'Intellectual Property is Property in a Legal Sense.'

The concept of intellectual property contains an inherent dichotomy: the regular view of property is of something corporeal and capable of physical possession such as land or chattels; to introduce the idea of intellectual is to produce a sense of something that can be owned which is incorporeal and therefore intangible. Bainbridge^[1] summarises the position succinctly:

“Most forms of intellectual property are ‘choses in action’, rights that can be enforced only by legal action as opposed to possessory rights.”

and cites the words of Channell J in Torkington v Magee^[2]:

“’Chose in action’ is a known legal expression used to describe all personal rights which can only be enforced by action, and not by taking physical possession.”

The most traditional and familiar forms of choses in action are instruments such as cheques and assets such as company shares but the category must now be extended to embrace certain other categories of rights such as ownership of copyright and patents. In the first chapter of Holyoak and Torremans^[3], the theme of the work is defined:

“This book is not just about ideas. It is about ideas skilfully expressed in writing, in music, or in a sculpture. It is about the bright idea for an invention, the details of which have been worked out and which takes the form of a product or a process that can be applied industrially. It is also about a logo or name applied in order to distinguish them from other products in the same category and to indicate their origin…Intellectual property is more than a reward for inventors and creators on the basis of a bright idea.”

The distinctive character of intellectual property rights is that they are essentially negative in nature. For example, where the property in question is a trade mark or a copyright, the owner has the right to prevent others from using or exploiting a particular design. This is not to say that there is not a corresponding match of rights and duties. Hohfeld^[4] introduces the notion of ‘legal correlatives’: rights exists in terms of the ability, for example, to make copies of a copyrighted work whereas a corresponding duty is impose upon others not to infringe that copyright.

This duty is tempered by considerations of reasonableness. For example, s.97(1) of the Copyright, Designs and Patents Act 1988 provides:

“Where in an action for infringement of copyright it is shown that at the time of the infringement the defendants did not know, and had no reason to believe, that copyright subsisted in the work to which the action relates, the claimant is not entitled to damages against him…”

Such protection calls into question the nature of intellectual property rights: in the case of land or chattels, interference with ownership is easily demonstrable and immediately punishable whereas the unwitting infringement of copyright is regarded as an innocent act. On this basis alone, it is easy to see that while such rights are ‘property’, their qualification as ‘intellectual’ places them in a different category to other forms of property rights – the fact that they are intangible renders them more vulnerable to interference than their corporeal counterparts.

Notwithstanding the above, the protection of intellectual property rights has a long and distinguished history. It is understood that the Romans^[5] embossed their pottery and merchants through the ages have employed marks to distinguish their goods. However, the early development of the law of copyright was bedevilled by the need to establish ownership according to existing common law principles. This appears to have largely depended upon the ability to demonstrate that the product in question had an established reputation carrying with it the consequent difficulties of evidence and proof. It was not until Victorian times and the passage of the Trade Marks Registration Act 1875 that a comprehensive system of registration of trade marks was introduced. This advance was consolidated in subsequent enactments:

• • Patents, Designs and Trade Marks Act 1883;

• • Trade Marks Act 1905;

• • Trade Marks Act 1938;

• • Trade Marks (Amendment) Act 1984; and

• • Trade Marks Act 1994.

It is necessary to distinguish this statutory protection from the regime which evolved in respect of copyright. The invention of the printing press created the ability to make multiple copies of works with great rapidity. Those who invested in the production of such works naturally sought a means to protect themselves from unauthorised copying and distribution. Accordingly, in 1556 a Royal Charter was grated to the Company of Stationers who then possessed the exclusive right to enter details of a work into a register. This conferred an effective monopoly upon members of the Company to make copies of the works. This position was formalised by the Statute of Anne in 1709 which conferred the “sole right and liberty of printing books” to authors and their assignees. Thus it may be observed that the emergence of the recognition of the commercial values of reproducing literary works gave rise to a system of protection. Although the interests that were thus guarded were purely commercial as opposed to physical, the concept was born of such interests being a form of property worthy of protection exactly akin to such rights as land ownership.

