Every year on April 26, World Intellectual Property Day celebrates innovation and creativity and how intellectual property fosters and encourages them.  Established in 2000 by the World Intellectual Property Organization (WIPO), this event masks the way the private sector has used international treaties, in particular the TRIPS (trade-related aspects of intellectual property rights) agreement, to claim property rights where no property rights exist, and to levy a private tax on the public using the privileges made available to them from government-legislated monopolies.

It was in the mid-nineteenth century that many of the principles behind IP were formulated, and in editorial that appeared in The Economist in 1851, the observations the anonymous author made are just as relevant today.

The Public will learn that patents are artificial stimuli to improvident exertions; that they cheat people by promising what they cannot perform; that they rarely give security to really good inventions, and elevate into importance a number of trifles […], no possible good can ever come of a Patent Law, however admirably it may be framed.

The first point that needs to be made is that “Intellectual Property Rights” are not property rights but legislated monopolies, which is one reason that nineteenth century laissez-faire economists were unhappy with the introduction of this pernicious form of market interference by governments.  I much prefer the term “intellectual products”, which is what I mean by IP.

Patents, trademarks and copyrights were introduced to reward innovation, be it industrial, intellectual, artistic or commercial.  In principle, this is not unreasonable as it encourages useful innovation, which, if not protected by a legal right, can usually be reproduced or copied by others at low cost in generic versions.

It is necessary to go back to the early debates, in which we see that those that created to protect IP did so reluctantly.  The great nineteenth century historian, Thomas Babington Macaulay, who was also a member of the House of Commons, saw copyright laws as a ‘necessary evil’.  In 1841 in a speech to parliament, he said,

The principle of copyright is this.  It is a tax on readers for the purpose of giving a bounty to writers.  The tax is an exceedingly bad one; it is a tax on one of the most innocent and most salutary of human pleasures; and never let us forget, that a tax on innocent pleasures is a premium on vicious pleasures.  I admit, however, the necessity of giving a bounty to genius and learning. In order to give such a bounty, I willingly submit even to this severe and burdensome tax. Nay, I am ready to increase the tax, if it can be shown that by so doing I should proportionally increase the bounty.

For Macaulay, the level of taxation should be kept as low as possible while still encouraging creativity.  Following his logic, like any tax, it is up to the legislatures to determine the amount to be levied.  Each country will be different, as the level of taxation should reflect national priorities and aspirations.  The idea of a uniform tax around the world is ludicrous, yet TRIPS  is an international treaty that does just that, and this achievement a tribute to lobbying by the entertainment and pharmaceutical industries.

This industry has distorted the debate by claiming that IP is property, which has allowed them to argue that IP is a natural right associated with ownership rather than a temporary privilege to levy a private tax on use of innovations.  This has permitted them to recast the debate in terms like “theft” and “piracy”, giving them to take the moral high ground.  It has also allowed them to present the issue in absolutist terms – you either choose to protect property or you won’t protect property.

I’m reminded by Keynes observation that there is “no divine harmony between private advantage and public good”.  There is no better epitaph that could describe the pernicious lobbying that has enshrined privileges to IP than no government should have agreed to, and even more outrageous is that it pretends to be about free trade.  An economist who was involved has been involved in negotiations for international treaties is Jagdish Bhagwati, whose comments about TRIPS is worth quoting.

For virtually the first time, the corporate lobbies in pharmaceuticals and software had distorted and deformed an important multilateral institution, turning it away from its trade mission and rationale and transforming it into a royalty collection agency.

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