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Posts Tagged ‘IP’
July 22nd, 2016 at 1:07 pm
Taylor Swift: Intellectual Property and Anti-Counterfeiting Champion
Posted by Timothy Lee Print

We take no position in the ongoing Taylor Swift versus Kanye West divide.  But as perhaps surprisingly featured in a Wall Street Journal opinion this week, we do applaud her strong stance in defense of intellectual property (IP) and against the scourge of counterfeiting:

Pop star Taylor Swift has been feuding in recent days with rapper Kanye West and his wife, Kim Kardashian.  The details of the drama are lurid and complicated, but young aficionados of Snapchat and Instagram have been following it all intently.  If only the same were true for other Taylor Swift feuds that have received less attention.  Namely, those the 26-year-old songstress has fought in defense of a principle often scorned by fellow celebrities and the social-media generation generally:  the value of intellectual property.

In battles against tech titans, Chinese e-commerce swindlers and others, Ms. Swift has repeatedly insisted on being paid for her music and brand – and in the process has taught some valuable lessons in basic economics.  This may be the ‘information wants to be free’ era, when online content is glibly swiped by millions who would never dream of shoplifting, but Ms. Swift has a deep appreciation for the profit motive and the fruits it bestows on society.”

As we’ve often noted, it’s no coincidence that the United States has become the most artistically innovative and influential nation in human history while maintaining the world’s strongest IP protections.  Rather, it’s a direct causal relationship, as Ms. Swift recognizes:

Ms. Swift explained why she fights.  ’Music is art, and art is important and rare.  Important, rare things are valuable.  Valuable things should be paid for.’  She added, ‘My hope for the future, not just in the music industry, but in every girl I meet, is that they all realize their worth and ask for it.’”

Whatever one thinks of Ms. Swift as a musician or pop culture icon, her high-profile leadership in defending IP is to be celebrated.

July 18th, 2016 at 12:11 pm
Intellectual Property Protection Means Greater Biomedical Innovation
Posted by Timothy Lee Print

Reasonable people understand that nations more protective of property rights and the rule of law enjoy higher levels of innovation and prosperity.  The fields of pharmaceutical advancement and biomedical innovation more specifically are no exception.

In a cogent new piece, U.S. Chamber of Commerce Executive Director of Intellectual Property Policy Patrick Kilbride demonstrates how strong intellectual property (IP) protections fuel biomedical innovation that benefits the world:

[E]conomies with the strongest IP protections are 60 percent more likely to provide environments conducive to biotech innovation.  And economies with specific protections for the life sciences field see an average of 13 times more biomedical investment than those lacking IP protections…  [A]s intellectual property systems have strengthened over time, public and private investment in health care has increased, as well as individual earnings to support heath costs.”  (emphasis in original)

Why does that matter?  Because international and even domestic forces seek to  undermine IP protections, threatening the goose that continues to lay golden eggs:

We live in a world where concerted efforts are being made daily to erode intellectual property rights, based on the false premise that IP somehow threatens access to medical care.  While the facts simply don’t support this theory, it hasn’t stopped activists around the world from spreading misinformation and chipping away at the very IP protections that produced life-saving medicines in the first place.  Just a few short years ago, India stripped a leukemia drug of its patent, claiming that it inhibited access by its citizens.  The result?  Due to government interference, fewer Indian citizens had affordable access to this medication than before the patent was annulled.  In Canada, an overzealous judiciary revoked 25 previously granted pharmaceutical patents and sparked a case involving NAFTA protections that could do lasting harm to future investments in life-saving medicines.  And Colombia’s prime minister of health has repaid medical researchers scrambling to find a cure for the Zika epidemic by pursuing an arbitrary and dangerous attack on others in the industry, effectively stripping a pharmaceutical company of its patent for another drug.  It is also against this backdrop that the United Nations Secretary General has pressed for establishment of a High-Level Panel on Access to Medicines (HLP) to quickly produce a report, based on the same false premise:  that ‘failure to reduce the costs of patented medicines is resulting in millions of people being denied access to lifesaving treatments.’”

As Abraham Lincoln observed, “The patent system added the fuel of interest to the fire of genius.”  It’s incumbent upon us to safeguard IP protections that continue to fire the genius of medical innovation.  Too many lives are at stake across the world to allow the grim alternative.

April 26th, 2016 at 4:01 pm
CFIF Celebrates World Intellectual Property (IP) Day
Posted by Timothy Lee Print

Please join CFIF in celebrating World IP Day!

Over more than two centuries, the U.S. has become the most innovative, prosperous and powerful nation in human history, without even remote competition.  What nation in all of recorded history rivals our array of patented advancements, from the light bulb to powered flight to computer technology to lifesaving pharmaceutical and medical advancements?  What nation has so dominated the world in terms of copyrighted content, from blockbuster films to popular music to literature to television entertainment?  What nation has ever maintained such disproportionately high levels of valuable trademarks recognized instantaneously throughout the world, from soft drink logos to technological products that have revolutionized our lives?

The simple answer is that no society rivals the U.S. in any one of those categories, let alone all of them simultaneously.

And that is the direct result of America’s tradition of strong IP protections, as the U.S. Chamber of Commerce’s annual International IP Index makes clear.  Our Founding Fathers specifically protected IP rights in the text of the Constitution, and the U.S. has consistently led the world in protecting IP rights.  The relationship between America’s IP protections and our unrivaled innovation and prosperity therefore isn’t coincidental, it’s causal.

So today let us celebrate IP, which accounts for over 40 million American jobs, rewards innovation, incentivizes inventiveness and helps ensure safe and genuine products for consumers.

