The Hidden Cost of ‘Free’: The Big Steal Shines a Light on the Domestic Threat to U.S. IP Rights

An important new book about the impaired U.S. intellectual property (IP) system, The Big Steal – Ideology, Interest, and the Undoing of Intellectual Property, by Jonathan M. Barnett, reveals the deepening failure of IP rights to retain their property status and the weaknesses – seen and unseen – that have accompanied it. The focus of The Big Steal is on what the IP system’s recent failures impact, who they benefit, and what can be done to repair the damage.

What is often pondered by members of the IP community but seldom discussed – the threat imposed by poorly defined IP rights – is at the core of The Big Steal. This engaging book provides well-argued insight into the declining reliability of U.S. intellectual property rights.  Many of those affected by IP assume theft on the part of Big Tech is obvious and there is little that can be done to reverse it, or they fear the potential repercussions of doing so. Some do not believe the weaknesses in the system are that bad or that they will impact the nation or them personally. They are wrong.

That strong IP rights and their restrictions are in fact good for innovation, creative expression and the economy, and provide far more opportunities than they might discourage, is lost today on even the best-informed professionals and educators. For them, the idea of “good” IP rights has come to be seen as counter intuitive. Thankfully, underserved communities are finally coming around to a better understanding of the benefits of strong, consistently applied IP rights, and that in general, when functioning properly, they work in their favor. As Barnett says in the book:

“Over anything other than the immediate short term, the world is better off by having replaced the kerosene lamp with electric lighting, rather than simply reducing the price of kerosene lamps. The current IP policy trajectory toward increasingly weaker IP rights risks giving us a cheaper kerosene lamp, but no electric lighting. That may be a good deal for the lamp maker and its existing customers, but it will be a bad deal for just about everyone else.”

Barnett, Director of the Media, Entertainment and Technology Law Program at the University of Southern California (USC)’s Gould’s School of Law and a former corporate lawyer at Cleary Gottlieb Steen &Hamilton in New York, provides context for the dwindling respect patents and other rights have experienced over the past decade and the serial theft it has wrought. He renders the role of IP rights more meaningful for a range of audiences, essential for rebuilding trust in a system that was once the envy of the world. This is no easy feat.

Those in the IP community who believe rule-of-law matters will appreciate Barnett’s ability to articulate what they already know. They will find a legal scholar with the economic and political background and writing skills necessary to convey the source and nature of the dysfunction. Disrespect for IP rights has become widely accepted, even championed. Many have thrown in the proverbial towel. Why make businesses pay for abstract rights when they can be free, and the savings can appear to be passed along to consumers?

Barnett reminds readers that infringing copyrights that cover written content, music and images, as well as patented inventions, is theft, and it represents a threat to creators, businesses and society alike. The “free” model of no-charge products or services, he argues, works for a handful of highly capitalized companies with strong distribution channels and deep pockets that can absorb the costs of low initial returns and defensive litigation. Think Alphabet, Meta, Amazon, Apple. “Free” or devalued IP rights undermine competition, discourage investment and prevent healthy disruption required for breakthrough inventions.

The IP playing field, never exactly level, but on balance workable for many of those who persist, is much less viable today. The sad events of the infamous Robert Kearns intermittent windshield wiper dispute, dramatized in a 1993 article in The New Yorker and film “Flash of Genius,” has become more the rule than the exception. The even graver problem is that many in the IP community who are aware of the frequency of IP theft and the difficulty of proving it, who should know better, choose to accept it. The Big Steal will make it easier for them to understand and explain the danger and why the system must be rebalanced by legislation.

Beyond the Legal Argument

What The Big Steal  does brilliantly is articulate the dilemma less in legal than economic and societal terms. Barnett enumerates the legislative and judicial origins of the crisis, touching on decisions like eBay v. MercExchange, which effectively halted injunctions for invention theft and altered rule-of-law, but spends more time on the innovation and commercial impacts of IP abuse, which are difficult to measure and challenging to convey. Barnett explains:

“Academic and policy discussion has long been dominated by what I will call loosely the ‘information wants to be free’ school of thought. With few exceptions, a worldwide echo chamber occupied by scholars, judges, regulators, and legislators holds that intellectual property (IP) rights are often or typically a monopoly franchise that confers undeserved windfalls on overcompensated pharmaceutical firms and legacy entertainment companies.”

Underlying the legislative and judicial contributions to the impaired IP system is political influence and financial power; highly capitalized businesses that are more concerned with short term shareholder value than innovation they cannot manage, national security or ethics. Google exists in large part because of a patentable algorithm its student founders shared with Stanford University in the 1990s. After the company had achieved success, it took pains to make sure no such patented inventions would threaten its leadership.

Under the rubric that “information wants to be free,” writes Barnett, significant portions of the scholarly, tech and legal communities have advocated for the erosion of property rights. Some owners are simply too small to matter; they are seen to impede “real” progress and as adding unfairly to consumers’ costs. In their view, in-licensing is unnecessary and those who out-license are engaging in a kind of “hold-up.” They would have the courts and policy makers believe they are the victims, and the pirates are those whose IP rights have been stolen.

