Magazine

Invasion Of The Brain Snatchers


HOT PROPERTY

The Stealing of Ideas in an Age of Globalization

By Pat Choate

Knopf -- 352pp -- $26.95

(Readers'

Reviews below)

Editor's Review

The Good Has absorbing detail on how the birth of ideas -- and attempts to protect them -- has shaped the business

The Bad The book tends to drag in its final third.

The Bottom Line Worries about intellectual-property theft aren't new, but Choate's trivia trove is fascinating.

For those already worried about America's eroding competitiveness and inability to stay at the bleeding edge of innovation, Pat Choate's Hot Property provides further cause for sleepless nights. This won't surprise readers who recall Choate's best-selling 1990 book, Agents of Influence, which argued that, during the 1980s, well-orchestrated Japanese lobbying in Washington bested U.S. business every time. Others may remember that Choate also co-authored Save Your Job, Save Our Country with H. Ross Perot -- and was his running mate when he ran for President in 1996.

Happily, this latest book involves more than scaremongering. Yes, Choate makes a persuasive argument that the country's intellectual property is getting plundered by pirates, copyright infringers, counterfeiters, and industrial spies and that Washington is losing the battle to stop such offenses. He warns that a flood of fake medicines, aircraft parts, CDs, and designer handbags is costing the U.S. hundreds of billions of dollars a year in lost sales and causing a wholesale evaporation of jobs. Little of this is new, though, and to back up his argument, Choate relies too heavily on secondary sources.

What makes Hot Property fascinating -- at least the first two-thirds -- is its look at how new ideas and attempts to protect them have shaped the business landscape during the past 200 years. We learn, for instance, that Francis Cabot Lowell built the first U.S. power loom in the early 1800s -- after stealing the secret from the British; that just one year after Eli Whitney patented his cotton gin in 1794, 9 of 10 machines in use were pirated, and the inventor nearly went broke trying to protect his patent; that Alexander Graham Bell registered his telephone only two hours before another patent application was submitted. In Choate's deft retelling, it seems that most of America's great inventors and entrepreneurs, from Thomas A. Edison to Herbert Dow of Dow Chemical Co. (DOW), ended up in intellectual-property battles.

Equally absorbing is Choate's discourse on how Germany exploited patents to develop its industrial might. Beginning around the turn of the 20th century, its government quite simply refused to grant any patent protection to foreign companies or to license German technology to foreign companies, while seeking and receiving protection for its ideas in the U.S. It wasn't until Franklin D. Roosevelt declared war in 1941 that the U.S. seized all patents belonging to Germany, making these secrets available to U.S. companies.

A chapter on "Japan's Way" serves as a warm-up for Choate's argument that foreigners have stripped American companies of their technology prizes. In what he calls "extortion, pure and simple," Choate describes how after losing the war, Japan shook down U.S. companies by giving them a grim ultimatum: License your patents to Japanese companies, or you will be excluded from the Japanese market. It also allowed Japanese companies to review foreign patent applications, giving them an advance look at new technology. Returning to the major theme of Agents of Influence, he describes how Japan, with the tacit assistance of the U.S. government, brought American TV makers to their knees.

But Japan bashing is yesterday's sport. So Choate sounds the alarm over China, which he says uses "licensing, theft, piracy, intimidation, spies" and more to get the technology it needs. He warns that by sharing tech knowhow with their Chinese joint-venture partners, foreign companies are sowing the seeds of their own destruction. He rightly points out that China is only paying lip service to cracking down on counterfeiters and copyright pirates.

Unfortunately, Hot Property loses momentum in its final third. Here Choate considers how global bodies that enforce intellectual-property rights have evolved, culminating in the Trade Related Intellectual Property Rights Agreement, which put such matters under the World Trade Organization's jurisdiction. And a section on U.S. intellectual-property law has all the verve of the Congressional Record and will be of little interest to most readers.

Still, his trivia trove is captivating. Describing how Edison resorted to extremes to protect his 1,000-plus U.S. patents, Choate retells how the inventor electrocuted a dog as part of a demonstration to discredit rival Westinghouse Corp., which was challenging a patent on electricity generation. He relates how a British company patented the color mauve, made popular by Napoleon III's wife, Eugénie. It turns out that the fourth smokestack on the Titanic was a fake, to make the public think the boat was faster, and that Time Warner Inc. (TWX) earns about $1 million a year in royalties on Happy Birthday to You, which was copyrighted in 1935. And it seems that two years after their first publication, only 2% of copyrighted works produce any royalties. For its fascinating stories if nothing else, Hot Property deserves a lengthier shelf life than that.

By Frederik Balfour


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