Intellectual Property Rights: How the Current Regime is Negatively Affecting the Developing World

Marcelo Gortari

Intellectual property rights (IPRs) are the legal guidelines that safeguard one’s knowledge and/or innovation(s).  They typically apply to companies that discover a new concept and/or invent something new, and these rules prevent others from stealing this newfound knowledge.  IPRs are usually safeguarded in the form of patents with a lifespan of at least 25 years; the logic behind IPRs and long-term patent protections is that firms will not undertake costly research and development (R&D) if they will not be able to reap the rewards later on.  At the moment, the legal guidelines surrounding IPRs are found in the World Trade Organization’s agreement known as the Trade Related Aspects of Intellectual Property Rights (TRIPs); membership to the WTO requires nations to ratify this agreement.  Based on my research to date, it seems as though firms should be allowed to profit from their R&D, but IPRs should not be enforced at the expense of society’s needs. 

The TRIPs Agreement has come under a lot of fire, particularly from developing nations, because it is seen as a barrier to the diffusion of much-needed technology from the industrialized world to the developing world.  For example, before Brazil and South Africa were able to use their economic and political clout on the world stage in the 1990s, U.S. pharmaceutical companies pushed the American government – through the WTO – to not allow these nations to produce cheaper generic HIV/AIDS medications.  There already was a provision in the TRIPs Agreement called “compulsory licensing,” which allows countries to circumvent the agreement in the case of national emergencies.  I cannot think of an emergency worse than having a substantial proportion of your population without access to costly HIV/AIDS medications.  Nonetheless, after much legal wrangling and international condemnation of TRIPs, Brazil and South Africa were allowed to produce their generics, and later at the Doha Round of the WTO negotiations, the TRIPs Agreement was reformed to facilitate the utilization of the compulsory licensing provision.  One could easily see how this agreement could lead to a host of ethical concerns as poor nations desperately need access to technological innovations in the fields of clean-energy, healthcare, information technology, etc.  Even a frontier economy such as Canada has been negatively affected by the TRIPs Agreement.  In the late 1990s, under the Manufacturing and Storage of Patented Medicines Regulations, Canada allowed generic drug manufacturers to stockpile generic versions of patented drugs six months prior to the expiration of the relevant patents. After complaints from the European Union, the WTO ruled that the stockpiling provision contravened the TRIPs Agreement. In October 2000 Canada revoked the Manufacturing and Storage of Patented Medicines RegulationsIn addition, pharmaceuticals are one of the largest contributors to the increase in healthcare costs in this country, something that is very worrisome considering our aging population.

I think the most powerful argument against the current IPR regime is that it does not even make economic sense.  The Nobel prize-winning economist Joseph Stiglitz claims that “knowledge is a public good” that should be shared with the rest of society.  Basically, the argument goes that IPR protections such as patents create a monopoly on knowledge, thereby stifling the potential competition that could arise from having firms disseminate their findings publicly.  Just like in academia, knowledge should be subject to peer review and others should be given the chance to build upon the new discoveries.  My favourite example of this in Stiglitz’s book, Making Globalization Work, is that during WWI many companies in the U.S. held patents on different parts of war planes (i.e. engines, wings, etc.) and the development of this technology could not evolve quickly enough because the parties holding the different patents could not come to an agreement.  In the end, the U.S. government stepped in and created a “patent pool,” whereby all the patent holders were forced to collaborate to facilitate the speedy development of the airplane in order to win the war.  Many would say that a modern version of this situation is displayed by the pharmaceutical industry, which appears more interested in producing “designer drugs” such as Viagra and hair-loss products rather than finding a cure for illnesses ravaging the developing world such as malaria.  If there is anything to take away from the latest global recession it is that free markets and the profit motive should not be the ONLY objectives of doing business.  We need to create more “win-win” situations where firms are rewarded for their innovations and society reaps the rewards as well.

Marcelo Gortari is a 2014 Master of Public Policy candidate at the School of Public Policy and Governance.  He holds a Master’s degree in Political Science from the University of Toronto and a BA in International Area Studies from Drexel University.  He was born and raised in Toronto, and spent 8 years teaching English in S.Korea, five of which were at the college/university level.  He has also taught English as a Second Language at York University for 8 months. 

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