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Gridlock: When IPR protection goes too far
By Wu Jiayin |
January 10, 2009, Saturday
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TO most economists, lawyers and other experts in developed countries, it seems that there can never be too much emphasis on the protection of intellectual property rights (IPR).
IPR protection has made significant contributions to economic growth, since by giving creators exclusive rights to their creations for a period of time, it provides incentives to develop and share information rather than keeping it secret.
There's a different take on IPR -- specifically on its overprotection -- in the book "Gridlock Economy'' by Michael Heller, who looks at the downside in the United States.
While agreeing that when too many people use a common resource, they destroy that resource, he also points out that "when too many people own pieces of one thing, cooperation breaks down, wealth disappears and everybody loses.'' That's what he call gridlock.
Heller cites numerous examples to support his argument.
In the 1980s the US government divided the broadcast spectrum into more than 700 territories and allowed hundreds of small companies to assert their ownership of the airwaves, thus creating gridlock.
As a result, even now, the US lags behind many countries in the extent of its wireless broadband service, with the majority of its spectrum lying idle most of the time.
"One economist estimates that 'perhaps as much as US$1 trillion might be lost over the next decade due to present constraints on broadband development','' says Heller.
Another example concerns the development of pharmaceuticals.
New drugs and treatments have saved the lives of millions of people in the past several decades.
The US drug industry has, however, lobbied for more favorable patent laws to increase their IPR protection.
Companies' eagerness to protect their cash-cow drugs from low-cost, generic copies has resulted in an overgrown thicket of patents on products and processes.
This raises costs and impedes the development of new drugs.
As Heller comments, "The most important cause of gridlock in biomedical research ... (is) the sheer multiplicity of rights that must be acquired to undertake innovation of any sort, including drug development.''
This echoes the views of Mei Xinyu, senior researcher at China's Ministry of Commerce, who believes that the US has gone to extremes in some aspects of IPR protection.
For instance, Mei wrote, in the past the US granted patents to each newly developed piece of software. But nowadays, the US grants a patent to almost each code used in certain software.
Although this appears to be beneficial to the protection of innovators' rights, it is in fact discouraging technological innovation on the whole.
Solving the problem is not easy.
Heller says systems of regulation and laws should include mechanisms for change. In particular, when patents block creativity rather than enabling it, there should be changes in relevant laws and regulations.
He calls for voluntary cooperation and philanthropy, which may be the most efficient solution to the gridlock problems at the moment.
Yet Heller is frank in admitting that "avoiding underuse in a tragedy of the anticommons (privately owned resources) is harder because we are just now discovering its pervasive reach and hidden costs.''
IPR protection has made significant contributions to economic growth, since by giving creators exclusive rights to their creations for a period of time, it provides incentives to develop and share information rather than keeping it secret.
There's a different take on IPR -- specifically on its overprotection -- in the book "Gridlock Economy'' by Michael Heller, who looks at the downside in the United States.
While agreeing that when too many people use a common resource, they destroy that resource, he also points out that "when too many people own pieces of one thing, cooperation breaks down, wealth disappears and everybody loses.'' That's what he call gridlock.
Heller cites numerous examples to support his argument.
In the 1980s the US government divided the broadcast spectrum into more than 700 territories and allowed hundreds of small companies to assert their ownership of the airwaves, thus creating gridlock.
As a result, even now, the US lags behind many countries in the extent of its wireless broadband service, with the majority of its spectrum lying idle most of the time.
"One economist estimates that 'perhaps as much as US$1 trillion might be lost over the next decade due to present constraints on broadband development','' says Heller.
Another example concerns the development of pharmaceuticals.
New drugs and treatments have saved the lives of millions of people in the past several decades.
The US drug industry has, however, lobbied for more favorable patent laws to increase their IPR protection.
Companies' eagerness to protect their cash-cow drugs from low-cost, generic copies has resulted in an overgrown thicket of patents on products and processes.
This raises costs and impedes the development of new drugs.
As Heller comments, "The most important cause of gridlock in biomedical research ... (is) the sheer multiplicity of rights that must be acquired to undertake innovation of any sort, including drug development.''
This echoes the views of Mei Xinyu, senior researcher at China's Ministry of Commerce, who believes that the US has gone to extremes in some aspects of IPR protection.
For instance, Mei wrote, in the past the US granted patents to each newly developed piece of software. But nowadays, the US grants a patent to almost each code used in certain software.
Although this appears to be beneficial to the protection of innovators' rights, it is in fact discouraging technological innovation on the whole.
Solving the problem is not easy.
Heller says systems of regulation and laws should include mechanisms for change. In particular, when patents block creativity rather than enabling it, there should be changes in relevant laws and regulations.
He calls for voluntary cooperation and philanthropy, which may be the most efficient solution to the gridlock problems at the moment.
Yet Heller is frank in admitting that "avoiding underuse in a tragedy of the anticommons (privately owned resources) is harder because we are just now discovering its pervasive reach and hidden costs.''
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