March 10th, 2016 at 1:01 pm
Open Letter to Canadian Prime Minister: Protect Intellectual Property
Posted by Timothy Lee Print

In an open letter to Canadian Prime Minister Justin Trudeau, CFIF joined a coalition of free-market organizations imploring him to promote an environment supportive of intellectual property (IP):

We the undersigned companies and organizations write to urge you to promote a public policy environment in Canada that supports innovation and intellectual property (IP).  Canada has a history of one of the most well-developed environments for promoting advancement of the arts and business through the defense of intellectual property rights, but we are concerned about current developments. Canada has begun to lag behind other developed nations in protecting and enforcing intellectual property rights, even though scholarly research shows that more than ever, the protection of such rights are key drivers for a country’s economic growth.

The letter proceeds to detail the value of IP to both the Canadian and American economies in terms of employment, investment, exports, research & development, consumer products and higher income jobs.

In addition, the letter alerts the Prime Minister to emerging threats to IP rights in Canada, including the proposed “promise doctrine.”  That misguided and potentially dangerous proposal would essentially require inventors to see into the future and itemize the various utilities of an innovation when filing patent applications.  Not only  are such predictions impossible to accurately foresee, but they add uncertainty that threatens to stifle innovative efforts and investment for fear of no future reward due to bureaucratic whim.  That is particularly true in the lifesaving pharmaceutical industry, where the effects are already being felt, as the letter details.  The promise doctrine also contravenes NAFTA, WTO rules and international IP norms.

Because Canada remains America’s most important trading partner, we therefore ask Prime Minister Trudeau to remain vigilant in protecting Canadian IP rights and resist ongoing efforts to undermine them.

In addition to CFIF , other organizations joining the letter include the American Legislative Exchange Council (ALEC), Americans for Tax Reform (ATR), the Small  Business & Entrepreneurship Council, American Commitment, Citizens Against Government Waste (CAGW), Frontiers of Freedom, Taxpayers Protection Alliance (TPA), the Institute for Policy Innovation (IPI), the National Center for Policy Analysis, Digital Liberty and the Property Rights Alliance.

The full letter, which was organized by the Property Rights Alliance, can be read here (.pdf)

January 15th, 2016 at 4:54 pm
IP Rights and Patent Litigation Reform Are Complementary, Not Contradictory
Posted by Timothy Lee Print

In a recent Daily Caller piece entitled “Patents Are Private Property, Too,” Eagle Forum adviser James Edwards throughout most of his column marshals a strong defense of America’s intellectual property (IP) rights system.

Unfortunately, in his final two paragraphs he needlessly and erroneously detours into alleging that patent litigation reform efforts before Congress somehow undermine IP protections.  The truth is precisely the opposite.  Patent litigation reform and IP rights are complementary, not contradictory.

CFIF takes a backseat to no organization in defending IP rights, and Edwards rightly highlights how America’s strong IP system provides the foundation upon which we became and remain the most innovative and prosperous nation in human history.  He correctly notes that our Founding Fathers considered IP a natural right no different than physical property, and how they accordingly specifically protected them in the text of the Constitution.  As Abraham Lincoln later observed, “The patent system added the fuel of interest to the fire of genius.”

And as we have noted repeatedly, it is not by coincidence that America maintains the world’s strongest IP protections while also standing unrivaled as the most inventive, powerful, prosperous and influential nation in history.  That relationship is causal.

Unfortunately, in his final two paragraphs Edwards veers regrettably astray.  Specifically, he claims that patent litigation reform legislation currently under Congressional consideration would somehow undermine patent rights and “make it much more difficult and riskier to defend one’s patent against infringers.”

Respectfully, that is flatly false.

Patent litigation reform legislation, which passed the House two years ago with an overwhelming 325-to-91 majority, addresses how patent disputes are litigated, not patent rights themselves.

Under current law,  as most people know, overly litigious actors can file frivolous lawsuits or baselessly defend against valid claims because it’s highly unlikely under our current system that they’ll be forced to pay the other side’s attorney fees and litigation costs when they ultimately lose.  That’s because American law generally requires each side to pay its own costs and fees, even if the other side’s claim was weak.  As a litigating attorney who defended against innumerable frivolous claims in my legal career, I can confirm firsthand that winning an award of costs and fees from even the most egregious litigants is exceedingly and unfortunately rare.  Accordingly, bad actors often use our court system to extract improper settlements or frighten legitimate patent holders from defending their rights due to the prospective time and costs of litigation.

That’s where patent litigation reform comes in.

The Innovation Act, the bill that CFIF most strongly supports, targets abuse of our court system by:  (1) Holding losing parties accountable for prevailing parties’ attorney fees and costs unless they can demonstrate that their “position and conduct … were reasonably justified in law and fact, or that special circumstances (such as severe economic hardship to a named inventor) make an award unjust”;  (2) Reforming pleading standards to require greater clarity and justification for their case, rather than relying on vague and unintelligible boilerplate allegations;  (3)  Increasing transparency regarding the true owners of disputed patents;  and (4) Streamlining the burdensome discovery process, which too often imposes oppressive burdens and delays resolution of cases.

Those are manifestly common-sense litigation reforms that all Americans, particularly conservatives and libertarians who broadly favor reform of America’s flawed system of litigation, should support.

CFIF simply would not support any bill that undermined America’s patent or other IP protections.  The simple fact is that patent litigation reform would protect legitimate patent holders, and the only people with anything to fear are those who cannot demonstrate that their claims are based upon good faith and valid law – which is not difficult for legitimate litigants to show.  We therefore encourage all of our supporters and activists across the country to contact their elected representatives in Congress to voice their support for badly-needed patent litigation reform legislation.

