The Common Thread of Innovation Ecosystems: Securing Ownership to Guarantee Creation

“If we want to maximize creation, we need strong, investible intellectual property that captures the imagination (and financing) of investors.”

Over the past several weeks, it has been our pleasure at IPWatchdog to be a media sponsor for the excellent programming on intellectual property and the innovation ecosystem produced by the Global Innovation Policy Center (GIPC) of the U.S. Chamber of Commerce. The last in the series, an overview of the common thread running through innovation ecosystems, took place on Wednesday, April 28.

“One thing we all have in common is that everyone wants more innovation and creativity to meet societal challenges, never more so than in a pandemic,” Patrick Kilbride, Senior Vice President for Global Innovation Policy at the United States Chamber of Commerce, told IPWatchdog following the conclusion of the Innovation Ecosystem series. “Sustaining the global middle class through COVID will require a steep trajectory of innovation. Our experience working with businesses of every size and sector, and governments around the world, shows intellectual property rights as a central enabler of innovation.”

If I had to summarize the sessions in one succinct, pithy sentence it would sound like this: intellectual property is essential in order to secure ownership, which creates an investible asset that attracts capital necessary to guarantee creation.

Therefore, if we want to maximize creation, we need strong, investible intellectual property that captures the imagination (and financing) of investors.

On this point, Kilpatrick explained to IPWatchdog:

IP plays two foundational roles that sustain ecosystems for innovation and creativity: first, in a competitive market where money is fungible it enables the allocation of resources to long-term, high-risk, capital-intensive activities. Second, it creates a legal and commercial basis for the IP licensing partnerships that sustain the multi-stakeholder innovation lifecycle as ideas and knowledge pass hands from early-stage research through to product development and testing to manufacturing and distribution.

Creators

“We all have our own worlds, but [those worlds] depend on each other,” said Mitch Glazier, Chairman & CEO of the Recording Industry Association of America, during the program on April 28, as he was discussing the distinct yet interconnected creative industries that depend upon intellectual property protection. “In the music world, just like in the movie world, it isn’t just about the actor or the artist. It starts with a lot of investment.”

And that is the very point of the innovation ecosystem. Intellectual property works to provide the underlying rights that secure ownership, which allows for investment. You cannot invest in what you cannot own, and without money the “magic” as Glazier repeatedly referred to it, cannot happen, which is so important because “it contributes to our culture,” Glazier said.

“The film, television and streaming industry support over 2 million jobs all over the United States,” said Karyn A. Temple, Senior Executive Vice President & Global General Counsel of the Motion Picture Association. So, these IP supported businesses and industries are not simply centralized in Hollywood, or even California, as Temple explained. “The IP system is foundational to every aspect of our industry… and copyright allows for creators to see the return on their investment.”

The Bell Labs of Wireless

“The importance of economic growth in the digital economy is a critical question today,” began Kirti Gupta, Vice President, Economic Strategy and Chief Economist for Qualcomm. “Governments around the world are asking the question today; it is at the top of the agenda.”

Explaining that the role of innovation is well understood, Gupta went on to further explain that “the role of intellectual property is less understood, and in the worst-case scenario it is ignored.”

“Only large firms will have the ability to innovate and protect their ideas and that doesn’t help anybody,” said Gupta. She went on to characterize Qualcomm as the Bell Labs of the wireless world, having contributed to the telecommunications standards over so many years, spending time working with Standard Development Organizations (SDOs) on 2G, 3G, 4G and now 5G and beyond.

Gupta punctuated her presentation by saying that IP is such an important economic driver because it gives innovative companies confidence that what they fund today, they will be able to own in the future, which is absolutely critical given the often-massive financial investments required to realize the imagination of engineers and scientists.

“Counterfeits are a serious risk to our business,” said Anna Dalla Val, Director of Global Brand Relations for Amazon. “If customers cannot trust our products, they will buy elsewhere,” Val told the audience. “If sellers cannot trust the platform, they will sell elsewhere.”

According to Val, Amazon removed over 6 billion bad listings in 2019 alone, with over 99.9% of product pages never receiving a notice of potential counterfeit infringement. Moreover, 2.5 million bad actor accounts were stopped before they published a single listing in 2019. But the fight goes on. And in June 2020 Amazon created a Counterfeit Crimes Unit dedicated to investigating illicit counterfeiting activity and to work with law enforcement agencies and brands to pursue bad actors.

Val said Amazon issues quarterly reports of confirmed counterfeiters to law enforcement and maintains solid relationships with UK and U.S. law enforcement IP teams, EUROPOL and INTERPOL. Still, Amazon realizes counterfeiting is a challenge that is here to stay, but she pledged Amazon’s support to work with anyone who is interested in eradicating counterfeits.

An Emerging Global Middle Class

At a time when a growing global middle class is attempting to emerge from economic shutdowns and search for economic opportunity, people from these emerging markets want a better life: “[They want] social and economic mobility, along with secure access to quality food, clean water, education, transportation, and technology—things that have long been associated with high-income economies,” Kilbride said.

“Where rights are well defined, transparently granted, and predictably and reliably enforced, the two functions of IP create an environment where people can develop their innate capacity for innovation and creativity to its fullest, technological advances follow and technology transfer happens organically,” Kilbride explained.  “An ecosystem for good things is born.”

And that is why IP matters.