Intellectual
Property Rights: Who Benefits?

Amit
Sen Gupta

THE
debate on amendment of India’s Patent Law last year centred around the need to
align our domestic laws in accordance with the TRIPS agreement in the WTO –
i.e. the agreement on “Trade Realted Intellectual Property Rights”. Today
there is an assumption that Intellectual Property Rights are necessary and need
to be protected. However, there is sufficient evidence today to question this
premise.

Intellectual
property is an explicitly modern notion. Less than 500 years back, the notion of
property rights related to physical entities. The
idea behind Intellectual Property Rights is that the fundamentals of an
invention are made public while the inventor for a limited time has the
exclusive right to make, use or sell the invention. It can legitimately be
argued that the notion of IPR is built on a contradiction: in
order to promote the development of ideas, it is necessary to reduce the freedom
with which people can use them. This contradiction is a running thread
in all debates on IPRs, and is sought to be resolved in laws related to IPRs by
attempting a balance between public interests and rights of the inventor. Two
contrasting interests, that often manifest as contrasting opinions — as
reflected in the following statements.

“The
relentless march of intellectual property rights needs to be stopped and
questioned. Developments in the
new technologies are running far ahead of the
ethical, legal, regulatory and policy frameworks needed to govern
their use.
More understanding is needed -in every country- of the economic and social
consequences of the
TRIPs Agreement. Many people have started to question the
relationship between knowledge ownership and
innovation. Alternative approaches
to innovation, based on sharing, open access and communal innovation, are
flourishing, disproving the claim that innovation necessarily requires
patents.” UNDP, Human Development
Report
1999

“The commercial sector discovers and develops nearly all new drugs and
vaccines, but this is expensive and
risky; the patent system provides the
incentive necessary to investigate thousands of new compounds and to
invest an
average of several hundred million dollars in R&D“. In
IFPMA, ASEAN
Workshop on TRIPS,
Jakarta, May 2000.

PROPERTY
RIGHTS OVER IDEAS

Since
it is now possible to convey ideas from one mind to another without ever making
them physical, ideas themselves are sought to be given ownership, and not merely
their expression. And since it is likewise now possible to create useful tools
that never take physical form, there is a move towards patenting abstractions,
sequences of virtual events, and mathematical formulae – the most unreal terrain
imaginable.

We
are now entering an era where major parts of the world economy are based on
ideas and knowledge, i.e. goods that take no material form. The central
distinction between information or knowledge or ideas and physical property is
that information can be transferred without leaving the possession of the
original owner. Unlike physical goods, there are no physical obstacles to
providing an abundance of ideas. Intellectual property can thus be conceived as an attempt to create an
artificial scarcity in order to give rewards to a few at the expense of the many.

IPRs
today bring into force another kind of dilemma. Open ideas can be examined,
challenged, modified and improved. But IPRs, by converting scientific knowledge
into a commodity, arguably inhibits science. We
also see the development of a new contradiction — information or ideas are
sought to be commodified at the same time as technology makes it possible to
exchange ideas in a radically free environment. If ideas are to be exchanged in
the marketplace, the basic assumption of the marketplace as it is with regard to
physical objects — that value is based on scarcity — should hold good. But
this is precisely contrary to the nature of information, which may — in many
cases — increase in value with dissemination.

MONOPOLY
AS A FACILITATOR OF CREATIVITY?

Central
to the projected utility of Intellectual Property Rights is the notion that
creation is facilitated by the
provision of a temporary monopoly. This notion
had a certain kind of validity in the context in which the
concept of IPRs
developed.
The earliest Patent and Copyright Laws were geared, to an extent, to benefit the
individual artisan, or the author of a literary piece or a musical score. Today,
IPRs help create

monopolies of a different order, and thereby place enormous
power at the disposal of a handful of corporations.

The
importance of the knowledge based sectors to the US (and global) economy can be
gauged from the performance of large companies today. Among the top fifteen
companies with the highest returns (profits) on Revenues (turnover), six are
pharmaceutical companies and five are from the information technology sector.

The
principal arguments of the pharmaceutical industry are related to its claims
that it invests huge amounts in the development of new drugs and hence deserves
returns for such investments. The important point to be underscored is that
after the claimed investments are made on R&D the pharmaceutical sector has
consistently been the most profitable sector. A
perusal of the profitability in different sectors based on data from the top 500
globally, shows that profitability in the pharmaceutical sector is way ahead of
all other sectors.

To
look at it in another way, if profit margins of top pharmaceutical companies
were to have been less by a third of current levels — which would still make
them more profitable than any other sector — 
a benefit of about 11 billion dollars could have been passed on to
consumers. That is in fact more than the projected 10 billion dollars that are
required to provide access to anti-AIDS drugs to all HIV positive patients in the world!

High
prices, driven by patent monopoly based incomes are just one part of the story.
The frantic search for the next “blockbuster”, skews drug development
in favour of new drugs for which there are buyers who are willing to pay
prohibitive amounts. The
basic qualification for the next “blockbuster” is that it should be
possible to sell it in the market, not that it should address real medical
needs. Hence, more and more drugs being introduced are “copycat” drugs
or drugs like Pfizer’s Viagra that address “lifestyle” needs and not
medical needs and do not significantly alter prevalent therapeutic practices (See
Table 1 below).

Table
1

Assessment
of New Drugs Introduced Between 1981-2000

Source:
Prescrire International

 “Full
disclosure” usually means providing enough detail for a “person skilled in
the same or the most clearly related area of technology to construct and
operate” the patented object. Strong
patent protection is now moving the pendulum away from the concept of “full
disclosure” and it is a matter of grave concern for the scientific
community. Clearly, patents have ceased to be a vehicle of dissemination of
knowledge and have become the tools to constrain its spread — quite the
antithesis of what good science requires.

Domestic
industries outside the developed countries have been able to develop in places
where strong patent production has not been allowed. India is representative of
such a situation, where the Indian Patents Act of 1970 allowed the development
of a strong vertically integrated pharmaceutical industry. It was facilitated by
the ability of Indian companies to develop and market generic versions of
patented drugs. The issue is not just that it allowed cheaper versions of
patented drugs to be sold in the Indian market. More importantly, it led to the
development of world class manufacturing facilities in a developing country. This
that is sought to be taken away by large pharmaceutical companies through the
medium of TRIPS.