PHELPS: Slamming the door on idea thieves

IP protection plan can save American jobs

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At the current dizzying pace of technological progress and scientific discovery, the nation that fosters a strong knowledge-driven economy will lead the world in economic expansion. There is no doubt that technological innovation is a central driver of economic growth, as it directly supports more than 18 million jobs across the U.S. economy and accounts for approximately 60 percent of our exports. Given that most estimates place intangible assets at about 70 percent of the value of U.S. corporations, the stakes are huge. In short, intellectual property (IP) - our ideas - is one of America’s most precious resources, and it is time that we protect it as such. It is the focus of the nation’s first intellectual-property enforcement strategy, to be released this month by the White House’s U.S. Intellectual Property Enforcement Coordinator.

The innovation race is becoming more and more competitive. Just as the Soviet Union challenged America’s lead with the Sputnik launch of 1957, China and other Asian nations are rapidly closing the gap in innovation. Though today there is no dramatic Sputnik “wake-up moment” to jolt the government into action, the current trend should give us pause. China is aggressively growing its research-and-development investment, capturing the third spot behind the United States and Japan, and soon it will overtake Japan.

While the ideas that start businesses and entire industries have to come from individuals, it is clear that innovation and creativity can only thrive in an environment that incentivizes and protects ideas. It’s no surprise, then, that enforcement practices should be among the first places to look to evaluate a nation’s competitive potential.

The true value of intellectual property is determined by how well it’s protected. Otherwise, what incentive is there to invent? It’s hard to imagine the HP garage being able to revolutionize electronics if the ideas born in it could be taken away at will; indeed, some of the most successful industries in America - Silicon Valley, Hollywood, biotech - started small, with a few ideas being their only asset. By protecting those assets for companies of all sizes, from multinational corporations to young start-ups, we support the future of the American economy. Leatherman Tool Group of Portland, Ore., is one example of a company that was founded and built around the concept of IP protection: It all started when the company’s founder dreamed up a new pocket multitool and opened doors to sell it in 1983. Today, the company holds 155 U.S. patents and employs almost 400 people. Without enforcing its intellectual property, it would hardly be able to sustain its business and work force, let alone enjoy popularity in more than 85 countries around the world.

Our nation has always been about big ideas, and workers across America depend on them to support their families. Research has shown that IP-intensive industries create jobs at all skill levels, on average paying their workers about 60 percent more than non-IP-intensive industries. Examples of American innovation and creativity are all around us - from air bags to medical treatments to touch-screen phones to software and movies - and the next generation of jobs will depend on how effective we are in ensuring that the intellectual property behind them is given the respect it deserves.

Unfortunately, IP theft remains a growing concern despite worldwide enforcement efforts, and the problem is exacerbated with the growth of Internet speeds and access. The Organization for Economic Co-operation and Development (OECD) estimated that the global impact of counterfeiting and piracy could be as high as $250 billion, and U.S. Trade Representative Ron Kirk recently said the failure of nations worldwide to protect intellectual property rights is a serious threat to American exports overseas and “a job killer for American workers here at home.”

As the pace of innovation accelerates and the world economy becomes more competitive than ever before, the value of intellectual property becomes an even more critical part of a nation’s economy. If America is to continue leading the world in innovation, it’s imperative that the federal government make intellectual property protection and enforcement a top priority. The first-ever national intellectual-property enforcement strategy, to be presented soon to Congress, is a significant first step, and Congress should give it thoughtful consideration. Anyone who’s concerned about maintaining an environment of innovation and creating high-paying jobs for the future should pay close heed.

Marshall Phelps is a former corporate vice president for intellectual-property policy and licensing at IBM and Microsoft. He co-authored “Burning the Ships: Intellectual Property and the Transformation of Microsoft” (Wiley, 2009).

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