Author(s)
Padmanabha Ramanujam
Source
ICFAI Journal of Intellectual Property Rights, Vol. 6, No. 3, pp. 8-17, August 2007
Summary
This paper explains how intellectual property (IP) rights make everyone better off.
Policy Relevance
Developing countries might not strengthen IP rights because they see these as benefiting only developed countries. But everyone benefits from more innovation. Also, developing countries can ask for more open trade in agriculture in return.
Main Points
- Intellectual property (IP) rights encourage innovation by holding out the prospect of a reward. Studies show links between IP rights and economic growth. A branch of economics known as “game theory” helps explains how people behave when making strategic decisions that anticipate the decisions of others. This can also help explain IP.
- One “game” is the prisoner’s dilemma. If police question two suspects in separate rooms about a crime, both are safe if neither confesses. But each fears the other will seek an advantage by betraying the other. Then both confess, making both worse off.
- Without patents, pharmaceutical firms, some or all might decide not to invest, because of fears that copycats cut into their profits. With patents, all the firms can get some clear benefit from investing, making everyone better off.
- If patents work this way, it helps explain the appeal of adopting harmonized uniform patent law across nations, represented by the TRIPS treaty.
- Some argue that stronger IP law everywhere means that money will flow to developed (northern) countries away from developing (southern) ones.
- Studies show developing countries also benefit from increased innovation due to stronger IP, and because they can offer stronger IP to developed nations and get more open trade in agriculture in return.
