The Role Of The Claim To Ownership In Defining Business In The United States

As we stated several times in class, property is possession enforced by the state. Article 1, Section 8 of the United States Constitution makes this just as valid for intangible assets as it is for real assets, such as a home or factory, and it does so by enabling authors and investors to claim ownership of their intellectual property. This “claim to ownership” enforced by the state manifests itself in two ways: patents and copyrights. A patent is an intangible personal property right granted to the first person to invent a product or process. Patents allow inventors to exclude others from making, using, and selling their inventions. On the contrary, a copyright grants to individuals a personal property right to original ideas that have been fixed into a tangible medium of expression. Such works include literary works, musical works, dramatic works, motion pictures, sound recordings, and many more. This clause enables the government to constitutionally enforce patents and copyrights, which has had profound effects on the way business is conducted in the United States. This phrase is synonymous with “monopolistic power”; in effect, this is the federal government constitutionally granting inventors and authors with monopolistic power over their creations. The state is deliberately creating in inefficient market in which the only market participant benefitting is the monopolist itself, who can accumulate immense wealth as a result. But why would a federal government be willing to create a monopoly?

At the time of the writing of the Constitution, the U. S. was a very capital-poor country. Therefore, this clause provided a strong incentive for individuals to be innovative and to create things that would accelerate the economic and social development of the United States. Luckily, this incentive proved extremely effective – inventions such as the cotton gin (1794), electric motor (1837), Phonograph (1878), and many others revolutionized America and contributed to our rapid accumulation of wealth since the Constitution was conceived. Today, several industries have been built on this clause. For example, patents are crucial to the pharmaceutical industry. Upon discovery and invention of a new drug, pharmaceutical firms rush to file the patent so that they are allowed exclusive right to manufacture, advertise, and sell that drug. Since this luxury is only awarded for a limited time and the sales of drugs plummet within only a year or two after the drug comes off patent protection, pharmaceuticals companies are in a vicious and perpetual race to discover and patent new drugs. Likewise, the technology industry (frequently referred to as “Silicon Valley”) is another industry driven by patents. For example, in 2017 alone IBM alone received rights to 9, 043 patents, with other major tech companies receiving around 2, 000 also in 2017.

Furthermore, the music industry wouldn’t exist if it weren’t for copyrights. Copyrights in the music industry allow artists and record labels to reap great monetary gains from the creation of their songs by providing them the exclusive right to decide where and how their songs are used. We can see this firsthand via a study of YouTube. In the early days of YouTube, individuals would post videos to YouTube with songs as, say, background music. However, since most did not give any credit to the creator of the song, hundreds of thousands of videos were taken off from YouTube for copyright infringement. By studying the pharmaceutical, technology, and music industries, we are provided a small yet accurate glimpse into the extremely important role this clause of the constitution has had in defining business in the United States.