• How important is intellectual property to the world economy?
• Should the averae consumer concern himself or herself with theft of intellectual property? What about the average citizen? The average worker?
• Does intellectual property theft undermine the workings of the free-market system?
• What is the impact of China’s lack of aggressive enforcement of intellectual property rights on its economic development in the short run? In the long run?
Intellectual Property rights form the basis of the well-functioning market systems of today. With any capitalist system, the maximum value out of the product must go to the innovator or the creator. This concept motivates them to create new state of the art innovations and create brands and products which consumers tend to remember over a long period of time. Intellectual Property rights tend to protect the manufacturers in the world economy. They are like rights to safeguard one’s creativity. (Ross, 2012)
The indispensable need of IPR, the setbacks of wanting awareness regarding it and the consequences of its deficiency
The paper focusses on the importance of IPR globally and how a slapdash system of restriction operated in different economies can bring stagnancy in their revenue generation.
The paper gives a synopsis about the prevalent drawbacks of the dearth of IPR, pitfall in the patenting systems of today, how the awareness about IPR is the need of the hour and how various economies like china are experiencing a dip in revenue in spite of their tie-ups with larger brands
It is often observed that intellectual property is not a property but is rather opposite to private-property or the free-market order. Patent are considered as exclusive monopolies being brought into interest to promote personal benefits. Initially, granting of patents was being done by governments to raise capital with using the tax clauses. In return, the patentee received protection from the competitors. Today, we come across a democratic and institutional intellectual property system. While now anyone can apply, the purpose has become somewhat deviant. Some organizations just apply to keep the competitors at docks. Now, creativity or discouragement occurs in cases where an organization lagging in research applies for a patent in comparison to a researcher much closer to results. As the scenario of challenging an organization with millions of patents registered in its name seems rather laughable, the individual may end up not getting the actual intellectual property protection which we were out to protect in the first place. (Perkowski, 2012)
Even in US, the founding fathers saw the IPR as ways of inducing and nurturing creativity. For the sole purpose, patents were allocated for minimal periods. The language of protection is used to protect the monopolies and make the actual individuals in need suffer. We realize that intellectual property in many ways undermines the free market system.
One of the major areas known for its piracy activities globally are in the lands of China. We saw multiple instances of piracy and how Chinese government has failed to create stronger restriction in order to force people to abstain from such practices.
Lack of aggressive enforcement of intellectual property rights leads to damage to economy in the short run also. The increasing piracy levels tend to act as negative agents and reduce profitability. Further, creativity is lost and consumers are exposed to counterfeit products and sub-standard quality. Brand loyalty is jeopardized and organizations end up losing a large chunk of their revenues. Thus, damage to company reputation and financials occur. This is a negative agent and prevents companies from investing in such a market. (Why is IP Important)
Further, when it comes to the pharmaceutical sector, we realize some fake manufacturers have gone a step ahead and sell pirated medicines. The composition of such medicines is incorrect and can cause to loss of life or severe health conditions can result from consumption. But since the regulations are softer, the culprits tend to get off easily. Further, as we read most of these have associations within the government which makes them go ahead easily and creating the piracy nuisance. (Intellectual Property Rights in the Global Creative Economy, 2013)
Presence of fake luxury products like fake Rolex watches or Prada bags only leads to loss of revenue for these big organizations. Further, there is a possibility associated with piracy. The piracy also leads to loss of revenue on behalf of the government. As billing is improper, the government may lose taxes and suffer in the long run. This brings economic harm and creates panic in the system. We must not forget that foreign nations tend to suffer more in this scenario. This forces them to reduce or innovate. For E.g. EA sports came up with more online market based products due to which CD based gaming was reduced. Ultimately, the product went off the shelves and was purchasable mainly online. Due to this, there was loss of revenue for retailers and further, jobs cut occurred in industries which were in some or the other way associated with hardware parts of the same in China. (Worstall, 2015)
Thus, it is important to realize that although the results may not be totally evident in the short run, the impact becomes severe in the long run. Thus, interest of corporations as well as common individuals can be protected by preventing piracy. Chinese government should focus on stronger and stringent clauses for the same.
