Earlier this week, the Commission on the Theft of American Intellectual Property issued its report. The Commission, a independent group, found that international infringement of US intellectual property (IP) — “theft” — is a $300 billion problem.
Regrettably, the report perpetuates the misunderstanding that intangibles equals IP:
According to a figure cited in the president’s 2006 Economic Report to Congress, 70% of the value of publicly traded corporations is estimated to be in “intangible assets,” that is, IP.
No – the 70% covers all forms of intellectual capital and intangibles. Some are covered by intellectual property rights; others are not.
This is an unfortunate missed opportunity. By equating intangibles solely with IP, the Commission was unable to fully develop the richness of understanding that the topic deserves. For example, the discussion of trade secrets dances around the issues of human capital, knowledge sharing and technology transfer that come with running a multinational corporation.
Interestingly, one of the short term recommendations comes directly out of broader concept of intangibles and human capital. The report recommends the expansion of work visas (green cards) for STEM university graduates — noting that many of these students are forced to return home after graduation:
Many of the 77,000 graduates who return home every year have knowledge of American intellectual property, gained in the course of their studies or in internships during their time in the United States. This intellectual property is of great benefit to foreign companies, enabling them to more quickly and effectively compete with American companies, both in overseas markets and even in the American market.
In other words, this leakage of human capital represents a form of loss of IP. Good point. But it represents a massive extension of the definition of IP to cover all human knowledge. Taken to its logical conclusion, this would argue for never allowing any visitor to gain access to any US-created knowledge. It would also argue against all of the student, business and academic exchange programs that we have set up expressly to learn from others. A broader focus on intangibles and intellectual capital would have allowed for a more complete discussion of this issue (and others like it) without having to inappropriately shoe-horn it into the IP framework
Thus, the work of the Commission is incomplete. A focus on fostering US of the intellectual capital is needed to expand on the Commission’s work. I look forward to hearing about the formation of the Commission on the Fostering of American Intangible Assets.