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Europe Ransacks Intellectual Property

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By TOM SCHATZ

Published: October 12, 2007

On Jan. 27, 1880, Thomas Alva Edison successfully secured a patent for the incandescent light bulb. Over the next 50 years, this revolutionary invention escalated the Industrial Revolution and increased productivity and economic growth. One idea was worth countless billions of dollars.

Intellectual property has played a central role in the advancement of societies, but never more so than today, when technological innovation and ideas reach into every aspect of our lives, including travel, business, entertainment and communications. No wonder it accounts for more than $5 trillion in the United States' gross domestic product annually.

Despite the significance of intellectual property to the economy, over the past few years the European Commission (EC) has been demonstrating its lack of respect for it. In 2004, the EC ruled against Microsoft in a lengthy antitrust case, and has been considering cases against other successful U.S. companies including Intel. Apple's iPod is the subject of restrictive new laws in France.

But the EC's ruling is not just a record fine of nearly $1 billion. It includes a complex series of demands that essentially amounts to forced exposure of some of Microsoft's most valuable intellectual property, including a requirement that the company redefine its product offering and deliver critical source code to competitors free of charge.

The ruling is part of the pattern in European governments, regulatory bodies and courts that abuses time-tested intellectual property rights. There is a disregard for the innovating progress of one company and rewards for the lack of innovation and sound business principles in others. Rather than helping consumers, these actions are suppressing the free market while elevating the powers and control of an unelected, unaccountable bureaucracy.

The ruling leaves two glaring questions unanswered:

First, what rights do market leaders have to benefit from their own ideas, innovation, concepts and designs? It would appear the EC is defining these rights very narrowly and insisting that one successful idea must be shared with everyone, free of cost.

Second, at what point does an idea, concept, innovation or product become so beneficial and successful that government has the right and power to strip the originator of the beneficial object and redistribute it among competitors and consumers?
Intellectual property rights are pivotal to every aspect of economic growth. Enterprising companies and individuals can only confidently develop and expand in an environment that respects and protects intellectual property.

European legislators, regulators, and judges have a choice: Continue to take the European Union down a historical path of economic depression and consumer punishment by obstinately violating intellectual property rights, or wake up to the implications of their actions against Microsoft, other U.S. companies and their own domestic businesses and restore an environment that protects property rights.

Tom Schatz is president of Citizens Against Government Waste.

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