Intellectual Property and Development: Understanding the Interfaces

My purpose in writing this chapter is to pose a number of questions that have not been satisfactorily addressed, if at all, by economists working in the area of intellectual property rights (IPRs), trade, foreign direct investment, and technology diffusion. There is always a basic tradeoff between fundamental gains and losses from protecting IPRs, or rather reforming them in a manner that offers more certainty and exclusivity to rights holders. On the one hand, such reforms may be expected to improve the functioning of formal markets in which technologies are traded across borders, at least in recipient emerging countries with supportive economic and policy frameworks. On the other hand, those reforms raise the costs of technology imitation by local firms and impose administrative burdens on domestic authorities. They may also limit the policy flexibility those authorities have to regulate the use of exclusive rights and encourage broad adoption and diffusion of incoming technical knowledge. In this chapter I offer some thoughts on these questions, with a particular emphasis on policy issues surrounding international technology transfer and IPRs. In the second section I discuss available evidence on how patent reforms seem to affect flows of technology through formal markets. Following that is a review of various policy flexibilities that matter in this context, considering the limited evidence about how well they work. In the last substantive section I address some of the broader policy questions that affect technology diffusion, most of which have not been studied systematically by empirical economists. In that context, the section sets out an agenda for economic research that would focus on understanding how broader policies and conditions could improve access to global technologies, even in the presence of IPRs reforms. That analysis is partly speculative, attempting to envision how to peel back the veil of ignorance covering key issues in this area of inquiry.

During the past year various members of the United States Congress have introduced legislation intended to ameliorate the high cost of pharmaceuticals, as well as to stimulate innovation using alternative mechanisms to the traditional patent system model. Several of the legislative proposals would authorize third-party importation of prescription pharmaceutical products from one or more countries. One issue considered by drafters of these legislative proposals was whether to include amendment of the United States Patent Act to authorize importation of pharmaceutical products first put on the market under the authority of the patent owner outside the United States. In other words, whether to provide for international exhaustion of patent rights, at least as to pharmaceutical products. Consultations on these developments with Congressional staff revealed a novel concept of legislative takings pursued by the pharmaceutical industry. Takings doctrine was advanced as the basis for opposing modification of the US Patent Act to authorize international exhaustion. Because the Supreme Court ruled in favor of international exhaustion of patents and, in the course of doing so, it did not mention anything about takings, the question whether Congress might adopt international exhaustion of patents without triggering the takings issue is formally mooted. However, the question whether Congress is somehow constrained in modifying US patent law by the constitutional prohibition against takings of private property without just compensation remains important.

This chapter is a tribute to Pedro Roffe who has been a central figure throughout the technology transfer negotiations at the United Nations Conference on Trade and Development, and has since then, worked intensely on numerous questions of balance in the global intellectual property rights system. This chapter is as personal as it is scientific to me: it reminds me of fond mutual interactions, professional debates and thought exchanges on technological learning, transfer, development, dissemination and the role of intellectual property rights that I have shared with him. The chapter begins by tracing the technology transfer debate since its inception to analyze its relationship with the protection of intellectual property rights. Tracing the developments from 1948 to the adoption of the Agreement on Trade Related Aspects of Intellectual Property Rights in 1995, it identifies two distinct approaches—the developmental approach, as put forward by several developing countries in the 1960s and the welfare approach, which positions IPRs as a reward for inventors for the creation of socially useful information. It argues that the failure of the Code, the inception of the TRIPS Agreement and the subsequent ratcheting up of intellectual property norm setting through free trade agreements (FTAs) that provide TRIPS-plus provisions, are all symptoms of a wider malaise: the persistent (and worsening) lack of balance in the global intellectual property system. An analysis of this wider phenomenon, which the chapter terms the “welfare bias” in the current intellectual property rights system, shows that it is spreading beyond the traditional North-South divide to skew the dividends of innovative activities worldwide. The chapter provides empirical evidence to show how patent reforms may cement returns from innovative activity disproportionately in some contexts to argue that there is a need to re-conceptualize and revitalize the technology transfer debate in the context of the sustainable development goals (SDGs).

