In the modern globalized world, the engine of economic growth is increasingly powered by the intricate interplay of intellectual property rights (IPR) and innovation. Intellectual property, in its various forms, serves as the bedrock upon which entrepreneurial spirit thrives, fostering innovation and technological progress. It is the foundation of flourishing industries, the incentive for creative endeavours, and the driving force behind economic expansion. However, this multifaceted tool, when misused or abused, can become a double-edged sword, acting as a formidable impediment to growth, stifling innovation, and creating monopolistic market structures. This paper embarks on a comprehensive exploration of this paradoxical relationship between IPR and economic growth.
The concept of IPR encompasses copyrights, patents, trademarks, and trade secrets, which collectively empower individuals and organizations to protect their innovations and creations. These legal mechanisms provide the exclusive rights and incentives necessary to encourage inventors, creators, and entrepreneurs to invest time, resources, and energy into developing new technologies, artistic works, and business models. This initial burst of innovation can have far-reaching implications for economic growth
However, while IPR can provide a springboard for economic growth, the abuse and mismanagement of these rights can also cast a shadow over innovation and commerce. The excessive wielding of IPR, often in the form of patent trolls and anti-competitive practices, can impede economic progress in several ways.
In this intricate tapestry of economic growth and IPR, there exists a delicate equilibrium. The optimal utilization of IPR can be a powerful driver of innovation and economic progress, while its misuse can pose serious obstacles to societal advancement. This article seeks to unravel the complexities of this relationship, shedding light on the mechanisms through which IPR can promote growth, as well as the pitfalls that await when it is manipulated for anti-competitive ends. By delving into the nuances of this relationship, this article aims to provide a nuanced perspective on the dynamic interplay between IPR and economic growth, offering insights that can inform policy decisions and shape the future landscape of innovation and commerce. This article delves into the realms of IPR’s potential to drive economic growth and its capacity to become a hindrance, shedding light on the complex equilibrium between fostering innovation and guarding against the shadows of overzealous protection. As we navigate this intricate terrain, we uncover the opportunities and challenges inherent in the world of intellectual property rights, ultimately revealing their profound impact on the global economic landscape.
What are Intellectual Property Rights
As times have changed, the need purview as to what a person can consider their own has expanded. What one can call their own and express their right of possession over it has transcended the physical realm. They are expressed by the means of Intellectual Property Rights (IPR). IPR has its genesis in the renaissance era with one of the first being awarded to Johannes Gutenberg, it essentially provides for rights to people over the intangible creations of their intellect or mind be it inventions, artistic creations, works of literature, designs, names, images or symbols. IPR provides for the progenitors of the aforementioned to have exclusive rights over the same for their use or be subject to royalties and generate income from the same. IPR is further divided into four major categories, namely, Patents; Copyrights; Trademarks & Trade Secrets.
Patents refer to the protection available to someone for their inventions. Processes, manufacture or improvement to the same. However, the same has to be something novel, useful and nonobvious. For the grant of the same, the inventors are required to apply and register for the same.
Copyrights is automatically allotted to someone the moment they create a tangible work be it literary, photographic or musical (songs or choreography). The copyrights are subject to transfer by the owner to individuals or multiple individuals making the exposure of the copyrighted objects to the public at ones behest.
Trademark can vary from a word, phrase, design and/or symbol that aids in distinguishing the source of the goods from one party and serves a point of identification of the same. Similarly, a service mark serves the same purpose of apperception of service by one provider and support the differentiation from one provider to another.
Trade secrets refer to a formula, practice, process, design, instrument, pattern, commercial method, or compilation of Information that is subject to reasonable measures to keep it hidden, is valuable to others who cannot lawfully obtain it, and benefits economically from being kept secret.
The concept of IPR is one such which is globally recognized and has taken the centre stage for quite some time now. It has even been recognized in the universal declaration of Human Rights. Enshrined in its Article 27 which provided for the right to benefit from moral and material interests resulting from authorship of scientific, literary or artistic productions.[1]
However, the first recognition that IPR received on a global stage was way back in 1883. This was the result of the fact that inventors from across the globe were struck by biterphobia which prevented them from attending the International Convention of Inventions in Vienna in 1873. This led to the adoption of the first treaty adopting Intellectual Property Rights, i.e., The Paris Convention for the Protection of Industrial Property.
