On
February 7, 2019, the U.S. Chamber of Commerce’s Global Innovation Policy
Center (GIPC) released the seventh edition of the International IP Index. Appropriately
enough it's titled “Inspiring Tomorrow.” The Index rates
the intellectual property (IP) systems of 50 countries, representing over 90%
of the world’s gross domestic product. Scores were derived from several
specific factors pertinent to gauging protection of intellectual property
rights.
Thus,
the GIPC Index is a valuable tool which allows policymakers to better
understand where their countries stand in relation to others.
Although the U.S. ranks at the top of the International IP
Index, its release nevertheless should prompt U.S. policymakers to strengthen
our IP rights system. The Index identifies the lack of a targeted legal basis
for addressing online piracy as a key area of weakness. Moreover, poor Index
scores for IP rights systems in certain foreign countries should spur U.S.
trade negotiators to seek stronger protections for Americans’ IP rights
overseas. By seeking to bolster IP protections around the globe, the U.S. will
further benefit from the strong relationship between strong IP rights and
economic activity.
Scores
in the 2019 International IP Index are based on eight key categories relating
to IP rights: patent rights, copyrights, trademarks, trade secrets,
commercialization of IP assets, enforcement, systemic efficiency, and
membership in and ratification of international treaties. Those eight categories
encompass 45 separate indicators pertinent to assessing the strength of an IP
system.
Because
scoring for this year’s Index is based on 45 indicators instead of 40 as in last
year’s Index, a weighted-score was calculated to determine whether countries’
protections of IP rights were stronger or weaker than that calculated in last
year’s Index. Among the 50 countries, 23 improved their weighted-scores in the
2019 Index. Many of the improved scores came from developing countries.
For
the seventh consecutive year, the United States had the highest score. The U.S.
IP system rated 42.66 out of 45. The United Kingdom and Sweden followed with
scores of 42.22 and 41.03, respectively. The countries with the lowest scores
were Egypt, Algeria, and Venezuela at 11.83, 10.28, and 7.11, respectively.
Despite
the United States’ leadership, there are some areas of weakness discussed in
the Index. For example, the United States has a perfect score with regard to encouraging
creativity by virtue of strong copyright protections, but it lacks an effective
enforcement regime to disable access to websites which facilitate pirated
content and counterfeit goods. A 2017 report by the IP
Commission found that the annual cost of counterfeit goods, pirated software,
and theft of trade secrets to the U.S. economy is between $225 billion and $600
billion.
To
combat online piracy, Congress can help by updating the Digital Millennium
Copyright Act’s notice and
takedown system
under Section 512. My October 2018 FSF
blog
stated that the United States-Mexico-Canada Agreement (USMCA) strengthens IP
rights protections and enforcement relative to the North American Free Trade
Agreement’s (NAFTA) IP Chapter. However, the USMCA failed to address the
outdated “notice and takedown” provision to improve its protection for creators'
content.
Moreover,
modernizing the U.S. Copyright Office by
updating its technological capabilities to maintain a readily searchable
database of copyright registrations would be helpful. So too would be giving
the Copyright Office the authority to address Section 512 matters and
establishing a process for adjudicating small infringement claims. Congress
should act to modernize the Copyright Office to enable it to adequately address
piracy issues and other copyright-related infringements.
While
there was significant improvement among many of the developing countries in
GIPC’s Index, the low scores in many developing countries reinforces the need
for U.S. pursuit of trade agreements that better secure protections for IP
rights holders internationally. As more countries adopt strong protections of
IP rights through trade agreements, the entire global economy also will grow
substantially, because legal institutions, including regimes that safeguard IP
rights, constitute a positive externality for the global economy. The mutual gains
from global trade increase when more nations adopt and enforce laws that
protect IP rights.
Importantly,
the Index emphasizes that there is a “strong correlation between the strength
of the national IP environment and different types of economic activity,
including rates of R&D spending, innovation, technology creation, and
creativity.” Across all countries, the Index found several noteworthy
correlations between strong IP protections and economic innovation and
creativity. On average, IP-driven countries:
- Are 26% more competitive,
- Are 53% more likely to employ high-skilled and high-paid workers,
- Are 33% more likely to receive private-sector investment in R&D activities,
- Are 39% more likely to attract foreign investment,
- Have over 4 times more online and mobile content generated,And are twice as likely to produce and export complex, knowledge-intensive products.
Strong
protections for IP rights incentivize investment in research and development,
innovation, and creative content production because they ensure entrepreneurs have
an opportunity to earn a return on their labors. And as economies with strong
IP rights regimes grow and prosper, consumers are the ultimate beneficiaries as
new goods and services, in whatever form they take, are brought to market.
In
sum, the International IP Index provides U.S. and foreign policymakers a useful
tool for assessing the need to improve their IP systems so that they can enhance
innovation and creativity in today’s economy.
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