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intellectual property

Roving Government “Bandits” Pillaging and Stealing Intellectual Property Need to Be Confronted by “Gunboat” Nations

A number of countries see cutting-edge intellectual property, especially for life sciences and high-tech goods, much like a predatory bandit saw trade caravans in centuries past—as something there to be raided and plundered. As trade and economic activity becomes more knowledge-based and dependent on intellectual property, the battle between countries that develop and protect the latest technological innovations against those that seek to steal it will only increase. A new paper by Australian academics Sinclair Davidson and Jason Potts—The Stationary Bandit Model of Intellectual Property—presents a new model that captures key traits of this global battle over intellectual property.

Before analyzing how this model reflects the real world, it’s important to consider the contrasting foundations of the new Davidson-Potts model compared to the standard economic model of intellectual property. The standard model sees intellectual property as a government-granted monopoly designed to create public incentives, that the natural domain of this property right is under the government which grants this right, and that intellectual property theft, when it occurs, is largely private—by individuals and firms. Traditional theory paints governments as benevolent actors that create the right conditions—the supply side

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World Intellectual Property Day – Highlighting How IP Incentivizes Innovation

Every April 26, the World Intellectual Property Organization (WIPO) celebrates World Intellectual Property Day to promote discussion of the role of intellectual property (IP) in encouraging innovation and creativity. Given the increasing tempest over the role of IP in the Trans-Pacific Partnership (TPP) trade agreement, the day provides an important reminder about the foundational role that IP plays in supporting innovation. IP is more important than ever as it is embodied in many economic sectors, especially across the digital economy, which means it affects not only innovation, but also trade, competition, taxes, and other areas of public policy and society. According to the OECD, investment in IP-protected capital is growing faster than investment in tangible capital.

To analyze this critical relationship between IP protection and innovation, ITIF compared the strength of IP laws and the effectiveness of anti-counterfeiting laws based on data from the World Economic Forum’s Global Competitiveness Report 2015-16 and creative output scores from the Global Innovation Index 2015, a report from Cornell University, INSEAD, and WIPO. The Global Innovation Index applies three distinct measures of creativity in an economy that taken together provide a measure

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Copyright Infringement: Science Pirates Are Still Pirates

The scientific community has become embroiled in a debate around online piracy after Alexandra Elbaykyan, a graduate student based in Russia, setup Sci-Hub—an online database of 50 million stolen scholarly journal articles. After encountering paywalls for scientific journals, she setup Sci-Hub because she said she believed that scientific information should be free to use and share. Elbaykyan can try to justify it in whatever way she wants, but what she is doing still involves the theft of property that is not her own.

Sci-Hub has garnered some support in the online piracy debate as the business model used by scientific publishing firms has clearly not caught up to the digital age and is in need of reform. The firms commonly charge as much as $35 for a digital copy of a journal article. Yet, an annual subscription to a top journal, such as The Lancet, costs $233 for both digital access and a print copy. This means, assuming four journal articles per weekly issue, that they charge 31 times more for a single digital article than a paper one, with zero marginal costs for the digital. While

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Music Piracy: Streaming to an App Near You

The distribution of music has evolved over time, from records, tapes, and CDs, to downloading and streaming online from computers, mobile devices, and a growing array of connected devices in the home and car. Music piracy has also evolved as those peddling and consuming infringing content adapt to new technologies. A new study from MusicWatch (a research firm that focuses on the music and entertainment industries) highlights the changing nature of music piracy and shows that while there is no “silver bullet” to combating online piracy, stakeholders involved in protecting intellectual property need to adapt their efforts to meet this evolving challenge.

The study has four main findings: music piracy is still prevalent; “streamripping” of music has emerged alongside the rise in legitimate music streaming services; music apps and app stores play an increasingly important role in music piracy; and piracy has a substantial negative impact on musicians and content owners.

First, the MusicWatch study shows that music piracy is still rampant, with an estimated 57 million Americans engaged in some form of illegal online downloading or streaming of music. In December 2015, the study surveyed 1,000 U.S. respondents aged

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Innovation Fact of the Week: Commercial Value of Illegally Installed PC Software Totaled Nearly $63B Globally in 2013

(Ed. Note: The “Innovation Fact of the Week” appears as a regular feature in each edition of ITIF’s weekly email newsletter. Sign up today.)

The global market for PC software is huge, but 43 percent of all PC programs that individuals and businesses installed in 2013 were not properly licensed, according to the BSA Global Software Survey. The commercial value of those illegal installations was $62.7 billion that year, up from $47.8 billion in 2007 when the illegal rate was 38 percent.

The United States has the world’s lowest rate of unlicensed software use (18 percent in 2013), but it is such a large market that the commercial value of those illegal installations is the world’s highest at $9.7 billion. In China, by contrast, 77 percent of all PC software installations were illegal in 2013, with a commercial value of $8.9 billion, the world’s second-highest total.

By region, the average rate of unlicensed software use was 59 percent or higher in Latin America, Central and Eastern Europe, the Middle East and Africa, and the Asia-Pacific region. That compared to 19 percent in North America and 29 percent

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Innovation Fact of the Week: US Leads World in Period of Data Exclusivity For Biologic Medicine Innovators

(Editor’s Note: ITIF features an “Innovation Fact of the Week” in each edition of its weekly email newsletter and on Innovation Files.)

