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8
Trends in Global Science and Technology and What They Mean for Intellectual Property Systems

JOHN A. ARMSTRONG

INTRODUCTION

Powerful forces are altering existing patterns of global activity in science and technology. My task here is to look at some of those forces and characterize how they will influence the relationship between research and development activities and the world's intellectual property systems over the next few years.

I undertake this task as a scientist (who holds two patents), not as an expert on intellectual property. Yet from my experience at IBM it is clear that our level of R&D could not and would not be sustained without protection of the intellectual property that results from the $6 billion we spend annually on R&D around the world. We are interested in protecting our intellectual property rights to obtain freedom of action for future manufacturing and marketing, and to provide a level, competitive playing field between companies that perform R&D and those that do not. These dual interests are characteristic of the computer and electronics industries.

Without an intellectual property regime that provides an opportunity for us and for others to gain a return on our various investments, our R&D spending would be both less efficient and lower in absolute terms. Clearly the global and social business impact would be undesirable; less innovation would create less new wealth.

Because the evolution of technology is necessarily a global endeavor, worldwide consistency and predictability in protection of intellectual prop-



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Global Dimensions of Intellectual Property Rights in Science and Technology 8 Trends in Global Science and Technology and What They Mean for Intellectual Property Systems JOHN A. ARMSTRONG INTRODUCTION Powerful forces are altering existing patterns of global activity in science and technology. My task here is to look at some of those forces and characterize how they will influence the relationship between research and development activities and the world's intellectual property systems over the next few years. I undertake this task as a scientist (who holds two patents), not as an expert on intellectual property. Yet from my experience at IBM it is clear that our level of R&D could not and would not be sustained without protection of the intellectual property that results from the $6 billion we spend annually on R&D around the world. We are interested in protecting our intellectual property rights to obtain freedom of action for future manufacturing and marketing, and to provide a level, competitive playing field between companies that perform R&D and those that do not. These dual interests are characteristic of the computer and electronics industries. Without an intellectual property regime that provides an opportunity for us and for others to gain a return on our various investments, our R&D spending would be both less efficient and lower in absolute terms. Clearly the global and social business impact would be undesirable; less innovation would create less new wealth. Because the evolution of technology is necessarily a global endeavor, worldwide consistency and predictability in protection of intellectual prop-

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Global Dimensions of Intellectual Property Rights in Science and Technology erty are essential. It is hard to run a railroad efficiently if the track width differs from place to place. However, that is the situation we have now as we try to conduct research and move technology around the world. But I foresee an expanding realization that innovation and fair trade will move us toward the global approach to effective intellectual property protection that is required. Since World War II, the world has seen two kinds of experimentation with intellectual property systems. In developing countries, we have seen attempts to diminish levels of protection radically. In the developed countries, we have seen attempts to create new sui generis forms of protection. In my view, both experiments have achieved far less than they promised. I see a growing awareness around the world that the basic concepts of intellectual property are sound and that flexible application of those concepts to new developments in science and technology makes sense. I return to these themes repeatedly in this chapter. Why is the importance of intellectual property systems growing? Clearly it is because the role of knowledge, particularly technical knowledge, is becoming much more prominent in modern economic life. I hardly need to assert that to you or illustrate it for you. However, what this means for business and for nations is changing, which is really the theme of this chapter. Twenty years ago, business seminars and academic research paid a lot of attention to investment. In the international setting, the focus was on foreign direct investment. That has changed. In recent years, we have all given a lot of attention to technology and, increasingly, to innovation and its role in the creation of wealth and the increased well-being of nations. Let me give you some images to help make my point. In the 1970s it was as though we had a stage. At stage center sat an imposing figure called investment. The plot was all about attracting investment and calculating investment risk, country by country. Technology played a supporting role and intellectual property was in the program notes, but certainly not on stage. Today, we have a video screen, not a stage. The actor technology is constantly the center of attention on this screen, and now we see investment pursuing technology, trying to keep up. As we look closely at the screen, we see the intellectual property system helping to guide investment in R&D and conditioning the origin, direction, and velocity of innovation. Stated differently, classical and neoclassical economic theories have sought to depict productive human activity in terms of capital, labor, and resources (meaning things in the ground, such as oil and gold). This trio of factors has overlooked innovation as a primary factor. Only in the last few decades have economists begun to look hard at what happens when the results of scientific and technical research are injected into economic activ-

