Global Competitiveness and Intellectual Property Protection

by Mark Esper

In the 2009-2010 Global Competitiveness Report, released on Tuesday by the World Economic Forum (WEF), the United States regrettably lost its crown as the world’s most competitive economy due to its current financial instability.  Interestingly enough, the report emphasized the importance of innovation and creativity to individual nation’s economies by ranking intellectual property (IP) as a key part in a country’s global competitiveness. This inclusion further solidifies the importance of safeguarding intellectual property in the global market.

Furthermore, in the WEF’s assessment of Innovation, the report calls on all economies to establish an environment that encourages innovative activity, sufficient investment in research and development, collaboration in research, and protection of intellectual property.  

In addition to saying all the right things about the role of IP in driving economic growth and competitiveness, the WEF’s country rankings—which are based on surveys—are also revealing.  Of particular note is the troubling fact that the United States ranked only 19th in how respondents assess America’s stance on IP protection and enforcement.  Do American executives really feel that the United States isn’t doing enough to protect and strengthen IP rights?  And if so, why, and how do we do better?  For a country whose economy is driven by innovation and creativity, where nearly half of the exports are from IP-based industries, and over $5 trillion of our GDP is based on IP, America should be setting the gold standard for IP rights and protections. 

The Global IP Center has been making many of these same points for quite some time.  In our view, the United States (and any country for that matter) can always do better.  The U.S. government has made good progress over the past couple years, but there are a number of additional steps the Congress and the Obama Administration can take now to not only substantively move the ball forward to strengthen IP protections, but to also send the signal that IP rights—and the innovation and creativity that they drive—are integral to America’s economic growth and job creation.

For starters, the White House needs to move forward on appointing an IP Enforcement Coordinator (IPEC). The IPEC can play an important role in enforcing current law and safeguarding industries that invest in IP, and mapping out a comprehensive national strategy to promote IP and innovation here and abroad.

Further progress by USTR on the Anti-Counterfeiting Trade Agreement (ACTA) will also play role in not only improving America’s global competitiveness, but will also greatly enhance IP protection by better coordinating the laws, policies and practices of the U.S. and its major trading partners.

Other things the administration and Congress can do include:

• Continuing to utilize the USTR’s Special 301 Report to ensure our trading partners live up to their international IP obligations.
• Engaging our trading partners in meaningful dialogue on how to strengthen and improve their IP legal and regulatory regimes
• Fully funding and implementing the PRO-IP Act (H.R. 4279) that was passed last year with overwhelming bipartisan support to protect and create jobs in IP-sensitive industries.

The WEF’s 2009-2010 Global Competitiveness Report makes clear the large role IP plays in a nation’s prosperity and competitiveness.  This is all the more true for the United States, which is renowned for its innovation and creativity.  The Obama Administration has taken a positive stance so far in defense of IP and innovation.  However, much more can be done to regain our competitive edge and to send the nation and our trading partners a clear message that the United States is not timid when it comes to ensuring the integrity of U.S. intellectual property.

Comments

[Business For Sale]

Inadequate enforcement or compliance with international IP standards can be a significant barrier for exporters of knowledge-based goods and services, and can result in lower investment in research and development.

[Matthew]

My hometown of Lowell Massachusetts got it's start by copying the British mill technologies, without regard to their claims of patents. The history of American innovation is filled with such stories of IP infringement. If it is true that we have a country driven by innovation, then our country would be best served with policies that did not stifle it. Passing laws such as the ACTA clearly puts pressure on new innovators, in order to protect firms who have existing copyrights and entrenched technologies.

[Christopher Covington]

Those who care about art and innovation should be very careful about strengthening IP protections for no reason other than because a handful of executives checked a box in response to an incredibly nebulous question. Patent, copyright and trademark law exist to reward ingenuity and creativity and to protect the public from fraud and counterfeiting. Extending existing laws serves principally to entrench existing entities, perhaps creating jobs temporarily, but doing so will ultimately poison the creative and innovative environment.

What exactly does strengthening the protections mean, anyhow? Extending copyright terms yet again? Pushing for Congress to explicitly allow software and business method patents--patents on abstract ideas rather than physical implementations? Upping the jailtime for taking a soldering iron to an Xbox? All of these are bad ideas. Instead it would be better to strengthen the systems by fixing them.

"The [WEF] report calls on all economies to establish an environment that encourages Innovative activity, sufficient investment in research and development, collaboration in research, and protection of intellectual property." The latter point has been taken too far, to the point that the current patent and copyright systems do more harm to innovative activity, creative works, research, and collaboration than good. The evidence for this is more than I could present properly here, but I refer everyone interested to the likes of Innovation and Its Discontents: How Our Broken Patent System is Endangering Innovation and Progress, and What to Do About It by Adam B. Jaffe & Josh Lerner and Free Culture by Lawrence Lessig.