Patent, copyright protection picture changing in globalized economy

By Clay Evans

Private Rights and Public Problems: The Global Economics of Intellectual Property in the 21st Century, by Keith E. Maskus

It seems, at first blush, to be something of a no-brainer: strengthening protections on American intellectual property rights (or IPRs) — on everything from drugs to music to technology — would be a boon to the national economy.

After all, we hardly want unscrupulous governments and businesses in Brazil, China, Russia or elsewhere effectively stealing American ideas and making money that should go to the innovators.

But rapid changes to global economy have made the situation considerably more complex, argues Keith Maskus, professor of economics and associate dean of social sciences at the University of Colorado Boulder. He makes the case at length in his new book, “Private Rights and Public Problems: The Global Economics of Intellectual Property in the 21st Century.”

Even as U.S. innovators, creators and businesses put their faith in sturdier IPRs to protect their interests and control production, a fast-changing world is undermining their efforts. At the same time, stronger international IPRs may paradoxically — though perhaps not surprisingly — have the effect of accelerating offshoring of some jobs.

“People tend to think patents will protect technology so (companies) can make money at home,” Maskus says. “But that doesn’t mean we will produce the goods in the U.S., and it may well diffuse technology more rapidly to the developing world.”

There are winners and losers, from the American perspective, of the stronger IPRs developed in the past decade. When innovators and companies in this “new ownership society” can win agreement from foreign governments — “You can produce our technological goods there, just make sure you pay us for it,” Maskus says — they are both gaining more efficient manufacturing and making their nut.

“That’s not necessarily good news for manufacturing workers and semi-skilled engineers here,” he says. “But consumers (in the U.S.) get cheaper products, while shareholders of high tech (companies), inventors, highly skilled technology developers and designers are going to make a lot of money in this world.”

In the book Maskus delves into numerous areas of IPRs, including some of interest to many average American consumers, including downloading of digital entertainment and the import of cheaper drugs from Canada and elsewhere.

On the former, Maskus says creative industries understandably want to protect their own profits and the earnings of those who actually create music, books, movies and other media. But, he says, a heavy-handed, litigious approach is not only ineffective, but also serves as lousy PR.

“One wonders at the wisdom of suing your own potential customers and risking public anger,” Maskus writes. Kids already know unauthorized downloading is illegal, surveys have found, but that hasn’t slowed file sharing.

So what to do? One idea he suggests is negotiating regional or global (as opposed to national) licensing agreements through which countries would levy fees on content providers that may benefit from illegal downloading.

Keith Maskus, professor of economics and associate dean of social sciences at the University of Colorado Boulder

“You don’t want to clamp down on legitimate fun and innovation” — think online mash-ups —“but you do want people to be paid for their creative work,” he says.

When it comes to buying drugs, millions of Americans are happy to buy Canadian, or from other sources: as many as one third already do so or plan to do in the future, according to a 2004 survey by the Civil Society Institute. From a consumer standpoint, it makes sense to open American markets up to patented drugs from Canada — right?

Not so fast, Maskus says. For one thing, that could suppress the amount of money available for research and development of new drugs in the United States, leading to 200 to 400 fewer drugs making it to market over a 20-year period. It also could drive up prices in Canada.

Maskus believes U.S. markets should be opened to Canadian drugs, but with caution, and over time. And if that doesn’t happen, he writes, the best solution to the high cost of drugs in the United States would be “for the government simply to bring as many retail patients into insurance coverage with prescription benefits as possible without opening the borders.”

Most Americans probably don’t think much about global intellectual property rights. But whether they know it or not, they are affected by it every day.

“These are important, complex but under-appreciated issues, and none of this is easy,” he says. “There are hard tradeoffs to make, and no easy answers.”

For more on Maskus’ book, published by the Peterson Institute for International Economics, click here. See a Financial Times column that mentions Maskus’ work here

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