“141, Mostly Children, Killed in Pakistan Attack” ~ New York Times, Dec. 16, 2014
“Bad men need nothing more to accomplish their ends than that good men look on and do nothing” ~ John Stuart Mill
I was pulling together background materials on the Bayh-Dole Act assisting a 13 year old student who asked for help on a paper she’s writing when the news broke that the Pakistani Taliban had attacked a school killing children her age and younger. The theme of her paper is leadership that’s made an impact on the world. Even in the 9th grade she knows that encouraging innovation makes the world a better place. The contrast between her insight and the madness also taking place recalled a prior experience.
In 2006 the Licensing Executives Society invited Senator Birch Bayh to address its meeting in New York and he asked if I could meet him there. That meant I had to fly on the 5th anniversary of the 9/11 attack. The airports were virtually deserted due to widespread fear that terrorists would strike again that day. As we flew over Manhattan the few of us on the plane were struck that it was a picture perfect September morning— exactly like that terrible day in 2001.
Listening to Sen. Bayh’s talk were attendees from around the world. They had not been intimidated by threats to their safety; traveling to the scene of the World Trade Center attack to build international partnerships rather than retreating into shells of isolation and fear. What better proof that a key goal of the terrorists had failed?
When he finished speaking Senator Bayh met with a delegation from South America who saw the protection of intellectual property and Bayh-Dole polices encouraging university— industry R&D alliances as essential ingredients for economic growth. The disparity between those inflicting pain and destruction on the innocent and these people who had undertaken such a long journey in the hope of building a better future for their countries was inspiring.
When you think about it the protection of intellectual property and the encouragement of entrepreneurism are potent weapons against those seeking to bind humanity with the shackles of fear and intimidation. The economies of the 21st Century will be driven by unleashing the creativity of the human mind, the greatest unlimited natural resource in the world. And what’s the key to unlocking this treasure— a strong, dependable intellectual property system.
Long term economic growth is intricately linked with political freedom. Political freedom fosters stable international relations. Stable international relations promote wealth creation. And so the cycle grows. Innovators go around the world looking for the best ideas and talent to create prosperity. The benefits of innovation are so enormous that they improve lives even in countries at the bottom of the economic barrel. We can only imagine what would happen if the creativity in those countries were unleashed as well. Few would trade this vision for the one the terrorists have in mind.
Economist Benjamin Friedman wrote The Moral Consequences of Economic Growth whose thesis is that politically open societies develop in times of growing economic wealth. When the economic pie is expanding societies feel confident as living conditions improve and personal freedoms increase. In static societies for anyone to move up they must pull someone else down. Then political freedoms shrink, confidence is replaced by fear and leaders look for internal or external enemies to blame to remain in power.
Now think about the international situation we face today. Where are the biggest threats to global stability coming from? Typically from societies that have missed out on economic growth, yet are reminded daily through their cell phones or TV how much better others are doing. Their children are not taught any marketable skills but learn to blame their misery on others. Such societies repress their citizens, persecute minorities and threaten their neighbors. While they don’t create innovative products they can misuse those made elsewhere– so plotters in mud huts in Afghanistan can successfully bring down the World Trade Center. That’s one aspect of the modern global village.
But why do some continually lag behind even though their citizens are just as smart and talented as those in prosperous countries? South American economist Hernando De Soto’s book The Mystery of Capital provides an answer. He demonstrates that a fundamental weakness of perennially under-developed nations is the inability of their citizens to obtain clear ownership of property, either physical or intellectual. Without the incentive of ownership wealth creation is impossible. Fortunately our Founding Fathers recognized this and wrote the patent system into the Constitution even before the Bill of Rights. While patenting had been restricted to the elites in England, in America they were available to any with the wit and drive to invent. Consequently, people of humble origin made the discoveries that created the modern world.
Entrepreneurism can only succeed when a society honors contracts and has a fundamental respect for the rule of law. It thrives in free enterprise economies encouraging personal risk and reward, the essential ingredients for building an innovative culture. This system relies on bottom up incentives rather than top down directives. With the rapid increase in science and technology command and control economies are less and less effective. Change is simply too swift for centralized planners to predict. The ability to move nimbly is essential for survival in an increasingly competitive global market.
The public and private sectors are closely intertwined as breakthroughs in fundamental science lead to revolutionary new products creating wealth and greater well-being around the globe. Tools like biotechnology and nanotechnology are direct results of government funded research. The human genome project never could have been accomplished without federal support. Yet the fruits of this public expenditure are only realized if entrepreneurs are willing to invest their sweat and money to turn research concepts into products. Much of the world is adopting our Bayh-Dole model using the incentives of the patent system to move publicly funded research from the lab into the marketplace for one reason: it works. Thus, more and more highly talented minds are getting involved in wealth creation for the benefit of their people.