December 21st, 2015 at 9:48 am
Before You Complain About Drug Costs…
Posted by Timothy Lee Print

Maligning pharmaceutical enterprises is a curious perennial dance, one that becomes even more active during presidential campaign seasons.  That always struck me as odd, since it seems a sign of societal advance that we can complain about the price of something that saves lives and improves living conditions rather than lamenting its nonexistence.

Regardless, the U.S. Chamber of Commerce’s Global Intellectual Property Center (GIPC) offers an instructive corrective entitled “4 Charts Explain the Economics of Drug Development.”  It is worth the brief examination and passing on to others, because it helps rebut many of the politicized myths that threaten the goose that lays the golden eggs:

“It’s not just the science that goes in to developing medicines that’s complicated.  The economics that drive the industry, allowing resources to be available so people can have access to beneficial new medicines is complicated, too.”

Each chart is worth 1,000 words, but the four broad takeaways are:  (1)  It takes ten years and $2.6 billion to bring a single drug to market;  (2)  In 2014, pharmaceutical companies spent $51.2 billion on research & development;  (3)  Only a few drugs, however, become commercial successes;  and (4)  The end result is that pharmaceuticals’ enormous investments result in people living longer and better lives.

Something to keep in mind as sometimes silly presidential campaigns get even sillier, at least in terms of maligning the innovative pharmaceutical industry.

September 30th, 2015 at 4:23 pm
GroupM, the Leading Global Media Investment Group, Announces Important Anti-Piracy Effort
Posted by Timothy Lee Print

This month, GroupM, the world’s leading media investment management company, announced that it will now require its media partners advertising on websites to receive anti-piracy certification from the Trustworthy Accountability Group (TAG).  This new initiative will go far to keep its clients’ advertisements off of rogue websites, as GroupM summarized in its announcement:

‘We’re in the business of giving the world’s most valuable brands marketing advantages with smart media strategies.  This inherently means we’re vigilant for clients’ brand safety.  Our work with TAG in the development and full adoption of anti-piracy guidelines is a major leap forward,’ said John Montgomery, Chairman, GroupM Connect, North America and Co-Chair of the TAG Anti-Piracy Working Group.  ’With IAB, 4As, and ANA, we’ve worked for years to make the digital ecosystem more trustworthy.  Fighting pirates of copyrighted content required every ounce of our tenacity and ingenuity, but with the advent of TAG’s Brand Integrity Program Against Piracy, we have powerful new tools and safeguards.’”

Such advertising on piracy sites accounted for an estimated $209 million in ill-gotten revenue in 2014 alone, so this constitutes a significant, voluntary private sector milestone.  Summarizing the nature of the problem, Mr. Montgomery observed:

There’s no brand in the world that wants their advertising to appear on a pirate site or wants to be seen as supporting piracy, even inadvertently…  A brand’s entire reputation is at stake – something that they’ve been nurturing for decades or, in some cases, centuries.  The people who create pirate sites are the same ones who perpetrate clickbait fraud – they’re the ones who spread malware and create armies of bots that generate most of the automated clicks in the business…  Which is why being worried about ad fraud without also being aware of the role piracy plays in its perpetration is like fretting over a flood in your apartment while neglecting to turn off the tap.”

Hopefully, other ad industry players will follow GroupM’s lead in utilizing TAG, but CFIF and anyone who supports the rule of law and property rights – including intellectual property (IP) rights – owe them an enormous “thank you.”  Accordingly, please click here to join us in thanking them.

July 28th, 2015 at 3:47 pm
Congress Should Oppose the So-Called “Local Radio Freedom Act”
Posted by Timothy Lee Print

Elementary concepts of fairness demand that musical artists and performers remain free to negotiate performance rights with broadcasters that seek to play their songs.  Indeed, current law allows artists to mutually bargain with satellite, Internet and cable stations.

The only exception:  traditional AM-FM radio stations, which are unfairly protected by federal law from having to negotiate with artists for performance rights.  This is precisely the sort of crony capitalism against which the American electorate is increasingly irate.

Unfortunately, rather than advocating market reform, some in Congress wish to cement the current protectionist status quo.  Under the so-called “Local Radio Freedom Act,” whose very name contradicts its real-world effect, terrestrial radio’s unjustifiable exemption from having to negotiate performance rights would be made more permanent.  The bill would foreclose bargained-for negotiation between artists and stations for compensation, perpetuating stations’ ability to earn billions by playing songs without paying for them.  And in an example of of supreme chutzpah, the same traditional radio stations benefiting from that loophole turn around and ask Congress to require cable and satellite providers to pay them for retransmission of television programs of stations they happen to own.

The bill’s proponents advance the offensive claim that artists seeking payment should just shut up and appreciate that their works get played over the air, thereby providing them publicity and advertising.  But that’s not something that stations should dictate.  The creators and performers of those songs should be free to determine which market model they prefer – performance for payment or free of charge.  That’s how a free market works.

Accordingly, we at CFIF have joined an array of fellow free-market organizations in a letter to Congress stating our objections to this protectionist and crony capitalist proposed legislation:

We urge you to refrain from co-sponsoring the Local Radio Freedom Act, which sanctions the status quo, and has a chilling effect on the development of a forward-thinking policy that respects the rights of all music producers in all media.  The Constitution protects private property rights and specifically delegates to Congress the authority to protect creative works.  Unfortunately, LRFA closes the discussion about how to best protect property rights by resolving that terrestrial radio should never pay performance royalties on music broadcast on their stations used for raising advertising revenue.  This is not equitable treatment for any musical artist or music distribution service.”

Americans are justifiably fed up with the sort of protectionism and cronyism that this proposed legislation represents.  We accordingly urge Congress to reject it, and that our hundreds of thousands of supporters and activists across the country to contact their representatives in Congress and express their opposition as well.

