Great Innovations Demand Great Protection
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You have to go back a long way – perhaps to the invention of the printing press, or the automobile – to find a technological advancement that has had as big an impact on the world as the personal computer (PC). Not just the big ones that NASA employed to get man to the moon in the 1960s, but the ones too that can be found in nearly every American home. Today, PCs are as prolific as television sets; some believe the computer will one day replace the TV.
But it has been the marrying of hardware and software—with the latter diversifying and expanding in more ways than we can imagine—that has transformed every aspect of our lives. People now have more ways to social network and build communities; businesses are far more productive and economies more prosperous; health and safety techniques are far more effective; our nation’s security is stronger than ever before; and new forms of entertainment are created every day. From work to play and everything in between, this technology has revolutionized the world we live in… and continue to do so this very moment.
Great innovations like computer hardware and software have immense value and potential. And it extends to the manufacturing sector in terms of efficiencies – whether it is the steel mill or the auto plant that employs American workers. Years of hard work, long hours of effort, millions of dollars invested, and extraordinary research by brilliant people go into inventing them. Because of their extraordinary value, others—from criminal organizations to governments—want to steal these innovations for their own gain or profit. That’s where intellectual property (IP) rights come in. These legal protections—whether they are patents, trademarks, or copyrights—safeguard these ideas from theft. The enforcement of these rights by governments is critical to defending the integrity of an innovation lifecycle that incentivizes future investment and research, and leads to tomorrow’s discoveries. Yet despite our best efforts, IP theft is increasing and doing great harm to our most innovative sectors.
In the digital age, the software industry has become a giant driver of jobs and economic growth. In 2007, 1.7 million people were directly employed in the U.S. software and related services industry. The average salary was $85,600 per year—an amazing 195% increase over the national average per capita income of $43,900.
As an industry, software companies contributed more than $261 billion to America’s GDP (almost 2 percent) and generated a commensurate amount in sales, income, payroll and corporate taxes to federal, state and local governments. This colossal economic force generated a $36 billion surplus for the United States’ balance of trade in 2008. One has to wonder where our economy would be if it were not for this industry, and conversely, where would we be if IP theft was not hurting this important cog in the American economic machine.
The software industry is facing a growing and acute threat from piracy—whether illegally making or distributing copies of software, unlicensed use in enterprises or illegally downloading the software over the Internet. According to the Business Software Alliance (BSA)—the “voice of the world’s business software industry”—one in every five copies of software in the U.S. is stolen, a loss valued at more than $9.1 billion as of 2008. Globally, more than one out of every three copies of software in use is stolen, attributing to a revenue loss of nearly $53 billion. And this is taking its toll on American jobs. In China, for example, BSA’s preliminary conservative estimate is that the U.S. job losses due to piracy number at least 25,000 direct jobs, and that doesn’t include the very significant multiplier effects on jobs in other sectors of the economy.
In some countries, software piracy can be upwards of 70-80%. Not only does this do great harm to software companies who are being ripped off on a massive scale, there is a double whammy for the U.S. economy and our global competitiveness. When foreign companies steal business software designed to make them more efficient and effective, they also gain an unfair advantage over American firms by avoiding the costs our companies incur by actually purchasing their software. Less cost allows them to under-bid U.S. firms, spend more on R&D, or even pay their workers more. It simply is not fair, and it all goes back to the underlying crime of IP theft.
With a staggering national unemployment rate of nearly 10%, and a trade in goods and services deficit of $40.3 billion, the problem of IP theft needs to be addressed immediately. An environment that defends innovation will not only save jobs and help our struggling economy, it will foster economic growth and a renewed spirit of creativity; lack of serious enforcement will do just the opposite. America cannot afford the latter. But we have a choice: either confront the growing crime of IP theft and create good jobs, or stand by and watch them disappear. To me, this is a no-brainer.
This week, the U.S. Intellectual Property Enforcement Coordinator delivered to Congress America’s first-ever National IP Enforcement Strategy. This plan has the potential to strengthen our enforcement efforts in safeguarding America’s ideas, protecting our innovative and creative industries and growing our economy in the process. This plan is long overdue, but a bipartisan Congress did the right thing by mandating it in 2008, and the Administration did a good job in delivering it this week. Now it is time for action, for moving forward on this plan and implementing it while Congress, the executive branch and industry continue to fine tune it. There is too much at stake to wait any longer.
Great innovations like the computer (both its hardware and software) always lead to new opportunities and novel discoveries. But the technology has transformed the human race and civilization in positive ways too numerous to list. If we want this change and innovation to continue, then we need to work to stop the explosion of software piracy that is occurring all around us, on the Internet, by end-users, and by enterprises. The White House’s new national strategy promotes coordination of programs and resources across the Federal government, provides a renewed focus on these challenges and promises real progress. Working closely with Congress, our trading partners, and the private sector, success is possible. After all, it’s our only option.