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Global Dimensions of Intellectual Property Rights in Science and Technology ity. This is preparing the way, let me suggest, for a serious scholarly examination of the role of intellectual property in conditioning the creation and diffusion of technology internationally. One of the exciting frontiers for this examination is in the developing countries, and I want to commend the organizers of this conference for pointing in that direction.1 Conventional wisdom in the business world says intellectual property is vital because it is a stimulus to innovation, a vehicle for technology transfers, and a magnet for financing. I would push that further. An intellectual property system is a crucial part of a country's economic infrastructure. It enhances the ability of any country to strengthen and advance its technological base in a sustained way. It helps to build human resources. It conditions priorities in allocating financial resources. It fosters the movement of technical knowledge across borders. Again, although I am not expert on the fine points of intellectual property, it is clear to me from my experience and position that intellectual property is not simply a set of legal provisions. It is a system with integral parts. If parts are missing, less happens and the system is apt to fail. A system that works well will have laws that protect the full spectrum of technology, everything from patent and trade secret protection, to copyright and trademark protection, from semiconductor "chip" topographic design protection, to protection for living matter, computer programs, and more. Just as important, a system that functions well also has reasonably predictable mechanisms for public administration of the various forms of protection and for judicially enforcing individual rights created by the system. A system that functions well creates, within the country, a general public confidence that innovation and creative expression will, in fact, be protected. Countries that have such systems will be able to do more with technology than countries that do not. From my experience around the world I know that there is a high correlation between private firm spending on research and the strength of intellectual property protection in country after country. It is private firm research, more than other activity, that converts scientific advances into useful products and services. Today it is particularly important to think in terms of a comprehensive system because more and more technical activity requires several forms of intellectual property protection. In my industry, we rely on copyright, patent, trade secret and chip topography protection in a major way. People working in the biological sciences, particularly in biotechnology, increasingly 1   For an elaboration of why economic theory has been slow to take up this subject, see Sherwood (1990a).

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Global Dimensions of Intellectual Property Rights in Science and Technology turn to both patents and trade secrets. Together, information technology and biotechnology underlie a large part of many countries' industrial base. So attention to the complete spectrum of intellectual property protection is very important. Now that I have given you a context for my comments, let me tell you how this chapter is organized. First, I describe three trends that characterize global developments in science and technology. They each carry implications for intellectual property. Then, from these trends, two general principles are indicated. Finally, I return to the original context to reaffirm the importance of intellectual property for all countries. Before describing the three trends in detail, I would like to preview the two principles I just mentioned: The first is that because activity in scientific and technological R&D will be increasingly global, it makes sense to globalize intellectual property systems at high levels of protection. The second is that because scientific and technological research will provide the world with constant surprises, it makes sense to keep intellectual property systems flexible. THREE SELECTED TRENDS As mentioned, I have selected three trends that characterize global developments in science and technology. Each carries implications for the ways we shape intellectual property systems in the international context. Trend One—More Surprises from Science The first trend I observe is that science continues to roll out surprises. It was never more true that we should expect the unexpected. Recent discoveries in high-temperature superconductivity, in nanotechnology, and in molecular and genetic engineering are clear evidence of this. I believe this means at least two things. First, for companies and countries, the ability to support high-level scientific inquiry will be central to economic growth and success. The ability to convert scientific advances quickly into products and services for human use will be even more crucial to company and country success. Second, market leadership positions will be eclipsed more quickly and widely than ever before. Indeed, entire industries can disappear when overtaken by new technology. The telegraph industry has almost vanished, the ''public business" of mail delivery is rapidly changing character, and the list can easily be extended. For intellectual property, this trend suggests that our legal systems will have more new fields of innovation to absorb and will need to do so quickly. This, in turn, suggests the avoidance of sui generis approaches, which are

