Why we need Patents


In the future who knows what other innovations will come. But when they do come they will come primarily because of strong patent  IP protections.

Just like it is fair for physical property to be held by the person who owns it, whether it is a car or a house or land that you have paid for it is unfair for somebody else to just take that or use it for their purposes. The same is true of intellectual property. If I invest billions of dollars on something to create a patent or if I create a song that is copyright or if I come up with a trademark which is also an IP those are things in which I have invested and if somebody else can just take them or appropriate them that is not fair. Most people can understand that point.

What is also important to note though is that IP and patents specifically maximize utility and efficiency in human life. The United States has some of the strongest patent and other IP rights in the world and as a result, we create almost two-thirds of new drugs introduced to the world each year, year after year. Our scientific innovations are due in large part, if not primary to patent and other IP protection. They protect artists and innovators who invest the time necessary to come up with those innovations. The drug industry is a perfect example.

Last year we celebrated 40 years of what is known as the Bayh-Dole act for which The Economist magazine said that it is perhaps the most important piece of legislation passed in the United States over the past half-century. The reason for that is what it did was expand patent rights for universities and non-profit organizations and other groups that didn’t exist before. As a result, we went from about 400 patents for universities and similar organizations in 1980 when the act was passed to hundreds of thousands in the 40 years since then. That has been particularly true of pharmaceuticals and drugs. It is important to note that it is no coincidence that nations like the United States, Finland, or other European nations that protect IP and patent rights more see more innovation whereas nations rated very low in terms of protecting IP like Venezuela or North Korea don’t.

What you recognize quickly is that strong direct correlation between patent rights and innovation. Over the last year, we’ve seen that firsthand. Creating a vaccine for a virus takes time. Typically it takes about a decade, sometimes 15 years, and billions and billions of dollars. But we were able to do this in one year. We are saving millions of lives across the world with these vaccines that were created in nations that protect patent rights. You can see that direct consequence. And people across the world can begin to understand, even if they never thought about this issue before how important patent rights are to creation. The vaccines coming out and saving lives is a perfect illustration of why patent rights are important and an illustration of how they lead to innovation.

What we begin to enter though is once those vaccines and drugs and other pharmaceutical innovations are created sometimes groups that don’t value IP rights suddenly think that they’re entitled to those and they want to undermine patent rights in order to access those drugs. The problem with that is a lot of places across the world that don’t necessarily respect production and safety requirements can’t just be given the ingredients to those drugs and allowed to distribute themselves.  Across the world, you are already seeing fake vaccines that attempted to be based on some of the vaccines created over the past year to end the COVID crisis and they’re either useless or ineffective, or harmful. We have got to be very careful about that. When people talk about brand protection that is important for some of these groups and companies it is very important to keep protecting that because those groups that we know are following safety standards in the manufacturing of these ideas that they come up came up with due to strong patent protections need to be allowed to carry forward.

On that note, you then get to the point of a lot of impoverished nations that don’t have some of these strong patent protections and therefore haven’t seen some of these innovations and therefore do not have a lot of these life-saving drugs available to them. The positive news there is the United States and other nations that do have these vaccines for the coronavirus are sharing them once we create them safely. That allows us to not only vaccinate our populations but to send them overseas.

When people across the world begin to think that the answer to getting more vaccines and other life-saving drugs, whether that is during a pandemic or just dealing with ongoing life-saving issues is to undermine patent rights the exact opposite is true. All that it will do is some of these drugs and vaccines and other innovations don’t get invented in the first place. Why would I, as an inventor, invest all of that time and billions and billions of dollars in creating something that can just be taken as soon as it is created? The better answer is what we are witnessing already – to strongly protect patent rights and other IP which leads to creation and innovation just as we have seen with the vaccines for COVID which then can be shared with other nations and impoverished peoples to vaccinate them as well. The alternative is to not protect patent rights or IP in which case these things won’t be created in the first place.

That is why it is important to strongly protect IP rights. It serves the interests of fairness because if I create something or if somebody innovates in some way it is fair to reward their innovation and their hard work. It also maximizes utility as we are seeing before our very eyes. You can look back across the decades and see that nations that protect patents and other IP see much more inventiveness and innovation.  The best way to move forward is to keep that system strong, protect it with regard to Bayh–Dole Act. We can’t undermine it by allowing, whether domestically or abroad people to disregard it and just march in and take drugs because they think that they’re entitled to them or the price is too high. The better way to go about it is to keep doing what has worked in the past. Let’s keep moving forward on that. We have got a lot more lives to save. In the future who knows what other innovations will come. But when they do come they will come primarily because of strong patent  IP protections. The miracle of human innovation is due in large part, if not primary to the strong protection of those rights.

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  • Timothy Lee

    Timothy H. Lee is Senior Vice-President of Legal and Public Affairs for the Center for Individual Freedom, an Alexandria, Virginia-based nonprofit organization established in 1998 to protect Constitutional rights, promote free-market principles, and advance international liberty.

The views expressed on austriancenter.com are not necessarily those of the Austrian Economics Center.

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