Down To Business: Why Our Intellectual Property Is Worth Protecting

When it comes to giving away other people's intellectual property, there's apparently no limit to our altruism. We take the entertainment industry to task for inserting (albeit awkwardly) anti-copying techniques into their wares and trying to shut down sites that traffic illegally in their music and movies. We rip pharmaceutical companies for charging "excessive" prices for drugs they risked billions of dollars to develop. We even bristle when software companies crack down on organizations and individuals who copy and use unlicensed versions of their products.

Granted, the intellectual property field is rife with excesses and gray areas; there's a reason legions of lawyers call it home. But there's a huge difference between patent trolling and gross profiteering on one end of the intellectual property spectrum and protecting hard-spawned creativity and innovation on the other. Even if their business models are getting old, the likes of Universal, Pfizer, and Microsoft aren't to be ridiculed because they go to great lengths to defend their cash cows.

It's estimated that U.S. companies lose as much as $250 billion annually to counterfeit goods, stolen patents, and pirated copyright works. U.S. software companies alone suffered $7.3 billion in losses to piracy in 2006, according to IDC, which estimates in a study released in May that for every two dollars of software purchased legitimately worldwide, one dollar's worth was obtained illegally. Go on all you want about big company greed, but the intellectual property of the software, semiconductor, entertainment, biotechnology, and other industries is the fragile marrow of the U.S. economy. It's worth protecting.

Despite the fact that almost every major country has signed a World Trade Organization agreement to enforce laws that protect intellectual property, more of it is getting ripped off every day globally. Meantime, over the past seven years, the Bush administration has opened only one WTO case protesting a nation's enforcement of intellectual property rights (filed against China last month), according to a recent paper by Edward Gresser of the Progressive Policy Institute. The fear is that U.S. pressure could lead to a trade war, but as a net importer of $800 billion in goods a year, the United States has plenty of leverage without having to resort to costly sanctions.

Still, some commentators argue that companies and countries shouldn't even bother trying to enforce intellectual property rights, as it's a losing proposition. In the digital realm, in particular, it's just too easy to copy and share over the Internet music, movies, novels, desktop software, and other content. Better that we turn a blind eye to piracy and patent infringement, they say, especially in poor countries, in the hope that the much wider distribution of those purloined products will ultimately create bigger commercial markets for the legit products.

Easy for third parties to argue, as their profits and market caps and ability to fund future R&D aren't at risk. Just because it's getting easier for criminals to steal and distribute something doesn't argue for giving them a free pass.

That said, organizations like the Business Software Alliance, which represents the world's leading software vendors, go a tad over the top with their anti-piracy campaigns. The BSA announced last week that it's increasing the bounty it pays to workplace whistle-blowers, to $1 million from $200,000. Concurrent with the announcement, the alliance is launching a national advertising campaign called "Blow the Whistle" that encourages people to rat out colleagues and employers that use unlicensed software.

Such tactics may bring in a few extra bucks--the BSA says it has settled with hundreds of U.S. companies since 2005, reaping nearly $22 million. But the United States has the lowest software piracy rate of all the countries IDC studied. It's more important to target those countries where fraud is rampant. Formal WTO pressure is the best start. It's time to take the fight where it matters most.

Rob Preston,
VP/Editor In Chief
[email protected]

To find out more about Rob Preston, please visit his page.