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Global Dimensions of Intellectual Property Rights in Science and Technology based on the assumption that new technological directions demand unique forms of protection. Sui generis laws—each unique by definition—fail to rely on or contribute to a body of consistent, developed principles of legal protection for intellectual property. Uncertainty is the result, and business risks are increased. Innovation is stifled because return on investment is jeopardized by unpredictable application of law worldwide. If we were to follow such a policy direction, we might soon have a bewildering array of legal tools that retard advances in applied science and technology, and delay the delivery of new products to market. The public good will be better served if we stick to basics. By basics I mean that we will be well served by using the existing frameworks for patents, copyrights, trade secrets, and so forth, and by fostering their evolution to accommodate new forms of technology. The basic principles that underlie these forms of protection have proved flexible and served us well since at least the last century. Our reflex should be to expect that the existing, well-tested, basic principles will accommodate new forms of technology in the future, as they have in the past. Let me illustrate my suggestion by referring to computer software. When software emerged as a separate area of innovation several decades ago, it seemed new and different. We were all uncertain about what form of intellectual property protection should be applied. After reflection, however, the fundamental principles of intellectual property were considered, and it could be seen that from an intellectual property point of view, software was not one thing but several. It was seen that from a patent perspective, inventive activity could be involved. Thus, if the standard criteria of inventiveness were met, a patent could be granted for certain aspects of software. Similarly, it was seen that from a copyright perspective, creative expression was involved. Thus the standard criteria for copyright were present, and this form of protection could be applied. Indeed, this protection could be uniform from country to country through application of the Berne Convention. It was also seen that for certain kinds of software, particularly customized software, standard criteria for trade secret protection could be found. Broken down into its several component parts, we now see that software can be served by three forms of intellectual property protection, depending on various factors. I want to conclude my reflection on this trend by stressing simply that when we are faced with new forms of technology there should be a strong preference for adaptation of existing intellectual property systems rather than a flight to exotic new mechanisms. I urge this primarily to achieve global congruence as rapidly as possible when new technology comes into play, chiefly through utilization of the international conventions of Berne and Paris, which have served well in this regard over the last hundred years.

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Global Dimensions of Intellectual Property Rights in Science and Technology Trend Two—Proliferation and Globalization of Research The second trend I observe is a continuing expansion in the topics of research and an increasing globalization of the way research is conducted by private firms. I want to spend more time on this trend because it is less well known than the other two trends. So much is happening at the frontiers of science that research can be pursued in an exponentially increasing number of directions. There is more than enough scientific advance to go around. This is true throughout the full range of research targets, from pure science, to applied technology, to process improvements. At the same time, the ease with which firms can pursue research globally is increasing. I know this from travel to many parts of the world and from my association with many research managers here and abroad. In the midst of this, I see the role of government changing in significant ways, both in conducting and in paying for research. What are the implications of this second trend? The explosion of scientific advances will mean many things, but let me pick just three. First, with more to do, that which is most worth doing from the perspective of payoff is less obvious. Second, even the largest companies cannot alone keep up with everything that is coming into play in their fields. Third, the methods by which research is being pursued are changing. About the first point, risk is increasing as those of us who manage research programs decide what is most worth doing in an expanding galaxy of options. Not every scientific advance rolls out startling new products. Not every new finding stimulates breakthrough technology. A small adjustment in scientific knowledge or in known technology may lead to major commercial consequences. All of this implies risk. Risk is at the heart of business in open economies, of course, but as risk increases because of this explosion of research directions, we become even more sensitive to intellectual property protection. The research results we do achieve become particularly important to us. There is also a strong tendency today for us to want to share this risk. As to the second point, I note that even the largest companies cannot keep up with all the new science that might bear on their field. This is creating opportunities for small, new entrants. Many large companies, including my own, allocate a significant portion of their R&D budgets to building relations with smaller firms. Although information technology industry has done this for some time, the emphasis now is increasing. There is an opportunity in this for smaller firms in developing countries. Given adequate intellectual property protection, there is no reason why they cannot participate in relationships with large companies. Although industry is accustomed to negotiating the treatment of intellectual property coming into

