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What is the value of Intellectual Property?

- May 21, 2008 - 3 Comments

It’s no secret that intellectual property is the capital upon which digital age companies build their business. If you look at the Fortune 500, the value of IP for its largest companies ranges between 45% – 75% and also represents the highest growth area in the global economy.For many companies, the value of IP breaks down to protecting their return on investment while continuing to grow and innovate. It’s an acceptable ROI that enables growth and continued funding of continued innovation.With the ongoing evolution of the net -traditional business, education, healthcare, and other types of models are being turned on their heads. Not surprisingly, this evolution has put intellectual property and its protection at the centre of many debates. Be it the pilfering of ideas or the production of counterfeiting goods, it’s the very strength of a company’s brand that makes it vulnerable to IP theft. It’s clear that IP theft is no longer limited in scope and affects geographies throughout the world. The concern is evidenced by actions such as the initiation of negotiations aimed at reaching a multilateral Anti-Counterfeiting Trade Agreement (ACTA) among some of the leading economies of the world.. But what specifically needs to be done? Is additional legislation needed in some areas to better secure IP protection? If rules are implemented, how far should ex-ante or ex-post rules be introduced?In terms of the flow of information are general competition laws a sufficient remedy for complaints about perceived restrictions on content availability? Or do we risk impeding on-going innovation if governments over-regulate? If you believe we’re moving towards a long-tailedflat world, business will invest in places where communities of innovators are evolving, where the talent is, where potential markets are developing, where intellectual property is thriving, and where it’s protected. A lack of IP protection is increasingly becoming a bigger piece of the puzzle that makes it less economically palpable to invest and innovate in specific areas. What business often finds frustrating is how part of the IP debate ends up being focused in part, on corporations vs. consumers. Nothing could be further from the truth. In this day and age, Intellectual Property rights and their protection are just as important as laying claim to commodities, promoting the manufacturing base, creating jobs, or ensuring the safety of citizens. IP is the new capital – for a new economy. Failure to adequately protect IP will stunt innovation and risk undermining what we’ve created… and what will be created. Let’s not fool ourselves. We’re unlikely to ever get any public policy 100% correct. That’s why public policy will always remain a living breathing entity – evolving with the times. But the result of inaction is always inherently more risky.–Recently, I participated on a panel that focused on the issue of Intellectual Property rights in Canada. It featured a diverse mix of views from both the business, academic, and government point of view. A VoD of CPAC’s coverage can be found here: IP Rights in Canada

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  1. 0) Because you're using the ambiguous term IP""(since IP means many contradictory things), it's hard to know what exactly you're saying, however:i) you cannot copyright an idea, you can only copyright specific instantiations of creative works.ii) I'm pretty sure you cannot patent an idea, you can only patent inventions; specifically processes and details that would make an idea work.iii) I don't think you can even trademark an idea; trademarks are labels, markers for your businessiv) electronic circuit designs are definitely not ideas, they are specific codified versions of an idea, not general concepts.and so on. So what part of IP do ideas lie in? What law in the US, Canada or elsewhere protects them? Anyway; ideas are not where the value of IP lies; the value lies in the social relationships involved in the process(the monopoly status that the government provides which may encourage people to create, the lack of disrespect for the rule of law, the cooperation that allows for people to create without worrying that someone else will just take the specific details of their work and replicate them without cost recovery), and the right information being available atthe right time.1) Technology has enabled the economy to grow with or without IP. However, there are metrics available for the IP growth, so that's what you, and others, seem to be paying attention to. However the world outside of the IP system has seen similar, if not more marked growth. There are hundreds of billions if not trillions of dollars of pirated material flying around the internet, and the implementation of free software also replicatesmillions if not billions of man-hours of effort for use by anyone---an incredible change in what productivity is.2) If you look at what ACTA and other copyright law actually do, the details are often more dangerous to innovation than supportive. ACTA for example,would allow for border agents to steal iPods and other equipment if they even suspected copyrighted materials are on them. There is no standards of evidence, no way to get your wrongfully taken iPods back--it's purely an arbitrary 'you don't have the right skin colourso we're taking your property' situation. These anti-private property laws demean the institutions of private property that have allowed the advance in technology to occur, and also lessen respect for the rule of law in general. 3) But let's suppose that ideas could be owned. How can we know which idea is the right one? If the right to consider an idea is one which must be purchased then there is necessarily an extremely great transaction cost for rustling through a great deal many of them in orderto find the one that works. It is the systematic elimination of the lag that is transaction costs that has driven technology's gains---trying to recreate it via legal regulatory mechanisms will not increase anyone's utility; it will only centralize power in inefficient bureaucracies, and drag the economy behind where it could be.As far as the Canadian link you provided, I can't be sure (since it won't play on my platform) but I notice that The Public was not considered as a ""major stakeholders""---well, at least there was no representative there from the general public.And yet the general public is a major stakeholder in Canadian Copyright. You of all people should know this; your company has been one of the major reasons *why* the general public is a stakeholder in this issue since it is no longer the case that only large companies can createand distribute creative works to millions of people at a time--anyone with a desktop PC and an internet connection can do this now, to a great deal thanks to Cisco.Rereading your post, I notice how little anything you have to say has to do with copyright. Take for example this gem:""What business often finds frustrating is how part of the IP debate ends up being focused in part, on corporations vs. consumers. Nothing could be further from the truth. ""Patent law is a sophisticated subject, that mostly has to do with businesses and how they work, from what I can tell. However Copyright law is not. Copyright law directly involves what kinds of things the general public can do, and in today's remix culture, where nearly everyone is committing what would have years ago been considered copyright infringement on a daily basis(Forward an email without the permission of the author? You're infringing copyright. Ad nauseam)The RIAA has sued tens of thousands of people. Regular people. The vast majority of those cases have never made it to court, because the people they sued have been by and large too poor to afford 250,000$+ fines; all they do is cave in, and pay a token extortion bill, and are on their way. People who have never even owned computers have been sued in this way. It doesn't matter; the RIAA uses its copyrights as a weapon to frighten the general public into believing that the only place to get music is from stores on little plastic disks, and maybe the radio. It uses copyright law as a blunt object to club anyone who tries to produce new culture, new ideas, new expressions, new content that could possibly compete with theirs.The RIAA has forced YouTube to censor a video of a small child dancing to a prince video. The parents, who were doing nothing but displaying their beautiful child to the world, were rightly astonished that a copyright holderwould try to censor their harmless video to ""protect"" their property.The RIAA employs SWAT-like teams who do SWAT-like busts on people's homes. They are not law enforcement, nor do they have any legal mandate to act in this way, but when they kick in your door and point guns at your family, you don't have time to be picky. Again, these are some of a variety of examples why Copyright law, at least is very predisposed a users vs. copyright holders view, and more generally average people vs. RIAA, and even more generally, people vs. corporations. It's only when you include copyrights into an ambiguous cloud term ""IP"" that anything other than copyrights that those things start to seem problematic, except for very minor exceptions.When it is not legal to sing happy birthday to a friend without worrying about the copyright police kicking down your door, If it's cheap and easy to send a Cease & Desist letter but costly to defend agaist them, and if the laws encourage and ""protect"" their use, then C&D;letters will be used to silence dissent, to stiffle innovation and competion, and lead to inefficiencies where there oughtn't be( )I know you're going to keep using the term IP, but please be mindful that there is a world outside of IP and the metrics associated with it, a world that every day grows more valuable and bountiful due in part to Cisco's technology. Laws like ACTA would probably be a lot better if they just forgot about copyright on the private scale, and went for commercial pirates and counterfeiters."

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