Case for Intellectual Property Rights
A BIAC Discussion Paper
Of course, the ultimate cause of all innovation is human creativity.
But innovation does not occur in a vacuum; it requires a workable structure
of incentives and institutions. Government policies that foster the right
enabling conditions for innovation, and that allow entrepreneurship and
markets to flourish, can provide a climate that encourages innovation
and economic growth in the 21st Century. Increasingly, one of the core
enabling conditions is intellectual property protection.
The American inventor and entrepreneur, Thomas Edison, once said, “the
value of an idea lies in the using of it.” IPRs have become a significant
factor in both creating and using ideas that are translated into knowledge
and inventions to promote innovation and economic growth. With the advent
of an increasingly knowledge-based society, intellectual property protection
ensures that innovators and creators have sufficient incentive to bring
their works to market and to build on the innovations and creations of
others for the benefit of society.
Intellectual property rights remain crucial policy tools for promoting
innovation and economic growth in the 21st Century for many reasons, including:
1. IP protection stimulates innovation and spurs sustainable and
widespread economic growth by providing incentives that ensure a sufficient
supply of new inventions and creations
By providing certainty and incentives for invention and creation to overcome
the problems of market failure with public goods, by enabling technology
transfers, and by stimulating additional creative activity, IPRs stimulate
innovation and create economic growth through increased productivity,
increased trade and investment, and enhanced consumer welfare. As efficient
market-oriented tools, IPRs are likely to enable firms to more fully appropriate
the return from risky and uncertain investments. At the same time, however,
it is important that critical attention be given to the quality of IPRs.
2. IPRs promote the disclosure of inventions and pioneering information,
which stimulates innovation across and within industries
Intellectual property rights are a market-based mechanism for disseminating
knowledge. Public disclosure is one the most important functions of most
IPRs, and one of the most overlooked. IPRs spur subsequent creative efforts
facilitating a vigorous cross-fertilization of ideas.
3. IPRs promote risky, uncertain and costly investments
Forward-looking IPR protection provides the incentive for firms
and individuals to invest in generating new technology and new products,
including incremental improvements, especially where the returns from
investment are longer term, where the investment involves significant
costs or risks, and where the invention or creation may be easy to copy
4. IPRs empower consumer protection in a global economy
The global economy increasingly depends on the international recognition
and dissemination of IPRs related to branded products. Trademark protection
is crucial to maintaining high-quality goods and services that earn consumer
trust. The large and growing problem of counterfeiting, however, is a
serious threat to legitimate commerce, as well as to public health and
safety. The booming market in fake products too often puts the health,
and even the lives, of consumers at risk. Counterfeiting also has a serious
impact on reputation and consumer trust.
5. Effective competition policy depends on an appropriate IP regime
Intellectual property and competition policy are vital to maintaining
competition and contestable markets because both encourage innovation
and enhance consumer welfare. They, increasingly, should be viewed as
complementary policy tools.
6. Securing the benefits of IP for the digital economy
Computers, telecommunications, semiconductors, entertainment and
education content and other information-based sectors increasingly depend
on IPRs as the legal and economic backbone of these industries. Digital
piracy, however, threatens the continued growth of the digital economy.
IPRs also play an integral role in broadband adoption and in creating
new technology platforms and markets through de facto standards and network
7. IP rights create new markets because IPRs are tradeable and transferable
IPRs facilitate the operation of markets and help create new ones
because they are tradeable and transferable. The linkage between IPRs
and contractual mechanisms such as voluntary licenses, distribution agreements,
rights assignments, royalty agreements and other market-oriented transactions
and relationships increasingly shapes the pace and direction of innovation
processes in positive ways.
8. IP enables innovation in key economic growth sectors, such as
The large R&D, regulatory, clinical trial and other costs associated with
healthcare innovation only can be sustained by innovator healthcare companies
if the economic climate and policy framework encourages and supports the
role of IPRs throughout the increasingly complex and risky process of
9. IPRs play a crucial role at the intersection between science and innovation
The quality of all our economies depends on their ability to acquire,
protect, translate, combine and apply knowledge through new university-industry-government
intersections and public-private partnerships. IPRs play an increasingly
crucial role in facilitating these positive trends.
A Proposed, Proactive IPR Action Agenda for “Value-Added “ OECD Work
Concerning Intellectual Property Rights