ISLAMIC CONSIDERATIONS IN RECOGNIZING AND PRICING INTELLECTUAL ASSETS

INTELLECTUAL ASSETS

A k b a r S a d e g h z a d c l i a n d S e y y e 'd M o h a m m a d T a g h i A l a v i

University of Tabriz Tabriz, Islamic Republic of Iran

Abstract

Intellectual property'

capital (IC),

intellectual assets (IA) and the similar terminology are becoming more fashionable and gaining more importance and attraction as

the traditional

e c o n o m y g r a d u a l l y . A l t h o u g h t h e f i e l d a g e s a b o u t o n e c e n t u r y 1, it s t i l l is n o t w e l l - o r g a n i z e d , h e n c e is a v e r y d e m a n d i n g d i s c o u r s e . T h e d i s c i p l i n e is s t i l l i m m a t u r e a n d " t h e r e is s t i l l a g r e a t d e a l o f room for experimentation" (IF AC

1998,18,. Recognition and

pricing of IA and IC are two important areas among the various sub-fields of the

Reporting in t h e

intellectual capital and developing intellectual capital measures and reporting practices remain one of the key challenges for the

accounting profession (IF AC 1998,18). '

As the latest and more complete divine religion and the formal guidance of God to His creatures Islam prescribes solutions to all

h u m a n p r o b l e m s i n c l u d i n g t o t h e s e r i o u s p r o b l e m s w e f a c e in recognizing and pricing IA and IC. The dynamic nature of Islamic j u r i s p r u d e n c e is r e s p o n s i v e t o t h e p r o b l e m s w h i c h a p p e a r in

congruence with social and technological changes. This research

d e l v e s in t h e I s l a m i c l i t e r a t u r e p e r t a i n i n g t o " r e c o g n i z i n g , a n d p r i c i n g i n t e l l e c t u a l a s s e t s " . T h e a i m is t o i n v e s t i g a t e h o w I s l a m , based on the Islamic logic, legitimizes "intellectual rights" and

h o w I s l a m i c c o n s i d e r a t i o n s a r e t a k e n i n t o a c c o u n t in r e c o g n i z i n g

a n d v a l u i n g I A a n d I C . T h e b a s e s o f I s l a m i c r e a s o n i n g in t h i s c a s e

a r e : t h e V e r s e : " f u l f i l l y o u r p r o m i s e " 2, t h e f a m o u s c i t a t i o n f r o m t h e Holy Prophet Mohammad (P.B.U.H.):"people are predominant o v e r t h e i r p r o p e r t i e s ” 3, “ c o m m o n l a w ” 4 a n d t h e " t r a d i t i o n o f t h e

w i s e " 5, a s t h e f i f t h p r o o f 6. T h e r e s u l t s , i t is h o p e d , w i l l e n h a n c e t h e completion

will boost

d e v e l o p m e n t , p a r t i c u l a r l y in M u s l i m c o u n t r i e s .

Key terms: Intellectual assets, Knowledge-based economy, Islam, Entrepreneurship and SMEs, Development.

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2 Islamic Considerations in Recognizing and Pricing Intellectual Assets

Introduction

Since the very old times attention of the scholars and scientists was attracted to the effect of knowledge on power and capability. However, since the last decade of the twentieth century

knowledge, knowledge-based economy and their effects on development t h r o u g h t h e p r o d u c t i o n o f i n t e l l e c t u a l a s s e t s 9 ( I A ) h a v e e a r n e d a s p e c i a l s t a t u s in t h e scientific arena and media. Entrepreneurs as well as small and medium enterprises (SMEs), as the actors of the scene of knowledge-based economy, have had an extraordinary effect on development and by producing intellectual capital have been

considered as the engines of development.

However, they are not free-minded of some hindering difficulties with regard to their intellectual assets. To name a few, there are some problems with regulation, protection,

valuing, pricing and transferring these ntellectual properties. Resolving these problems and

removing these difficulties will accelerate the pace of economic development. Every economy should take actions and should provide solutions and remedies.

