Organization Aims to Protect Intellectual, Physical Property Rights

Published January 1, 2006

A new organization whose goal is to bridge the gap between intellectual and physical property rights has been launched under the auspices of Americans for Tax Reform.

The Property Rights Alliance (PRA) came into being on September 26, 2005. Its mission is to study and promote private property protection issues–including land rights, rent control, and intellectual property rights–to lawmakers and the public. PRA will focus on domestic and international policies, including:

  • federal and state laws regarding “takings” and the use of eminent domain;
  • federal government land and building ownership;
  • U.S. environmental policy and its effect on private property ownership;
  • piracy and counterfeiting of intellectual property on domestic and international fronts;
  • property law and protections in developing countries in order to foster economic growth and democracy;
  • strong intellectual and physical property safeguards in all trade agreements involving the United States; and
  • the patent system, including copyrights, patents, and trademarks.

Scott A. LaGanga, PRA’s executive director, discussed the organization and its views on protection of physical and intellectual property rights in an interview with the author.

Fabry: Was the Property Rights Alliance created in response to the U.S. Supreme Court decision in the Kelo case? [Editor’s note: The 5-4 decision in Kelo vs. New London, Conn., issued in June 2005, gave local governments the power to use eminent domain to seize private property from one owner and turn it over to another owner who promises to use the property in ways expected to boost economic growth or generate more tax revenue.]

LaGanga: We started the Property Rights Alliance to advocate the connection between intellectual and physical property rights across the country. Prior to the Kelo decision, Americans believed their right to private property was fundamentally protected by the Fifth Amendment. But following the Kelo decision, we learned how wrong we were.

Intellectual property is also specifically protected in Article I, Section 8 of the U.S. Constitution. But today you can easily find a pirated copy of Windows XP in China or the newest U2 release obtained illegally on a college student’s computer. PRA was created to link these two very similar movements.

Fabry: What has been the response nationally to the Kelo ruling?

LaGanga: Organizations in Washington, DC and around the country have begun a coordinated effort, led by the Institute for Justice [IJ], to implement measures by state statute or referendum to curb the abuse of eminent domain. Although eminent domain has been of value to projects such as public road construction, IJ has documented more than 10,000 cases of abuse nationally between 1998 and 2002.

Many states have already begun to address abuse. Thirty-eight states have either introduced legislation or created a task force to review their state policy on eminent domain. Delaware was one of the first states to pass legislation to limit its use [after the Kelo ruling]. Later, Alabama and Texas passed their own measures.

Currently, the Pennsylvania Senate is debating legislation [S.881] that can be viewed as a model for legislators in other states. The measure clearly defines legitimate public use for eminent domain.

Fabry: You mentioned the referendum process. How is that being used?

LaGanga: Measure 37, passed by referendum in Oregon in 2004, before the Kelo ruling, clearly stated that governments must compensate longtime property owners for any value lost to land-use regulations or allow them to waive development rules. More than 60 percent of voters supported the measure.

After the vote, the Oregon legislature convened to debate land use issues, and an appeal was filed by opponents of Measure 37. The measure was overturned by a circuit court judge and now goes before the state supreme court. Property rights organizations, including PRA, are writing [legal briefs] in defense of the measure.

Fabry: What has been the federal response to the Supreme Court’s decision, and what impact does this have on the American taxpayer?

LaGanga: Immediately following the Court’s decision, members of Congress from across the country introduced legislation in response. This included liberal members such as Maxine Waters [D-CA] and John Conyers [D-MI] and conservative members such as James Sensenbrenner [R-WI] and Butch Otter [R-ID], … the full political spectrum. They collaborated to create H.R. 4128, the “Private Property Rights Protection Act” that passed the House with more than 370 votes.

The measure went right to the heart of the problem–money. The legislation, which still awaits a Senate sponsor and hearing, withholds all federal economic development funding for a period of two years to a state or locality if an abuse of eminent domain is committed.

This forces state and local governments to think twice before taking a family’s home to build a commercial building in order to acquire higher tax revenue. The gain in tax revenue would not be worth losing economic development dollars from the federal government.

Fabry: What are the intellectual property rights [IPRs] issues facing the American consumer and taxpayer?

LaGanga: A respect for the protection of physical property must be matched with respect for and protection of intellectual property. It is estimated that the nationwide loss to state sales tax collections due to piracy is $330 million. Taxpayers in states around the country face two critically important issues with respect to intellectual property rights: economic growth of state economies, and taxpayer dollars used to fund college campuses.

University campuses can be a very difficult arena to enforce protection of intellectual property. Campuses have what are known as local area networks (LANs) that act as an internal network for the campus. An unintended consequence of these networks is that they allow for rampant piracy of all forms of media. These takings have become a number one target of the content industry because university piracy has risen significantly over recent years. Many of the targeted campuses are state schools receiving taxpayer funding.

Though illegal file sharing remains an immense problem, the intellectual property industry continues to drive the U.S. economy and state economies. More than 18 million people in this country are employed by the IP industry. U.S. copyright industries (those that produce copyrighted materials, such as book publishers and the music industry) employ 5.48 million workers and are responsible for an estimated 6 percent of the nation’s GDP.

In a low-income state such as North Carolina, the movie and television industries employ more than 14,500 people and raise approximately $365.5 million in wages. Louisiana sees well over $166.7 million in wages from movie production. In New Jersey, the pharmaceutical industry employs more than 60,000 people, and the automobile industry in this country accounts for approximately 13.3 million jobs nationwide.

These are just a few industries with protected property that will be hurt if our protections remain lax.

Sandra Fabry ([email protected]) is state government affairs manager for Americans for Tax Reform.