Are Intellectual Property Rights in the Interests of the Public Good - Essay Example

Intellectual Property Rights By + Introduction The expansion of intellectual property rights bringsabout a new phase in the economy that threatens future progress. This paper discusses the shortcomings of intellectual property rights with much focus on its impacts on income distribution, innovations in science and technology, legal disputes and individuals’ personal freedoms. The regulation and management of production of knowledge is at the centre of the working of the new knowledge economy and its beneficiaries. Intellectual property is part of a society’s system of innovation and its intention is to restrict the use of knowledge produced by innovators by charging a fee which serves as a return and therefore an incentive for more innovations. It is important that the society also has some other means of producing knowledge which can be through educational institutions or in government research laboratories. Important ideas such as the basic idea that led to the development of computer, Turing machine, were actually not covered by the patent system. Returns on knowledge can be provided in other ways other than through patents such as exploration of virgin markets and maintaining trading secrets. Prizing systems can also be used as incentives to new knowledge. Research might be costly and would require finances. However, gaining monopoly profits is not the socially efficient way to finance research Static Inefficiency The most important basic idea is that knowledge is a non-rival good. The consumption of knowledge by one individual does not limit the consumption of that knowledge by another person (Raju, 2006). This is to say, there are no associated marginal costs in consumption of knowledge. It is therefore more efficient to freely distribute knowledge other than charging a fee for it. Restricting the use of knowledge creates distortions in the knowledge economy. Intellectual property rights lead to monopoly power. The legal framework supports patents in order to provide incentives for innovations. However, this overlooks the economic implications of the monopoly power such as inequalities in resource distribution. Some of the market inefficiencies brought about by intellectual property rights are discussed below. Access to Healthcare Basic healthcare is one of the basic human wants. However, high costs of medicine and other healthcare services due to patent system has left healthcare to be a dream for the poor who cannot afford the high cost. This begs the question; why innovate when the society cannot realize the benefits? Pandemics such as AIDS are taking their toll on the world population due to the expensive costs of related drugs. In a society where everyone has a right to basic needs, only a few do enjoy these rights (Miller, 2010). Intellectual Property Rights as Leverage for Monopoly Power The social efficiency cost of intellectual property is more than just the creation of monopoly power. Organizations are using their monopoly power to further extend their monopolistic predatory nature. An example is Microsoft which extends its monopoly power in manufacturing operating systems to dominate the applications field. Some of these applications include Ms Office and Internet Explorer. These anti-competitive practices deny customers the opportunity to access better products that would otherwise be produced in a competitive market without Patent restrictions (Intellectual Property Rights, 2005). Self –Interest vs. Social Benefit The success and development of innovations have proved to hit a snag once innovators obtain property rights. The automobile was one of the most important innovations. However, patents have impeded the development of this innovation. The patent owner instead of improving his innovation became focused on gaining profits and ended up forming cartels to limit competition. A legal battle ensued in later years by a man who envision automobiles at a cheaper price unlike the cartel minded high priced automobiles. Fortunately, Henry Ford won the legal battles against the patented cartel minded innovators. Had he lost, what is known today as the automobile industry would be different and worse off? It’s clear that personal oriented motives of innovators work against societal well-being as the population is left vulnerable to exploitation. The prices charged for goods might not reflect the true costs of manufacturing those goods (Innovative Discipline, 1994). Costs in the Patent System From a social perspective, administrative costs are social costs which add the burden to citizens who are already suffering monopolistic effects of the patents. Litigations over patents introduce uncertainty in the market. Take the case of Apple’s legal war with Samsung. Samsung was ordered to pay Apple compensation fee worth $1 billion. It is not the huge sum of money that is worrying but rather the uncertainty that the outcome of this case has on the mobile industry. Future innovations are not only hampered but also the costs of related products will be high due to licensing fees that other companies are obliged to pay Apple. In the short run it is Apple that benefited but in the long run it is consumers who will carry the burden of high costs. This would not be the case if Apple did not have patents as competition would have increased and as a result marginal benefit would spill over to consumers. Marginal Social Return vs. Innovators return In the providence of public goods, equilibrium is achieved when the marginal social benefits equal marginal social cost. The aim of patents is to provide incentives for innovations. However, the patent system does not have a well-designed technical proxy for rewarding innovations (Innovative Discipline, 1994). Innovations are well rewarded in excess of the marginal social returns of their contributions. Innovations should be awarded on the basis of their marginal contribution. However, measuring the marginal social contribution is in itself a difficulty. Patent ‘tax’ and Income Concentration Just like individuals finance the provision of public goods through taxes so do they finance innovations by paying license fees and other associated charges? However, unlike government taxes which are used to further provide or improve public goods, patent fees can be used in any way by the innovators. This is contrary to the objective of patents which is to encourage innovations. Furthermore, government revenue from taxes is redistributed to all regions thereby creating some form of economic balancing. Contrary to this, patent fees go to pockets of a few individuals who enrich themselves leading to unequal distribution of income. Patents widen the gap between the ‘‘haves and the have not’s’’ which should not be the case from an economic point of view (Miller, 2010). Public Domain When a firm receives a patent, it is able to make knowledge a private good. That is the public do not have the knowledge. However, if another firm successfully challenges the awarding of that patent, then the knowledge is released in the public domain and anybody can use it. This clearly explains that intellectual property rights are actually in the interest of private goods and not public goods (Raju, 2006). Conclusion The concept of intellectual property rights is prevalent with contradictions. Many people believe technological advances can only be realized in a market society where there are proper incentives to innovations. However, protection of intellectual rights means arming individuals with monopolistic power. This monopolistic power causes many impediments to advancement of technology. In the current world where many scientific challenges are amassing, there is need for increased innovation to tackle these problems such as global warming disease control. Intellectual property rights do not seem to bear any fruits. Diverting scientific knowledge into privacy and litigations will only bring about more problems. Patenting innovations on basic life necessities like healthcare is like patenting life. Many questions as well as answers have been raised on this issue but at the end of the day it is not the right thing to do. Scientists and religious groups have clashed severally on this issue but no resolution has been reached yet. The people must, however, be put in front of anything else while making innovative decisions. Intellectual property rights are important even though their importance has been exaggerated. The innovation system is a wide field and intellectual property is just but a part of a portfolio of innovative instruments. Prizing systems and Government funded researches form the other part of innovative portfolio. Transaction costs, risk factors, finances and incentives should be used by the relevant authorities as yardsticks of the innovative system to ensure the social welfare of the population is well covered. References Innovative discipline.1994. West Haven, CT: NEA Professional Library. Intellectual property rights. 2005. Kuala Lumpur, Malaysia: Embassy of the U.S., U.S. State Dept. Miller, J. S. 2010. Patents. Cheltenham, UK: Edward Elgar. Paton, K. 2007. Property rights. Detroit: Greenhaven Press. Raju, C. B. 2006. Intellectual property rights. New Delhi: Serials Publications. Read More