As the latest and more complete divine religion and formal guidance of God to His creatures, Islam provides solutions to all human problems. The dynamic nature of

Islamic jurisprudence makes Islam capable to resolve all human problems which appear in c o n g r u e n c e w i t h s o c i a l a n d t e c h n o l o g i c a l c h a n g e s . T h i s s t u d y a i m s t o i n v e s t i g a t e h o w

I s l a m i c c o n s i d e r a t i o n s a r e t a k e n i n t o a c c o u n t in r e c o g n i z i n g a n d v a l u i n g I A a n d

i n t e l l e c t u a l c a p i t a ! ( I C ) . T h e r e s u l t s , it is h o p e d , w i l l e n h a n c e t h e e n r i c h m e n t a n d completion

brain drain, encourage entrepreneurs and will support small and medium enterprises (SMEs), inventions, innovations and new ideas; and eventually will boost economic, social, political and cultural development o f societies.

of the discipline

The next section introduces intellectual assets and the related terminologies such as: knowledge-based economy (KBE), intellectual wealth (IW), intellectual ownership (10),

i n t e l l e c t u a l p r o p e r t y ( I P ) , i n t e l l e c t u a l a s s e t s ( I A ) c o m m o n l y u s e d in t h e l i t e r a t u r e . L a t e r on the role of knowledge and knowledge-based economy on development will be analyzed briefly. Then we will survey the Islamic literature (the opinions of different s e c t s o f I s l a m ) a n d w i l l e v a l u a t e t h e d e g r e e o f i m p o r t a n c e g i v e n t o t h e r e s e a r c h t o p i c in Islam. Lastly, after summarizing the results, we will make a conclusion and based on that some suggestions.

Intellectual Outputs

It'is necessary to define intellectual outputs and the related technologies first. However, to be brief and make the long story short, only some citations from the literature are

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The International Journal o f Accounting and Business Society 5

and consulting processes as well as extending to potential intellectual property" (IFA Cl 998,4)..

"Intellectual property (IP) assets are collections of intellectual p r o p e r t y ': patents, trademarks, copyright works, industrial designs, geographical indications, trade secretes and other types of intellectual property- that along with human capital have economic value because of their ability to enhance the value and return from products and

technologies"( WIPO 2002, 3). "Intellectual property, very broadly, means the legal r i g h t s w h i c h r e s u l t s f r o m i n t e l l e c t u a l a c t i v i t y in t h e i n d u s t r i a l , s c i e n t i f i c , l i t e r a r y a n d

a r t i s t i c f i e l d s " ( W I P O 2 0 0 1 , 3 ) . " I n t e l l e c t u a l p r o p e r t y is l e g a l l y d e f i n e d a n d a s s i g n s property rights to such things as patents, trademarks, and copyrights. These assets are the o n l y f o r m o f i n t e l l e c t u a l c a p i t a l t h a t is r e g u l a r l y r e c o g n i z e d f o r a c c o u n t i n g p u r p o s e s .

However, accounting convention based upon historical costs often understate their value" (IFAC 1998,3). "Intellectual capital can be thought of as the total stock of capital o r k n o w l e d g e - b a s e d e q u i t y t h a t t h e c o m j- ; n y p o s s e s s e s . A s s u c h , i n t e l l e c t u a l c a p i t a l c a n

be both the end result of a knowledge transformation process or the knowledge itself that transformed into intellectual property or intellectual asset so f the firm" (IFAC 1998,3). "Intellectual capital encompasses booth the inventory of knowledge-based assets as well

a s t h e c a p a c i t y t o a c q u i r e a n d a s s i m i l a t e n e w l e a r n i n g r a p i d l y . I t is o f t e n i n v i s i b l e , intangible, or difficult to detect or quantify" (Rose 2000,4).

Let us confine ourselves to these quotations from the literature which introduces the t e c h n o l o g y u s e d in t h i s p a p e r .

The Role of Knowledge-Based Economy and Intellectual Property on Development

" K n o w l e d g e is p o w e r " is s a i d 9 8 0 y e a r s b e f o r e b y F e r d o u s i 11, t h e I r a n i a n m o s t f a m o u s scholar and poet. However, its real meaning was never before well understood as in the new millennium. Different schools of economic thought have stated different factors as the basis of and/or

t h e e n g i n e f o r e c o n o m i c d e v e l o p m e n t . S o m e o f t h e s e d o c t r i n e s a r e s u m m a r i z e d in t h e following table:

Economic School

Important Factor in Activity Which Gains

the Factor Mercantilists

Development

Trade Physiocrats

Gold and silver

Agriculture Classics

Land and Land,Owner

L a b o r , C a p i t a l , ' R a \ y ?M a t e r i a l Industry

a n d E n t r e p r e n e u r s h ip

Marginalists

Production Marxists

Profit

industrialization Gcrman-Austria Classics

Technology

Production Chicago School

Creative Innovation

Uncertainty, Risk and Production

Human Resources Source: Ahmadpoor Daiyani (2000,21)

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Centre fo r Indonesian Accounting and Management Research Postgraduate Program, Brawijaya University

4 Islam ic C onsiderations in Recognizing and Pricing Intellectual Assets

The most recent and the dominant doctrines of our era focus on entrepreneurship, small

a n d m e d i u m s i z e e n t e r p r i s e s ( S M E s ) a n d k n o w l e d g e a s t h e m o s t i n f l u e n t i a l f a c t o r s in development.

