The first Senate hearing I attended struck me as a “dog and pony show” since the witnesses were presented for display purposes, merely echoing the pre-determined opinions of the presiding Senators. I’m beginning to see the animals in a less benign light.
Today, Senator Baucus (D-MT), Chairman of the Senate Finance Committee, held a hearing on “International Enforcement of Intellectual Property Rights and American Competitiveness,” with Ranking Member, Senator Grassley (R-IA), in the wings and with Senators Kyl (R-AZ) and Roberts (R-KS) making cameo appearances towards the end. As for the witnesses, the deck was stacked, as appears to be more the norm than the exception.
Andrew Lack, chairman of SonyBMG, represented the viewpoint that 40% of America’s economy is at risk unless the public commits more resources to pirated CDs and online downloading. He didn’t mention that the $11bn generated by the recording industry represents less than 0.1% of US GDP. Jeffrey Kindler, chairman of Pfizer, represented the viewpoint stronger IP protection equals more innovation equals greater competitiveness equals more jobs. He neglected the logical fallacies at each step of his equation: greater “protection” can eventually stifle innovation; increasing innovation tends to decrease competitiveness (unless only one side is allowed to innovate); and greater competitiveness, as we know from most mergers and buyouts, means fewer jobs, not more. J. Walter Cahill, from the International Alliance of Theatrical Stage Employees union, told us that theft is theft and that downloading a movie is like stealing it off of a shelf. He also contended that greater protection benefits everyone. He did not explain how greater protection’s lesser choice, higher prices, and infringement of fair use benefits consumers. Professor John Barton, from Stanford Law, maintained a more balanced outlook, reminding everyone of the humanitarian issues involved in enabling compulsory licensing for medicines in less-developed countries. But Prof. Barton, while sincere and humane, is a soft-spoken man of academia. He was hardly the forceful advocate needed to counter the bombast and aggressive insistence of the SonyBMG and Pfizer representatives.
There were three themes of particular importance. The first was the presumption that “more resources” are needed to fight all IP infringements, wherever they may be. Well, how much more resources are needed? What, exactly, would those resources buy? What would each incremental dollar spent on enforcement accomplish? Is there an optimal expenditure-return point on the cost-benefit curve? Most importantly, who should be committing these resources? If the recording industry, for example, feels that more resources are essential, would it feel the same if it had to put its money where its mouth is by footing the bill? How about even half of the bill?
A second was that the USTR, while doing a great job, of course, simply doesn’t have the “resources” to do its job as well as it should. Lack was blunt, “We need stronger leadership to get results.” That is, branches such as the USTR, the Department of Homeland Security, the Department of Justice, and others have too many things on their plates to focus specifically on IP-related issues. Companies such as SonyBMG and Pfizer want an “IP Czar” to coordinate the activities of the different departments and serve as their go-to guy for their IP interests. Considering that most governmental organizations are structurally incented to already represent the interests of companies such as SonyBMG and Pfizer, it seems like overkill on top of overkill to empower yet another executive position for their benefit. Of course, many of these structures could be more dedicated to consumer interests. But they’re not.
The third big theme was the tying of all future free trade agreements to specified levels of IP enforcement. Kindler actually mentioned the USTR’s anti-counterfeiting efforts as a positive development in this direction. Senator Baucus seemed to agree, suggesting that doing more “TRIPs-plus” agreements (such as ACTA with consenting countries might be a way to go. Here, Prof. Barton softly mentioned that IP protection can sometimes go too far and that it is best to carefully consider the options when pursuing TRIPs-plus IP protection. But this thought was obliterated within the microsecond it took Kindler to cut back in and return the discussion to strong international enforcement.
Ultimately, this hearing, as with most of the other hearings I’ve attended, transparently re-confirmed what the presiding chairs wanted to hear. The one wrinkle to this particular hearing was the sincere effort by Sen. Baucus to retain the issue of humanitarian allowances for IP use. He repeatedly encouraged Pfizer’s Kindler and Prof. Barton to get together to come up with a plan to balance IP protection and humanitarian concerns. But when one party is a gentle academic and the other heads the world’s biggest pharmaceutical company and believes that, while assistance to utterly destitute sub-Saharan nations might be ok, assistance to developing countries like Thailand is wrong, and that “international competitiveness” is defined by who has the most draconian IP laws, it’s easy to see where this “balance” is going. Sen. Baucus asked Prof. Barton and Kindler to report back in a month. The suspense of waiting for their results rivals that of anticipating the findings of this hearing.