Defending intellectual property

'With products and technologies protected (by intellectual property), businesses and institutions are guaranteed their riches, which is further reflected in the economic growth of the country.' The above statement is not propaganda from the US pharmaceutical lobby, it is from the publicity materials of the Brazilian National Institute for Industrial Property. Why, then, is the Brazilian government pushing for the global intellectual property regime to be weakened?

Under the current regime, agreed unanimously in 1994, all members of the WTO must have in place a system for patenting pharmaceutical products by December 31 2005. Critics of this regime argue that increased patent protection allows drug companies to maximise profits while limiting access to expensive remedies, especially in the Third World. The reality, however, is rather different.

Most of the drugs on the World Health Organisation's list of 'essential medicines' (drugs for diseases such as TB, malaria, hepatitis and dysentery ó the third world's biggest killers) are no longer patented. And a recent study published by the Journal of the American Medical Association points out that even for AIDS medicines, the number of patents held in Africa is only a fraction of the total available.

As Amir Attaran, a Professor at the Harvard Center for International Development and one of the study's authors, points out, the lack of drugs 'has little to do with patents'. Indeed, by undermining incentives to produce new products, a weakening of the patent regime would lead to fewer new medicines.

Perhaps more worrying is the suggestion that only large corporations benefit from strong intellectual property protection, while everyone else suffers. This is not merely wrong, it is downright dangerous. In countries where the WTO rules have already been implemented, independent inventors, the local economy and consumers all gained from increased innovation, investment, and institutional improvements.

According to the US Patent and Trademark Office, nearly 50 per cent of all US patents go to foreign inventors. This figure seemed very high, so to find out what is behind it, I surveyed over 100 foreign inventors who chose to patent in the US. The main reason they gave for patenting their inventions in the US was the high level of protection afforded by a US patent.

The opportunities for marketing and licensing their inventions in the US ó which one might have thought would be the principal reason ó came second. In addition, about a third of those surveyed said that inadequate intellectual property protection in their own countries influenced their decision to patent in the US.

Many inventors, particularly those in science and technology fields, thought that improved intellectual property laws, complemented by effective legal enforcement, would help attract investment and much- needed funding for research and development in their home country. As one Indian scientist stated: 'It is now recognised by the Indian industry that for it to become globally competitive, especially in emerging areas such as IT, pharma and biotechnology, strong intellectual property protection both within India and outside is a necessity.'

Inventors also complained that political squabbles often plagued their national intellectual property offices, resulting in disorganised and unhelpful institutions with no real commitment to promoting inventive activity.

What does all this have to do with the current squabble over pharmaceutical patents? Well, in the past, intellectual property offices in developing countries have often become mired in the debate over pharmaceutical patents. Thus, the weakening of protection for pharmaceutical product patents eroded the protection provided to all inventions. Patent offices became political tools, where appointees were hired and fired with little thought to continuity.

Take Argentina, for example. Renowned Argentine patent lawyer Ernesto O'Farrell told me: 'The discussion of pharmaceutical patents has poisoned the bureaucracy ... which is always afraid of granting too many rights to inventors ... there is a lot of mistrust.' So you have an absurd situation in which the Argentine inventor of a unique sculpting compound received a US patent after only one year, but his application to the Argentine Patent Office is still pending more than six years after initial submission. Fearing piracy, he has concentrated his marketing efforts outside Argentina.

Recently, however, the WTO agreement has inspired many patent offices to improve services and raise public consciousness about intellectual property.

In Ecuador, the government made the intellectual property office autonomous and appointed its president for a six-year term. The result was a depoliticised office, small but immaculate, with a dedicated and knowledgeable staff. The office has had some success in reducing its patent backlog, improving services and increasing recognition of intellectual property rights among Ecuadoreans.

Ironically, Brazil and India, the two countries leading the charge against the WTO's intellectual property regime, have benefited enormously from improved intellectual property protection over the past few years.

In its informational pamphlet, the Instituto Nacional Da Propiedade Industrial (National Institute for Industrial Property) in Brazil boasts about the benefits of their 1996 patent law, which is WTO-compliant. INPI saw a record number of patent applications in 2000, including major increases in applications submitted by academic institutions. According to the official booklet, two of INPI's biggest patent clients are Brazilian companies (Telebras and Petrobras) and a recent study indicates that the law has also attracted significant foreign investment.

Like Brazil, India is a country rich in creative individuals, with science and technology fields that many developed countries envy. Indian newspapers even cite the number of US patents a featured scientist holds. Two major Indian pharmaceutical companies, Ranbaxy and Dr Reddy's, have even begun spending heavily on developing new drugs. They are doing so because they believe that India will introduce patent protection on pharmaceuticals and they will reap the rewards.

At a recent conference on intellectual property in New Delhi, Bimal Raizada, managing director of Ranbaxy, noted that his company is looking forward to stronger product patent protection.

The costs and effort that intellectual property protection inevitably entails would act as a serious disincentive to innovation, and those who did innovate would have little reason to cater to their own market under the threat of state sanctioned piracy. Inventors would be hindered, consumers would miss out on new products and investors would avoid sending capital to where it's most needed. And that would be patently unfair for everyone.

Unfortunately, the outcome of Doha suggests that inventors in developing countries may only find true intellectual property protection in the first world. The costs and effort this inevitably entails would act as a serious disincentive to innovation, and those who did innovate would have little reason to cater to their own market under the threat of state sanctioned piracy.

(Margalit Edelman is a Visiting Fellow at the Hispanic American Center for Economic Research, in Fairfax, Virginia, which recently published her study, Inventors, Innovations and Intellectual Property (available for download here in PDF).