Copying trade secrets and catching up

From Ed Crooks in The Financial Times (register to get past paywall)

US charges Sinovel with trade secret theft

The US government has charged Sinovel, one of the largest Chinese wind turbine manufacturers, with stealing trade secrets from one of its US suppliers, alleging the offence amounted to “attempted corporate homicide”.

If we skip over the fact that this brings the personification of the corporation to a new and, well, corporeal level (I’ll leave that matter to Yves Smith), here’s your Rorschach: is Sinovel the hero and AMSC the villain, or vice versa?

Advocates of open innovation systems often speak of intellectual property monopolies as if they were hurting us all (all except the monopolists, of course): the estimable Glynn Moody in the UK, or Dean Baker in the US, or Boldrin & Levine[1] (though I would not want to suggest that any of these people would side with Sinovel in the case linked above). It is undoubtedly so that, within those rich countries specialized in IP – the US and UK in particular, but also e.g. France and Sweden… – IP monopoly has contributed a lot to the rise of the 1% and the stagnation of incomes of the rest. But it is also so that those countries do specialize in IP – it’s a big part of what we sell to the rest of the world, what keeps the imports rolling in for us to consume. So if you’re a resident of one of the big IP exporters, IP monopoly is, if not a mixed blessing, at least a mixed curse. At a national level, for better or worse, this is the family business we’ve inherited. We’ve inherited it by virtue of both our countries’ large foundations in scientific and creative industries, and our governments’ neglect of the various prerequisites of making things on competitive terms.

With this or any other economic specialization comes the question of how long it can be sustained: how long (on the assumption that nothing lasts forever) before our countries lose their competitive edge in IP? From the origins of the British patent system in the early 17th century (one of its aims was to provide incentives for pirating importing inventions from other countries[2]), through American, German, and Japanese industrialization from the late 19th century onwards, the governments of newly industrializing countries have in one way or another encouraged their industries to pirate IP, stealing the plans to learn what makes the machine work: from the standpoint of the poorer country, failing to pirate is to let the rich stay richer in perpetuity.

The conflict between the net producers and net consumers of intellectual property, between the old rich and the newly industrializing countries, is not one that can be settled through international agreements. The conflict is fundamental, and all that agreements – the WTO’s TRIPS and such – can do is to weight the scales a bit in one direction or the other. (For ongoing coverage of the contest over international IP agreements, see Knowledge Ecology International.)

Un-Linked References – Google them yourself!
[1] Boldrin, Michele and David K Levine. 2008. Against Intellectual Monopoly. Cambridge: Cambridge University Press.
[2] Sell, Susan and Christopher May. 2001. “Moments in law: contestation and settlement in the history of intellectual property.” Review of International Political Economy 8:467-500.

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