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The Logic of International Intellectual Property Protection

by Randolph J. May and Seth L. Cooper     •     Free State Foundation

Intellectual Property - BrainSecuring protection of American intellectual property (IP) rights internationally is an economic imperative. It is also a constitutional duty. In today’s information economy, copyrights and patent rights provide critical financial investment incentives for research and development of new products and services. And IP constitutes a potent source of economic value and prosperity. According to an official U.S. Department of Commerce report, IP-intensive industries in America generated an estimated $5 trillion in revenues in 2010 alone, providing over 27 million jobs. Since then, those figures almost certainly have grown. Another report estimated that the copyright industries alone contributed $1.1 trillion in value added to the U.S. economy and employed nearly 5.5 million workers in the U.S. in 2014.

As IP becomes increasingly vital to our nation’s wealth and prosperity, the need to ensure its protection on a global basis increases correspondingly. The American economy suffers staggering losses each year to international IP theft. According to the IP Theft Commission (2013), these losses likely exceed $300 billion annually. IP theft is an injustice to the IP owners, diminishes economic prosperity, and undermines job opportunities. Indeed, this is a reason why it is so important to conclude international trade agreements, such as the recently-negotiated Trans-Pacific Partnership, that contain meaningful intellectual property protections.

The Constitution expressly makes protection of intellectual property rights an imperative of the federal government. The Intellectual Property Clause contained in Article I, Section 8, provides that Congress has the power “To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.” The IP Clause is premised on the understanding that copyrights and patent rights are property rights grounded in the intellectual and physical labors of authors and inventors.

There is strong constitutional foundation for international protection of Americans’ copyrights and patent rights. The IP Clause permits protection of foreign intellectual property under federal law – or at the very least, permits it as a means of securing American IP rights abroad. Federal legal recognition of foreign IP constitutes fair play. As a matter of common sense and experience, doing justice and providing comparable treatment to rights of foreigners facilitates foreign cooperation to protect American IP rights. Treaty-making with foreign nations constitutes another critical constitutional mechanism for securing international protections for Americans’ IP rights.

The Copyright and Patent Acts of 1790, adopted by the First Congress and signed by President George Washington, constituted crucial first steps in fulfillment of the IP Clause’s mandate. But those landmark laws only provided domestic copyright and patent right protection to American authors and inventors. In most instances, early 19th century theft of American intellectual property was entirely permissible under the laws of foreign nations. For its part, America offered no copyright or patent right protections for foreigners. Nor did America offer IP protections for imported creations and discoveries already protected under foreign laws. American publishers openly engaged in literary piracy by reprinting cheap, royalty-free American editions of foreign works by Sir Walter Scott and Charles Dickens. A foreign reprint “courtesy of the trade” custom emerged among a small handful of prominent northeastern American publishers. By this custom, publishers typically agreed with one another concerning which firm would pirate a particular work, effectively monopolizing the American reprint market. And American tradesmen imported foreign inventions and, without license, profited by their use in manufacturing or other business activities. Without protections, creative works by American authors were left prey to foreign literary piracy, too. Publishers in Great Britain and other nations reprinted American works without obtaining consent or paying royalties to American authors, such as Washington Irving and James Fenimore Cooper.

Foreign piracy of American literary works rendered a serious injustice to authors. It also inflicted incalculable financial losses. This significantly harmed the ability of aspiring authors and inventors in America to earn a living through their creativity and innovation. Absence of international IP protections undermined the incentive of aspiring authors to engage in the extensive mental and physical labors and to make resource investments necessary to pursue new literary achievements.

American inventions were also an open target for unauthorized technology transfers to manufacturing and commercial interests in Britain and other nations. However, within only a few decades after the Founding, rapidly industrializing America recognized the expediency, if not the justice, of respecting the intellectual property rights of foreign inventors and inventions. So, in most cases, the Patent Acts of 1836 and 1839 permitted foreign nationals to obtain patent protections in America. These laws similarly permitted American patents for foreign discoveries regardless of whether they had previously been patented in other nations. Federal patent protection for foreign nationals and citizens alike was carried over into the Consolidated Patent Act of 1870. Thus, laws passed by Congress in the 1830s supplied the basic groundwork for all future federal patent laws respecting international patent protection, as well as the basis for America signing patent treaties with foreign nations.

By contrast, securing international copyright protections in America involved several decades of advocacy by American authors, artists, lawyers, and statesmen. Consideration of the primary arguments driving the American international copyright movement is therefore instructive to understanding the logic of intellectual property in the American constitutional order. The case for international IP protection – including both copyrights and patent rights – is rooted in justice to the author or inventor who labors to produce a creative work or invention. The product is the intellectual property of the author or inventor. And as the owner of that property, the author or inventor is thereby entitled to exclusive control over the reproduction of that property and to reap the financial rewards arising from the production and use of copies. Government is responsible for securing individual private property rights, including IP rights. One of government’s foremost duty is protect its own citizens’ property rights. Nonetheless, foreign citizens’ property rights are entitled to respect as well, except where compelling circumstances counsel otherwise. As both a principled and practical matter, by respecting the property rights of citizens of foreign nations on equal or at least similar terms with its own, a government may best secure foreign protection for its own citizens’ property rights. Thus, international IP protection is based on the justice of rewarding the labor of authors and inventors, whether foreign or domestic, and bolstered by a beneficent expediency in more fully securing IP rights from other nations on a reciprocal basis.

