Intellectual property

A study of an idea’s role in the US economy

Caleb Herup7/29/2015

The concept of intellectual property is very convoluted. It is extremely difficult to

determine what parts of an idea are intellectual property, and should therefore be protected. The

Legal Information Institute defines intellectual property as “any product of the human intellect

that the law protects from unauthorized use by others”. [1] It also defines a product of the human

intellect in terms of its effects, saying that a product if the human intellect “may be used

simultaneously by more than one person without diminishing the availability of that product for

use by others”. [1] These definitions can be helpful in defining what intellectual property is

according to law, but the question of what should be counted as intellectual property still

remains. In the course of this study it will be found that any unique idea that has a profitable

potential should be eligible as intellectual property. This paper will cover what should be termed

as a “unique” idea, why profitable potential is so key to intellectual property, why it is important

to protect intellectual property in the first place, and various methods of preventing patent

trolling, where a company buys out a patent simply to deny its use.

The definition of a unique idea can be difficult to define completely. An idea as simple as

a lever cannot be patented because it is already available to public use. According to the United

States Patent and Trademark Office (USPTO), in order for a patent to be obtained, and thus for

the idea of intellectual property to be valid, the idea must not be contained in a previous patent,

and also must not be implemented in public society already. [2] The basic thought is that the idea

has to present a new concept that has not been implemented yet, and does not copy someone

else’s idea. It is important to note that it is often essential to build on already existing patents or

ideas to conclude something new. The new part of the idea is unique, but one must also consider

any possible patents or pieces of intellectual property utilized in the idea, and royalties or

settlements must be made before any type of profit or production can be pursued.

The term “profitable” is extremely important in this study, since it lays the groundwork

for explaining the necessity of protection. The United States especially runs on the idea of

capitalism, which relies on the concept that in order to get what you want, you must work for it.

The term profitable is the name of the game, since without it, one cannot eat, pay bills, or have

good quality of life in general. When an idea benefits society as a whole, they are able to produce

or enjoy more, and in a capitalistic culture, that can be very lucrative. There is real incentive for

finding good ideas and methods to do different things, because doing so directly benefits the

inventor. Without that incentive, one must rely on the goodness of people’s hearts and their

desire to benefit others in order for them to work hard and be inventive and resourceful. Looking

from a Judeo-Christian ethical viewpoint, one concludes that this is very shaky ground, as

mankind is inherently selfish. Even from an evolutionary standpoint, the same conclusion must

be reached. Only the fittest survive, so the idea of selfishness pops up there too. Finally, one just

has to look at himself or his fellow, and if honest, one must conclude that self-centered thinking

pervades humanity. Philosophers have debated whether or not this thinking can be combated, but

when one looks at the socialist and communist countries in the world today, they are clearly not

doing things correctly, as most of them have an extremely high poverty rate, and oppressive

governments. Capitalism takes the idea of selfish thinking, and turns it into something that

benefits society as a whole. The incentive is personal gain, but everyone benefits from the

production of that individual. When someone has an idea that can turn a profit, it becomes his

intellectual property. This leads into the next point of why it is important for intellectual property

to be protected in the first place.

Intellectual property is essential to the function of the economy. Many argue that it

hinders progress because it sets up red tape and hurdles for other companies to jump through,

and the dangers of patent trolling become very real. Some of the arguments have merit to them,

but one must also consider the enormous positive impact that intellectual property has had on the

economy. First, as mentioned before, the opportunity to make a profit provides the much needed

incentive for inventors to produce new ideas as the USPTO argues. [3] Many people arguing that

intellectual property should be free to anyone have very little idea of the enormity of the role that

it plays in the economy. According to the USPTO, “ intellectual property (IP)-intensive

industries support at least 40 million jobs and contribute more than $5 trillion dollars to, or 34.8

percent of [the] U.S. gross domestic product (GDP)”. [3] If intellectual property were null, and

ideas were free to all, it is likely that most of these industries would disintegrate, and with it, one

third of the US economy. Intellectual property provides jobs, production, and benefits that touch

nearly everyone in the US, lifting the quality of life for everyone. There are however, problems

that need to be addressed. Many owners of intellectual property are so stringent with leasing and

such, they inadvertently strangle the profitability of the idea. Ignorant inventors can get so

preoccupied with making as much money as fast as possible that they kill their own idea.

Economical education is important in every individual’s life, so they know how it works, and

why. If one wants to make as much profit as possible, the price that the idea comes at must be

low enough so a large portion of the population wants to spend their hard-earned money on it.

One can make more money selling a million copies of a game at a $10 profit than they can make

by selling one hundred thousand copies at a $20 profit. A savvy entrepreneur knows how to find

the delicate balance between profitability and affordability.

Finally, there is the unavoidable problem of patent trolling. Sometimes a new idea or

invention will greatly reduce the cost of a process or product, and will jeopardize some

company’s product line or service. In order to protect their now obsolete line, some companies

purchase patents or ideas from inventors willing to settle for a tidy sum of quick cash, and simply

file them away and prevent others from producing that product. This unethical practice is known

as patent trolling. Intellectual property is as much at risk from this practice as any other patent.

Such a practice damages the economy as a whole by hindering a new product or idea from

benefitting everyone. There should be some guidelines in the system of intellectual property to

prevent this from happening. Even now, there are expiration dates of patents, after which, the

idea is considered public and accessible to anyone who thinks they can turn a profit with the

idea. Right now, a patent generally lasts 20 years, with the possibility of extension after that

period. [4] Another possible way to combat patent trolling would be to have a shorter period that

the patent is good for initially, but multiple extension opportunities. With each extension, it must

be proved that the company or individual is actively pursuing a profitable venture with the

patent, and not simply sitting on it so no one else can get to it. A profitable venture could be

something as simple as the lease of the idea to other companies, where royalties or leasing fees

of some type are paid to the owner of the patent, or something as complex as a corporation built

around the patent or idea.

Intellectual property is essential to the US economy, and needs to be protected, albeit

with some qualifications. A common misconception is the “idea” that entrepreneurs make

ridiculous amounts of money from their inventions, and none of that wealth ever reaches anyone

else. When thinking of the big picture though, it is important to note that a good idea that makes

a lot of money also generates a lot of jobs and production that benefit society as a whole. The

inventor may very well get ridiculously rich, which is completely fine. The incentive then exists

for everyone who has a good idea to try and see if the can turn a profit with it. Meanwhile, the

economy is boosted in general because of the increased productivity, making everyone a winner.

References:

[1] “Intellectual Property”. Legal Information Institute, Cornell University Law School. https://www.law.cornell.edu/wex/intellectual_property

[2] “General Information Concerning Patents” 2014. United States Patent and Trademark Office. http://www.uspto.gov/patents-getting-started/general-information-concerning-patents

[3] “Intellectual Property and the US Economy” 2012. United States Patent and Trademark Office. http://www.uspto.gov/learning-and-resources/ip-motion/intellectual-property-and-us-economy

[4] “General FAQs”. United States Patent and Trademark Office. http://www.uspto.gov/learning-and-resources/general-faqs