I P a s s e t s h a v e e c o n o m i c v a l u e 13 a n d s t i m u l a t e e c o n o m i c g r o w t h 14. I n t h e c o m p a n i e s around the world the creation, identification and application of intellectual capital represents the one truly sustainable source of competitive advantage ( Morello 2001,1).

At the macro-economic level intangible assets, including human capital and IP, arc often t h e m o s t v a l u a b l e e l e m e n t s in n a t i o n a l a n d r e g i o n a l e c o n o m i e s ( W I P O 2 0 0 2 , 2 } . " I P is t h e c o r e c o m p e t e n c y f o r w e a l t h c r e a t i o n " ( C o u g h l i n e 15 i n W I P O 2 0 0 2 , 2 ).

Intellectual property has always been an integral part of general economic, social and cultural development (WIPO 2001, 163) and as a political tool for enhancing national competitiveness,

exchange, augmenting revenues,

exports, corporate

drain, and motivating

e m p l o y e e s ( W I P O 2 0 0 2 , 9 , 7 ).

Having introduced the recent literature on intellectual outputs, the commonly used related terminologies, and the effects of knowledge and knowledge-based economy on

d e v e l o p m e n t , t h e n e x t s e c t i o n is d e v o t e d t o r e s e a r c h i n g t h e I s l a m i c l i t e r a t u r e o n intellectual asset recognition and pricing.

Islamic Literature on Intellectual Asset Recognition and Pricing

R e c o g n i z i n g i n t e l l e c t u a l o u t p u t s a s a s s e t s o r p r o p e i t i e s a n d p r i c i n g t h e m is v e r y significant, and meanwhile a very difficult task. However, after recognition and before p r i c i n g t h e y s h o u l d b e v a l u e d . " I P v a l u a t i o n is e s s e n t i a l f o r b u s i n e s s p l a n n i n g a n d j o i n t v e n t u r e s , a n d is i m p o r t a n t f o r l i c e n s i n g , a c q u i s i t i o n s , m e r g e r s , i n v e s t m e n t s , l o a n s , e t c . a s

a key element to determine the monetary worth of an IP portfolio" WIPO 2002 (d), 7).

As the latest and more complete divine religion and formal guidance of God to His creatures, Islam prescribes solutions to all human problems including to the serious problems we face in recognizing and valuing IA and IC. The dynamic nature of Islamic

j u r i s p r u d e n c e is r e s p o n s i v e t o t h e s o c i a l a n d t e c h n o l o g i c a l c h a n g e s .

T h e r e e x i s t s a v e r y r i c h l i t e r a t u r e in b o t h ( 1 ) " t h e i m p o r t a n c e o f k n o w l e d g e K B E a n d their effect on power and capability" and (2) "the recognition of blossoms and outputs of knowledge as intellectual properties". Just as an example of the given importance to knowledge, suffice it to quote from Ferdousi - the Iranian famous scholar and poet - who

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The International Journal o f Accounting and Business Society 5

said 980 years before:

"K n ow ledge is p o w e r" and

refer to the highly insisted

6 3 6 ) . I n i t i a l l y g o l d a n d s i l v e r a n d l a t e r o n a n y o b j e c t i v e t h i n g w h i c h is r e s e r v e a b l e a n d can be owned was called property (Toreyhi 1985, 475). Some have perceived "property" as obvious as needless of definition (Jouharil

1 8 2 1 ) H o w e v e r , in t e c h n i c a l m e a n i n g o f " p r o p e r t y " t h e r e is a d i v e r s i t y o f o p i n i o n s a n d b e l i e f s a m o n g t h e d i f f e r e n t S e c t s 20 o f I s l a m .

984,p

H a n a f l t e s b e l i e v e t h a t " p r o p e r t y " is " t h e t h i n g i t s e l f 2 I " o n w h i c h o n e c a n d o a t r a n s a c t i o n s o r m u n i f i c e n c e . T h e y r e c o g n i z e t w o c r i t e r i a f o r p r o p e r t i e s : ( 1 ) " P r o p e r t y is a m a t e r i a l t h i n g w i t h e x t e r n a l e x i s t e n c e t h a t p r e s e r v i n g a n d g u a r d i n g o f it is p o s s i b l e ; a n d ( 2 ) t h e t h i n g s h o u l d h a v e ‘ p r o p r i e t a r y w o r t h ’22" ( F e r a j H o s s e i n 1 9 9 2 , 3 4 ) . C o n s i d e r i n g t h e s e t w o c r i t e r i a , " b e n e f i t s 23” a n d " r i g h t s 24” a r e e x c l u d e d f r o m t h e d e f i n i t i o n o f "property".

