Assuring Development Gains from the International Trading System:

Intellectual Property Rights

Simonetta ZarrilliDivision on International Trade and Commodities

UNCTADNew York – 7 June 2005

(Simonetta.Zarrilli@UNCTAD.org)

Why IPRs?

IPRs have been designed to benefit society by providing incentives to introduce new inventions and creations. Therefore, their purpose is not the exclusive benefit of individuals/corporations but of the public community at large

What levels of IPR protection would bring benefits? To whom and in which societies?

What levels of IPR protection would be appropriate for the development needs of the developing countries?

History and Evolution of IPR RegimesLong history: • The first patent law was passed by the

Venetians during Renaissance• English Statute of Monopolies of 1624 • English Statute of Anne of 1710 on copyright

law• US Patent Act of 1836: First modern patent

law • International level: 1880s formation of unions

in Europe for the protection of industrial property and literary/artistic works

• Most developments have been taking place from the 1960s onwards

History and Evolution of IPR RegimesEvolution:• The extension of protectable subject matter +

elimination/reduction of exceptions• The creation of new rights• The progressive standardization of the basic

features of IPRs

Far-reaching potential economic & social implications of IPRs

•Public interest in IPRs worldwide has reached unprecedented levels

•Views on IPRs effects differ quite radically

IPRs and Competitiveness The commercial importance of IPRs has grown

considerably, especially since the 1970s– Pressure on business and national economies to be

competitive, inter alia, through innovation and creativity new products, new services, differentiation between products

– Technical knowledge, artistic creativity, reputation and distinctiveness add market value to goods and services

IPRs help to maximize the opportunities for private appropriation while minimizing the risks of “free-riding”

IPRs and Trade

• The protection in a given country of a company’s R&D investments through IPRs may induce that company to export its high technology products to that country (positive link)

• IPR-holders may block imports if those infringe upon their domestic exclusive rights (negative link)

IPRs and Investment

In a country where high-intensity R&D sectors are important (pharmaceuticals, chemicals, software, aerospace), IPR policies may provide incentives for R&D and FDI

In a country where low-intensity R&D sectors are dominant (agriculture, textiles, electronic assembly) IPR may have limited effect on innovation and FDI, while reducing diffusion and increasing the cost of foreign technology

At certain stages of development, weak levels of IPR protection are more likely to stimulate economic development and poverty alleviation than strong levels IP protection becomes important only when countries reach a certain degree of technological capacity and income level one size does not fit all

• Numerous countries have at times exempted certain sectors of industry from patent protection and/or included safeguards

• The 1883 Paris Convention for the protection of industrial property and the 1886 Berne Convention on literary and artistic works allowed considerable flexibility in the design of IP regimes

• Countries in East Asia used until the 1970s weak forms of IP protection to facilitate technological learning and promote their own industrial policy objectives

Finding the right balance between the interests of creators, users and the public is difficult.It is particularly difficult for countries where some industries may benefit from high levels of IP protection, but others may notDifferent views within countries and among groups of countries

Balancing the interests is not a purely economic calculation, it is an inherently political exercise

which has important social implications

The Emergence of TRIPS and its Main Features

• TRIPs included in the single undertaking of the UR• It establishes minimum standards for all types of

IPRs (but utility models and breeders’ rights) • It is based on and supplements, with additional

obligations, the Paris, Berne, Rome and Washington Conventions

• It extends to IPRs the principles governing international trade: MFN, NT

• It contains provisions relating to enforcement of IPRs, amendment and reservation

The « Development Deficit » of TRIPS• TRIPS does not include “General Exceptions”

• TRIPS does not include S&D provisions (except for transitional periods and ToT to LDCs)

• Different language: Art. 27.1 (patents shall be available and patent rights enjoyable without discrimination as to the field of technology); Art.7 (The protection and enforcement of IPRs should contribute to the promotion of technological innovation and to ToT, to the mutual advantage of producers and users of technological knowledge and in a manner conducive to social and economic welfare, and to the balance of rights and obligations).

The « Development Deficit » of TRIPS

What if it does not? •No remedies and no sanctions in the event of failure•Strengthened global protection for the suppliers of technology, but no international framework to ensure that:

•ToT takes place•Restrictive technology licensing practices are minimized

Desirable and feasible measures:•Commitments to ensure that the benefits of publicly funded research are available to all•Commitments to ensure open access to scientific databases•Commitments to ensure access to vital technology

The « Development Deficit » of TRIPS• Art. 8 (Members may…adopt measures necessary to

protect public health and nutrition, and to promote the public interest in sectors of vital importance to their socio-economic and technological development. Measures may be needed to prevent the abuse of IPRs by right holders or the resort to practices which unreasonably restrain trade or adversely affect ToT, provided that such measures are consistent with the provisions of this Agreement ).

