Intellectual Property and the Digital Economy: Five Issues for International Norms and Trade Rules

Over the past two centuries, the nature of innovation has evolved profoundly across many dimensions, including in the pace and volume of change, in the cost and institutional structure of innovation activity, in the enabling environment for innovation (which itself has evolved because of innovation), in the sources of demand for innovation, in the proliferation of entities engaged in innovation (including most recently the role of artificial intelligence as a patent-receiving inventor), in the distribution of its benefits, and in the nature of concerns that new technologies have raised. With the emergence of the data-driven economy, the pervasive, protean and permanent characteristics of digitized data, one of today’s most important types of intellectual property, create fundamental new social and political conditions that will necessarily elicit social and political responses. And along the way, innovation and the system of protection for intangible assets that innovation produces became the central bone of contention in the trade and technology war between the United States and China (in which third countries are increasingly embroiled). Even as these profound changes unfolded, the basic instruments incentivizing innovation – the various forms of intellectual property (IP) protection – were essentially unchanged and indeed formally expanded, even as the amount of protected IP expanded enormously. Given that many key metrics of economic performance and social behaviour have changed in problematic directions during this period, and in light of the fact that in the innovation-intensive countries the economy has been transformed from one dominated by tangible assets to one dominated by (protected) intangible assets, the system bears reviewing. This note identifies five issues for the current international norms and trade rules insofar as they cover the intangibles economy – in particular IP and the digital economy.