试听180秒077：A Menu of Pro-Technology Policies

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Hello, Himalaya’s subscribers. My name is Timothy Taylor. 

And today  we're going to discuss a menu of pro technology policies. Usually when we think about the idea of property, we think about goods and services. And by goods, I mean like buying a place to live or buying a bowl of noodles, buy services, we think about things like a train ticket or a haircut. And if you own something, you own a good or service. That means that in a legal sense, it's your property. You're the one who gets to use it, and others are not allowed to take it away from you. 

But when we talk about new technology and innovation, we're talking about ideas, not goods or services. Is it possible to own an idea? Is it possible for an idea to be property. In the term economists use what is intellectual property. These feel a little like questions of philosophy rather than economics, but they've been going on for a long time. When you look into it, the term intellectual property goes back a long, long time. I found one book review written back in 1769, about 250 years ago, where they complained that the author of this book was using the intellectual property of others by copying from other books. 

I don't know if you can own an idea exactly, but you can own the right to use and sell that idea in the economy. And in this lecture, we'll talk about how that idea of intellectual property is an important way of creating incentives to come up with innovations and new technology. We'll discuss this in two main parts. First, we'll talk about examples of intellectual property, patents, trademark, copyright, and trade secrets. And then second, we'll talk about how does intellectual property provide incentives. Let's start by talking about examples of intellectual property. 

And I'll just say that the start that all countries around the world have patents, trademarks, copyrights, and trade secrets. In fact, the laws around the world often look very much the same, because there are a number of different international treaties about these issues. And they often require that countries respect the intellectual property rights of others. Maybe the best known example of intellectual property is a patent. A patent is an exclusive legal right granted by the government to use an invention for a specific and limited time. By use the invention either the patent holder can use it directly in a business that the patent holder runs, but also the exclusive right to sell that patent, so others could have a license to use it. 

In China modern patent laws goes back to the 1980s with the creation of the State Intellectual Property Office. In August 2018, that was renamed the China National Intellectual Property Administration. And China has had three kinds of patents. One is called an invention patent, and it's designed to protect bigger and more important inventions, like brand new products or brand new methods of making things. To get this kind of patent, you need to persuade the patent office that your idea really is new and different, not obvious, really different from anything that's come before. And that's difficult. It's a fairly extensive process. 

But if you do persuade the patent office, you can get protection, patent protection lasts twenty years. Utility patent is sometimes referred to as being for smaller inventions, like improvements to an existing product. It still needs to be new, but it's easier to apply for and easier to get. And it only lasts for ten years. And design patent is for the appearance of a product. It's not how the product works or how it's made. It's not directly about the functionality of the product. It's just how it looks. And again, that's easier to apply for and easier to get, but it only lasts ten years. 

A second kind of intellectual property is a trademark which refers to a word or name or symbol that indicates the source of where a good or a service comes from. And this helps a seller establish a certain kind of reputation. You can think of the trademark as like the names of airlines that you fly on. An example from a global market might be the McDonald's fast food chain. McDonald's has about thirty five thousand restaurants around the world. Less than half of those were in the US and several thousand of them are in China. 

The name of the restaurant McDonald's and the golden arches symbol that often is nearby are trademarks, a firm can renew its trademarks over and over again as long as it keeps using them. The main benefit of a trademark is that it helps consumers. If something has a trademark, then you know who made it and you know something about the quality of their product. So for example, if I want fast food and I see a MacDonald sign, basically I know what it is I'm going to get. For better or for worse, and that's useful information for consumers in this world we live in. In China you apply at the China trademark office to get your trademark. That's now part of the new China National Intellectual Property Administration I mentioned a minute ago. 

A third kind of protection is copyright protection. Copyright is legal protection against copying original works of authorship. And that would include literary works, musical works, maps, drawings, other kinds of works. In China if an individual creates something like that, copyright protection will last for the authors lifetime and then fifty years after death. For a corporation, copyright protection would be fifty years after the original publication of the work. In a legal sense, copyright comes into existence when you create something, when an author or a creator does something like that, you don't technically have to apply for it, but it's a really good idea to apply most of the time,if you think the work might have some commercial value. You can register your copyright at the copyright office in China,this would be the National Copyright Administration and that provides an official record that you really are the author of this new item. 

If you register, it helps to avoid arguments later about who actually did something first. And last, I checked, roughly two million works were registered at China's National Copyright Office. One interesting issue with copyright in recent years involves computer software. In a way, computer software is like a book or a novel. You take a language, in this case, a computer language, and write something with it. However, copyright protection lasts a lot longer than a patent fifty years instead of only twenty. The trick is that copyright doesn't stop people from writing similar things. If one person writes a book where two people fall in love, you can't prevent anyone else from writing a book with that same broad theme. 

