Argument: Intellectual property rights incentivize investment of time and money in developing new products

When a real chance of profit exists in the development of a new product, or writing a new song, people put the effort into developing and creating them. The incentive to profit drives a great deal of people’s intellectual endeavors. Research and development, for example, forms a major part of industries’ investment, as they seek to create new products and inventions that will benefit consumers, and thus society as a whole. Research and development is extremely costly, however. The 2000 largest global companies invest more than €430 billion a year in researching new products1. The fear of theft, or of lack of profit stemming from such research, will serve as a powerful disincentive to investment, which is why countries with less robust intellectual property rights schemes are not home to research and development firms. Without the protection of intellectual property rights, new inventions lose much of their value, since a second-comer on the field can simply take the invention and develop the same product without the heavy costs of research involved, leaving the innovative company worse off than its copycat competitor. This will lead to far less innovation, and will hamper companies currently geared toward innovative and progressive products. Furthermore, intellectual property is particularly important to firms with high fixed costs and low marginal costs, or with low reverse engineering costs, such as computer, software, and pharmaceutical firms. The costs of commercialization, which include building factories, developing markets, etc., are often much higher than the costs of the initial conception of an idea2. Without the guarantee of ownership over intellectual products, the incentive to invest in their development is diminished. Within a robust intellectual property rights system, firms and individuals compete to produce the best product for patenting and licensing that will give them a higher market share and allow them to reap high profits. These incentives lead firms to “invent around” one another’s patents, leading to gradual improvements in technologies, benefiting consumers. Clearly, intellectual property is essential for a dynamic, progressive business world.

1 Institute for Prospective Technological Studies. 2009. “The 2009 EU Industrial R&amp;D Investment Socreboard”. Economics of Industrial Research and Innovation

2Markey, Justice Howard. 1975. Special Problems in Patent Cases, 66 F.R.D. 529.

Candidate 1: "Firms and individuals misallocate resources trying to race others to the same goal, and spend resources stealing from one another:

Intellectual property rights systems create perverse incentives in firms, leading them to inefficiently allocate resources. One such inefficiency arises from the duplication of effort by firms seeking to develop the same process or product, though only the first to do so may profit from it. This leads to brutal races and excessive expenditure of resources to be first over the line and to monopolize the production, at least for a time. Another serious inefficiency arises in the production of similar products to existing ones, seeking to get around existing intellectual property rights. Such has been the case for years in the pharmaceutical industry, which has succeeded in curing erectile dysfunction dozens of times. An overemphasis on such spinning off of similar products is the result of intellectual property rights perverting incentives1. Furthermore, intellectual property rights create the problem of corporate espionage. Firms seeking to be the first to develop a new product so as to patent it will often seek to steal or sabotage the research of other competing firms so as to be the first to succeed. Without intellectual property rights, such theft would be pointless. Clearly, in the absence of intellectual property, markets and firms will behave more efficiently. 1 Gabb, Sean. 2005. "Market Failure and the Pharmaceutical Industry: A Proposal for Reform". National Health Federation."
Candidate 2: "While there is little cost to the government of recognizing intellectual property rights there is a big cost to those whose intellectual property is being protected. The cost of both processing and enforcement is passed on to the users who are the people who are most innovative. This is adding a cost to innovation and so making it less attractive to innovate."
Candidate 3: "Costs of monitoring intellectual property rights by states and companies outweigh the benefits, and is often ineffective:

The state incurs huge costs in monitoring for intellectual property right infringement, in arresting suspected perpetrators, in imprisonment of those found guilty, even though in reality nothing was stolen but an idea that, once released to it, belonged to the public domain. The United States government, for example, projects costs of investigating intellectual property claims will cost $429 million between 2009 and 20131. Firms likewise devote great amounts of resources and effort to the development of non-duplicable products, in monitoring for infringement, and in prosecuting offenders, all of which generates huge costs and little or no return2. Furthermore, the deterrent effect to intellectual property piracy generated by all the efforts of the state and firms has proven generally minimal. This is because in many cases intellectual property rights are next to unenforceable, as the music and movie industries have learned in recent years. Only a tiny handful of perpetrators are ever caught, and though they are often punished severely in an attempt to deter future crime, it does little to stop it. Intellectual property, in many cases, simply does not work in practice; firms should move with the times and recognize they need to innovate in ways that will compensate.

1 Legal Alert. 2009. "PRO-IP Act Promises Increased Focus on IP Rights and Expanded Counterfeiting Remedies". Sutherland.

