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Opinion

The Trans-Pacific Partnership and Intellectual Property: Not All Criticism is Equal

 

The Trans-Pacific Partnership has long been touted as the world’s first true 21st century trade agreement. At the center of this forward-looking pact is an effort to support and protect intellectual property rights, which are the bedrock of the global innovation economy.

These intellectual property policies have been a lightning rod for a lot of criticism, much of which should be dismissed.

Critics are reverting to three main reproaches to mask their underlying opposition to the broader idea of paying or getting permission to use another person’s intellectual property: first, that intellectual property has nothing to do with trade; second, that protecting intellectual property is a corporate giveaway; and third, that the new policies that have been agreed upon are an attack on free speech. All three are false.

On the first point, critics try to exploit the fact that the popular understanding of trade is still based around manufactured goods facing tariffs when crossing borders, while intellectual property is intangible and complex in nature and therefore not part of trade. But ideas are crucial to the goods and services of the future, and must be protected in the trade agreements of tomorrow, just as cutting tariffs for manufactured goods was the aim of the trade agreements of yesterday.

Indeed, modern trade requires robust protection for intellectual property because without it firms and people will be less able to sell their products and services across borders. With piracy and weak intellectual property rules, trade—an import of a good or service paid for with an export of money—by definition declines. Moreover, the knowledge and creativity required to create the goods and services exchanged in the 21st century—from smart phones, to drugs, to movies and music—is hard to come up with, but often very easy to steal or pay for at less than full market value. Without fair payment, innovation and creative output goes down.

On the second point, critics often portray intellectual property rights as a tool serving big corporations. But they forget that big corporations employ more than half of American workers, who earn 57 percent more than workers at small firms, on average. When these corporations lose sales to piracy and other intellectual property theft, yes their profits are hurt, but so too are their workers, because the firms’ sales go down. Moreover, for many small- and medium-sized firms working in sectors such as software, app design, and biotech, intangible intellectual property is their main asset and source of competitive advantage. Worldwide intellectual property rights are essential to protecting the latest business idea from small U.S. firms because many are “born global” via the Internet.

On the third point, critics claim the Trans-Pacific Partnership agreement is an attack on free speech, because it does not mandate the use of the U.S. “fair use” doctrine, which is how the United States defines exemptions and limitations to copyright protections for such uses as commentary, criticism, parody, news reporting, research, and scholarship. What critics ignore is that the agreement protects fair use by using the same core criteria—known as the “three step test”—that has been part of international law for decades in the Berne Convention, the Trade-Related Aspects of Intellectual Property Rights agreement, and other World Intellectual Property Organization treaties, which all parties in the TPP must join, if they have not already. In the United States, these criteria are used by judges in interpreting U.S. copyright law, while other common law countries include these same criteria as part of a “fair dealing” doctrine. Civil law countries use statutory exceptions. But everyone is working with the same set of principles.

Making the U.S. fair use doctrine mandatory for all members does not make sense as other countries do not have the same court-tested set of legal precedents. Even as codified in law, the U.S. fair use doctrine remains dependent on judicial interpretations, meaning that it continues to evolve with new judicial decisions. It is one thing for a country to revise how it applies these three steps to create the space in copyright laws for free speech, but forcing countries to adopt the U.S. approach is misguided given the serious risk of it being misinterpreted and misapplied.

The criticism of the intellectual property rights laid out in the Trans-Pacific Partnership is neither surprising, nor new. The critics’ calls for free speech and an open Internet, while laudable, are mostly a smokescreen for their ideological opposition to intellectual property protection, trade, or both. Many of these opponents do not want to acknowledge the role that intellectual property plays in spurring innovation and creativity in the U.S. economy, especially online. Nor do they view trade as a progressive force. As policymakers evaluate what is a large and complex agreement, and look for constructive analysis, they would do well to ignore the misleading distractions caused by these congenital opponents.

Nigel Cory is a trade policy analyst at the Information Technology and Innovation Foundation, a think tank focusing on the intersection of technological innovation and public policy. Follow him on Twitter @NigelCory.