This chapter has been drafted in honor of Pedro Roffe, for whom I have admiration and gratitude. His work at the United Nations Conference on Trade and Development (UNCTAD) and the International Centre for Trade and Sustainable Development (ICTSD) on the multiple dimensions of the relationship between intellectual property and development has guided policy-makers and scholars around the world. I have had the chance to collaborate with Pedro in trainings organized by the Interamerican Bank, where I have witnessed not only his influence but also Pedro’s generosity. This chapter argues that intellectual property rights (IPRs) that government transfer to private entities could be considered as financial contributions in form of the “provision of goods” under Article 1.1(a)(1)(iii) of the Agreement on Subsidies and Countervailing Measures (SCM Agreement). Following a brief introduction in this section, a general overview of the disciplines of the SCM Agreement is provided in Sect. 2, including a description of the elements of the definition of “subsidy”. Section 3 addresses the question of whether IPRs can properly be characterized as “goods”. It is hold that IPRs are neither tangible goods nor intangible services, and that the term “goods” should be interpreted in the context of “financial contributions”. Based on the foregoing, it is argued that IPRs are “intangible goods” within the meaning of the term “goods”. In Sect. 4 it is argued that the Appellate Body (AB) findings in US—Softwood Lumber IV case do not exclude the possibility of accepting intangible goods within the scope of application of this provision. In Sect. 5, we observe that when existing IPRs are transferred by a government to a private entity, it is not problematic to consider that goods have been “provided” in the context of a financial contribution.

This chapter captures the many valuable contributions Pedro Roffe has made in his three decades at the United Nations Conference on Trade and Development and a decade and a half at the International Centre for Trade and Sustainable Development. It focuses on three sets of development bridges that he has built and helped build in the intellectual property arena, drawing illustrations from the author’s personal encounters with him and his organizations. This chapter begins with bridges that allow us to revisit the past developments in the international intellectual property regime. It then turns to bridges that help provide a unique vantage point for taking stock of current developments and recognizing what is new and important in this regime. The chapter concludes with bridges that help advance the debate on intellectual property and global development while reorienting us towards a better future.

Wide differences in per capita incomes persist across and within different world regions, and economic research has argued that patterns of technology diffusion go a long way in explaining these differences. Yet, looking back at the past 40 years, it is also the case that a number of East Asian economies were able to achieve remarkable industrial development, and today host companies that compete at the world’s technology frontier. A natural question to ask is what role public policies played in spurring successful industrialization. This question seems especially pertinent in relation to technology, given the many market failures associated with knowledge acquisition and knowledge diffusion. A large number of theories have emerged and empirical investigations carried out in search for an answer. In this chapter, we scrutinize the resulting economic literature to provide a perspective on the role of intellectual property in the industrial development process. We do so in the following way. We first contrast the industrial development experience of East Asia to that of Latin America and summarize the explanations economists have offered to account for them (Sect. 2). We then turn to intellectual property and explore the evolution of both IP policies and IP use in the two regions (Sect. 3), before reviewing and critically assessing the empirical literature that has attempted to establish causality between intellectual property and industrial development (Sect. 4). Against this background, we ponder on how policymakers should approach the development of their IP framework as part of broader industrial policy objectives (Sect. 5).

This paper reviews the evolution of WIPO’s assistance to developing countries and the push for greater development-orientation. While the quest for stronger development-orientation remains an iterative “work-in-progress”, this paper identifies three intersecting factors that limit the prospects for improvement: weaknesses in WIPO’s governance system, shortcomings in the Secretariat’s management of the Organization’s development portfolio, and inconsistent demand for effective, development-oriented assistance by recipient countries.  Part 1 introduces the paper, while Part 2 offers a historical review of how WIPO’s development cooperation evolved from 2004 to 2016. Part 3 summarises the core components of WIPO’s assistance as of early 2017. Parts 4 and 5 show how governance and management shortfalls compound the already difficult task of improving development-orientation of WIPO’s assistance in a highly politicized context. Part 6 argues that the potential for greater development-orientation and impact of WIPO’s development activities is limited by inconsistent demand from developing country governments and stakeholders. Part 7 concludes with several proposals for how several of the enduring obstacles to greater development-orientation could be overcome.

