1.7 - Purpose of IP: enhancing the public domain

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Exception. IP-rights are an exception to the rule that knowledge and information – as such or the codification thereof – are free and belong to the public domain. That leads to the question what the purpose of this exception is.

Unlimited exploitation potential. The utilitarian approach learns that as a society we grant IP-rights to make it possible to obtain a return on investments in the development of immaterial goods. The possibility to obtain a return on investment may be an underlying reason for granting IP-rights, but in practise it does not play a role when it comes to awarding or acknowledging individual IP-rights. The possibility to earn money with the exploitation of an IP right is not somehow limited or restrained. The fact that in a particular case the investments that may have been necessary to develop the immaterial good concerned may have been recouped and a reasonable return on the investments may have been achieved, does not mean that the IP right concerned should therefore lapse. The exclusive right to exploit the immaterial object protected by an IP right is only limited by the expiration of the exclusive right. The duration of that right is predetermined and independent from whether or not any investments which were necessary to develop that immaterial object may have been recouped. Furthermore, if an object – such as an invention or work of art – may been achieved without any investment to speak of, IP protection is available. The lack of a financial maximum for the exploitation an IP-right, and the lack of a financial minimum as a requirement for IP protection, makes it possible to achieve unlimited earnings with the exploitation of IP-rights. For the person who is lucky enough to be able to make a fortune from an IP-right, this is of course a much appreciated result. However, this is only a potential side-effect of an IP-right, and not the purpose of these rights.

Individual interests not the purpose. If freedom of competition, technology and information is the rule – and that rule serves the public interest – then it is obvious that an exception to that rule cannot be justified by an individual interest. If we assume that the public interest is –  generally speaking – best served if technology and information are freely available and that every entrepreneur is challenged by competitors ‘breathing down his neck’, then it speaks for itself that it is not smart to allow for an exception to that rule simply to make it possible for only some to make a fortune. If we create an exception to these freedoms, that serve the public interest, then simple logic dictates that this exception should be motivated by the public interest.

Enhancing the public domain. Knowledge and information that is freely available, is part of the so-called public domain. That public domain can be freely used by anyone without owing anything to any third party. If the public interest is well served by a public domain, then it is clear that the public interest will also benefit from a - quantitatively or qualitatively – expanding public domain. Stimulating and facilitating the enhancement of the public domain is therefore what we aim to achieve by introducing exclusive IP-rights.

Innovation = an expanding public domain. Schumpeter’s “creative destruction” is an essential characteristic of a capitalistic free market and increasing prosperity that can thus be realized. The creative destruction of existing knowledge and insights – in other words: innovation – is what is needed to increase general welfare on a large scale. Innovation stands for the creation of new “knowledge and skills”, which simply means that the publically available knowledge and technology grows in quantitative or qualitative terms. Thus, innovation stands for an expanding public domain. By granting IP-rights we aim to stimulate and facilitate innovation and therefore granting IP-rights serves the same public interest of having an expanding public domain.

Means to an end. IP-rights offer the possibility of an exclusive exploitation of intangible goods and to make a fortune by doing so. However, this is not the purpose of these rights. The goal of IP-rights – that provide limitations to the rule that knowledge and skill are public domain – is to enhance the public domain. IP-rights are merely a means to facilitate this goal. These private rights are created to serve the public interest. For a proper application of IP-rights – like determining or interpreting the requirements for protectability or the limits of scope of protection – it is of crucial importance to keep in mind that these rights are a means to an end and what that end is.

Stifling effect of IP-rights. If one assumes that the goal of IP-rights is to provide their rightful claimant with an opportunity to make as much money as possible, then it is inescapable that on the one hand the threshold for eligibility should be as low as possible, and on the other hand the scope of protection should be as broad as possible. Such a perspective on IP-rights that is inspired by private interests will, however, not enhance the public domain. Such an unrestrained granting of IP protection will have a stifling effect on innovation, because a business that innovates will then be more likely to be found to infringe someone else’s IP-rights. If the realm is surrounded and shielded by IP-rights of third parties rights without much free space for further innovation, then IP-rights are effectively penalizing innovation instead of stimulating it.

Clear lines of demarcation required. If one does not lose sight of the fact that IP-rights exist in order to stimulate innovation and to enhance the public domain, then it is a given that the threshold for eligibility should not be set at a relatively low level. Furthermore, it makes it obvious that not necessarily any manner in which advantage is taken of IP protected subject matter should amount to an infringement, but that a proper balance between the private interests of IP proprietors and the general interest of a large public domain should be found. In short, keeping in mind what the goal of IP is and constantly realizing that IP is a means to an end, is required to ensure that IP is facilitating innovation instead of frustrating it.