Immaterialgüter- und Wettbewerbsrecht

Legal Concept and Protection of the Traded Idea in the Open Market for Ideas

In the open dynamic of innovation emerges the market for unprotected ideas. The functioning of the market for unprotected ideas is economically inefficient. The legal protection of the trade object can solve that market inefficiency problem.

Last Update: 01.07.18

The open dynamic of the innovation process is characterized by the permanent flow and externalization of ideas. The increasing availability and quality of external ideas enable their commercialization, even if they are not legally protected. In this context emerges a business opportunity, and the market for unprotected ideas as well. In this marketplace contract-based exchanges over legally unprotected ideas take place. That way, these ownerless and free-use resources are factually appropriated. Nevertheless, due to their lack of legal protection, the disclosure of these intellectual creations entails an ‘appropriation’ risk. A rational consumer needs to know the idea to determine if he wants to acquire it. But once he knows it, he is legally entitled to freely use it, without paying the creator for the creation. In this sense, the disclosure leads to a free and anticipated acquisition for the consumer. This hazard and the singular difficulties of transacting an ownerless good involve high transactional costs. These non-optimal conditions prevent the commercial transactions and lead to an economic market inefficiency. Following the methodology of the economic analysis of law, the emerging market is described and analyzed, as well as the effects of commercializing this type of legally unprotected assets within it. Considering the principal-agent theory, regarding the appropriation hazard the creator is the principal and the consumer is the agent. Hence, they play an agency game within the relevant market. The solution of this game is non-cooperative and consists of not revealing the unprotected idea. Thus, no commercial transactions can be achieved between rational and self-interest market players. This situation introduces a misallocation problem since the resource is not allocated to the person that values it most. Besides, the high costs and the improbable benefits that the creator may obtain—that is, the price—, generate a cost-benefit tradeoff problem. The great risks, increasing costs, and low benefits end up discouraging the commercialization and creation of this type of creative assets. These circumstances raise an economic inefficiency problem. Because of the appropriation hazard, only one market agent is better off, while the other is worse off without any compensation. Consequently, a reassessment of the last-century lack of legal protection of the commercial ideas is proposed, as a possible solution for the legal and economic problems factually created in this specific marketplace.


Doctoral Student

Maria Alejandra Echavarria-Arcila


Dr. Michèle Finck, LL.M.

Doctoral Supervisor

Dr. Ana Maria Pérez-Gomez

Main Areas of Research

I.1 Innovation