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Global Dimensions of Intellectual Property Rights in Science and Technology and emerging from cooperative ventures, new complexities are introduced as government, industry, and academia explore joining forces as a catalyst to innovation. The varied cultures of each of these sectors will require flexibility to accommodate the interests of the others. Perhaps most important, a stable body of consistent law is required on which all parties can rely, thereby avoiding yet one additional complicating factor that would be introduced if sui generis laws were prevalent. As to the third point, the catalogue of approaches to research is expanding: it includes large corporate programs, national laboratories, research done under contract, state-funded programs, university research, and individual research done "at the kitchen sink." We also see technology alliances and networks that do not necessarily depend on equity ownership or even contractual relationships. We see on-line computer-connected research done at two or more locations, even on opposite sides of the world. We see platform building through knowledge sharing that includes "casual" research relationships, in which one company or laboratory will volunteer information to another (on a confidential basis) with an expectation of some feedback. Also, there is more transient employment in laboratories as researchers move from place to place. More attention is being paid to how to conduct research to maximize creativity, and the computer is playing an ever greater role. I have noted that one of the major ways R&D has changed is by being globalized. This is true of research being conducted by single companies as well as by research consortia. Computer linkages through satellites, data bases, and networks mean that research of all kinds can be conducted in different locations as a single effort. This is already far advanced. It is not unusual for teams operating in different time zones to relay information through electronic mail and other techniques so that research continues around the clock. These linkages are not confined to business. Some of the biggest networks are shared by private industry, universities, and government agencies. Some are public or quasi-public networks, whereas others are private or classified government communication channels. There are several factors that are prompting research through global networks, now that the capability has been demonstrated. A desire for greater proximity to customers, suppliers, and university talent accounts for some global activity. In other areas, relatively lower personnel cost is a notable reason for going overseas. Another reason is the desire to tap talent found in other countries. A leading example is access to programmers in India through satellite links. There are elements of risk sharing, cost sharing, and economies of scale in these arrangements, but the desire to pool knowledge is increasingly evident as a motivating factor. IBM's new arrangements with companies such as Siemens and Apple illustrate this. Whatever the mixture of motiva-

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Global Dimensions of Intellectual Property Rights in Science and Technology tion, shared research activity that crosses national boundaries is a growing phenomenon. In developing countries, the concept of the state as mother of us all is in decline, with state enterprises being privatized or streamlined. Yet the importance of using technology as a tool for economic development is seen by all, and governments are spending accordingly. So there are some crosscurrents at work in terms of the role of the state in research. In the United States, we have seen the Carnegie Commission (1991) report suggesting that complex defense procurement procedures have built a wall between government-supported military and civilian research programs to the increasing detriment of the Pentagon. This report recommends that these two arenas be merged institutionally. In effect, the report signals a shift in defense procurement policy and practice, and this will carry intellectual property system implications as the private and public sector cultures attempt to mesh traditionally disparate views on the role and operation of intellectual property regimes (the former relying on laws to ensure return on investment, the latter relying on laws for national security and protection of the taxpayer's investment in public programs). In nearly all countries, budgetary constraints are limiting government research expenditures. As a result, the private sector will be asked to pick up more of the national research bill, both for internal research and for public research in universities and public research institutes. This will mean that intellectual property systems will become a crucial supporting factor helping to induce private investment in research. In those cases where government pays more or does more, private industry will often be a companion. I want to add that explicit government-to-government scientific cooperation is playing a role in research at the global level. For some time, the United States has entered into bilateral science and technology agreements with developing country governments, which are meant to foster good relations and encourage university professors to exchange information. The research funds offered by the United States are relatively modest, particularly when compared to those from Japan. Still, such cooperation has boosted university programs in some developing countries. The 1984 reform of the U.S. trade laws added a requirement that bilateral science and technology agreements must have an ancillary intellectual property agreement. The requirement, which does not define the content of the agreement, was meant to leverage partner countries into adopting stronger intellectual property systems. I propose an additional catalyst. Experts from both sides should be asked to devote structured time to a discussion of intellectual property. In most developing country universities today, there is intense curiosity about the growing emphasis on intellectual property in American universities.

