New York Times
14 October 2002
on Intellectual Property
19th century, the United States was both a rapidly industrializing
nation and - as Charles Dickens, among others, knew all too well -
a bold pirate of intellectual property.
days, when it comes to dealing with developing nations around the
world, the United States seems to be ignoring its own swashbuckling
heritage. Or at least that's the implication of a recent report by
the international Commission on Intellectual Property Rights. The
report recommends that the World Trade Organization's treaty on intellectual
property rights be made much more flexible so that developing nations,
from Brazil to Bangladesh, can adopt rules more at their own pace.
debate over intellectual property rights - patents, copyrights and
trademarks - is focused mainly on forward-looking industries like
computer software, pharmaceuticals and biotechnology. But Americans
can look back to this nation's 19th-century experience in book publishing,
for example, to understand the developing world's viewpoint.
then, American law offered copyright protection - but only to citizens
and residents of the United States. The works of English authors were
copied with abandon and sold cheap to an American public hungry for
books. This so irritated Mr. Dickens - whose "Christmas Carol"
sold for 6 cents a copy in America, versus $2.50 in England - that
he toured the United States in 1842, urging the adoption of international
copyright protection as being in the long-term interest of American
authors and publishers.
appeals proved unpersuasive until 1891, when the United States had
a thriving literary culture and a book industry that wanted its own
intellectual property protection abroad. So Congress passed a copyright
act extending protection to foreign works in return for similar treatment
for American authors overseas.
the economies that were shining success stories of development, from
the United States in the 19th century to Japan and its East Asian
neighbors like Taiwan and South Korea in the 20th, took off under
systems of weak intellectual property protection. Technology transfer
came easily and inexpensively until domestic skills and local industries
were advanced enough that stronger intellectual property protections
became a matter of self-interest.
But according to the recent report, this kind of economic-development
tactic - copying to jump-start an industry - is endangered by the
United States-led push for stronger intellectual property rights worldwide.
of a sweeping trade deal reached in 1994, the member nations of the
World Trade Organization must adhere to a global agreement known as
Trips, for Trade-Related Aspects of Intellectual Property Rights.
Trips stemmed partly from the prevailing belief during the 1990's
that the "American model" - free trade, wide-open capital
markets and strong intellectual property protection - was the sure
way to global prosperity.
as the prescriptions of the International Monetary Fund are now being
questioned, as prosperity has proved elusive for countries like Brazil
and Argentina, so are the W.T.O.'s intellectual property rules.
we cut off imitation strategies for developing countries, we are drastically
narrowing the options they have to reach an economic takeoff,"
said John H. Barton, a professor at Stanford law school who led the
commission on intellectual property rights.
economists regard the 1994 agreement as a triumph for a few industries
- pharmaceuticals, software and Hollywood - that stand to gain a lot
from the protections and whose interests were championed by the United
States government. "Trips was a matter of powerful companies
with intellectual property concerns essentially dictating trade policy,"
said Keith E. Maskus, a trade expert at the University of Colorado.
States does stand to gain the most from stronger intellectual property
protections, most of which must be in effect by 2005, under Trips.
A World Bank study estimates that American companies would pocket
an additional $19 billion a year in royalties, while developing nations
like China, Mexico, Brazil and India - net importers of intellectual
property - would pay more to the patent holders.
property rights are temporary grants of monopoly intended to give
economic incentives for innovative activity. Why toil for months or
years to develop a new drug or think up a clever software program,
the thinking goes, unless there is the potential for a big payoff?
The intended result is that consumers will pay somewhat higher prices
for an individual drug or software program but will benefit from all
the additional innovation in the economy.
is the theory. Within the United States, there is criticism that the
corporate frenzy to patent any technical advance, even business methods,
undermines innovation by unnecessarily restricting the flow of ideas.
