Who Owns Ideas? The War Over Global Intellectual Property

The current explosion in controversy over the protection of ideas has three main causes. First, brainpower drives the modern economy: there are more demands to own ideas and more demands for cheaper access to ideas. Second, technological change has made it harder to protect ideas. More people want to use technology to get access to intellectual property. The owners of this property want to stop or at least limit these attempts. Third, globalization has made it easier for intellectual property to spread to parts of the world with weaker protection of ideas. In a variant of Gresham's Law, the one nation that does not protect patents within its borders can drive down global standards, making it harder to enforce ownership rights everywhere.

On top of these trends, the output of the "idea industry" has grown exponentially. More books, movies, drugs, music, software, and video games exist today than at any time in history. Still, the basic tension over intellectual property remains the same. The originators of innovative ideas are trying to stop people from using the fruit of these ideas for free. Charles Dickens, for instance, was upset that he received no compensation when his work was copied in America -- the United States did not honor foreign copyrights. Many of today's novelists and musicians similarly see copyright infringement as a death blow -- surely an exaggeration -- to their ability to make money from their next big hit.

What is new today is that consumers and their advocates, using technology to gain increasing access to patented content, are undermining the very premise of intellectual property protection. In his contribution to Copy Fights, John Perry Barlow, a former lyricist for the Grateful Dead and cofounder of the Electronic Frontier Foundation, a digital civil liberties organization, says that "strict control over content by a handful of media companies limits free speech and thought." He resents the idea that publishers can prevent someone from copying a poem off the Internet. Ideas, he argues, "need to be free to mix with one another, as living things do in nature."

FREE FOR YOU AND ME

Despite such disagreements, the economic principles of intellectual property are widely accepted. Intellectual property differs from physical property in two key respects. First, you and I cannot both sit in the same seat at Boston's Symphony Hall. But you and I can both listen to Mahler's Ninth. Intellectual property is not an exhaustible resource. My consumption does not reduce your consumption. Second, making more seats to enlarge Symphony Hall costs money. Reproducing a recording of a Mahler symphony costs very little.

Non-exhaustibility and cheap reproducibility create an important dilemma: how to maximize the value of intellectual property for the public. Once an idea has been created it would seem best to make it available to everyone. It does not cost anything from society's standpoint, and many benefit. But that leaves nothing for the idea creator. To get an idea created society may have to form a pact with the inventor. If you create that idea society will allow you to sell it (strictly speaking, the "expression of the idea") for a profit. Advocates of free intellectual property always need to be reminded that making ideas free after the fact may kill the incentives to create ideas in the first place. The unsurprising effect of South Africa's decision to allow generic drug manufacture was that multinational pharmaceutical firms either closed their plants or withdrew investment from the country.

Supporters of stronger intellectual property rights need a reminder too. They have struck a bargain with the public. You create, we reward. But rewards have strings attached. Patents, copyrights, and trademarks provide a way for creators to charge for their products. They also provide incentives for sharing ideas with the public -- patents do this most clearly since the creator has to disclose the invention to get ownership rights.

Creators sometimes object to this bargain. "If I spend $100 million on a factory no one can ever take it from me, but if I spend $100 million on a cure for cancer I only get a 20-year patent. What is the difference?" One response is "I could have come up with the one-click shopping method if I had thought about it for 20 seconds. Why should Amazon.com get a 20-year patent on that?" And therein lies the problem. Many people can come up with the same idea by putting their minds to it. So creating an idea is not the same as creating a factory. The same goes for ownership.

The problem that societies have wrestled with is deciding when an idea warrants the reward. According to one of the contributors to Copy Fights, "the Venetians identified the same basic concepts that inform current patent policy: novelty, creativity, exclusivity, and the reduction of the creative idea to actual use and an embodiment in physical form, limited duration, and an explicit recognition of incentive effects. U.S. jurisprudence is built around the same factors, adding only a number of limitations on the patentability of laws of nature, mathematical formulae, natural substances, methods of operation, and similar phenomena." Another factor is whether society has other ways of providing incentives. Much basic science leads to important discoveries that might at best give the creator a shot at a Nobel Prize -- which, when shared by three, and after taxes, might pay for a beach house. Albert Einstein made more money, at least directly, from his more than 40 refrigerator patents than from the general theory of relativity (for which he did not even get another Nobel). Still, prizes, peer status, and personal satisfaction do elicit great creative effort. But they will not get us a better mousetrap.

HOW MUCH IS TOO MUCH?