1.5.3 - Utilitarian grounds

Stimulate innovation. The utilitarian point of view is based on the assumption that investment in innovation is stimulated when it is possible to realize a return on these investments. From that perspective, the goal of IP-rights is to enhance the development and distribution of knowledge and culture. Common sense indicates that this assumption is correct. Without IP-rights, an investment in the development of an immaterial good cannot be justified on rational grounds, given that immaterial goods are by nature public goods and therefore cannot be subject to market forces since they are not scarce.

Patent law. For patent law the study by Guellec and Van Pottelsberghe de la Potterie is illustrative. They conclude, on the basis of various studies by third parties, that the patent system generally contributes to innovation in a positive manner but that the actual impact differs per industry sector. In particular pharma, biotech, chemistry and mechanical engineering are fields of technology where the impact of patent is substantial (Guellec & van Pottelsberghe de la Potterie, 2007, p. 70). Generally speaking, these are industry sectors that require large investments or start-up costs for inventions and have marginal costs – the costs for actually applying the invention – that are indeed marginal in comparison to the initial R&D costs.

IP as a means. An important difference between the utilitarian approach and the natural rights perspective is that in the utilitarian approach intellectual property rights are seen as a means to an end and not as an end in itself. The goal of IP is to stimulate the development of immaterial goods. In a natural rights perspective, IP-rights are an end in itself. In that approach, IP-rights are seen as a legal necessity and the only question remains where and why limitations to these rights have to be made. Setting these limits then requires a justification to avoid being accused of being unjust towards the proprietor of these rights. It is therefore up to those that want to provide for certain limitations to IP-rights to demonstrate that these limitations are justified. With a utilitarian approach that perspective changes dramatically. If one sees IP-rights as a means to an end, then that end can be used as a yardstick and the question to be answered is simply whether certain elements of these rights do indeed contribute to achieving that end or function as an obstacle on the way thereto. Setting limits can thus be done in the perspective of making a choice between conflicting justified interests.

TRIPs. The utilitarian approach to IP-law has been internationally recognized in the TRIPs agreement of 1994. Article 7 TRIPs states that the protection and enforcement of IP-rights should contribute to the advancement of technological development and to the transfer and dispersion of technology. According to article 7 TRIPs, this should result in mutual benefits for the producers and users of technological knowledge in a favourable way for social and economic well-being and for striking a good balance between rights and duties.

Enhancing heritage. Innovation stands for improving on what was already there. By definition, innovation builds on what has been developed over the centuries and is available in the form of “the state of the art” or “cultural heritage”. In the same manner as the proprietor of an IP-right was able to build upon the existing state of the art and cultural heritage, third parties should, in their turn, be able to build upon that contribution to the state of the art or the cultural heritage. This requires that clear boundaries for the scope of protection of IP-rights are determined. These boundaries are threefold

For a limited time. The public interest requires that IP-rights are only granted for a limited time. After the term of protection expires, the protected intangible objects should in their turn become part of the public domain so that they can be used freely by others. Therefore, the protection of IP-rights is generally limited to a predetermined term: twenty years after the filing date of a patent application and seventy years after the death the author of the copyrighted work. Trade names and trade marks are in this case the exception to the rule, as the protection granted by these rights may last forever provided that the trade mark or trade name continues to be used.

Minimum requirements for protectable subject matter. Second, the public interest requires that not just any achievement can be protected. Protection should be limited to an achievement which ‘stands out from the crowd’: a creative, elaborated insight for patents or copyrightable works, distinctiveness for trade marks or industrial designs or ‘sweat of the brow’ for productions of for instance makers of databases, performing artists and producers of film or phonograms.

Exploitation. Third, the public interest requires that not just any use can be prohibited. Protection should generally be limited to direct commercial use – exploitation – of the protected immaterial object. Merely taking advantage of the existence of the protected item or the market or opportunities created thereby should generally be allowed. The same should generally apply with regard to non-commercial use of the immaterial object, such as use for research and education.