So Much For Protecting US Interests – Most Big 'IP Intensive' Firms Are Foreign-Owned

from the well,-look-at-that dept

These days, it’s become quite common to talk about the importance of spreading copyright maximalism around the globe based on the US’s interests. After all, the US seems to be the leading country in pushing for such maximalism, and people often talk about the big copyright players and their lobbyists, as being US-centric. After all, there’s Hollywood for movies, NY for publishing and NY/LA/Nashville for music. And, so much activity seems to be driven by their lobbyists — mostly the RIAA and MPAA. However, a new study is pointing out, for all this talk of the “American entertainment industry” driving the discussion on copyright laws, that a very, very large number of these companies are actually foreign, and much of the industry is really foreign (pdf). There’s a nice infographic to go along with the report as well:

The paper starts out by questioning a key assumption that is made frequently, by calling out a specific statement by IP Czar Victoria Espinel:

Americans are global leaders in the production of creative and innovative services and products, including digital content, many of which are dependent on the protection of intellectual property rights.

The paper notes that many have challenged whether or not those industries are truly “dependent” on intellectual property laws, but few have explored whether or not those industries are really “American.” Turns out… they’re not. And, as such, if we’re making policy based on just propping up the few legacy companies who run those industries, we’re often funneling US money to foreign countries, rather than investing it in the US. Among the findings (many of which are in the graphic above):

  • Four of the “Big Six” publishers (who represent a huge percentage of English-language book publications) are foreign-owned. More than 80% of the revenue made by the Big Six goes to foreign-owned companies.
  • Only 7 of the world’s top 50 publishers are US-owned.
  • The book publishing business in Europe employs twice as many people as the US
  • Two of the three major record labels are foreign-owned. Those two labels represent nearly 60% of the market.
  • 13 out of the 20 best-selling artists are not American.
  • Half of the 50 most popular movies in the US in 2012 were filmed partly or entirely outside the US.
  • Over the last two years, half of all Oscar winners were foreign.
  • The video game market is dominated by Japanese firms, with 70% of the market for the most recent generation coming from Japan

The report finds that this carries over to the patent side as well.

  • Foreign companies obtained 7,000 more US patents than US companies in 2011 (likely a bigger gap in 2012)
  • Seven of the top 10 companies getting US patents were foreign in both 2011 and 2012.
  • Nearly 60% of pharmaceutical revenue is generated by foreign-owned companies.
  • The majority of employees in the pharma industry (including for US-owned firms) work outside the US.

Basically, the more you look, the more you realize that even with all this talk of how we need these laws to protect US interests, a significant amount of any benefits may actually be flowing right out of the country.

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Comments on “So Much For Protecting US Interests – Most Big 'IP Intensive' Firms Are Foreign-Owned”

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Frequent Visitor says:

I’m a little disappointed in your article here – I’d like to see some links or discussion of who exactly is being considered foreign with these statistics. They dont surprise me or anything, but usually at tech dirt you’re a little better at least at looking at how robust a given statistic is. I’d like to see some of that without needed to access the report.

Anonymous Coward says:

it must then show that the politicians who keep doing whatever it takes to protect these industries and companies, including additional new laws, are more concerned about lining their own pockets from foreign-based firms than backing home-grown companies. this must include the producing of monopolies as well, which are then preserving old business models in favour of innovation. now the truth is out, i wonder how long before the denials are released and what excuses will be used to justify what is going on?

out_of_the_blue says:

Misleading. Whatever % US has HERE, protect it HERE!

Irrelevant too. Just support (limited to 1970’s terms) copyright even for furriners.

Red herring. If you’re suddenly for protectionism, Mike, then you join me as a Populist.

This “paper” verges on xenophobia.

Here’s interesting point: through the 80’s we were told that “socialist” Europe would go broke on welfare programs, while the Chi-coms and Russkis would collapse and starve to death. — HOW THEN are those pesky furriners able to buy up so much in the US? Wish there were an economist here who could answer that question…

Take a loopy tour of! You always end up at same place!
All Techdirt logo T-shirts are hand-made. … By laborers, a class of people whom Mike never even mentions, let alone favorably.

Anonymous Coward says:

Re: Misleading. Whatever % US has HERE, protect it HERE!

The “insightful” document seems to me to be little more than a nice set of relatively meaningless graphics and numbers. Thus, I agree that it verges on xenophobia, not to mention that foreign participation in the US economy is hardly newsworthy or a new phenomena.

Anonymous Coward says:

Re: Re: Re: Misleading. Whatever % US has HERE, protect it HERE!

What does this have to do with anything? Foreign companies for many, many decades have been able to avail themselves of US law, just like US companies have been able to avail themselves of foreign law. One of the reasons the US participates in international agreements is so that its businesses get a fair shake internationally.

nasch (profile) says:

Re: Re: Re:2 Misleading. Whatever % US has HERE, protect it HERE!