So copyright for software, it can't stop people from doing other software in the same general area. It just stops someone from an identical copy. And a final example would be trade secret protection. A trade secret is a formula or an item of information that gives a business an advantage over its competitors. To be a trade secret, it has to be something that's not generally known or easily discovered, and where the business makes a reasonable effort to keep it secret. One famous US trade secret is the formula for coca cola, which is not patented. It's not protected under copyright. It's just kept a secret by the company. 

A trade secret applies when a company has important information or a design or recipe, and it doesn't qualify for a patent, it's not a new invention. But if the company tries to hide this non public information, you can't just walk up and steal it. Many trade secret cases involve people who leave one company and go to another company and take some information with them. For example, a few years ago, there was a case in China where someone had been working for Lao Gan Ma, the company that makes the hot sauce. And that person was found to have downloaded lots of information about the recipe and then moved to another company which started making a very similar sauce. 

So that would be a case where you suspect a trade secret has been stolen. With all of these different kinds of intellectual property protection, how does it work?  This moves us to our second main theme. Basically, intellectual property works by limiting competition. As we discussed in the previous lecture, if you didn't have intellectual property, you would have to worry that your invention or your trademark, or your new book, or your new pod cast would just be copied and sold by others. And if you're worried about that, there's less reason to produce it in the first place. 

In a way, intellectual property is a way for the government to give an inventor or a creator a monopoly over the use of that invention. And as we know earlier, a monopoly happens when there is a barrier to entry for others. When there's a barrier to entry and you have a monopoly, then the producer doesn't have to worry about direct exact competition. And that producer can charge higher prices and earn higher profits. But it's important to remember the goal of intellectual property. The goal is not to make inventors happy or rich. The goal is to give those inventors and incentive so they produce innovations that will benefit everyone, not just themselves. And as a result, the monopoly that you get from intellectual property is not permanent. 

There will often be arguments over the details. For example, say that some company invents a new drug and gets a patent, but the company can't sell that drug until it's done safety tests on people, which can take years to see if there are any long term side effects to worry about. Should that drug company get a longer time for their patent to make up for all the time they had to spend doing testing? Well, that's something we could argue back and forth about. Or I'll give you one little long term advance warning of a problem that's happening with copyright protection in the US and it will start happening in China soon，I predict right around 2040. After all, stuff that got fifty years of copyright protection in China back in the 1990s, we’ll start going off copyright in 2040. 

And of course, most of what was copyright in China in the 1990s will be forgotten by the 2040. But there will be a few characters or novels or songs that are still popular. And companies will say, “well, we should just extend copyright to protect these a little bit longer.” So there are always arguments. Should a regular patent be twenty years or twenty five years or fifteen years? Should it differ by product? How long should copyright protection be? And it's important just to think about these as trade offs. It's just a question of what incentive you want to give inventors, because that's the long term goal. 

Another issue that sometimes comes up is called a patent thicket. And a thicket is the idea of a company that gets lots and lots of patents to make a certain product. And it keeps getting new patents over and over and over. So in effect, its patent protection will never run out. The classic US case here is a company called Xerox, which invented the photocopy machine some decades ago. In the early 1970s, Xerox had more than one thousand seven hundred patents on all different parts of the photocopy machine. Every time Xerox made a tiny little improvement on the machine, it got a new patent on the new improvement. 

In the early 1970s, the US government said that Xerox was abusing the patent process in this way. They were trying to keep a permanent monopoly, not a temporary one, and they required Xerox to allow other companies to use its patents and to provide competitors with access to some future patents. Not surprisingly, there was immediately a lot more entry and competition in the US market for making photo copy machines, which tended to benefit consumers. A similar worry today is that a lot of high tech electronics products may depend on many, many different patents. 

And if producers are always getting new patents, that may create a patent thicket that blocks others from coming into the market. Again, remember, the ultimate goal here is not to be nice to innovators and not to make innovators rich. Instead, the idea is to encourage a steady stream of innovations that can increase the standard of living of the economy. It's often true that new innovations will build on older innovations. And if you give current inventors too much power, that can slow down or block later inventors. So we need to stand ready to tinker sometimes with what patent and copyright and trademark protection mean. 

Another common pattern around the world overtime is that as an economy develops, more and more firms in that economy will rely on intellectual property. More and more firms will have patents and copyrights and trademarks and trade secrets. And as that happens, the enforcement of intellectual property rules tends to rise. So as countries become better off, they tend to worry more about protecting intellectual property. That's already been happening in China in recent decades, and I expect it's a pattern that will continue into the future.

Let's finish here with a few review questions. What's the difference between a patent and a trade secret? What's the difference between a copyright and a trademark? How does intellectual property provide incentives for innovation? And can intellectual property in some cases go too far? In the next lecture, we will talk about China's technology agenda looking ahead, including not only intellectual property, but many other policies too. 

I'm Timothy Taylor. Thank you for listening to Himalaya.