And just last week, the United States Supreme Court heard a challenge
to a 1998 law that extended copyrights in this country by 20 years;
the law's opponents contend that the extension inhibits public creativity
by making it harder for other people to obtain and build upon existing
works. But in general, the theory behind intellectual property rights
tends to work in rich nations.
about Trips is that it is too much of a one-size-fits-all approach
that works to the detriment of developing nations. "It would
be fine if we lived in a world of all rich people," said Jeffrey
D. Sachs, a development economist at Columbia University. "The
danger with Trips is that it will mostly hurt the developing countries'
access to ideas."
of the intellectual property rights commission, which was sponsored
by the British government, includes a long list of recommendations,
some of which would be anathema to American companies:
developing nations to make greater use of compulsory licensing of
Allow more "reverse engineering" of software programs -
that is, copying a product by studying and making educated assumptions
about the underlying code.
Permit "cracking" of software used to protect copyrighted
digital media, if the country determines that the copy-protection
technology limits the fair use of digital text, video or music.
report comes amid a growing backlash in developing countries against
the imposition of a strong global system of intellectual property
rights. The lightning-rod issue has been the AIDS epidemic, and the
resulting confrontation between developing nations and the pharmaceutical
a public outcry and the threat of compulsory licensing in countries
like South Africa, Brazil and India, the pharmaceutical companies
began cutting prices by 80 percent or more on drugs for use in treating
AIDS-related ailments in developing nations two years ago.
Trade Organization, at its meeting last November in Doha, Qatar, issued
a declaration that public health matters must be weighed equally with
intellectual property rights. As part of the Doha declaration, the
trade organization allowed the world's least developed nations, mostly
in Africa, to exempt pharmaceuticals from patent protection until
2016. (The intellectual property rights commission recommends that
exemption for the poorest nations be extended to all fields of technology.)
the AIDS episode was a single, isolated case or a sign of a changing
relationship between the developing counties and the pharmaceutical
industry is uncertain. But emboldened developing countries could invoke
the public health argument for diseases like heart disease and diabetes
- and the increasing sophistication of generic drug makers in India
and China could give them alternate sources of supply.
is what made everybody think about this," said Dr. Jim Yong Kim,
a professor at the Harvard Medical School and an expert on health
projects in poor countries. "But I think access to medicine will
be on the table much more broadly in the developing world."
makers insist that they responded quickly to the AIDS crisis, working
cooperatively with the United Nations and other international agencies.
But the industry says focusing on low-cost drugs alone ignores the
more significant chronic hurdles to treating diseases of all kinds
in developing nations - lack of public health infrastructure, education,
financing and political will. There are 35,000 people in Africa being
treated under the international program begun two years ago, while
an estimated 30 million people have H.I.V. in Africa.
is plenty of supply," said Harvey E. Bale Jr., director general
of the International Federation of Pharmaceutical Manufacturers Associations
in Geneva. "Access is not the issue."
who defend the Trips global standards for intellectual property protection
say that a strong patent system not only fuels innovation but provides
the best way for developing nations to attract investment and encourage
a rapid transfer of technology. China, for example, has steadily given
foreign companies a greater measure of protection for intellectual
property and last year signed on to Trips, when the nation joined
the World Trade Organization.
is no doubt that has played an important role in attracting R. &
D. investment in China," said Brad Smith, the general counsel
of Microsoft. In June, Microsoft announced that it would spend $700
million over the next three years in China in education, training
and research, and in investments in local companies.
end, the debate over intellectual property rights, like the controversy
over I.M.F. policies in developing nations, may be more a dispute
about speed than direction. Free trade, open financial markets and
intellectual property rights are economic goals worth pursuing. But
that is not to say that the preferred path is necessarily the straight
line of ideological purity.
as it stands, reflects "a mentality borne of the American triumphalism
of the 1990's," said Mr. Sachs of Columbia. "There is a
widespread sense that that approach to development policy has to be
We are grateful to the New York Times for a considerable reduction
in their normal fee for reproduction.