In ownership there is power, and nowhere is ownership more powerful today than in the world of high-tech intellectual property.
How fundamental are intellectual property rights, i.e. the rights accruing to an inventor or author or company of exclusive ownership of their own work or invention as enshrined in patent and copyright laws?
For one thing, they are the only “right” specifically mentioned in the body of the U.S. Constitution. Article 1, Section 8, Clause 8 states: “To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive right in their respective Writings and Discoveries.”
For another, no less an authority than Abraham Lincoln counted patent rights among the six great breakthroughs of civilization, along with the advent of language and the inventions of writing and printing, and the art of empirical discovery itself.
Why? Because according to Lincoln it “secured to the inventor, for a limited time, the exclusive use of his invention; and thereby added the fuel of invention to the fire of genius, in the discovery of new and useful things”—from the telegraph and light bulb to microchips and the software underlying today’s AI revolution, and the hardware that will facilitate the quantum computing revolution of tomorrow.
Since the first patent was granted in 1790, there have been more than six million patents issued in America, and we’ve been the worldwide leaders in patent rights until today. They’ve been the foundation of US economic growth and, together with copyright law, of American intellectual freedom. One could argue that intellectual property rights are the true foundation of American exceptionalism.
Today, of course, the landscape of intellectual property rights have changed dramatically. Patent law is now a globalized landscape, and organizations like the WTO and the World Intellectual Property Organization (WIPO) now oversee what has become a race to dominate the high-tech future—-not from laboratories or computer screens but from law offices.
The Hudson Institute’s Quantum Alliance Initiative, jointly with the Federalist Society, sponsored a recent conference on IPR and quantum technology. The expert panelists included Chris Duan of R Street Institute; Stephen Ezell of the Information Technology and Innovation Foundation; Martin LaForest of ISARA Corporation and senior advisor to the Institute of Quantum Computing at the University of Waterloo, Ontario; and Chris Monroe of the University of Maryland and Chief Scientist at IonQ, where the “fire of genius” is being focused on building an ion-trap quantum computer.
The panelists examined how IPR fosters innovation in high-tech including for the coming quantum computer revolution, and the implications if strong IPR protections lose out to a “might makes right” mentality regarding scientific and technological invention—the mentality that has emerged from America’s leading antagonist in the race for high-tech dominance, namely China.
Strong IPR protections, for example, not only incentivize inventors and IP stakeholders, they facilitate technology transfer through licensing and Joint Development Agreements that allow for the diffusion of knowledge on an orderly basis, a diffusion process which is literally worldwide. A recent (2015) WIPO study has documented how IPR have enabled not one but two major technological revolutions, in artificial intelligence and robotics.
Those protections also generate a revenue stream of royalties through which companies can fund the next generation of innovation. Even further, patents play a crucial role in establishing standards everyone in a given industry can work with, for example in microchips, telecommunications, and pharmaceuticals, that can spawn new innovations and products the original patent-holders never imagined.
But patents and IPR can also play another, less constructive role. They can be a way for a firm or country to block innovation by others by bottling up knowledge in order to intimidate other players through the threat of future litigation or worse.
This is, for example, what China is doing now in the international IP arena. For years China has been a regular plunderer of American inventions and discoveries through cyber theft and other illicit means; after a seven-month investigation into China’s intellectual property theft, the United States Trade Representative concluded that “Chinese theft of American IP currently costs between $225 billion and $600 billion annually.” A 2017 report by the Commission on the Theft of American Intellectual Property listed China as “the world’s principal IP infringer.” Meanwhile, if an American company wants to partner in certain areas with a Chinese firm, new Chinese laws force it to share its IP such as trade secrets or industrial designs. The WTO has explicitly disavowed this kind of quid pro quo, but analysts say such negotiations are usually conducted in secret.
A paper by the St. Louis Federal Reserve in 2015 estimated that fully one-half of the technology possessed by Chinese companies came from foreign firms, either through outright theft or through extortionate IP-sharing agreements.
Fortunately, Section 301 of the Trade Act of 1974 gives the Trade Representative broad authority to take measures against a foreign country’s unfair trade practices, including China’s. Right now the Trump administration is challenging China for alleged violations of IP rights and practices of forced technology-transfers; those 301 investigations have the potential of curtailing China’s predatory IP regime.
What America needs to do now, is to take back leadership in the IP arena and restore the high standard that historically benefited everyone, including China, and that will truly fuel what Lincoln called “the fire of genius” for the foreseeable future.