S h a f e i t e s p e r c e i v e " c o m m o n l a w ” 25 a s t h e b a s i s o f a n d a c r i t e r i o n f o r t h e " p r o p r i e t a r y worth" of things; hence they authorize the absoluteness of "property" to "standing p r o p e r t i e s ” 26 a n d " b e n e f i t s " . " N o t h i n g m a y b e p e r c e i v e d a s a " p r o p e r t y " u n l e s s h a s a n

e x c h a n g e v a l u e a n d it s w a s t e c a u s e s c o m p e n s a t i o n ( " S i y o o t h i 1 9 9 8 , 2 2 1 ) .

H a n b a l i y y e h p e r c e i v e a t h i n g a s a " p r o p e r t y " w i t h r e g a r d t o it s b e n e f i t s r a t h e r t h a n it s o b j e c t i v i t y 27, o r i g i n s 28 a n d l o c a t i o n .

I m a m i y y e h c l e r g i e s l e a n o n c o m m o n l a w in t h e m e a n i n g o f p r o p e r t y , a n d c o m m o n l a w perceives whatever which has exchange value and which brings something in exchange

a s a p r o p e r t y . A n d t h e r e is n o r e a s o n t o c o n f i n e it t o " s t a n d i n g p r o p e r t i e s " o n l y ( K h o y i e 1992,302 and Khomeini, 1995,20).

H a k e e m ( A y a t u l l a h ) p e r c e i v e s t h e " p r o p r i e t a r y w o r t h " a s " a c o n v e n t i o n o f t h e w i s e ” 29 s t e m m e d f r o m p e o p l e ' s i n t e n t i o n a n d w i l l ( 1 9 9 8 0 , 3 2 5 ) . B r i e f l y s p e a k i n g , p r o p e r t y is w h a t e v e r - s t a n d i n g p r o p e r t y , b e n e f i t s a n d r i g h t s — t o w h i c h s o m e t h i n g b e s t o w e d in exchange.

O w n e r s h i p : A n " e s t a t e " is w h a t e v e r b e l o n g e d a n d s p e c i f i c t o s o m e o n e . " O w n e r s h i p " is t o g a i n p o w e r a n d a b i l i t y t o a p r o p e r t y . T h e w i s e a c c e p t a p r o p e r t y w i t h r e g a r d t o it s r e a l or conventional

exchange. Ownership is the conversance and domination of someone to something valuable (actually or potentially)

benefits

and

pay cash/non-cash

in

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6 Islam ic Considerations in Recognizing and Pricing Intellectual Assets

( S h a f a 'i e 2 0 0 4 ) . I n it s g e n e r a l m e a n i n g " o w n e r s h i p " is s y n o n y m o u s t o s o v e r e i g n t y 30 ( r i g h t ) a n d it i n c l u d e s t h e o w n e r s h i p o f i n t e l l e c t u a l p r o p e r t i e s , t o o .

M a lik ie s ' (M a lik iy y a h s') and S h a fe ite s ' definition of property do not encompass the ownership of claims and ownership of literary and art works. They argue:

1. A n e s t a t e is t h e l a w s e n t e n c e o n " s u b s t a n c e " a n d " b e n e f i t s " [ o f a p r o p e r t y ] Vv i i c h a u t h o r i z e s its o w n e r t o e n j o y it o r u s e it in e x c h a n g e s ( G h o r a f i a n d S i y o o t h i 1 9 8 3 , 2 5 0 in J a a 'f a r i L a n g r o o d i 1 9 9 5 , 9 4 ) .

2. O w n e r s h i p is t h e l e g a l r i g h t o f m e n t o e n j o y t h e s u b s t a n c e o r b e n e f i t s [ o f a p r o p e r t y ] o r u s e t h e m in e x c h a n g e s t o o t h e r s u b s t a n c e o r b e n e f i t s ( J a a 'f a r i L a n g r o o d i 1 9 9 5 , 9 4 ) . T h e r e l a t i o n o f p r o p e r t i e s a n d e s t a t e is s u c h t h a t s o m e p r o p e r t i e s a r e n o t e s t a t e s ( f i s h e s in t h e s e a b e f o r e c a t c h i n g t h e m ) a n d s o m e

* estates are not properties( such as a grain or a torn out balloon).

