Freedom Line Blog

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.

Speaking at an America’s Future Foundation (AFF) gathering, Senator Ted Cruz stood up decisively for intellectual property (IP) rights in America.  Whereas too many contemporary political figures either falsely malign IP protections or equivocate while trying to please everyone, Sen. Cruz advocated more vigorous enforcement of IP, highlighted IP’s unique role in America becoming the most innovative and prosperous society in human history, described the incentive it provides for small businesses (which create most new jobs in America), detailed its importance in sparking desperately-needed economic growth and sounded the alarm regarding domestic and foreign IP theft.   In addition, he offered an interesting personal insight by describing his legal work as an attorney before the Supreme Court.

For good measure, Senator Cruz also took a nice swing at the misnamed Marketplace Fairness Act, the pernicious Internet sales tax legislation that somehow passed the Senate but fortunately appears doomed in the House.  He’s looking like a gem.

In this week’s Freedom Minute, CFIF’s Renee Giachino discusses how recent efforts to erode fundamental intellectual property rights are in fact a direct assault on the American dream.

Various groups that favor such things as making the Internet a public utility have declared today “Internet Freedom Day.”  That’s a euphemism, unfortunately, meant to disguise a deeper animosity toward property rights.  What they falsely label “freedom of expression” is often a transparent aversion to straightforward intellectual property rights.

Intellectual property, or IP, simply refers to the legal protection accorded to creators in the same way that someone possesses a natural physical property right.  The only distinction is that IP protects inventions, artistic expressions and distinguishing trademarks.  Although opponents of IP falsely attempt to distinguish it from physical property by, among other things, asserting that physical property is finite whereas IP is infinite, that’s a sloppy distinction without a difference.  After all, if your automobile sits unused in a garage as you read this, then according to their logic its social utility would be increased by allowing someone who doesn’t own your car to use it while you are not.  Try telling a recording artist that after investing effort and financial resources in securing costly studio time and top-quality backup singers and band members, he or she has no right to the creation or to enjoy the fruits of his or her labor.

Protection of IP is necessary to not only secure for innovators the just fruits of their labor, but also to provide societal incentive for innovation.  No reasonable person opposes Internet freedom, but nor should that concept be used to disguise animosity toward property rights.

Today, IP remains under threat from foreign piracy, costing hundreds of billions of dollars per year.

Businesses reliant upon IP account for more than 60% of American exports, which are by nature more vulnerable to foreign piracy.  Those businesses also employ almost 55 million workers, pay their employees an average wage 30% higher than non-IP counterparts and account for $5.7 trillion of the nation’s GDP. Meanwhile, parasitic overseas websites continue to threaten that IP wellspring of innovation, jobs and prosperity.  Although estimates vary, foreign IP piracy now amounts to a cumulative enterprise that inflicts at least $500 billion in loss annually and now accounts for approximately 25% of all Internet traffic.

Each moment, rogue sites across the world seek to make an easy and illegal profit by selling things they had no hand in creating.  That has to stop.  Although many proponents of today’s so-called “Internet Freedom Day” will falsely demonize future efforts to curtail IP theft, they must be recognized as apologists for illegality.  Just something to bear in mind amidst the synthetic hoopla.

CFIF’s Timothy Lee discusses increased enforcement activities against counterfeit goods and pirated music and movies, the detrimental impact such goods have on innovation, and the intellectual and historical roots of copyright law.

Listen to the interview here.

“I do believe in intellectual property. I do believe you have a right to your property.”

So said Senator Rand Paul (R-KY) in response to a question following his remarks during an event last week at the Heritage Foundation titled, “Will the Real Internet Freedom Please Stand Up?”

In Article I, Section 8 of the U.S. Constitution, our nation’s Founders specifically provided for the protection of intellectual property (IP) in order “To promote the Progress of Science and useful Arts.”  While the fundamental concept of providing artisans, authors and inventors exclusive right to their respective works and discoveries has remained relatively uncontroversial for most of the nation’s history, recent debates regarding what to do about widespread infringement over the Internet have caused some to diminish IP protection by setting it aside as merely some abstract, disposable ideal.

That mindset is dangerous, both in theory and in practice.

First and foremost, intellectual property is vital to free enterprise and drives economic growth. According to a recent study by the Global Intellectual Property Center, IP-intensive industries currently employ more than 55 million Americans and account for 74% of all U.S. exports and $5.8 trillion in GDP.  Without strong IP protections, the incentive to innovate is removed, drying up investment, stalling growth and progress, and thus undercutting the entire economy.

Little if any incentive would exist for an author to write the next great novel, Hollywood to produce the next cinema blockbuster or a pharmaceutical company to develop a cure for cancer if none of them are able to benefit economically from their works.