2 World Intellectual Property Organization. 2011. "Emerging Issues in Intellectual Property"."
Candidate 4: "It is no more just that an individual's family benefit from a monopoly over an idea, than the individual who created it. There remains no inherent right to an idea. As for the sale of patents and licenses, firms will waste precious resources in fighting amongst each other for monopoly control over intellectual property, and will even buy the rights to products with no intention of using them, planning simply to prevent any competitors from doing so. The most efficient system is to have ideas be public and accessible and usable by everyone. When they are, more innovation will occur."
Candidate 5: "The complicated legal arrangements created by intellectual property raise costs of doing business:

Many firms cannot act independently, but rather rely on the technology and systems of other firms. The complicated, and often convoluted, licensing arrangements needed by many firms to function sap resources and effort, slowing productivity and causing general economic sluggishness. In high-tech and science research firms particularly, mutual licensing pacts are needed that often slow production and advancement due to the complicated legal arrangements that must be entered into to allow firms to go about their business. For example, the recent battle over rights to computer technology between Hewlett-Packard and Oracle, which has cost both firms millions of dollars in legal fighting1. These costs are entirely mitigated in the absence of intellectual property rights, as ideas flow freely and people can go about their business without the complications of licensing. 1 Orlowski, Andrew. 2011. "Oracle and Itanic: Tech's Nastiest Ever Row?". The Register."
Candidate 6: "No one can own an idea. Thus creating something like a property right over intangible assets is a meaningless endeavour. Doing so gives monopoly power to individuals who may not make efficient or equitable use of their inventions or products. Physical property is a tangible asset, and thus can be protected by tangible safeguards. Ideas do not share this right to protection, because an idea, once spoken, enters the public domain and belongs to anyone who can use it."
Candidate 7: "Intellectual property slows the dissemination of essential information and products

An individual or firm with a monopoly right to the production of something may not have the ability to efficiently go about meeting demand for it. Intellectual property rights slow, or even stop the dissemination of such ideas and inventions, as it may prove impossible to sway the creator to license or to market the product. Such an outcome is deleterious to society, as with the free sharing of ideas, an efficient producer, or producers, will emerge to meet the needs of the public1. A similar harm arises from the enervating effect intellectual property rights can generate in people and firms. When the incentive is to simply rest on one's patents, waiting to for them to expire before doing anything else, societal progress is slowed. In the absence of intellectual property, firms and individuals are necessarily forced to keep innovating to stay ahead, to keep looking for profitable products and ideas. The free flow of ideas generated by the abolition of intellectual property rights will invigorate economic dynamism. Furthermore, many firms that develop and patent ideas do not share them, nor do they act upon them themselves do to their unprofitability. This has been the case with various treatments for predominantly developing world diseases, which exist but are unprofitable to distribute to where they are needed most, in part of Africa and Asia.2 With no intellectual property rights, the access to such drugs would be facilitated and producers interested in helping the sick rather than simply profiting would be able to help those in need left to die due to intellectual property. 1 Stim, Rishand. 2006. Profit from Your Idea: How to Make Smart Licensing Decisions. Berkeley: Nolo. 2 Boseley, Sarah. 2006. "Rich Countries 'Blocking Cheap Drugs for Developing World'".The Guardian."
Candidate 8: "Research and development will continue, irrespective of intellectual property rights. The desire of firms to stay ahead of the competition will drive them to invest in research regardless. That their profits will be diminished by the removal of intellectual property rights is only natural and due to the fact that they will no longer have monopoly control over their intangible assets, and will thus not be able to engage in the rent-seeking behavior inherent in monopoly control of products."
Candidate 9: "More ideas are not released into the public when there is intellectual property. The release of ideas is most bountiful when there is active and constant competition to produce newer and better products and ideas. This is only possible in the absence of constricting intellectual property rights. The ideas circulating in the public domain are only expanded by the constant competition and innovation essential for firms to succeed in the absence of intellectual property protections."
Candidate 10: "There is no such thing as intellectual property, since you cannot own an idea:

An individual's idea, so long as it rests solely in his mind or is kept safely hidden, belongs to him. When he disseminates it to everyone and makes it public, it becomes part of the public domain, and belongs to anyone who can use it. If individuals or firms want to keep something a secret, like a production method, then they should keep it to themselves and be careful with how they disseminate their product. One should not, however, expect some sort of ownership to inhere in an idea one has, since no such ownership right exists1. No one can own an idea. Thus recognizing something like a property right over intangible assets is contrary to reason, since doing so gives monopoly power to individuals who may not make efficient or equitable use of their inventions or products. Physical property is a tangible asset, and thus can be protected by tangible safeguards. Ideas do not share this right to protection, because an idea, once spoken, enters the public domain and belongs to everyone. 1 Fitzgerald, Brian and Anne Fitzgerald. 2004. Intellectual Property: In Principle. Melbourne: Lawbook Company."

Research and development will continue, irrespective of intellectual property rights. The desire of firms to stay ahead of the competition will drive them to invest in research regardless. That their profits will be diminished by the removal of intellectual property rights is only natural and due to the fact that they will no longer have monopoly control over their intangible assets, and will thus not be able to engage in the rent-seeking behavior inherent in monopoly control of products.
