This article is the first part of a series of three articles by Paramjeet Singh. Find the second part here and the third part here.

By Paramjeet Singh

In order to understand this topic, it is relevant to understand its constituents. The said constituents are ‘Intellectual Property Law’ (or IP Law), ‘individual values’ and social values’. To comprehend what should be reflected by an IP law, it necessary to know what the IP system intends to do for society.

Laws do not operate in a vacuum. Laws exist qua society. Therefore, laws have a utility as they perform functions for society. Law as such is intended to govern a particular subject matter. The application of law brings life to it. ‘IP Law’, by definition, is a law that is meant to govern every aspect about IP. Its functions are always directed towards some entity or group. Our society is made up of diverse interest groups and the interests of these groups may not be similar and at times might also conflict with each other. The views expressed in this essay are for the sake of discussion, keeping different perspectives in mind.

IP Law helps innovative manufacturers.

Imitation of innovation cuts down benefits. | Photo courtesy : Pixabay

Should IP Law Reflect Individual Values or Social Values?

The Law always calls for a balancing act between the various aspects involved therein. Therefore, by pursuing this discussion, we seek to know whether IP law should have social or individual values as its foundation.

A foundation can be defined as that which marks the genesis of something, while at the same time throwing light onto its goal and the means to achieve that goal. The objective of law tells us what to achieve and its foundation guides the process to be taken to achieve this objective. The foundation and ‘goal’ in the case of law have a very strong connection and cannot go in different directions. When we talk about the ‘goal’ of the law, we are talking about the ‘application’ of law. Law and its application are, unfortunately, two very different things. A discussion of law to the exclusion of its “application” aspect does not yield any valuable results. Hence, in this essay, the author shall make an endeavour to discuss the law from the perspective of its application and practical realities.

The Nature of IP and the Rationale for Its Existence

Why did intellectual property rights come into existence? It is indeed a difficult task to attribute a reasoning to something that is so very broad in nature. However, let us try to understand the very basic reasoning behind the existence of intellectual property rights. For a moment, let us forget other theories such as the theory of labour, natural rights etc., all prevalent as forming the philosophical foundations of IP.

 In a commercial setting, everyone is trying to get more and more profits. Simply said, profits come from consumers. Hence, it is important to attract consumers.

Dynamic and Static Theories of Competition

Two theories on how to attract consumers have been floated:  the theories on Dynamic and Static Competition.

Static competition is based on price, wherein a seller reduces the price of a product in order to wean the consumers off other competitors. Relativity is ever-present in the market. If a consumer has approached one producer, it means the other producers of the same product have been deprived of him.

In Dynamic Competition, new goods and services are produced by the competitors to attract consumers. There is a presumption in this case: consumers are attracted to new and improved goods and services. Therefore, if any producer in the marker comes up with new and improved products, the market share of that producer will increase and of its competitors will decrease.

Consumers are attracted to new and products in the market. | Photo Courtesy: Unsplash

Consumers are attracted to new and improved goods and services in the market. | Photo Courtesy: Unsplash

With the continuous advancements in the fields of science and technology, man learnt how to improve products and services, and a large share of the market went to those who commercialised new products.

The Market of Imitations

The other participants of the market, thus, wanted to imitate or copy the new products and services in order to attract consumers. The copying of the products leads to an increase in the availability of more products and services in the market which in turn brought down their price and thus, Static Competition increased. This lead to a situation in which the manufacturer who came up with the innovation suffered economic losses due to the dilution of its market share by those who copied the product of its intellect.

This situation is not what the manufacturer relied upon while innovating. Manufacturers would want to retain the market share because they put in the effort required to come up with those new and improved goods and services. The application of intellect leads to the creation of products which are combinations of material and non-material-resources. Now that the product created is in the possession of the manufacturer/creator, others are excluded from selling the product to the consumers and reaping profits. But this exclusion is only limited to the physical attributes of the product in the absence of the IPRs (Intellectual Property Rights). This is because the non-material aspects of the product (such as the innovated technology, the brand of the product, etc.) are not in possession of the manufacturer and thus, can be used by its competitors.

The IP system gives the manufacturer certain tools so that these non-material resources can be protected by giving rights to the manufacturer to exclude the competitors from their use.

The competitors have access to the material resources which do not belong to the manufacturer, and that would be sufficient to produce exact copies of the new and improved products produced by the manufacturer in question. Both material and non-material-resources are important for the manufacturer because if they go to the competitors, the competitors will produce the same goods and service and reduce the market share of the manufacturer. Therefore, the IP system was ushered into the commercial world. The IP system gives the manufacturer certain tools so that these non-material resources can be protected by giving rights to the manufacturer to exclude the competitors from their use.

The source or genesis of IP law is based in the commercial context. However, there can be circumstances wherein the role of IPRs becomes important where there is no commercial context involved. “Inventions” are also directed towards consumers. “Discoveries” also fall in the same category as inventions because it requires intellect to recognise discoveries.

Paramjeet Singh is a lawyer practicing before the Supreme Court of India. 

Featured Image Credits : Pexels

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Posted by The Indian Economist