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Intellectual Property is the key to innovation, economic growth

By Celeste Arenas | March 02, 2017

The last 200 years have demonstrated that innovation is the blueprint for a prosperous society. Entrepreneurs and inventors who commercialize brilliant ideas create unprecedented opportunities for improving customer experience with better products and services. This has built the compounded economic impact of advanced technological progression in the 21st century, fostered by and through sound patent protection.


The capacity for innovation has blurred the distinctions between rich and poor and enriched entire nations, while those without sound intellectual property rights continue to fall behind. By learning from the historical and institutional experience of unique innovation protection in the United States, some third world countries have begun to conquer one of the most cyclical and vicious impediments to economic growth. The US in turn, must take every measure to continue sound practice of the law without compromising the principles ofconstitutionally-protected innovation.


IP is the root of American exceptionalism


When properly enforced, intellectual property protections are one of the strongest pillars for fostering world changing innovation that stimulates the economy. This is primarily evident in the American experience; simultaneously the world’s greatest innovator and protector of intellectual property.


Historically, the United States was the first country on earth to protect intellectual property by law, as the Founding Fathers had the foresight and vision for an explosive growth in creative invention and enterprise. Approximately 6000 patents were filed every year after the Civil War, more than any other nation in in its time. The act of invention and copyright was considered “democratic” in that any American can, and was even expected, to participate. As Professor Ernest Freeberg put it, “no self-respecting American gentleman could die without filing a patent.”


As an ordinary feature of everyday life, intellectual property law was part and parcel of serving inventors who served customers. These were the environs that allowed for the inventions and patents of Alexander Graham Bell’s telephone and Thomas Edison’s electric light bulb. From these foundations, 21st century innovators from Steve Jobs to Bill Gates have likewise made the best use of intellectual property laws to protect  the inventions that serve customers on a global scale.


From the 19th, 20th to 21st century, technological capacity has traveled light years beyond what had been predicted because the legal foundation has remained consistent in protecting and respecting the individual’s right to intellectual property.


Why innovation has no value without IP


Opponents of intellectual property legislation, particularly for developing economies, note that entrepreneurs in third world cannot afford another business expense and counterfeit industries have spillover benefits for the economy as a whole.


The problem with this approach is that it fundamentally distorts the playing field of existing copyright legislation; continuing the cycle of rapid innovation in the first world while developing countries lag behind because of a legal glitch. Instead of hypothesizing on the ethical dilemma of adding another business expense, it is better to adapt to an existing global framework that has proven to facilitate growth. The cost of not having enforceable IP legislation is much higher.


Further, the spillover benefits of counterfeit production are trivial next to the capacity to become economically independent. The permanent liability of counterfeit industries is remaining dependent on the first world for innovation. Without intellectual property protection, there is no room for profitability outside imitation. This is turn reduces the capacity to export, creates a negligible business environment and does little to attract foreign investment.


Innovators in third world countries can maximize their capacity in a world of decreasing operational costs and increasing capital mobility. However, without an internal legal apparatus, the proper enforcement and extension of international TRIP arrangements, brilliant ideas will not have incentives, protection or commercial viability.


IP must be protected worldwide


Although the United States has been the world leader of innovation and intellectual property, it is not entirely immune from the structural flaws that inhibit the third world from growth. By refusing to adhere to the constitution, policy makers can, and have at times, compromized on our strong IP protection. This is why Digital Liberty signed this letter with 70 other organizations asking lawmakers to support the principles of IP.


Without a strong legal foundation that protects the natural right of inventors and innovators to own their ideas, there is no room or mobility for economic growth.