• In case of conflict between promoting the public interest/preventing abuses and adhering to the Agreement, TRIPS indicates that the latter should prevail.

Does this language render null and void the Principles?

Overcoming the « Development Deficit »

1. Articles 7&8 dealing with Objectives and Principles need to be operationalized

2. Ensure that TRIPS does not limit policy options aimed at development the flexibility provided for in the Agreement needs to be fully available to WTO Members

3. Amendment, Interpretation

1. Articles 7&8 need to be operationalized

Doha Declaration on TRIPS and Health • Each provision of TRIPS shall be read in the

light of the object and purpose of the Agreement as expressed, in particular, in its objectives and principles (Art. 5(a));

• TRIPS does not and should not prevent Members from taking measures to protect public health;

• TRIPS can and should be interpreted and implemented in a manner supportive of WTO Members’ right to protect public health and promote access to medicines for all (Art. 4)

• Article 7&8 will inform and influence every other provision of TRIPS• The Declaration provides guidance to Panelists and AB as to how TRIPS should be interpreted• The Declaration provides guidance to governments as to how TRIPS should be implemented• WTO Members have the right to protect public health and this right cannot be prejudiced by TRIPS• WTO Members have the right to promote access to medicine for all• The Declaration recognizes the “flexibilities” in the TRIPS Agreement

First effort at the WTO Ministerial-level to « rebalance » TRIPS in response to thedesire of the larger WTO membershipand outside world. However, ethical concerns played a very important role. Would this ”rebalance” happen when ethical concerns are not as visible ? Would the public opinion be mobilized for, for example, access to the technology?The 30 August Decision and the implementation difficulties

2. Flexibilities: Illustrative List

Implementation and review of national legislation in the light of the flexibilities allowed by TRIPS and by the Doha Declaration on TRIPS&Health

• To include in the national legislation – provisions for compulsory license and to keep

the freedom to determine the grounds upon which such licenses are granted

– provisions related to disclosure of origin, PIC and benefit sharing

– provisions related to the ‘early working exception’

• To allow freedom to protect pharmaceuticals test data through exclusive or non-exclusive rights regimes

• To determine the novelty and inventive steps requirement in a manner that prevents ‘bad patents’

• To allow parallel imports• To keep freedom regarding

– the exclusion of plants and animals from patentability

– protecting plant varieties by a sui generis system • To make use of GI to avoid domestic products to

become ‘generic’• To develop national competition law

3. Amendment, Interpretation• Amendment

– Difficulties related to TRIPS&Health not encouraging

• Interpretation

– Interpretative guidance (Doha Declaration on TRIPS&Health)

– Authoritative interpretation (Art. IX, 2 of the WTO Agreement)

Improving policy-making and drafting• Establishing inter-agency governmental

committees• Involving private sector &civil society• Undertaking interdisciplinary studies on the

implications of IPRs on different sectors and activities

• Training government, academia and NGO professionals in IPR policy-making and drafting

• Putting emphasis on TA aimed at policy formulation

• Monitoring TA so as to ensure unbiased advice that presents all options available to developing countries

UNCTAD’s overall role• UNCTAD’s mandate as the UN focal point for the

integrated treatment of trade and development• UNCTAD assists developing countries and economies

in transition to beneficially integrate into the globalizing world economy

• UNCTAD promotes the effective implementation of the MDG commitment “to an open, equitable, rule-based, predictable, and non-discriminatory multilateral trading and financial system”– These tasks are carried out through:

• Intergovernmental work and consensus building

• Analytical work• Training and technical cooperation

UNCTAD’s role: IPRs and ToTSão Paulo Consensus, UNCTAD Ministerial Conference, June 2004

• UNCTAD should undertake – Analysis of the development dimension and implications of

IPRs & TRIPS, including improvements in ToT, protection of TK, genetic resources, and fair and equitable benefit sharing

• UNCTAD’s analytical work should– draw lessons from successful experiences with ToT through

FDI and other channels; – support efforts by developing countries to respond to

technological changes, identify best practices in ToT and assess the effectiveness of policies aimed at domestic innovative capability-building, including the role of IPRs;

• UNCTAD should assist developing countries – in identifying ways and means to operationalize ToT in

international agreements, and in maximizing the potential benefits of those agreements

UNCTAD’s role: IPRs and ToT• IPRs

– Resource Book on TRIPS and Development – Policy Discussion Paper on IPRs and Development– Study on TRIPS and trade negotiations– Book on national experiences in protecting and promoting TK– Studies on specific topics, e.g. compulsory licensing, copyright in the

digital era, product patents in the pharmaceutical sector– Support to developing country negotiators within the TRIPS Council – Technical cooperation activities

• ToT– Studies on selected topics– Reference book on key issues– Active participation in the WTO WG on ToT– Technical cooperation activities

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