Theories and Justifications of Intellectual Property

1. The problem every theory must answer

Intellectual property gives a person the right to stop others from using an idea, an expression, a sign or a design, even though using it takes nothing away from the creator. Economists call information a public good: it is non-rivalrous (my use does not reduce yours) and non-excludable (once disclosed it is hard to fence). Thomas Jefferson made the same point in his 1813 letter to Isaac McPherson: a person who lights his taper at mine receives light without darkening me. If ideas are not scarce, why create artificial scarcity? Each theory below is an answer to that question, and each fits some parts of IP law better than others. William Fisher’s essay Theories of Intellectual Property (2001) groups them into four: utilitarian, labour, personality and social planning. That grouping is the cleanest frame for an exam answer.

2. Labour theory: Locke

In chapter V of the Second Treatise of Government (1690) John Locke argues that every person owns his own body and therefore the labour of his body. When he mixes that labour with something held in common, he makes it his property, provided that “enough and as good” is left for others (the sufficiency proviso) and that he takes no more than he can use without waste (the spoilage proviso). Applied to IP, the creator who works on the intellectual commons of ideas earns a right in the result.

• Fit. The theory explains why copyright vests in the author on creation, and why the person who did the inventive work is the “true and first inventor”. Justin Hughes, in The Philosophy of Intellectual Property (1988), argued that the provisos are easier to satisfy for ideas than for land, because the idea pool is not used up.
• Difficulty. Labour alone does not get protection. The “sweat of the brow” doctrine was rejected in the United States in Feist Publications v. Rural Telephone Service (US Supreme Court, 1991), where a telephone directory was held not original. India took a middle path in Eastern Book Company v. D.B. Modak, 2007 INSC 1266, (2008) 1 SCC 1, requiring skill and judgment with a minimal degree of creativity, so copy-edited judgments as such were not protected but the editor’s headnotes and additions were. Labour is necessary, not sufficient.
• Objection. Robert Nozick asked whether a man who pours his can of tomato juice into the sea owns the sea or has lost his juice. Mixing labour does not tell us how far the right should extend, and patent law gives the whole field to the first filer even when a second inventor laboured independently.

3. Personality theory: Kant and Hegel

Hegel, in the Philosophy of Right (1821), treats property as the means by which a person gives his will an external existence. Kant had earlier treated a book as the author’s speech to the public. On this view a work of art is an extension of the author’s personality, so the law should protect the author’s link with it even after sale.

• Fit. The theory explains moral rights: the right of paternity and integrity in Article 6bis of the Berne Convention and section 57 of the Copyright Act, 1957. The Delhi High Court in Amar Nath Sehgal v. Union of India (2005) awarded damages to a sculptor whose mural was taken down and stored as scrap by the government. It also explains the continental droit d’auteur tradition, which speaks of authors’ rights rather than copy rights.
• Difficulty. It says little about patents for a pharmaceutical salt or a trade mark for a soft drink, where there is no personality to protect. It fits art and literature, not industry.

4. Utilitarian (incentive) theory

The dominant justification in Anglo-American law is instrumental. Bentham and Mill argued that without a temporary monopoly, creators cannot recover the cost of creation because copiers can free-ride. The law therefore trades a limited exclusive right for the social benefit of more inventions and works, which fall into the public domain when the term ends. The United States Constitution, Article I, section 8, clause 8, authorises Congress “To promote the Progress of Science and useful Arts” by securing exclusive rights for limited times. The Statute of Anne, 1710, was titled an Act “for the Encouragement of Learning”.

Patent law adds the disclosure or contract theory: the state grants a monopoly in exchange for full disclosure of the invention in the specification, which enlarges public knowledge. That is why section 10 of the Patents Act, 1970 requires the complete specification to describe the invention and the best method of performing it, and why insufficient disclosure is a ground of revocation.

William Landes and Richard Posner, in The Economic Structure of Intellectual Property Law (2003), developed the efficiency account: the optimal right balances the incentive gain against the deadweight loss of monopoly pricing and the cost of blocking follow-on creators. Kenneth Arrow’s information paradox (1962) adds that an inventor cannot sell an idea without revealing it, and once revealed the buyer need not pay; a property right solves the paradox and makes licensing markets possible.

5. Social planning and the public domain

The fourth approach, associated with Neil Netanel and William Fisher, asks what IP rules would promote a just and attractive culture: a vibrant public domain, democratic discourse, access to education and health. It explains fair dealing (section 52 of the Copyright Act), compulsory licences, and the exclusion of methods of treatment and traditional knowledge from patents (section 3 of the Patents Act). James Boyle’s essay The Second Enclosure Movement and the Construction of the Public Domain (2003) compares the expansion of IP to the enclosure of English common land, and warns that the commons of the mind is being fenced.

Two further critiques belong here.

• Tragedy of the anticommons. Michael Heller and Rebecca Eisenberg (1998) showed that when too many owners hold rights over fragments of upstream biomedical research, the cost of assembling licences can block downstream innovation. Hardin’s tragedy of the commons (1968) is the opposite failure: overuse when nobody owns.
• Instrumentalism versus proprietarianism. Peter Drahos, in A Philosophy of Intellectual Property (1996), argues that IP should be treated as a privilege granted for public ends, and he warns against “proprietarianism”, which treats IP as a natural right and so resists limits. Drahos and Braithwaite’s Information Feudalism (2002) tells how TRIPS was written largely at the request of US corporate lobbies.

6. Theory in the Indian courts

Indian law is openly instrumental. The Justice N. Rajagopala Ayyangar Committee (1959), whose report shaped the Patents Act, 1970, said patents should serve industrialisation and that a foreign patent not worked in India served only to secure an import monopoly. The same view appears in the Supreme Court. In Novartis AG v. Union of India, 2013 INSC 198, (2013) 6 SCC 1, the Court read section 3(d) as a deliberate legislative choice to prevent evergreening, so that a new form of a known drug earns no new monopoly without enhanced therapeutic efficacy. In Entertainment Network (India) Ltd. v. Super Cassette Industries Ltd., 2008 INSC 708, (2008) 13 SCC 30, the Court treated copyright as a right that must yield, through compulsory licensing, where the owner unreasonably withholds a work from the public. Both decisions rest on the social planning view.

Trade marks need a separate explanation. They do not reward creation at all. They lower consumer search costs and protect goodwill, so the justification is consumer protection and fair competition, which is why a mark can last forever while it is used.

How this is examined

Typical questions: “Critically examine the theories justifying intellectual property rights,” or “Is intellectual property a natural right or a state-granted privilege?” Structure: the public-goods problem; the four theories, each with its thinker, its fit and its weakness; the critiques (Boyle, Heller and Eisenberg, Drahos); then Indian law and Novartis. End with your own view, for example that no single theory explains the whole field and that each IP right is justified on a different mix.