In Nairobi, AIDS activists are celebrating a rare victory. After months of vacillation, the Kenyan parliament recently approved a law allowing for the importation of generic, or copycat, versions of patented anti-retroviral medicines without their patent-holders' consent. Many people believe that opening the market to generic copies will bring down prices for millions of HIV-infected Kenyans faster than any discount offered by giant drug companies.
Meanwhile, in the Puna highlands of Peru, poor farmers are furious about patents issued to two US companies giving them exclusive rights to market maca, a potato-like plant and popular aphrodisiac, in America. The Peruvians say their traditional crop is not a novel invention, and that the patent unfairly restricts their ability to sell it in the US.
Evidently patents are a bad thing for poor places-or so many argue. They are largely the preserve of western multinational corporations, giving them a licence to establish monopolies, drive out local competition, divert R&D away from the needs of poor places and drive up the prices of badly-needed goods. Patents prevent poor people from getting life-saving drugs, interfere with traditional farming practices and allow foreign "pirates" to raid local riches without getting permission or paying compensation.
Yet there is another side to this story. In Senegal, as many as 60,000 musicians struggle to make ends meet. Not because their music is unplayed, but because it is unpaid-broadcast by radio stations, used by better-off performers and reproduced on pirated cassettes, without the creators' consent, largely due to the country's copyright laws which are poorly composed and enforced. In India, pharmaceutical companies which are shifting from generic manufacturing to original R&D are lobbying hard for a tightening of Indian patent policy. Since national law does not yet fully cover pharmaceuticals, the fruits of their costly research are hard to protect from copycats at home.
By this measure, intellectual property protection is good for poor countries. It encourages domestic industry, boosts foreign investment and improves access to new technologies. To true believers, intellectual property protection is part of the doctrine of modern economic growth, along with free trade and democracy.
These differing views have turned intellectual property rights (IPR) into one of the most controversial topics in international development. Other forces too are pushing IPR out of the backroom of commercial law and into the spotlight. The first is the rise of the "knowledge economy," in which an industry's chief assets are not so much physical capital as good ideas and the property rights which control their exploitation. Anyone who doubts the power of patents in the west should look at what happens to drug companies when their bestselling drugs lose protection: last year, Eli Lilly's shares lost a third of their value when a patent on Prozac expired and generic competitors came flooding in.
Patenting has certainly become a popular pursuit, as the rise in the number of patents issued worldwide shows (see graph). Some of this growth is due to the expanding scope of patents, taking in questionable innovations such as internet novelties. Other newly-patentable advances, such as gene sequences and genetically-modified organisms, also raise hard questions about the ethics of laying claim to living things.
The second force bringing IPR to the fore is globalisation. IPR used to be a domestic issue, with countries deciding their own levels of enforcement. The WTO has altered all that. As part of the trade deal hammered out eight years ago, countries joining the WTO also signed on to Trips (trade-related aspects of intellectual property rights), an international agreement that sets out minimum standards for the legal protection of IPR.
Many poor countries think that Trips is taking them for a ride, bringing the heavy expense of raising their legal protection to western levels with no sign of the benefits claimed for it. Like almost every other measure associated with the WTO, Trips and IPR have become a battleground between supporters and opponents of global capitalism.
are patents working as they should?
This is not the first time that the rights and wrongs of intellectual property protection have been debated. The mid-19th century saw a lively exchange between those, like John Stuart Mill, who argued that patents were a just reward for an inventor's labour and others, like The Economist, which reasoned that it was quite wrong to think of ideas in the same way as physical property and that any protection afforded inventors by the state was a privilege, but not a right. Patents, The Economist asserted, hindered rather than helped economic growth by restricting the free exchange of ideas. Inventors should be rewarded by the open market, not a state-sponsored lottery.
For much of the 19th century, parts of the industrialising world which today are staunch defenders of IPR were far less enthusiastic about its obligations. Until the late 1800s, America provided no copyright protection for foreign authors, arguing that it needed the freedom to copy in order to educate the new nation. Similarly, Switzerland built its industrial base by copying others' inventions, a model which was followed after the second world war by Asia's industrial powerhouses, Korea and Taiwan. As soon as their industrial base was mature enough to foster home-grown innovation, however, IPR enforcement became a matter of urgent self-interest.
