Global Intellectual Property Center

IP Myths v. Facts

IP Myths v. Facts

Some governments and a number of special interest groups seem committed to undermining the global system of Intellectual Property rights, norms, and laws that drive the innovation and creativity that has served the world well for generations—providing us new technologies and works of art that have saved lives, created jobs, advanced economic growth and development, improved our personal and professional livelihoods, and helped us meet global challenges ranging from famine and disease, to climate change and energy security.

To help advance their aims, these groups have propagated a number of “myths” about IP rights and their role in society. Listed below each “myth,” however, are the “facts.” You decide.

  • Myth 1: Intellectual Property (IP) rights harm the public domain by shrinking it through high prices, artificial barriers to access, and unfair restrictions on speech.
  • Myth 2: Many of the patents issued by the U.S. Patent and Trademark Office (USPTO) actually contain no innovation, effectively allowing the private sector to capture—for profit—ideas that have long been in the public domain.
  • Myth 3: Intellectual Property Rights (IPRs) raise the cost of knowledge so much that they inhibit innovation and creativity.
  • Myth 4: The Digital Millennium Copyright Act (DMCA), which is the federal law governing copyright rights in the United States, impedes innovation because copyright owners wield the law to hinder competition and impede access to works.
  • Myth 5: Intellectual Property rights block developing countries’ access to medicines by making drugs more costly, stifling competition, and preventing cheaper generics from entering the market.
  • Myth 6: The Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement requires all World Trade Organization (WTO) members’ laws to meet minimum international standards for protecting IP rights. The TRIPS Agreement, however, unfairly imposed a range of obligations before many developing countries were in a position to undertake them.

 

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Myth 1: Intellectual Property (IP) rights harm the public domain by shrinking it through high prices, artificial barriers to access, and unfair restrictions on speech.

Fact: IP protections expand the public domain by providing the incentive for artists and inventors to innovate, and then protecting their “creations of the mind” so that they benefit from their hard work and talents. This lifecycle of innovation improves our general welfare by creating jobs (such as publishers, retailers, and support staff), fostering economic growth, and offering products like computers, medicines, or movies that enhance our lives.

Every innovation and work of art expands the public domain. There also increases demand for these products—as well as competition between similar products (e.g. Mac vs. PC)—is what determines the price, not IP rights.

IP rights are in place to ensure inventors and artists receive fair recognition and compensation for their hard work and investment during the term of protection they enjoy. Patents, trademarks and copyrights do this by protecting inventors and artists from theft, whether it is someone selling a fake handbag on the street corner, or another person posting a movie or book online for others to view free of charge. Either way, enforcement of these rights—which some try to paint as “barriers to access” and “restrictions on speech”—ensure the real rights holders receive their just compensation, and are incentivized to keep expanding the public domain through newer works and inventions.

 

Myth 2: Many of the patents issued by the U.S. Patent and Trademark Office (USPTO) actually contain no innovation, effectively allowing the private sector to capture—for profit—ideas that have long been in the public domain.

Fact: The U.S. Congress and Federal Courts have providedthe USPTO an effective legal framework for issuing patents to inventors provided they are “useful,” “novel,” and “non-obvious,” and therefore not in the public domain. In a 2007 decision (KSR International v. Teleflex, Inc.) the Supreme Court heightened the standard for “non-obviousness” to help ensure that only those inventions that are truly inventive are patented. A reexamination procedure also exists for others to challenge patents whose validity is questionable.

While there will likely always exist a small minority of cases that somehow make it through the system—a challenge that the GIPC is working to address—the current framework that has proven successful for decades is essential to continue fostering and rewarding the innovation that translates into economic growth, job creation, and new inventions to help us in our professional and personal lives.

 

Myth 3: Intellectual Property Rights (IPRs) raise the cost of knowledge so much that they inhibit innovation and creativity.

Fact: Strong IP rights actually enhance innovation and creativity by protecting the rights of inventors and artists, and guaranteeing them just compensation for a limited period of time. This, in turn, provides them both the means and incentive to create newer works, products and services, thus continuing to expand the depth and breadth of knowledge around the world.

Moreover, because the filing of patents requires the disclosure of information that would enable others to replicate the inventor’s discovery (and others be kept secret), others can use and build upon this shared knowledge to create newer and/or better products.

Innovation responds quickly to incentives and protections guaranteed in a modern system of IP rights. Indeed, multiple studies over a period of several years have demonstrated that countries with strong IP frameworks and protections typically experience the greatest innovation and creativity, as determined through patent and copyright filings. Developing countries with the best legal frameworks for IP rights also tend to see the greatest share of technology transfer, joint R&D work, and other forms of knowledge sharing and capacity building that helps advance their own development and economic growth.

Without strong IP rights, and the disclosure requirements on inventors they also impose, knowledge would be treated as “trade secrets” that would be unavailable to the public. Inventors and creators would also be reluctant to share their works broadly. All of this would undermine the time-proven lifecycle of innovation that has served the world well for generations, and slow the proliferation of knowledge globally.

 

Myth 4: The Digital Millennium Copyright Act (DMCA), which is the federal law governing copyright rights in the United States, impedes innovation because copyright owners wield the law to hinder competition and impede access to works.