When people commonly think of patent and trademark offices of different countries, they think of huge amounts of paperwork, unresolved issues, backlogs and stagnated knowledge. Offices have been perceived for years as bureaucratic and passive entities, having immense backlogs. Only a few were able to appreciate their actual potential and significance. The latent and key role of the knowledge held by intellectual property offices across the world has been underestimated for years. However, with the passage of time and the paramount significance gained by technology, digitalization, trade and innovation, these offices have begun to become protagonists—and not antagonists—in the advances and economic progress of a country. The emergence of digital technologies and the internet is an opportunity not only to solve the traditional problems of intellectual property offices but also to fulfill, once and for all, one of the original objectives of the IP system, which is, not only to promote innovation, but also technology transfer and diffusion of knowledge. Our reflection focuses on the leading role that said offices have or should acquire in the twenty-first century, which is expected to continue in the upcoming years, with special emphasis on the closest case to us: Chile’s National Institute of Industrial Property.

The Agreement on Trade-Related Aspects of Intellectual Property Rights includes a number of provisions on technology transfer. Developed countries have a positive, legal obligation to provide incentives to enterprises and institutions in their territories to promote and encourage technology transfer to least-developed countries, which is in Article 66.2 of the Agreement. At the Doha Ministerial Conference in 2001, ministers agreed that the TRIPS Council would “put in place a mechanism for ensuring the monitoring and full implementation of the obligations.” The Council adopted a decision setting up this mechanism in February 2003. It details the information developed countries are to supply by the end of the year, on how their incentives are functioning in practice. This decision is now being implemented, and submissions made and discussions held in the Council are available as formal documents that can be found online. This chapter outlines in more detail how this decision was negotiated in the WTO and how this provision in Article 66.2 is being monitored in the Council.

The protection of traditional knowledge is among the most vexing and morally compelling issues in international intellectual property law today. As a matter of conventional IP law, many applications of traditional knowledge—its dizzying array of expressions, forms, and utilities—easily overlay the globally ubiquitous trade secret, patent, copyright, and trademark categories. But as a matter of political and economic organization, the epistemological core of traditional knowledge is based on the distinctiveness and cultural autonomy of indigenous groups and local communities. Amid the notable arguments against recognizing proprietary rights for traditional knowledge holders, the most provocative is the claim that such knowledge is already in the public domain. The claim that traditional knowledge consists principally of public domain material has significant implications for the welfare and development capacity of indigenous groups. It undermines treaties that already acknowledge or require protection for the rights of indigenous groups and, by extension, traditional knowledge holders. Moreover, it violates central obligations of the international IP framework such as non-discrimination and protection for non-economic interests associated with cultural goods. There is no meaningful basis for the argument that exclusive property rights for traditional knowledge are unavailing because of its unique characteristics. This article addresses public domain concerns in the context of ongoing efforts to secure an international regime of protection for traditional knowledge.

Until recently, for developing and emerging economies intellectual property policy taking was the norm rather than policy making. What we mean is that the developed countries set the standards for other countries to follow. This may still be the general trend but developing nations are starting to devise their own policy approaches that other countries are imitating. This shift towards policy making is certainly noticeable. But it is not yet hugely significant. Conformity to the recommendations (and still in some cases the dictates) of developed countries, their industries, and experts from the Global North remains very common. The question arises of whether developing countries continue to be policy takers or have begun to develop their own counter-norms which are viable. As we will see there is evidence that some developing countries are indeed “translating” international obligations in some imaginative ways that may (or may not) promote their interests better. It may be that divergences between Europe and the United States in how innovations in plant science and agricultural biotechnology are protected inadvertently encourages the adoption of more flexible perspectives than would otherwise have been envisaged. However, there are massive policy challenges ahead especially due to the lack of empirical evidence on the effects of different intellectual property rules concerning plants on rural development and food security that could be used to shape law and policy. This goes far in explaining why only a handful of countries has sought alternative approaches. Further research is desperately needed.