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Global Dimensions of Intellectual Property Rights in Science and Technology Quite often the scientific leadership of developing countries is closer to government policymakers than is the local business community. Ultimately, the scientific leadership of a developing country could emerge as strong advocates of effective intellectual property protection and have greater political impact for reform than the current approach alone. What will all of this mean for intellectual property systems? The explosion of research directions and the globalization of research mean that the contribution of intellectual property is being more widely felt. While some companies have long recognized its importance, others—including many smaller companies—are just beginning to realize that they can live or die by their ability to protect their intellectual property. An offshoot of the globalization of R&D is the expanding opportunities this gives to researchers in many of the developing countries. In important areas of research, it does not require giant laboratory facilities to make significant advances. There are many excellent minds working in Third World universities who are capable of making contributions. For them, the issue is often how to move their work from the laboratory to the marketplace in the absence of strong intellectual property protection. Without protection, they typically have difficulty safeguarding their results and attracting needed start-up funds. Countries lacking adequate and effective systems will want to install strong legal protection so that their best minds will not be left out. It will be seen increasingly that more happens technologically in countries with effective protective systems. As another aspect of the globalization of R&D, I have described the increase in research by alliances. When firms decide to jointly build knowledge platforms by sharing information and sharing risk, the ability to identify and protect both the information going in and the results emerging from that collaboration is crucial. Intellectual property plays this role. The various forms of intellectual property serve to define and "package" those results, to enhance their negotiability, and to defend them from loss to others who do not participate in the risk sharing. To the extent that such research is conducted across borders—and this is happening more and more—the intellectual property systems of the participating countries need to be highly congruent. This means that protection increasingly needs to be achieved through similar and effective mechanisms. This is true, whether the project is small in terms of expenditure, or gigantic. For the participants, the ability to safeguard results is a necessary precondition to undertaking research in this way. Countries that want to give their scientific and technical people opportunities to be involved in such research alliances will want to be sure their intellectual property system meets the expectations of potential partners from other countries. Let me emphasize that such research alliances are not restricted to large companies. The opportunity this presents for researchers in developing

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Global Dimensions of Intellectual Property Rights in Science and Technology countries is significant, I believe, and there are already examples of research partnerships between large companies from developed countries and small companies from developing countries. This trend is, however, severely constrained by the typical weakness of intellectual property systems in many developing countries. There is another relevant perspective based on the increasing tendency for researchers to change jobs. As they move from one company or institution to another, questions arise about what knowledge they are permitted to take with them to use in their new position. The tools of intellectual property, particularly the trade secret, are very helpful in defining and selecting the knowledge that is proprietary and therefore nontransferable. Countries without these tools will be at a disadvantage in building a research culture that can participate in research alliances. I have noted some of the pressures that are building for greater congruence among the intellectual property systems of the world. Each country with a weak system will certainly feel these pressures as it contemplates the future of its own technology base and the various roles its own researchers are to play. Let me clarify a point. I am not arguing that other countries adopt the particular intellectual property system of the United States. Within certain parameters, there are various ways that adequate and effective protection for inventions, technical knowledge, and creative expression can be provided. The point is that national systems for intellectual property protection will need to be sufficiently similar to the world norm if those nations are to participate in the globalization of research and in the wide range of shared research options that science is constantly opening up. Much can be said for the U.S. system when you consider that the booming growth in the creation of computer software correlates with the early and strong protection available to software creators in this country. By the same token, I am told that, of the funds devoted to research on biotechnology on both sides of the Atlantic, 90 percent is spent in the United States because of the far stronger protection available here. It is no accident that an increasing number of European firms conduct a good portion of their research in the United States. All of this seems to indicate that the greater the degree of intellectual property protection, the higher is the level of research stimulation. Trend Three—Short, Quick Steps at a Premium The third trend I observe is that many industries place great emphasis on incremental refinements in technology and that in most cases there is great pressure to collapse the elapsed time from a discovery in science to resulting product application.

