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War on Drugs, War on Poverty, War on… DVD’s?

May 4, 2010

When the U.S. Government thinks of international intellectual property, it seems that all that comes to mind is video and merchandise pirating. This is an important issue, but it is unlikely to stop. Instead, the government should be focusing on significant IP threats that have a significant impact on innovation, the economy, or society. Particularly, the government should be focusing on economic polices that circumvent IP protection in developed countries.

President Obama, when discussing the importance of IP overseas, seems to largely focus on DVD and merchandise piracy as a problem, as do The Special 301 Reports, for the most part (it is nice to see the pharmaceutical issues in OECD countries getting some more attention).

Q Yes, okay, it has to do with international patent rights. With all this free trade and trade barriers falling, it’s really hard for an individual like me with a global-scope patent to file all over the world and get patent protection everywhere, and having to go overseas to fight infringement. So if you’re going to drop trade barriers, maybe you can extend my patent rights to the foreign countries.
THE PRESIDENT: Well, this is a great question, and this is a huge problem. (Applause.) Look, our competitive advantage in the world is going to be people like this who are using their minds to create new products, new services. But that only helps us and helps you build a multibillion-dollar company if somebody can’t just steal that idea and suddenly start making it in Indonesia or Malaysia or Bangladesh with very cheap workers.
And one of the problems that we have had is insufficient protection for intellectual property rights. That’s true in China; it’s true for everything from bootleg DVDs to very sophisticated software. And there’s nothing wrong with other people using our technologies. We just want to make sure that it’s licensed and you’re getting paid.

More of the discussion here.

I believe that the stated goals for IP laws in the US Constitution: “to promote the progress of science and the useful arts,” apply to IP laws worldwide. Countries need to craft their own laws to promote this in ways that work for their country.

Instead, developed countries pressure developing countries to immediately implement US or EU equivalent IP laws. The implemented laws are used as a policing mechanism only. This ensures that the citizens fear IP laws instead of utilizing them to promote the progress of science and the useful arts. Thus, the IP laws in these situations fail at their basic purpose.

It is a waste to commit much resources to trying to stop this type of piracy overseas. The practice is not going to stop. Nobody in China is going to pay $15 for a DVD, that money could feed a family of four for weeks. The focus should be on developed countries because these are places where substantial damage is done by inadequate IP protection.

Because most developed countries are TRIPS members, their IP laws and enforcement are not inadequate on their face. However, many economic polices implemented by developed countries serve to circumvent IP protection.

An example is the pharmaceutical price controls imposed by the EU to circumvent aspects of patent protection. Price controls limit revenue and thus substantially limit the money that is spent on drug R&D. This results in a decreased the number of new drugs coming to market on a worldwide scale. For more discussion on the issue of price controls, please read my paper.

If President Obama is truly committed to promoting US IP worldwide, cracking down on DVD and Rolex pirates in developing countries is not the answer. The significant IP circumvention is what need to be addressed. Challenging these may not be as easy as targeting pirates, but it would be the best way to make an impact on international IP protection, stimulating creativity and innovation.

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One Comment leave one →
  1. May 24, 2010 11:19 pm

    You make some good points David, but I believe that countries that allow rampart piracy and counterfeiting do not do themselves a service. Counterfeiting is an organized activity usually run by criminal enterprises. They go from watches, to drugs, to selling guns with ease. Allowing one kind of activity encourages disrespect for law and undermines an orderly society. No one expects China will stop pirating watches and sports shoes soon, but why should we tolerate them doing it at all? (see, I used a question mark).

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