"right to w i t h d r a w ' 0 2 a n d " r e t a l i a t i o n ( r e t r i b u t i o n ) r i g h t " 33. A c c o r d i n g t o t h i s d e f i n i t i o n , " r i g h t " is d i f f e r e n t f r o m " e s t a t e " ( M o h a g h g h i g h D a m a d 1 9 9 4 , 5 5 ) . I f a r i g h t is o n e o f t h e i n t e n t i o n a l l y t r a n s f e r a b l e r i g h t s , i t c a n b e u s e d in a n e x c h a n g e t o a property (Ansari 1975, 21). Therefore rights such as "demarcation right" have " p r o p r i e t a r y w o r t h " , s i n c e t h e y e n t e r in " r e c o n c i l i a t i o n s ” 34.

c o n t r a c t o r a p e r s o n - s u c h a s " d e m a r c a t i o n ( l e v e l i n g ) r i g h t 31,

F a y y o o m i 35, l i k e H a n a f i t e s ' c l e r g i e s , p e r c e i v e a t r a n s a c t i o n t h e e x c h a n g e o f a n a s s e t t o a property. Without any doubt, the definition of "property" encompasses the output of human work (Khoyie 1992, 303) and intellectual properties' right, such as patents and

copyrights are not but the benefits and financial rights of human deeds.

Intellectual Rights and the Opinions of Contemporary Clergies

F o r t h e f i r s t t i m e K a n t 36, t h e G e r m a n p h i l o s o p h e r , t a l k e d a b o u t " c o p y r i g h t " ( a s a n

i n t e l l e c t u a l r i g h t ) in t h e 1 8 t h C e n t u r y . S o m e s c h o l a r s d o n o t p e r c e i v e i n t e l l e c t u a l r i g h t s , such as copyright, to be legal based on this reasoning that something may be perceived a " p r o p e r t y " b y c o m m o n l a w b u t n o t b y t h e " d i v i n e l a w ” 37. T h i s is n o t a n a c c e p t a b l e r e a s o n i n g b e c a u s e p r o p e r t y is a m o n g t h e c o n n o t a t i o n w i t h o u t a d i v i n e r e a l i t y ; r a t h e r , a

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notion within the realm of "common law". The "common law" judges whether a specific t h i n g is a p r o p e r t y o r n o t ; t h e " d i v i n e l a w " o n l y i s s u e s t h e p e r t a i n i n g d e c r e e . E x a m p l e s are:

(wickedness)"," barren land", "rehabilitation of barren land", "weighable"," neighbor" and "tribes".

T h e V e r s e f r o m t h e H o l y Q u r a n " f u l f i l l y o u r p r o m i s e ” '’8 ( 5 : 1) h o l d s t r u e f o r c o p y r i g h t s and patents. If adaptation of an invention or a copyright or imitating others' literary and

a r t w o r k s is a u s u r p a t i o n , it is n o t p e r m i s s i b l e w i t h o u t t h e a u t h o r i z a t i o n o f t h e o w n e r s o f t h o s e r i g h t s . H o w e v e r , t h e r e is n o r e a s o n t o d e c l a r e a s u n l a w f u l t h e e s s e n c e o f a d a p t a t i o n and imitation of others' initiations" (Safi Golpayeganin Imami 1993,207-209).

" T h e b e n e f i t s o f i n t e l l e c t u a l o u t p u t s m a y n o t b e p e r m a n e n t ; r a t h e r it s h o u l d b e s e t f o r some specific period of time. For this reason, we should negate the adjective of " p o s s e s s i o n " ( o w n e r s h i p ) f r o m c o p y r i g h t a n d p a t e n t ; b e c a u s e p o s s e s s i o n is a p e r m a n e n t

(S a h ib ul W aseet in S a d e g h i M o g h a d d a m 1 9 8 9 , 2 4 8 ) .

e n j o y m e n t r i g h t , w T ie r e a s a c o p y r i g h t o r a p a t e n t a r e t e m p o r a r y e n j o y m e n t r i g h t s

In the contrary, other clergies have corroborated intellectual rights and perceived them as l a w f u l . M o n t a z e r y ( A y t o l l a h ) h o l d s t h a t c o p y r i g h t is " a r i g h t o f t h e w i s e ” 39 a n d m u s t b e o b s e r v e d ( M o n t a z a r i in I m a m i 1 9 9 3 , 2 0 8 - 2 0 9 ) .

