The Impact of Intellectual Property Law in the Economic Development of Nigeria
In both public and private universities in Nigeria and in the various Faculties and Colleges of Law of these universities intellectual property law is usually a course resident in the Business or Commercial law departments of these Faculties and Colleges and this underscores its economic characteristics. This conclusion is further supported by a consideration of other courses that intellectual property law keeps company with in the business and or commercial law departments, such as the following: company law, employment law, law of banking and insurance, law of contract, commercial law, law of taxation and so on.
This phenomenon is not unconnected with the justified belief that intellectual property law and its branches is essentially economic and commercial in nature.
Intellectual property constitutes a significant subject which deals with the protection of creative and inventive works emanating from the exertions of the mental faculty. And because of its huge economic potentials, a no mean attention has been directed at developing, and advancing both the legal and administrative frameworks for interrogating intellectual property at international, regional and national jurisdictions.
Intellectual property law is in a nutshell, the legal rules and principles relating to and guiding the subject matter of intellectual property. It is a set of related legal rules that are intended to protect the products of human ingenuity, that is, intangible ideas, words, sounds, and it consists of two main branches as follows: Copyright on the one part; and Industrial property, mainly in Trademarks, Inventions (Patents) and Industrial designs.
It is to be expected that the subject matter of Intellectual property which comprises “legal rights which result from intellectual activity in the industrial, scientific, literary and
artistic fields, and “the legal rights which may be asserted in respect of the product of the human intellect”, “that area of the law which concerns legal rights associated with creative effort or commercial reputation and goodwill”, and “a branch of the law which protects some of the finer manifestations of human achievement…”1 will, if its legal and institutional frameworks are properly developed and harnessed, cannot but impact positively on the economy of any such country taking appropriate steps to develop its intellectual property architecture.
The robust economic nature of the subject matter of intellectual property itself is made manifest in how the various countries of the world have embraced knowledge, skills and other results of intellectual activity as a tool in the fostering of the growth of their economy. Thus, effective intellectual property management is employed as a very important part of the development strategy of countries.
Intellectual property protection is not a new area of Law as the earliest attempts at enacting Laws on it dates back to the 19th Century. There is no debate about the added value of Intellectual property to the economy and individuals lives. Intellectual property rights have a vital role in growing the economies of countries all over the world. Various studies have shown that Intellectual intensive Industries and Businesses report better and higher growth, income and development than other industries.
2.0 Economic objectives of intellectual property law
There are two central economic objectives of any system of intellectual property protection. The first is to promote investments in knowledge creation and business innovation by establishing exclusive rights to use and sell newly developed technologies,
goods, and services. In the absence of such rights, economically valuable information could be appropriated without compensation by competitive rivals. Firms would be less willing to incur the costs of investing in research and commercialization activities. The second goal is to promote widespread dissemination of new knowledge by encouraging (or requiring) rights holders to place their inventions and ideas on the market.2
Technology and knowledge have contributed greatly to the economic growth of countries like the United Kingdom, USA, France, Japan, Brazil, India, Russia, China and many more. Thus, it is clear that Intellectual property protection has a huge influence on the financial improvement of a nation.
