The Basic Problem Behind the IPR Regime—Utilitarian Perspective

Good fences make good neighbors.

Robert Frost, “Mending Wall”

For centuries, these property rights operated at the state level as per the state’s needs and capacity. However, after World War 2, when the prospects of International socio-economic interaction increased, many felt the need to manage these rights at supra-national level. The prospects of ending anarchy led to the formation of the United Nations, GATT, WTO, and many other agreements leveled up across the globe. The deliberations began in 1994 in Uruguay, around of the World Trade Organization. A document named ‘Trade Related Aspects of Intellectual Property Rights’ was universally implemented and accepted. The document created a formal setup for the transfer of anything that is a property of one’s mental labor. In a sense of an easy liberal argument, the advantage of intellectual property rights is to award mental labor, creativity and innovation. However, in the years following 1994, the document and the entire system was found incoherent with the needs of the developing countries, and it was argued that it did not lead to economic development in the developing countries.

‘Property rights’ basically means liberty of one’s property over others. It is believed that the IPR system is meant to benefit all countries and to provide the deserving share. However, as long as all the participants do not share the same incentives, the IPR system will continue to be a discriminator with a north-south bias. A lot of political controversy has stemmed out of the non-uniformity between the two blocks. One of the most famous arguments is that the developed countries have tricked the developing countries into making them enter into this agreement by luring them into easy technology transfer as a means of development.

One can see that the idea of any property in general, emerges from the concept of scarcity. Anything that has utility has wealth. Anything that has wealth can be owned and ownership creates property. Scarcity leads to competition. However, when one speaks of mental labor, scarcity does not naturally fit into the argument. The process of making scarcity out of resources operates differently in tangible and intangible goods. For example, land is not scarce. However, habitable land is scarce. The value of land is very location-driven and dependent on the density of population. This same logic cannot be applied to intangible property. People employed in mental labor for example, artists, musicians, writers have tended to create the artificial scarcity out of this intangible property.

There are two schools of thoughts—utilitarian and libertarian that propagate intellectual property rights. The libertarians make use of the natural rights theory to claim that property can be made out of everything as naturally as possible. These rights are natural and inalienable, and the job of the state is not to create them but to secure them by using force against those who break laws. This leads to an absolute self-ownership of labor and creation of one’s work.

Stephen Kinsella, a prominent theorist in this field has given three types of ownership. For example, if a man enters a field, irrespective of whether the owner of the land has knowledge about it or not, digs some iron out of the land and makes a road out of it. Since he is using his creativity to make the road, it belongs to him. If he gets the road made from someone else who is acquainted enough with the skill, it will be termed as ownership by labour. Finally, one can argue that the road belongs to the land owner who owns the land and not the laborer or the creator.  This is called the ownership by occupation. The ‘intellectual property rights’ is a very complicated amalgamation of the three types. This is also a case of controversy.

Those with a utilitarian approach have the main aim of wealth and utility maximization. They believe that Intellectual Property Rights is an efficient way of allocation of resources and this can be achieved by innovations and by facilitating technological progress. Anything which leads to a lower production cost increases the efficiency and the revenue. This efficiency can be achieved by more technological sophistication in production. According to the logic of the utilitarian, occupancy comes secondary to creation as the utilitarian idea of rewarding the creator is more efficient than rewarding the owner. However, in the present political and economic scenario, scientists who work in the multinational companies in the research and development sector are hired on a salary-based contract. Thus, they do not get the fruits or the rewards of their intellectual property as they are enjoyed by the company. Thus, the revenue that is supposed to encourage the laborer or the creator goes entirely in the hands of the owner. There are a number of debates that the libertarians and the utilitarian present against the present IPR regime.

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