In addition to awarding patents to creators of novel biologic medicines, countries also mandate varying periods of intellectual property protection for the clinical test data on the drugs. This “data exclusivity,” as it is commonly known, helps ensure that creators of biologic medicines have sole rights for a certain period to all of the underlying IP necessary to make and market the drugs. Once the patent on the original compound expires, other manufacturers are free to produce similar drugs—and they are free to generate their own clinical trial data in the process—but, until the period of data exclusivity expires, they cannot use the original patent holder’s clinical trial data to prove the safety and efficacy of their new “biosimilar.”

This additional period of data exclusivity is important because it makes the economics of drug development work. It gives the innovator more time to market the drug and recoup the costs of developing it, which today can approach $3 billion for innovative biologics. The United States offers 12 full

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Yes, Piracy Costs Content Creators a Fistful of Dollars

A month ago, I examined the academic literature surrounding what turns out to be a very tricky question for empirical researchers to answer—does digital theft of music and film have a measurable negative impact on profits for content creators? Methodologies addressing the question are fraught with complications, and while the majority of papers surveyed in a recent review of the literature (Hardy et al.) find that online piracy is not, in fact, a victimless crime, some past studies remain inconclusive. The literature is sometimes inconclusive because it is very difficult to prove that content being stolen has a negative impact on revenue in an era in which almost all digital content is stolen to some degree. However, research of late has been clearer in identifying significant causal impacts of piracy on profits and content creation in the music and film industries. As academics hone in on the question, results are beginning to coalesce around exactly the answer you would expect—online piracy has a negative impact on revenue and content creation in both music and film.

(First, I should note that as literature reviews go, Hardy et al. actually

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The True Damages of Online Piracy? It’s Hard to Measure

It doesn’t take a rocket scientist to realize that online piracy is detrimental to content creators, including in the film and music industries. However, academics studying the effects appear to be behind the curve. A few studies, brandished by illegal content providers to perpetuate the myth that content theft is a ‘victimless crime,’ claim to show that illegal downloads actually contribute to industry profits.

In theory, pirates are additional viewers who could purchase merchandise or generate word-of-mouth advertising that could get others to legally view the content. If the good outweighs the bad, then piracy might actually be helping the content industry. Leaving aside the issue of morality of theft, given the scale of online piracy, it’s hard to imagine the good truly outweighing the bad. Yet there are data-driven studies by real academics insisting that digital piracy is a boon for content creators.

However, a new meta-analysis of literature examining the effects of online-piracy, Friends or Foe? A Meta-Analysis of the Link Between “Online Piracy” and Sales of Cultural Goods by Wojciech Hardy, Michal Krawczyk, and Joanna Tyrowicz, shows that these papers finding that digital piracy does not have

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Chris Dodd and Nancy Pelosi

The Culture Addict Dream Conference

Each year, the Motion Picture Association of America (MPAA) hosts a large conference at the Newseum dedicated to highlighting what is new in creativity, content, and technology around the world. At the most recent confab, held on Friday, April 24, MPAA’s message focused on how creativity and innovation will play an even more integral role in the future than they do today. Indeed, the Creativity Conference is about exploring the critical intersection between technology and the arts, and their capacity to drive invention and economic growth across industries and regions. Bringing together leaders from the worlds of politics, media, business, and the arts, the Creativity Conference engages its audience in an open dialogue on the meaning of creativity, its economic impact across sectors, and the ways in which we can continue to protect and nurture American innovation and innovators.

At the conference, a group of leading, innovative women discussed the ways in which Hollywood and Washington, D.C. intersect. Rep. Rosa DeLauro (D – CT), Evan Ryan (Assistant Secretary of State for Educational and Cultural Affairs), Barbara Hall (Creator and Executive Producer, Madam Secretary) and Lori McCreary (President, Producers Guild of

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You’re Ruining It for the Rest of Us: Ecuador and Intellectual Property

It appears that the global club of those who do not adequately appreciate intellectual property (IP) has gotten a new member: Ecuador. In the past few years the IP environment inside that small South American nation has deteriorated quite significantly, especially with regard to the protection of pharmaceuticals and biologics. And as the situation continues to worsen, those of us around the world paying attention are probably all thinking the same thing: You’re ruining it for everyone else.

Indeed, Ecuador’s weakening life sciences IP situation is just one of a long line of countries doing so around the world, including Canada, India, Nigeria, the Philippines, and South Africa. Ecuador’s decision to weaken its environment for life sciences IP risks perpetuating this global contagion effect. For example, since 2010 the nation’s main IP agency (responsible for ensuring IP rights, including enforcement and promotion) the Ecuadorian Intellectual Property Institute, has granted nine compulsory licenses (CLs) with 12 applications still pending. Six of those nine CLs were issued in 2014 alone, including one for Pfizer’s kidney and gastrointestinal cancer medication, Sutent. According to the World Trade Organization’s Trade-Related Aspects of Intellectual Property Rights

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