Bolstering intellectual property rights critical to innovation and economic growth

10 May 2019
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April 26 marked World Intellectual Property Day, which celebrates the role intellectual property (IP) rights play in spurring innovation, creativity and technological progress. But what exactly is IP?

The World IP Organisation (Wipo) refers to IP as creations of the mind — for example, inventions, literary and artistic work and symbols, names, images and designs used in commerce. IP is omnipresent and surrounds us in all that we do during our everyday lives.

The intangible nature of IP should not detract from its importance to society. One of the major benefits of this intangible nature is that IP has a tremendous ability to reach a vast number of people at one time. Given the intangible nature of IP, innovators face a challenge to appropriate the economic benefits of their ideas. To overcome this problem, governments grant IP protections to assist innovators and provide incentives for innovation and IP dissemination.

Wipo director-general Francis Gurry says: “IP is a crucial part of a successful innovation system. It provides a return for those who take the risk to introduce the ‘new’ — products and services — into the economy. It provides a framework for the rather difficult and challenging journey any idea has to undertake before becoming a commercially available product or service.”

Consider the extraordinary amount of innovation that has occurred in the field of medical technology over the past five decades. Medical innovation has given scientists access to powerful tools to develop new procedures and drugs that have resulted in unprecedented advancements in human longevity. Between the 1920s and 1940s, huge advances in medical procedures were made, including discoveries such as penicillin, bacitracin, streptomycin and chloroquine.

In the post-world war years, such drugs became widely available and their application brought about the remarkable decline in the crude death rates experienced in many developing countries. By the 1950s and 1960s, fewer children and young people were succumbing to the easily preventable diseases that historically depressed the health indicators of developing nations.

Throughout the world, life expectancy is on the rise. It has increased dramatically from an average of 53 years in 1960 to an average of 72 years in 2016. There can be no doubt as to the extraordinary benefits advances in medical innovations have conferred on humanity, helping people live longer, healthier and happier lives.

New drugs and medicines invented in one place are made available throughout the world via international markets. Most drugs start off protected by patents (a type of intellectual property), which eventually expire and open the market for generic competition. As a result, many off-patent medicines are available at extremely low prices, allowing people in poorer countries to benefit from the knowledge and innovation of more affluent countries. Recent examples of this include antiretroviral drugs, statins and insulin, as well as neonatal intensive care units, kidney dialysis equipment, screening equipment and myriad other modern medical devices.

Patent laws were developed to encourage people to share their inventions with others for the benefit of all. The logic was obvious: if people could own the right to their creative endeavours they would earn more by sharing them with others rather than by concealing them. Innovations would spread more rapidly to the benefit of society. Perceptive entrepreneurs would recognise their potential and develop them further. As competition and financial rewards build up, it encourages more and more people to invest in innovation.

For a country such as SA that aspires to reduce poverty and boost income levels, innovation is a critical cornerstone for economic growth. Innovators and creators need to be able to secure their investment in developing their creations — or they simply do not create. They certainly will not invest in commercialising and bringing products to market if they can freely be stolen and copied.

IP laws are only one of the factors among several that influence innovation. Successful implementation of IP rights depends on complementary factors such as the quality of legal institutions, markets and infrastructure. Simply put, the efficacy of IP reform is ultimately subject to the environment in which IP rights operate. National prosperity is achieved when countries implement a positive policy paradigm — of which an important component is IP rights.

World IP Day provided an opportunity to celebrate the efforts of the innovators, scientists and risk-takers around the globe who are working to make our lives healthier, safer and more comfortable. SA’s economy and, more importantly, the lives of all South Africans can only improve if we are free to innovate, knowing full well that government is committed to protecting our lives, hard-won freedoms and private property rights, both physical and intellectual.

• Urbach is an economist and director at the Free Market Foundation.

 This article was first published in BDLive on 10 May 2019


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