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Global Dimensions of Intellectual Property Rights in Science and Technology The reason is clear—competition. The constant pursuit of competitive advantage in our industry is driving down product lives, and shorter product lives demand—and are driven by—technological advance and the incremental improvement of products. That is the basis for competitive advantage. Consumers are, of course, well served by such an emphasis. In market economies, consumers decide whether an improvement is worth their attention or not, and companies are accordingly kept on their toes. What does this mean for intellectual property systems? In awarding the privilege of exclusivity, intellectual property systems must distinguish between that which is new and different and that which is simply an imitation. It is not always an easy task. Viewed from a distance, things can appear to be the same or closely similar. Viewed from closer range, things can be readily distinguished. The work of an intellectual property system is to make these fine distinctions. It is work that the well established systems have performed reasonably well in the past. This issue manifests itself primarily in the patent area where a basic concept of the law calls for inventions to be novel and nonobvious. When a patent application is filed it must describe what it "claims" as novel and nonobvious. Drafting claims can be crucial. If written too broadly, they can be attacked later as overreaching. If written too narrowly, the patent can be avoided by simply making superficial changes (Chisum, 1991). The concepts of patent law must also address issues such as basic versus improvement inventions. Consider this example. If Jones invents the bicycle and obtains a patent, and later Smith invents the 10-speed bicycle gear shift, what can Smith do with his invention before Jones's patent expires? Will the basic patent preclude the improvement patent? In an age of incremental improvements and refinements, how can such inventiveness best be protected from imitation and how does it relate to more basic inventions? Although the greater emphasis on incremental advances is new, the issue of how to deal with increments themselves is far from new for patent and copyright systems. Generally speaking, the improvement patent owner is asked to honor the basic patent. This forces the two parties to negotiate suitable arrangements so both inventions reach the market. Trade secret protection also plays an important role in the context of incremental advances. Let me take a few moments to discuss trade secrets. They are quite important,2 yet little known. This is because they are created by private action, not by a government office. There is neither a bureaucracy nor a cadre of specialist lawyers to attend to the trade secret. Those 2   Perhaps two-thirds of the technology that moves from place to place does so under trade secret protection, see Sherwood (1990b).

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Global Dimensions of Intellectual Property Rights in Science and Technology who generate technical information that has valuable commercial or industrial application simply take reasonable precautions to keep competitors from learning such information. If the information is obtained by a competitor by unfair means, the courts will intervene to stop the competitor from using it. However, if the competitor develops the same information independently, he is free to use it. Trade secret protection is particularly appropriate in process technology. In my view, any country without strong trade secret protection today is severely handicapping itself in the global competition to improve commercial technology. TWO GENERAL PRINCIPLES I discern two general principles in these reflections on developments in science and technology around the world. The design of intellectual property systems will benefit from attention to both of them. Principle One: Change Will Be Constant, So Keep Intellectual Property Flexible Things we cannot foresee will emerge from science. This indicates reliance on the evolution of existing basic intellectual property concepts rather than resorting to novel new legal schemes. As a lesson, I point to the sui generis chip protection law of the United States. Rather than expanding patent and copyright concepts already functioning around the world, the United States saw fit in 1984 to create a new form of protection for the topographic layout of semiconductor chips. Enough time has passed since the enactment of this law to see at least two problems arising from this sui generis approach. First, this experiment relied for its global reach on a unique reciprocity provision that says, in essence, that chips created in another country will receive protection in the United States only if that other country provides equivalent protection under its law. Japan reciprocated. However, many other countries did not. Instead, in 1989 they created a treaty3 that has internationalized a lower order of protection for chips. The result is that two conflicting systems for chip protection are operating in the world. If 3   The Treaty on Intellectual Property in Respect of Integrated Circuits (commonly referred to as the Washington Treaty) was adopted at an international diplomatic conference sponsored by the World Intellectual Property Organization (WIPO), held in Washington, D.C., in May 1989. The United States and Japan opposed the treaty based on an inadequate term of protection, unacceptable compulsory licensing provisions, failure to provide for remuneration to the right holder from innocent infringers, and failure to adequately protect rights holders from infringement through higher-level products incorporating pirated chips.

