Intellectual property rights and the TPP

Over 200 years ago Thomas Jefferson grasped the essence of the debate over “Intellectual Property”:

“If nature has made any one thing less susceptible than all others of exclusive property, it is the action of the thinking power called an idea, which an individual may exclusively possess as long as he keeps it to himself; but the moment it is divulged, it forces itself into the possession of every one, and the receiver cannot dispossess himself of it. Its peculiar character, too, is that no one possesses the less, because every other possesses the whole of it. He who receives an idea from me, receives instruction himself without lessening mine; as he who lights his taper at mine, receives light without darkening me.“

Ever since Jefferson’s time there has been a contest between two principal propositions on intellectual property (IP).

One says that only by the state assigning exclusive property rights to an idea for some period of time can there be an adequate incentive (royalties, etc)  to innovation and new ideas; in particular, new ideas that result in market success. People voting with their dollars is a powerful vote in making markets do the thing they do best: improve the efficiency of labor and other resources, and thus, advancing overall wealth, at least wealth in commodities.

The other holds that the wide dissemination of knowledge, science, craft and art is the key foundation for sustained research, development, especially human capital development, and thus marketplace innovation as well. This trend also asserts that the role of reputation in a reward system can be very powerful, and competitive with financial rewards in many areas. The “open source” software movement and related spinoffs demonstrate this. 

There is inherent tension between these competing principles. But, at least within a market, or mixed social democratic economy, there is truth in both. The answer is to find a balance that says when rents become excessive and when copyrights and patents should enter the public domain.

Jefferson’s observation that ideas are inherently public goods previews Paul Samuelson’s more formal definition of an economic public good, as a good that is non-exclusive, and non-rival.

The attributes and incarnations of an idea give it no natural protection of its exclusive use  by “owners”, in the way a physical object like a hammer does. Further, enjoyment (use) of the idea does not prevent or diminish enjoyment by another (rival). So, the property argument goes,  the state must provide this protection in the form of patents, copyrights, industrial design rights, trade secrets, and trade dress (product appearance).

In a democratic society, however, state intervention on this scale must be justified by serving a public interest. So far, that public interest has been defined as “promoting innovation.” But critics point to grave distortions in enforcement of intellectual property rights that actually undermine innovation, and the stability of trade agreements.

The Trans Pacific Partnership trade agreement, for which the Obama administration is seeking “fast track” authority to push through Congress un-amended, would actually not change much in trade with the currently participating countries, according to Paul Krugman, who is a left-wing free-trader. Tariffs and duties between these countries are already low. But, it would allegedly expand and strengthen intellectual property rights through international enforcement tribunals independent of national governments, tribunals with presumably the power to levy fines and other economic sanctions.

Entertainment, software, and pharmaceutical companies are the big players here. They say their intellectual property is being copied without compensation around the world. It is. In the U.S. alone, an army of lawyers and consultants are hired to troll for copyrights and copyright violations, and then intimidate alleged violators into paying damages to avoid impossible legal costs. This intimidates innovation.

But reality is not going to cooperate for the IP true believers. 

First, there is no patented pharmaceutical that is not composed of AT LEAST 97 percent knowledge in the public domain. Demanding lifetime exclusive returns, especially when narrowing knowledge or use increases public health risks, loses public justification. And, one may assume, some part of the remaining portion is less innovation and more marketing spin.

Second, there is no piece of software that, as any programmer knows, is not composed of reams of collective and public domain, as well as original, code. The free/open/community-licensed software in use now is so ubiquitous that most web services these days are run on non-proprietary software. In addition, no one can prevent the programmer from walking out the door of his employer with the software design in all essentials in his head-and the programmer cannot be “dispossessed”, as Jefferson notes.

If ideas can be property, then it’s time for the rights of all human capital to a fair return on the social and individual investments in their education, training and experience. If, and when, they are not “private” property, then we return Einstein’s reward: a good reputation! Maybe everyone with an idea should join the National Writers Union now and fight for the best of both worlds!

Not mentioned often in the IP debate is the fact that most nations joining the TPP do not have the infrastructure to self-enforce intellectual property rights. Some countries barely have a private property law of any kind. Consequently, litigation, grievances, violations are processed typically in the United States. In the past, trading countries have often not been able to raise the legal costs to compete with corporate resources. This handicap to weaker nations introduces a form of imperialism into agreements, where the supposedly independent tribunals can be manipulated by wealthy U.S. interests and clients.

Strengthening IP rights through side agreements in trade deals has nothing to do with trade per se, or improving the gains from trade, and a lot to do with political manipulation of participating governments in the interest of multinational corporations.  Today’s should be less intellectual and more public property rights.

Image: UNECE