It encompasses trade names, utility models, patents, trademarks, industrial designs, trade names, service marks, and anti-unfair competition legislation in their fullest sense. This international agreement was the first big step towards supporting creators in assuring intellectual property protection in other countries.
This agreement pioneered the concept of national therapy. In terms of national treatment norms, each participating state is expected to provide industrial property protection to nationals of other contracting states on a par with its own residents. Nationals of a non-contracting state are entitled to national treatment under the agreement if they reside in a contracting state or have a genuine and operating industrial or commercial enterprise there.
Soon copyright was ready to set foot for recognition on the global stage. The progenitor for the same was The Berne Convention for the Protection of Literary and Artistic Works, accepted in Berne Switzerland in 1886. There are three major categories in which the provision of the convention can broadly be divided into.
- To provide protection of artistic, literary and scientific productions irrespective of the domain of publishing.
- The right to translate to be extended to perform/communicate to public, broadcast and make adaptations, reproductions and arrangements.
- It also set forth the duration of applicability of copyrights, which was 50 years post the death of the author, which could be provided to related parties for longer terms. However, an exception was made to cinematography and photography.
Seven years down the line in 1993 the two small bureaux formed by virtue of the two conventions, converged and formed a united front for the protection of Intellectual Property. It was called BIRPI or United International Bureaux for Protection of Intellectual Property. The predecessor to WIPO. T
The origins of WIPO, the World Intellectual Property Organization, are shrouded in a complex web of post-World War II diplomacy. Emerging from the ashes of global conflict, the international community recognized the need to usher in a new era of intellectual property rights (IPR) protection. This led to the establishment of WIPO in 1967, a discreet and pivotal development that has reshaped the landscape of IPR.
At its inception, WIPO’s mission was to foster innovation and creativity by harmonizing global IPR laws and regulations. This endeavour was groundbreaking in the realm of intellectual property, as it provided a platform for nations to collaborate and craft a unified approach to protect the fruits of human ingenuity. This international organization went beyond the limitations of traditional legal frameworks, laying the foundation for a new era in IPR.
India and IPR
India has emerged as an innovation hub over the past few years. With prior to the COVID outbreak there was a steep incline in the registrations in the nation. As per the data provided by Department of Industrial Policy and Promotions, a growth of 236% (2018), 233% (2017) and 41% (2016) was observed in the registration patents, trademarks and copyrights.[2] Such numbers necessitate a robust legal regime to administer and govern the Intellectual property space in India.
To ensure the same, the Indian government has rolled out the first IPR policy for providing a structure to the IPR sector. Spurred on by the motto of “Creative India, Innovate India”, the policy aims to environ all perceivable facets and types of IPRs under one umbrella and striving to create harmony between the statues and agencies. Department of Industrial Policy and Promotion (Ministry of Commerce) has been appointed to play a pivotal role to provide guidance, Coordinate and oversee implementation and development of IPRs in India. The policy works with the aims of providing awareness of IPR, induce the genesis of more IPRs, have an effective and robust legal framework for IPRs to help in their management and administration for smoother enforcement and streamlined adjudication in disputes, and to achieve right value for the IPRs. For the implementation of the said objectives, ‘Cell for IPR Promotion and Management’ (CIPAM) has been established as a point of reference.
DPIIT, in cohorts with the Federation of Indian Chambers of Commerce and Industry has launched an enforcement toolkit for IPRs with the aim of helping police in dealing with IP crimes, especially the ones around counterfeiting and piracy. Also, in a bid to further trade and cooperation with the largest IPR market in the world, Indian DPIIT and the United States Patent and Trademark Office signed a Memorandum of Understanding for concord in technical mechanism and promotion of Intellectual Property, which is guided by a Biennial work Plan. [3]
However, this is not the sole legislation or statute that governs the IPRs in Indian subcontinent. India is a signatory to the Trade Related Aspects of Intellectual Property (TRIPS Agreement) and a member of the World Trade Organisation. India is also a member of World Intellectual Property Organisation. And hence as a by-product, a member to the following conventions and treaties-
- Budapest Treaty on the International Recognition of the Deposit of Microorganisms for the Purposes of Patent Procedure
- Paris Convention for the Protection of Industrial Property
- Convention Establishing the World Intellectual Property Organization
- Berne Convention for the Protection of Literary and Artistic Works
- Patent Cooperation Treaty
- Protocol Relating to the Madrid Agreement Concerning the International Registration of Marks- Madrid Protocol
- Washington Treaty on Intellectual Property in respect of Integrated Circuits
- Nairobi Treaty on the Protection of the Olympic Symbol
- Convention for the Protection of Producers of Phonograms Against Unauthorized Duplication of Their Phonograms
- Marrakesh Treaty to facilitate Access to Published Works by Visually Impaired Persons and Persons with Print Disabilities.[4]
IPR AND ECONOMY
Intellectual property now accounts for upwards of 70 percent or more of the market value of many organisations. Small businesses may find that the only thing that matters is the intellectual property they have generated in an amazing new technology. Patents are becoming increasingly important for firms and inventors in emerging markets. Individuals and small and medium-sized businesses perceive patent regimes in developed and emerging nations as advantageous for protecting and earning from their discoveries.
