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Strong Intellectual Property Laws Drive Innovation and Economic Growth, According to New Study

Exclusive intellectual property rights are essential to technological innovation; emerging nations of the world need solid intellectual property protection to assure long-term economic growth, concludes study by The  Manufacturing Institute

 Patents, copyrights and trade secrets play a critical role in producing technological creativity, innovation and economic growth at home and abroad, according to a new study, "Intellectual Property for the Technological Age," released today by The Manufacturing Institute, the research and education arm of the National Association of Manufacturers (NAM).

“Innovation drives economic growth by spurring higher productivity, higher wages and a higher standard of living. Studies have shown that up to 85% of growth in U.S. per capita income stems from technological change.  Manufacturing lies at the center of this unique process, generating nearly 60% of private sector research and development in America,” commented Jerry Jasinowski, president of The Manufacturing Institute. 

“Technological innovation would be crippled without the intellectual property (IP) protections that assure inventors and investors that their work will not be stolen,” he continued.  “Patents, copyrights and trade secrets play a critical role in supporting the development of nearly all the building blocks of our innovation economy:  semiconductor chips, miracle drugs, energy-efficient motors, software, recordings, chemicals, fertilizers, and new food products. 

“Clearly, there is an important link between intellectual property and technological innovation.  This insight is shared by other countries, like India, which recently strengthened its IP regime and has benefited from a corresponding leap in foreign investment and innovation.  The U. S. is the world’s innovation leader today, but we will lose our edge if we don’t take the necessary steps to promote IP laws and strengthen the U.S. Patent and Trademark Office,” Jasinowski said. 

The new study by Professor Richard Epstein, a prominent legal scholar at the University of Chicago and the Hoover Institution, responds to the seven most common objections to IP laws, including claims they are static, freeze innovation, and are too cumbersome and costly.

“While it is unwise to belittle these charges, the fact is we choose to bear these costs because any loss of liberty is more than offset by the gains from manufacturing, agriculture and commerce that exclusive property rights foster.  The inconveniences generated by IP are fully justified by the greater prosperity and well-being for the population at large,” Epstein noted.

“Unfortunately, intellectual property protection and other building blocks of a strong economy are too often poorly understood,” he went on to say.  “Fueled by high profile cases of IP protection gone awry, the level of criticism has been rising.  The chief mistake of all these criticisms is to assume that a person who holds, for example, a patent over some device can thereby thwart new entry by competitors.  In fact, the law only protects the patentee’s device from imitation, but not from economic competition by new patents for rival inventions.  Failure to see where the critics go wrong could lead to some wrong turns in public policy,” he said.

“Exclusive intellectual property rights are essential to technological innovation and do not create undesirable monopolies, as misguided critics claim.  Rather, strong IP laws work to secure the rapid introduction of competing technologies that expand market options.  Social progress in our technological age is intimately bound up with the creation and protection of intellectual property,” Epstein concluded.

“The emerging nations of the world need solid IP protection to assure long-term economic growth,” said Michael P. Ryan, director of The George Washington University Law School's Creative and Innovative Economy Center. “Professor's Epstein's paper demonstrates this axiom and is important reading not only in Washington and Brussels, but also in Brasilia, Beijing and Johannesburg. Filmmakers, recording artists, software engineers, pharmaceutical researchers, and other creators and innovators can not thrive in economies where they are constantly being pirated.  Fortunately, we now see countries like India, Jordan, Nigeria, Brazil, and Botswana starting to take a closer look at how proper management of creativity and innovation can positively impact their economies.”

For a copy of the new study, "Intellectual Property for the Technological Age," click on