What does this have to do with anything? Foreign companies for many, many decades have been able to avail themselves of US law, just like US companies have been able to avail themselves of foreign law.

The point is that the maximalists have been wailing that we need stronger IP laws to protect US companies, when it turns out that even if the laws work, most of the protection will go to foreign companies. So that whole basis for IP protectionism is basically founded on sand.

Jay (profile) says:

First Revolution to the second...

In 1776, 1/3 of the nation decided to take on the largest army in the world at that time: The British army. They had one idea in mind, to eradicate the business that was hurting their nation at the time which was the East India Company.

Because of their monopolies on foreign goods, they urged the British to increase taxes on their colony. On top of this, they subsidized tea for the EIB. This lead to arguments against taxation without representation. But another effect had gone largely ignored…

It created our constitution that never spoke of corporations. Yet, now we have a Constitution that was supposed to have corporations regulated by state and federal governments which have now become too powerful and too greedy to be controlled.

This is a scary new turn in how we’ve lost democracy in the name of plutocracy…

Chuck Norris' Enemy (deceased) (profile) says:

Re: First Revolution to the second...

Yet, now we have a Constitution that was supposed to have corporations regulated by state and federal governments which have now become too powerful and too greedy to be controlled.

Uh, the point of the US Constitution wasn’t a guide on how to regulate corporations. It specified the limitations of the Federal government’s reach. But as the governments mission continued to creep to control more and more the corporations joined ’em in bed…and now we are here.

Anonymous Coward says:

Re: Re: Re: First Revolution to the second...

I agree completely and the way they act is pretty cruel. In EU they have a company in Ireland they funnel money to through transfer pricing to get as low a tax as possible and that is only grey zone as in not necessarily illegal. Their top-CEOs get money through stock options and bonuses rather than wages since it is taxed at a lower rate.
If any state goes after them for tax fraud they create a campaign about how the country is bad for businesses and threatens moving business unless they get what they want from the laws.
Too big to fail is just another word for high and increasing concentration of money in few hands with economic turnovers dwarfing national governments and therefore having a very strong and strenghtening bargaining position in relation to the politicians, when they lobby! It is not so much about the politicians being open to taking bribes as it is susceptibility to industries threatening to leave their state and thereby cripling the economy and the politicians chances of ever winning an election again!

Yes, multinational companies have a lot of advantages!

Jay (profile) says:

Re: Re: First Revolution to the second...

No, corporations were required to have charters that could be pulled at any time. That’s what Andrew Jackson did with the Second Bank and it wasn’t able to recover.

There are two things that could be the equivalent of a corporate death penalty were it not for our bribery laws that we call “corporate speech”

1) Charters that make a corporation invalid in a state.

2) Sherman anti-trust act which busts corporations that are illegal cartels or trusts that infringe on the rights of people.

It wouldn’t be that hard in breaking up the big banks, big monopolies in publishing and other companies that were big and unwieldy.

TheLastCzarnian (profile) says:

Re: Re: First Revolution to the second...

That’s not what Jay said. He got it right. So did you.
Corporations were purposely left out of the Constitution. That would give states total control over them, and did for a number of years. They could be liquidated at the drop of a hat: the price you pay for having no personal liability in the business entity. Now that’s no longer the case. We now have corporations which are too big to fail, subsidized by everyone and beholden to no one but the board and executives. (Shareholders? Yeah, right. Why is Apple sitting on billions again?)
We seriously need to start splitting them up or shutting them down, but no one has the intestinal fortitude, and probably won’t for the foreseeable future.

Jay (profile) says:

Re: Re: Re:2 First Revolution to the second...

The commerce clause gave them the power to regulate interstate commerce.

Yes, the Feds, as elected by the people, could regulate banks and businesses. That was their entire mission: ensure that democracy prospered and that people weren’t hurt by greed from the rich, which was the effect of the charters.

It never occurred to the Founders that bribery and party politics would destroy our nation because they had known the rules that corporations lived by.

Anonymous Coward says:

Re: Re:

Typical troll response.

The point of the article, and the paper the article is based on, was to debunk the nonsense the pro-IP trolls spout about protecting US companies.

As soon as there’s concrete proof that these pro-IP laws actually support and protect non-US companies the trolls move onto a new argument.

It’s pathetically transparent.

Anonymous Coward says:

There’s a couple of simple fixes for this. If the corporation is American in claims it needs it’s headquarters in the US, not in the Caymans, not in some other country but here.

If it seeks laws, rules, and regulations, then it needs to be a resident corporation to qualify.

If it takes it’s money outside the US to avoid taxation, then it isn’t eligible to qualify for protection through additional lobbying.

If it pays no taxes, year to year, then it doesn’t support the nation and as such doesn’t qualify for consideration.

Vincent Clement (profile) says:

Re: Re:

“If it pays no taxes, year to year, then it doesn’t support the nation and as such doesn’t qualify for consideration.”