Intellectual property rights, like any other property, are valuable. The major motivation for the continuing creation of intellectual property is financial gain.
Laws are essential to prevent infringement on intellectual property rights. A holder of intellectual property rights is granted the exclusive right to use their creations, either directly or through the sale of licences to third parties for a fee. Because intellectual property rights are monopolistic, there are legal restrictions on how they can be used.
The competitiveness of the marketplaces in which an IPRs regime operates is the most essential factor in determining its success. One of IPRs’ key goals is to encourage investments in higher-quality products, which are typically required for entry into export markets. IPRS can help with marketing strategies that improve customer demand for a product and allow developing countries to expand their output volume.
Additionally, trade secret protection is a feature of intellectual property legislation in many economies. In contrast to other forms of protection, trade-secret protection does not establish an unequivocal title on the inventor of an original work. Rather, it protects businesses from the unauthorised use or disclosure of private information.
When it comes to the business evaluation of intellectual property, one issue stands out above the rest: organisations must determine whether their current intellectual property corresponds with their company objectives. The preservation of intellectual property rights reduces the risk of invention infringement. With wage, these impacts increase and subsequently decline.
The dynamic ecosystem nurtured by IPR attracts both domestic and foreign investments, injecting a steady stream of capital into the economy. Moreover, IPR catalyse the growth of startups and small enterprises, empowering them to compete with industry giants and thereby diversifying the economic landscape. The influence of IPR extends globally, enhancing the nation’s standing in international trade by protecting businesses’ intellectual property assets. In essence, IPR are the underpinning of economic growth, fortifying innovation, competition, and the allocation of resources, ultimately fostering prosperous and dynamic economies.
Intellectual property rights security may influence the incentives to improve, which could have a significant impact on financial success. Some countries are unsure whether stricter enforcement of intellectual property rules is a wise course of action for creating financial development.
Intellectual property protects any significant advancement in human cognition, such as a novel, perceptive, focused, or regular sequence of events. Licenced invention rights offer true rights to test one’s creation. These genuine rights confer a prohibitive right on the maker/maker or its chairman who utilises it for a defined period of time. IPR has an impact on a country’s financial development by creating considerable barriers and facilitating a financial and mechanical turn of events. The following is an overview of IPR.
The widespread usage of the internet is fuelling the digital economy’s rapid expansion, yet capacity restrictions and registration requirements are constantly changing. These advances promote the growth of worldwide content marketplaces, which benefits copyright holders; yet, they also introduce a new risk: piracy, which has the potential to severely impair artistic endeavours.
The aforementioned are some of the reasons to keep pushing forward and ensuring that progress is assured: The ability to create and organise new works in the realms of development and culture continues to be a source of growth and value to humanity. Instead of being silent, intellectual property protection encourages the creation, sharing, and disclosure of work to all. Authorised development growth and security promote the economy, provide new businesses and opportunities, and increase personal satisfaction.
Misuse
The main disadvantage of IPR is that it sometimes inhibits technology from being deployed in the most appropriate way. Everyone who has rights occasionally abuses them. They can charge whatever they want, and competitors are prohibited from using their discoveries due to intellectual property rights protection. The most crucial aspect in an economy’s development is competition. The competitive mindset keeps a check on both product quality and price. However, IPR restrictions are antithetical to the concept of competition.
Intellectual property abuse, in essence, defends intellectual property infringement. When such a defence is proved in a case, the defendant is released of the need to provide the plaintiff with quick relief. The abuse notion, however, does not bar the party from using the courts in the future. The intellectual property owners may return to court after they have “purged” the infringement, for example, by deleting anti-competitive provisions from their licencing agreements.