Today, IPR is central to western notions of prosperity. Patents encourage innovation by giving inventors (corporate or individual) the right for a fixed period of time to exclude others from commercialising their innovation, thereby allowing them to recoup their investment. This not only benefits the public by bringing bright ideas to the market, but also enriches society with information, since applicants have to dissect and disclose their invention's inner workings before getting a patent.
But John Barton, a law professor at Stanford University, wonders if the interests of creators haven't taken precedence over the needs of society. He worries, for example, that by staking a claim on so many basic tools of research, such as gene sequences, the proliferation of patents and licensing agreements is repelling academics from some important fields of study. He is not the only one with questions about how well the patent system is performing in its promised land: an expert commission, convened by America's National Academy of Sciences, is due to report by the end of this year on ways in which the US can improve its patent system, including changes to the country's costly legal mechanism for challenging patents, which favours big corporations over small-time Edisons.
Barton is keen to see both rich and poor countries start thinking about IPR as something with social and economic effects far beyond the boardroom. This is particularly true in the poor world, where IPR can have a profound impact on development, and where many people question the western notion that strongly protecting the rights of inventors is automatically good for the public at large.
For the past year, Barton has chaired a commission on IPR, comprised of lawyers, academics, a bioethicist and an industry executive, convened by Britain's department for international development to look at how such protection can work to the benefit of poor countries. Their report, published on 12th September (and online at www.iprcommission.org), won praise from Clare Short, the minister responsible for overseas aid, as a blueprint for sounder policies on IPR. The study is meticulously researched and lays out detailed recommendations of how developing countries should craft rules to best suit their conditions. Its central message is that poor countries should avoid committing themselves to rich world systems of intellectual property protection unless they clearly benefit from them, nor should rich countries press them for more.
the meaning of trips
This, however, is easier said than done. With the advent of Trips, countries no longer have the freedom to go their own way on IPR. Under the terms of the agreement, much of the poor world had until 2000 to bring their IPR systems up to scratch; least-developed countries were given a stay of execution until 2006 (developed countries were expected to toe the Trips line by 1996).
Trips does not create a single, universal patent system which allows, say, a patent issued in the US to be recognised in India. Much to their annoyance, multinational companies seeking protection around the world still depend on each country's patent office to grant the rights and their judicial, customs and police services to enforce them. Although US big business argues the case for a single, one-size-fits-all patent regime, the commission urges poor countries to resist, and to make the most of Trips, with all its wrinkles.
Trips does lay down a long list of ground rules as to the depth and breadth of protection these systems must provide. These include extending IPR to include pharmaceuticals, computer programs, semiconductors and plant varieties-items that were unprotected in most developing countries until the agreement. Patents, for example, can be granted for any technological process or product, so long as it is new, involves an inventive act and has an industrial use. Under Trips, such protection lasts 20 years from the date of application. Patent rights are valid whether the products are imported or locally produced and IPR protection must be extended equally to all patent-holders, whether foreign or domestic.
Countries vary greatly in how closely their existing IPR systems reach the Trips standard, largely according to their degree of economic development. America, for example, has patent legislation which goes beyond what the agreement requires. The US patent office has an annual budget of more than $1 billion and a staff of 3,000 highly-trained scientists, engineers and legal experts to examine claims. The country also has 600 judges specialising in intellectual property law to preside over patent disputes, an extensive antitrust authority and a vast customs and excise service to clamp down on counterfeiting. Eritrea's patent office, on the other hand, consists of one untrained official somewhere in the ministry of trade and industry.
Upgrading to Trips does not come cheap. The World Bank reckons that it will cost a developing country at least $1.5m just to build a barebones infrastructure to implement Trips; running the system will bring further costs. Not surprisingly, poor countries fighting disease or civil war would rather see their engineers building sewage systems and their judges trying insurgents than dealing with patents. At last year's WTO meeting in Doha, developing countries began to flex their muscles and issued a declaration that the poorest among them should have until 2016 to put in place patents on pharmaceuticals. The commission agrees and argues that this exemption should be extended to all forms of intellectual property, and that a system be devised to gauge when countries are ready to comply with Trips, based on their income and technological capacity.
