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The Current System of Trade and Intellectual Property Rights

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European Yearbook of International Economic Law 2016

Part of the book series: European Yearbook of International Economic Law ((EUROYEAR,volume 7))

Abstract

One of the key arguments of the proponents of the Agreement on Trade-related Aspects of Intellectual Property Rights adopted as a component of the World Trade Organization was that the grant of intellectual property rights would boost innovation globally. The world map of R&D, however, does not show a general improvement of R&D capabilities in developing countries in the last 20 years. While the pharmaceutical industry was an active promoter of that Agreement, the innovation in this sector has declined. The proliferation of pharmaceutical patents reflects strategies aiming at blocking generic competition rather than a genuine increase in innovation. Alternative models to generate new drugs, especially those needed to address diseases prevalent in developing countries, are needed.

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Notes

  1. 1.

    Paris Convention on the Protection of Industrial Property (1883), Berne Convention for the Protection of Literary and Artistic Works (1886) and Madrid Agreement for the Repression of False or Deceptive Indications of Source on Goods was also adopted at that time (1891).

  2. 2.

    Universal Copyright Convention (UCC), adopted in Geneva, Switzerland in 1952.

  3. 3.

    See Rome Convention for the Protection of Performers, Producers of Phonograms and Broadcasting Organizations (1961), the International Convention for the Protection of New Varieties of Plants (UPOV) (1961), the Lisbon Agreement for the Protection of Appellations of Origin and their International Registration (1967), the Patent Cooperation Treaty (1970), the Geneva Convention for the Protection of Producers of Phonograms against Unauthorized Duplication of their Phonograms (1971), the Brussels Convention Relating to the Distribution of Programme-Carrying Signals Transmitted by Satellite (1974) and the Budapest Treaty on the International Recognition of the Deposit of Microorganisms for the Purposes of Patent Procedure (1977).

  4. 4.

    Convention Establishing the World Intellectual Property Organization signed at Stockholm on July 14, 1967, Preamble, second recital.

  5. 5.

    Deveraux et al. (2006).

  6. 6.

    See Group of Negotiations on Goods (GATT) Negotiating Group on Trade-Related Aspects of Intellectual Property Rights, including Trade in Counterfeit Goods, Applicability of the Basic Principles of the GATT and of Relevant International Intellectual Property Agreements or Conventions—Communication from India, GATT Doc. MTN.GNG/NG11/W/39, 5 September 1989, https://www.wto.org/gatt_docs/English/SULPDF/92080040.pdf (last accessed 5 October 2015), para. 2.

  7. 7.

    Group of Negotiations on Goods (GATT) Negotiating Group on Trade-Related Aspects of Intellectual Property Rights, including Trade in Counterfeit Goods, Communication from Brazil, GATT Doc. MTN.GNG/NG11/W/57, 11 December 1989, https://www.wto.org/gatt_docs/English/SULPDF/92090039.pdf (last accessed 5 October 2015), para. 11(a).

  8. 8.

    Correa (2011).

  9. 9.

    See e.g., Group of Negotiations on Goods (GATT) Negotiating Group on Trade-Related Aspects of Intellectual Property Rights, including Trade in Counterfeit Goods, Suggestion by the United States for Achieving the Negotiating Objective, GATT Doc. No. MTN.GNG/NG11/W/14, 20 October 1987, https://www.wto.org/gatt_docs/English/SULPDF/92030039.pdf (last accessed 5 October 2015), p. 2; Group of Negotiations on Goods (GATT) Negotiating Group on Trade-Related Aspects of Intellectual Property Rights, including Trade in Counterfeit Goods, Trade-related Aspects of Intellectual Property Rights: Submission from the European Communities, GATT Doc., No. MTN.GNG/NG11/W/49, 14 November 1989, https://www.wto.org/gatt_docs/English/SULPDF/92080171.pdf, (last accessed 5 October 2015), p. 7.

  10. 10.

    See e.g., Maskus K, Yang L (2013) The Impacts of Post-TRIPS Patent Reforms on the Structure of Exports. The Research Institute of Economy, Trade and Industry, http://www.rieti.go.jp/jp/publications/dp/13e030.pdf (last accessed 2 May 2015).

  11. 11.

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  12. 12.

    Mani and Nelson (2013), p. 235.

  13. 13.

    Gaillard (2010).

  14. 14.

    See Batelle (2013) 2014 Global R&D Funding Forecast, http://www.battelle.org/docs/tpp/2014_global_rd_funding_forecast.pdf (last accessed 2 May 2015), p. 4.