3.0 The synergy between Intellectual Property and Economic Development
The Intellectual property intensive industry of Nigeria keeps booming by each passing day and this has a staggering effect on the Nigerian economy. According to PwC Global entertainment industry, Nollywood which is the nation’s movie industry, is said to be one of the world’s fastest growing creative industries in the world. The industry contributed about $1.8 billion (730 billion naira) to the country’s 2020 GDP.3 The speaker of the house of Representatives, Femi Gbajabiamila, at a Two-day Leadership Master class training hat held in April 2021, said that the Nollywood film industry contributed 2.3% to the nation’s Gross Domestic Product (GDP). The Arts, Entertainment and Recreation sector of Nigeria also boosted the growth of the nation’s GDP by 2.39% in year 2021.4
Furthermore, other countries including the G7 countries, have also recognized a nexus between Intellectual property and their economic development. Thus, for example, the intellectual property intensive industry of the United States accounts for 38% of the county’s GDP, 52% of merchandise exports, 27.9% of million jobs and 46% of wage premiums.5
Intellectual property fosters economic growth through the following means:
(a) Promoting innovation by providing exclusive rights to and protecting the interest of the creator, providing incentives to invent and create and to produce socially desirable new innovations. In the words of Abraham Lincoln, the patent system “added the fuel of interest to the fire of genius in the discovery and production of new and useful things.”6 This also applies to other branches of Intellectual property;
(b) Protecting innovators from unauthorised copying, forbidding the exploitation or misuse of the property without the permission of the creator;
(c) Creating a market for inventions, creating platforms for financial investments, supporting start-up liquidity and growth and enabling a more efficient market for technology transfer and trading in technology and ideas;
(d) Facilitating vertical specialization in technology markets; and
(e) Supporting licensing-based technology business models.
The combined effect of all the above-mentioned leads to economic development and growth. Thus, a country with higher rate of technological growth is more likely to experience a higher standard of living than those of countries without much growth.
As much as Intellectual property law has its positive impact, there is also an adverse side to it. Thus, the impact of Intellectual property can be classified as positive or negative.
4.0 The Benefits of Intellectual Property Laws to the Economy
The business sectors and industries that depend on intellectual property Law represent an important and growing part of every modern economy, particularly as these economies advance from dependence on agricultural, mineral and low value- added manufacturing to higher-value products and services. Intellectual-property based sectors in both developed and developing countries are substantial drivers of GDP and
employment growth.7 The following are means through which Intellectual property Laws are of benefit to the economy.
4.1 Attraction of Foreign Direct Investment and provision of the necessary conditions for
Effective protection of intellectual property rights attracts inward foreign direct investment in various countries. The Organisation for Economic Co-operation and Development has conducted various extensive data survey whose results showed a positive correlation between the strength of Intellectual property law/rights patents, trademarks and copyright and Foreign direct investment. Economists discovered that a 1% increase in a country’s patent protection correlates to a 2.8% increase in foreign direct investment, and a 1%improvement in trademark and copyright protection increases Foreign Direct Investment by 3.8% and 6.8% respectively.8 Thus, weak Intellectual property protection will prevent investment in various sectors of the economy thereby leading to stunted or redundancy in the economy and may also negatively impact the country’s investment climate.
4.2 Fostering of Research and Development in the country
Free riding has a negative effect on innovations. Studies have shown that there is a tendency for individuals and industries to under invest in Research and Development in the absence of effective Intellectual Property laws. This is because these creative works will not be defended from free riders. This implies that individuals and industries that do not fully recover their investments are dissuaded from engaging in Research and Development due to the activities of free riders. The Organisation for Economic Co-operation and Development also discovered that a 1% increase in the strength of patent protection in developing countries correlates to a
nearly 1% increase in domestic research and development. Also, increase in trademark and copyright protection correlates to a 1.4% and a 3.3% increase in domestic research and development, respectively.9 Intellectual property Laws that are effective prevents this by reassuring these individuals and industries that their creations are free from the antics of cheats and free riders.
4.3 Intellectual Property Laws attracts venture-capital investment
Intellectual property protection attracts Venture-capital investment in Research and development and for the commercialization of innovative products and services. It aids firms or individuals in getting funding from investors as venture-capitalist.
4.4 Intellectual property rights could play a significant role in encouraging innovation, product development, and technical change
By protection of intellectual property rights, individuals and firms are motivated to create more, innovate and improve existing innovations. This is a win-win situation in that the state benefits economically, while the individuals are rewarded by their interest in the creation being protected. The combined effect of these innovations is critical for economic growth and productivity activity. For example, then protection of utility models has been shown to improve productivity in countries with lagging technologies such as Brazil and Phillipine. It has been concluded that Utility models were an important source of technical change in Japan. Protection also adds value to these innovations.
