When Patents Are Stolen, So Are American Jobs

Ideas build nations. Great minds fueled the economies of nations as far back as the ancient Egyptians. Yet, after only a bit more than 200 years, America has become the world’s innovation leader.

Small and medium-sized American companies generate the overwhelming percentage of this creativity, filing 13 more patents per employee than large corporations do.

Meanwhile, the core copyright industries alone (not including the broader sector) lead all major industry sectors in U.S. exports and have grown three times faster than the overall economy in the past 20 years. Core copyright industries are those that create copyrighted works as their primary product, including motion pictures, music, software and publishing.

Our intellectual property (IP) is in demand everywhere around the globe.

Unfortunately, not everyone who demands our IP cares to pay for it.

Shutting down the theft of this property – especially if we were able contain one particular country — would have an overwhelmingly positive impact on job creation and the American economy.

The country most notoriously connected to IP theft is China, which according to a 2009 report issued by the U.S. International Trade Commission, found:

“Chinese IPR infringement and indigenous innovation policies largely block U.S. firms from China’s enormous government procurement market. These policies cost the U.S. IP-intensive economy that conducted business in China in 2009 an estimated $48.2 billion in sales, royalties, or license fees. Moreover, the Commission found that if China raised its IPR protection and enforcement efforts to comparable U.S. levels, this would translate into approximately 923,000 new jobs for U.S. IP-intensive firms.”

Now comes word of another country condoning IP theft, this time from India. India effectively ended Bayer Corp.’s monopoly on a patented cancer drug, licensing a much cheaper generic under a unique law aimed at keeping costs affordable. Bayer Corp., a subsidiary of the German pharma giant, is located in Pittsburgh, Pa.

According to the AP, “In a decision likely to upset Western pharmaceuticals, India’s patent office approved Natco Pharma Ltd.’s application to produce soreinib, a kidney and liver cancer treatment.”

The Indian ministry has decided that a right cannot be absolute and the Indian patent office can force companies to grant licenses to generics in cases of public emergency or where they can show patented products are priced out of reach.

The AP notes that this is the first case of compulsory licensing under India’s unique patent laws passed in 2005 and only one other nation (Thailand) has ever issued such a compulsory ruling.

It also reported that Western pharmaceutical companies have been pushing for stronger patent protections and rules to clamp down on a $26 billion Indian generics industry they say is overstepping intellectual property rights.

This is all the more troublesome because we already have a U.S. goods trade deficit with India of $4.7 billion in 2009. U.S goods exports in 2009 were $16.5 billion, down 6.9 percent from the previous year. Corresponding U.S. imports from India were $21.2 billion, down 17.6 percent. India is currently the 17th largest export market for U.S. goods.

We have a trade deficit with India and they reward our loyalty by trashing our patents and intellectual property? That’s not fair play and that’s not how America should conduct business.

To get a feel for how duplicitous this Indian IP grab is, according to the Business in India website: “The importance of intellectual property in India is well established at all levels — statutory, administrative and judicial. India ratified the agreement with the World Trade Organization (WTO). This Agreement, inter-alia, contains an Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS) which came into force from 1st January 1995.”

This agreement specifically covers copyrights and related rights and trade marks.

If other nations around the world see this ruling by India as a license to follow suit, we could see U.S. IP and patents under attack in other countries.

The United States must fight back. It starts with the Import Administration and the Patent and Trademark Office, divisions of the U.S. Department of Commerce, who are dedicated to enforcing our international commerce agreements. But they are woefully understaffed.

We need to invest in a dramatic increase in the legal personnel in these trade-enforcement groups and we must give them the resources they need to deal with the enormity of the problem.

When nations such as India and China steal our intellectual property, they are stealing from American companies, their employees, and from the American people.

This should become an issue vital to every American. Our economy suffers, our employment picture suffers, and our prestige suffers when our patents are ignored.

As a result, the American consumer pays more for just about everything as nations around the world get a free ride on everything from pharmaceuticals to software.

Don’t ignore this issue.

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