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Intellectual property key to economy

By JASON MOLL, for United Press Internatioanl

WASHINGTON, July 25 (UPI) -- Strong protection of intellectual property rights is crucial to the well being of the U.S. economy because such safeguards motivate people to create and sell new products, according to experts at a recent forum sponsored by two libertarian think tanks.

The Washington-based Competitive Enterprise Institute and the Lewisville, Texas-based Institute for Policy Innovation sponsored the forum last Monday to promote the continued protection of intellectual property rights at a time when many believe these rights are seriously threatened.

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Intellectual property is defined as novel creations and ideas of the mind, and is regulated by patent and copyright law. Copyright law protects original works of "authorship," which include books, music, paintings, sound recordings, motion pictures, sculptures and computer programs. Patents protect original inventions.

The forum included legal representation from several key industries that CEI and IPI believe are most concerned with enforcing IP rights: the entertainment industry, computer software and hardware manufacturers and the pharmaceutical industry.

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The entertainment industry, represented by the Motion Picture Association of America, is troubled by unauthorized distribution of movies and songs over the Internet and the use of electronic transmissions that are not paid for. In the computer realm, as much as 25 percent of the software on America's computers is illegal, according to Susan Mann of Microsoft, which denies the industry an enormous amount of revenue.

The pharmaceutical industry is concerned about competition from generic medicine manufacturers, according to Robert Armitage, vice president and general patent counsel for Lily Research Laboratories. It is not unusual for new medicines to require years and millions of dollars to develop, and patent laws grant drug companies only a limited amount of time after FDA approval to earn profits on their product before generic competitors enter the marketplace and sell a similar drug for a lower price.

Armitage says he is distressed about Senate Bill 812, which would accelerate the patenting of generic drugs that have bio-equivalence to name brands. This would further erode the time the pharmaceutical industry has to recoup the large costs of creating new drugs.

Although these and other industries are interested in protecting their original creations, they do not agree that strong intellectual property protection is beneficial in every case. This is because companies use intellectual property in addition to creating it, according to James DeLong, a senior fellow with CEI's Project on Technology and Innovation.

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The microprocessor maker Intel, for example, uses many processes and components to manufacture its product. According to Jeffrey Lawrence, lead attorney for the Intel Architecture Labs, there may be up to 1,000 different patents involved in a specific product Intel manufactures, which can act to inhibit product development.

In addition to requesting government regulation of IP law, industries may also lobby Congress to create new copyright and patent law. Congress extensively reformed copyright law in 1998 when it passed the Digital Millennium Copyright Act, which is intended to bring copyright law into line with advances in digitalization and technology.

Adam Thierer, director of telecommunications studies at the Cato Institute and editor of "Copy Fights: The Future of Intellectual Property in the Information Age," says there must be a balance between the private and public benefits of intellectual property. Thierer says the libertarian position on intellectual property is inconsistent and that the most vehement disputes about it occur in libertarian circles.

"(There are) conflicting principles at work in the debate over intellectual property," Thierer says. "On one side of the coin you have property rights, which all libertarians agree are important in their foundation of a free society; on the other hand we have free expression and human exchange, and that is sometimes restricted by intellectual property rights."

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He says the government has increasingly granted greater privileges to copyright and patent holders, and that the length of time of these exclusive rights should be scaled back because of the fast paced world of digital technology.

"The real question with intellectual property is not perpetually providing a form of protection, but rather trying to find a way to incentivize artistic and scientific creativity," Thierer says. "One wonders -- when we have copyright laws that provide protection for the life of the author or creator plus an additional 70 years -- how much incentivizing (of other creative talent in the same field) is going on when that person has been dead and buried ... for several decades.

"When the founding fathers crafted these rules the restrictions back then were only about 14 years in terms of protection. So a decade or two is certainly more reasonable than life of the author plus 70 years."

Thierer says that an extreme example of how empowering creators of intellectual property is hindering entrance into the marketplace of others is the fact that e-businesses may patent their methods rather than their physical products. Amazon.com received a patent for its "one-click payment" method, and Priceline.com received one for its "name your price" method.

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"The idea of 'name your price' has probably been around since medieval times, maybe the times of the caveman," Thierer says. "Since the very first time there was barter or exchange, someone said 'Hey, name your price.' As for 'one-click' shopping, everything on the Internet is sort of one-click when you think about it."

DeLong, on the other hand, likens the Internet to the Wild West and says that intellectual property owners need to be more assertive in claiming their rights, just as settlers used barbed wire to demarcate property on the frontier. Sharing of files and illegal distribution of songs and movies is widespread over the Internet, he points out, depriving entertainment companies of revenue.

In order to prevent illegal distribution, DeLong says companies should be able to deploy "self-help" technologies that would purportedly send out authentic files to unauthorized users, but would actually be worthless. Rep. Howard Berman, D-Calif., recently proposed legislation that would legalize self-help technology.

"The prime strategy (of companies) is that they have to keep honest people honest and lazy people lazy," he says. "And that if you can keep the price down, then people will go ahead and use legitimate sources rather than pirate sources ... You essentially raise the price of piracy by putting up spoof (products) and substituting stern lectures on piracy for the record you thought you got. You don't have to raise (the price) a lot to make it worth somebody's while simply to go ahead and deal with the authorized site."

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Robin Gross, staff attorney for intellectual property at the liberal Electronic Frontier Foundation, believes that self-help is an example of how corporations, if given the right, will trample upon the rights of consumers to use intellectual property.

"This is nothing more than vigilantism taken to a new extreme," Gross says. "It's not proper for you to go around in more traditional spaces destroying other people's property because you believe that it belongs to you, or you feel that they have done something wrong to you.

"There is a legal system in this country. There is a legal process and they are really trying to side step that and bypass that and simply have the legal authority to decide on their own whether or not what you are doing is appropriate (or) that you are infringing their copyright. There is no check or balance here, and there is no need for any court or judicial proceeding. It is just giving the copyright holders total control in the situation."

What makes the United States unique, Thierer says, is that protection of all forms of property has generated great confidence in the economy of the United States. Thierer says this is reflected in the weakness of the economies of nations that hold little esteem for property rights.

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"It was when that we decided to move forward with a regime that protects property rights -- not only tangibles, but intangibles -- that we found a way to become globally successful and competitive like nobody else," he says. "You still see, in those countries where there is an absolute refusal to protect intellectual property, absolute poverty and squalor. To the extent they care about intellectual property, it's about how they steal it from industrialized nations and multinational corporations."

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