02 April 2012 Written by  Balew Mersha and Kahsay Debesu

Theories of Intellectual Property

Natural Right theory: Labour Theory (Locke’s Theory)

Property right is a natural right. A person has a right to own the creation of his mind in the same manner he owns creation of his labour. When a person is deprived of what he has created he becomes.

At the beginning, everything was common but by using labour /intellect/ it has become private. We need to protect somebody’s labour because it is a natural right. So, it may take to conclude that intellectual property rights are natural rights.

The problem is that natural right theory doesn’t cope with the temporal limitation of intellectual property rights. It is true that temporal limitation is applicable to intellectual property. Intellectual property is most of the time limited in time as to the protection accorded by law. This theory may be justifiable for corporeal ownership in which its existence may be for indefinite period of time. In intellectual property, however, after lapse of a certain time the work will be part of the public domain.

Nothing can be called with greater prosperity man’s property than the fruits of his labour. The property in any article or reason of his own mechanical labour is never denied him; the labor of his mind is no less worth of the protection of the law.

A person has a natural right to the fruits of her labour and that this should be recognized as her property, whether in tangible or intangible term.

John Locke has two theses.  1) Everyone has property right in the labour of his own body. The labour of his body and the work of his hands are properly his. 2) The appropriation of an unowned object (ideas or theories) arises out of application of human labour to that object. Mixing one’s own labour with unowned thing confers upon a property right in the whole thing. However, after appropriation there must remain objects of similar quality in sufficient quantity for others: “Enough and as good left for other.”

Personality Theory

Intellectual property rights are important to create personal self assertion. As propounded by Hegel, a person would be more self assertive when she/he owns property. He will feel more equal (equality). He will be freer. It is believed that the work is the personal expression of the author’s or the inventor’s thoughts. So he should be given the right to decide when and how his work may be produced or performed in public, and the right to prevent mutilations and changes. Intellectual property laws are to be there to protect the author’s or the inventor’s manifestation of his personality. This is also backed by the need for the safeguarding of the individual’s freedom of expression.

Utilitarian Theory

What do Intellectual Property Rights do? They make the public good a private, a non rivalorous – rivalorous and the non-exclusive – exclusive, and the non-scarce scarce which are not scarce by nature. The laws create artificial scarcity of knowledge. This is because creators do not have the necessary incentive unless they have accorded some means to control their knowledge. Unless this is done, they lack the necessary economic incentive. This is called utilitarian theory of intellectual property.

Utilitarian is institution socially beneficial. It states that we have intellectual property systems because it has the effect on the betterment /economic/ of the society. Its correctness is to be assessed in the economic success of the countries. So, it is more of an economic issue. We have witnessed tremendous technological advancements both in the science and the arts.  The question is: would it be possible without intellectual property systems? According to this theory, you do something because you will get something. Why should we care about creations of society? Society should care about its creators because the ultimate beneficiary is the society itself because they give solution to technical problems.

Such theory has never been successful as we would expect them to be. There is an objection from economists. When intellectual property is given exclusive rights, according to them, it is a creation of a monopoly right. Monopoly is contradistinguished with a perfectly competitive market. If monopoly is unrestricted it will result in market crush. How does intellectual property right create monopoly? How do antitrust organizations fight monopoly?

There are arguments counterfeiting this. Whenever the law gives an exclusive right to the innovator, the right holder is not enabled to control the problem. There are so many ways of resolving a problem. That means there is no intellectual property law which prohibits other innovators from innovating a solution to the same problem. This is not sound in copyrights since they protect expression of ideas.

Patent for a drug for a certain illness does not prohibit innovating another drug for the same illness. However, each monopolizes their right until another comes. So, the monopolistic nature is undeniable. That is why governments try to control such monopolization.

What if design law does not exist? Some say without intellectual properties, designers will not engage in such business and then a given society may not promote cultures. There is a counter argument for the monopolization of a patent. The economic incentives given to an inventor enforce another person to invent around the patented idea. It stimulates others to develop an alternative solution because of the monopolization of the patented idea. So it induces inventing around an existing patent.

There is a counter argument to this, i.e., if we end up in giving different solutions to the same problem, it will result in economic waste since there are different problems which we have to give solutions to.

The other version of utilitarian theory is incentive (bargain) theory. The protection given to intellectual property is an incentive to individuals not only to create works of the mind but also to publicize and disseminate them into the public. It is to encourage creativity and publicity. Works of the mind are very important to a given society for its social, cultural and economic development.

Through literature development, the cultural orientation of a given country will be promoted. Invention promotes industrialization. Development of the west has to do much with intellectual creativity.

Those works require investment in terms of time, money and effort. So without protection people will not invest on them. They are no less investment demanding than corporeal thing and the protection of the law is needed. In addition, creativity by itself is not adequate. If the work of a mind is not made available to the public, that is not useful. With protection publicity will be encouraged thereby enabling their publicity and serve their intended purpose. Upon the expiry of their period of protection the public will start to use the properties. When right is protected then the creator will make his work to be known. Without protection people may not make their works known. The state is bargaining with individuals.

Do intellectual properties really stimulate innovation? Are not there any stimulators other than intellectual property rights? It is a controversial issue.

The other question is: does the theory really work? Numerous assertions are made. There are factors other than intellectual property rights which stimulate innovation.

Before the existence of intellectual property rights there were innovations. Some say, even great works of the mind are created without the existence of protection. As an example, we can take Shakespeare’s writings. What incentives encouraged these people? What they are saying is there are born creators, who continue creating even without protection. People create for different reasons: to satisfy their natural urge, necessity, fame… Some writers say copyright is unnecessary restriction on the public favor of the author. For them, when there is shortage, a better system is needed and creativity follows even without legal protection.

However, the critics must be seen seriously in light of the world’s development. In older days, people may write books because violation itself is very difficult, there were no printing machines, no mechanism of dissemination, no recording machines for reproduction and distribution.

In history, works of the literature were even limited to certain groups, elites of the church. These days, however, the situation the changed. The critics on incentive theory will not work firmly today.

Objections to incentive and reward theory may be summarized as:

The need to pay the rights owner a royalty or fee may increase the price of the product or service to which intellectual property right relates. It can be seen as a kind of tax on knowledge and information.

Even if consumers are prepared to pay the prices charged by the right owners, the latter may not meet the demands of the public in sufficient quantities. This will lead to compulsory license.

The grant of rights has little positive effect in promoting investment that is required for the production of new inventions, technical innovation, literary and artistic productions and the like.

Whilst no monopolies in the strict sense are applied by economists, intellectual property rights have the potential to be used to anti-competitive effect, particularly where they are pooled together or used as a lever to obtain other ends.

Intellectual property rights can be used to suppress free speech and access to information.

Regarding issues related to intellectual property rights, we have attached the following different materials written by different scholars. Please read them critically.

Last modified on Wednesday, 02 May 2012 13:05