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The field of Intellectual property rights has only become mainstream in the last 30 to 40 years. But, intellectual property as a concept has been recognized for a much larger period. For example, the Harappan traders used unique seals to differentiate their goods from those of other traders and this is believed to be one of the earliest recorded uses of “trademark”. The question that arises now is “why does intellectual property exist in the first place?” or “what are the justifications behind the same?”. The answers to these questions have been a subject of much debate and thus many such answers are available. Through this blog, I will try to cover as many answers as briefly as possible in 2 subsections, the first of which would cover the “philosophical justification” and the second one would include “economic justification”.

The ‘philosophical’ justifications

While many theories constitute this philosophical justification of intellectual property, the one’s mentioned below are most well-known:

The ‘natural rights’ theory: Majorly supported by philosopher John Locke’s principles, this theory states that every person has a right over the creation resulting from his mental work, originality, and inventiveness. According to this theory, intellectual property rights cover both tangible as well as intangible works. Although this theory is very popular, its limitations have been pointed out by many professionals. Firstly, this theory considers the term or duration of these rights to be unlimited. This harms the public interest because without entering the public domain the benefits of many creations cannot be extracted to satisfaction. Secondly, this ‘unlimited term’ actually restricts other creators from innovating in the same or similar areas.

The ‘utilitarian/incentive’ theory: Another popular theory is the utilitarian theory, also known as the incentive theory. The core of this theory can be found in the definition of the term utilitarianism itself, which more or less means “greatest good for greatest number should always be promoted”. Followers of this one believe that when a creator creates something (in other words- something that has utility) the society benefits from his creation thus, granting certain special privileges (in the form of intellectual property protection), would be a nice way to 1. Reward and 2. Provide an incentive for people to create more things. Followers of this theory are mostly pro-capitalists. But this theory isn’t without flaws. It has been criticized for prioritizing the gains from exclusive ownership over the loss from exclusive ownership. Also, suspicions have been raised on whether this supports monopoly as an accepted market practice or not.

The ‘ethic and reward’ theory: This theory states that a creator must be rewarded, by giving him exclusive rights, and by doing so the ethics behind intellectual property rights will be realized. This ‘reward’ is given as an acknowledgment of the creator’s contribution to society and his contribution is treated as an addition to social utility.

The ‘personhood’ theory: Personhood theory is concerned with the relation between the property (or the creation) and the personality (of the creator) hence, the name ‘personhood’. According to this theory, the personality of a creator is embedded in the creation. Also, personality growth is an integral part of creative works. Thus, Since the artistic works are part of an artist’s very identity, he/she should never be completely separated from it. For example; a painter should never be completely separated (non-physically) from his painting. There are some more theories on this subject (social planning theory, moral desert theory to name a few) but most of them haven’t quite gained momentum to be regarded as mainstream yet.

The ‘economic’ justifications

To understand the economic justifications behind intellectual property rights it is necessary to understand firstly, the concept of public good, secondly the economic theory of market failure, and finally the mechanisms of intellectual property rights.

Public goods, intellectual property, and market failure

The economic theory of goods divides goods into 4 categories: private goods, common pool goods, club goods, and public goods. Public goods are those goods that are non-rival (multiple persons can use them simultaneously) and non-excludable (a good which generally a person can’t be prevented from using). Lighthouses, roads, traffic lights, etc. all fall under the category of public goods. There’s an economic theory that at some point in time these kinds of goods will be underproduced because of market failure. This will happen because the maker or the producer will not have any desire to produce any such goods due to the lack of incentive, they are given for doing so.

For example, a builder of lighthouses spends his money to design, build and maintain multiple lighthouses on ports all over the region. But since it is a public good and any ship passing through that area can take full use of it without having to pay a fee, the owner would simply incur losses and at some would have to stop building or maintain those lighthouses even though the need for them is ever-present. Thus, to prevent this market failure and to keep the production of public goods going, some sort of intervention is needed. In the case of public goods, the gap is bridged through government funds i.e., the government keeps giving the builders and producers incentive to keep making public goods for societal benefit.

The point is, that in certain aspects intellectual property is also like a public good i.e., anyone can copy, reproduce, re-sell it. This creates two problems:

  1. The free-rider problem: creating something which people don’t pay to use i.e., the cost of creating is high but the cost of consumption is low.
  2. Tragedy of commons: this happens when individuals neglect well being of society in pursuit of personal gain.

So just like actual public goods, intellectual property must also be given some kind of protection as an incentive to creators. In the modern world, this is done by giving legal protection to intellectual property.


While there are many theories surrounding the philosophical justification portion, the best solution in my opinion will be achieved by balancing all these theories. Natural rights theory generally forms the basis of any such protection to IP while utilitarianism theory and ethic reward theory are dependent upon the economic perspective of the individual. Whereas the economic justifications extract their reasoning through very statistical and practical concepts of public goods, market failure, and methods to prevent it. In the end, intellectual property rights are very necessary to provide an incentive to the creators to create more and take society forward.

Author(s) Name: Alok Tomar (Dharmashashtra National Law University, Jabalpur)