Summer Reading: Intellectual Property 

For lawmakers on vacation, a day at the beach presents a plethora of possibilities. You can read a work of fiction (your political opponent’s autobiography), tinker around with a dangerously drooping beach umbrella, or down a greasy slice of boardwalk pizza. Each of these things would be unfathomable without the magic and majesty of intellectual property (IP) rights. Copyright laws ensure that authors can write about their (embellished) lives without someone else stealing the material and claiming it as their own. Patent protections give innovators the incentive to perfect beach umbrellas, along with all the unseen gadgetry within. And, trademark rights let consumers know that a franchise selling boardwalk pizza is in fact the business they claim to be. These various types of IP rights come in different forms with different applications, but they all have a pivotal role to play in supporting growth and innovation. And, unfortunately, they’re all under threat.  

Patents are usually the go-to target for lawmakers and policymakers who fail to appreciate the importance of IP protections. For example, members of the Senate Judiciary Committee have repeatedly made the link between patents and drug prices. The argument is seductively simple (and of course wrong), alleging that drug makers have used “thickets” of patents that make it impossible for rivals to make any drug remotely similar to the one protected by IP. Fortunately, Senator Thom Tillis (R-NC) was around to set his colleagues straight during a May Senate Judiciary Committee hearing. He lamented, “I’ve been here for 10 years and the substance of this hearing is not materially different than the substance of hearings that I had in my first Congress here…we at least know we’re reducing incentives to invest and take risk [through anti-IP policies]… We need to stop talking past each other, finding one link in the value chain that we naively think is the way you solve this problem and all agree that there are ways to increase availability and decrease the cost of prescription drugs but it’s not this simplistic approach to take it only one link in the chain at a time.”  

The attack on patents also ignores a wealth of empirical evidence underscoring the importance of IP rights for drug innovation. According to a 2016 analysis in the American Economic Review, the weakening of IP protections for medications leads to lower availability and delayed launch times for new drugs. The authors examined data on the “launches of 642 new molecules in 76 countries during 1983-2002” and found that, all else equal, “longer and more extensive patent protection strongly accelerated diffusion [of new drugs], while price regulation delayed it.” A more recent preliminary analysis by Princeton scholars confirms these findings. Government seizure of patents “is associated with 5.10% decrease in innovation. Specifically, when the market share affected by compulsory licensing increases by 1%, patenting rates for the licensed disease decrease by 12.7% to 16.3%.”   

This evidence has not stopped policymakers from trying to misuse laws on the books to steal IP from pharmaceutical manufacturers. As the Taxpayers Protection Alliance noted in January 2024 comments submitted to the National Institute of Standards and Technology, the Bayh-Dole Act of 1980, “allowed individuals and private institutions the ability to gain title for inventions whose creation involved federal funding… The Bayh-Dole Act sought to promote the successful commercialization of federally funded projects – and the law changed everything. In the two decades following its enactment, American universities’ rate of patent generation increased tenfold…The… Act provided for instances in which the government may counteract perceived private-sector abuses by exercising ‘march-in’ rights… NIST is now considering updates to march-in guidance that would place more weight on the pricing decisions [the government can] make… updates to march-in guidance could be used to impose back-door price controls on innovators.” The government “marching-in” to seize patents would be a disaster for drug development, effectively drying up the pipeline for new and innovative treatments.  

When policymakers aren’t scheming up ways to seize IP, they’re determined to subvert protections for their own benefit. Thanks to the pivotal protections established by the 1946 Lanham Act, businesses are free to cook up catchy jingles and eye-catching logos knowing that they won’t be ripped off by competitors. With the help of local lawmakers, the New Orleans Regional Transit Authority (RTA) wants to weaponize trademark law and charge businesses a fee for displaying antique pictures of streetcars.  

Sponsored by state Sen. Jimmy Harris (D-New Orleans), Louisiana Senate Bill 340 “would prevent citizens from reproducing images of the original 900 series Perley A. Thomas streetcars designed in the early 1920s, and the replicas assembled by RTA for business purposes.” These images have long been considered part of the public domain, but the money-hungry RTA wants a piece of local businesses’ streetcar marketing. 

In a DC Journal op-ed on the topic, TPA President David Williams notes, “The RTA is a hot mess. The agency has a massive consumer base of 18 million tourists annually and 400,000 residents, yet it is far from balancing its books. The RTA takes in a paltry $11 million yearly in fare revenue compared to an astounding $78 million in operating costs for buses and streetcars.  

Federal taxpayers are ‘asked’ to step in and provide $30 million yearly to defray RTA expenses, and New Orleans taxpayers bridge the rest of the gap through sales and hotel taxes. The Louisiana Senate bill is another attempt to paper over these losses by fining businesses up to $5,000 for having the audacity to use an old streetcar for marketing purposes. Stopping this legislation is the big, easy fix.”  

 Policymakers should also be wary of regulation that claims to act in defense of IP protection, but in reality, chokes the development of new technologies to advance a political agenda. This conduct is most evident in certain proposals and public statements surrounding artificial intelligence (AI) and copyrighted content. For example, the Federal Trade Commission’s comments to the Copyright Office is essentially a catch-22 for AI companies, as it criticizes AI companies for training their models on copyrighted content without authorization, but at the same time condemns companies for engaging in data licensing deals. Other proposals, like the COPIED Act, would place onerous liability on developers and users of generative AI trained by publicly available and potentially copyrighted content. As some have noted, the bill disguises various mandates as voluntary technical standards, and places an unrealistic expectation that all content used to train an AI model must have explicit consent from its creator. While it is important to ensure that the deployment of this technology does not result in an erosion of IP rights, policymakers ought to be wary of overcorrection that would erode other IP rights such as fair use.    

Policymakers should stop exploiting IP laws and halt attempts to undermine protections for innovators. It’s easy to take intellectual property for granted during a doctor’s appointment, a (disappointing) ride on the streetcar, or a day at the beach. But, those experiences would all be far worse (or non-existent) without patents, copyrights, and trademarks.