The once customary view that genetic resources, together with associated traditional knowledge, constituted the “Common Heritage of Mankind” was first directly challenged in 1962, when the United Nations adopted a Resolution on the sovereignty of states over national resources. By the 1990s, when the most developed countries were demanding universal respect for patented microbes and plant breeders’ rights under what eventually became the Agreement on Trade-Related Aspects of Intellectual Property Rights of 1994, the developing countries struck back with “biopiracy” claims of their own. Specifically, they argued that the downstream innovations protected by intellectual property rights in the Global North were often based on genetic resources taken from the biodiversity rich countries, along with associated traditional knowledge of indigenous populations. On this view, unauthorized use of these same genetic resources and traditional knowledge even for public research purposes constituted an illegal encroachment on their territorial sovereignty. In 1992, that thesis became firmly established in the Convention on Biological Diversity (CBD), now signed by some 190 countries. In effect, the CBD asserted territorial sovereignty over all genetic resources and related traditional knowledge, and it conditioned the rights of anyone—including research scientists—to remove or otherwise use such resources on the permission of the relevant government authorities. Taken together, the provisions of the CBD established the premises for an international regime of misappropriation with respect to unauthorized uses of genetic resources—plant, microbial, animal—and all related traditional knowledge originating from the territories of nation states adhering to the CBD. Reasonable as these arrangements may sound, however, they are in practice onerous and often unworkable from the scientific researchers’ perspective. In the first place, provider countries have been slow to enact implementing legislation, and once enacted, these laws tend to be diverse, complicated, and often full of both legal and practical uncertainties. Second, there is no consensus regarding access and benefit-sharing obligations applicable to genetic resources acquired before 1993, when the CBD took effect. This same problem will resurface with the adoption of the Nagoya Protocol to the CBD in 2010.

This chapter considers the public—private international law interplay in the context of access and benefit-sharing (ABS) for genetic resources (GRs) and associated traditional knowledge (TK). The public international ABS framework, primarily via the Convention on Biological Diversity and its Nagoya Protocol, obliges contracting parties to ensure that access to GRs and TK is based on prior informed consent (PIC) and based on mutually agreed terms (MAT), and that benefits arising out of the utilization of GRs and TK are shared. This public law framework however leaves it to private ordering via ABS contracts between providers and users to determine nature and scope of benefit-sharing. And while the public law framework sets out a basic “enforcement” structure for ensuring that access is based on PIC and that MAT have been established, enforcing benefit-sharing commitments in ABS contracts is up to providers and users, relying on private law mechanisms. Because of the cross-border nature of most of the provider-user relations, enforcing ABS contracts raises complex questions on the jurisdiction of courts or arbitration tribunals, applicable law, and the enforcement of judgments or arbitral awards. This chapter reviews these private international law questions in light of the normative guidance the public international law ABS framework offers.

The aim of the paper is to compare some of the recent trends in implementation of the Nagoya Protocol, shedding light on the emerging discrepancies above all between the European Union and other provider and user countries that have implementing legislation (Switzerland, Norway, South Africa and Namibia). We particularly focus on differences in the “trigger” for benefit-sharing, the treatment of traditional knowledge, and user compliance measures. It is the authors’ belief that the emerging implementation discrepancies will undermine legal certainty and erode the necessary trust among users and providers to uphold the Protocol’s grand bargain of facilitating access to genetic resources on the one hand, while ensuring appropriate legal recognition and benefit-sharing on the other. We argue that above all, what the Nagoya Protocol provides is a normative standard for the sourcing and utilization of genetic resources and associated Traditional Knowledge that users should adhere to without doing a “scoping” analysis of the various jurisdictions and their access and benefit-sharing systems. In the end, it will be on these principles that the media and broader public will judge companies and other users.

Due to the current interest of research and business at the international and national levels in marine genetic resources, they are regarded as a new frontier and source for genetic and biochemical information. This article seeks to shed light on selected examples and potential or realised economic value of marine bioprospecting for the industry as well as jurisdictional and legal issues in international law over the rights regarding those resources. It will also explore how some countries are starting to regulate access and utilisation in areas within national jurisdiction and introduce some links to their utilisation in patented inventions and implications to patent law. The notes will not cover MGRs in areas beyond national jurisdiction, as this is a regime in the making under a potential new treaty to protect marine resources under the United Nations General Assembly. The note will end on some conclusions on the fact there is a significant interest and increase in the use of MGRs for bioprospecting purposes, R&D and in terms of patent filing trends.