An interesting justification of intellectual property rights is supplied by Lehmann^[6] who argues that the essential characteristic of property rights is that they are exclusionary rights through which third parties are prevented form using and exploiting the object protected by those rights. The rationale which lies behind this is the motivation that inspires an individual to develop and bring a product to market. It may be argued that if it were not possible subsequently to protect a invention from reproduction by others, there would be little commercial or practical incentive to embark upon the innovation process. This argument is developed by Torremans^[7]:

“…if everyone would be allowed to use the results of innovative and creative activity freely, the problem of ’free riders’ would arise. No one would invest in innovation or creation, except in a couple of cases where no other solution would be available, as it would give them a competitive disadvantage.”

This, however, poses a dilemma. If a system of intellectual property protection is too rigorous, there is a danger that too little use will be made of the concept or invention. Conversely, in the event that there is little practical protection of such innovation, the incentive to be original and creative disappears since the reward for such originality is diminished. Therefore there arises the crucial consideration of the ability to exploit such creativity and originality and this gives rise to the issue of the ability to transfer intellectual property rights.

Bainbridge^[8] makes the valid point that mere possession of an article does not confer upon the possessor the right to perform acts which might infringe the intellectual property rights of the owner. For example, if one were to be in physical possession of the script of a play, such possession would not, of itself, carry the right to perform that play. In this respect, therefore, it is important to make the distinction between physical ownership or possession and the intellectual embodiment of the property. Having made such a distinction, it is then possible to consider the ability to transfer or ’assign’ rights in the intellectual property. A significant convergence of the concept of purely intellectual property and more familiar corporeal assets occurred in Cray Valley Ltd v Deltech Europe Ltd^[9] in which Jacob J dealing with a document which purported to transfer copyright but which referred only to ‘assets’ said:

“Of course a word such as ‘assets’ will take its meaning from any written agreement not from its acontextual or mere dictionary meaning but from its context. In the present case where the evident commercial intention behind the lost agreements was to transfer everything to the assignee I see no reason to suppose if the assignment used the words ‘assets’ there would or could have been any intention to hold anything, and specifically copyright, back.”

This is perhaps the clearest judicial expression of the concept that intellectual property (in this case specifically copyright) must be treated on a par with ownership of physical assets.

A reinforcement of this view may be obtained from Schroeder Music Publishing v Macaulay^[10] in which the claimant was an unknown songwriter. He entered into an agreement with the defendant music publishing company to give his services exclusively to them for a stipulated period of time. The company was under no obligation to publish any of the claimant’s work but was nonetheless entitled to assign their rights in is work. He claimed that the agreement was void on public policy grounds. While the company argued that it was under no obligation to publish, the House of Lords held that the agreement was entered into on an unconscionable basis and represented the abuse of superior bargaining power. It is submitted that the significance of this decision is in recognising the value of an intellectual property asset with no determinable value. The works of the writer had, by definition, not been published and therefore had no appreciable value. Nonetheless, the House of Lords held that the refusal of the company to publish the works represented a restraint of the ability of the writer to trade. This is perhaps an example of intellectual property as property in its purest form. Whereas the vast majority of copyrights will be capable of possessing an ascertainable value, there can have been no certainty here that the works of the writer would have any appreciable value at all. This notwithstanding, he was held to have owned a form of property capable of protection.

Further support for the treatment of intellectual rights as property can be found in the ability of a copyright owner to license the same. The owner of a copyright is perfectly able to license another to perform certain acts in relation to the work which would otherwise be prohibited. There is a direct comparison to be drawn between this and the ability of, for example, a landowner, to license another to enter into possession of or exercise certain rights over his land.

While the above argument has focussed upon copyright, it may be observed that similar principles apply in respect of design rights. Section 222(3) of the 1988 Act provides that the assignment of design rights must be in writing and signed by the assignor. Similarly, they may be the subject of testamentary disposition. There are powerful parallels here with the requirements surrounding the disposition of real property. Similarly, by comparison with the law relating to sale of goods, it is possible to consider the vulnerability of a licensee of a design right in circumstances in which the right is assigned to a purchases in good faith for valuable consideration and without actual or constructive notice.

There nonetheless remains an anomaly in the treatment of intellectual property rights. Consideration has been given above to the similarities between such rights and rights in real property or, at the very least choses in action. However, s.30(1) of the Patents Act 1977 declares that patents are personal property and not choses in action. Bainbridge^[11] opines:

“This strange anomaly seems to be without purpose or consequence as the provisions for ownership and assignment are contained in detail in the Act itself.”