F. Scott Kieff, former ITC Commissioner and professor of Law at George Washington University, has advised four U.S. presidential administrations about security. Kieff says vested interests spent over $1 billion to help push through the 2011 America Invents Act (AIA) and establish what became the onerous Patent Trial and Appeal Board (PTAB), a tribunal that has come to invalidate all or parts of up to 85% of the patents it reviews and that have been issued by the United States Patent and Trademark Office (USPTO). Those same interests and their various proxies perpetuate misinformation about the patent and copyright system, including the infamous patent “troll” meme, an insidious misrepresentation of patent licensing that has negatively branded patent licensing.

The Big Steal puts into perspective the IP system and the various interests that have come to shape it and details the effects of allowing them to do so. This book reminds readers of something the Center for Intellectual Property Understanding (CIPU), the nonprofit I chair, has been saying since 2016: inventor/creators, patent and copyright owners, businesses and individuals, and anyone who attempts to monetize IP rights, are in the same sinking IP-laden ship, weighted by new ideas too numerous to count, digital access too fast to measure, and artificial intelligence too complex to monitor. They would be smart to row together.

Consider copyright as the canary in the coal mine. AI has sensitized more people to the abuse of IP rights. With incessant scraping, violations of privacy and rearrangement of existing content into new but potentially derivative works, generative AI has thrown a spotlight on copyright – the most widely held of IP rights. Publishers to policymakers, creators and consumers are increasingly aware that copyrights matter less to some businesses than others. Patents have been similarly commoditized, even if the nature of the protections differ. Hostility to and devaluation of both invention and creative expression rights, orchestrated in part by successful businesses that benefit, is already the biggest steal in U.S. history.

Anyone touched by IP, including investors, creators, lawyers and policymakers, will benefit from reading The Big Steal.  Journalists, too. It will help them to better understand how the IP system works and how it has been weakened, and why doing so threatens the very core of democracy. While China remains an IP challenge, The Big Steal is the most compelling book to date about the hidden domestic abuse of U.S. IP rights.

Patent AND Copyrights    

The Big Steal reminds readers that, while different in nature, patents and copyrights are two sides of the same intangible asset coin. Most patent and copyright holders see their plight as fundamentally different, even counter to each other. However, both are victims of an onslaught against IP rights as intangible assets, tech’s own valuable trademarks and trade secrets notwithstanding. Barnett expresses the weakening of IP rights as illustrated by the refusal of infringers to take a license under even the least contentious business terms. Alleged infringers would rather engage in litigation, a business decision that is sometimes referred to as “efficient” infringement, because it is a calculated business decision on the part of a defendant thought to benefit their bottom line. It is now more widely seen as predatory infringement and anti-innovation, and bad for shareholder value. According to Barnett:

“A critical factor that stands behind the success of modern IP skeptics is what I call an ‘accidental alliance’ composed of a well-resourced business constituency that shares an interest in weakening IP rights with academics and advocacy groups that have ideological or other intellectual commitments to a strong presumption against robust forms (or, in some cases, any form) of IP protection.”

The (High) Cost of Free

In the introduction to this book, “The Cost of Free” (which might have been “The High Cost of Free”) Barnett makes a strong case for how content and invention theft is rationalized by both businesses and consumers. The section, “The Hidden Costs of Free Stuff,” is a revealing look at what happens when fundamental property rights like IP are ignored. This accessible book can be read and understood by almost any college student and should be included in undergraduate courses.

Both patent and copyright holders need a remedy to the thin rule of law that currently protects patents and copyrights. Meritocracy is fundamental to U.S. leadership. That must include intellectual property. The nation, and the new ideas it generates, will have a difficult time staying competitive without the foundation of merit supported by rule of law. Barnett alludes to influence and self- interest of big tech but refrains from making too specific a case for the origins and extensive lobbying that got us here. Indeed, his book is not investigative journalism, nor should it be. It is insightful and provocative analysis of the weakened U.S. IP system and the problems that have ensued and need to be addressed. It is not about keeping competitors “out,” but about fueling our resources from within. Audiences should make the time to read this important book. Many will eagerly; others with reluctance. Some might find its truths painful or embarrassing.

Now is the perfect time for a leading company to step up and accept paying the royalties they must. They will be thought of as strong business leaders, not weak managers. The reasons to support IP rights or not go beyond quarterly profits. Organizations like the 4,000-member Content Authenticity Initiative (CAI), which tracks provenance in images to prevent fakes and unauthorized changes, and provides the ability to track theft via ablockchain-like, open-source system, is the inevitable future of copyrighted content value. Patent/product tracking are likely to move in a similar direction. Tracking prior art and infringed claims will eventually be sorted with the help of AI prompts and will not necessarily need to be adjudicated by the courts.

Alive, if Not So Well

The Big Steal provides more hope than despair. Its message suggests that America’s embrace of property and rule-of-law are alive, if not so well, when it comes to IP rights over the past decade. Greater IP certainty, better awareness of the role of patents, copyrights, trademarks and trade secrets, and legislation, can help to neutralize the effects of systematic IP infringement and serve to keep the U.S. competitive in the battle for innovation leadership it has come to take for granted.

Barnett, Jonathan M. The Big Steal: Ideology, Interest, and the Undoing of Intellectual Property (p. viii). Oxford University Press. Kindle Edition. Click here for a digital sample.