December 1, 2010

Are Intellectual Property Laws Harmful?

Are Intellectual Property Laws Harmful?

Intellectual property laws have long been the backbone of innovation. Intellectual properties are the so-called ‘creations of the mind;’ that is, inventions, artistic works, trademarks, copyrights etc. In essence, then, intellectual property rights laws serve to grant the owner or creator of the invention/idea/patent etc. exclusive rights for using and benefiting from such intangible goods. But are these laws right? Let us take a look from an economics standpoint.

On one hand, it can be argued that intellectual property laws are a necessity in promoting innovation and creation in the first place. Without intellectual property laws to protect his patents, copyrights and trademarks, a creator could potentially lose his ideas to others who find them appealing. What motivation – save for purely altruistic motive or creative passion - would a designer have to invest his time, his brainpower, and potentially millions if not billions of dollars into something that he may ultimately reap no reward from? Assuming the invention is any good, there would be massive demand for an invention at 0 cost. In this case, though, it would stand to reason that the producer would be unmotivated to produce if he won’t gain any benefit, and ultimately, the good would go unproduced. This extreme case of excess demand thwarts the idea of abolishing intellectual property laws, and the notion surely is that of a socialist mindset that everyone must share equally.

However, not everyone buys this logic. The other side of the argument cries that intellectual property laws dissuade competition, reduce maximum innovation, and lead to monopolies. This is the position the article’s author seems to take. He appeals that, especially in biotechnology and medication industries, that vital information is being purposefully restricted. It is not entering the marketplace at all, so not only can nobody compete, those who could benefit from the goods cannot and people are dying as a result. Furthermore, as information is often hoarded rather than allowed to enter the marketplace, free market competition is not allowed to thrive. In the instances of software rights and other goods being shared (eg. open source software), the industries boon on the free ability of different producers to share ideas and create better products. This not only benefits the consumer, but the producers are selling more, and it stands as a triumph of free market capitalism and is hardly a ‘socialistic mindset.’ Lastly, from intellectual property laws arise monopolies. The government empowering the bearers of intellectual property with unlimited control of their goods – no matter how much or how little of it is used – allows certain businesses to conquer entire industries (eg. Microsoft). Good ideas will flourish whether or not the government is sticking its nose in the business, and everyone would be better off if intellectual property laws were simply abolished.

This issue is certainly a complex one with strong points for both sides. Would abolishing intellectual property rights be a boost to a free market system and be better for everyone as the author and other proponents of this idea suggest? Or is protecting the intellectual property of innovators the only way to encourage production? What do you think?

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