Intellectual Property and Theft- A Wild West
What happens if we misuse a system which wasn’t designed for the present.
With India and the United States signing a knowledge-sharing agreement on Intellectual Property Rights (IPR) just ahead of US President Donald Trump’s visit, it pushes into the forefront the entire subject of IP and how certain countries like China have been bending their IP laws to position themselves ahead in today’s increasingly online lifestyle.
This problem is a lot bigger than China and India, and the consequences are far bigger than what has been anticipated.
So, First Questions First, What is Intellectual Property?
Intellectual Property or IP is a category of property that deals with the intangible creations of the human intellect, in other words, anything which is original and is produced by any individual or company can be considered as Intellectual Property. Lyrics to a song, trademarks, patents, inventions are all Intellectual Property.
There are various types of Intellectual Property, with certain countries recognizing more than others. However, the main forms of Intellectual Property which are recognized by almost all countries on the planet are patents, copyrights, trade secrets, and trademarks.
- Patents: Patents allow inventors of a product up to 20 years, to have a monopoly in the sale of a certain type of product. This is done mainly to recoup some of the Research and Development costs and to incentivize companies and individuals to innovate. Prescription drugs are a good example of this- once the patent granted on a certain drug expires, competitors can flood the market with similar products, having similar ingredients.
- Trademarks: Logos, slogans, or brand names of a company or an individual are all trademarks. Trademarks are only issued when a company or individual sells something. Trademarks also need to be renewed from time. A good example of a trademark is the Nike Swoosh or the Google logo.
- Copyright: Copyrights protect works of art. Copyrights are used to protect original works by authors, lyrics of a song, or a movie. Copyrights ensure that someone cannot just copy the work of others without the permission of the individual or company who created the work.
- Trade Secrets: Trade Secrets are not officially protected by any government but the organizations themselves take proper measures to protect these. A good example of a trade secret is the secret recipe for Coca-Cola which the brand claims are the “World’s Most Guarded Secret”.
Patent Trolls & The Race for Patents and Intellectual Property
As pointed by John Oliver in his HBO show “Last Week Tonight”, there happen to be certain companies like Pragmatus, whose entire business model is based on extorting companies to pay for loosely defined patents that were issued to them.
These businesses are also called Patent Trolls and they buy patents and sue other companies or individuals using any of those technologies. In one case, even using a photocopier was enough grounds to sue a disability hospital. According to a study, almost one-third of patent lawsuits in the United States are from such patent trolls.
The start of the digital age caused a huge amount of Patent filings for software. The patent office is supposed to certify patents that are useful and non-obvious. However, software, unlike hardware, is much difficult to specify. This made it much easier to get broad and vague patents, which in turn, enabled certain companies and people to claim ownership of something which they didn’t even think of at that time.
And with the huge surge in patent applications, companies are scrambling left and right to file patents to everything they create.
Google’s acquisition of Motorola showed how essential patents are becoming to an organization. By acquiring Motorola for a whopping $12.5 billion, Google got the huge number of patents issued to Motorola over the years. Google sold off Motorola for $3 billion, $9 billion less than what it paid for it. However, it retained the patents, signifying the true cost of patents.
Intellectual Property also helps a company fend off imitators. It is estimated that IP intensive industries contribute a third to the entire GDP of the United States.
Intellectual Property in China
China is an autocracy, signifying it places huge checks to keep control of everything that’s happening on its soil. From blocking Facebook and Google to having huge trillion-dollar companies like Apple and Microsoft at their fingertips, China leverages its huge population to gain an unfair advantage in every field possible.
The Chinese market is huge, and with declining sales in developed parts of the world like Europe and the United States, companies turn to China to increase their reach.
However, the Chinese, unlike other countries like India have remained hostile to Western companies.
The Chinese government forces companies to share their strategies with the government for a company to have a business in China. The playbook for the growth of a Chinese company can be summed up in the following four steps:
- The Chinese government allows a certain company, say, for example, Uber to enter China and conduct business.
- Forced Technology Transfer: Uber is forced to share its trade secrets and other proprietary information with the government or fear getting kicked out of the country and thereby lose a potential billion customers.
- A competing start-up, say, Didi Chuksing, enters the market, and with total help of the Chinese government can gobble up market share aggressively.
- The western company, Uber, is subjugated to endless bullying by the Chinese government forcing it to leave the market.
This results in a huge transfer of Intellectual Property and this is exactly what happened to large players like Google, Facebook, and Uber. The Chinese have created their indigenous companies which work great and can substitute the foreign players completely. These companies also work closely with the Chinese government and can share data on its citizens, censor results and can do whatever the government asks it to do. It becomes a tool of the government which is an inherently bad direction for technology to be heading.
The Utmost Disregard of Western Intellectual Property by the Chinese
China is one of the few countries which has time and again, shown its total disregard for the Intellectual Property Rights of companies.
This was also one of the main issues for the recent trade war between the United States and China which lasted months and led to damages totaling billions.
From the issuance of the “iPhone” trademark to a bag manufacturer and not to Apple to the hundreds of counterfeit goods which Chinese factories create, it’s hard to downplay the total disregard of the Chinese for Intellectual Property.
Hundreds of Thousands of counterfeit shoes, mobiles are flooding the markets of countries like India and the United States. All of these have one thing in common- “Made in China”. This easily displays how lax Chinese laws and authorities are on the topic of preservation of IP.
The IP Commission found out that IP theft from China and other countries cost the US economy $225 billion in counterfeit goods and $600 billion in trade secrets every single year.
The Chinese treat Intellectual Property as something which is disposable and makes it seem like it's okay to counterfeit goods, cheat others of something they own.
Intellectual Property Theft is a Lot More than Only China
Intellectual Property Theft has in effect been prevalent right from the time man started inventing. However, with the advent of laws to protect the inventors, it got tough to get away with IP theft.
Simple things, like, photocopying a book is copyright infringement. This has been going on since the year when the photocopier was invented. However, little to no prosecution took place for this type of infringement because it was considered alright by the people as a whole.
Similarly, in the 1990s, Napster started gaining traction as a way to illegally download songs. This was a huge IP infringement. Even though, Napster was forced to close and pay damages in millions, immediately hundreds of services sprung up which provided similar ways to download songs and music illegally. This clearly showed how decentralized the Internet had become as well as the fact that people can take it upon themselves to judge and enforce Intellectual Property rules.
In India, a court forced a pharmaceutical company to license the recipe of a drug to cure a certain form of cancer to a regional company, to get it available to Indian consumers at a greatly cheaper rate.
All this begs the questions, is Intellectual Property inherently a right someone has, or is something, which governments and people get to decide upon, as on a case-by-case basis?
Future Steps for Intellectual Property
Intellectual property is something that humans should pride themselves on getting somewhat figured out.
The case to universally acknowledge the creator or an inventor the rights to his creation, is something which is fundamental to human development and innovation.
Its high time that countries and people hold hands and work together to protect the creations which help push the human race forward, to make the world a better place for future generations.
