The United States and Brazil Aaron Shaw
businesses, states and citizens in the developing world.
In non-OECD countries, the consumption of informational goods comes at a high cost. Not only is the price
paid for licenses and royalties worth more per capita in
real terms, but the resulting profits flow to the multinational firms that dominate these sectors, the majority of which are based in developed countries.
Since 2000, worldwide revenue from licenses
and royalties has doubled to almost $140 billion
last year. However, the distribution of that revenue
is skewed. Wealthy OECD countries accounted for
approximately $97 of every $100 earned. Just over
$50 of every $100 went to the United States alone. By
contrast, Latin American and Caribbean countries
combined accounted for $0.005 (one half of one cent)
out of every $100, according to the 2008 World Bank
Development Indicators database. Such a vast income gap
in some of the world’s most
dynamic industries has only
fed the frustration of developing-country governments and
to exclusive, or “maximalist”
forms of intellectual property
have also emerged from within developed countries. During the past 20 years, the spread
of personal computers and the Internet has radically reduced the cost of reproducing and distributing
informational goods and is giving rise to a thriving
economy based on access and sharing. This transformation has undermined the logic of exclusion at the
foundation of much intellectual property regulation.
The situation poses a threat to companies in a
number of industries—such as entertainment and
pharmaceuticals—which continue to rely on maximalist IP to guarantee stable revenues. Aggressive
tactics by these industries’ lobby groups and lawyers
have succeeded in preserving a strong voice in the
U.S. Congress and among the appointed officials in
charge of trade, commerce and IP law enforcement.
These victories may prove Pyrrhic: they have come at
a steep cost in terms of public relations, and criminalize behavior that has already become commonplace.
Open Innovation and Access-Oriented Business Models
Within the private sector, support has
grown for a more flexible approach
that can accommodate enhanced
opportunities for information sharing and reproduction. Nevertheless,
the entrenched interests behind the strict-enforce-ment agenda show no signs of backing down.
The increasing acceptance of research and
successful experiences with techniques of “open
innovation”—essentially information-sharing and collaborative approaches to solving complex problems—
has facilitated once unthinkable alliances in support
of less restrictive forms of IP. A growing number of
companies in research and
sectors now participate in pat-ent-sharing pools or outsource
their product development
through open online competitions such as those managed
by InnoCentive (http://www.
More than any other sector, information technology
firms have led this charge
toward openness and shar-
ing—in particular, IBM, Sun Microsystems, Intel,
Nokia, and Google. Having already invested massively in sites and services that depend on freely
reusable information goods, these firms find it in
their best interests to resist the sort of rigid enforcement agenda proffered by the industry groups in the
music and film industry. The tech companies have
also been joined by Procter & Gamble, which recently embraced research competitions and IP-sharing as
a means of distributing the risks and costs of basic
research and new product development.
In addition, the number of start-ups that incorporate sharing, remix and flexible IP into their business
models continues to grow. For example, the California-based Magnatune offers subscription-based access to
unrestricted, freely reusable and, in some cases, redis-tributable music. The Magnatune business model not
countries, IP functions
more like a regressive tax
on progress—a barrier
blocking equitable entry
into the network society.