Intellectual property: Protecting ideas is good for business

Bar graph showing number of patent applications filed by non-residents in different offices around the world (World Intellectual Property Indicators, 2017)Intellectual property is one of the foundations of modern business.

The World Intellectual Property Forum defines intellectual property as “creations of the mind, such as inventions; literary and artistic works; designs; and symbols, names and images used in commerce.”

Intellectual property is generally divided into three categories: patents for inventions, copyrights for literary and artistic works, and trademarks for logos and brand items.

At its core, intellectual property means that inventors, creators and entrepreneurs are able to own their ideas and have the exclusive right to use them to make money from their hard work.

Without effective protections for intellectual property, there is nothing to stop bad actors from stealing designs, inventions, software or trade secrets.

How countries protect intellectual property is a major aspect of how companies conduct business and whether foreign investors trust local institutions with their ideas. After all, if businesses cannot be sure that their technology or products are safe, why would they operate there?

Intellectual property rights in China and the U.S.

Line graph showing sources of fake goods seized in U.S. (Sources: 2017 IP Commission Report, National Bureau of Asian Research; Dept. of Homeland Security)

This theft of other people’s ideas is most seen in the global market for counterfeit goods. According to the Department of Homeland Security, in 2017 China and Hong Kong produced 78 percent of counterfeit goods seized coming into the United States.

China’s lax enforcement of intellectual property rights is partially because China has only had intellectual property courts since 2014 and is still working to develop its laws and regulations on the issue. But China’s industrial policies for technology acquisition also play a role. The 2017 IP Commission Report (PDF, 351KB) produced by the National Bureau of Asian Research found that China is “the world’s principal IP infringer [and] is deeply committed to industrial policies that include maximizing the acquisition of foreign technology and information.”

In contrast, the United States has one of the world’s most robust intellectual property protection systems. Promoting “the progress of science and useful arts” by giving “authors and inventors the exclusive right to their respective writings and discoveries” is written into the U.S. Constitution.

The impact can be seen in the number of international innovators who bring their ideas to the United States. As the 2017 statistics show, the United States receives far more foreign patent filings than any other country in the world.

China should continue to strengthen its intellectual property protections and eliminate unfair industrial policies. The United States is the preferred country to develop new ideas and keep them safe from copycats and thieves.