4.5 Intellectual property rights also could stimulate acquisition and dissemination of new information
Protection of Intellectual property rights affords firms confidence that they face limited threats of uncompensated misappropriation. This certainty could induce them to trade and license their technologies and products more readily, enhancing
their diffusion into the economy.
4.6 Facilitation of transfer of technology
Intellectual property rights help in increasing innovation and technology diffusion.
Technology transfer is the process of disseminating technology from the owner of the intellectual property to another. Technology transfer ensures that new scientific and technological developments are easily accessible by a broader range of users who can then exploit the said developments and make new bye-products from it. The advances in technology furthers the growth and development of the economy at large, making the public the ultimate beneficiary of these transfers and advancements.
Thus, technology transfer is critical for nations as it promotes economic progress and prosperity. Therefore, effective Intellectual property laws will help protect inventor’s interest and maximize inventor’s incentive for the particular technology.
Furthermore, effective intellectual property laws help developing countries access foreign technology.
5.0 Negative Impact of Intellectual Property Laws on Economic Development.
Of a truth, Intellectual property laws is capable of fostering economic growth and development, it may however, have an adverse effect on the economy as well. These laws might also raise difficulties on the economy. Below are possible negative impacts that Intellectual property laws could have on the economy:
Intellectual property laws support monopoly. This creates barriers preventing others from using the innovation thereby allowing the inventor to charge prices which are times outrageous since consumers will have no other or limited options. Studies have shown that where intellectual property laws are in place, there tends to be monopoly of the market.
5.2 Absence of competition
Competition is the most important factor for the development of an economy. This serves as a form of check and balance on products, services and their prices. It also ensures that consumers are satisfied better by having a variety of options to pick from. It also helps to keep industries in their toes to provide products and services of better quality. However, Intellectual property laws may serve as an hinderance to this as it provides security to the creators and inventors.
5.3 Diminished access to Technology
A fundamental concern raised about intellectual property protection is that their exploitation could result in diminished access to technological information. This can be by inventors or creators raising imitation costs and placing considerable pressures on imitative enterprises in developing economies. Thus, a paramount worry for developing countries is that protection of intellectual property could result in higher costs for the use of new technologies.
5.4 Increased cost of administration and enforcement
Cost associated with administration and enforcement of Intellectual property Laws are expensive and may be burdensome to the government of developing countries.
5.5 Economic and social costs
Effective Intellectual property laws might also raise difficult economic and social costs. Developing economies could experience net welfare losses in the short run because many of the costs of protection could emerge earlier than the potential benefits.
In summary, policies which include strengthening of human capital and skill acquisition, promotion of flexibility in enterprises and organizations, ensuring a strong degree of competition in domestic markets, and development of a transparent, non- discriminatory, and effective competition regime will all aid in ensuring intellectual property Laws has maximum positive on the Nigerian economy.
This is supported by statistics that have shown that Intellectual properties crimes cost nations’ economies a huge amount. In the United States, intellectual property crimes cost the countries’ economy 180billion dollars from theft of trade secrets, 18 billion dollars from pirated U.S software and 29 billion dollars in displaced legitimate sales due to counterfeit and pirated goods.10
In conclusion, the absence of effective intellectual property laws deprives a country of huge revenues that could boost the development of the country. This is supported by statistics that have shown that Intellectual properties crimes deprives many countries’ economies huge amounts. The president of Nigeria disclosed at the inauguration of Falcon Eye Project, Nigerian Navy’s Strategic Maritime Surveillance System, in July, 2021, that the country loses about 26.3 billion dollars annually to various forms of criminality particularly Piracy and sea robbery. This emphasises the adverse effect that lack of effective intellectual property laws has on the economy. In the United States, intellectual property crimes cost the country’s economy 180billion dollars from theft of trade secrets, 18 billion dollars from pirated U.S software and 29 billion dollars in displaced legitimate sales due to counterfeit and pirated goods.11
However, that a Law has a few disadvantages does not mean it is to be stashed away and neglected by the society as this would deprive society of the numerous benefits it could fetch the economy. Although, Intellectual property Laws may have a negative impact on an economy in certain instances, it is still very much clear and
obvious that its pros outweigh its cons
Furthermore, the negative impacts can be worked on to the barest minimum by the following ways:
8.1 Imperatives of a review and update of extant Intellectual Property Laws
It is recommended and advised that to get the maximum benefit afforded by Intellectual property to the economy, existing laws be reviewed, amended and updated. This will help for more economic activity and interest in the economy by both external and internal investors
8.2 Implementation of procompetitive standards
It is suggested that standards should be established that encourage learning and follow up on innovation within the intellectual property system/ domain.
