for Creating Wealth
Prepared By: Tony Lyall
Why Protecting Intellectual Property Rights are Important for Creating Wealth
What is intellectual property? The World Intellectual Property Organization defines intellectual property as the “creations of the mind: inventions, literary and artistic works, and symbols, names, images and designs used in commerce” (WIPO). If a country wants to create wealth it must provide opportunities for its citizens to protect their intellectual creations from thief, otherwise there is no incentive for people to be inventive, creative or to produce new ideas, products or services and bring them to market. Without newly created goods and services the market for exchange would soon dry up and the opportunities for creating new wealth would as well.
It is important to the creator of intellectual property that he be allowed the opportunity to profit from his work. Commonly intellectual property is protected by the use of copyrights, trademarks, servicemarks, patents, industrial designs and trade secrets. A “copyright is a form of protection provided to the authors of “original works or authorship” including literary, dramatic, musical, artistic, and certain other intellectual works both published and unpublished”. A “trademark is a word, name, symbol or device which is used in trade with goods to indicate the source of the goods and to distinguish them from the goods of others”. A “servicemark is the same as a trademark except it identifies and distinguishes the source of a service rather than a product.” A “patent for an inventor is the grant of a property right to the inventor” (USPTO). Trade secrets are formulas, processes, services or similar things that give companies a competitive advantage over their competition, for example the formula for Coca-Cola or Kentucky Fried Chicken’s eleven herbs and spices recipe. Industrial designs are the designs for Page 1
equipment or machinery that allows a company a competitive advantage. The rights given the creator by these instruments give the individual or company a type of legal monopoly to profit from the creation for a certain number of years dependent on the method used without outside interference. The rights granted by these intellectual property protections are normally territorial and require the inventor to apply for the necessary protection in each country in which he or she desires protection of the intellectual property. One exception is the Berne Convention which provides protection of copyrighted works of authors are automatic with no registration required. Countries who are members of the Berne Convention must copyright works for a least 50 years, or longer if the country wishes, after the author’s death, photographic and cinematographic works are excluded (Wiki).
Without the protection afforded to intellectual property rights inventors and creators would be subject to their valuable ideas and creations being stolen and duplicated for profit by others. Even with these protections many individuals and corporations are constantly battling counterfeiting and brand hijacking. The Organisation for Economic Co-Operation and Development (OCED) estimates counterfeiting and piracy cost the world economy 200 billion dollars annually. The OCED states “counterfeiters and pirates target products where profits margins are high, taking into account the risk of detection, the potential penalties, the size of the markets that could be exploited and the technological and logistical challenges in producing and distributing products” (OCED, 2007). This sounds like the actions of any well run competitive firm, however, these actions result in counterfeiters and those who pirate products having an unfair advantage in the marketplace. These firms pay nothing for the research and development costs involved in producing the new product; they have no advertising...