Intangible and Incorporeal Property
Chapter Two
Syllabus topic 1, "Introduction to Intellectual Property Rights (IPRs)"
Pages 5 to 8 of 842
In one line
Intellectual property is property you cannot touch, and almost every rule about it follows from that one fact.
In exam wording: intellectual property is intangible incorporeal property, that is property whose subject matter has no physical existence and which is therefore incapable of physical possession, delivery or dispossession, so that the ordinary incidents of the law of movable and immovable property apply to it only by analogy and often not at all.
The vocabulary first
Corporeal property is property with a body: land, a car, a bag of rice. You can touch it, hold it, and hand it over.
Incorporeal property is property with no body: a debt, a share in a company, a right of way, a patent. It exists as a legal relationship and nothing else.
Intangible means the same thing as incorporeal in ordinary use. Indian statutes and Indian judgments use both.
Note the spelling. MU prints "incorporate". That is not a word for this idea; the word is incorporeal. Write the correct form in the exam and the meaning is unmistakable either way.
Why the law has this distinction
Because the whole of property law was built for things you can hold. Possession, delivery, theft, adverse possession, bailment, the passing of risk: every one of those concepts assumes an object that can be in one place at a time and in one person's hands.
None of them works on an invention. You cannot possess an inventive concept. You cannot deliver a melody. You cannot be adversely possessed out of a trade mark by somebody sitting on it for twelve years.
So the law had to build a parallel set of rules, and it did so statute by statute. That is why there is a Patents Act, a Copyright Act, a Trade Marks Act and five more, rather than one chapter of the Transfer of Property Act.
The three-way comparison
| Immovable property | Movable property | Intellectual property | |
|---|---|---|---|
| Subject matter | Land and things attached to it | A physical chattel | An intangible creation |
| Can be possessed | Yes | Yes | No |
| Can be delivered | By registered conveyance | By handing over | Only by assignment in writing |
| Two people can use it at once | No | No | Yes, and this is the whole difficulty |
| Lost by being taken | Yes | Yes | No. Infringement takes nothing away |
| Duration | Perpetual | Until destroyed | Fixed by statute, then public domain |
| Created by | Occupation, grant, purchase | Making or buying | Statute alone |
| Territorial limits | Where the land is | Travels with the goods | Only where the statute runs |
What follows from intangibility, in practice
There is no theft of a patent. Section 378 of the Indian Penal Code, and now the corresponding provision of the Bharatiya Nyaya Sanhita 2023, requires movable property to be taken out of a person's possession. An infringer takes nothing out of anybody's possession, which is why infringement is a civil wrong with statutory criminal provisions bolted on for particular kinds of copying, and not theft.
Intangible and Incorporeal Property
Damages are hard to prove. With a stolen car the loss is the car. With an infringed patent the loss is the sales the owner would have made, which requires an argument about a market that did not happen. This is why accounts of profits, statutory damages and delivery up all exist.
Injunctions matter more than damages. Because the loss is diffuse and the wrong is repeatable at no cost, stopping the infringer is worth more than compensating the owner, which is why TRIPS Article 44 requires injunctions and Article 50 requires provisional measures.
Ownership must be recorded. Since possession proves nothing, the law substitutes registers: the Register of Patents, the Register of Trade Marks, the Register of Designs. Copyright is the exception, and Indian registration of copyright is voluntary and only evidentiary.
Transfer must be in writing. Section 68 of the Patents Act requires an assignment to be in writing and duly executed; section 19 of the Copyright Act requires the same; section 39 of the Trade Marks Act deals with assignment. There is no delivery, so writing does the work delivery does elsewhere.
A worked example
Ganesh Iyer buys a patented machine from its patentee for eight lakh rupees.
He owns the machine outright. It is a chattel. He can sell it, mortgage it, break it up for scrap.
He owns no part of the patent. The right to stop others making that machine stays with the patentee, and Ganesh cannot make a second one.
He can nevertheless resell the machine he bought, because the patentee's right in that particular article is exhausted by the first authorised sale. Exhaustion is worked in [TRIPS Articles 6, 7 and 8: Exhaustion, Objectives and Principles].
If a fire destroys the machine, the patent is unaffected. If the patent is revoked, the machine still works. Two kinds of property, one physical object, and neither follows the other.
