Integrating Intellectual Property Rights and Development Policy


The Economist
14 September 2002

Patently problematic

An important new study shows the promise, and pitfalls, of intellectual-property rights for the poor

INTELLECTUAL-PROPERTY rights (IPR), which embrace patents, copyright, trademarks and trade secrets, were once considered an esoteric, and slightly dull, bit of commercial law.

No longer. Today, IPR law is the focus of intense interest, and it is not just lawyers who are paying attention. The original purpose of patents was to encourage innovation, and thus growth, by creating an incentive for inventors to disclose the details of their inventions in exchange for a limited monopoly on exploitation. Some argue that the modern system of IPR law is having the opposite effect-delaying the diffusion of new technology.

John Barton, a law professor at Stanford University, wants to see both rich and poor countries start thinking of IPR more as a development tool, and for them to reconsider the notion that strongly protecting the rights of inventors is automatically good for all. For the past year, Dr Barton has chaired the Commission on Intellectual Property Rights, a body of lawyers, academics, a bio-ethicist and an industry executive convened by Britain's Department for International Development to look at how IPR can work to the benefit of the world's poor countries.

The commission's report, published on September 12th, sets out detailed recommendations for how developing countries should craft IPR to suit their conditions. Its central message is both clear and controversial: poor places should avoid committing themselves to rich-world systems of IPR protection unless such systems are beneficial to their needs. Nor should rich countries, which professed so much interest in "sustainable development" at the recent summit in Johannesburg, push for anything stronger.

All together now

There was a time when countries could go their own way on intellectual-property rights, and introduce legal protection for creators whenever they thought it appropriate. For most of the 19th century, America provided no copyright protection for foreign authors, arguing that it needed the freedom to copy in order to educate the new nation. Similarly, parts of Europe built their industrial bases by copying the inventions of others, a model which was also followed after the second world war by both South Korea and Taiwan.

Today, however, developing countries do not have the luxury to take their time over IPR. As part of a trade deal hammered out eight years ago, countries joining the World Trade Organisation (WTO) also sign up to TRIPS (trade-related aspects of intellectual-property rights), an international agreement that sets out minimum standards for the legal protection of intellectual property. The world's poorest countries were given until 2006 to comply in full with the requirements of the treaty.

Contrary to popular perception, TRIPS does not create a universal patent system. Rather, it lays down a list of ground rules describing the protection that a country's system must provide. These extend IPR to include computer programs, integrated circuits, plant varieties and pharmaceuticals, all of which were unprotected in most developing countries until the agreement. Patent rights are valid no matter whether the products are imported or locally produced, and protection and enforcement must be extended equally to all patent holders, foreign and domestic.

Although many poor countries feel that TRIPS gives them a raw deal-all cost and scant benefits-few want to see the agreement dismembered or removed from the WTO, according to Rashid Kaukab, at the South Centre, a think-tank based in Geneva. That is largely for fear of what might take its place. Instead, a few developing countries, such as India and Brazil, are starting to flex their muscles when it comes to the battle between western standards of IPR protection and matters of public interest, such as health and farming. As the commission points out, the wording of TRIPS gives poor countries considerable latitude to look out for themselves when introducing new systems of IPR protection. It also suggests a few ways that they can make the most of this flexibility in a number of important areas:

* Drugs Much of the recent debate over the impact of IPR on the poor has centred on the issue of access to expensive medicines. On paper, many of the world's least-developed countries have laws which provide patent protection for pharmaceuticals. In practice, few enforce them. Spurred on by a victory in April 2001 against drug companies fighting patent reform in South Africa, developing countries issued a declaration at the WTO meeting in Doha last year. This asserted the primacy of public health over IPR. They resolved that the world's least-developed countries should be given at least until 2016 to introduce patent protection for pharmaceuticals.

On September 17th, the WTO council responsible for TRIPS will consider a far trickier proposition in the declaration: how to make compulsory licensing (the manufacture and marketing of a patented drug without the patent-holder's consent) work for the poorest. TRIPS already permits compulsory licensing under certain conditions, including national emergencies. This is fine for countries such as Brazil, which have domestic drug industries to copy the medicines. Brazil has, indeed, used the threat of compulsory licensing to wring price discounts out of drug companies, a ploy which the commission, somewhat controversially, supports.

The problem is what to do with countries which have no drug makers. For the moment, they can import generic copies from the likes of India, but come 2006, when those exporters are supposed to have fallen in with the TRIPS line, who will supply the drugs?

* Education and research Alan Story, a specialist in IPR at the University of Kent, in Britain, reckons that copyright, particularly as it pertains to education and research, will be the next big battleground. Those countries that have signed up to TRIPS have also accepted international copyright rules. Although these allow some unauthorised copying for "fair use" or personal consumption for education or research, the commission worries that these exceptions are too limited, and that copyright may hamper access to textbooks, journals and other educational material in poor countries, by requiring the consent of, and likely payment to, the publisher prior to copying.

The commission is even more worried about the Internet, which has great potential for broadening access to education in poor countries, but in which encryption technologies can override the principle of fair use. Some publications, such as the British Medical Journal, allow free online access for people in poor countries. The commission would like to see more of this.
In the meantime, it recommends that developing countries allow users to sneak round technical barriers such as encryption, to gain access for fair use. Not surprisingly, software makers are unenthusiastic.

* Traditional knowledge The most glaring conflict between rich and poor over intellectual property comes from the is appropriation of "traditional knowledge" - such as ancient herbal remedies that find their way into high-priced western pharmaceuticals without the consent of, or compensation to, the people who have used them for generations. Often, patent examiners are simply unaware that the plant variety which an enterprising businessman is trying to patent has been used for centuries by a tribal community half a world away. The commission recommends that countries create databases to catalogue such traditional knowledge (India is already doing so), and urges that consulting such databases should be made a mandatory part of patent examinations the world over.

More than this, however, Kamal Puri, a lawyer at the University of Queensland, Australia, argues that new systems of IPR protection are needed for traditional knowledge. That is because its communal ownership, uncertain date of creation and unwritten form does not fit the requirements of western systems of IPR. On September 17th, a model law, drafted by Dr Puri and co-sponsored by UNESCO, will be unveiled at a meeting of Pacific island states in New Caledonia. The law gives traditional users jurisdiction over native knowledge, and requires that those who wish to commercialise it must seek the users' consent. All transactions must be registered with a tribal authority, which will deal with subsequent disputes.

Even when armed with these weapons, poor countries will have a hard time deploying them. Drafting IPR legislation and setting up a patent office that has modern information-technology systems and trained examiners does not come cheap or easy. Neither does establishing judicial, customs and competition authorities, and police services to enforce IPR rules. The World Bank reckons that it costs at least $1.5m to create a working system, plus recurrent costs.

Moreover, inventors in poor countries find it tough to use patent systems in the rich world. Merely securing a patent from America's patent office costs at least $4,000. Defending it in court can cost millions. The commission identifies several ways in which rich countries could open their domestic IPR systems, including discounted fees and subsidised technical assistance. It also suggests they should help poor countries to set up their own systems without saddling them with rich-world standards until they are ready to benefit from them. Inventing a way to do that might be worth a patent in its
own right. Those who heed the commission's report, however, might well resist the claim.

© The Economist Newspaper Limited, London, 14 September 2002.

Note: The Economist kindly waived its fee for permission to use this article.



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