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Does the New Economy Need All the Old IPR Institutions?

by Paul A David

In the knowledge-driven economy the continuous search for new, reliable knowledge and the generation and absorbing of new information are centrally responsible for structural change and material progress. The focus of attention in the search for improved efficiency has moved from perfecting the management o f routine to sustaining the capacity for problem-identification and their solution. Accordingly, an increasing share of society's domestic resources comes to be devoted to activities of the latter sort, in the course of which heterogeneous intangible knowledge-assets are formed and recombined to generate further knowledge-assets.

Recent decades have seen a significant acceleration in the pace of this extended historical transition. A developmental surge has been quite evidently associated with the dramatic advances in ICT, especially with the progress of digital computing and its convergence with telecommunications. The cluster of convergent innovations that has made possible the phenomenon of the Internet - very large integrated circuits on silicon wafer, digital switches, electro-optical networks, and computer operating systems and applications - may be conceptualized as having provided a new and potent general purpose technology (GPT). This is a tool set that may be utilized in many ways, combining with, transforming, and thereby enhancing the productivity and profitablity of other, pre-existing technologies and organizational modes. The digital GPT cluster is not displacing "the old economy" but instead manifesting its potential for "renewal".

My presentation to the WIDER Conference on "The New Economy in Development" concerned the growing importance of digital data and information goods in scientific and technological research, and the ways in which the extension and protection of intellectual property is affecting access to knowledge critical for sustained economic growth in the developed and developing regions of the world. A central feature common to the multiplicity of diverse processes of economic renewal that presently are underway is t heir intensified dependence upon the generation, capture, processing, transmission, storage and retrieval of information. The spectacularly declining costs of performing those activities promotes this intensification. It induces the search for still newer uses which, the accumulating bodies of information can be put to in order to form the capabilities that we refer to as "knowledge" - which included the capacity to find order (information) - in the myriad streams of data that now can be captured and subjected to systematic analysis.

The collection of data and the preservation of information extracted from them hardly are new human activities. Scientific and scholarly inquiry has long created collections of objects, and observations, as a means of preserving materials that could form the basis of later study and forming the necessary support for the collective memory that allows the cumulative advancement of knowledge. In former times scientific databases were comparatively small (10 kilobytes), and feasible for individuals and small groups of researchers to compile, annotate and maintain by labor intensive methods; they often were published as typeset tables or simple, on-line documents. Recently, however, the size and complexity of scientific databases have grown explosively. With them have grown the potentialities of linking distributed databases to create vast new "discovery spaces" that may be searched for new regularities and hitherto unsuspected phenomena, as well as mobilized to test hypotheses and re-calibrate well-established statistical relationships. They constitute a critical  part  of  the  emerg i n g infrastructure for globally organized collaborative research activities, many  of  which  are  essential for genomic research and the understanding of scientific phenomena relating to global geophysical, climatic and atmospheric changes.  Those a just some among the spheres in which the developed and developing countries have aligned interests in the creation of reliable, publicly accessible knowledge resources, and the formation of capabilities to participate in the process of scientific discovery and its application to solve common human problems.

It is for some of the same reasons that distributed databases and the software tools to work with them have grown increasingly prominent on the landscape of the digitally "renewed economy". The knowledge-driven society is coming to rely more heavily upon, and find new and more productive uses of digitized forms of the rather mundane collections of materials that we now call "databases". Accordingly, the perception of their value as research tools, and foundations for the provision of information services and the management of commercial and financial transactions, has made it increasingly attractive in some quarters to press for the protection of private rights to exploit the contents of databases as legally owned intellectual property. The European Commission Directive on the Legal Protection of Databases, issued in March of 1996, responded to pressures of this kind; it broke new ground by mandating creation of a sui generis property right by the member states of the EU, and also provoked the introduction of parallel legislative initiatives in the U.S. House of Representatives - proposed laws that remain under legislative consideration.

To many writers in the business press, academic economists, lawyers and policy makers, the centrality of information technologies and information goods in the phenomena that are associated with the New Economy has suggested that the world has now entered the epoch of "Intellectual Capitalism". It is claimed that the inherited regime of intellectual property rights institutions must be protected from the disruptive effects of the rapid advance of digital information technologies and computer-mediated telecommunications; this need for further strengthening and global harmonization is said to arise because the same techniques that facilitate the generation and transmission of data and information are facilitating the expansion of digital "piracy". Yet, much of the justification for that view, and hence for the sanguine (and in some quarters enthusiastic) view of recent trends in the elaboration and extension of IPR protections, rests on little evidence and inadequately careful economic analysis. There are respects in which the new technological setting is increasing the seriousness of the drawbacks of using legal monopolies to solve the problems that the "public goods" features of information pose for competitive markets. Yet, the latter problems, although long familiar to economists, are beginning to look increasingly tractable without recourse to IPR protection.

A case therefore can be made that the developed and developing economies have a common interest in halting, and, indeed, reversing the encroachments upon the public knowledge commons that have resulted from the excessive application of copyright and copyright-like protections. Their interest lies not only in reducing the impediments that the enforcement of recent IPR provisions poses to global scientific collaborations. It lies also protecting the public domain in cultural information, and preserving opportunities for future business innovations for the commercial exploitation of emerging peer-to-peer networking techno- logies. In the particular instance of databases, a variety of corrective policies (see Box) can be offered as a basis for discussions of concerted policy action.

Professor Paul A. David is Professor of Economics at Stanford University, and Senior Research Fellow of All Souls College, Oxford. Professor David participated at the WIDER Conference on the New Economy in Development, 1 - 11 May and presented a paper entitled Does the New Economy Need all the old IPR Institutions? Digital Information Goods and Access to Knowledge for Economic Development.