It is therefore superficially tempting to concur with the Bainbridge proposition that forms the title hereof. As has been demonstrated, there are many compelling similarities between intellectual property rights and other rights of ownership of corporeal entities such as land and chattels. It may however be argued that there remains an important distinction: the infringement of an intellectual property right remains a notional concept which can only be enforced at law. It is perhaps appropriate to observe that the practical ability to do so may be contingent upon the claimant’s ability to fund and pursue such litigation. By contrast, interference with physical possessions can be the subject of practical action (such as the right to re-enter in landlord and tenant cases) and the sanctions visited by the criminal law in cases of theft or even trespass. The role of the assignment of intellectual property rights must however be acknowledged. The ability to assign or license such rights does tend to place them on an apparently equal footing with other forms of property. However, while such a comparison is attractive, it overlooks the fundamental difference between the corporeal and the merely notional. It is therefore argued that the concept of such rights as ’property’ is a commercial construct as opposed to a practical reality. It is submitted that the whole notion of ’intellectual property’ is a misnomer. While it is attractive to place rights of origination in a literary or artistic work or the right to exploit an invention on the same basis as the physical possession of property, this is a concept that has arisen only as a result of the desire of such creators and inventors to protect their ability commercially to exploit their creations. To regard such works as property is contrary to common sense. The Bainbridge quotation arises from a false premise. It is suggested^[12] by that author that:

“Intellectual property rights give rise to a form of property that can be dealt with just as with any other property, and which can be assigned, mortgaged and licensed.”

As has been acknowledged, this is undoubtedly true but the consequent equation of such rights with real property and chattels ignores the real practical distinction. It may therefore be more helpful to conduct this analysis in by equating intellectual property with a set of rights rather than the physical objects which are the subject of other aspects of the law. It would be ludicrous to compare a chose in action such as a banker’s draft with ownership of tangible property such as a plot of land. Similarly, therefore, the ownership of a copyright or trade design should be regarded in the same fashion as an equitable interest. Ultimately, perhaps Bainbridge is correct if one qualifies his statement with the addition of one word:

“Intellectual property is property only in a legal sense.”

Bibliography

Primary

Copyright, Designs and Patents Act 1988

Cray Valley Ltd v Deltech Europe Ltd [2003] EWHC 728 (Ch)

Patents, Designs and Trade Marks Act 1883

Patents Act 1977

Schroeder Music Publishing v Macaulay [1974] 3 All ER 616

Statute of Anne 1709

Trade Marks Registration Act 1875

Trade Marks Act 1905

Trade Marks Act 1938

Trade Marks (Amendment) Act 1984

Trade Marks Act 1994

Torkington v Magee [1902] 2 KB 427

Secondary

Lehmann, M., The Theory of Property Rights and the Protection of Intellectual and Industrial Property [1985] IIC 525

Case Study/Texts

Bainbridge, D., Intellectual Property, (6^th Ed., 2007)

Cornish, W., Cases and Materials on Intellectual Property, (5^th Ed., 2006)

Hohfeld, W., Fundamental Legal Conceptions as Applied in Judicial Reasoning in Lloyd, Lord of Hampstead, Introduction to Jursiprudence, (4^th Ed., 1979)

Torremans, P., Holyoak and Torremans Intellectual Property Law, (4^th Ed., 2005)

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Footnotes

^[1] Bainbridge, D., Intellectual Property, (6^th Ed., 2007), p.10

^[2] [1902] 2 KB 427 at 430

^[3] Torremans, P., Holyoak and Torremans Intellectual Property Law, (4^th Ed., 2005), p.3

^[4] Hohfeld, W., Fundamental Legal Conceptions as Applied in Judicial Reasoning in Lloyd, Lord of Hampstead, Introduction to Jursiprudence, (4^th Ed., 1979)

^[5] See Torremans, Op. Cit., p.8

^[6] Lehmann, M., The Theory of Property Rights and the Protection of Intellectual and Industrial Property [1985] IIC 525

^[7] Op. Cit., p.13

^[8] Op. Cit., p.94

^[9] [2003] EWHC 728 (Ch) at para. 69

^[10] [1974] 3 All ER 616

^[11] Op. Cit., p.10

^[12] Op. Cit., p.10