It can legitimately be argued that the notion of IPR is built on a contradiction: in order to promote the development of ideas, it is necessary to reduce the freedom with which people can use them. This contradiction is a running thread in all debates on IPRs, and is sought to be resolved in laws related to IPRs by attempting a balance between public interests and rights of the inventor. Two contrasting interests, that often manifest as contrasting opinions -- as reflected in the following statements. 
 

“The relentless march of intellectual property rights needs to be stopped and questioned. Developments in the new technologies are running far ahead of the ethical, legal, regulatory and policy frameworks needed to govern their use. More understanding is needed -in every country- of the economic and social consequences of the TRIPs Agreement. Many people have started to question the relationship between knowledge ownership and innovation. Alternative approaches to innovation, based on sharing, open access and communal innovation, are flourishing, disproving the claim that innovation necessarily requires patents.”

"The commercial sector discovers and develops nearly all new drugs and vaccines, but this is expensive and risky; the patent system provides the incentive necessary to investigate thousands of new compounds and to invest an average of several hundred million dollars in R&D".

          While IPR laws have always been a compromise between these two contrasting positions, in the last few decades the resolution of the underlying contradiction has tended to increasingly favour the latter position. How this has happened is, in a manner, embedded in the history of the development of human enterprise in the last 300 odd years.

          Throughout much of human history, the possession and distribution of property was mediated by the use of force. This mediation was later codified in the form of laws which sanctified the concept of private property. These laws were primarily directed at real estate, a form of property that is local by definition and, as the name implied, was very real. The Industrial Revolution and industrial modes of production led to the necessity of redefining “property”. Tools acquired a new economic value and, thanks to their development, it became possible to duplicate and distribute them in quantity. To encourage their invention, copyright and patent laws were developed. These laws were geared towards getting mental creations into the world where they could be used - and could enter the minds of others - while assuring their inventors compensation for the value of their use. The earliest Patent laws were an expression of the need to ensure that innovations did not die away with the original inventor -- in other words they were designed to promote disclosure and dissemination of knowledge. However, the systems of both law and practice which emerged were based on physical expression. Thus what was protected as intellectual property was an expression of an idea  -- a technological artifact, a piece of music, a work of literature, etc. 

          Since it is now possible to convey ideas from one mind to another without ever making them physical, ideas themselves are sought to be given ownership, and not merely their expression. And since it is likewise now possible to create useful tools that never take physical form, there is a move towards patenting abstractions, sequences of virtual events, and mathematical formulae - the most unreal terrain imaginable.

          We are now entering an era where major parts of the world economy are based on ideas and knowledge, i.e. goods that take no material form. The central distinction between information or knowledge or ideas and physical property is that information can be transferred without leaving the possession of the original owner. Unlike physical goods, there are no physical obstacles to providing an abundance of ideas. Intellectual property can thus be conceived as an attempt to create an artificial scarcity in order to give rewards to a few at the expense of the many.

          IPRs today bring into force another kind of dilemma. Open ideas can be examined, challenged, modified and improved. But IPRs, by converting scientific knowledge into a commodity, arguably inhibits science. There are innumerable examples to show that IPRs have been used to suppress innovation. Companies may take out a patent, or buy someone else’s patent, in order to inhibit others from making use of new ideas. As far back as in 1875, the US company AT&T collected patents in order to ensure its monopoly on telephones: an act that is beleived to have slowed down the introduction of the radio by almost 20 years. In a similar fashion, General Electric used control of patents to retard the introduction of fluorescent lights, which were a threat to its market of incandescent lights.

          We also see the development of a new contradiction -- information or ideas are sought to be commodified at the same time as technology makes it possible to exchange ideas in a radically free environment. If ideas are to be exchanged in the marketplace, the basic assumption of the marketplace as it is with regard to physical objects -- that value is based on scarcity -- should hold good. But this is precisely contrary to the nature of information, which may -- in many cases -- increase in value with dissemination.

          Central to the projected utility of Intellectual Property Rights is the notion that creation is facilitated by the provision of a temporary monopoly. This notion had a certain kind of validity in the context in which the concept of IPRs developed. The earliest Patent and Copyright Laws were geared, to an extent, to benefit the individual artisan, or the author of a literary piece or a musical score. In the last hundred years, however, protection of IPRs has acquired a radically new connotation. We are no more talking about protecting the property of a single, or a group of artisans who have labored to produce an useful artifact. Intellectual products, today, are social products. With the institutionalisation of the concept of IPRs individual creators ceased to be the beneficiaries, and were replaced by large corporate interests. In practice, today, most individual creators do not actually stand to gain from protection of intellectual property. When employees of corporations and governments have an idea worth protecting, it is usually copyrighted or patented by the organisation, not the employee. Since intellectual property can be sold, it is usually large corporate entities who benefit.

          Today, IPRs help create monopolies of a different order, and thereby place enormous power at the disposal of a handful of corporations. It is a power that allows corporations not only to reap huge profits, but more importantly, to determine the direction of research. Microsoft, for example, with its virtual monopoly over software that is used on Personal Computers (PCs) has consistently obstructed the development of new products by its competitors. A handful of Pharmaceutical corporations, given their monopoly over the control of knowledge, can decide the kind of drugs that will be developed -- drugs that can be sold to people with the money to buy them. Thus on one hand we have the development of “life-style” drugs, i.e. drugs like viagra which target illusory ailments of the rich. On the other hand we have a large number of “orphan” drugs -- drugs that can cure life threatening diseases in Asia, Africa and S.America, but are not produced because the poor cannot pay for them.

          To understand how IPRs have become a major instrument of Capitalist development, it would be instructive to trace the changing stance of  the US on IPRs. Until 1891 the United States did not recognize foreign copyrights. The U.S. made the transition from “pirate” to “police” over the past 100 years and today the United States has become the international advocate of strong intellectual property protection. This advocacy has been the motivating force behind the inclusion of intellectual property rights in the GATT, the United States-Canada Free Trade Agreement, NAFTA, and numerous other treaties.

          In the mid-80’s the United States was faced with waning industrial competitiveness, which hurt U.S. companies and U.S. trade internationally. As a consequence it began searching for new areas of commerce which would maintain U.S. dominance in the world market. Around this time several intellectual property dependent industries, namely information technology, entertainment (records, films, and books) and pharmaceutical who were becoming extremely important contributors to the U.S. economy. All these sectors were heavily IPR dependant as they dealt in products where the development costs were high but the replication costs were small. These were sectors where, in order to maintain high levels of returns, monopoly “rent” incomes had to be protected thought the mechanism of strong Intellectual Property Protection.

          The importance of the knowledge based sectors to the US (and global) economy can be gauged from the performance of large companies today. Among the top fifteen companies (Table 1) with the highest returns (profits) on Revenues (turnover), six are pharmaceutical companies -- Microsoft, Cable and Wireless, E.I. du Pont de Nemours, Eli Lilly, Glazo Wellcome, Roche Group, Bristol-Myers Squibb, Novartis and Pfizer. Five are from the information technology sector -- Microsoft, Cable and Wireless, Telefonos de Mexico, Intel and Textron. Yet, none of these figure anywhere among the top 100 in terms of turnover. Microsoft is 216th in the list in terms of turnover, but has the highest return on revenues (39.4%). Clearly rent incomes, today, are one of the major driving forces of the economies of the developed countries.