First, do no harm to the intellectual property system

Until a few years ago, intellectual property was considered a dull and tedious topic. But in recent years, all that has changed, and today intellectual property issues have become highly politicized and controversial, both domestically and internationally. As a result, the IP policy area is sizzling.

At least one reason is the fact that egalitarian activists have seized upon intellectual property issues as a cause celebre, suggesting that intellectual property rights are a prime culprit for what they view as imperfections of the information economy.

Domestically, these IP critics make a run every legislative session at undoing the Digital Millennium Copyright Act (DMCA), a law that has done remarkably well at dealing with IP issues in the digital world, and has withstood multiple court challenges. Rep. Rick Boucher (D-Va.) has been particularly ambitious, attempting for the past two Congresses to undo both the DMCA and the Supreme Court’s Grokster decision in a single piece of legislation.

These critics also advocate tilting the playing field further to the benefit of generic pharmaceutical copiers and against the innovator companies themselves, forgetting or ignoring that without original innovation, there isn’t anything to copy.

Internationally, IP critics have spent years trying to persuade developing countries to test the boundaries of the IP system by issuing compulsory licenses on pharmaceuticals, and finally succeeded late last year when the military dictatorship of Thailand issued compulsory licenses not only for necessary AIDS medications, but also for a whole host of popular pharmaceutical products. And when Dr. Margaret Chan, the new director general of the World Health Organization, dared to suggest that more could be accomplished by working with pharmaceutical companies than by stealing their patents, she was viciously attacked by activist organizations, including some based in the U.S. and funded by prominent U.S.
foundations.

One of the commonly used bits of rhetoric by IP critics is that intellectual property policy needs to be “balanced.” The implication behind their rhetoric is that the IP status quo is severely unbalanced.

Now, reasonable people can disagree about whether a particular IP regime is balanced, or in need of adjustment. But more often than not, the solutions proposed by IP critics would throw the IP system into disarray, rather than into an improved state of equilibrium.

Much of their rhetoric and many of their solutions suggest that access to IP goods and property rights are mutually exclusive. “Copyright is theft,” they say. “Patents kill” is also a popular rallying cry.

But if the goal really is a “balanced” IP system, remember that you can’t balance things that are mutually exclusive.

I have a balanced relationship with the grocery store. My needs and the needs of the grocery store are not mutually exclusive.
I go into the store, and I give them money in exchange for an equivalent amount of goods. My needs are balanced against the needs of the store, and we’re both happy.

What makes this possible? How can my need for groceries and the store’s need for revenue be balanced? What makes seemingly incompatible needs and desires suddenly compatible?

It is the existence of a market, and the price mechanism, which allows us to balance conflicting needs and desires. And what makes a market possible? Property rights and the rule of law.

Now, if I went into the store and left with an armful of goods without paying, our relationship would not be balanced. Similarly if after I entered the store I was thrown up against the wall and robbed of my wallet, our relationship would also be out of balance.

It’s no different with intellectual property. Because the IP system is based on property rights and rule of law, it has done an incredible job of balancing the needs of all parties involved — ensuring that creators have great incentive to continue to innovate, and making sure that consumers have wide access to creative goods.

But when a country can just take whatever patents it wants, or college students can take whatever songs or movies they want, or a company can infringe a patent without fear of injunction, property rights are undermined, markets are destroyed, and the innovation system is in danger.

If patent or copyright law can be improved, let’s improve it. But in our discussions about how to tweak the IP system, both domestically and internationally, the greater risk is that in the course of trying to perfect the IP system, we will instead turn the system on its head, risking the foundations of our innovation economy.

Innovation comes first, and access logically follows. The public cannot access that which doesn’t yet exist. While consumer access to movies, music, books and medicines are critical, if in the name of improving access we destroy the rewards to innovation in the first place, we’ll find that the result is a system out of balance, and we will all lose as a result.

Giovanetti is president of the Institute for Policy Innovation. IPI is hosting a World Intellectual Property Day event tomorrow. For information, visit www.ipi.org .