8.3 Enhance capacities to develop and use intellectual properties:
it is imperative that the country works on enhancing and fostering capacities and abilities to develop and use intellectual properties. This ca be by making trainings and education in this respect available and affordable.
8.4 Promote competitive markets:
one of the important determinants of the success of an intellectual property protection regime is the competitive nature of the markets within which it operates. This is because competitive markets have been shown to reduce or prevent monopoly in the economy. This will be aided by development of competition policies as well.
All of the above-mentioned benefits will not be maximized in the absence of effective intellectual property rights and administration. It is therefore imperative that necessary steps are taken to put this in order in the Nigerian setting.
Furthermore, it is advised that the Nigerian government works in light of the
aforementioned to better access the benefits afforded an economy by effective intellectual property laws as this could generate more international economic activity and greater indigenous innovations.
In addition, relevant treaties should be ratified and enacted into our National Laws as soon as possible by the Nigeran legislative house. There should also be improvement on government policies especially in commercialization of invention where financial difficulty is encountered as well as encouragement of research and development by the Federal Government through different means possible12.
1Oyewunmi AdejokeO, Nigerian Law of Intellectual Property, University of Lagos Press and Bookshop Ltd, (2015) pp.2-3. Learned Author was considering the various definitions of Intellectual Property from the many viewpoints by WIPO, Intellectual Property Handbook, (2nd Ed. WIPO Publication No 489 (E) Geneva, 2004); Jeremy Philips and Alison Firth, Introduction to Intellectual Property Law,(4th Ed., London: Butterworth, 2001)p.4;Bainbridge, David, Intellectual Property (6thEd., Essex: Pearson 2007) 3; and Cornish William and Llewellyn David, Cornish & Llewellyn’s Intellectual Property: Patents, Copyright, Trademarks and Allied Rights (6thEd., London: Sweetand Maxwell,2003) 3.
2Keith E. Maskus, Intellectual Property Rights and Economic Development, 32Case W. Res. J. Int’lL.471 (2000) Available at:https://scholarlycommons.law.case.edu/jil/vol32/iss3/4
6Nicolay and Hay 1905, 113.
8 “Promoting and protecting Intellectual Property in Nigeria”, pg 5, Business Action to Stop Counterfeiting and Piracy, available at https://iccwbo.org/content/uploads/sites/3/2017/01/Promoting-and-Protecting- Intellectual-Property-in-Nigeria.pdf
9“Promoting and protecting Intellectual Property in Nigeria”, pg5, Business Action to Stop Counterfeiting and Piracy, available at https://iccwbo.org/content/uploads/sites/3/2017/01/Promoting-and-Protecting-Intellectual-Property-in-Nigeria.pdf
About the Author
Ogooluwa Osilesi is a final year student of law at Olabisi Onabanjo University. Her interests in law include, but not limited to Intellectual property law, Corporate Finance, Commercial Dispute Resolution, Energy law and legal technology, amongst others.
2 thoughts on “Impact of IP Law in the Economic Development of Nigeria – Ogooluwa Osilesi ”
This is such an exciting read. Well done
Thank you, ma.