June 29th, 2015 at 1:03 pm
Protectionist “Local Radio Freedom Act” Would Prevent Payment to Musicians for Songs
Posted by Timothy Lee Print

Under current law, recording artists remain free to negotiate performance payment rights with Internet, cable and satellite stations.  Due to an unfair exception, however, artists cannot negotiate in the same manner with traditional AM-FM radio.  Unfortunately, proposed federal legislation backed by broadcasting interests would cement that anomaly.  Deceptively entitled the “Local Radio Freedom Act” (”LRFA”), the bill would stifle a potentially freer marketplace and foreclose future negotiation for payment to musicians for songs.

If successful, that would perpetuate terrestrial radio broadcasters’ ability to exploit a legal loophole allowing them to earn billions of dollars by playing songs whose artists would remain uncompensated.  Exacerbating matters, those same terrestrial broadcasters simultaneously ask Congress to require cable and satellite providers to pay them for retransmission of television programming from stations that they own.  That similarly violates straightforward concepts of fairness and intellectual consistency.

This past January, CFIF joined an array of other free-market organizations in a letter to Congress opposing the LRFA and setting forth the policy basis for our objection:

The Constitution protects private property rights and specifically delegates to Congress authority to protect creative works.  Unfortunately, LRFA closes the discussion about how best to protect property rights by resolving that terrestrial radio should never pay performance royalties on music broadcast on their stations used for raising advertising revenue.  That is not equitable treatment for any musical artist or music distribution service.”

Fortunately, there’s a superior alternative also before Congress.

Representative Marsha Blackburn (R – Tennessee), perhaps the most reliable advocate of property rights in Congress, has joined Representatives from both parties in introducing the Fair Play, Fair Pay Act of 2015.  This bill would correct the existing unfairness described above by finally requiring terrestrial broadcasters to negotiate with artists who seek compensation for broadcast of their creative works.

Advocates of LRFA claim that artists have no reason to complain when terrestrial radio plays their works without compensation, since that provides them publicity and free advertising.  But that’s something for artists and broadcasters to freely negotiate, rather than have broadcasters make that decision for them and deprive them of choice in the matter.  Some artists may indeed opt to allow their works to be broadcast for free.  But as Taylor Swift just illustrated in standing up for her rights, other artists have a right to disagree and negotiate payment for those playing their songs.

CFIF believes that property rights, including intellectual property (IP) rights for artists and musicians, must be fiercely defended.  America’s foundation of strong IP protections is one reason we’re the most innovative and artistically productive nation in human history.  Accordingly, we encourage our supporters and activists to contact their representatives, demanding that they reject the dangerous LRFA and support Rep. Blackburn’s PRMA.

May 29th, 2015 at 11:03 am
Pass Free Trade Legislation, But Ignore Calls to Insert “Fair Use” Provisions That Weaken American IP Protections
Posted by Timothy Lee Print

We at CFIF strongly advocate both free trade and intellectual property (IP) protection.  Although typically distinct policy questions, they are currently intertwined as Congress finally and fortunately moves toward passing free trade legislation.

The pending legislation rightly demands that trading partners recognize American IP rights, but that has naturally drawn fire from some of the usual suspects (e.g., Google, the Internet Association, et al.) who tend to oppose stronger IP rights because those protections tend to run contrary to their own particular business interests.  Specifically, those interests seek to include copyright limitations in free trade bills, including mandatory “Fair Use” exceptions.

That would be a bad idea.

Among other problems, those voices misstate domestic law in suggesting that “generally, an Internet company in the U.S. is not held liable for the conduct or content of third parties who use its platform.”  While existing law provides a level of immunity for Internet companies, such immunity is limited and does not excuse violations in numerous circumstances, including:  (1) when the interactive computer service materially contributes to the illegal content; (2) when the interactive computer service itself engages in fraud/misrepresentation; (3) when the interactive computer service engages in, or aids and abets, criminal activity; or (4) if the illegal activity violates IP laws.  Accordingly, omitting discussion of an Internet company’s liability for copyright infringement is particularly and intentionally misleading.  American law regarding the liability of intermediaries is infinitely more complicated, and intermediaries may face liability under a variety of circumstances, including where they induce the infringement of third persons (the Grokster standard), and in other circumstances in which they meet the standards of contributory infringement or vicarious liability.  Additionally, “safe harbors” under applicable law remain conditioned on a number of affirmative acts on the part of intermediaries, such as promptly taking action once they learn of infringing content (rather than merely upon receiving formal notice), maintaining policies with regard to repeat violators and adoption of standard technical measures designed to prevent infringement.

Thus, domestic law does not extend some blanket, general exemption from liability for Internet companies with regard to the conduct of third parties, and the scope of liability in the U.S. continues to evolve, both from a judicial standpoint and a legislative one.  Furthermore, Congress is presently considering the appropriate contours of the safe harbors established in the 20-year-old DMCA, with many members expressing concerns about the levels of piracy that prevail, and the fact that “notice and takedown” has been largely ineffective in reducing piracy levels, with a particularly devastating impact on individual creators and actors who can ill afford to pursue takedowns only to have the same content immediately re-uploaded.  Accordingly, it remains unclear exactly what liability regime the US should be seeking to export.  But it’s absolutely clear that American interest in foreign markets remains primarily in promoting greater discipline and accountability to reduce piracy levels that deprive the US billions of dollars in earnings.

