August 3, 2015

How Protecting IP Can Fuel Global Innovation

This piece was originally posted on GE’s IdeasLab.

Albert Einstein once advised, “Life is like riding a bicycle. To keep your balance you must keep moving.” Einstein recognized that innovation is not a destination, but a journey. When you stop moving, the journey ends.

In the case of scientific and technological innovation, we are all embarked together on a multi-generational journey. The imagination, science and new ideas of our predecessors build to create greater success today and tomorrow. Just as Einstein built on the work of Aristotle and Newton, current generations of new thinkers and disruptors benefit from the increase in knowledge that Einstein and his peers contributed in more recent decades.

Einstein and all innovators also recognize that risks, and even failure, are inevitable by-products of the innovative journey. Accordingly, appropriate rewards are necessary to provide incentive for risk-taking. And this is where our road takes us into uncharted territory.

Today, the costs of entry for innovation in cutting-edge industries such as bio-tech can be enormous, and the stakes can literally mean life and death when you consider the innovative products that create cures for deadly diseases long considered untreatable. Success requires an appropriate balance of research — where trial and error produce new ideas — and development of products for use by consumers and industries. Investment is needed to bring new products, inventions, medicines and breakthroughs from the research lab or garage to the marketplace.

In order to attract investment for innovative pursuits, talent development and research and development, businesses also require legal certainty — and in the innovation sphere, that means having the right intellectual property (IP) structures. IP adds value to the innovation process, enabling human advancement on the major challenges of our day — climate change, hunger, poverty. There is also an opportunity cost for economies that do not provide a strong environment for IP, and thus limit the potential of their domestic economy.

Over the course of the past three years, the U.S. Chamber’s Global Intellectual Property Center (GIPC) has empirically demonstrated the connection between IP protection and innovative industries internationally. The most recent edition, titled UP: Unlimited Potential, provides the data for countries who wish to understand the factors business evaluate as they are seeking to invest.

Across the 30 economies surveyed, the correlation between strong IP environments and growth indicators were very high. High-tech sectors, creative content and strong brands all thrive in countries with higher scores on the GIPC IP Index. Conversely, things such as access to digital technologies and life-science innovation are limited where the IP scores were lower.

This is a critical time for global innovation. Thomson Reuters recently released a study claiming a “slowdown” in global innovation, as measured by the number of patents issued each year. While the number of patents filed in the U.S. has grown, there has been a significant decline in Japan. Whether this is a result of the global economic slowdown or a lack of trust in IP systems that create few incentives for filing patents, it should alert industry and policy makers alike of the tenuous balance required to maintain growth.

Companies — innovative ones, successful ones — want to compete. They have drive and ambition. And it is these companies, large and small, that will boost economies. GE’s Jeff Immelt made this clear in his impassioned speech to promote trade at The Economic Club in Washington, D.C. this summer when he said, “Nothing would put more life into this slow-growing economy than a firm, unequivocal commitment to trading, competing and winning around the world.”

As we move along this journey of innovation, the current effort to bring together economies representing 40 percent of global GDP in the Trans-Pacific Partnership (TPP) will create a structure for trade for these countries and beyond. This may serve as a vehicle for rapid improvement and growth. The U.S. and its negotiating partners have within their reach the ability to keep the collective economies of these nations moving with a trade agreement which will set standards for the next generation.


David Hirschmann is President and CEO of the U.S. Chamber of Commerce’s Global Intellectual Property Center.


Photo Credit: Luis Llerena

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