Paradigm shift taking place in thinking on IPRs

Dr. Carlos Correa, special advisor on trade and intellectual property of the South Centre, addressed current trends related to the protection of intellectual property (IP) and made a few references to negotiations in this area. He recalled that during the last twenty-five years, the trend in IP has been inclined towards expansion and increasing protection. The Trade-related Aspects of Intellectual Property Rights agreement (TRIPs) had a very important role in globally increasing this protection, Dr. Correa noted. In addition, the World Intellectual Property Organization (WIPO) adopted two treaties in relation to copyright law that incorporate new standards in this area. Furthermore, free trade agreements contain substantive chapters on IP that incorporate a large number of TRIPs-plus standards, which increase the terms of protection for patent holders. This, according to Dr. Correa, has been part of a trend towards expanding protection of intellectual property rights.

Dr. Correa explained that this trend has been strongly supported by unilateral action from developed countries. These actions have been mainstreamed through very different means, including intervention by Ambassadors, and efforts to make the case that these protections are important to increase benefits.

Dr. Correa gave the example of the pressures facing India in order to increase protection of IP. He explained that an investigation was started in the United States against India, arguing that the latter is not fulfilling the standards that the US considers to be appropriate in relation to IP. The case argues against India’s granting of a compulsory license and attacks Section 3(d) of India’s patent act. Consequently, India is facing the threat of loosing trade preferences in the United States that are estimated to be around 4 billion USD of exports. Dr. Correa noted that this action has been prompted by business associations, including the pharmaceutical industry.

According to Dr. Correa, there are two ironies in this situation. The first irony is that the United States has granted the largest number of compulsory licenses in the world, amounting to thousands, including for pharmaceuticals. In contrary, India has granted one compulsory license for an anti-cancer drug because its price was exorbitant. A second irony is that there is no complaint submitted before the WTO claiming that India is violating WTO rules. India is being judged under the rules that the United States considers unilaterally as best for the United States’ companies. If there were violation of the TRIPs agreement by India, then there would be a case in front of the WTO. Consequently, Dr. Correa noted that such action by the United States is undermining the legitimacy of the WTO system. He recalled a statement made by the South Centre on March 4, 2014, whereby the Centre calls on WTO Members to respect the rights of other Members to avail themselves to WTO flexibilities.

Dr. Correa questioned whether the trend towards expansion of IP protection is justified by evidence that such protection would lead to more innovation and economic development. According to Dr. Correa the reply is that there is no such evidence. On the contrary, economic and academic studies, especially by American economists, have been skeptical about the role that intellectual property might play in promoting innovation.

One of the studies recalled by Dr. Correa claims that such IP protection is not promoting but might deter innovation. Dr. Correa quoted Scherer who is a reputable Harvard professor. Scherer has noted that “as economic studies have shown repeatedly, patents do not play a particularly important role in most fields of industrial innovation”. Dr. Correa also referred to Gary Becker, a Nobel prize winner, who has noted that “the current patent length of 20 years (longer for drug companies) from the date of filing for a patent can be cut in half without greatly discouraging innovation”.

Furthermore, Dr. Correa recalled Lerner’s work, who is a professor at Harvard Business School. Lerner had surveyed patent laws in over sixty countries and came to the conclusion that strengthening patent rights resulted in an increase in filings from foreign applicants with no effect on filings by local inventors.

This paradigm shift about intellectual property is growing so strong that two economists from the United States had published a study during 2013 suggesting that public policy should aim to decrease patent monopolies gradually but surely, while the ultimate goal should be the abolition of patents.

Dr. Correa stressed the importance of highlighting these trends because in Geneva the approach still insists on the old argument that intellectual property necessarily will promote innovation and economic development. Yet, what has been said and written as outcome of investigations in developed countries is leading to a different approach.

Another question raised by Dr. Correa concerned the possible limits or changes to the upward trend in IP protection that has been witnessed during the last twenty-five years. On this issue he noted that some elements may show that maybe we are at a time where relentless increase in intellectual property protection might to some extent be stopped.

Besides economists in the United States, concerns with the negative effects of patents and IP in general are increasing among businesses. For example, the Computers & Communications Industry Association (CCIA) that includes members such as Google, Motorola, Microsoft, E-bay, and Yahoo had made the following statement: “we do not think it is an accident that innovation has flourished in a society that values an open, competitive economic marketplace, nor where original independent and free speech are enshrined in law…Therefore our commitment to vigorous competition, freedom of expression, and openness is a natural product of the understanding of what has helped our industry thrive, and what it needs to continue to do so”.

These companies know that they are spending more money on lawyers than they are spending on research and development, according to Correa. They know that they could innovate better in an open system rather than in a system based on strong appropriation of innovation.

