Intellectual property can be stolen too
The maverick British Lord Chief Justice, Lord Denning, stated that however big they are, no-one is above the law. Microsoft has discovered that despite its size, the European courts are even mightier. It has given up the fight to protect its own intellectual property.
Bill Gates built a big company by innovation, beating his rivals by designing better products that business and the public chose. And his reward? To be told to hand over that advantage to his less innovative competitors so that they can catch up.
US competition authorities ordered Microsoft to license its products to competitors but at a price the rivals were reluctant to pay. That shows what the innovative advantage was worth. However, the EU regulators believe Microsoft’s intellectual property should be shared out for almost nothing – one-off fee of just £7,000. When royalties are payable, the EU ordered a cut from 5.95 per cent to just 0.4 per cent.
Gates’s company has resisted this theft of its enterprise for a decade but has now given up after hefty fines, fines for resisting the fines and with new fines being clocked up each day. The £1bn Microsoft has set aside for fines is small for a mighty corporation but the principle is large: design something really good and you must share it with your inefficient rivals.
Why should entrepreneurs bother if that is the message? What reward is there for taking risk? The drug companies have already seen pressure to share their successes; other companies should worry that patents no longer offer protection.
Competition regulators argue that the greater good is better served if more companies can offer a winning product, bringing down prices. That is back-door nationalisation though: confiscation of private value for the public good.
October 24th, 2007 at 2:00 pm
Whilst your views are correct in one respect you have assumed that an innovator has a right to their creation.
Governments grant patent rights to individuals, giving them the ability to make income from their innovation. If the government chooses not to grant these rights, or to limit the income from them, that is their choice. In a democracy we hope that they are acting in the best interests of their population.
If a government frequently or unjustly alters rights of ownership then it will find that investors avoid it. The EU can only hope that the benefits of this decision outweigh the consequences.