  15. 15.

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  16. 16.

    Shapiro R, Mathur A (2014) How India Can Attract More Foreign Direct Investment, Create Jobs, and Increase GDP: The Benefits of Respecting the Intellectual Property Rights of Foreign Pharmaceutical Producers. SONECON, http://www.ipdelivers.com/resources/wp-content/uploads/2014/01/Report-on-FDI-IP-and-the-Pharmaceutical-Sector-in-India-Shapiro-Mathu-.pdf (last accessed 5 May 2015).

  17. 17.

    Moser (2013), pp. 23–44.

  18. 18.

    Bessen and Meurer (2008), p. 16.

  19. 19.

    Bessen and Meurer (2008), p. 16.

  20. 20.

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  21. 21.

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  22. 22.

    Shavell S, van Ypersele T (1999) Rewards Versus Intellectual Property Rights. NBER Working Paper 6956, http://www.nber.org/papers/w6956 (last accessed 5 May 2015), p. 32.

  23. 23.

    Torrance and Tomlinson (2009), p. 164.

  24. 24.

    Boldrin and Levine (2013), p 20.

  25. 25.

    Boldrin M, Levine D (2007) Against Intellectual Monopoly, http://levine.sscnet.ucla.edu/papers/ip.ch.8.m1004.pdf (last accessed 9 May 2015), p. 2.

  26. 26.

    Boldrin M, Levine D (2012) The Case Against Patents. Federal Reserve Bank, Research Division, https://research.stlouisfed.org/wp/2012/2012-035.pdf (last accessed 2 July 2015), p. 1.

  27. 27.

    Pharmaceutical Patents Review Report. 2013, http://www.ipaustralia.gov.au/pdfs/2013-05-27_PPR_Final_Report.pdf (last accessed 2 July 2015), p. 5.

  28. 28.

    See, e.g. Siebeck W, Evenson R, Lesser W, Primo Braga C (eds) (1990) Strengthening Protection of Intellectual Property in Developing Countries A Survey of the Literature. World Bank World Bank Discussion Papers 112, http://www-wds.worldbank.org/servlet/WDSContentServer/IW3P/IB/2000/01/06/000178830_98101903544215/Rendered/PDF/multi_page.pdf (last accessed 9 May 2015).

  29. 29.

    Penrose (1951).

  30. 30.

    Machlup F (1958) An Economic Review of the Patent System. Subcommittee on Patents, Trademarks and Copyrights. Committee on the Judiciary, U.S. Senate, Study no. 15, https://mises.org/sites/default/files/An%20Economic%20Review%20of%20the%20Patent%20System_Vol_3_3.pdf (last accessed 2 July 2015).

  31. 31.

    U.S. Congress, Office of Technology, Assessment, Intellectual Property Rights in an Age of Electronics and Information. OTA-CIT-302 U.S. April 1986, Government Printing Office, Washington DC, http://www.princeton.edu/~ota/disk2/1986/8610/8610.PDF (last accessed 2 July 2015). Moreover, historical studies have shown that the United States emerged as the world’s industrial leader by illicitly appropriating mechanical and scientific innovations from Europe and that the leaders of the republic supported the piracy of European technology in order to promote the economic strength and political independence of the new nation (Ben-Atar 2004).

  32. 32.

    See e.g., Commission on Intellectual Property, Final Report. 2002, http://www.iprcommission.org/graphic/documents/final_report.htm(last accessed 9 May 2015).

  33. 33.

    Dosi and Stiglitz (2014), pp. 3–4.

  34. 34.

    Swanson and Goeschl (2014), p. 284.

  35. 35.

    Pharmaceutical Patents Review Report. 2013, http://www.ipaustralia.gov.au/pdfs/2013-05-27_PPR_Final_Report.pdf (last accessed 9 May 2015), pp. 22 and 32.

  36. 36.

    Productivity Commission 2012, Trade Assistance Review 2010–2011. Annual Report Series, http://www.pc.gov.au/about/governance/annual-reports/annual-report-2010-11/annual-report-2010-11.pdf (last accessed 2 July 2015), p. 100.

  37. 37.

    See Hall B, Helmers C, Rogers M, Sena V (2012) The Choice between Formal and Informal Intellectual Property: A Literature Review. National Bureau of Economic Research (NBER) Working Paper No. 17983, http://www.nber.org/papers/w17983.pdf (last accessed 2 July 2015), p. 15.

  38. 38.

