Volume 15 Issue 2 - August 20, 2010 PDF
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Intellectual Property Rights and Innovation
Michael A. Gollin
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An effective system for protecting patents, copyrights, and other intellectual property promotes innovation by balancing exclusive rights with accessibility. Michael Gollin is a partner with the Venable LLP law firm in Washington, DC; chairman of Public Interest Intellectual Property Advisors, and author of Driving Innovation: Intellectual Property Strategies for a Dynamic World. This article appears in the November issue of eJournal USA, “Roots of Innovation.”

Employees sort AIDS medicine at a lab in Port Elizabeth, South Africa, a country that opposes strong patents for such medicine.
Innovation feeds on the known and converts it into the new. Creative people successfully build old ideas into new ones, put them into practice, and build on them again. Innovation challenges the establishment, creating winners and losers, and causes many ventures to fail.

The tumultuous developments in communications and genomics, the spread of cell phones, AIDS medicine, popular music, and textbooks all share the fundamental dynamics of this innovation cycle.

The United States recently announced a national innovation strategy, joining a growing group of countries seeking to harness innovation to serve their national interest. An effective innovation strategy must focus on the most important, but least understood, of the forces driving innovation — the complex system of institutions, laws, and practices referred to as intellectual property (IP).

IP rights include patents, copyrights, trademarks, and trade secrets, each of which is subject to separate laws in every country. IP laws evolved over centuries as a tool to derive public benefits from the innovation cycle. Because it is so tightly linked to innovation , intellectual property holds a key to our future.

Intellectual property rights apply to innovative endeavors as diverse as computer technology, pharmaceuticals, agriculture, music, and publishing. IP systems capture, channel, and shape innovation. In an effective, well-balanced IP system, exclusive rights serve as incentives that amplify the innate human will to create.

That exclusivity also establishes a framework for collaboration and investment in creative ideas to push them out into society. But the exclusivity and control available to creators and their investors is carefully limited so that other people can access and build on new products and ideas, and the innovation cycle can move forward.

A balanced IP system promotes innovation. Innovative companies rely on their own IP rights, and their ability to steer around the rights of others. If exclusivity is too weak or too strong, imbalances in the IP system can limit innovation and its benefits.

Finding Balance

Sweden's Pirate Party advocates free music file sharing and no patents.
IP rights have expanded from wealthier countries into poorer countries over the past decade. But extensive research, debate, reform, and training about intellectual property in recent years show no signs of leading to a global consensus on the impact of current IP systems on human welfare , much less how potential reforms would help or hurt larger society.

When Venice's leaders passed the first patent law in 1474 with 116 votes, there were 10 votes against it. In the late 19th century, there were fierce debates about whether countries should join the first round of international IP treaties established at that time, and entrenched groups argue today both for and against stronger IP rights.

The inevitable tendency of IP systems to go out of balance explains the intense and ongoing debates about IP rights over the years. Patient advocates in Brazil, South Africa, and elsewhere argue that patents on AIDS medicines are too strong to permit fair access to existing drugs , while drug researchers counter that weaker patents would destroy the incentive to invest the fortunes necessary to discover new drugs. Unlicensed software, music, and videos are downloaded freely on the Internet, to the dismay of industry. Meanwhile, the sudden rise of the Pirate Party in Swedish politics, with its platform of free music file-sharing and no patents, shows that we cannot predict the future of IP rights with any confidence.

To illustrate why IP systems tend to get out of balance, imagine a simple society including you and me. You want free access to my innovations (with no IP restrictions), but you want to limit my access to yours (with strong exclusivity). I want free access to your innovations, but I want exclusive control. If I invent a new drug and you record a new song, you want to use my drug, and I want to listen to your song. We could try to block each other out by keeping the innovation secret. But we would have problems attracting investors, and we might not innovate again.

There is an inherent conflict between our opposed desires — for exclusivity over our own innovations and for access to the other person's. We might be able to make a deal with each other; then again, we might not. The only certain resolution makes neither of us completely happy, but works for society: The win-win outcome is a balanced IP system, with each of us being able to obtain limited exclusivity as innovators, and with limited access assured as well.

Balancing IP systems make sense in a world with globalized innovation. For example, movies are produced in Hollywood, Bombay (Bollywood), and Nigeria (Nollywood). Hollywood producers advocate for stronger enforcement of copyright overseas because the uncontrolled duplication of hit movies undercuts their profits. But it is not very convincing for them to argue, in essence: “Protect my rights in your country because it is good for me.” There is a more persuasive argument: “Support an effective, balanced system of IP rights because it will help you.”

Indeed, I have spoken with both Indian and Nigerian movie producers who, too, are protesting the rampant piracy of their movies — in stores in the United States! There is a global interest in a balanced IP system that promotes innovation everywhere.

Whether for life-saving drugs or cultural expressions such as music and movies, an effective IP system includes mechanisms to balance access and exclusivity, case by case. The legal and procedural details differ for each type of innovation, for each type of IP right, and in each country, but the common thread is that there are ways for innovators to gain exclusive rights, and paths for others to gain access to the innovations protected by those IP rights, including negotiation and legal proceedings. Unfortunately, these mechanisms can be very expensive and frustrating. Hence, companies and organizations working within the system seek greater efficiency as part of an effective IP system.

Expressing Individual Choice

Intellectual property rights can be viewed as instruments of competitiveness and economic growth, with patenting and trademark activity linked to gross domestic product. But IP systems can also be seen as instruments by which innovators express individual choices regarding their creations. In this light, intellectual property contributes not only to commercial interests, but also to human development — freedom of choice in personal expression and how we lead our lives. One author may be happy to give an open-access license to her work on Wikipedia, but another may choose to publish a copyright-protected article. Innovators should have that choice.

Innovation and IP laws have always created winners and losers and always will. This is, of course, unsettling. But rather than choosing the winners, government's role should be to ensure that the IP system maintains an effective balance between the freedom of an innovator to exclude others and the freedom of others to access the innovation. An IP system can provide a higher degree of individual freedom, and more competition, than a centralized system of grants, incentives, and prizes awarded by governments and philanthropies. Centralized systems can drive innovation in a particular state-sanctioned direction, but at the cost of individual choice and flexibility.

The inventor's enthusiasm, the author's pride, the entrepreneur's confidence, competition — these are forces we can build on with innovators around the world. In doing so, we must meanwhile ensure that people of all walks of life can enjoy access to the fruits of innovation in medicine, food, information, entertainment, and education.

The opinions expressed in this article do not necessarily reflect the views or policies of the US government.

Design & Layout : Barry Wu, The Banyan Editorial Office
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