Guy de Jonquières: How piracy pays

From The Financial Times (subscription required):

When western businessmen in China and other emerging Asian markets meet, the talk soon turns to pirates. Not the seafaring kind but the armies of imitators, counterfeiters, criminal syndicates and corrupt officials who profit by violating the rights of intellectual property owners.

Almost every company has a story of new product designs mysteriously appearing in shops before it has launched them; of vast markets in illegal copies and bogus spare parts; even of Chinese customs impounding genuine imports, claiming they were fakes and then charging legitimate importers a stiff fee for their release.

…… The conclusions are obvious: first, relying narrowly on legal measures to protect IPR is pointless, unless the market provides effective incentives to respect the law. Second, those incentives grow as economies develop, industrialise and innovate.

Americans who rail against IPR infringements in poor countries should listen less to lawyers, study economics and learn from history. Until a century ago, their country was the world’s most persistent pilferer of other people’s intellectual property. Today it is IPR’s global policeman. As Rupert Murdoch once observed, monopolies are a terrible thing until you have one.

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