Policy Documents

The Importance of Intellectual Property Rights

Bartlett Cleland –
April 1, 2003

How many movie studios would be willing to spend multiple-millions of dollars on a blockbuster film if other studios could copy it upon release and send it to the video rental stores under their own label?

Would J.K. Rowling even try to write another Harry Potter novel if other publishers could print their own edition of the book, perhaps in paperback, and sell it for a lot less money, in part because they wouldn’t pay the author any royalties?

Intellectual property--something that is a creative work, created in the mind of someone or a group of people--is still property.

People whose homes have been broken into, their possessions stolen, feel violated; people whose intellectual property has been stolen feel no less violated.

The technologies of today make it increasingly easier to transfer intellectual property from one person to another. The Information Age and the New Economy are forcing us to rethink property rights. What kinds of “things” do people have a right to call their property? To what kind of compensation are they entitled if someone takes that property? These questions are not easily answered.

This country has a long history of recognizing intellectual property. Patent protections, for example, were among the first laws enacted by the First Congress in 1790. The Constitution authorizes patent protection as a way to “promote the progress of science and useful arts.” The Founders understood patent protection provides the incentives necessary to encourage companies and individuals to keep inventing, and to invest in commercializing the invention.

What patent laws have done for pharmaceuticals and computer hardware in the U.S., copyright laws have done for music, film, publishing, and software. We lead the world in these industries ... because in the United States, creators own their intellectual property and have the right to profit from it. Take away or diminish that right and you will soon have no intellectual property to steal.

Attacking Intellectual Property

U.S. protections for intellectual property are under attack on several fronts.

South Africa is one example. Its government--and many liberal activists in the U.S.--claim the people of South Africa are being “held at ransom” by U.S. pharmaceutical companies that refuse to cut prices for their AIDS drugs. Why, do you suppose, have none of these innovative, technologically driven pharmaceutical companies grown in South Africa? Look no further than the protection of intellectual property. And what, do you suppose, will happen to the U.S. pharmaceutical industry if it is prevented from profiting from the billions it spends on research and development every year?

On another front, former Vice President Al Gore wants to make it more difficult for pharmaceutical firms to get patent extensions. He supports compulsory licensing of U.S. intellectual property, which would allow foreign interests to exploit protected property without getting permission from the owner.

And in the U.S. Senate, several bi-partisan proposals for restricting patent protections are under consideration. All end in the same wrong-headedness: government meddling in the free market, and specifically in the world of technology.

Bad for the Economy

Intellectual property represents a huge slice of the U.S. economic pie. Demand for these products in the international marketplace is growing more rapidly than demand in the U.S. itself. In the short term, proposals to restrict the intellectual property rights of pharmaceutical manufacturers and similar firms will have a devastating effect on the economy, at a time we can ill afford it.

In the long run, wholesale erosion of property rights will mean irreparable damage to the most innovative and creative industries that drive our economy. In a world where one cannot profit from ideas or inventions, little incentive exists to continue.

The United States has a long history of opposition to government takeover of industry. By failing to protect intellectual property rights, we turn our back on that history, allowing a power grab of not just a company, or even a single market sector, but of the very foundation of economic growth and innovation.

Doing so will leave this country--and the world--substantially poorer, not just in the pocketbook, but intellectually as well.

Bartlett Cleland is director of the center for technology freedom at the Institute for Policy Innovation (IPI).


For more information ...

Prescription Drug Prices and Profits. Pharmaceutical manufacturers are under attack by those who seek to exploit the industry for political purposes. Some aim to establish a government-run health care system, while others simply want votes and campaign contributions from those with a grudge against the industry. (Institute for Policy Innovation, January 2003, 2pp.)

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