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The Importance of IP

The Importance of IP

Answers are not always clear-cut when it comes to different policy objectives but any liberal pro-trade agenda must include strong IP rights.

Intellectual property rights, which are very important to the economy, give to the holder property on his creation. There are different kinds of IP rights. First, we have copyright and copyright-related ones which are usually creative like the rights authors have over their books and artistic works. They are time-bound to a minimum of 50 years after the death of the creator. There is a difference between the author’s moral rights and economic rights. The moral right means that the author has the right to be credited when his or her work is presented or used. The economic right is the author’s exclusive right to dispose of the work by presenting or making it available to the public. Secondly, there are IP rights of industrial property that are not time-bound – this could be the protection of distinctive signs such as trademarks and geographical indications, which aim to stimulate fair competition and protect consumers. Other types of industrial property that are protected to stimulate inventions, design, and the creation of technology are patents, industrial design, and trade secrets.
The purpose of industrial property is to provide protection for the results of investments in the development of new technology. Giving the incentive and means to finance research and development successful IP rules should also make the transfer of technology in the form of foreign direct investment, joint ventures, and licensing easier. The protection is usually given for a specific time period, typically 20 years (in the case of patents).

Why are IP rights so important

Intellectual property rights create an economic value. IP and patent rights are preconditions for innovation which is necessary for successful companies that provide prosperity in our societies. Innovation and risk-taking should always pay off otherwise no one would dare to do it. It is also important in order to build an entrepreneurial culture where inventors are rewarded for their ideas. Therefore, I believe in strong copyright protections. Ideas and creations should not automatically become common property. We should also strengthen patent and trademark protections. Meanwhile, protection of geographical indications takes up a disproportionately big part of the EU’s current efforts to protect IP rights. Naturally, there needs to be a balance so that innovation and risk-taking are rewarded. But there can be a healthy competition that makes products even better and cheaper for consumers. During the COVID crisis, we have heard voices in the European Parliament and around the world that want to weaken the World Trade Organization’s IP rights of certain important products such as vaccines. This is wrong because patents are the very reason that companies invest time and money into developing vaccines. We need pharmaceutical companies to want to develop them. Pharmaceuticals IP rights are designed to encourage research and innovation, to incentivize pharmaceutical companies to come up with new life-saving medicines as their patents will be insured for a certain period. This period should be long enough to ensure the investment is worth it, meanwhile allowing the patent to be lifted in due time for other companies to make copies of the medicine which will result in competition, higher quality, and lower prices for patients. We need to make sure that vaccines that are developed can be manufactured and distributed in large quantities all over the world. Companies are already cooperating with each other on a massive scale to overcome technical and engineerial challenges to scale up the manufacturing of cutting-edge vaccines. Unfortunately, there is a false narrative emerging that IP is a barrier to such collaboration and that weakening IP rights would lead to a quick increase in vaccine supply.

Conclusion

Instead of questioning IP rights countries and manufacturers should be working together to strengthen healthcare systems, streamline regulatory approvals, and address supply chain bottlenecks in order to speed vaccine distribution globally.
Losing IP rights in the EU now would erode them forever. Protecting IP rights is necessary to develop medicines not only for COVID but for the future as well. The EU should be proud of its strong competition rules. They have served us well thus far. IP rights are a precondition for international trades. Among other things, it can help to build trust and fight counterfeiting. The erosion of intellectual IP rights could therefore give reasons for countries to close up and act protectionist.
Incorporating IP into international trade has enabled us to exchange consumer goods on a global scale, lift millions of people out of poverty, and facilitate innovation across the globe. Ensuring that this trend continues in the post-COVID era is a key issue. Free diverse trade needs to go hand in hand with strong IP and patent rights. They are equally important for all the parts of the world and everyone profits. IP rights are also paramount for us to bounce back and build a more competitive Europe for the future. For IP rights there is a balance to be stuck. Answers are not always clear-cut when it comes to different policy objectives but any liberal pro-trade agenda must include strong IP rights.

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The views expressed on austriancenter.com are not necessarily those of the Austrian Economics Center.

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