Last week I got into a very heated dinner-party debate with an artist, an academic and a publisher about the economic value of copyright protection in particular, and intellectual property rights in general.
It started with a discussion about file-sharing and illegal downloads, and led to an argument about patenting genomes. I can’t attribute directly, but the gist of the argument was as follows:
1 Copyright and patents do not encourage innovation – they stifle it
2 Intellectual property rights represent a modern phenomenon – ancient societies managed to exist without them
3 Everything on the Internet should be free – and not subject to copyright protection
Let’s agree that formal intellectual property laws are a relatively recent invention – the modern concept of patents emerged in 15th century Europe, and the first British copyright law was passed in 1710. These laws then grew in importance as technology introduced the printing press and the industrial revolution.
I would argue, however that all civilisations have placed a premium on knowledge, creativity and invention. Regardless of whether this knowledge is based on folklore, scientific experiment, geographical discovery or geological exploration – specific rights, actual economic benefits and certain legal protections have been afforded to those who establish ownership or control of these assets. Examples would include the right to copy ancient manuscripts held in monastic libraries; the monopolies and protection granted to members of craft guilds in plying their skills; the trading rights granted to merchants; and restricting the practice of certain tribal traditions to selected community elders.
Most of these knowledge-based activities involve a high degree of effort, ingenuity and risk-taking – so in return, it was acknowledged there needed to be financial and other rewards to act as incentives. In the case of science and technology, these incentives are often deemed essential to offset the huge capital costs of developing new products and processes. In the case of copyright, the rewards of author royalties and content licensing fees are desirable to encourage people to come up with new ideas and new concepts – even if the purpose is simply to amuse and entertain us.
Of course, the economic rewards need not simply be derived from patents or copyright – tax-breaks for R&D or public grants to fund academic research are some examples of alternative financial incentives for both inventors and people of ideas.
As for the concept that “everything on the Internet should be free”, I am reminded of what I once told a client, who could not understand why access to the on-line version of a printed reference work was costing him more than the “physical” cost of adding a new user log-in and password to our content publishing platform: “OK”, I replied, “you can have all the content for free, but we’re not going to index it, or structure it with headings and sub-headings; we won’t tag it, insert cross–references, or add hypertext links; we won’t even edit it; and finally, we won’t update it every time there is new material.” He soon got the point.
The real point about IP, is that it needs to be used to be of any value, and usually it is in the manner of using of it that the value really resides, the “Intellectual Capital” that evolves from the IP.
IC is not tradeable, it resides between peoples ears, which is the huge change that has occurred in the world with the advent of the net. No longer is a patent of much value, as they can be easily copied, the IC now has the value.
Protection of IP is increasingly expensive, and usually associated with regulatory regimes (as in pharmaceutical applications) and represents the domain of large corporations only. Increasingly, the value of IC will be recognised, and managed, with the relative value of IP being eroded.
Interesting distinction between “Intellectual Property” (the asset?), and “Intellectual Capital” (the know-how?). First, I think that IC is tradable: most employees who design or create something in the course of their employment have to assign all rights in that invention to their employer; this is on the basis that they are paid a wage or salary to perform their work duties, and the employer is providing the means to do this. Second, I agree that some forms of IP registration and enforcement are only available to large corporations or those with deep pockets; but I also believe that individuals and small businesses can take practical steps to establish and commercialise their own IP assets, and to ensure that they receive the benefits of their efforts – maybe this is what you are calling IC? Finally, when it comes to placing a value on IP, the market will usually decide what that will be.
My view of IC is wider than the one you articulated, much more than the stuff that is created that, as you point out, is usually invested in the one paying the bills.
However, the process of developing an innovative design is one of trial and error, and the learning that takes place during that process is the source of IC, and is not tradeable, unless you see the employee as the tradeable asset, a perspective I encourage.
Increasingly what you know is more important than the actual physical assets, and what you know remains between the ears, irrespective of the location of the ears.
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