What is Intellectual Property? How is it justified?

University Degree Law

LX2032A INTELLECTUAL PROPERTY LAW

COURSEWORK

PART B

WHAT IS INTELLECTUAL PROPERTY? HOW IS IT JUSTIFIED?

‘Property: Something of value, either tangible, such as land, or intangible, such as patents, copyright.’

Traditionally the term ‘property’ was concerned with the regulation and control of tangible goods such as land or a house. However, the change in the commercial climate has meant that there is an increased need to regulate intangible goods as well as tangible goods. Intangible goods can cover a range of areas, with the two predominant areas being company shares and intellectual property.

The term ‘intellectual property’ has been found difficult to define as there is no statutory definition of ‘intellectual property’ and due to the abstract nature of the goods concerned. There have been some attempt to try to define the term ‘intellectual property’ and the most comprehensive definition comes from World Trade Organisation (WTO), although other regulatory bodies such as the World Intellectual Property Organisation have offered similar suggestions. The definition from WTO states that

‘Intellectual Property rights are rights given to people over the creation of their minds…. Creators can be given the right to prevent others from using their inventions, designs or others creations. These rights are known as “intellectual property rights”.

However, even these general definitions pose problematic. Although creators are given property rights over the creations of their minds, the notion of idea expression dichotomy allows for a creator to only acquire property rights to the expression of an idea yet not for the idea itself. Therefore, if the basic product of the mind, an idea, is not afforded property rights, how can intellectual property and the scope to which it covers be defined?

One way on defining intellectual property and its scope is to analyse ways in which the six key areas of intellectual property are similar. One common characteristic is that unlike a piece of land, intellectual property is intangible nature. Although they are intangible, they are still considered as property and give rise to a form of property that can be dealt as with tangible property. For example, intellectual property can be assigned, mortgaged and licensed, however, unlike tangible property such as a car, it is difficult to define the scope of intellectual property. Given the intangible nature of intellectual property, it is difficult to demarcate an area or protection conferred on a particular right, for example

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Justification of copyright

The difficulties with defining the scope of intellectual property have thrown up the issue of whether intellectual property rights should be justified. Various justifications have been put forward, with the two most commonly expressed approaches being consequentialist and deontological justifications.

The most commonly expressed consequentialist viewpoint is also known as the ‘Law and Economics’ approach. Those who favour this approach have noted a particular issue in relation to the creation of intellectual property. As discussed previously, intellectual property is intangible in ...

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Justification of copyright

The difficulties with defining the scope of intellectual property have thrown up the issue of whether intellectual property rights should be justified. Various justifications have been put forward, with the two most commonly expressed approaches being consequentialist and deontological justifications.

The most commonly expressed consequentialist viewpoint is also known as the ‘Law and Economics’ approach. Those who favour this approach have noted a particular issue in relation to the creation of intellectual property. As discussed previously, intellectual property is intangible in nature, thus creating what is known in economic terms as a ‘public goods problem’. In creating intellectual property, there is a considerable degree of creativeness and originality exerted on the part of the creator which is both time consuming and costly. However, once the mental investment is embodied in a physical form, it can be relatively cheap and easy to produce. The ‘Law and Economics’ approach states that intellectual property rights are justified in that they prevent others from taking advantage of intellectual capital without incurring the original cost. This, the approach states, not only protects the owner and their work but also stimulates growth of the intellectual property market. Intellectual property rights offer an important incentive for the creation of new capital, a view shared by Harold Demsetz

‘Consider the problems of copyright and patents. If a new idea is freely appropriable by all, if there exists communal rights to new ideas, incentives for developing such ideas will be lacking…. If we extend some degree of private rights to the originators will come forth as a more rapid pace.’

Without intellectual property rights, individuals and companies would be deterred from procuring new capital and so the market would be deprived. Furthermore, without incentives, in the long term there would be other social and economic costs. Van de Bergh stated in ‘The Role and Social justification of Copyright’ without intellectual property rights, the public domain would be depleted since intellectual property would be expected to become part of the public domain and form the basis of future intellectual production. Therefore, intellectual property rights are seen as a solution to the ‘public goods problem’.

However, the consequentialist view can create other social and economic costs. Michael Lehmann criticised the theory in ‘The Theory of Property Rights and the Protection of Intellectual and Industrial Property’ stating intellectual property rights serves to generate optimal levels of production of intellectual property. However, This being so, this creates a conflict between the protection market competitiveness and the monopolistic protection of intellectual property rights. For example, a patent owner may raise the price of an invention above one which the majority of the public can afford. If there were no alternatives on the market due to the protection afforded to the owner, then the patent owner would have a monopoly. Others inventors, as a result may be deterred from exploiting similar inventions due to the possibility of legal action. However, there are provisions in both UK legislation and in European Community Law to control the abuse. Patents Act 1977 section 48 allows for any person to apply for a compulsory license to work a patent after three years of the patent being granted while Article 81 of the European Community Treaty controls restrictive trade practices. Thus, although there is an inherent tension between intellectual property and free market competition, statutory provisions have tried to limit the tension. In addition, free-market economists generally favour this approach, as the underlying assumption with the economics theory is that rational individuals will only seek to maximise economic gains and will not act if they only stand to receive marginal economic gains.