On the surface, it's hard to see what most of the world's developing countries, with the notable exceptions of India and China, are getting out of the global IPR system at the moment. More than 90 per cent of the world's patents are issued to Americans, Japanese and residents of the EU (see chart). Western patent systems are too costly and complex for most inventors in poor countries. In general, it costs at least $4,000 to secure a patent from America's patent office, and millions more to defend it in court against a legal challenge.
Some poor country inventors get lucky. The Society for Research and Initiatives for Sustainable Technologies and Institutions (SRISTI) in India has helped five small inventors file patents in the US on such novelties as a mini-tractor and a protective device for fibre optic cables, in part thanks to a US law firm which donated its expertise free. The commission encourages such pro bono assistance and other concessions to make western systems more accessible to the developing world.
Back at home, the benefits of putting in intellectual property systems for poor places are far from clear. Many poor countries which signed onto Trips did so in the hope that they would win trade concessions in other crucial areas such as agriculture and textiles. Such indirect gains have yet to materialise, much to their annoyance. But they are also waiting for the direct benefits of stronger domestic IPR protection. According to the commission, there is little evidence to suggest that the world's poorest countries will see a flood of foreign direct investment or western technology when they strengthen their IPR.
As for stimulating domestic innovation, it is unlikely that a rigorous patent system will turn a downtrodden place like Zambia into a silicon savannah any time soon without prior investments in education and research, not to mention sanitation and electricity. What many poor countries can expect, however, are higher prices for some goods, and more unemployment once copycats are driven from the market. The same is true in better-off developing countries, such as India and China, but at least those places with companies advanced enough to alarm western businesses by their industrial-scale copying are probably advanced enough to support homegrown innovation which would benefit from IPR protection in the first place.
findings of the ipr commission
More pressing than the long-term effects of IPR on poor countries' economic growth is its short-term impact on individual welfare. The commission highlights four areas of concern:
Pharmaceuticals. Patents have attracted much of the blame for the gap in availability of high-tech medicines between rich and poor countries. Many of the most effective drugs to treat such scourges as HIV are covered by patents in the developed world, which allow their corporate creators to charge what the market will bear in order to recoup their hefty R&D costs. This drives up the cost of the drug to beyond what poor countries can afford. On paper, almost three quarters of the world's poorest people live in countries which offer patent protection on pharmaceuticals. In practice, however, few of these patents are enforced; IPR is only one of many reasons that impoverished people do not get the medicines they need.
To their credit, the big western drugs companies realise that something must be done beyond ad hoc donations of drugs. One path they are pursuing is tiered pricing-the commonsense idea that poor places should pay less for costly drugs than rich ones. The trouble lies in trying to prevent the discounted drugs from flowing back into their main markets in the rich world. (Clare Short's department for international development is producing another report on how to do this later this year.)
By the end of the year, the WTO Trips council will have to come up with a plan to deal with another proposition in the so-called "Doha Declaration" on Trips and public health: how to make compulsory licensing-manufacturing and marketing a patented drug without the patent-holder's consent-work for the poorest. Trips already permits compulsory licensing under certain conditions, including a national emergency, which is fine for countries such as Brazil or even the US, which have a domestic drug industry to copy the medicines. Indeed, Brazil has recently used the threat of compulsory licensing to wring price discounts out of drug companies such as Merck and Roche.
The problem is what to do with countries like Angola which have no drugmakers to speak of. For the moment, they can import generic copies from India, but once the more developed exporters have also toed the Trips line by 2006, who will supply the drugs? Several ideas are on the table, but it will take a lot of hard bargaining to make one stick.
Education. Those countries which signed up to Trips automatically signed a set of international copyright rules. While these allow for some unauthorised copying for "fair use" or personal consumption, the commission worries that these exceptions are too limited and that the copyright may be hampering access to educational materials in poor countries by requiring the consent of, and likely payment to, a publisher prior to copying. Much like patents and drugs, strict copyright rules are not the only reason why, say, 30 children in a school in rural Africa have to share a single textbook. But fixing everything else will make little difference unless the copyright problem is also sorted out. One possibility is to have publishers significantly drop prices for poor places, in much the same way that drug companies have started doing for some medicines.
