Intellectual Property Proliferation: Strategic Roots and Strategic Responses
CIGI Papers No. 121, Centre for International Governance Innovation, March 2017
20 Pages Posted: 23 Mar 2017
Date Written: March 21, 2017
Intellectual property (IP) is essential for commercialization in the knowledge-based economy. However, the creation of intellectual property rights (IPRs), which were originally developed for a world of sparse and sporadic invention, has led to potential stumbling blocks for industrialized research and development (R&D) and continuous and massively parallel innovation. This potential has been actualized through the untrammelled proliferation of IPRs in recent decades. This paper argues that this proliferation has strategic roots at the national level, based on the potential to capture global rents through the internationalization of IPRs. This gives rise to a collective action problem for exit strategies, which, in turn, requires strategic solutions. The key protagonists are the United States and China. For the United States, the post-1980 focus on IP development was perceived to be a game-changing economic policy decision, and the enhancement of IPR protection became a central feature of its international commercial policy. China, which made technological progress the cornerstone of its economic modernization policy, has long since passed the point where its national interests lay principally in minimizing payments to foreign technology, and has become the most prolific issuer of patents, with a growing potential to appropriate payments to itself. China’s emergence in this area creates the rivalry conditions that could underpin a mutual retreat from the current regime, which is damaging growth globally but generating large rents for vested interests, including by raising barriers to entry. In a rules-based system, a World Trade Organization (WTO) agreement, championed by the United States and China, modelled conceptually on the Strategic Arms Limitation Treaty (SALT) agreement between the United States and the Soviet Union, would establish disciplines on the creation of IP, provide for a timely retirement of non-performing IP (modelled on mutual tariﬀ elimination under the General Agreement on Tariﬀs and Trade [GATT]) and establish an international IP court for the adjudication of cross-border infringement claims. This would reduce innovation costs, in particular for start-ups, address the “tragedy of the anti-commons”, and contribute to the policy reforms required to address the “stag-deﬂation” to which IP proliferation has been a contributing factor.
Keywords: intellectual property rights, innovation, stag-deflation, SALT
JEL Classification: O31, O33, O34, O38
Suggested Citation: Suggested Citation