Economics, Intellectual Property, and Why It's Hard to Say

Fellow classmate Brandon Robison recently extended an in-class discussion and presented an argument in favor of intellectual property law in his post: “Open Science and Why It’s a Bad Thing.” I chose to explore some of the major underpinnings of the intellectual property debate in a position paper for another class a few years ago, and thought I might as well dig up that paper that only I and my professor had ever read and contribute it to the discussion. I feel that there is a lot of useful background information on the issues, as well as some conclusions of merit.

The intellectual property debate is broad and encompasses several sub-debates that can be classified in various ways, including intellectual property type, government branch, and economic region. The over-arching question, however (also articulated in our class discussion), is this:  does the patent system (and intellectual property in general) encourage innovation?

I hold that the ability of intellectual property protections such as patent systems to achieve this goal in today’s globalizing world is dependent on economic context.

But what does that mean, exactly? Basically, the effectiveness of intellectual property rights in encouraging innovation is contingent upon the ability of an economy to sufficiently reward and thus motivate said innovation. It is important to remember that the original goal of intellectual property rights was to encourage innovation, not necessarily to maximize the profitability of its application. As I state in my paper: “It is precisely because time and money are of such great focus that patents, and thus the intellectual property system, do accomplish their purpose of encouraging innovation in the United States. The economy is sufficiently built up so as to merit consideration of money, and by extension time, as the most universal form of incentive for innovation. The patent system secures for inventors the opportunity to receive compensation in return for their time and effort.”

But we aren’t cut-off from the rest of the world, and neither is the debate about intellectual property. There is a push for “global harmonization” of patent law, presumably to continue the encouragement of innovation on the global playing field. But again, we can’t think solely in terms of protecting profits: “In addition, the economic impact of intellectual property on both developed and underdeveloped countries is a major consideration in the global harmonization of patent law. Developed countries want to secure rights to their innovations worldwide, while underdeveloped countries would like to advance their ability to innovate through imitation.”

“Many countries simply do not have the economic strength to justify intellectual property rights as the sole incentive for innovation.”

The idea here is that not every country’s economic-political tag-team is well-suited to rewarding innovation. A scientist working independently in a foreign country may not, because of intellectual property laws, have the right to build upon previous advances in his field, and even if he did, the bleak prospects of protections for his own innovations in his own country and abroad may discourage him from even trying.

“A question that perhaps lends itself slightly better to the situation today is whether or not innovation would truly be discouraged without these protections.”

Perhaps the market, left to operate without the lurking variable of intellectual property law, would reward innovation all by itself.

We have to consider why intellectual property rights are (or were) effective, and be open to the idea that past solutions may not be adaptable to fit all.

Maybe intellectual property rights have outlived their usefulness. In today’s globalized society, the cost of non-collaboration may be greater in terms of potential innovation lost than the economic advantage offered by “protecting the rights” of the discoverer.