However, this is not a viewpoint shared by all, a popular alternative is that of the deontological approach. The rights based approach, formulated by John Locke in ‘The Second Treatise of Government’ states that everyone has a property right in the labour of his own body.

‘Every men has a property in his own person.’

A view which is supported by Laurence Sterne in ‘Tristram Shandy’

‘The sweat of a man’s brow and the exudations of a man’s brains are as much a man’s property as the breeches on his backside’

The Lockien theory assumes there is an uncultivated ‘common’ which is characterised by an abundance of raw material. Intellectual property rights should therefore be granted to those whose labour adds value to the uncultivated goods which they have taken from the ‘common’. However, Locke stipulates an important condition for an owner to acquire intellectual property rights; after the appropriation of goods from the ‘common’ there must remain intellectual goods of a similar value must be left within the common. Known as the ‘enough and as good left over’ provision, it is meant to ensure that the appropriation of an intellectual good does not hinder the position of another person.

Initially, the Lockien theory was concerned with tangible goods, it has since been adapted to intangible goods. In the case of Intellectual property rights, the ‘common’ is considered as the public domain. The public domain retains intellectual raw material that no person owns such as ideas and discoveries. It is once this raw material has had the necessary labour expended in it that intellectual property rights can be granted on it. However, this in itself is contradictory to the Lockien theory because once the ‘finished’ intellectual property is given rights it would leave the public domain and breaches the ‘enough and as good rule. Nevertheless, advocates of the Lockien theory stress that this is not in breach of the theory. By affording rights to owners, it serves to encourage individuals to place their creations within the public domain. Once intellectual goods leave the public domain, they stimulate new ideas and further creativity. In addition to this, and given the limited time nature of intellectual property rights, these intellectual goods do return to the public domain.

Both the Lockien ‘labour’ theory and the economic theory suffer from inherent difficulties. However, the two views need not been seen as mutually exclusive. Horacio Spector in ‘An outline of a theory justifying intellectual and industrial property right’ stated that the two views could be seen as complimentary as well as justified. Spector maintains that property rights are justified because firstly, the consequentialist approach justifies the need for property rights in relation to the creative and innovative needs of society, while in recognising the author and inventor as holders to the rights of the property. In sum, property rights in intellectual property are seen as justified because not only does the consequentialist view protect the creative and innovative needs of a society, the deontological views recognises that an owner is entitled to receive credit for his work.

REFERENCES

D Baird, “Common Law Intellectual Property and the Legacy of INS v Associated Press” (1983) 50 U Chicago LR 411.

Collins English Dictionary, William Collins Sons & Co Ltd, 1982, London

H Demsetz, ‘Toward a Theory of Property Right’ American Economic Review, LVII (1967) at 350

E Hettinger, ‘Justifying Intellectual Property’ (1989) Philosophy and Public Affairs 31.

J Hughes, ‘The Philosophy of Intellectual Property’ (1988) 77 Georgetown LJ 287.

M Lehmann, ‘The Theory of Property Rights and the Protection of Intellectual and Industrial Property’, IIC 16 (1985)

J Locke, ‘The Second Treatise of Government’, section 27 (at 305 to 306) in Two Treatise of Government, edited by Peter Laslett, Cambridge University Press, 1970

N MacCormick, “On the Very Idea of Intellectual Property: an Essay according to the Institutionalist Theory of Law” [2002] IPQ 227

H Spector, ‘An outline of a theory justifying intellectual and industrial property right’ EIPR 1989 11(8), 270-273

TABLE OF STATUTES

Patents Act 1977

Treaty of Amsterdam 1999

‘Collins English Dictionary’, William Collins Sons & Co Ltd, 1982

‘Products of the mind: inventions, literary and artistic works, any symbols, names, images and designs used in commerce’

Harold Demsetz, ‘Toward a Theory of Property Right’ American Economic Review, LVII (1967) at 350

Michael Lehmann, ‘The Theory of Property Rights and the Protection of Intellectual and Industrial Property’, IIC 16 (1985)

Michael Lehmann, ‘The Theory of Property Rights and the Protection of Intellectual and Industrial Property’, IIC 16 (1985) at 538 to 539

As consolidated by The Treaty of Amsterdam, 1999

John Locke ‘The Second Treatise of Government’, section 27 (at 305 to 306) in Two Treatise of Government, edited by Peter Laslett, Cambridge University Press, 1970

EIPR 1989 11(8), 270-273

Horacio Spector in ‘An outline of a theory justifying intellectual and industrial property right’ EIPR 1989 11(8), 270-273 at 273