Makarem Shiraizi (Aytollah) perceives copyright and patents as a divine and legal rights, t o w h i c h r e s p e c t m u s t b e p a i d ( m u s t b e h o l d in e s t e e m ) . H e s t a t e s " I n t e l l e c t u a l o w n e r s h i p s a r e n o t l e s s [ i m p o r t a n t ] t h a n " b a r e o w n e r s h i p ” 40 a n d t h e I s l a m i c S t a t e m u s t t a k e t h e r e s p o n s i b i l i t y o f p r o t e c t i n g it, T h e r e a s o n is t h a t w e g e t s u b j e c t s f r o m t h e common law and the decrees from the "divine law". Violating others' rights is forbidden

a n d i l l e g a l . T h i s is t a k e n f r o m I s l a m . B u t t h e s u b j e c t " i n f r i n g i n g a n d t r a n s g r e s s i n g o t h e r p e o p l e ' s r i g h t " is t a k e n f r o m t h e c o m m o n l a w . T o d a y , a l l t h e w i s e a c k n o w l e d g e it a s a r i g h t a n d it s d i v e s t i n g a s a n i n j u s t i c e . L i k e w i s e , I s l a m s t a t e s n o o n e s h o u l d t r a n s g r e s s in t h e p r o p e r t y o f o t h e r s w i t h o u t t h e c o n s e n t o f its o w n e r . T h i s d e c r e e a l s o is t a k e n f r o m

I s l a m . H o w e v e r , t h e s u b j e c t - t h e t y p e s o f o w n e r s h i p - is t a k e n f r o m c o m m o n l a w ( i m a m i 1993,210).

F a z i l L a n k a r a n i ( A y a t u l l a h ) h a s u s e d " t h e w i s e ' t r a d i t i o n ” 41 t o p r o v e t h e l e g a l i t y o f

i n t e l l e c t u a l r i g h t s s u c h a s c o p y r i g h t ( i m a m i 1 9 9 3 ) . M a r 'a s h i S h o o s h t a r i ( A y a t u l l a h ) h o l d s t h a t : " c o p y r i g h t d i d n o t e x i s t in t h e o l d s o c i e t i e s b e c a u s e t h e a u t h o r s o f t h e b o o k s d i d n o t consider their own profit. When the books became traded as commodities, the authors gained the right to benefit from their works at first. It does not seem logical that others make big monies from their works while the authors themselves suffer from poverty. As

a result, authors have gained right to enjoy the material benefits of their books and make t h e e n j o y m e n t o f o t h e r s s u b j e c t t o t h e i r o w n c o n s e n t " ( M a r 'a s h i 1 9 9 4 , 2 3 8 - 2 3 9 ) .

The citation from the Holy Prophet Mohammad (P.B.U.H). People are predominant over t h e i r p r o p e r t i e s " d o e s n o t m e a n t h a t t h e b u y e r o f a b o o k m a y r e p r i n t it w i t h o u t t h e

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8 Islamic Considerations in Recognizing and Pricing Intellectual Assets

p e r m i s s i o n o f i t s a u t h o r a n d / o r p u b l i s h e r ; o t h e r w i s e a n a r c h y c o m e s i n t o u s a g e , w h i c h is u n a c c e p t a b l e b y t h e w i s d o m a n d S h a r i 'a h . T h e r e f o r e , a s w e s e e , " p r i v a t e l a w " is t r a n s f o r m a b l e . I t is q u i t e p o s s i b l e f o r s o m e a f f a i r s w h i c h w e r e n o t p r i v a t e l a w s a t o n e t i m e b e c o m e p r i v a t e l a w s l a t e r ( M a r 'a s h i 1 9 9 4 , 2 3 8 - 2 3 9 ) . F r e n c h l a w y e r s d i s c u s s i n g about movable properties introduce intellectual properties as "judgmentally movable p r o p e r t i e s ” 42 ( J a a 'f a r i L a n g r o o d i 1 9 9 5 , 1 2 2 ) .

’ o s s e i n i R o o h a n i ( A y a t u l l a h ) b e l i e v e s t h a t : A n y a u t h o r is t h e o w n e r o f h i s 43 a u t h o r e d w o r k s , w h i c h is h i s i n t e l l e c t 's o u t p u t a n d h a s t h e r i g h t t o p r e v e n t o t h e r s t o o u s t e r ( t o usurp ate)

common laws people are predominant

because according to religious as

well

as

1990, 93-97). Others may transcribe a copy for their personal use, but may not make, say, one thousand copies and sell them (Mothahhari 1990, 122 and 134).

over their

In Malikiyyeh jurisprudence the criterion for "proprietary worth" includes standing p r o p e r t i e s , b e n e f i t s a n d r i g h t s . S i n c e t h e e s s e n c e o f r i g h t is a p p r o p r i a t i o n , a n o w n e r s h i p

c a u s i n g r i g h t b e c o m e s s u c h a s a p r o p e r t y . S i n c e t h e c o p y r i g h t a l s o is a p p r o p r i a t e d , it

f a l l s in t h e r e a l m o f " r e a l r i g h t ” 44 ( A d d a r i n i 1 9 7 9 , 3 3 - 3 7 ) .