Furthermore, U.S. trade agreements already include provisions relating to exceptions and limitations.  They also already recite the relevant provisions of international law that define the scope of permissible exceptions and limitations.  Those binding provisions are contained in a variety of agreements, including the Berne Convention, TRIPS, the WIPO Treaties (WCT and WPPT), and each of our free trade agreements.  Other nations have employed different means to achieve what they believe is a proper balance between protection and limitations, but remain they bound by the provisions of international law.  A particularly wide variance exists in how common law and civil law nations approach exceptions and limitations.  More specifically, courts in civil law countries are not permitted to interpret general provisions, and legal standards that require the weighing of different factors are a poor fit.  As a result, legal provisions such as Fair Use are ill-suited to the jurisprudence of most countries across the globe.

Moreover, as the world’s leading producer and exporter of copyright protected materials, the U.S. maintains a tremendous economic interest in ensuring the effective protection of copyright works.  While all parties strongly endorse balanced copyright protection that both protects works and provides reasonable flexibility, the biggest problem in foreign markets is lack of discipline, and not overboard protection.

It is critical that Congress passes free trade legislation currently on its agenda, and those who seek to exploit it as a device to weaken American IP protections must be rejected.

February 25th, 2015 at 5:06 pm
CPAC: Patent Litigation Reform Panel Should Include and Acknowledge Both Sides of Debate
Posted by Timothy Lee Print

This week, conservatives from across the nation and even the globe congregate in Washington for the annual Conservative Political Action Conference (CPAC).

Each year, CPAC features prominent conservative political figures, including prospective presidential candidates, as well as panels on various issues.  This year, appropriately, a panel is scheduled to address the important issue of patent reform.

We at CFIF value and advocate strong intellectual property (IP) rights, including patent rights, as much as any organization.  At the same time, we support patent reform like that proposed by Congressman Robert Goodlatte (R – Virginia).  The way we see it, the problem of so-called “patent trolls” (which can be an overused and unfair term, as non-practicing entities have every right to enforce legitimate patent rights in court) is largely one requiring legal reform, rather than one justifying weakening of patent rights themselves.  Accordingly, we favor such reforms as requiring greater specificity in court pleadings, assessment of fees and costs to a greater number of improperly-litigious plaintiffs and discovery process reform.

Opponents of patent reform legislation incorrectly claim that it will deprive judges of discretion in assessing fees, but the fact is that discretion will remain.  As we have detailed, what will change is that the presumption in awarding costs and feels will shift on the continuum toward allowing innocent victims of vexatious plaintiffs to receive compensation for having to defend against unjustified lawsuits.  Reform opponents also claim that it would improperly chill the filing of lawsuits by legitimate plaintiffs.  But as any reasonable person realizes, the overwhelming problem in our current litigation system is not reluctance by plaintiffs to sue, but rather excessive willingness to sue.

Accordingly, our hope is that the CPAC panel allows a full and fair presentation of both sides in this debate.  To do otherwise would be a disservice to attendees, the broader debate and CPAC itself.

February 6th, 2015 at 11:50 am
We’re Still # 1: U.S. Chamber of Commerce Global Intellectual Property Center Releases Third International IP Index
Posted by Timothy Lee Print

This week, the U.S. Chamber of Commerce Global Intellectual Property Center released its third annual GIPC International IP Index, and it provides some welcome good news.

Namely, the U.S. retains its top global ranking in a survey that expanded this year to include 30 nations, “comprising nearly 80% of the global gross domestic product (GDP).”  The Index provides critical “empirical literature showing a robust relationship between strengthening levels of IP protection and an increase in economic benefits such as foreign direct investment, job creation, technology transfer, and economic development.”

We at CFIF often note the way in which strong IP protection is the causal factor explaining why the U.S. stands as the most innovative and prosperous nation in human history – by far.  With the release of this year’s Index, the Chamber and GIPC provide the latest empirical support for that critical causal connection.

January 20th, 2015 at 10:28 am
Michael Rosen: A Tech Manifesto for the 2016 GOP Field
Posted by Timothy Lee Print

In a typically excellent commentary, AEI’s Michael Rosen suggests how Republicans can begin to correct their costly lag in attracting “votes and dollars from the high-tech industry,” and to “forge a technology policy rooted in free-market policy and updated to reflect and respond to 21st-century concerns.”

Mr. Rosen provides illustrations of the nature and depth of the problem, but also identifies recent progress made by various Republicans.  Helpfully, he proceeds to identify three key components of a much-needed “technology manifesto”:  (1)  Address the needs and wants of the tech community without pandering to it;  (2)  Adhere to free-market values, but apply them intelligently to new technological challenges;  and (3)  Avoid soundbites – articulate sound explanations.  He then cites AirBNB, Uber and other tech upstarts to apply his points.

Finally, Mr. Rosen smartly addresses the ongoing patent reform and patent “troll” debate that’s likely to reappear in the new Congress.  Among other points, he highlights how litigation reform to curb trial lawyer abuses, as opposed to altering patents or intellectual property rights more generally, offers the primary corrective to the underlying problem:

Republican candidates must promote real innovation and reduce deadweight loss without succumbing to the temptation to demonize patent holders.  The patent ‘troll’ reform debate contains multitudes, but the specific issue of attorney fees nicely encapsulates the tensions and the opportunities for GOP candidates…  GOP candidates hoping to garner support in the tech community should resist their inclination to uproot centuries of American legal and intellectual property tradition simply to settle old scores, both in general and in the particular area of attorney fees.  Rather than undo our longstanding ‘day in court’ practice by presumptively awarding fees to winning parties, as many Congressional Republicans seek to do, discerning free marketeers should push to modestly trim, not flip, the burden.  This approach may not fully satisfy the rabidly anti-trial-lawyer conservative donor base, or, for that matter, large Silicon Valley companies pushing for significant changes to the patent system.  But it will certainly find favor with small and large companies whose bottom lines – if not whose very existences – depend heavily on their IP assets.  Such a nuanced position promotes innovation and comports with historical notions of American justice – two key themes Republicans looking to score points in the Valley must hammer home consistently.”