Conclusion
Absence of IPR can only cause efforts of a sole entity or individual and benefits are attained by others. In such scenarios, people tend to abstain from creativity and become more dependent. Although, globalization has introduced huge piracy into the system due to income disparities of developed and developing economies, presence and importance of IPR cannot be ignored.
In the parallel case, the recognition is also lost by the creator. We saw the example of a Chinese firm emulating Abro brand. Thus, consumer awareness in a region is limited to the fake entity and the real product value and brand recognition is also lost. Also, presence of fake products increases in the absence of IPR. Fake products promote negative brand image as the brand name is same but the quality is compromised. Also, the loss considerations remain for the intellectual property right owners. (Kassner) Organizations lose huge amounts of revenues due to this case. Ultimately, smaller organizations or individuals are forced to make changes which may not be suitable either to the organization or its consumers. Thus, prevention of piracy and upholding the IPR becomes extremely important for individual entrepreneurs and organizations. (Ohim)
The question of awareness seems more important at higher level than at lower income levels. Yet, the importance cannot be ignored. It is very important for average consumer to know about the concept of piracy and theft of intellectual property. Often, customers unaware buy a product in the name of a great brand. The piracy causes cheating for brand loyal consumers, who may have a bad experience after use and may end up using a different brand. In other cases, customer value for money is not achieved by purchase of products which are in any form related to theft of intellectual property. Poor product value with same amount of money amounts to cheating and thus, customer protection can only occur via awareness about intellectual property rights and prevention of piracy. (Globalization and the Economics of Intellectual Property rights: Dancing the dual distortion)
It is also important for average worker to be aware and concerned about intellectual property. With increase in piracy, the products demand reduces. Ultimately, organization has more supply. It either reduces its prices or ends up producing less. In either case, there is a loss of revenue. When the organizations fail to reach a breakeven, job cuts occur and people or average workers end up losing jobs. (Kinsella)
For an average citizen too, IPR is very important. Piracy is not only in CDs or content but seen in pharmaceutical zones. In such cases, the life of an individual can be jeopardized. Hence, control of piracy can be made by an aware citizen. This ultimately will prove beneficial to the individual himself.
(n.d.). Retrieved 28 August 2015, from https://www.mpaa.org/intellectual-property-is-vital-to-the-future-of-american-workers/
China’s IP Reform: State Interests Align with Intellectual Property Protection (Again). (n.d.). Retrieved 28 August 2015, from https://jolt.law.harvard.edu/digest/patent/chinas-ip-reform-state-interests-align-with-intellectual-property-protection-again
Enforcing Intellectual Property Rights in China. (n.d.). Retrieved 28 August 2015, from https://www.chinabusinessreview.com/enforcing-intellectual-property-rights-in-china/
European citizens and Intellectual Property: perception, awareness and behaviour. (n.d.). Retrieved 28 August 2015, from https://www.iprhelpdesk.eu/node/2134
Globalization and Intellectual Property Rights: Dancing the dual distortion. (n.d.). Institute of International Economics. Retrieved from https://www2.dse.unibo.it/naghavi/maskusIPR.pdf
Kinsella, S. N. (n.d.). How Intellectual Property Hampers the Free Market | Foundation for Economic Education. Retrieved 28 August 2015, from https://fee.org/freeman/how-intellectual-property-hampers-the-free-market/
Perkowski, J. (n.d.). Protecting Intellectual Property Rights In China.Forbes. Forbes. Retrieved from https://www.forbes.com/sites/jackperkowski/2012/04/18/protecting-intellectual-property-rights-in-china/
Why is IP Important? | Global Intellectual Property Center. (n.d.). Retrieved 28 August 2015, from https://www.theglobalipcenter.com/resources/why-is-ip-important/
World Economic Forum. (2013, October). Intellectual Property Rights in the Global Creative Economy. Retrieved 28 August 2015, from https://www3.weforum.org/docs/GAC/2013/WEF_GAC_IntellectualPropertyRights_GlobalCreativeEconomy_Report_2013.pdf
Worstall, T. (n.d.). The Entire Concept Of Intellectual Property Is Proof That Free Markets Aren’t Perfect. Forbes. Forbes. Retrieved from https://www.forbes.com/sites/timworstall/2015/01/25/the-entire-concept-of-intellectual-property-is-proof-that-free-markets-arent-perfect/
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