Moreover, when the importance of IP is diminished or dismissed altogether, its protection is afforded different levels of enforcement not on par with that of physical property.  But the concept of property should not be rooted in its physical existence.  Owning property is a contract that provides the title-holder specific rights that lead to economic benefits, not simply a plot of land. In that way, intellectual property is no different than any other form of property. 

Senator Paul gets it. In his remarks – previewed as “what could be the most significant talk on Internet freedom this year” by the Heritage Foundation’s Robert Bluey – Paul declared, “There are some libertarians who don’t believe in copyright. I am not one of them. I think you have to protect intellectual property.”

Senator Paul’s comments reveal that not only do some libertarians get IP wrong, but that all property needs protection and enforcement thereof. As evidenced by over 200 years of practice, patent, trademark and copyright protections promote the general welfare and lead to great economic advantages by driving innovation and developing capital. The end result comes in the form of countless benefits from millions of IP-intensive jobs, billions in exports and trillions in GDP spilling over to the rest of society.

Property, including intellectual property, is preeminent and deserves strong protections.

At this moment in Dallas, Texas, the Trans-Pacific Partnership (TPP) trade negotiations have resumed, with important implications for intellectual property (IP).

According to the U.S. Commerce Department, 75 domestic industries it identifies as “IP-intensive” account for 40 million jobs, approximately 28% of our total employment.  Industries reliant upon IP also account for $5 trillion – some 35% – of total American gross domestic product (GDP), 61% of U.S. merchandise exports and pay wages 42% higher than non-IP employers.

It is therefore critical that TPP negotiators establish a solid foundation for IP protection as they move toward finalization.

The TPP currently consists of eight Pacific trading partners in addition to the U.S. – Australia, New Zealand, Singapore, Malaysia, Vietnam, Brunei, Chile and Peru.  In 2010 alone, America exported $89 billion in goods to those nations, making the TPP one of our largest collective export markets.  The express goal of the TPP charter is “to establish a comprehensive, next-generation regional agreement that liberalizes trade and investment and addresses new and traditional trade issues and 21st-century challenges.”  And with other Pacific region nations Japan, Canada and Mexico expressing interest in joining the TPP, the agreement currently under negotiation can set the foundation for future trade practices across the Pacific realm.

To its credit, the U.S. stands as a worldwide leader in demanding strong IP standards in agreements such as this, as reflected by domestic laws and international accords such as the one completed just last year with Korea.  Similarly, with pressure on to finalize TPP negotiations, we must ensure strong IP protections in the final agreement.  Doing so will prove beneficial in terms of protecting American jobs against theft and counterfeit, protecting American consumers against potentially dangerous products, reducing the threat to American creativity and innovation posed by copyright infringement, promoting future innovation, protecting American competitiveness against those who seek to steal our ideas and creations and setting clear rules for worldwide commerce.

If successful, we can set a sound foundation of IP protection, which will prove critical for American innovation, jobs, exports and continued prosperity in an increasingly Pacific-dominated 21^st century.

In this week’s Freedom Minute, CFIF’s Renee Giachino debunks the misinformation by opponents of the Stop Online Piracy Act (SOPA) and discusses the immediate need for Congress to pass legislation to crack down on foreign rogue websites that are dedicated to stealing U.S. intellectual property.

This week, CFIF joined dozens of employers, entrepreneurs and groups spanning the political spectrum on Capitol Hill to ask Congress to help put a stop to online theft by rogue websites that steal jobs and cost American businesses $135 billion annually.  In this era it is rare to find an issue that achieves almost complete consensus among ideologies and interest groups, but this is one.

Rogue websites steal intellectual property (IP) through counterfeiting, knockoff goods, piracy and misappropriation of movies, music, books and software.  Such thieves don’t pay taxes, they don’t follow American laws, they cut into American exports at a time of enormous trade deficits and they cut into our jobs and earnings.  Astoundingly, such sites constitute approximately 25% of all Internet traffic (53 billion visits per year), deceive honest customers, spread malware and even threaten lives and health with counterfeit pharmaceuticals and cosmetics.

Simply put, there is no justification or defense whatsoever for rogue websites.  So what to do?

Well, on May 12, 2011 Senators Orrin Hatch (R – Utah), Chuck Grassley (R – Iowa) and Patrick Leahy (D – Vermont) along with nine other original co-sponsors  introduced S. 968, the PROTECT IP Act.  That legislation would at long last halt rogue site access to the American market and help secure the fundamental rule of law.  Because many rogue sites operate outside our borders, the Act would allow the Department of Justice or private individuals to obtain court orders halting search engine connections to sites proven through due process to be “dedicated to infringing activity.”  The Act would also require payment processors and online advertising networks to discontinue payments to rogue sites.

Chances are that you or others close to you are impacted by rogue websites causing inestimable damage to U.S. jobs and prosperity.  We can help put a stop to that travesty by supporting the PROTECT IP Act and asking our Senators and Representatives to do the same.