Excellent points with which CFIF has consistently agreed, apart from my need to assure him that at least this “anti-trial-lawyer conservative” tested negative for rabies.

November 7th, 2014 at 12:24 pm
WSJ’s Gordon Crovitz Veers Off Course on Intellectual Property Rights
Posted by Timothy Lee Print

Each Monday, The Wall Street Journal’s “Information Age” column by L. Gordon Crovitz is a must-read.  His analyses are invariably intelligent and his policy positions are usually wise.

On intellectual property (IP), however, Crovitz occasionally hits discordant notes.  Unfortunately, this week provided another example.

In “Even Silicon Valley Tilts Republican,” he highlights the surprising news that this year, technology companies reversed tradition and gave 52% of their political contributions to Republicans.  He also touches upon the topic of patent law reform, which CFIF has broadly supported.  But then he veers off logical course by maligning patent rights, specifically with regard to software patents:

Patents make little sense for software, which almost always builds on an earlier work.  There are some 250,000 potential patent violations in smartphones alone.  Companies known as ‘patent trolls’ stockpile patents to extract huge settlements from technology companies, not to build products.  Plaintiff lawyers joke that their focus has gone from ‘PI to IP.’  Now that personal-injury litigation has been reformed in many states, they’re turning to intellectual property lawsuits such as patent infringement.”

It’s difficult to fathom how Crovitz continues to make such a claim.

The United States maintains by many measures the world’s strongest patent and IP protections.  It also leads the world in technological innovation, including software and smartphones.  That’s not coincidence.  It’s cause-and-effect.  In an excellent recent piece for IPWatchdog.com, patent attorney Gene Quinn offers a superior analysis on IP rights and innovation in such areas:

Why will anyone invest the extraordinary sums of money to create the innovations we want without an expectation of exclusivity that will allow for a recoupment of the investment plus a reasonable return on investment?  ‘The Truly Staggering Cost of Inventing New Drugs unveils a Forbes study finding:  ‘The average drug developed by a major pharmaceutical company costs at least $4 billion, and it can be as much as $11 billion.’  And it is pure fiction to believe that software development doesn’t follow the same economic realities.  When IBM produces one of their large-scale projects, there will have been many hundreds of people working on the software solution for at least several years.  The same is true for a new Apple operating system, or the next version of Microsoft Windows.  It is pure fantasy to believe that software programs are written over a long weekend by a single person who is merely a second-year engineering student.  Software that is compatible, secure and actually works is rare these days, and takes real development effort, which costs real sums of money.  The quickest way to get less innovation is to destroy the patent system.”

Quinn is correct, and the real-world facts speak for themselves.  Strong patent protections spur the innovation for which America and its tech sector are known.  Moreover, there isn’t anything inherently wrong if a patent holder with no ability or intention of manufacturing or marketing an invention sues for violation.  A patent right is simply a property right enforceable by law, just as a songwriter can rightfully sue for infringement even if he or she didn’t have the ability to sing the song, assemble a band, reserve a recording studio or find an agent.

That obviously doesn’t mean that we should in any way condone the filing of frivolous lawsuits based upon false claims of patent infringement.  But it does mean that much of the “patent troll” problem can be resolved via litigation reform, such as requiring greater specificity in court pleadings and shifting of attorneys’ fees and costs to more of a “loser pays” system.

What we don’t want to do is demonize patent rights, which have been the foundation for American innovation through the decades and centuries.

July 8th, 2014 at 3:58 pm
What Economists Miss in the Patent Reform Debate
Posted by Timothy Lee Print

Following up on our patent reform post last week, today’s Wall Street Journal includes an interesting viewpoint via letters to the editor.  Specifically, Paul Adams of Albuquerque, New Mexico notes that while some economists short-sightedly applaud the way in which weakening patent protections and encouraging copying can lower costs in the near-term, they ignore the longer-term incentive to invest and invent that strong patent protections provide:

It may satisfy economists that allowing copying by large corporations will drive down prices for consumers since there is no other way to compete.  But that does enhance technology.  In fact, one benefit of the patent system is the pressure on competitors to invent a different and likely better solution, thereby advancing the technology.  I have on many occasions assisted competitors in ‘designing around’ a patent creating a new product or service.  There are few patents of such broad scope that there is not an alternative.”

Opponents of strong patent protections often fancy themselves clear-sighted, dispassionate, economics-based observers, but their positions are more accurately penny-wise but pound-foolish, as Mr. Adams correctly notes.

July 2nd, 2014 at 5:05 pm
The Mythical “Patent Troll?”
Posted by Timothy Lee Print

“Patent troll.”  The term has assumed prevalence amid discussion of broader patent law reform, which we at CFIF have supported in some incarnations.

The “patent troll” problem, however, is to a large degree a litigation problem more than a problem inherent in our patent system.  And in that vein, two prominent conservative/libertarian figures have penned a Wall Street Journal commentary entitled “The Myth of the Wicked Patent Troll.”  Author Stephen Haber is a senior fellow at the Hoover Institution’s Task Force on Intellectual Property, Innovation and Prosperity, while co-author Ross Levine is a business professor at the University of California, Berkeley and a senior fellow at the Milken Institute.  In other words, their intellectual and free-market credentials are well-established.

