Intellectual Property

Intellectual PropertyVS

Standard of Living

• Thesis: How to increase your standard of Living through IPR

• Abstract: Private Vs Government Investment– How do you maintain a Comparative

Advantage in the new communications environment

• Counter Argument :– R&D Tax Credits will the capital to sustain Growth

What Is Intellectual Property

• Copyrights,patents,trade secrets and trademarks

• Exclusive, temporary and tradable rights

• Enforcement by civil proceedings (IP rights fall to owners)

Patent and Copyright

• Patent– Length =17 years– Requirements

• novelty

• non-obviousness

• useful– Examination =Yes

– Publication =Yes

– Protection = Claims

• Copyright• Length = 50+years

• Requirements– original

• Examination =Yes

• Publication = No

• Protection = Expression

Private Vs US Government R&D Funding

R&D Funding VS GDP

R&D Funding By Country

U.S. Patents Granted

U.S Patents Granted to Non Resident Inventors

US R&D Tax Credit Policy

US policy:

Definition excludes contract R&D and reverse engineering.

R&D above a base determined by the average of 84-88 R&D is eligible.

R&D depreciated at 100% (the quantity is expensed)

The credit is taxable

Foreign R&D is not eligible

The credit rate is 20%.

Spillover Effects

• Gap can vary by country– R&D benefits may go to other

countries

• Varies By Industry– Pharmaceuticals– Communications– Semiconductors

Spillover Effects• Varies By Technology Type

– Pure science• Bohr: quantum mechanics• Basic Genome Mapping

– Goal-Oriented applied research• Edsion: light blub/photograph• electric batteries

– Scientific Discoveries from solving practical problems

• Pasteur: bacteriology via wine research• mathematics for encryption

Prof. Bronwyn H. Hall

R&D TAX Credit SummaryR&D Tax Credit by Firm Size

Total Assets Amount of Credits No. of Firms Credit per Firm

Under $1m $189 m 4,601 $40,984

$1m-$49m $742 m 8,568 $86,617

$50m-$99m $241 m 717 $335,287

$100m- $249m $312 m 625 $449,939

$250m-and up $5.75B 1,198 $4.8m

Total $7.23B 15,709 $460,604

Source : Internal Revenue Service data for 2000 complied byWashington Council Ernst &Young

IP Balance of PaymentsNet Reciepts for 2002

Nation Plus US Billions Minus US Billions

US 19.1

Japan 5.7

Germany 6.8

France 3.3

China 5.1

India 0.9

Mexico 2.6

Brazil 0.5

Source: World Bank

Conclusion• Most Economic Models show that for every

dollar of R&D credit another dollar of private R&D funds is made

• Protection of IP very important to continued growth in standard of living

• Must Balance social costs Vs social benefits• Increase in Government R&D needed to ensure

social and political reform continue• R&D Tax credit provides small entrepreneurs

the opportunity to bring there inventiveness to marketplace