In Hanafites'jurisprudence, "rights" are not segregated (abstract) from properties. Their

e x i s t e n c e is n o t o n t h e i r o w n b e h a l v e s ; r a t h e r is l a t i t u d i n a l ( t r a n s v e r s a l ) a n d is t h e o u t come of substance and benefit. Therefore, all of the Sects of Islam hold that an

i n t e l l e c t u a l w o r k , s a m e a s a p h y s i c a l w o r k s , is t h e s o u r c e o f b e n e f i t ( A d d a r i n i in A y a t i 1997,69).

In Islamic laws, ownership not only includes the ownership of substance, rather the ownership of benefit, enjoyment and the sovereign (such as the right of heir to reject the w i l l in e x c e s s o f o n e - t h i r d o f e s t a t e ) .

Conclusion

K n o w l e d g e - b a s e d e c o n o m y s e r v e s a s a f l o w e r p o t in w h i c h e n t r e p r e n e u r s h i p a n d S M E s grow. Their inventions, innovations, new ideas and intellectual outputs must be regarded

a s v a l u a b l e a s s e t s , m u s t b e h o l d in e s t e e m a n d m u s t b e p r o t e c t e d . T h i s r e c o g n i t i o n , respect and protection reduces brain drain and accelerates the pace of economic, social, political and cultural development of societies. Every economy should take actions and should provide solutions and remedies.

The dynamic nature of Islamic jurisprudence takes very significant actions to recognize intellectual outputs and assets and takes the responsibility of protecting the resultant r i g h t s . I s l a m h o l d s t h a t p r o p e r t y is e v e r y t h i n g " a p p r o p r i a t e a b l e ” d o n e w h i c h h a s s o m e exchange value. In the same way we perceive "standing properties" as assets; intellectual outputs, which are the results of their developers' intellects, also have "proprietary

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The International Journal o f Accounting and Business Society 9

worth and respected before the common law. The developers must own the material benefits of their outputs.

I n t e l l e c t u a l p r o p e r t y r i g h t s w e r e n o t d i s c u s s e d t r a d i t i o n a l l y in I s l a m . H o w e v e r , t h e

d y n a m i c n a t u r e o f I s l a m i c j u r i s p r u d e n c e is r e s p o n s i v e t o t h e p r o b l e m s w h i c h a p p e a r in congruence with social and technological changes. Based on reasons such as "fulfill your p r o m i s e " t h e l e g i t i m a c y o f a n y c o v e n a n t ( w h i c h is n o t p r o h i b i t e d in t h e r e l i g i o n ) c a n b e

proved.

A routine deed within "the wise' tradition" to ease their daily lives can be as a religious reason if approved by the Shari ah. The lack of a negation counts as an approval.

T h e w i s e ' c o m m o n l a w r e g a r d s s u c h r i g h t s a s p r o p e r t i e s . T h e r e is n o d e f i n i t i o n in S h a r i a h f o r t h e p r o p r i e t a r y w o r t h o f t h i n g s . R a t h e r , t h e p r o p r i e t a r y w o r t h o f t h i n g s is

a m o n g t h e " w i s d o m c o n v e n t i o n s ” 45.

W h o e v e r p r o d u c e s a n i n t e l l e c t u a l o u t p u t b e c o m e s it s o w n e r a n d m a y p r e v e n t o t h e r s t o t a k e p o s s e s s i o n o f it. B e c a u s e , b a s e d o n t h e H o l y P r o p h e t 's c i t a t i o n " p e o p l e a r e predominant over their properties' and the judgment of common law people are dominant over to their properties.

Therefore, the rights of those who develop intellectual outputs, including material or

i n t e l l e c t u a l r i g h t , h a v e t h e n a t u r e o f p r o p e r t y a n d c a n b e v a l u e d in m o n e y t e r m s a n d h a v e

i n t e l l e c t u a l v a l u e . I t is n e c e s s a r y t o p r o t e c t t h e m a t e r i a l a s w e l l a s t h e i n t e l l e c t u a l r i g h t s of the developers. The developers deserve to enjoy the benefits of the material and non­ m a t e r i a l r i g h t s o f t h e i r o u t p u t s . V a l u i n g i n t e l l e c t u a l a s s e t is a p r e r e q u i s i t e t o

p r i c i n g t h e m a n d r e c o g n i z i n g t h e m is a p r e r e q u i s i t e t o v a l u i n g .

