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The Injustice of Intellectual Property
by Peter Drahos (AU)

Intellectual property rights are growing in strength and spreading. Many people working in Internet-related businesses would be wearily familiar with cease and desist letters from intellectual property owners alleging infringement of a trade mark, patent or copyright.

Amazon’s “1-click” patent is but one example of many thousands of patents that relate to the most basic functions of the Internet, including the transmission and receipt of files. Intellectual property used to be a civil matter, but these days you can go to jail for infringing someone’s intellectual property. Aside from using the criminal law to police their monopolies, intellectual property owners also sermonize to the rest of us on what we should and should not be doing. The Recording Industry Association of America’s website says that in addition to parents giving their kids guidance about sex, drugs and alcohol, they should also talk to them about the immorality of sharing music files.

Hardly an area of social life remains untouched by intellectual property issues. Research scientists find themselves worrying as much about who owns the intellectual property rights in the research tools they need to solve a problem, as they do about the problem itself. School teachers, musicians, lecturers, programmers have to steer their way through thickets of copyright rules in order to be able to do their jobs. Small to medium-sized companies, which never bothered much with intellectual property protection, spend more and more time worrying about it.

The one constant in all of this is the cacophony of intellectual property lawyers. In the manner of a Greek chorus they wail for more and more protection of intellectual property. It’s a great form of protection to be in, because intellectual property is invisible and intangible. No matter how much money it hands over to the lawyers, a company can’t be sure that it has done enough to protect these invisible assets. And then there is the uncomfortable fact that these assets can grow through exchange. When people get together and exchange ideas, information and knowledge these things grow. There are also examples of business models based on open domain approaches to information. The growth of the Free Software movement and the use by some businesses of software licences that permit free access to the source code of a program is a case in point. This suggests that there are alternative and less costly strategies for dealing with intangible assets.

Should we be worried about the rising tide of intellectual property regulation? The answer depends on who is the “we” in the question. Some individual firms have a lot to gain from increased levels of intellectual property protection because they are large enough to afford the costs of intellectual property systems. IBM takes out roughly 2000 patents a year in the US market alone. Not many firms, however, can afford the cost of so many patents.

If we think of intellectual property protection as a kind of arms race, we can see that firms should think very carefully before entering the race. An arms race in intellectual property is expensive because you are forever paying the lawyers to escalate to new levels of protection. In an arms race it’s hard to get ahead and even harder to stay ahead. There can only be one winner and that is the person with the deepest pockets. There is also a basic paradox if you want your company to remain innovative. Innovation depends on people communicating with each other. The more that you place your creative people in intellectual property cells, the more risks you take with the innovation process.

Not all firms will benefit from the global paradigm of intellectual property that is emerging through the World Trade Organization and other international organizations like the World Intellectual Property Organization. Probably only a few will. Not many countries will benefit either because most are net intellectual property importers. By agreeing to ever higher standards of intellectual property developing countries especially are simply worsening their terms of trade. Most patents in developing countries are owned by foreigners, mainly by US and European patentees. Increasing patent protection benefits, in income terms, the US and to a lesser extent Europe. It is not just about patents, however. Increased copyright protection for textbooks, journals and computer programs will raise the costs of mass education in developing countries. Basically intellectual property begins to look like a game in which the rich have found new ways to rob the poor.

The stench of hypocrisy is everywhere when it comes to the US and Europe setting the rules of the intellectual property game. These countries grew economically in the nineteenth and first part of the twentieth century using strategies of technological imitation. Developing countries will not be given the same sovereignty over their growth policies. The whole point of intellectual property is to block imitation and competition. The US and Europe mouth the importance of human rights, but apparently the right to health of poor people in developing countries does not count. Why else have the US and Europe done so little to reform the patent rules at the WTO to help poor people gain access to patented drugs for diseases like HIV/AIDS? In fact, the draft deal that was tabled at the WTO last December actually strengthens the hand of US and European pharmaceutical multinationals. The US and Europe preach a pro-development rhetoric, but they send their bullying trade negotiators to inflict further trade losses on developing countries in bilateral deals that see intellectual property protection ratcheted up and up. Developing countries are obliged to protect Western intellectual property assets. They also face protected agricultural markets in the US and Europe. Apparently the economic despair that arose in European countries because of the beggar-thy-neighbour trade policies that prevailed between the First and Second World Wars has been forgotten in the West.

One of the real dangers of global intellectual property rules is that they might eventually blow the world’s trade regime out of the water. Trade is about goods and services moving across borders. But intellectual property law through its complex rules on parallel importation, exhaustion of rights and doctrines of infringement allows owners of intellectual property to stop the movement of goods. Europe, for example, is busily exploring how the intellectual property in geographical indications can be extended to include high recognition terms like ‘feta’, ‘bratwurst’ and ‘brut’. A lot of the new protectionism that will confront developing countries will be hidden under the cloak of intellectual property law’s complexity.

The globalization of intellectual property that we are witnessing is part of a familiar colonial phenomenon. The basis of competition lies in the development of skills and knowledge. When newcomers acquire skills and knowledge they disturb roles and hierarchies. The success of the Indian pharmaceutical industry fundamentally threatens those at the top of an international hierarchy of pharmaceutical production – the US, Europe and Japan. Underneath the moral rhetoric of intellectual property there lies an agenda of underdevelopment. It is all about protecting the knowledge and skills of the leaders of the pack.

Peter Drahos is Professor at he Australian National University. His latest book on intellectual property, co-authored with John Braithwaite, is Information Feudalism: Who Owns The Knowledge Economy? (Earthscan, London, 2002 and the New Press, New York, 2003).

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