    Scherer F, A Note on Global Welfare in Pharmaceutical Patenting. Working Paper No. 03-11 Federal Reserve Bank of Philadelphia, November 2002, https://www.philadelphiafed.org/research-and-data/publications/working-papers/2003/wp03-11.pdf (last accessed 11 May 2015), p. 2

  39. 39.

    See, e.g., United Nations Conference on Trade and Development, The TRIPS Agreement and Developing Countries. 1996, UN, Geneva http://unctad.org/en/Docs/ite1_en.pdf (last accessed 11 May 2015).

  40. 40.

    See, e.g., Deveraux et al. (2006).

  41. 41.

    Scherer F, A Note on Global Welfare in Pharmaceutical Patenting. Working Paper No. 03-11 Federal Reserve Bank of Philadelphia, November 2002, https://www.philadelphiafed.org/research-and-data/publications/working-papers/2003/wp03-11.pdf (last accessed 11 May 2015), p. 10.

  42. 42.

    The figure includes drugs that are classified as ‘new molecular entities’ (NMEs), which are characterized as ‘new’ for administrative purposes by the US Food and Drug Administration (FDA), but nonetheless contain active moieties that are closely related to active moieties in products that have previously been approved by FDA, FDA, New Drugs at FDA: CDER’s New Molecular Entities and New Therapeutic Biological Products. January 2015, http://www.fda.gov/Drugs/DevelopmentApprovalProcess/DrugInnovation/ucm20025676.htm Scherer F, A Note on Global Welfare in Pharmaceutical Patenting. Working Paper No. 03-11 Federal Reserve Bank of Philadelphia, November 2002, https://www.philadelphiafed.org/research-and-data/publications/working-papers/2003/wp03-11.pdf (last accessed 11 May 2015), p. 10.

  43. 43.

    See Article 65 of the TRIPS Agreement.

  44. 44.

    See e.g., Hurley D, A Diabetes Drug Made the Old-fashioned Way, International New York Times, 15 November 2014, p. 12.

  45. 45.

    Scannell et al. (2012), pp. 191–200. As a result of the observed decline, the authors suggest that in the field of pharmaceuticals an inverse Moore’s Law (which predicated that the number of transistors in an integrated circuit would double every 2 years) applies (‘Eroom’s Law’).

  46. 46.

    World Health Organization (WHO), Public Health: Innovation and Intellectual Property Rights. Report of Commission on Intellectual Property Rights, Innovation and Public Health, April 2006, http://www.who.int/intellectualproperty/documents/thereport/CIPIH23032006.pdf (last accessed 11 May 2015). Type II diseases are incident in both developed and developing countries, but with a substantial proportion of the cases in the latter. Type III diseases are those that are overwhelmingly or exclusively incident in developing countries, such as malaria and Chagas disease.

  47. 47.

    The Lancet–University of Oslo Commission on Global Governance for Health, The Political Origins of Health Inequity: Prospects for Change. 11 February 2014, http://dx.doi.org/10.1016/S0140-6736(13)62407-1 (last accessed 11 May 2015), p. 12.

  48. 48.

    Pedrique et al. (2013).

  49. 49.

    See, e.g., Muñoz et al. (2015).

  50. 50.

    Velásquez G (2014) Public-Private Partnerships In Global Health: Putting Business Before Health? South Centre Research Paper 49 http://www.southcentre.int/wp-content/uploads/2014/02/RP49_PPPs-and-PDPs-in-Health-rev_EN.pdf (last accessed 11 May 2015).

  51. 51.

    See WHO (2014) Increasing Access to HIV Treatment in Middle-Income Countries: Key Data on Prices, Regulatory Status, Tariffs and the Intellectual Property Situation, http://www.who.int/phi/publications/WHO_Increasing_access_to_HIV_treatment.pdf?ua=1 (last accessed 12 May 2015).

  52. 52.

    Global Commission on HIV and the Law, HIV and the Law: Risks, Rights & Health. July 2012, http://www.hivlawcommission.org/resources/report/FinalReport-Risks,Rights&Health-EN.pdf. (last accessed 12 May 2015), p. 8.

  53. 53.

    Gagnon (2012), p. 192.

  54. 54.

    Olfson and Marcus (2013), pp. 1116–1125.

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    Wolf M, A Much-maligned Engine of Innovation, Financial Times, 4 August 2013, http://www.ft.com/cms/s/2/32ba9b92-efd4-11e2-a237-00144feabdc0.html (last accessed 12 May 2015) comment on the book by Mazzucato (2013).

