Technological innovation is a predominant source of persistent economic growth. Endogenous factors, principally human capital, financial capital, and government intervention play an important role in how the innovation process can enhance welfare through the grant of intellectual property rights. However, the expansive reacts of such proprietary interests in cyberspace has important implications for how e-commerce might contribute to overall economic growth. Thus far, the scope of intellectual property rights in cyberspace has been examined in isolation from empirical data reflecting how businesses seek to create value and effectively capture the benefits that the Internet offers over real-space markets. This Article argues that expansive construction of intellectual property rights distorts the informational properties of such rights and reintroduces high search and use costs to transactions in cyberspace. It also deters development and use of innovative business strategies that could generate greater value from e-commerce. Consequently, there is a need for more government intervention in regulating competition for markets in cyberspace.