Intellectual property is already shaping up to be a key battleground in the debate over the Trans-Pacific Partnership. And rightly so – the agreement’s IP sections could have the most far-reaching effect on businesses and consumers in Canada and throughout the world.
In a world where innovation is the pathway to prosperity, IP laws and treaties are absolutely crucial for economic success. If the 19th and early 20th century were the era of labour and production, and the late 20th century (including today) the era of finance, it’s a fair bet that the 21st century will be shaped by the ability to control the creation, dissemination and use of knowledge.
As this newspaper has argued , it’s a bit silly to expect ordinary Canadians to read, much less understand, a 6,000-page agreement written by lawyers for lawyers. We can, however, evaluate the experts’ analyses. To do that, we need to understand what intellectual property is and what it is supposed to do. Fortunately, while IP law is notoriously complex, its underlying principles are relatively straightforward.
Intellectual property is designed to encourage innovation and the dissemination of knowledge by, somewhat paradoxically, restricting access to knowledge. It does so by imposing a price on, or preventing unauthorized people from using, this knowledge, with some built-in exceptions.
Economists consider these restrictions in terms of their marginal benefit to society. Typically, they are justified as necessary to ensure that innovators can receive a return on their creations. Because copying costs are relatively low, the thinking goes, a societally optimal level of innovation requires some degree of knowledge protection to incentivize creation. IP protection always comes with a cost, namely higher prices and use restrictions. It is up to us to determine if the cost is worth the benefits.
The IP elements of the TPP are based on this logic, which is also the logic of the world’s entire market-based IP regime.
Unfortunately, as the Economist magazine has argued , it turns out that intellectual property doesn’t actually spur innovation, which comes from “the clever combination and extension of existing ideas.” A 2009 statistical study found that stronger copyright does not incentivize the creation of new works, while economist Petra Moser has found that, historically, in countries with patent laws, the majority of innovations occur outside the patent system.
Instead, as the Economist notes, patents “are used to lock in incumbents’ advantages.” The same is true for IP generally. The monopoly rights granted to IP owners can give existing firms a veto over future innovation, allowing a firm to restrict the competition it faces, and/or to demand payment from others who want to compete. That’s a great deal for the dominant player, not so much for consumers and potential competitors.
Even assuming that some level of protection is necessary, overprotection imposes clear losses on consumers and future innovators. There is no better example than the TPP’s economically indefensible increase in the term of copyright protection from the life of the author, plus 50 years to life, plus 70.
Nobody plans their life based on what will happen to them 50 years after they’re dead, let alone 70. This is a blatant giveaway to those firms that control enduring intellectual property. (Hi, Mickey Mouse!)
The TPP raises the bar for IP protection in its member countries. Knowledge is needed to innovate. Stronger IP laws tend to benefit those who already control economically valuable IP. Most of these firms tend to be located in Japan and the European Union, and particularly in the United States, whose 2015 National Security Strategy lists among its priorities the “protection of intellectual property.”
The U.S. treatment of IP as a national security issue makes sense. In a globalized world, the dominant IP country would want to ensure that its IP could cross borders freely, not subject to the whim or needs of the locals. In a sense, IP is the new protectionism.
International treaties, once ratified, are incredibly difficult to change. Given the lack of strong evidence that IP even does what it is supposed to do, Canadians should think very carefully about the costs of hitching our wagon to the TPP in this new global economy.