A few years ago the Government of South Africa sent out a delegation to find the worldwide best practice for integrating research universities into the economy. While South Africa once led South Korea and Brazil economically they had fallen behind and realized they needed to develop more of their own technologies to get back in the race. Their team selected the Bayh-Dole model which they enacted. South Korea also adopted Bayh-Dole as part of its economic development plan. Conversely, Brazil added lots of government control to its model. You can guess how that’s working out.
The basics of technology licensing are worth considering from a broader perspective. Those successful in licensing learn to work across cultural and national barriers because for a deal to work it must be a win for both parties. Licensing professionals share a code of professional ethics. They seek out dependable, long term partners at home and abroad. Developing good relationships around the world is part of the profession. These are all characteristics needed to bring more parts of the world into the virtuous circle of innovation. Such conduct couldn’t be further removed from the hate filled world of the terrorist.
Helping other countries adopt the essential ingredients for prosperity is in everyone’s interest because much more is at stake than simply dollars and cents. We should never fear the success of our neighbors in a fair marketplace. The creation of intellectual property is not a zero sum game. The more nations seated at the table of prosperity the better for all of us.
Unfortunately, the lessons that made us successful can also be forgotten. Often innovators are portrayed as exploiting the public once they achieve success after years of unrecognized effort. Some believe that important discoveries would be more readily available if others could freely copy them. They seem to feel that inventors will create important technologies whether we reward them or not.
This philosophy is right out of George Orwell’s book Animal Farm where the horses were supposed to keep working while the pigs lay about deciding who should get the rewards (hint: bet on the pigs). That didn’t work well for the animals (particularly the horses, they died) and it won’t work any better for a nation. Unfortunately, Animal Farm isn’t just a book— it’s the economic model of tyranny.
Some doubt the value of patents because once an inventor solves a problem it looks so easy. Thomas Edison’s dictum that invention is one percent inspiration and 99 percent perspiration is as true today as when he helped light the world. It took Edison thousands of experiments to get the right filament to light his bulb. Others had the idea but either could not or would not do the hard work needed to turn the idea into a product.
It might be argued that once Edison hit upon the solution others could have made lightbulbs cheaper. After all they didn’t have thousands of failed attempts to pay for so their costs of production were lower. Of course, such an approach kills progress but often we fail to explain why.
Innovation is risky, expensive and daunting for those leading the way. Failure is much more likely than success. The genius of the intellectual property system is that encouraging inventers to pursue their personal dreams ultimately works for the betterment of all. Successful entrepreneurs create wealth not just for themselves but for those around them. Compare that to what terrorists “create” where they hold sway.
It’s with good reason that those involved in innovation are called “entrepreneurs.” Webster’s dictionary defines the term this way: “one who organizes, manages and assumes the risks of a business or enterprise.” The assumption of risk is the operative part of the definition. This is not a game for the timid. However, it’s part of human nature that when given the opportunity some in every nation and culture are always ready to accept the challenge. They create rays of hope we should recall when fearing that the world will be plunged into darkness. Take a look at this map tracking biotechnology inventions around the world. Who can’t help but pull for that lone inventor in Tanzania?
So don’t lose courage. We’ve been through tough times before. Not long ago we faced a period when intellectual property was a dirty word to some. The government gave away federally funded inventions thinking that was fairer than protecting patent rights. The Justice Department was dominated by antitrust lawyers who viewed patents as monopolies and the courts couldn’t decide whether patents were worth the paper they were written on. This witch’s brew came home with a vengeance in the 1970’s. The U.S. began slowly — and then rapidly — to lose its lead in innovation. Our manufacturing heartland became the Rust Belt. Others eclipsed us in electronics, autos and telecommunications. Inflation soared. For the first time Americans felt that their children’s lives would be worse than their own.
Luckily, then we had political leaders who rose to the challenge. They had faith that the fires of American ingenuity could again be stoked if given the chance. Here’s how the The Economist Technology Quarterly summarized what happened:
Possibly the most inspired piece of legislation to be enacted in America over the past half-century was the Bayh-Dole act of 1980. …this unlocked all the inventions and discoveries that had been made in laboratories throughout the United States with the help of taxpayers’ money. More than anything, this single policy measure helped reverse America’s precipitous slide into industrial irrelevance.
Who were the heroes in this turnaround? We should rightly laud our research universities but even more important are those who assumed the cost and risk of commercialization – private sector entrepreneurs. They formed innovative companies around intellectual property that pulled our economy out of the ditch.
Yet note how The Economist article ends:
The culture of competitiveness created in the process explains why America is, once again, pre-eminent in technology. A goose that lays such golden eggs needs nurturing, protecting and even cloning, not plucking for the pot.
Rather than forgetting this hard won lesson ourselves we must share it with others. It’s not by accident that entrepreneurism and individual freedom are linked. For creativity and innovation to flourish the dependable, secure protection of property– physical and intellectual– is essential. This is the true ethical high ground. It’s a direct rebuke to those plotting to enslave the human spirit.
The freedom and prosperity of the world are at stake. The barbarians are at the gate. It’s time to meet their challenge. Take hope— we have an ally in Tanzania.