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    Hall B, Helmers C, Rogers M, Sena V (2012) The Choice between Formal and Informal Intellectual Property: A Literature Review. National Bureau of Economic Research (NBER) Working Paper No. 17983, http://www.nber.org/papers/w17983.pdf (last accessed 2 July 2015), p. 15.

  57. 57.

    See, e.g., Oyelaran-Oyeyinka and Gehl Sampath (2010).

  58. 58.

    Ranbaxy, one of the firms taken over by a foreign (Japanese) company, was the local firm with the largest R&D budget in India. See, e.g., Srinivasan S, Gupta N, Dabade G, Phadke A, Sengupta A, Takeover of Indian Pharma Companies. Economic & Political Weekly XLV(43), 23 October 2010; Sreedhar et al. (2011), pp. 343–344.

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    See, e.g., t’Hoen and Passarelli (2013).

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  62. 62.

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    Bedi et al. (2013), p. 109.

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    See in Chaudhuri S, Park C, Gopakumar K, Five Years Into the Product Patent Regime: India’s Response. United Nations Development Programme (UNDP), December 2010, http://apps.who.int/medicinedocs/documents/s17761en/s17761en.pdf (last accessed 19 May 2015), p. 80.

  65. 65.

    Nair and Fernandes (2014), p. 14.

  66. 66.

    Article 33 of the TRIPS Agreement.

  67. 67.

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    See, e.g., Correa C (2013) Investment Agreements: A New Threat to the TRIPS Flexibilities? South Bulletin 72 http://www.southcentre.int/question/investment-agreements-a-new-threat-to-the-trips-flexibilities/ (last accessed 3 July 2015).

  70. 70.

    A ‘Markush claim’ consists of the generic description of a chemical formula which includes a multiplicity of closely related compounds.

  71. 71.

    Patent CA 1,075,687.

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  76. 76.

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  77. 77.

    High prices may also be the result of data exclusivity regimes, i.e., those that prevent generic companies to use or rely test on data for a certain period after the first approval of a drug to introduce a generic version thereof. For instance, a study found that ‘of all the current forms of intellectual property protection in Jordan, the provision for data protection has the most significant effect on the price of medicines’ (Abbott R, Access to Medicines and Intellectual Property in Jordan. Intellectual Property Watch, 23 July 2012, http://www.ip-watch.org/2012/07/23/access-to-medicines-and-intellectual-property-in-jordan/ (last accessed 19 May 2015). See also, for the case of Colombia, Cortés Gamba M, Rossi Buenaventura F, Vásquez Serrano M (2012) Impacto de 10 Años de Protección de Datos en Medicamentos en Colombia. IFARMA, Bogotá http://web.ifarma.org/index.php?option=com_content&view=article&id=70:serie-buscando-remedio-qimpacto-de-10-anos-de-proteccion-de-datos-en-medicamentos-en-colombiaq&catid=22:buscando-remedio (last accessed 3 July 2015).

  78. 78.

    See, e.g. The New Drug War, Hard Pills to Swallow, The Economist, 1 July 2014, http://www.economist.com/news/international/21592655-drug-firms-have-new-medicines-and-patients-are-desperate-them-arguments-over (last accessed 24 May 2015).

  79. 79.

    See, e.g., Armstrong D, At $84,000 Gilead Hepatitis C Drug Sets Off Payer Revolt, Bloomberg, 27 January 2014, http://www.bloomberg.com/news/articles/2014-01-27/at-84-000-gilead-hepatitis-c-drug-sets-off-payer-revolt#q (last accessed 24 May 2015).

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    Dosi and Stiglitz (2014), p. 4.

  83. 83.

    Mowery et al. (2010), p. 20.

  84. 84.

    Open Source Drug Recovery, http://www.osdd.net/about-us (last accessed 24 May 2015).

  85. 85.

    See, e.g., Correa (2008).

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  1. Center for Interdisciplinary Studies on Industrial Property and Economics, University of Buenos Aires, Buenos Aires, Argentina

    Carlos M. Correa

  2. South Centre, Geneva, Switzerland

    Carlos M. Correa

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  3. Chair for Public Law and International Law, University of Erlangen-Nürnberg Faculty of Law, Erlangen, Germany

    Markus Krajewski

  4. Competition and Regulation Institute, Leuphana University of Lüneburg, Lüneburg, Germany

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Correa, C.M. (2016). The Current System of Trade and Intellectual Property Rights. In: Bungenberg, M., Herrmann, C., Krajewski, M., Terhechte, J. (eds) European Yearbook of International Economic Law 2016. European Yearbook of International Economic Law, vol 7. Springer, Cham. https://doi.org/10.1007/978-3-319-29215-1_8

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