(Article) CSM - November 2012: Intellectual Property Rights

Intellectual Property Rights

Ideas can also belong to the people who conceived them like physical property. These ideas result in popular names for products, books and articles, films, music, processes for manufacturing products and products themselves. There is a tension between the original conceiver of thee idea who wants to earn the maximum incentives for his invention and the desire of the public to have that invention at the lowest possible price at the earliest time. Society feels it neces-sary to provide incentives to the inventors because without such incentives there is not sufficient idealism around for inventions to arise in all fields. A steady flow of inventions is essential for progress and a better quality of life for human beings. At the same time, poor countries have difficulty in paying incentives, which become such more expensive for more recent inventions. There is, therefore, a country for inventions to be copied and made available to the public at low prices. In fact, many of the most important ideas – for example, the mathematics that underlies the modern computer or the theories behind atomic energy or lasers – are not protected by intellectual property. Academics spend considerable energy freely disseminating their research findings. I am pleased when someone uses my ideas on asymmetric information – though I do appreciate them giving me some credit. The growth of the “open source” movement on the Internet shows that not just the most basic ideas, but even products of enormous immediate commercial value can be produced without intellectual property protection. Without intellectual property protection, incentives to engage in certain types of creative endeavors would be weakened. But there are high costs associated with intellectual property. Ideas are the most important input into research, and if intellectual property slows down the ability to use others’ ideas, then scientific and technological progress will suffer. By contrast, an intellectual property regime rewards innovators by creating a temporary monopoly power, allowing them to charge far higher prices than they could if there were competition. In the process, ideas are disseminated and used less than they would be otherwise. The economic rationale for intellectual property is that faster innovation offsets the enormous costs of such inefficiencies. But it has become increasingly clear that excessively strong or badly formulated intellectual property rights may actually impede innovation – and not just by increasing the price of research. Monopolists may have much less incentive to innovate than they would if they had to compete. Modern research has shown that the great economist Joseph Schumpeter was wrong in thinking that competition in innovation leads to a succession of firms. In fact, a monopolist, once established, may be hard to dislodge, as Microsoft has so amply demonstrated.

Indeed, once established, a monopoly can use its market power to squelch competitors, as Microsoft  so amply demonstrated in the case of the Netscape Web browser. Such abuses of market power discourage innovation. Moreover, so-called “patent thickets” – the fear that some advance will tread on preexisting patents, of which the innovator may not even be aware – may also discourage innovation. After the pioneering work of the Wright brothers and the Curtis brothers, overlapping patent claims thwarted the development of the airplane, until the United States government finally forced a patent pool as World War I loomed. Today, many in the computer industry worry that such a patent thicket may impede software development. The creation of any product requires many ideas, and sorting out their relative contribution to the outcome – let alone which ones are really new – can be nearly impossible.

Laws relating to copyright, trademarks and patents are intended to moderate this tension and to prevent copying without reward to the inventor. They provide protection to the inventor for a given period of time and also enable propagation so that a larger section of the public is able to derive benefit from the invention. Ultimately, after a period of time, the invention becomes available to everybody without having to pay further incentives to the inventor. The controversy between India and the U.S.A. which Ms. Carla Hills has symbolized relates of the Indian laws about intellectual property, the protection afforded to the inventors, and the ways in which these laws are administered and enforced.

India is not a country with much invention. This is evidenced by the far fewer number of patents filed in India, as against the number in many other countries, especially Japan and the U.S.A. Yet we also want our people to enjoy the benefits of many of the inventions of other countries. This has led to a considerable amount of copying through legal moans, such as collaboration and licensing, and illegal means. Almost any film in the world is available on a copied video tape in India. Most recorded music is available on “pirated” audio tapes. There are many printers who copy bestselling books. Sometimes new books are written and published in the names of bestselling authors, in which the authors had no hand! Many products manufactured abroad are copied and some-times have been sold under the trade mark name of the original product. In the eyes of the USA and many other countries, this copying without the permission of the inventor amounts to theft of intellectual property. The Indian copiers and Indian customers enjoy the benefits of these inventions without any reward ac-cruing to the original inventor.

The laws in India, relating to copyright and trade marks are very strong in protecting the original owner of the trade mark and the copyright. It is in the enforcement that there is weakness. The Indian administration, police and judi-ciary are overburdened with having to enforce a large number of laws. They do not regard copying as a serious crime unlike the many other crimes they have to deal with. -To the slowness of the Indian legal system is added the problem of easy corruption-the copier has so much to gain that he can offer a substantial sum to the law enforcer who sometimes succumbs to the temptation. Yet there are many companies that have themselves established strong surveillance and taken thee copiers to court. Their vigilance has to a large extent protected them from this kind of theft. Prominent among these companies are the multi-nationals. Those that are not able to protect themselves, suffer because others Copy their inventions without any benefit to the owner.

