What is intellectual property for?

zeugmaThis is a huge subject, and a short article.  (Did IP Draughts nearly create a zeugma?)

The theme of today’s sermon is that IP is a business asset, and only a business asset, and that thinking of it in this way is desirable, and leads to good IP policy decisions by government.

An alternative view, apparently held by some designers and others in the creative industries, often working in small businesses, is that IP is the legal mechanism by which the little man (or woman) protects his creative labour and integrity from assault and exploitation by others, including major corporations.

The little man can’t afford to spend much, or sometimes any, money in IP litigation. IP is inherently good and beneficial for society and the little man who creates IP should be supported. If one has this perspective, then one is likely to be in favour of making infringement of IP a criminal offence, and a social disgrace. IP infringement becomes a matter that the state gets involved in, rather than a private property dispute.

raggedAccording to the logic of this alternative view, Government policy should support and protect the interests of IP owners. For example, school pupils should be taught to ‘respect’ the rights of IP owners, eg by not making illegal downloads of music from the internet. Recent UK government statements, eg in the IPO’s 5 year strategy document, suggest that the government leans towards this general approach. After all, such an approach is consistent with the present government’s positive attitudes towards (a) IP, and (b) SMEs.

In IP Draughts’ view, this approach is misguided, and a surprisingly interventionist one for a Conservative government to take. Traditional IP laws (eg copyright) should not be used to protect a person’s creative integrity; ‘moral rights’ (the paternity and integrity rights) are better suited to this objective. The poverty of the creative artist should be addressed by having inexpensive enforcement mechanisms, eg in the small claims branch of the IP court. The state should not generally intervene or act as a champion of IP owners.

The better way of looking at IP is that it is a business asset. IP creates monopolistic rights which reduce competition; this is justified but only up to a point. Go too far in the direction of the owner and legitimate competition is stifled. Go too far in the direction of the competitor, and the IP creator has no financial incentive to create the IP. The system needs to be kept in balance for the good of the overall economy. Once the system is roughly in balance, changes should be kept to the minimum: investment decisions are based on what the system is, and certainty and consistency may be preferable to tinkering with the system, however well intentioned. IP rights are best asserted and defended privately. We should have good and cost-effective courts for IP litigation, and many people think that IPEC achieves these objectives. If the financial amounts at stake are too small to justify even the limited cost regime of IPEC, then this is no different to any other private dispute where the costs outweigh the benefits. In those circumstances you shouldn’t go to court. Life is sometimes unfair.

IP Draughts is not sure how best to fit the existence of criminal offences for IP infringement into his preferred system. Perhaps some infringement is so bad that the state should intervene. But where the threshold for this exceptional state of affairs should lie is not clear. Perhaps it would be clearer to IP Draughts if he were an IP litigator.

Consistent with IP Draughts’ approach is the view that one should only spend money in protecting IP if having the IP is considered likely to lead to a financial benefit or avoid a financial disbenefit. For example, academics should not use patents as an alternative to publications.

charityOccasionally, IP protection may be considered justified in support of a non-business objective, eg to support an open-access policy for a university’s technology. In other words, you promote the dissemination of the technology, for the public good, via a licensing programme, where you use your ownership of IP as the legal peg on which to hang contractual obligations on the part of licensees. While IP Draughts can see the potential, theoretical attractions of such an approach, he is instinctively suspicious of public bodies spending money on IP protection in support of objectives whose value may be difficult to determine.

This posting has turned out making IP Draughts seem more right-wing, economically, than he thought he was, and certainly than the present Conservative government of the UK seems to be. He looks forward to being shown the error of his ways by commenters!

3 Comments

Filed under Intellectual Property, Legal policy

3 responses to “What is intellectual property for?

  1. “one should only spend money in protecting IP if having the IP is considered likely to lead to a financial benefit or avoid a financial disbenefit.” Hear hear.

  2. *applause*

    The best summary of IP that I’ve seen for a long time.

    Now, in relation to the criminal offences for IP infringement, I always took the view that they were there because there were some infringements that were actually injurious to the health & welfare of the citizenry – counterfeit pharmaceuticals are the prime example, but other counterfeits fall into the same category. I recall once reading of counterfeit brake pads that were made of compressed grass clippings and unlikely to assist in an emergency stop. Now, as the rights owner might not always have the time and the funds to stop these, or might not know about them, or might not consider it worthwhile enforcing against someone with no assets, we created a criminal sanction so that the State could step in on behalf of the citizens and stop the flow of clearly misleading and potentially dangerous goods.

    Sadly, our current criminal provisions go way beyond that limited remit.

  3. The late Donald Banner was one of the deans of the global IP bar in my youth; he was a former Commissioner of Patents and Trademarks. I regularly heard him proclaim, for example at ABA IP Section business meetings, the need to protect “the little man from Little Rock,” i.e., independent inventors.

    Experience, though, has convinced me that:

    (1) When it comes to furthering the public good by promoting innovation — which in the U.S. is the constitutional foundation of patents and copyrights — the *execution* of an idea is usually at least as important, and often far more important, than merely having and publicly disclosing the idea. The little man from Little Rock often isn’t in a position to benefit the public by taking the necessary next step and *executing* on his idea; to my mind, that limits his claim to “ownership” of the idea.

    (2) We’d prefer it if the people who come up with Innovation A didn’t rest on their laurels and passively collect economic rents; instead, we’d like them to turn to working on their next Innovations B, C, etc.

    (3) To an innovator, the fear of being overtaken and passed by copiers can sometimes be just as much a spur to further innovation as the prospect of obtaining a legal monopoly. (As legendary baseball pitcher Satchel Paige famously put it: “Don’t look back. Something might be gaining on you.”)

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