In their commentary, Mr. Haber and Mr. Levine substantively detail research showing that, “innovation rates have been strongest in exactly the industries that patent-reform advocates claim are suffering from ‘trolls’ and a broken patent system.”  They also correctly highlight the fact that, for whatever its flaws, our patent system is the world’s greatest:

Thanks in large part to the patent system we have, the current rate of invention in the U.S. might be the fastest in human history.  Where is the evidence that society would benefit from undertaking the risky process of reforming a patenting system that has been the envy of the world for more than two centuries?”

The real problem, they say, is large corporations seeking to leverage government power in pursuit of their own self-interest:

There is one basic reason behind the attacks on trolls:  Big Money.  Many patent-intensive products — the smartphone in your pocket, the laptop computer in your briefcase — are produced by big corporations that license many patents.  The iPhone is a classic example:  It contains thousands of patented components, but Apple does not own many of the key ones.  It must negotiate for the right to use them.  These corporations can make higher profits the less they pay to use patented technology they do not own, and higher profits still by paying nothing at all.  The battle over the ‘right price’ for patented technologies takes many forms, one of which is political.  Indeed, some corporations are looking to gain a competitive edge by changing the rules of the game.  The strategy is to pass patent-reform legislation that weakens the negotiating position of patent holders.  Corporations that pay large sums for patented technologies will point to lawsuits, trolls and anything else that will encourage lawmakers to pass such reforms.”

Agree or disagree, their piece brings an important and under-discussed perspective to the ongoing patent reform debate.

February 25th, 2014 at 11:47 am
Homeland Security Hearing Should Emphasize Intellectual Property Protections and Stopping Piracy
Posted by Timothy Lee Print

At 10:00 a.m. tomorrow, the House Homeland Security Committee will hold a hearing with new U.S. Department of Homeland Security (DHS) Secretary Jeh Johnson entitled “The Secretary’s Vision for the Future – Challenges and Priorities.”  The hearing provides a perfect opportunity for Chairman Michael McCaul (R – Texas) and his committee to emphasize America’s commitment to Intellectual Property (IP) protections, and to ensure that combating IP theft – both the anti-counterfeiting operations and efforts to stop online IP piracy – remain on the front burner.

Correctly and justifiably, many divisions and agencies within the Department focus on national security, but it would also be useful for the Committee members to discuss others that have a role in our economic well-being.  A large and diverse coalition of businesses recently came together to write Secretary Johnson, stressing upon him the importance of protecting American ingenuity and our competitive edge by reinforcing the need for strong enforcement of IP.  American companies continue to create the world’s most innovative goods and products, and fully two-thirds of all U.S. exports come from industries that depend on the recognition of strong IP rights.

Unfortunately, whenever creators succeed in building brands that consumers come to trust, there will in turn be nefarious characters who seek ill-gotten profit from someone else’s good name and hard work.  Fake consumer products, medicines, apparel and other goods can be found online, and unsuspecting shoppers end up with inferior, even dangerous products from unknown sources both domestic and abroad.  Consequently, absent significant effort by U. S. enforcement agencies, those knock-off goods can end up in hurting both the purchaser and the company unfairly being copied.  Whether manifested by state-sponsored theft of U.S. military technology, Eastern-bloc crime bosses using revenue of fake goods to fund their syndicates or simply domestic swindlers trying to scam consumers, U. S. policy makers and officials need to do what it takes to stop the bad guys to help ensure fair play as well as our safety.

Emphasizing that point at tomorrow’s hearing will provide an important step in that path.

February 10th, 2014 at 5:00 pm
MPAA’s Ben Sheffner Sets the Record Straight on the Value of Copyright Protections
Posted by Timothy Lee Print

Do America’s copyright protections stifle artistic innovation?

Obviously, that question answers itself.  After all, no nation in human history even approaches the United States in terms of sheer scale of musical, film and other creative innovation.  And that’s due precisely to our strong copyright laws that reward creativity and incentivize more.  Moreover, Americans’ ability to access a greater amount of artistic content, more easily, more cheaply and via more outlets increases daily.

Bizarrely, however, the contrary assertion remains regrettably fashionable even among some self-proclaimed “libertarian” and “conservative” circles.  Fortunately, voices of reason rebut the pernicious anti-intellectual property (IP) movement’s myths, and bring clarity to the debate.  One such voice of reason is Ben Sheffner, the MPAA’s Vice President of Legal Affairs.  In this abbreviated and this full-length debate video recently released, Mr. Sheffner clarifies the realities and refutes the curious claim that copyright laws inhibit innovation.  Quite the contrary, he makes clear, strong copyright laws not only preserve the fruits of creators’ labor, they incentivize the risk-taking and investment critical to spark additional creativity now and into the future.

Mr. Sheffner does an excellent job, and absolutely schools Derek Khanna multiple times on both the broader and finer points of intellectual property generally, and copyright more specifically.

January 16th, 2014 at 4:12 pm
Free Trade Negotiations Offer Opportunity to Improve Intellectual Property Protections
Posted by Timothy Lee Print

In our Liberty Update this week, we highlight the new 2014 Index of Economic Freedom, which itself highlights the critical importance of property rights and free trade in generating prosperity.  The facts, and that correlation, are simply beyond dispute.

On that note, current Trans Pacific Partnership (TPP) free-trade agreement negotiations provide a critical opportunity to upgrade intellectual property (IP) protections that have gradually become outdated since the landmark North American Free Trade Agreement (NAFTA) was signed two decades ago.  That was the expert conclusion of Mark T. Elliot, Executive Vice President of the U.S. Chamber of Commerce’s Global Intellectual Property Center, in testimony this week before the House of Representatives at a hearing entitled “NAFTA at Twenty:  Accomplishments, Challenges, and the Way Forward.”