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Footnotes:

J maChiRe Wh' Ch

m8M

° f pril,ted

*"«*»* eoP^sht

• .(1 :*•>*-) jj**^v -

2 cr1*-

- ’ j * i n 11 jj. r

ttu S ^ r w; i T £ ) ‘; :iS " ”„™ ^ T 1’' ^ C1" ‘c“ Sk“ h of * ' Ho,>' Moha"m“d ConOT!“s

, ‘ I n F c r d o u s i ’s o w n w ° r d :

"IWtoevcr is knowledgeable is powerful "

I 1* 0 ^ ’ T d . ) . V e r y fa m O U S Ir a iU “ S C h 0 la r " * ^ ° fthC 4<h CeaSmy <A H - c o r r e s p o n d i n g t o t h e

- Intellectual property (IP) and intellectual assets (IA) assets will be defined in the next section

Interested researchers may refer to the extensive and very rich literature for more details. - T h e e x a c t t r a n s l a t i o n o f F e r d o u s i ’s e x p r e s s io n is : " W h o e v e r i s k n o w l e d g e a b l e i s p o w e r f u l " .

h r * J f T S ib lC aSf

, l nU3gC fTOm h U m a n C ap itaI a n d k n o 'v - b o w t o ‘d c a s , s t r a t e g i e s , b u s i n e s s p la n s

5 ^ 2 ^ r m ta n 8 ib I C f n iit5 ° f 8

ctaa^ % C T cativc *“»v«tivc talents (UNCTAD )

« ” " W I P O S 2 2 !b x’ 3 g,V ! S.SCVCn r ea s o n s w h y d 0 IP

h a v e e c o n o m ic v a lu e W I P O .

15 wii ? S’ CX1I

IP 455615 stunuLatc e c o n o m ic g r o w t h in s e v e r a l w a y s .

F o n i M o , r C? n ^ r "

° f FO rd G ' 0 b a l

*>TOP e r ty C o u n s e l f o r

16 - T o q u o t e f r o m t h e lite r a t u r e ( s o m e c it a t io n s f r o m th e H o l y P r o p h e t M o h a m t m d ^ 8 UJ< >)• *

S e e k t h e k n o w l e d g e fr o m c r a d le t o g r a v e ( * J »

t_*lU )

x m{‘Musfa*">-*1any<aMus,ta

you ^

,o 8 0 “

<,bc m*t tamc p ,8 c ' ° r ** p ro p h c l', o t ) JUI- n

6 *1 - 19

J S T r " f0 U r

*" OrflX>d0X lsUm <*" Mohammedan religion) and another tadina

sect called

Imamtyyeh, th e f o l lo w e r s o f I m a m A l i Ib n A b i T a l i b . T h e f o u r s e c t s a r c - Hatuifhts th e

followers of Aboo Hanifa;

Malikiyytk, th e f o l l o w e r s o f M a li k I b n A n a s s ; ShafcUes the foli^vera of

Mohammad Ibn

Idrecs;

Ilanbaltyyeh oi Hanabilah, die followers of Ahmad I^Hanbah

y o l- 13, No.l/2Desember 2005 centre fo r Indonesian Accounting and Management Research

Postgraduate Program, Brawijaya University

12 Islamic Considerations in Recognizing and Pricing Intellectual Assets

( j J U a I . 23 -

24

25

26

V 27 n

(Wisdom incorporeal) w

a LV..U . 30

t5>- - 31 6* - 32

, j ^vl ■ olll ^a. - ij

jx L J i - 14

35 - T h e a u th o r o f

Mis bah ul Mottecr.

16 -

Emanual Kant. ,

] (} JjiJb 1 jj - M

J ji* . - 19 (ownership of substancc)

<ySJL. .

( ' T h e w is e * tr a d it io n " , “ C h a r a c t e r s k e t c h o f

the wise") 2 * ^ * jtH - 41

(I n c o r p o r e a l m o v e a b l e p r o p e r t i e s ) cr*5'-* J A - J

&+ - 42

43 - N o n - s e x i s t l a n g u a g e u s e s h is / h e r t o r e f e r t o b o t h g e n t s . H o w e v e r , f o l l o w i n g G o d ' s t r a d it io n in

Q u r a n , w e p r e f e r t o u s e " h is r w h e n e v e r t h e t w o g e n e t s a r e m e a n t .

A c tu a l r ig h t

cS* - **

(Wisdom incorporeal)

tf

- 43

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