A clear and quite decisive legal and judicial perspective on infringement of intellectual property rights has generally remained limited to patent infringement, later extending to copyright infringement, which branched out of the former.
A clear and unambiguous legal and judicial perspective on intellectual property rights violation has generally been limited to patent infringement, with copyright infringement following as a branch of the former.
Trade secret and trademark misappropriation remain simply theoretical issues with no legal ramifications.
IPR regulations create a monopoly in the market. It promotes monopolies. Copyright, trademark, and patent laws provide barriers for competitors who use inventions. Because of the danger of customer unhappiness, producers are compelled by competition to consider the welfare and satisfaction of their customers. Any price strategy chosen by the manufacturer will have an immediate impact on the market and the consumer. If the price is high, there will be less demand, according to the law of demand. Nonetheless, this law does not apply when there is a monopoly in the market. The customer’s sole alternative is to purchase the product at the manufacturer’s suggested price. Due to competition, the manufacturer is constrained to charge no more than the marginal cost.
Patent trolls, also known as “Non-Practicing Entities (NPEs)” or “Patent Assertion Entities (PAEs),” are businesses that profit from false patent infringement claims. Patent trolls usually purchase patents at a discount from insolvent companies, whereas legitimate businesses use patents to prevent counterfeit goods from being sold on the market. Following that, these businesses use the acquired patents to demand exorbitant licencing fees from anyone who appears to be infringing on any of the purchased patents.
Most developing economies employ a large number of individuals in the manufacture of illicit commodities. When the legal systems and enforcement practises in these countries improve, these workers will have to find new jobs. When it comes to implementing more IPRS, authorities should prioritise displacement. The likelihood that IPRS may be utilised to encourage monopolistic pricing is also a major source of concern. As a result, such effects should be limited if IPRS is adopted in competitive markets in order to protect market positions with strong IPRS and entry barriers.
CONCLUSION
India is currently working to develop a balanced stimulus that will contribute to the overall expansion of the IPR business. A much-needed effort is being made in India to improve overall IPR security and encourage the creation of new intellectual property (IP). Recent innovations include the New IPR policy, the provision of an effective toolset in the form of a checklist to serve as a reckoner for police dealing with IP offences, and incentives to innovators such as expedited patent assessment if they file first in India. India has it all: an abundance of raw materials, low-cost labour, and a dedicated, imaginative workforce.
Implementing an effective and equitable intellectual property regime can make it simpler for all nations to realise the potential of intellectual property as a catalyst for social and cultural well-being and economic growth. The intellectual property system helps to strike a balance between the interests of inventors and the general public by creating an environment that stimulates creativity and invention and benefits all parties concerned.
Abusing these rights, on the other side, may undermine the concept and meaning of their grant. Mistreatment results in increased costs, psychological misery, a tarnished reputation, and a halt in business growth.
IPR may have a positive or negative impact on how things unfold and improve. Even if the relationship is dependent on various elements that support advance points of interest from permitted development confirmation, the existing minimal confirmation suggests that the association is certain. To summarise, intellectual property rights may be effective weapons for persuasion and promotion in the corporate environment to overcome barriers to information generation and distribution.
Intellectual property rights protection serves a twofold role in terms of the financial course of events. On the one hand, it fosters progress by providing legal protection to innovators; nevertheless, by restricting the diffusion of breakthroughs, it may impede learning and make up time. Thus, the protection of invention rights is critical to the success of countries and their economies.
[1] Universal declaration of human rights, United Nations, https://www.un.org/en/about-us/universal-declaration-of-human-rights (last visited Oct 25, 2023).
[2] Government of India, Annual Report 2019-20 (2021), https://ipindia.gov.in/writereaddata/Portal/Images/pdf/IP_India_English_29.08.21_Final_.pdf (last visited Oct 20, 2023).
[3] India – protecting intellectual property, International Trade Administration | Trade.gov. Available at: https://www.trade.gov/country-commercial-guides/india-protecting-intellectual-property (Accessed: 18 October 2023).
[4] Drishti IAS, Intellectual property rights Drishti IAS (2019), https://www.drishtiias.com/to-the-points/paper3/intellectual-property-rights (last visited Oct 25, 2023).
Author: Aakash Srivastava
Juris Centre 