Dr. Correa also highlighted the emergence of civil society involvement in addressing the implications of an increase in protection of intellectual property, especially by organizations working on issues related to the internet. Dr. Correa referred to the anti-counterfeiting trade agreement (ACTA); he explained that there was an attempt by the United States and a small group of countries to develop a new agreement that would increase the enforcement measures in the area of intellectual property. This agreement was negotiated in secrecy, and was put forward for ratification by the group of countries that prepared it. Civil society organizations emerged against this agreement, taking into the streets in manifestation of opposing it. Many European countries, such as Poland, decided not to ratify this agreement. This movement was successful, and the ACTA did not get the number of ratifications that was needed. It was rejected by the European Parliament by a vote of 478 against 39.

Another example given by Dr. Correa relates to developments in the United States; there were two bills submitted to Congress – one called ‘Stop Online Piracy Act’ and another called ‘Protect Intellectual Property Act’. Those bills would have allowed the US government to block websites, even foreign ones, on the ground that there might be violations of intellectual property. There was a very strong reaction against these propositions, including a number of street mobilizations. The outcome was that these bills were not adopted.

According to Dr. Correa, these developments show that there might be some obstacles for further increase in IP protection.

Dr. Correa also demonstrated some updates from selected developing countries where legislation were adopted or court decisions were taken that mitigate the effect of monopoly rights conferred by intellectual property. For example, through the amendment of its Patent Act in 2005, India introduced a section that includes rigorous standards for the assessment of chemical and pharmaceutical inventions, on which there is already a decision and interpretation by the court that protects against ‘evergreening’ (The term ‘evergreening’ stands for granting patents for frivolous developments that are acquired to block competition by the generic industry.)

More recently, Argentina adopted a number of very specific guidelines for pharmaceutical patents based on rigorous standards in order to avoid proliferation of patents. Ecuador has also recently launched a comprehensive reform of its intellectual property system, aiming at integrating intellectual property into its wider national policies. This, according to Dr. Correa, is a good example of a country that is trying to integrate intellectual property as an instrument within its national policies and strategies and not an intervention that is developed in an isolated manner or copied from what is done in other countries.

South Africa was another example cited by Dr. Correa, where the government has announced the reform of the intellectual property system, in particular patents. South Africa is considering the introduction of prior examination of patents, in particular for pharmaceuticals. Today, patents in South Africa are granted without examination, and consequently thousands of patents are being registered for very minor developments. The government of South Africa found that pharmaceutical companies have been funding a lobbying firm in order to derail its efforts to amend the patent system.

Dr. Correa referred as well to a decision taken by the Kenyan high court overturning the counterfeiting bill due to human rights considerations. He also noted other interesting court decisions in Ecuador and Argentina that deny data exclusivity, which has been one of the demands of the US and the EU (data exclusivity refers to the protection of clinical test data required to be submitted to a regulatory agency to prove safety and efficacy of a new drug).

Some governments, including developed country governments, are increasingly becoming cautious about the upward trends of protecting intellectual property. For example, the Productivity Commission in Australia has said that “an increase in intellectual property rights in a country which is a net importer of technology is likely to benefit overseas rights holders disproportionately compared with domestic rights holders”.

In the UK, Professor Hargreaves’ Report to the government indicated that “government should ensure that development of the IP System is driven as far as possible by objective evidence. Policy should balance measurable economic objectives against social goals and potential benefits for rights holders against impacts on consumers and other interests. These concerns will be of particular importance in assessing future claims to extend rights or in determining desirable limits to rights”.

Dr. Correa also noted that some governments are being advised or are taking measures in order to avoid increased levels of protection. For example, the Marrakesh Treaty that was recently adopted in order to introduce an exception in the area of copyright for people with limited visual capacity is the first international treaty to establish an exception and not to increase the levels of protection.

To conclude, Dr. Correa underlined the possibilities for a paradigm shift in the international intellectual property regime. He stressed that there is a clear change in the way academics and governments think of intellectual property, and which has impact on the way governments act and courts take decisions. Also, the public is increasingly involved in trying to prevent the increase in the level of protection. The academic community is strongly critical of the intellectual property system, both in developed and developing countries.

While some years ago there was some sort of policy monopoly on the IP discussion by IP experts or practitioners, Dr. Correa was of the opinion that this monopoly has been broken. The simplistic argument made by the practitioners that more intellectual property leads to more innovation and economic development is not sustainable. There are many ways in which this assumption has been discredited, he added. Moreover, there is growing skepticism about the positive effects of intellectual property, including in developed countries. Dr. Correa called upon negotiators at WIPO and the WTO to acknowledge that there is a change in the way intellectual property is addressed and thought of, and to reflect this change in their negotiations.

Dr. Correa ended his presentation by referring to a proposal made by Bolivia to declare living matters non-patentable, and a submission made by Ecuador in connection to patentability of technologies that are sound for the environment. He called for looking at these proposals in light of the shift of paradigm on intellectual property.


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