Motivations for Globalization of Stronger IPR Regimes

Pressures for strengthening US patent law and expanding its scope began in the 1970s and originated outside of agriculture. They arose from the concern of business interests with capturing rents on existing technology, as distinct from creation of new incentives for innovation. They reflected the pessimistic perception that the USA had lost its technological edge in the 19 70s to other countries such as Japan, and that these countries were insufficiently compensating the USA for past innovations (Dutfield, 2002). The resulting strengthening of US patent law in turn led to demands for extension of stronger IPRs globally.

Recently, there has been rapid and unprecedented international proliferation of commitments to stronger IPP among less-developed economies. Again, the original motivation was rent collection by a handful of multinational corporations rather than encouragement of global research competition (Ryan, 1998; Dutfield, 2002). The interests of food producers or consumers do not appear to have figured prominently in the WTO agreement. Trade-Related Aspects of Intellectual Property Rights (TRIPS) which has credible means of enforcement; countries can be penalized with trade sanctions if they do not comply.2 It was the value of trade access, not domestic benefits of patent protection, that induced widespread accession to TRIPS by less-developed countries. They faced the threat of loss of trade access via bilateral interactions if they did not support this multilateral agreement.3

Economists as a group have never given expansion of patent rights the kind of support they have given to trade liberalization initiatives since the time of Adam Smith.4 Although there is consensus that incentives are important for research and development (R&D), it is increasingly clear that the theoretical advantage of using patents (as distinct from public research, grants, or contracts with other non-profit or private sector researchers, which had long been successfully used in agricultural research) was rather narrow and delicate, dependent on the exis tence of information on the value of innovations held by innovators but inaccessible to the public sector (Wright, 1983), and on the infeasibility of alternate means that might be used to elicit such information (Scotchmer, 2004a). In agriculture, where much of the value of innovations accrues as consumer benefits from lower-priced food and better nutrition, it is by no means obvious that evaluations of benefits are generally less accurate in the public than in the private sector. Furthermore, the recent prominence of the 'open-source' phenomenon, especially in software development, has, if anything, made economists more keenly aware that a system of direct monetary rewards might not in practice be the universally superior means for inducing innovation.

Some economists have seen advantages in stronger IPP as a stimulant to R&D investment, or private foreign direct investment more generally (e.g. Kanwar and Evenson, 2003; Lesser, 2005, respectively). If these effects are important, they should be apparent in the pharmaceutical industry, where patents are recognized as unusually important. Recently, Lanjouw (2005) has studied how patent regimes affect market entry of new pharmaceuticals, and finds that for less-developed countries, strong process patents and weak (short-life) product patents encourage early entry, but lengthening the life of product patents has not further encouraged entry. More generally, we know of no evidence of any stimulus to independent domestic innovation that is sufficient to offset the costs of local patenting by foreigners, which typically forms the overwhelming majority of patents for developing countries with a modern patent system.5

TRIPS has rightly been viewed by developing countries as preferable to bilateral bullying under the threat of Section 301 sanctions by the USA; the countries also anticipated that they would be rewarded by improved access for their textiles and agricultural exports. In addition, exemption for plants and animals under TRIPS is viewed by some commentators as an important concession by those pressing for globally stronger IPP. But bilateral pressures have returned as TRIPSplus negotiations pressed by the European Union (EU), European Free Trade Association and the USA, and in regional free-trade agreements. The process is apparently progressing from economically small nations to others that are larger and more powerful.6 In many cases, weak developing countries have given up the alternatives available under Article 27.3(b). In any case, the latter is actually of limited significance for innovation in plant biotechnology, since plants containing new genetic material or produced by a novel process might be indirectly protected via a patent on that material or process, as in the Canadian Supreme Court decision on Monsanto v Schmeiser.7 Finally, progress on promised market access for developing countries has been less than anticipated.

On the other hand, implementation is still largely under domestic control. Developing countries have yet to implement the protection of plants to which they have recently committed. As a recent set of case studies by Louwaars et al. (2005, pp. 2-3) has shown, implementation is clearly a daunting task in many countries, even given the best of intentions. However, effective enforcement of rent collection for use of foreign IPRs in transgenic crops is being established in some challenging institutional contexts and, in particular, for Brazilian trans-genic soybeans.

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