At the time of signing, NAFTA intended to create the best levels of IP protection and enforcement…  It was a testament to how important IP was viewed by Mexico, Canada, and the United States.  However, as this was signed twenty years ago, this level of IP protection is now a very low bar in 2014.  In 2012, the Chamber released an International IP Index, a comprehensive review of the intellectual property environment in 11 key markets based on existing international standards and best practices.  The United States, the United Kingdom, and Australia all perform well in the Index…  Mexico and Canada, however, rank closer to the likes of Russia, Malaysia, and China.

In Mexico, however, we continue to see progress… and the business community has been working productively with the Mexican government.  In contrast, Canada’s relative low score is a result of wide-ranging IP problems including:  enforcement, weak on membership and poor ratification of international treaties, and significant problems with patent and copyright laws.  Canada is the largest trading partner for the United States… [making] it all the more bewildering to the business community at how substandard Canada’s IP system is.”

When NAFTA was signed, it was an idea ahead of its time.  And as former Clinton Administration Chief of Staff Thomas “Mack” McLarty noted a recent Wall Street Journal commentary, the results have been spectacular:

U.S. trade with Mexico and Canada has tripled to more than $1 trillion a year, supporting millions of American jobs.  The U.S. exported more last year to Mexico than to Brazil, Russia, India and China combined; and more to Canada, with 35 million people, than to the European Union, with 500 million…  NAFTA also opened the door for free trade agreements across Latin America, a catalyst for economic and political reforms.  Mexico was transformed from one of the most closed economies in the world to one of the most open, and it subsequently threw off decades of one-party rule.   Today, U.S. products make up 40% of the contents of goods imported here from Mexico (compared with 4% in goods imported from China).  An integrated market boosts exports and imports, and helps keep good jobs at home.”

Today, we face a perfect opportunity to improve upon NAFTA’s good thing.   As Mr. Elliot testified:

2014 will present many opportunities for the United States, Canada, and Mexico to further improve their IP environments…  In particular, all three countries are participants in the Trans Pacific Partnership (TPP) Agreement negotiations.  The TPP is being negotiated between 12 different countries, and it is essential that it include robust standards for IP protection, using the Korea-U.S. free trade agreement as a model and providing 12 years of regulatory data protection for biologic products.  We encourage the U.S., Canadian, Mexican, and all TPP negotiators to uphold their positions and protect IP from the efforts to weaken existing laws and norms.  The TPP provides the U.S., Canada, and Mexico the opportunity to stand shoulder-to-shoulder in support of strong IP protections, innovation, and access to the creations and inventions of the 21st century.  A TPP agreement that includes a high-standard IP chapter is good for jobs and good for international trade.  The TPP will also allow Canada to raise its IP standards, promote innovation, and bolster its growing economy.  2014 should be the year when the North American neighbors work together to improve each other’s IP environments and the IP environments of countries around the world.”

Free trade and strong IP rights are critical components of economic freedom, which the latest Index of Economic Freedom shows is causally related to a nation’s prosperity.  America, Canada, Mexico and the other negotiating nations face an important opportunity in 2014 to improve upon both, which will boost our prosperity at a time when we desperately need it.

July 26th, 2013 at 4:23 pm
New Survey: Americans Overwhelmingly Support Intellectual Property Rights, Efforts to Fight Piracy
Posted by Timothy Lee Print

I had the honor this week of participating in a panel on Capitol Hill hosted by The American Consumer Institute (ACI), whose speakers also included Rep. Marsha Blackburn (R – Tennessee), ACI’s Steve Pociask,Todd McCracken of the National Small Business Association, Sandra Aistars of the Copyright Alliance and Dr. Joseph Fuhr, Jr., Professor at Widener University and ACI Senior Fellow.  At that time, ACI unveiled its new public opinion survey showing overwhelming support for intellectual property (IP) rights and legal efforts to combat IP piracy.  Remarkably, in this era of political polarization, that support approaches 90%, so political leaders should pay attention.

Today, IP rights are under constant threat not only by way of theft and counterfeiting, but also by special interests here and abroad who seek to undermine IP protections.  For example, some of the nations with whom the U.S. is negotiating free trade agreements believe that IP should receive little, if any, legal protection.  Accordingly, for my part I emphasized that IP is precisely the basis on which the U.S. has evolved into the most prosperous, innovative nation in human history.  After all, many alternative legal systems exist providing less protection for IP.  Yet it is here in America, with its strong tradition of IP protection, where the overwhelming amount of innovation has occurred over the past two centuries.  That is not by accident, and it’s not coincidence.

Our IP system has delivered a higher standard of living and record of creation than any other system that the world has ever known.

But I also emphasized that IP protections aren’t just utilitarian in nature, as some seem to claim.  Rather, IP protections also reflect our view that the right to enjoy the fruits of one’s labor and efforts is a natural, unalienable one.  As stated by John Locke, “Our handiwork becomes our property because our hands – and the energy, consciousness, and control that fuel their labor – are our property.”  That right is at the core of American society itself.  The Constitution reads, “The Congress shall have the Power … [t]o promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.”  That reflects not only British common law, which is the basis for our own legal system, but also the Founding Fathers’ views.  In The Federalist No. 43, James Madison noted, “The copyright of authors has been solemnly adjudged, in Great Britain, to be a right of common law.”

Today, American IP is valued at approximately $5 trillion, which is greater than the gross domestic product (GDP) of any other nation in the world.  It also accounts for over half of American exports, which is critical at a time of increasing international competition.  Unfortunately, piracy of U.S. IP constitutes a multi-billion dollar threat, which steals our wealth and deprives our innovators the fruits of their labor.

With ACI’s new study, lawmakers can recognize where the American public overwhelmingly stands.  That data can prove critical in the ongoing battle to protect IP rights and increase legal protections to fight piracy both domestically and abroad.