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I read a book a few months ago called “Who owns this Sentence: A History of Copyrights and Wrongs” which painted a good picture of the evolution of copyright and IP laws. Near the end of the book, I read something pretty staggering about how much intellectual property costs the average American.
The book cites a 2018 paper by economist Dean Baker who attempted to estimate how much the average household spends on licensing, copyright, IP laws, etc.
Using data from the Bureau of Economic Analysis, he compiled a table of all IP dependent consumer expenditure in the United States, and then estimated how much of that was the actual cost of licensing.
It came out to 827.4 billion dollars. Divide that value by the number of households in 2018, and it comes to over $6,000.
Every time you buy a new book, turn on some music, or buy a new computer – you’re racking that number up.
But hold up. Why does licensing cost the consumer anything? There are two main ways that licensing & IP can cost you money.
1. When something is patented – it blocks the free market from competing to drive down cost (and therefore the cost can stay higher)
2. When purchase some items, they may have had to license certain technologies in order to be legally manufactured
A big example of patents driving up prices can be consistently observed in pharmaceuticals. A 2021 paper by Simon van der Schans et al analyzed drug prices in the Netherlands before and after their patents expired. What they had found is that after 4 years, the median drug price decreased by 41%.
When you purchase the latest cell phone – it very well could have an ARM core micro controller in it, and that technology had to be licensed in order for the manufacturer to create the chip.
Now I understand that IP law can be necessary – I’m a firm believer that nothing is black and white. Especially when you look to some of the original reasons behind IP laws
The idea of patents originated in Venice during the 1400s – it was experience an economic boom, most of which was cause by new technologies. Talent was flowing from all over the world, and with that talent were coattail riders. There were many cases of people entering into apprenticeships just to steal and replicate methods. The Patent Statue was created to ensure that creators would have monopolies on their ideas for a fixed term.
Copyright has a long and complicated evolution. Interestingly it started out in England as an agreement between publishers and the crown. If the publishers agreed to censor works according to the crown’s laws, then the crown would grant them certain rights over what was published. The Statute of Anne was eventually created and that shifted the ownership to the authors (mostly) but kept a limited term of 14 years (with an option to renew another 14 years). The term length was set somewhat short in order to keep the price of books lower and therefore bolster public education.
The laws were created to give certain privileges to creators for a limited time. However over the last 500 years those laws have evolved and expanded. Some say these growths are warranted as “economic complexity increases”. In the US a copyright can now last the authors life plus 70 years, and a patent can last 20 years. I’m not trying to argue that the laws shouldn’t exist (because even if I was, it wouldn’t change anything), instead I’m arguing that designers and engineers should consider the greater impact of how they license their works.
