🎧 Why My Dad’s Old-School Lifestyle Reveals the True Value of Intellectual Property

How Investment spending on intellectual property helps businesses work better

Someone using ChatGPT on a phone, a pile of books, and an inventive shoe sole

My dad asks us all the time why we need the internet.

He has cable so he can watch baseball and public TV.

He’s like me, an inveterate reader. When the power goes out, all I worry about is if my iPad has enough juice for me to read. He just reads until the light fails.

He pays his bills by check, going to the post office when he needs to mail one.

He also gets his bank statement in the mail and uses an old-school ledger to balance his statement by hand. And back when we got married (1982), my husband and I did the same things. We watched network TV on cable.

I, like my dad, watch TV and read for entertainment. Copyright law protects that kind of property. But there are other kinds of intellectual property that households and businesses use.

Non-residential intellectual property

In the last post, we looked at the more traditional forms of Investment, spending on goods to help make more goods and services. (See below.) Goods that are like the hair products my hair salon keeps in stock, the robotic aids that help doctors with surgical procedures, and inventories of parts to make cars.

But businesses also buy and fund intellectual property.

Non-residential intellectual property includes inventions as well as creative output like music, art photography, and literature. Patents and copyrights protect this kind of property.

For example, copyright law protects this Substack post and all the others that I’ve written. The law also protects every Substack post that has original content, including written work, recordings, and artwork.

The best part is I don’t have to do anything. If someone wants to use one of my posts or even a large section of a post, they must ask for my permission. Fair use doctrine applies, though. Fair doctrine allows limited use for criticism, comment, research, and teaching purposes.

Even then, the work should be properly credited.

Fun fact: Since Congress passed the Sonny Bono Copyright Extension Act, copyrights are now in place for 95 years. You might have read that “Yesterday,” is the most covered copyrighted song. That’s not true in the US. 

That spot still belongs to “Summertime.” Written by George Gershwin, DeBose Haywood, and Ira Gershwin in 1915, the song will go into the public domain in 2030. There are nearly 68,000 recordings of the single. [1]

If you invent something, on the other hand, you need a patent grant if you don’t want someone else to use your work. There are three types of patents in the US: utility, design, and plant.

Utility patents

A utility patent is one that governs inventions and processes. For example, my husband and his team came up with processes for analyzing significant quantities of audio data. He shares eight patents with his teammates.

The earliest patent in the US, held by Samuel Hopkins, was a process for making potash.

Shunpei Yamazaki holds the most US patents (12,587) granted for inventions. He invented the glass integrated circuit chip used in computing. Yamazaki, a Japanese inventor and entrepreneur, is also the world record holder.

According to the US Patent Office, a patent gives an inventor’s owner “the legal right to exclude others from making, using, or selling an invention for a limited period of time in exchange for publishing an enabling disclosure of the invention.”

Unfortunately, patent holders have to sue if someone is using their product or process without their permission.

There are two other kinds of patents.

Design patents

Design patents protect ornamental designs. A process for making cleats (or boots) fit better for female soccer players needs a utility patent. But the exterior design, like the colors and where they’re placed, can get a design patent.

The patent relates to the shape, surface area, or a combination of both. But a design can’t exist by itself. For example, the design of a new wallpaper only gets patent approval if it’s going on walls.

Plant patents

Most new plant seeds have patent protection. According to the Patent Office, this includes cultivated spores, mutants, hybrids, and newly found seedlings.

Patents on new seeds designed to be diseased-resistant and climate-resistant have been a source of controversy. The seeds can be expensive to small farm owners, restricting their access.

Pollen from a patented plant can blow into neighboring farms leading to lawsuits. [2]

Patents of all types are a source of controversy particularly since the 1990s when the Patent Office approved many poor-quality patents. They guarantee a monopoly right to the owner, even if their sole reason for filing were to sue future potential users.

However, when a patent gets approval, the owner has to share the process. That way others can build on their work.

In these two posts, we’ve looked at spending on physical and non-tangible capital.

However, financial capital also has a role to play.

Financial capital (or investing) is not part of GDP

Financial capital is the money used to buy capital goods. A kitchen in a restaurant might need a new walk-in freezer. But these units can cost the business $8,000-32,000 for a pre-made unit. Custom units will cost more.

Most restaurant owners don’t have that readily available and will need to borrow money.

In a future post, I’ll look at financial capital in more depth. The next post in my series on GDP will discuss Government Spending and Investment.

Thank you for reading,

Nikki

[1] The Gershwin’s extended the original 28-year copyright twice before. The song was under copyright when copyrights were set for 75 years with an optional 20-year extension.

[2] https://www.dw.com/en/patents-on-plants-is-the-sellout-of-genes-a-threat-to-farmers-and-global-food-security/a-49906072

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