Economic growth and job creation in the United States today relies heavily upon expansion and innovation from industries which develop and commercialize highly complex technology.  Enterprises and entrepreneurs in these industries require constant access to capital, and investors who can provide such financial resources must consider the potential risks and rewards.  The creation of new medical products, software, or energy technology are inherently uncertain, a reality which is increasingly exacerbated by legal and regulatory risks in the U.S. and abroad.

A new Washington Legal Foundation Working Paper,  Emerging Risks For U.S. High Tech: How Foreign “Public Interest” Regulation Threatens Property Rights And Innovation pinpoints diminishing international respect for one essential legal protection – private intellectual property (IP) rights – as the greatest current and future driving force behind regulatory risk for U.S. high-tech investment and innovation.  Written by Institute for Trade, Standards and Sustainable Development President Lawrence Kogan, the paper details how some nations and their non-governmental organization (NGO) allies are systematically advancing the notion that technology which benefits health, education, the environment, etc., should be public property, and thus IP rights awarding private profits are against the public interest.  Nations and NGOs are pursuing this controversial concept through regulatory imposition in countries such as Brazil, India, South Africa, and China, as well as in below-the-radar international standards setting groups and organizations like the United Nations and the World Intellectual Property Organization (WIPO).

Mr. Kogan focuses on two governmental regulatory instruments that can directly or indirectly erode private property rights – compulsory licenses which force healthcare and energy companies to essentially give away their products; and government procurement rules which impose national purchasing preferences for patent-free and royalty-free products.  The latter of the two directly impacts software, “SMART” energy, and information technology and discriminates against proprietary innovation models in favor of the “open” source model.  The Working Paper meticulously documents the past year’s developments on these two regulatory instruments and urges IP-based businesses and their investors to monitor activities at WIPO and other international organizations in the coming year.  Mr. Kogan also counsels vigilance by U.S. government trade officials, who should take action under international trade and competition laws if foreign compulsory licensing or procurement rules discriminate against American businesses.