Fact: Since being passed into law with overwhelming bipartisan support in 1998, the DMCA has allowed consumers to reap the benefits of the digital age. It has effectively protected the rights of copyright holders while allowing the reasonable “fair use” of such works in a way that has enabled the Internet to thrive and knowledge to spread. Indeed, without the DMCA, popular websites such as Google and YouTube may not have succeeded.

For example, the DMCA includes a web-provision that provides ISPs, hosting websites, interactive web browsers and their customers the ability to legally spread ideas across the Internet.  The law also contains a “notice and takedown” provision that allows the Internet to flourish by granting websites like YouTube a legal “safe harbor” from copyright infringement: if these sites quickly remove material that are alleged to violate the rights of a copyright owner through a “takedown notice” to the infringer, then the sites are legally safe in the event it is proven that copyright infringement did occur. This clause has helped reduce the possibility of frivolous lawsuits that could otherwise stifle innovation and impede access.

The circumvention clause in the DMCA is another feature of the law that provides copyright protection for creative works while permitting the legal “circumvention” of access and copy controls for limited purposes. There are seven exemptions under the DMCA that aim to expand public access. Under one exemption, for example, libraries, archives, and educational institutions are given permission to lend copyrighted materials and allow public use.

These are just a couple examples of how the DMCA successfully accomplishes two important objectives at the same time—protecting the rights of copyright holders from piracy and theft while ensuring legitimate public access and fair use of these materials—in a way that promotes innovation, access, and the spread of knowledge.

 

Myth 5: Intellectual Property rights block developing countries’ access to medicines by making drugs more costly, stifling competition, and preventing cheaper generics from entering the market.

Fact: Study after study has shown that IP rights actually facilitate the development and deployment of new technologies and medicines to the developing world. Further, these reports show that, among other things, the real barriers to technology access include weak legal frameworks to protect the rights of patent holders, high tariff and non-tariff barriers, limited infrastructure, and insufficient human capital in these countries to absorb the technology.

Government duties, taxes, and tariffs in many developing countries also raise the cost of medicines many times over, making vital drugs unaffordable to many. These government-imposed costs are a regressive tax on the world’s poor and should be removed to promote improved access to medicines. While pharmaceutical companies have increased access by offering medicines at or below cost—and even free—to the world’s poor, and NGOs and governments in the developed world have established global funds to help cover the costs of these medicines, developing countries need to do their share by also improving their legal frameworks for IP protection and taking other steps that will improve their ability to effectively absorb, deploy, and utilize these technologies.

IP rights play a vital role in stimulating innovation in public health by guaranteeing private-sector researchers and investors a sufficient return on their investment if they are successful. History has shown this market-driven process to be very successful. For example, nearly all of the 300 products on the World Health Organization’s Essential Drug List came from the R&D-based pharmaceutical industry. Without strong IP rights, a good share of this R&D might never have been conducted in the first place. Generic drugs can help lower costs for consumers, but they must be allowed in a way that does not undermine the incentives or remove the means by which companies conduct R&D into new and better medicines. All of this must be done, as well, in a way that safeguards drug quality for patients.

Lastly, without strong and enforced IP rights, the counterfeiting of medicines can run rampant, resulting in the proliferation of fake or poor quality drugs that either fail to perform as a patient requires, or include toxic materials that can harm (and kill) someone who is ill. In either case, patients and consumers suffer when IP rights are not protected and enforced.

 

Myth 6: The Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement requires all World Trade Organization (WTO) members’ laws to meet minimum international standards for protecting IP rights. The TRIPS Agreement, however, unfairly imposed a range of obligations before many developing countries were in a position to undertake them.

Fact: To begin, the WTO is not imposed on countries, and no government is forced to sign its agreements—TRIPS or otherwise. Rather, countries choose to belong to the WTO and participate in its various rules, requirements and agreements because they view membership as overwhelmingly in their best economic self interest. Further, each and every one of the WTO’s rules and agreements is negotiated, agreed to by consensus, and ratified by Member governments.

Additionally, under the premise that all nations may not yet meet the IP standards of developed countries, developing countries freely negotiated (and received) significant “transition periods” to implement their TRIPS obligations. They were also granted substantial benefits under “special and differential treatment” rules in several WTO agreements, and were permitted numerous flexibilities, limitations and exceptions to IP rights that are not necessarily available to developed countries.

Recognizing the value of IP rights and protections to advancing global economic growth and development, membership in the WTO requires countries to implement and abide by certain minimum standards for the protection of copyright, patent, trademark and other IP rights. As such, the TRIPS Agreement is one of the fundamental pillars of a country’s ascension to the WTO, and an integral part of today’s free, open, and rules-based multilateral trading system.

In today’s global marketplace, businesses of all sizes rely on foreign markets to grow. And most countries welcome these new products and services as a way to advance their own development and welfare.  As businesses look toward emerging economies for new markets, a country’s membership in the WTO is a tell-tale sign of its commitment to these rules of the game. More often than not, firms will avoid countries with little or no protection of IP rights and shift exports to more IP-friendly markets.

The bottom line is that appropriately implemented trade policies and IP protections provide emerging economies with the opportunity to advance their own development, increase their internal capacity to become more innovative, and take constructive steps toward poverty reduction and economic opportunity.  Developing countries negotiated a good and fair deal under the WTO that accommodated their special circumstances while still preserving the fundamental principles underlying the tenets of free trade and IP rights that have served the international community well for generations.