Modern societies are reliant upon technological innovation, which is underpinned by secure intellectual property rights. Great progress has been made in getting countries across the world to accede to international agreements on enforcing intellectual property rights. But it was not always thus, and much remains to be done. Let us review the situation in the past as a lesson in what happens without adequate protection for intellectual property holders.

Background Information: 

The Texts: Piracy in the Twenty-First Century

The texts discuss intellectual property and express particular views about this topic. The term “intellectual property” suggests that products of the mind can be identified and owned, bought, or sold just as physical goods or land can be owned, bought, or sold. This has been viewed in very different ways in history. It has also been viewed in different ways in different cultures. Even goods and land have been thought about in quite different ways in different cultures. In many traditions, for example among many native Americans, concepts of ownership did not include the idea of owning land. Similarly, there are different traditions about owning ideas or artistic productions.

Today intellectual property is protected by the world intellectual property organization (WIPO), which is a specialized agency of the United Nations. The majority of United Nations members are members of WIPO. WIPO offers a means of protecting intellectual property across borders and also offers ways of resolving potential infringement issues without going to court. This last point is quite important because, as the writer of Text 2 notes, there is a lot of money involved in intellectual property. Many large firms, particularly technological companies, spend much time and money involved in possible infringement cases.

The two texts here offer opposing views of intellectual property rights and thus reflect the current debate. On the one hand, many people regard intellectual property (ip) as crucial to a company or a product’s success. On the other hand, the high costs involved in attaining any item protected by IP can have a negative effect on the spirit of collaboration and innovation.

As many Western companies once discovered to their cost, investing in Southeast Asia before the advent of secure intellectual property rights was an expensive proposition. To enter these markets, Western companies had to disclose to authorities details not only of their products, but also of the processes whereby their products were created. The result, all too often, was rapid and blatant copying of goods which were not protected against copyright abuse of this kind.

There are numerous examples of such copyright piracy from the past. The American chemical giant Du Pont, for example, introduced into one Asian country its famous Londax herbicide, which kills weeds in rice fields. The company had invested millions of dollars in the research and development of this product, and ploughed another US$25 million into opening a local production plant. Less than one year afterwards, however, very cheap bottles of a fake Londax were openly on sale. The only difference between the fake and real items — other than the price — was that the fake was called Rondex and came in a blue rather than green bottle. However, as it was so much cheaper than the original, it effectively destroyed Du Pont’s investment. It also made the company much less willing to invest in R&D (research and development) of new chemicals. The “recipe” for Londax should have been treated as the intellectual property of Du Pont. For another company to make unauthorized use of it was stealing, just as surely as if they had stolen Du Pont’s machines or any other physical property.

Key Word:

plough…into: to invest a lot (of money) in (something) in order to improve it or make it successful

It was not only products that were vulnerable — protecting a brand name in the Asian market was once nearly impossible. Even Kellogg’s, the manufacturers of the original Kellogg’s Corn Flakes, found themselves competing with a product superficially similar to their own: Kongal Cornstrips, which even came in a near-identical box. Unfortunately, as in the Du Pont case, Kellogg’s chances of successfully prosecuting the copyists were virtually zero, because local law did not adequately recognize the concept of copyright protection.

Fortunately, the situation is now much improved following various rounds of negotiations within the World Trade Organization. Nonetheless, international companies must remain vigilant against violation of their intellectual property rights. There are always those who will seek to profit from someone else’s research efforts, financial investment and market goodwill. Innovation will be killed if its rewards cannot be protected by the law.

You hear a lot about copyright and intellectual property (IP) nowadays, usually from one point of view: that of the copyright holder. That’s not an accident — there’s a lot of money to be made from so-called “intellectual property” rights, and many people will want to convince you that intellectual property rights are necessary and good, rather than being a giant rip-off for consumers across the planet. What you’ll most likely be told is that intellectual property rights need to be protected, otherwise no one will “innovate.” Why invent something if someone else makes all the money from it and you get nothing?

Key Word:

rip-off: Something that is more expensive than it should be

While this is a real problem that needs to be addressed, it’s also a limited way of looking at innovation. Innovation is a cooperative process, a social process that builds upon the work of countless other people. It’s natural for people to innovate, and to work creatively together to find solutions to problems and challenges. Seen from this perspective, protecting IP slows down innovation, because people cannot use each other’s ideas, or even similar ideas, without paying a lot of money or risking a lawsuit.

If you want an example, look at the IT creativity that exists in the Asian region. It is probably safe to say that a lot of coders and IT creators cut their teeth on at least some pirated software. Those people now have skills that are invaluable in the modern economy. What if they had been forced to pay the “market price” for legitimate products? They would have been priced out of learning and practising their skills. There’d be fewer people who could innovate in technology. We’d all be worse off — except for the copyright holders!

Key Words:

coder: Someone who writes codes for computer programs

cut one’s teeth (on something): To get your first experience in a particular job by doing something

There’s a reason I’ve put “market price” in scare quotes. Here’s IP’s dirty little secret — IP is anti-free market. If you’ve ever read the finance pages of a newspaper, you’ll know that protectionist measures like import tariffs are considered bad for economies because they distort free market prices. But intellectual property rights distort free market prices as well, and by a lot more than things like tariffs do. Think about it: if it is wrong to double market prices by imposing a tariff on a particular good, why is it acceptable to increase prices tenfold on the basis of an intellectual property right? It is well known that things like software and pharmaceuticals are many, many times more expensive when protected by IP rights than when subjected to competition in the free market. If it is good for the free market to determine prices — and economists say it is — then surely intellectual property rights in their current form must go.

Key Word:

tariff: a tax the government charges on goods that enter or leave their country

So next time you hear intellectual property rights justified in terms of innovation, try this little translation to get the real meaning: “In fact, I don’t mind less innovation, just so long as I can buy a new Porsche. Would you and your friends be kind enough to pay for it?”