Don’t Undercut IP: Innovation is America’s Competitive Edge

October is Intellectual Property Month, an ideal time to reflect on the importance of protecting American discoveries and inventions. From the nation’s founding to the present day, America’s leaders have recognized that protecting intellectual property (IP) is crucial to fostering innovation and promoting progress for both inventors and society as a whole.

George Washington personally urged Congress to provide effectual encouragement to inventions essential to “promote the progress of science and useful arts.” The other framers of the Constitution, notably James Madison, shared this belief and wrote those very words into our country’s founding document. In Intellectual Property Rights Are Natural Rights, ALEC authors detail how the constitutional framers prioritized intellectual property rights (IPR).

The system the Founding Fathers would go on to launch had a simple objective: reward inventors and creators for their ideas, then return those ideas to the public to promote the continual expansion of knowledge. Their vision proved to be transformative, as it incentivized individual creativity while balancing a groundwork for collective benefit. What they designed, at its essence, was more than lofty idealism; it was a durable system whose strength lay in concrete IP protections as outlined in foundational principles. The recently adopted ALEC model State Constitutional Amendment Jury-Determined Compensation for Property Devaluations Caused by Regulatory Takings underscores these concepts.

Today, that same framework continues to safeguard creators against theft while fueling innovation across industries. Intellectual property protections give innovators the confidence to invest time, talent, and resources in research and development by minimizing the fear of IP theft. This security fosters a culture of bold experimentation, where creators can push boundaries knowing their work is secure. By granting inventors exclusive rights for a limited time, they channel individual ingenuity and successes into public progress, ensuring that discoveries can serve as stepping stones for future breakthroughs.

This system’s impact can be measured in economic terms. In 2022, the United States had a $74 billion intellectual property trade surplus, highlighting that American IP is one of our country’s most valuable financial assets. Subsequently, earnings from this surplus can be reinvested into domestic research to create positive feedback loops, propelling inventions in medicine, technology, and alternative energy. Large corporations are not the only beneficiaries; small and medium-sized enterprises (SMEs) benefit from patents, trademarks, and copyrights, giving them the confidence to enter global markets.

Intellectual property protections also expand public opportunity. In 2019, IP-intensive sectors contributed $7.8 trillion to the U.S. economy, which amounted to 41% of the national GDP. They also supported 63 million jobs, totaling nearly 44% of all employment in the country. These jobs were not only abundant but were also remarkably lucrative. Workers in IP–intensive industries earned wages that were 60% higher on average than in other fields. This enhanced financial stability, strengthens families, expands the middle class, and supports long-term community growth. Patent-intensive sectors offer even more robust benefits, from comprehensive health coverage to retirement security to higher lifetime earnings. Intellectual property protections anchor upward mobility and opportunity.

Intellectual property protections are just as important at the state level. Utah, which holds the number one ranking in the ALEC-Laffer Rich States, Poor States, and Washington State both surpass the national average for employment related to intellectual property. Texas, with a favorable business climate and low tax burden that earned it a ninth-place ranking in Rich States, Poor States, is another success story. The Lone Star State leads the nation in exports with more than $32 billion in goods connected to intellectual property. These states illustrate how strong intellectual property rights (IPR) protect the ideas that build industries that spur regional growth, bolstering national strength as well as how states attract investment, nurture talent, and create ecosystems where creativity thrives.

Yet, this system requires constant vigilance. Counterfeiting and intellectual property theft drained an estimated $467 billion from the global economy in 2021. However, the consequences go beyond economic growth. A New Resource to Understand and Combat the Counterfeit Pharmaceutical Trade describes the implications of a proliferation of counterfeits for public health, corporate reputation, and employment. Unchecked, these threats to inventors and their creations will discourage innovation and stem national progress.

Meeting the challenge of IP theft demands more than punishment after the fact. It requires proactive enforcement like that included in the ALEC model State Constitutional Amendment: Jury-Determined Compensation for Property Devaluations Caused by Regulatory Takings that protects creators while preserving the flexibility entrepreneurs need to bring new ideas to the market. Ultimately, it is only with this multi-pronged approach that the United States can continue to foster an environment where innovation flourishes.

Innovation and the intellectual property that underpins it transform ideas into businesses, businesses into jobs, and jobs into stronger communities. America’s Founding Fathers viewed intellectual property as a cornerstone of a free and prosperous society – a belief that has stood the test of time. IP protections honor their vision while addressing the requirements of a global economy. By reinforcing this system through education, enforcement, and forward-looking policy, the United States can maintain its competitive edge and ensure that the next great breakthrough is made right here in America.