I so despise that statement. Yes, because companies don’t employ people and don’t buy goods or services from other companies. Companies shouldn’t be paying taxes on income in the first place.

Suzanne Lainson (profile) says:

Re: Re: Re:

Yes, because companies don’t employ people and don’t buy goods or services from other companies. Companies shouldn’t be paying taxes on income in the first place.

That’s fine. Then revise the tax system so that taxes are raised another way. Of course, consumers aren’t going to like seeing their taxes go up. But someone needs to pay for what the government provides. And if people want to end government services, then they need to be prepared for the changes in the economy when government jobs, government contracts, and transfer payments disappear.

special-interesting (profile) says:

This argument of foreign ownership has been around a long time. Its been kicked about somewhat by the public, but is generally, forgotten quickly. Since most of the arguments are technical the average voter is overwhelmed. Outlining this difficult but important problem and trying to suggest possible solutions…

Foreign ownership of American firms is a form of participation in American democratic values and thus, is in itself, fine. Its a genius way to avoid both economic and physical war by way of international cooperation through trade and (partial or in whole) firm ownership. Smart countries do not engage in overt protectionism because it chases away business opportunities. (duuuu! Three Stooges logic, but this is the level…)

Not mentioned, in addition to the foreign based influence, is the domestic government agencies with large lobbying budgets. I kind of equate foreign owned firms in the same category as domestic government agency lobbying. Since these agencies are only the tools of a citizen elected government I see no reason not to outlaw this specifically and see it as an important way to limit the uncontrolled growth of bureaucracy. Only citizens need need to influence/convince themselves who to vote for. They are free to read whatever industry or government journal they like.

It is normal for any interested party to want to control their destiny by any means. Just like any domestic firm would. Each firm does their best to see what our rivals are doing and study them for covert intelligence (looking over another persons shoulder, so to speak, is normal).

One point is of course what means do we allow an entity to influence their bottom line profit margin. Of course that does not include breaking and entering or especially physical violence against anyone or firm. Such is the traditional most popularly understood way to succeed and that this applies to both domestic and foreign firms alike is equitable in the American way of universally applied law.

This (admittedly sparse) bread crumb trail leads directly to what is law and how is it influenced. Furthermore. How can a foreign firm take advantage of that? And. More importantly. How to prevent such untoward influenced on domestic (copyright) law.

Much is made of the American electoral process as fair and representative of the voting public. Influence of voting is commonly exerted by, (domestic, foreign firms and domestic government agency) special interest groups (SIGs) both domestic and foreign. How does one uncover a foreign or domestic government agency donation? It is a problem associated with anonymous large donors. Corruption of the election system is obvious and rampant but the argument do foreign firms exert to much control and should we allow any at all?

My archaic solution (to this specific voter quandary) is to eliminate the assumption that firms are as citizens. They might be treated as equal to people but (because they are not necessarily American) they definitely cannot be treated as citizens. Its is extremely normal that firms use and often abuse shell (or cover) firms to disguise operations or actions they did not want their competitors to thwart.

Its is also normal that countries use the shell company method for whatever covert operation they deem in their own interest. This distinction between a real citizen and a, corporation treated as a, person (still with rights) would allow the complete denial of corporate (and interestingly enough: domestic and foreign government agency) funding, through whatever means, of election candidates.

Because an election is supposed to be an equality based event no citizen should have (to much?) advantage over another so a low, low monitory limit accessible to the average person would be nice. Problem, of foreign influence on elections, solved. Scream if you must. This solution does not completely remove the potential influence of foreign powers that be and do we want to?

This will not stop the incessant, extremely well produced and positioned foreign, domestic and government agency sponsored, advertisements. (cigarette argument anyone?)

SIGs, even it they are not considered citizens, would still exist and likely we only want to limit foreign influence anyway. Lobbying is natural for any firm affected by potential legislation. Only preventing firms (shell or real or otherwise) from donating to candidates or parties would go a long way to preserve the institution of voting as, it is to me, a personal American experience.

Since the creation of law is in reality the definition of who and what is illegal it is the entire reason we have elections in the first place. Allowing it to be hijacked by anonymous large donors is irresponsible in the extreme.

I do believe that the effects of domestic, foreign firms and domestic government agency influence on the American political process is significant but we need to be specific. I have expressed my opinion on how voting donations should be exempt from SIG influence directly but they will still indirectly sponsor ads and such in the same way. One step at a time.

Since this is the usual late and wordy post will leave off for now. All I have done is define the problem and proposed a solution to a good part of it. The arguments are generic so far and see no need to specify copyright or trademark law abuse.

Unsolved is the Huge influence of SIGs which would lead directly to current abuse of electronic technology law (and other law). Additionally, not explored (yet) are my thoughts on how all this effects copyright law and specifically to be analyzed is recently passed electronic information legislation and its implications for a free society which might even be better covered in other posts.

Getting off topic. -throws away two page rant-

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