a world, only large firms with alternative revenue models (i.e., Big Tech) can sustain innovation. In some of the key industries of the 21st century, including biotech, pharmaceuticals, and high-tech manufacturing, too-weak IP is a major concern because the cost of research and development (R&D) easily exceeds imitation costs.

Too-strong IP also has its risks, namely it reduces competition and follow-on innovation. Excessively strong patents can lead to patent thickets, where overlapping claims create barriers to entry. Strong IP monopolies may slow down innovation if firms focus on rent-seeking through litigation rather than developing new technologies. Barnett argues this isn’t the world we now live in; rather, the pendulum has swung too far toward “weak.”

State-granted monopoly / Turning, now, to the libertarian arguments against strong IP rights, the first is that IP is a government-enforced monopoly that restricts competition and free markets. Thus, government intervention in enforcing IP rights distorts market mechanisms by limiting voluntary exchanges.

Libertarians point out that, unlike physical property, ideas are non-rivalrous (i.e., they can be used by multiple people simultaneously without depletion). But that misses a defining feature of a robust IP regime: licensing. With a robust IP regime, patent holders can license the rights to use their inventions at market rates. The licensing regime is an important part of the technological diffusion process. Licensing is an efficient commercialization, dissemination, and utilization of innovations while maintaining incentives for creators.

Marvel Studios, for example, avoided bankruptcy in the late 1990s by licensing its IP—specifically its copyright to characters like Spider-Man, the Hulk, and the Fantastic Four—to major film studies, generating much needed revenue while rebuilding its brand.

Scarcity vs. non-scarcity / Second, traditional property rights are justified because physical goods are scarce, meaning that if one person possesses an object, another cannot. But libertarians argue that ideas and information are non-scarce: one person’s use of an idea does not prevent another from using it. In other words, the libertarian argument is that IP laws artificially impose scarcity where none naturally exists.

While ideas themselves are non-scarce, the effort, time, and capital needed to develop them are scarce. Without the prospect of exclusivity, people and firms may underinvest in R&D because competitors will just free ride on their discoveries. Property rights apply to ideas because they protect value, not just scarcity.

Hindrance to innovation and progress / Third, libertarians argue that IP laws slow technological progress and innovation by creating legal barriers to building upon existing ideas. Instead of fostering creativity, the argument goes, patents and copyrights serve as tools for rent-seeking and litigation, benefiting large corporations at the expense of smaller innovators. But again, that misses a defining feature of a robust IP regime: public disclosure and licensing. A patent system incentivizes public disclosure, which fosters cumulative innovation.

Consider the patents of Jack St. Clair Kilby and Robert Noyce for the integrated circuit in the late 1950s, and how their patented disclosures allowed others (like Intel) to refine and scale the technology, leading to the microprocessor revolution. Or the Wright Brothers’ patent on aircraft control systems, filed in 1903, and how their public patented disclosures allowed companies like Boeing and Airbus to improve and optimize flight technology, leading to advancements in jet engines and aerodynamics.

Prize regime / Finally, many libertarians advocate a prize regime as an alternative to IP protection. In a prize regime, innovators who develop new technologies would receive monetary rewards. But the way a prize regime works contradicts the fundamentals of libertarianism. In a prize regime, there needs to be a funding mechanism, where prizes are financed through public funds, industry levies, or philanthropic contributions. That means the government, certain pre-ordained segments of the private sector, or charitable organizations would decide which innovations society needs. For that to work, a group of individuals at a government agency or a large foundation would decide what is prize worthy, but that would be inefficient. For instance, consider how large a prize would be needed to induce the semi-monolithic integrated circuit that laid the foundation for modern electronics. Or what about the iPad? Recall that in the early days of its invention, few people thought it would be a successful product and most thought it would be too expensive for mass adoption. It turns out the iPad was a game changer. On the other hand, the Segway, which was massively hyped as a revolutionary personal transport device, flopped and the company was discontinued in 2020.

No one knows how an invention is going to turn out. Only the market will reveal its value. There are too many unknown factors for any select group of people to know the real value of an invention. No foundation or government committee (even if aided by artificial intelligence) could do that.

Others advocate for sole reliance on trade secrets. But that would prevent broader dissemination of knowledge because a patent system incentivizes public disclosure, which fosters cumulative innovation.

Ignoring incentives / Economists focus on incentives because they are the key drivers of human behavior in economic decision-making. Incentives—whether financial, social, or moral—influence how individuals, businesses, and governments allocate resources. People respond to incentives, and incentives shape choices. Without copyrights and patents, creators and inventors have less incentive to invest time and resources into producing new innovations and new works because competitors could freely copy and profit from their efforts. After all, what is the point of investing time, effort, and resources in something if there is no payoff? Unless you are independently wealthy and just a curious person, there is no point.

We don’t have a great natural experiment to study the effects of not having an IP rights regime, but Petra Moser came close in her 2005 American Economic Review article, “How Do Patent Laws Influence Innovation?” She examined exhibits from two great world expositions, the 1851 Crystal Palace Exhibition in London and the 1876 Centennial Exhibition in Philadelphia. Using those exhibits, she compared countries with and without patent laws in the 19th century to see if they affected innovation. She found that countries without patents like Switzerland and Denmark still innovated, but they relied on trade secrecy and first-mover advantages rather than patents. The lack of IP rights and sole reliance on trade secrets hindered technological diffusion. She also found that patents can shape industry choices: In countries with strong patent systems (e.g., Britain and the United States), inventors were more likely to focus on industries where patents were enforceable (e.g., machinery).

Barnett’s argument highlights the critical role of intellectual property rights in maintaining the incentives necessary for sustained innovation, economic growth, and technological progress. While libertarian critiques focus on the theoretical downsides of IP as a government-enforced monopoly, they often overlook how strong but balanced IP protections enable market-driven innovation. This happens by allowing creators and inventors to reap the rewards of their efforts. As history and economic research demonstrate, weakening IP rights in the pursuit of free access risks undermining the very system that drives technological advancement, ultimately stifling progress.