What it does NOT mean
It does not mean intellectual property is not property. Article 300A of the Constitution says no person shall be deprived of property save by authority of law, and Indian courts treat statutory intellectual property rights as property for that purpose. The European Court of Human Rights has held the same of a trade mark, and that judgment is worked in full in [Is Intellectual Property Itself a Human Right?].
It does not mean the right is weaker. A patent can be worth more than a factory, and it can be mortgaged, licensed, taxed and inherited.
Intangible and Incorporeal Property
It does not mean there is no physical embodiment. There usually is. The point is that the right attaches to the intangible creation and not to the embodiment, which is why a purchaser of the embodiment gets no share of the right.
Quick revision
- Corporeal property has a body; incorporeal or intangible property does not. MU prints "incorporate"; the term is incorporeal.
- Intellectual property cannot be possessed, delivered or dispossessed, so possession, theft, bailment and adverse possession do not apply to it.
- Consequences: no theft of an intangible; damages hard to prove, so injunctions dominate; ownership proved by registers, not possession; transfer by writing, not delivery.
- Two people can use the same creation at once and infringement takes nothing away, which is the feature that distinguishes it from every other kind of property.
- Duration is fixed by statute, and afterwards the subject matter is in the public domain.
- Buying the embodiment does not buy the right; section 68 of the Patents Act and section 19 of the Copyright Act require assignments in writing.
Test yourself
1. What does it mean to call intellectual property intangible incorporeal property, and what follows from it? It means that the subject matter of the right, the invention, the expression, the sign or the design, has no physical existence, so the right cannot be possessed, handed over or physically taken. Four practical consequences follow, and each of them explains a rule a student otherwise has to memorise. There is no theft of an intangible, because theft requires that movable property be taken out of somebody's possession and an infringer takes nothing out of anybody's possession, which is why infringement is primarily a civil wrong. Damages are hard to prove, because the loss is the sales that did not happen rather than an object that has gone, which is why accounts of profits and statutory damages exist. Injunctions matter more than damages, because a wrong that costs the infringer nothing to repeat has to be stopped rather than compensated, which is why TRIPS Article 44 requires injunctive relief and Article 50 requires provisional measures. And ownership has to be recorded on a public register and transferred in writing, because possession proves nothing and there is no delivery to mark the moment of transfer.
2. Distinguish intellectual property from movable and immovable property. Immovable property is land and what is attached to it; movable property is a physical chattel; both can be possessed, and both can be lost by being taken. Intellectual property has no physical subject matter at all and therefore cannot be possessed or taken. The critical distinction is that immovable and movable property are rivalrous, meaning that only one person can use the thing at one time, whereas the subject matter of intellectual property can be used by any number of people simultaneously without any of them interfering with any other, so that an infringer deprives the owner of nothing except an opportunity to be paid. Duration differs too: title to land is perpetual and title to a chattel lasts until the chattel is destroyed, while every intellectual property right has a term fixed by statute after which the subject matter enters the public domain. Territoriality differs: land law follows the land and a chattel carries its title with it across borders, while an intellectual property right exists only under the statute that created it and stops at that statute's border, which is the fact that makes an international treaty system necessary. And creation differs: land and chattels can be acquired by occupation, manufacture or purchase, while every intellectual property right in India owes its existence to an Act of Parliament.
Intangible and Incorporeal Property
3. Ganesh buys a patented machine. What does he own and what does he not own? He owns the machine, which is a chattel, absolutely. He may use it, resell it, mortgage it or destroy it, and his right to resell that particular machine is protected by the doctrine of exhaustion, under which the patentee's rights in the individual article are spent by the first authorised sale. He owns no part of the patent. The patent is a separate item of incorporeal property, which continues to belong to the patentee, and it entitles the patentee to prevent Ganesh from manufacturing a second machine to the same specification. The two items of property are independent of one another in both directions: if the machine is destroyed by fire the patent is unaffected, and if the patent is revoked by the Controller the machine continues to work and continues to belong to Ganesh. The example is the whole distinction between the intangible right and its physical embodiment in a single transaction.
The rest of this subject
These notes are cut from the University's printed syllabus. Open the syllabus itself, or the past papers, for the same subject.