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Global Dimensions of Intellectual Property Rights in Science and Technology the current intellectual property negotiations in the General Agreement on Tariffs and Trade (GATT) Uruguay Round are successful, greater congruence would be achieved. Second, a sui generis approach is by definition self-limiting. It is designed to apply only to a defined (new) technology. There has been interest recently in bioelectronic devices, parts of which might be produced by "natural" processes. It is by no means clear that U.S. or Japanese laws, or potentially the international treaty, will cover the new "biochip."4 Likewise, these chip laws and treaty do not protect the masks used in producing micromotors and thin-film heads. Here we see how an attempt to create a new form of intellectual property protection has failed to predict the future. It will not be the last failure, given the surprises that science will surely produce. A third objection to the sui generis approach, aside from the opportunity it provides for unintended mischief, is the delay in protection it causes. Exotic new technology is most vulnerable in its early stages for lack of protection. Imagine what will happen if research and development must be put on hold while our legal systems take several years to create a novel form of protection. Will this become the common reflex? Will we be taught to assume that new types of technology are not covered by existing forms of protection? I urge, instead, that the common reflex be to assume that existing forms of protection can be adjusted and adapted to accommodate new technologies. Once this reflex is clearly in place, we will create more globally uniform protection more quickly than we would through sui generis approaches. In urging this, I am encouraged by the experience of the last two centuries which shows that traditional forms of protection have exhibited great flexibility in adjusting to new technology.5 Principle Two: Activity Will Be Global, So Make Intellectual Property Global I suggest as the second principle that since research, development, and invention are all increasingly done globally, intellectual property systems 4   The U.S. and Japanese mask work laws are restricted in application to semiconductor material. The WIPO Treaty on Intellectual Property in Respect of Integrated Circuits is broader in that it is limited to "elements, at least one of which is an active element . . . formed on a piece of material which is intended to perform an electronic function." 5   The patents system has evolved to cover new technologies, from steam engines to electrical applications to radio devices, from computers to nuclear energy to biotechnology. Copyrights have expanded from novels and speeches to maps and charts, from sound recordings to computer programs, and there will certainly be new technologies in the future.

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Global Dimensions of Intellectual Property Rights in Science and Technology should be globalized. The generation of new scientific and technological insights and their diffusion and application are not confined to one or a few countries. If we wish to include all willing countries in this wealth-producing activity, and to catalyze global research and development activities, a greater degree of congruence among national intellectual property systems is obviously desirable.6 The boundaries of nations do not themselves impede the flow of technical knowledge. However, technical knowledge does not now flow equally into all countries (Sherwood, 1989). Just as electricity flows best through certain media and not through others, so too, technology flows best under certain conditions. Some countries, particularly those in the Third World, have built intellectual property system strategies on the supposition that technology flow is spontaneous and that weak protection increases the flow. As these strategies fail, I think it is getting clearer that this supposition is wrong. Countries with weak intellectual property systems receive less technical knowledge. There are at least three reasons. First, even if proprietary knowledge can be ''stolen" or "pirated," those who obtain it are denied associated knowledge from a willing source. So less is learned, and it is learned late. Those who pirate technology condemn themselves to perpetually catching up. Moreover, the skills learned from pirating are not the skills needed to conduct research and development. Second, because such countries are hindered in building a knowledge infrastructure, they cannot even make good use of technology that is freely available. They do not develop people who can appreciate and work with such technology. This is true whether the freely available technical knowledge comes in the form of knowledge embodied in capital goods or through journals, magazines, conferences, and even newspapers. Moreover, without the means to protect innovation, there is little incentive to advance this technology even when it is freely available. Furthermore, it will be increasingly difficult for countries with weak intellectual property systems to export products with "pirated" technology into markets that have strong protective systems. It will also be difficult for such countries to attract private foreign investment to supplement local support for research and development relevant to industrial development there. The principle I distill from these observations is that if countries lack- 6   Harmonization would be an additional degree of congruence. Congruence means that those active in science and technology would not have to give much thought to system differences, although specialist lawyers would be needed. Harmonization would mean that even the lawyers would not have to give much thought to system differences.