The movement for international copyright protection did trigger America’s only organized and influential opposition movement to expanding intellectual property rights protections in the 19th century. Even so, the opposition movement was principally concerned with international aspects of intellectual property protection. Also, the opposition movement was primarily directed toward practical considerations, not against the natural law theory of literary or industrial property rights. According to the natural law perspective, constitutional protection of intellectual property rights is substantially grounded in abstract notions of doing justice not only to individual authors and inventors but to foreign countries as well. To a large degree, the 19th century movement against international copyright was fueled by the American publishing industry’s protectionist concerns. A small handful of major Northeast American publishing houses established their own “courtesy of the trade” custom, thereby effectively monopolizing the reprint market. In times past and present, IP rights have been misguidedly attacked as government-conferred monopolies rather than respected as property rights. Yet, throughout the 19th century it was the protectionist – indeed, monopolistic -major American publishing houses that opposed expanding IP rights protections.

Throughout the 19th century, the movement for international copyright presented a compelling logical case for the exclusive rights of authors to control the reproduction of their literary property and reap the financial rewards and for the need to secure those rights from infringement abroad. Early leaders of the American copyright movement in legal and political arenas included authors and writers such as Washington Irving, James Fenimore Cooper, and William Cullen Bryant. Lawyers and statesmen were also part of the early international copyright movement.

Henry Clay was the most widely known American statesman to actively support the cause of international copyright in the late 1830s and early 1840s. Between 1837 and 1842, Clay filed five international copyright bills in the Senate. After gaining appointment as Chairman to a Select Committee to consider the subject, Clay presented the first Congressional committee report favoring international copyright. It declared: “That authors and inventors have, according the practice among civilized nations, a property in the respective products of their genius is incontestable; and that this property should be protected as effectually as any other property is, by law, follows as a legitimate consequence.”

Francis Lieber, deemed by many to be America’s first academic political scientist, published the century’s most respected academic defense of international copyright protection. Lieber’s pamphlet, On International Copyright (1840), emphasized that copyright is a form of property created by a person’s labor which government is entrusted to protect:

Both personal and intellectual activity appear clearest in a literary production; and if any product of individual activity has any claim whatever to an individual title of property, it is a literary composition; if there exists any species of property not made by government, but existing by its own spontaneous right, and which requires only to be acknowledged by way of protection on the part of government, it is literary property.

In 1848, New York lawyer John Jay II wrote a petition that one historian has called “the most elaborate and carefully argued defense of international copyright to reach the halls of Congress before the Civil War.” Wrote Jay, “the passage of an international copyright law, by which foreign authors shall be allowed their copyright here, and American authors assisted to their copyright abroad, would not only be an act of national justice, but of national policy.” Jay’s petition identified nearly 600 American books that had been reprinted in Great Britain, evidencing the extent of foreign piracy and lost rewards due to American authors.

The post-Civil War international copyright movement in America built upon the central arguments of its forbears. The American Publishers’ Copyright League and other organizations sprung up in support. Authors and creative artists, including Henry Wadsworth Longfellow and Samuel Clemens, also lent support. The primary justification for international copyright urged by supporters was the claim, as a matter of natural right, of authors to the fruits of their labors. As Longfellow put it in his 1886 Senate hearing testimony:

One could live a great deal cheaper, undoubtedly, if he could supply himself from other people’s labor or cost. But at the same time-well, it was not called honest when I was young, and that is all I can say… and if I were asked what book is better than a cheap book, I should answer that there is one book better than a cheap book, and that is a book honestly come by.

Finally, the International Copyright Act of 1891 established the principle of reciprocity, whereby American authors and creative artists could obtain copyright protections from foreign nations similar to those already enjoyed at home. The 1891 Act laid the groundwork for future international cooperation by the United States to secure copyrights, including American signing of copyright treaties with foreign nations and trade agreements.

Today, the United States is a signatory to numerous treaties with foreign nations that incorporate international protection of IP. The recently concluded Trans-Pacific Partnership Agreement (TPP), which will now come before the Senate for ratification, is but one example. Precise answers as to how American IP rights may best be secured internationally through laws passed by Congress or by treaties signed with foreign nations inevitably involve practical judgments that take specific facts and circumstances into account. But all such judgments begin with recognition of the IP Clause’s imperative to secure the IP rights of American citizens and the principled and practical reasons for treating the IP rights of foreign nationals justly.

In sum, by providing protections for the IP rights of foreign nationals on terms equal or similar to the way that the United States protects its own citizens’ IP rights at home, our government acts in a principled and practical way to secure our citizens’ intellectual property rights abroad. International IP protection thus fulfills the Constitution’s promise to secure the rights of American authors and inventors. Making good on that promise through the negotiation and ratification of international trade agreements and otherwise is all the more vital in light of the crucial role played by intellectual property in today’s information economy.

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Randolph J. May is President of the Free State Foundation, an independent free market-oriented think tank located in Rockville, Maryland.

Seth L. Cooper is a Senior Fellow of the Free State Foundation.