(Reprinted with permission from EuropeanCEO Magazine, published in the July/August 2005 issue)
Today, multinational companies, especially American, European and Japanese, complain about the threat to their intellectual property (IP) assets (copyrights, trademarks, patents, trade secrets, etc.) as demonstrated by raids and seizures conducted around the world. Public source media report on counterfeit and pirate products being seized every day somewhere in the world. There have been hundreds of media reports about the efforts of businesses and governments to thwart today’s criminal intellectual property thieves. Today, governments engage governments in an effort to stem the criminal activity resulting in IP theft.
Moreover, major intergovernmental organizations like INTERPOL, World Customs Organization, World Intellectual Property Organization, World Health Organization, and the Organization for Economic Cooperation and Development, to name just a few, concern themselves with the issue of IP enforcement and the threats posed by sub-standard and dangerous counterfeit products. Whether these organizations discuss the issue at meetings and conferences or provide training or facilitate enforcement actions, governments have identified the issue of IP crimes as one that should have the attention of all of these and other organizations. This represents a significant investment of time and energy of the business sector to prod governments into placing the issue of IP crimes on the agendas of these organizations.
One result of the heightened level of IP theft is the amount of time and energy that government officials and business leaders spend engaging their counterparts in the countries where counterfeit and pirate production is occurring and where enforcement is woefully inadequate. Thus, a second result of the massive trade in counterfeit and pirate goods is the globe-trotting of government and business officials who try and convince authorities in the problem countries that more needs to be done. And, flowing from the high-level activity is the day-to-day enforcement efforts by industry and government.
In some of the countries that are responsible for the production of counterfeit and pirate product, the illegal activity is more insidious. The outright theft of IP assets is one way to learn how to improve their own products and compete directly with the IP asset owners. The theft of trade secrets and patents fuels the growth of local industries and companies. As a result, some find shortcuts to access new technologies and it is done with little or no penalty.
The massive counterfeiting and piracy problem is compounded by the fact that some of the countries that are the most prolific sources of counterfeit and pirated products are becoming major economic competitors, challenging the existing global economic order. The difficulty for the United States, Japan and the European Community is the effort to change behaviour in foreign countries, i.e., improve IP protection and enforcement, which requires tremendous effort and resources through various direct and indirect programs that use funds from the U.S., Japan and Europe. Millions of dollars are spent annually either directly by governments to provide IP enforcement training and education or indirectly through funds from the budgets of intergovernmental organizations for the purpose of training and education on the subject of combating IP crimes.
As China, India, and Brazil’s massive labour pools and education systems combine to challenge global economic leaders, a lot is written about future competition and how the United States, Europe, Japan and others will compete effectively in the future. Essentially, the future lies in the continuing ability to be creators and innovators. The ability to create and innovate rest on that most fundamental function of government—providing a strong educational foundation from which the next generation can learn in order to become creators and innovators who create and invent new products that need to be made with jobs that do not yet exist.
Countries like India and China get a lot of attention for outsourcing, cheap labour and for the theft of intellectual property (trademarks, copyrights, patents, trade secrets, etc.). Ultimately, countries like China, India, Brazil and a few others, if not already, will be stiff economic challengers to the U.S., Europe and Japan. The growing middle classes of the emerging economic heavyweights represent improvements in their educational and economic systems as well as their ability to produce and compete globally.
The strength of the currently dominant developed economies has, to a great extent, emanated from the creativity and innovative efforts of individuals. Whether in the manufacturing, pharmaceutical, technology, entertainment or other sectors, the competitive advantage and lead in the global economy have, to some extent, been due to the ability of individuals to bring their intellectual talents to bear in these and other industry sectors.
Today and in the future, the ability to continue leading or to be competitive among the leaders will depend upon future creativity and innovation. The future national economic security and stability of the United States, Europe and Japan will depend upon strong educational systems that produce the types of individuals who will have the necessary educational foundation to be those creators and inventors either founding new products that will result in new industries and jobs or contributing to existing enterprises that will create new products and, hopefully, require more domestic workers.
No one questions the need to challenge countries stealing the intellectual property assets. Indeed, those companies that are victimised must continue to take steps to protect themselves and their governments must raise the issue of inadequate protection and enforcement when massive illegal production and distribution occurs. Significant energy is expended to engage trading partners to stop the theft of innovative and creative economic assets. And, significant amounts of funding are dedicated to helping these trading partners to develop and to combat IP theft through training and education programs and through efforts of joint enforcement actions. At some point, however, one must wonder if the national economic security for the future requires investment today into the educational systems to produce future creators and inventors so that the U.S., Europe and Japan continue to be the leaders or one of the leaders in a more competitive global economy.
While the U.S., Europe and Japan are busy looking outward to foreign governments and engaging them to adopt stronger legal regimes and enforcement systems to protect IP assets abroad, are sufficiently strong steps being taken domestically? Hopefully, governments would have more control over what occurs in their domestic educational and economic systems than the ability to get trading partners to combat IP crimes. Perhaps it is necessary to assess how much is being done to try and ensure future economic security through investment in improving the education systems of the current leading developed country economies. The governments of the current leading economies may need to re-examine their long term domestic policies in order to strengthen and improve the product of their public education systems not simply for education’s sake, but because of the implications for future economic growth.
From a corporate perspective, this may raise questions about industry’s role in promoting and advocating for stronger educational requirements. A more basic question may be whether the issue is at all important given the global nature of trade and the global image of companies. Do companies today have sufficient national identities to press for better national policies such as a stronger educational system that will provide future creators and innovators? Or, do companies today believe that the needed creativity and innovation will come from any number of countries and, therefore, the issue is of lesser importance?
In view of the growing competition among businesses, it would seem that future success depends upon a well-trained, well-educated and skilled labor pool around the world. There is no doubt that valuable new employees will need to come equipped with a good educational foundation that will be complemented by a company’s internal training and education program. But, the companies may have to grapple with the issue of the quality of the education new employees bring with them to the job. Realising that many companies have flexibility due to the location of their operations around the world, do companies headquartered in the U.S., Europe and Japan feel any pressures to insure that they keep certain critical functions and operations in their “home” country or that they find certain skills in those countries? Today’s global economic and competitive environment may not place these issues so squarely at the doorstep of corporate executives.
Perhaps the answer is more important to governments if they are looking at the future. Indeed, the rise of other economies to challenge the U.S., Europe and Japan should be prompting the United States, European Union and Japan to examine how they can maintain their competitiveness. The governments’ ability to deliver high quality basic education is only one element, but a critical element for the future. Ultimately, creativity and innovation, the ability to produce what does not yet exist and grow new industries leading to new job opportunities are examples of just a few things that need to be considered and discussed. Industry’s ability to create intellectual property is linked to building from the fundamentals—quality education.