The major controversy relates to the patenting of products for processes. The inventor can patent a final product or the route to make it. There could be other routes. In India at present it is legal to search for discover make and market, the product through a different route. Out law does not provide for patenting of certain products. The USA and other have argued that we must allow product patents and for a longer period than we even allow today for process patents. We are not for product patents because they prevent us ‘root undertaking out’ own research and development to develop alternatives routes to reacts the same product. After all, ‘imitative” inventions were the secret of the Japan’s success for a long time until recently. Many other countries including Italy, Spain. Greece has amended their laws only in the last few years to permit product patents. A poor country must have a long enough period in which it can “Imitate” the inventions and products of other countries and invent new pro-cesses to make them. This period of imitation is a prelude to original invention. Thus, breathing time is essential and India must have it before India can allow product patents.

The problem arises only for drugs, chemicals and agricultural products. Agricultural products in India are in the public domain. Research is largely conducted in governmental laboratories. The propagation of new, seeds and methods quickly at low cost to the user has resulted in the substantial growth that has taken place in Indian agricultural production. Under no circumstances can India permit product patents for agricultural products and specially for seeds, nice that will hit at the very base for the growth of agricultural production in India.

Some research in the USA shows that the original patented drug continues for many years after the expiry of the patent to dominate the market through its trade mark name. Since Indian trade mark laws are strong, the patent owner in effect has a product patent through his trade mark. If we allow product patents for drugs and chemicals only and for the same period as we now do process patents, the owner of the patent will be able through his trade mark to enjoy dominance even after the expiry of the patent. At the same time, it is essential that all such patents be filed in India and that there is a procedure to compel the owner to license the patent for Indian use. India can, in the case of drugs and chemicals permit product patents for a limited period. Our registration procedures could be speeded up from the present five years or so between application and granting of patent. If that cannot be done the patent period can be accounted from the date of registration and not front the date of application. In this way the patent owner can enjoy the benefit of the patent for the full period, which he is not able to do at present because of the long interval between filing and granting of patent.

The controversy over IPR was avoidable. Unfortunately, it became politicized and issues of national sovereignty cause up for debate. It can be nobody’s case that India wants to progress merely by copying and without payment Nor can anybody in the world argue that India should not enjoy similar benefits as other countries that are note rich but which were able to imitate and progress.

Last October, the General Assembly of the World Intellectual Property Organization (WIPO) decided to consider what a development-oriented intellectual property regime might look like. The move was little noticed, but, in some ways, it was as important as the World Trade Organization’s decision that the current round of trade negotiations be devoted to development. Both decisions acknowledge that the current rules of the international economic game reflect the interests of the advanced industrial countries – especially of their big corporations – more than the interests of the developing world. Society has always recognized that other values may trump intellectual property. The need to prevent excessive monopoly power has led anti-trust authorities to require compulsory licensing (as the US government did with the telephone company AT&T). When America faced an anthrax threat in the wake of the September 11, 2001, terrorist attacks, officials issued a compulsory license for Cipro, the best-known antidote.

Unfortunately, the trade negotiators who framed the intellectual-property agreement of the Uruguay trade round of the early 1990’s (TRIP’s) were either unaware of all of this, or more likely, uninterested. I served on the Clinton administration’s Council of Economic Advisors at the time, and it was clear that there was more interest in pleasing the pharmaceutical and entertainment industries than in ensuring an intellectual-property regime that was good for science, let alone for developing countries.

I suspect that most of those who signed the agreement did not fully understand what they were doing. If they had, would they have willingly condemned thousands of AIDS sufferers to death because they might no longer be able to get affordable generic drugs? Had the question been posed in this way to parliaments around the world, I believe that TRIP’s would have been soundly rejected.

Intellectual property is important, but the appropriate intellectual-property regime for a developing country is different from that for an advanced industrial country. The TRIP’s scheme failed to recognize this. In fact, intellectual property should never have been included in a trade agreement in the first place, at least partly because its regulation is demonstrably beyond the competency of trade negotiators.

Besides, an international organization already exists to protect intellectual property. Hopefully, in WIPO’s reconsideration of intellectual property regimes, the voices of the developing world will be heard more clearly than it was in the WTO negotiations; hopefully, WIPO will succeed in outlining what a pro-developing intellectual property regime implies; and hopefully, WTO will listen: the aim of trade liberalization is to boost development, not hinder it.