Theories of IPR

Roman Philosophers
• Things in Patrimony
– Things capable of being taken in private ownership
• Things out of Patrimony
– Things which cannot be owned privately
 Natural Law Theory
• Grotius
– ‘res nullies’
– Nobody’s Property
– Ownerless, abandoned property is free to be owned
• Pufendorf
– ‘res communes’
– Things owned by no one and subject to use of all
• It is possible to believe that certain things are naturally fit to
become property, while others are not.
• A manifestation of nature, free to all men and reserved exclusively to none.
Whereas human ingenuity deserves property rights.
 Labour Theory
• John Locke
• “A person who labours upon resources that are either not
owned or held in common, has a natural property right to the
fruits of his or her efforts, and the state has a duty to respect
and enforce that natural right”
• Each person plainly has a property in his own
person.
• Whatever he mixes that labour with belongs to him.
 Contd.,
• ‘Value added’ theory:
– It is the social value created by labour and not labour
itself that deserves to be rewarded.
– Ex: Patent – Utility requirement = value added
– Exception: CR – worthless works, if original
copyrightable.
– IP system as a whole lead to net increase in social value
 Contd.,
• “Enough and as good”
– Unclaimed nature
– Commons had enough goods of similar quality that
one’s person extraction from it did not prevent the
next person from extracting something of the same
quality and quantity.
 Logic of Labour Theory

“Labour is mine & when I appropriate objects from common I

join my labour to them. If you take the objects I have gathered
you have also taken my labour, since I have attached my labour
to the objects in question. This harms me, and you should not
harm me. You therefore have a duty to leave these objects alone.
Therefore I have property in the objects”
 Utilitarian Theory
• Maximization of net social welfare
• ‘Greatest good of the greatest number’
• To strike balance between
– Exclusive right to stimulate innovation &
– Public enjoyment of Intellectual creations
 Contd.,
• Patent
– Innovators incur fixed cost which has to be
recouped in the absence of which innovation will be
deterred.
• Trademark
– Reduce consumer search cost and is a utilitarian
proposition from the viewpoint of the consumer.
 Contd.,
• Copyright
– Consumption of copyrighted work does not reduce
the enjoyment by one due to the enjoyment by
another.
– How to compensate Financial Loss of author?
Ans: License
 Will Theory
• Kant
– An expression of will over a thing against another
– There must be union of wills or recognition of
general will which can convert the individual’s
possession into a right.
 Hegel Philosophy or Personality Theory

• Private Property Rights are crucial to the satisfaction of

some fundamental human needs.
• IP is the personification of the personality of an individual.
• Expression of idea or novel inventions are personifications
• Will depends on the personality of an individual
• Moral Rights: Natural obligation to respect the personality
of an author’s work.
 Incentive Theory

• William Nordhaus
– Each increase in the duration of patents stimulates
an increase in inventive activity
– Marginal benefits = Marginal Costs
 ‘Incentive to invent’ or
‘Incentive to disclose’ theories

• Patent monopoly = incentive to invest in research

• Disclosure of new inventions enlarges public
domain
• Imitation of Inventions = Zero returns for inventor
• Monopoly ensures returns on the investment in
R&D
 Incentive to innovate
• Patent monopoly
– necessary to induce further innovations or
– Lure to promote innovations
• Incentive to (invent or disclosure)
– Operates before a patent granted
• Incentive to innovate
– Operates after grant, preserves incentives of existing
patents during patent term
 Reward Theory
• John Stuart Mill
• Limited Patent Monopoly
– Reward to the inventor depending on utility of
invention to consumer
 Schumpeterian Theory
• Joseph Schumpeter
• Monopolies are conducive to innovations
• Innovation is important than invention
• Innovation promotes economy more
• Innovation is a process of creative destruction
– New firms with new innovation drives out old firms that
provide obsolete goods & service
– New technologies far more significant than price competition
among firms offering similar goods and services.
 Prospect Theory
• Edmund Kitch
• Patent monopoly is generally not limited to the primitive version
of the invention described in patent application but extends to
subsequent refinements as well.
• Control over subsequent research
– Subsequent improved versions falling within the scope of patent claims
– until the patent expires
– New discovered uses for the invention
• Either secure license or face infringement action
 Summary
• IPRs are
– Granted not on abstract ideas but rather over physical,
concrete or tangible manifestations of these ideas.
– What is protected is the use or value of ideas
– Nature, free to all men and reserved exclusively to none
– Commons mixed with intellectual labour creates private
property
– General will or Union of wills will convert possession into a
right
– Will depends upon personality of an individual.
 Contd.,
– Incentive, to invent/disclose/innovate
– Reward, to the utility
– liberty-intruding privileges of a special kind
– To maintain balance between individual rights and public
enjoyment
– IP Rights are duration specific