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Global Dimensions of Intellectual Property Rights in Science and Technology ing adequate and effective intellectual property systems wish to participate in global advances in science and technology, they will be well served by making their systems congruent with the many existing national systems that are adequate and effective. The more globally consistent the treatment of intellectual property is, the greater will be both the stimulation of research and the conductivity of technology across borders. At the moment it is still not possible to know the outcome, but I hope the attention being given to intellectual property in the current GATT negotiations will confirm my observations. Although the December 20, 1991, Trade Related Aspects of Intellectual Property (TRIPS) text has its critics, it is a strong agreement in some important areas, including the protection of computer programs. It is clear that with additional improvements, particularly in the area of patent protection covering pharmaceuticals and chemicals, a TRIPS agreement could have a significant impact on improving the protection of intellectual property worldwide. OBSERVATIONS I have the following closing observations. As Ideology Fades, Technology Will Drive Development For much of this century, ideology has informed many aspects of public policy, particularly in developing countries. Today, however, pragmatism signals new approaches to many things as ideology fades rapidly (provided resurgent nationalism does not erect new barriers). Within one lifetime, ordinary people now see profound technical revolutions that change entire industries and countries. The deliberate quest to be part of such revolutions will drive government policy in many countries to an increasing degree, and this will in turn, I believe, encourage strong intellectual property systems for all countries. The presence or lack of strong intellectual property protection in developing countries will be a critical factor in their participation in the world's economic progress. As Economies Open, Invention Will Flourish The era of the closed economy and the import substitution model is rapidly closing. As economies open to join the global marketplace, exciting things are happening. Competition intensifies, putting a premium on innovation. In this setting, and particularly as more of the global economy is directed by private rather than state decisions, the balancing of interests achieved by well-considered intellectual property systems, and the globalization of

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Global Dimensions of Intellectual Property Rights in Science and Technology those balances, will serve both the generation and the diffusion of technology as it has in the past. Nations that take part in this globalization will participate in the resulting wealth. As Research Grows, Everyone Will Benefit Throughout the research chain, from basic science to incremental product improvements, the intellectual property system strongly conditions decision making. When those who make research decisions look across the globe, it is important for everyone that they see a landscape in which research is uniformly encouraged. This does not imply that intellectual property systems need to be uniform, only that the encouragement they offer needs to be uniformly adequate. I firmly believe that given greater uniformity among intellectual property systems around the world, much more will happen at the international level. Large companies like mine operate widely already, but I foresee that smaller companies will link with counterparts in other countries to accelerate the advance of knowledge and technology in a great variety of special fields. The trends in global science and technology indicate to me that the basic concepts of intellectual property, applied globally and flexibly, will be increasingly called on to serve research and development activity around the world. ACKNOWLEDGMENT I would like to acknowledge discussions with—and the assistance of—D.P. McCurdy, W.T. Ellis, and V. Siber, all of IBM. REFERENCES Carnegie Commission on Science, Technology, and Government. 1991. Technology and Economic Performance: Organizing the Executive Branch for a Stronger National Technology Base. New York. Chisum, Donald S. 1991. Patents: A Treatise on the Law of Patentability, Validity, and Infringement. Matthew Bender, Chapters 8 and 18. Sherwood, Robert M. 1989. New theory of conductivity in licensing. les Nouvelles: Journal of the Licensing Executives Society 24(4):186-189. Sherwood, Robert M. 1990a. Intellectual property and economics. Chapter 4 in Intellectual Property and Economic Development. Boulder, Co: Westview Press. Sherwood, Robert M. 1990b. The importance of trade secrets. Pp. 57-59 in Intellectual Property and Economic Development. Boulder, Colo.: Westview Press.