Ethics @ Work: Owning ideas

Intellectual property rights have generally been much more strictly enforced in recent years.

October 20, 2005 20:36
3 minute read.
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One of the most common topics of discussion in this column is intellectual property. Software and music piracy, patent protection/infringement and trademark piracy (forgery of designer items) are among the most prominent ethical issues in modern business. Intellectual property rights have generally been much more strictly enforced in recent years. Now the Adelphi Group, which describes itself as "an international group of artists, scientists, lawyers, politicians, economists, academics and business experts" has published The Adelphi Charter, a kind of manifesto intended "to ensure that everyone has access to ideas and knowledge, and that intellectual property laws do not become too restrictive." Today's economy is an idea economy; an amazing fraction of what we buy is not tangible but rather the fruits of someone's creativity; when we buy a computer program or a song, we are basically only buying the rights, because these can be copied at virtually no cost. Even when we buy a medicine, the overwhelming majority of the price is not for the production costs (which are often negligible) but rather a result of the patent rights, which are meant to cover staggering research costs. It's only natural that in an idea economy the law should make the protection of intellectual property a high priority. Ideas have immense value and involve immense costs; without legal protection, those who introduce them would not be able to recoup their investments. This is the same reasoning behind recognizing property rights with ordinary objects; if a farmer can't keep the proceeds for his crops, he will have little incentive to invest thousands of hours in cultivating them. BUT THERE is a key difference between tangible and intellectual property. If someone comes and takes away a farmer's crops, he deprives the farmer himself. Food is a "private good"; only one person can consume any given doughnut. But someone who uses my computer program, listens to my recorded song or makes a new device based on my patent doesn't deprive me of anything; I can continue to enjoy the innovation too. This is one reason why intellectual property rights are often limited in duration. For example, patent protection lasts about 20 years - unlike ordinary property rights, which last forever and can be bequeathed to future generations. Furthermore, the balance we need to strike in intellectual property is not only between encouraging creation of new ideas (stronger protection) and encouraging their use (weaker protection). Excessive protection can actually discourage innovation! A patent can prevent competitors from developing inventions that partially overlap the patent, or employ it as part of a new invention. While we take the benefits of patents for granted, the topic was controversial until surprisingly recently. As late as the 1950s, the United States Office of Technology Assessment engaged a comprehensive study of the entire patent system by one of the world's leading econometricians, Fritz Machlup. After years of intensive study, Machlup announced his conclusions: If he were asked whether the US should establish a patent system, he wouldn't necessarily recommend it, but now that it has one, he wouldn't recommend getting rid of it. Much more research has been done since then, and today there is a broad consensus that strong intellectual property laws are vital to fostering innovation. But research equally confirms that when it comes to intellectual property, more is definitely not always better. The new Adelphi Charter is a thoughtful and hopefully influential statement of the need to balance protection for one innovator against the interests of users and other innovators. The writer is research director at the Business Ethics Center of Jerusalem (, an independent institute located in the Jerusalem College of Technology. He is also a rabbi.

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