US and EU trade negotiators met in Arlington, VA today. They heard presentations from stakeholders as part of a negotiating round for the Transatlantic Trade and Investment Partnership. My presentation argued that it is important for any international agreement to allow countries to adopt IP laws that are best suited to their domestic needs. It also pointed out that previous laws strengthening IP protection have not always led to more output, growth or employment.
My prepared comments follow.
Click here for my presentation slides.
- Introduction:
Hi. My name is Mike Palmedo. I’m from American University, where I’m a researcher at the law school, but I am a non-lawyer. I got my Masters in International Economic Relations at AU’s School of International Service, where I studied the practical effects of TRIPS Plus intellectual property provisions.
The title of my talk is “Preserving Policy Space for the Evolution of Intellectual Property Law.” Put simply, there are a lot of processes underway to change IPR at the domestic level, and it would make little sense to bind the hands of domestic policymakers while these processes are ongoing.
But since I am the first speaker in the intellectual property room today, I want to talk about the studies and data that drive intellectual property debates. The often-cited reports don’t really support the drive for TRIPS-plus IP protections, but there are other ways to apply empirics to study the effects of IP on the real economy. Especially from a consumer point of view. And hopefully, this kind of different look at the effects of IP laws can drive the domestic reform processes that are currently underway in a lot of TTIP countries, including the U.S., the UK, Ireland, and others.
- Slide: USPTO and OHIM reports – TM v. CR v. Patents
A lot of attention has been given to reports that identify certain industries as intellectual property intensive, and then tally numbers of jobs, contributions to GDP, and exports attributable to those industries. In the U.S., and I suspect in Europe as well, the figures from these studies or similar ones are repeated constantly by rightholder groups and policymakers alike. The two main ones these days are the Commerce Dept. report in the U.S. and the OHIM report in Europe.
In both cases, most of the industries included in the tallies are trademark industries. Yet the figure are put forward to support the strengthening of patents and copyrights.
- Examples of TM industries
And these include some industries that are not what one thinks of as an IPR-intensive industry. The U.S. report includes grocery and clothing retail, as well as residential home building.
- Slide: Ven Diagram
But let’s focus on copyright component of the U.S. report. The data is used by policymakers to justify increasing the strength of copyright law, but the tallies include firms in industries that may not want such policies. Many of the industries in the “copyright intensive” also rely upon limitations and exceptions to copyright protection.
Consider that the Computer and Communications Industry Association has produced reports that use the same methodology to report the growth, employment, and exports of U.S. industries that rely on fair use and other limitations to copyright. They come up with higher numbers than the reports on the copyright industries, and they basically do this by counting more industries. But what is interesting to me is that they count the a lot of the same industries, and these include big dollar industries like software publishing (5112) and building databases (5415).
Some of the technology firms that would fall into the middle here came out against SOPA. They belong to trade associations that have lobbied against the IPR provisions in the Trans Pacific Partnership. I’m talking about innovative firms like Google and Red Hat. So while it is true that companies like these do need some level of copyright protection to do their work, it is often the case that they’re thriving in the current environment, and changes to copyright that limit flexibilities could actually harm their business.
This illustrates the larger point that getting copyright policy right is not about constantly strengthening protection for right holders. It is about finding the best balance between the rights of creators and the rights of users or consumers.
- Slide: These studies do not demonstrate that ever-higher levels of IPR protection are associated with outcomes any different than TRIPS-level IPR protections.
The most important point is this. There is no clear connection between the data in these reports and the policies they are used to support. These studies do not demonstrate that ever-higher levels of IPR protection are associated with outcomes any different than TRIPS-level IPR protections. They don’t address causality. They do not address the full set of issues related to intellectual property including the consequences longer, stronger monopolies. They don’t ask if higher levels of IPR increase overall social welfare.
So policymakers need to consider other ways to think about the effect that intellectual property policy has on different sectors of the economy, creators and users alike.
- Slide: U.S. issued ISBNs
One way to do this would be to look at the experiences of countries at points in time when there was a change to their IP law. Were there corresponding changes in the output of industries sensitive to IPR? Are more people being hired? Is more R&D being performed? But there is a problem that frustrates this type of research for copyright, and that is a general shortage of data, especially because registration is not required.
One source of data on quantity produced is the number of ISBNs assigned to books in order to track and facilitate sales of new titles and reprints. These include both printed books and ebooks, and there is one format that is shared across all countries. The fact that reprints are included makes it an imperfect metric, but more ISBNs do show greater output by the publishing industry, and they make a better metric than sales because their movements don’t reflect changes in price.
So here we have a graph showing total ISBNs issued in the United States from 1980 to 2012. During that time, we extended the term of copyrights, however, the years before and after this policy change did not see an increase in the rate at which new ISBNs were being issued. The number grew six percent a year before the policy change, and it grew six percent a year after the policy change. It wasn’t until disruptive firms that helped people self-publish books entered the market in the mid-2000s that you see a surge in new books.
Even better would be to go a step further and compare change in one country to stasis in a comparator country or countries, which act as a sort of control.
- Slide: Chile v Latin America ISBNs issued
Here I am going to use Latin American data to make a point because I have not yet found similar country-level data for the EU over a long enough period of time. But this is an example of a way to look the effect that changes to copyright policy have had on output.
A Latin American publishers association releases a biannual report with ISBN data, and the most recent report includes the number of ISBNs issued each year from 2000-2011 in 19 countries. In at least one of the countries, we observe a policy change.
In 2003 Chile implemented many of its copyright obligations under the US-Chile FTA. It increased the terms of protection; expanded protections to foreign rightholders; protected Rights Management Information with civil and criminal sanctions; added a distribution right and ‘making available’ right, and removed a formality regarding protection of photos.
If stronger copyright rules lead to more output from creative industries, one would expect that Chilean authors would produce more books in the years after the change. And they did, as indicated by the graph on the left. However, if we use all of the other countries in Latin America as a control – we see that they experienced an even greater increase in new titles. So in this particular instance, a strengthening of copyright rules beyond what was required by TRIPS failed to incentivize greater production of new works.
- Slide: new drugs
And quickly, if you are a patents-minded person, you can do similar sorts of things. Here we have new drug approvals, and applications for new drug approvals submitted to the FDA. In 1998, the U.S. extended its patent term to 20 years in order to join the WTO, and once again, there is no observable growth in new products. Really the data on applications for new drug approvals tells the story better because of the long periods of time involved in drug development.
- Slide: other studies.
Finally, there are other studies that have looked empirically at the effects of intellectual property [read the slide]
- Slide: Thank you.
Hopefully, adopting a new way of thinking about IPR is useful to policymakers both to frame the IP part of TTIP negotiations, but also in domestic debates about the revisions to intellectual property law.
Thanks, and if you’re interested in this sort of thing, you can read my blogs on infojustice.org. Cheers.