Aside from printed books, the commissioners are even more worried about the internet, which has great potential for broadening access to education in poor countries but where encryption technologies can override the principle of fair use. The commission recommends that developing countries ensure that domestic copyright legislation allows for broad exemptions for education and research. In the meantime it recommends that developing countries bend their laws within the limits of Trips to allow users to sneak around technical barriers on the internet or software to allow for fair use. The western IT industry is understandably nervous at the prospect.
Genes and living things. Trips allows for the patenting of DNA sequences, new plant varieties and micro-organisms. The US has embraced this, Europe has adopted it in parts, but many poor countries, such as Brazil, strenuously oppose it. Aside from the ethical debate over asserting ownership to biological materials, there are practical issues. The commission worries that patents on plants may interfere with the poor farmers' custom of saving and exchanging seed rather than buying it from commercial suppliers, and recommends that poor countries introduce IPR rules which preserve this right, as India has recently done.
Furthermore, it suggests that countries inclined to issue patents on genes define strict standards and narrow uses to prevent such patents from inhibiting research. The debate over these issues has been rumbling for years in the Trips council. Developing countries, emboldened by their success over pharmaceuticals, are pressing for a more flexible reading of the agreement, along the lines of other international treaties which defer to their rights as custodians of most of the world's genetic riches.
Traditional knowledge. Perhaps the biggest source of friction between rich and poor comes from the misappropriation of traditional knowledge-sacred aboriginal designs turning up on Vietnamese carpets or ancient herbal remedies finding their way into high-priced western drugs-all without the say of the indigenous communities which have used them for generations. In the case of patents, some are indeed warranted since the foreign "bio-prospectors" have significantly enhanced nature with a novel, inventive step.
But there have been a few high-profile cases, such as American attempts to patent India's turmeric plant, where nature is left pretty much unadorned, and a patent is issued anyway, without any acknowledgement of, or reward to, its traditional users. Often patent examiners in the west are unaware of the "prior art" or documented use of the alleged invention elsewhere which would render it unpatentable; the commission recommends the creation of databases to document traditional knowledge, as India is doing, and says that these should be made a mandatory part of the patent examinations the world over.
A few developing countries are working on laws which would require all those applying for a patent on say, a plant variety, to declare where they got it and to prove that they not only have the consent of its native users, but they have also cut some sort of deal to share the eventual rewards of commercialising the product or process. Other indigenous groups are taking matters into their own hands. The Ye'kuana Indians of Venezuala are working jointly with Otro Futuro, a local charity, and the Policy Sciences Centre of New Haven, Connecticut, to assemble their traditional myths, music, knowledge of medicinal plants and other traditional folklore into an atlas.
Making the Ye'kuana database public might help to stem biopiracy. But it may not bring the tribes much material reward, since they themselves cannot patent the contents of the database once it has been disclosed. So the Ye'kuana are using another intellectual property right-the trade secret-to reveal just enough of their traditional knowledge to establish a legal claim, but not too much to prevent them patenting in future, should they one day choose to do so.
Many argue that there are limits to cramming such traditional practices into the holes that conventional intellectual property law provides. Western IPR grew out of a particular model of innovation at a particular time in history. It assigns specific rights to individuals, for well-defined developments for prescribed periods of time. This model does not fit neatly with the sort of collective ownership which prevails with the Ye'kuana, where the "invention" is vague and its origins are lost in the mists of time. New models or sui generis systems of rights will probably be needed to protect such traditional knowledge, and these will not be easy to establish.
As the commission points out, there is no shortage of reforms that rich countries can introduce to open up the international IPR system to poor countries. But by the same token, poor country governments need to take a hard look at their own resources, and consider IPR as a way to boost their people's prospects, rather than dismissing it as a tool of foreign exploitation. As Anil Gupta, head of SRISTI says: "The only thing that poor people are rich in is their knowledge." The challenge is to create an IPR framework in poor places that does as much for their "knowledge economy" as it has for ours.
