IP Abuses Harm Taxpayers

Now that tax day is over, another very important day is on the horizon: World Intellectual Property (IP) Day on April 26. World IP Day is observed each year and marks the importance of IP and the benefits it has on the free market as well as to taxpayers, consumers, and businesses.

As IP continues to be a critical issue on a number of fronts, including trade and the economy, it cannot be ignored that the abuses of IP protections are harmful to economies and taxpayers not just in the United States but also all over the world.

Free market groups from around the world are taking notice of the importance of IP.  The Taxpayers Protection Alliance (TPA) joined with the Property Rights Alliance and more than 80 other organizations representing more than 50 countries signing this coalition letter sent to the Director General of the World Intellectual Property Organization (WIPO), Dr. Francis Gurry. The letter lays out the case for protecting intellectual property rights and not just here in the United States, but around the entire world.

Two areas where the economic impact can be seen directly are digital piracy and plain packaging.

First, digital piracy continues to be a major problem globally. Recent studies have shown that IP theft in the digital market is still an issue that must be addressed. While there have been encouraging developments through broad based initiatives (TPA has written about some of them already), there is still much more work to be done. Late last year one report showed that “infringed content, malware and fake traffic is costing the U.S. advertising and media industry about $8.2 billion each year.” Taxes are evaded when content is pirated, and that impacts businesses, consumers, and taxpayers all at the same time.

The news is also troubling for taxpayers for plain packaging. In 2012, the Australian government began instituting their plain packaging policies aimed at curbing the use of tobacco products by preventing “tobacco advertising and promotion of tobacco products and tobacco product packaging by making it an offence to sell, supply, purchase, package or manufacture tobacco products or packaging for retail sale that are not compliant with plain packaging requirements. Unfortunately, as TPA has been paying close attention to the initiative, it has been a failure. Skewed data is the only thing officials have been able to cling to in order to claim victory.

The reality is that plain packaging has had an enormously negative impact for the market and taxpayers and intellectual property. The reports are in and they show that tobacco consumption is up, illicit trade is up, and revenue continues to be lost as the black market continues to benefit from plain packaging regulations. In Australia, nearly $1 billion in revenue was lost in the first year alone.  That means that taxpayers will pick up the tab because of the IP infringements that the government regulators have put in place on the tobacco industry in Australia.

The news isn’t all bad though, there is good work being done and it shouldn’t be overlooked. A key component to strengthening IP at home and abroad is to recognize that progress made by countries when it comes to the quality of IP protections. The United States Chamber of Commerce’s 2016 International IP Index (found here), put out by the Chamber’s Global Intellectual Property Center (GIPC), shows the strides being made by countries in protecting IP.  The GIPC’s 2016 International IP Index was their fourth annual release and it examines 38 economies and bases the index off of 30 different indicators to measure the strength of their IP system.

TPA will continue our mission to encourage greater IP protections both at home and abroad. As more countries begin to realize the importance of strengthening IP, the better it will be for taxpayers and markets all across the globe.