Oct 192012

On October 16, the Program on Information Justice and Intellectual Property held the event “IP, Trade and Development,” with speakers from academia, the government, the biotech industry, and DC-based nonprofits.  My notes are below.

The webcast, presentations, and participant bios are available here.

Prof. Jerome Reichman (Duke Law School) told the audience he is troubled by developing countries’ reliance on multilateral forums for inspiration or permission to innovate in their laws.  Developing countries need to lead – to develop laws in their own interest that take maximum advantage of flexibilities in TRIPS.  For instance, countries could enact strong limitations and exceptions for the blind without waiting for WIPO to make a treaty on the matter.   One example of a developing country leading the way on flexible TRIPS-implementation is India in the area of medicine patents.  

Prof. Michael Ryan (Georgetown University) discussed how Colombian coffee growers used trademarks to build their brand, which has a reputation for quality and gets a premium.  He also discussed how biomedical firms in emerging economies are using intellectual property as part of larger innovation strategies that incorporate things like entrepreneurial universities and government-industry-academic cooperation.

Prof. Walter Park (American University) discussed the effect of patents in developing countries, saying that there are theoretical arguments as to why strong patent protection could be beneficial to developing countries (such as solving the appropriation problem, and attracting tech transfer) or harmful (such as increasing the costs of R&D and reducing rivalry).  When one looks at empirical evidence, one finds there is no statistically significant relationship between patents and innovation in developing countries.

Economist David Langdon from the U.S. Department of Commerce presented the USPTO report Intellectual Property and the U.S. Economy: Industries in Focus.   The entire U.S. economy relies on some form of IP, because virtually every industry either produces or uses it. In 2010, IP-intensive industries accounted for about $5.06 trillion in value added, or 34.8% of U.S. gross domestic product (GDP)and directly or indirectly employed 40.0 million Americans, or 27.7% of all employment in the economy.

Joe Damond from the Biotechnology Industry Organization told the audience that medicine is shifting towards biologics and personalized medicines.  These products are more difficult for developing countries to replicate than small molecule drugs, and there are fewer imitators.  He also said that the copying of medicines we see in middle income countries (such as the compulsory licenses in India) are commercially motivated, and are not used to advance public health goals.  Countries such as India and China are spending inadequate shares of their income on public health.

Burcu Kilic from Public Citizen discussed how the debate over global intellectual property norms has shifted from TRIPS to the Trans Pacific Partnership – which is being secretly negotiated, and which sets up a system that maximizes protection for IP owners at the expense of consumers in poorer countries.  She argued that manufacturing is moving to the East, and innovation will follow, much as it innovation followed manufacturing to the U.S. a century ago.  In 40 years, the U.S. may regret implementing TRIPS-Plus IP protection when most patents are owned by Indians or the Chinese.

Rashmi Rangnath from Public Knowledge discussed the USPTO study presented earlier in the panel.  She noted that it does not correlate IP intensity or benefits to any particular design of an IP regime.  The study lumps together patents, copyright, and trademarks even though they have different purposes and policies.  Additionally, the report does not address the important role played by limitations and exceptions to IPR in certain sectors – for example, computers, consumer electronics, and search engines all have business models that rely on exceptions to copyright.

During Q&A the following questions were asked of the panelists:

  • Shouldn’t we be studying the added value of IP, not just whether it is present?
  • Shouldn’t we be measuring costs as well?
  • How do we account for other ways in which technology transfers that do not involve patents?
  • What lessons can the biotech sector learn from the small molecule market, which has seen prices fall, and which is learning from open models?

Joe Damond said that the small molecule industry is in a period of less innovation,  following the bumper years of the 1990s. R&D is shifting to biotechnology and targeted treatment, which is more expensive.  FDA registration is slower and more expensive today than it has been in the past, and the pricing environment is more challenging.  The EU has strong IP but it also has price controls, so you see more developers moving to the U.S.  Regarding medicines for HIV/AIDS, Damond said that bulk purchasing through programs like PEPFAR and the Global Fund brought prices down, not “suspension of IP”.

He also said that the criticism surrounding the lack of transparency in the TPP negotiations are misplaced, because the IP chapters in U.S. free trade agreements are very similar.  One can infer what the U.S. is proposing based on previous FTAs, and the administration has said it will base the TPP text on the Korea FTA.

David Langdon said that the USPTO study is not supposed to justify the argument that increased rights will lead to increased employment. Nuance is needed in further research. It is an open question what the next research step should be.

Rashmi Rangnath agreed with Damond that intellectual property chapters in FTAs are similar, but she argued that the small details where they differ can be very important.  For example, some FTAs provide an exception for temporary copies, others don’t.  It is important to have limit on the scope of rights covered in FTAs.  Regarding procedure, it is important that all stakeholders have access to decision makers.  Advocates for robust limitations and exceptions need to have an opportunity to participate.

Burcu Kilic said that the TPP will set the new global standard for IP protection, and that the leaked texts indicate it will have IPR rules that go beyond those in other FTAs, including the Korea FTA.   Regarding prices on HIV/AIDS medicines, PEPFAR is doing a great job (and is funding most of the HIV treatment in Vietnam), but it has trouble paying for expensive second line medicines that face more patent barriers and tend to be more expensive than first line drugs.

Prof. Oona Hathaway (Yale Law School) addressed the way that trade agreements are ratified in the United States via ex-ante  Executive Agreements – a process which cuts out meaningful Congressional participation.  Through this process, we do not hold international lawmaking to the same standards as the rest of our lawmaking.  She proposes that instead we use ex-post Executive Agreements to ratify trade agreements. These are typically used for major international agreements (for instance, joining the IMF). All of Congress participates, and they result in more reliable commitments.  Prof Hathaway also recommended that the U.S. enact broad based “fast-track” legislation and implement an Administrative Procedure Act for international law to ensure transparency and opportunity for public involvement.

Prof. Rochelle Dreyfuss (New York University) noted that the U.S. negotiates trade agreements under the belief that more IP is always best, but IP is really about balance.  To come up with a balanced system of new global norms, it would be good to have a robust system of administrative law with standards similar to the Administrative Procedures Act.  Without such global standards, IP owners can engage in forum shopping and begin to raise norms through domestic laws in certain countries and through bilateral and plurilateral forums.   They can game the fractured system


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