Intellectual property rules 'too rigid'
4 February 1999 [LONDON]
The chief economist at the World Bank has warned that countries that encourage an excessively strong intellectual property rights (IPR) regime are in danger of inhibiting the growth of their knowledge-based industries.
Speaking at a conference in London last week, Joseph Stiglitz, former chairman of US President Bill Clinton's Council of Economic Advisers, said that the knowledge economy needed a sustained investment in basic research, as well as in science education.
"There may be a tendency both to under-appreciate the importance of basic research and to attempt to free ride on the basic research done by others," Stiglitz said. "The results can be disastrous; at the very least a slowing down of the pace of progress."
For example, Stiglitz said that while the United States continued to derive economic benefits from its high levels of investment in basic research through the defence budgets of the Cold War, "the well will begin to dry up" if spending remains at current levels.
The British government, which sponsored the conference, recently pledged to put knowledge development at the heart of its industrial policy. The World Bank, too, is keen to invest more in what is being described as the 'weightless economy'.
Indeed, Stiglitz said that the bank now sees economic development "less like the construction business, and more like education, in the broad and comprehensive sense". He told the conference that firms often took to extremes the idea that without knowledge protection, they had little or no incentive to innovate. And he said that this needed to be stopped.
But, unlike many in the industrialised world, Stiglitz argued that a system of strong IP protection would also hamper the pace of innovation, and that knowledge will lead to greater commercial benefits if it is treated more as a public good than private property. A hawkish approach to intellectual property rights, he predicts, will encourage monopoly practices.
Stiglitz is understood to have wanted these views reflected in the World Bank's latest World Development Report. However, sources at the bank say that Stiglitz was unable to have his way following objections from the United States.
The US government argued that member states of the World Trade Organization (WTO) have already agreed on the need for strong IP systems under the WTO's Trade Related Aspects of Intellectual Property Rights agreement (TRIPs).
Nonetheless, Stiglitz revealed in his talk that when he worked in the White House in Washington, both the Council of Economic Advisers and the Office of Science and Technology Policy were worried about the potentially adverse consequence of strong IPR for innovation. "If practices that [some companies] are engaged in are not against the law, then the issue is, perhaps the law should be changed," he added.
"Suppose a computer program that has a high level of success uses the letter 'q' for quitting the program. Should that 'innovation' be protected by intellectual property?" he asked. "Doing so can impede the development of common languages and the pace of innovation more broadly."
Stiglitz told the meeting that intellectual property was wrongly considered to be similar to ordinary private property rights. "Clearly, a system of government which protects my physical property from theft is necessary...and there is almost universal agreement that governments should strive to have the most effective protection of physical property as possible."
Reasoning by analogy, he added, "some have argued for strong IPR regimes, failing to note the salient differences". For example, he said, "all ideas build on the work of others, drawing upon the common pool of ideas. Indeed, the basic ideas, such as mathematical theorems, which provided the basis for the modern computer, typically are not patentable."
Paul Stoneman, a research professor at Warwick Business School in the UK, who also addressed the conference, says that the impact of strong IP systems on innovation has long been of concern. But he points out that evidence shows that patents fail to prevent legitimate copying in all but the pharmaceutical industries. "Ninety-nine point five per cent of patents are valueless," Stoneman claims.
At the same time, Stoneman points out that patenting still has many advantages over rival systems of knowledge protection, such as keeping an innovation secret. Patenting, by contrast, tries to protect the interests, both of the producers of knowledge, as well as of wider society, even if a proper balance is not always achieved.
EHSAN MASOOD
For the text of Stiglitz's address, 'Public Policy for a Knowledge Economy',
see http://www.worldbank.org/html/extdr/extme/jssp012799a.htm
 |  |  |  |
Nature © Macmillan Publishers Ltd 1999 Registered No. 785998 England.