New report urges governments to replace TRIPS

UNDP | Making Global Trade Work for People | January 2003

CHAPTER 11: TRADE-RELATED ASPECTS OF INTELLECTUAL PROPERTY RIGHTS

"If nature has made any one thing less susceptible than all others of exclusive property, it is the action of the thinking power called an idea...that ideas should freely spread from one to another over the globe, for the moral and mutual instruction of man, and improvement of his condition seems to have been peculiarly and benevolently designed by nature". - Thomas Jefferson, 1813

The contentious introduction of the Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement into the framework of the multilateral trade regime has probably aroused more controversy than any outcome of the Uruguay Round. This stems from the far-reaching implications of TRIPS for human development in the spheres of technology, public health, education, and conservation, stewardship and ownership of traditional knowledge and biological resources.

FOOD SECURITY, BIOLOGICAL RESOURCES AND TRADITIONAL KNOWLEDGE

Article 27.3(b) of the TRIPS Agreement allows members to exclude plants and animals and biological processes for the production of plants and animals, other than microorganisms and non-biological or microbiological processes, from patentability. It also requires member nations to extend intellectual property protection to plant varieties through either patents or a sui generis system or any combination thereof.

The TRIPS Agreement does not explicitly prevent or promote the formulation of additional measures that provide for farmers' rights, or the sharing of benefits in genetic resources or traditional knowledge with countries or communities, as long as these measures do not violate the minimum standards laid down under the Agreement. Most of these measures lie outside the scope of TRIPS though some TRIPS provisions can be used in some cases.

-- Article 27.3(b) and human development: farmers' rights and food security

The issue of protection for plant varieties is central to the world's food supply. Plant breeding can generate higher yields and lead to seed varieties with stronger resistance to drought, pests and disease.

Many plant varieties come from seeds that farmers in developing countries have selected and sown for many years; these practices form the basis of food security and livelihoods for communities throughout the developing world. Where subsistence-based production is dominant, it is critical to maintain farmers' freedom to save, exchange and replant their own seed.

However, as the biotechnology industry has expanded, it has sought to demand protection for genetically modified seed varieties in order to guarantee returns for high R&D investment costs. Similarly, as developing countries build their industrial seed production capabilities, their views on the utility and shape of a patent and plant variety protection system will also change. 'In areas with good access to urban markets, even small-scale farmers may see a shift to modern hybrids as an attractive option because of their high yield potential. In this case, private sector companies are the main seed suppliers' and private breeding companies may wish to seek greater protection.

But with large numbers of farmers engaged in subsistence farming for at least part of the time, a sui generis system that protects the rights of farmers to exchange and replant protected seeds is critical to ensuring food supply and livelihoods. This was also acknowledged internationally, at the UN Food and Agriculture Organization Conference-approved International Treaty on Plant Genetic Resources on Food and Agriculture 2001, which established a multilateral system of access to plant genetic resources for food and agriculture, as well as of fair and equitable sharing of the benefits obtained from their use. It also included provisions on farmers' rights.

Several international efforts to create such systems have already occurred. The Union for the Protection of Plant Varieties (UPOV) models of 1978 and 1991 are two such examples. The 1978 model allowed farmers to save seeds for their own use and breeders to freely develop new seeds. The 1991 convention restricts these exceptions; farmers' privilege is optional but the breeders' exception is preserved. It also implements a sui generis system of plant variety protection through which the commercial interests of plant breeders are protected.

The implications of plant variety protection are uncertain and vary according to circumstances. A preliminary study in the US showed that it led to increased seed prices for farmers, a falling role for public investment in plant breeding and reduced information flow from the private to the public sector. It also did little to stimulate plant breeding. Further, genetic modifications increase gene uniformity, and this can affect biodiversity in the long run. Developing countries need to encourage incentives for new seed development without restricting the rights of farmers to save and replant seeds through an appropriate sui generis system.

However, TRIPS is essentially an inappropriate model for property rights that do not follow the conventional Western model (based on individual rights), and TRIPS mandates countries to deal with the requirements of these community rights through the creation of appropriate sui generis systems.

The gender dimension of the impact of IPRs on biodiversity is often overlooked. TRIPS affects women's reproductive health, agriculture, food security and traditional knowledge in health care and medicines. Women are affected in many direct and indirect ways by IP since they are the primary users and protectors of biodiversity. They produce 50 per cent of all food in the world and are also responsible for collecting food, fodder, fuel and water. In the poorest rural households in developing countries, traditional diets often consist of a finely balanced mix of cultivated crops and plants and fruits found in the wild. Women, more than men, tend to use the forest as a source of a wide variety of insects, plants and plant products to supplement the basic diet, especially during food shortages.

Common property resources have been used as grazing lands for animals, communal sources of water and forest resources for food and income. The protection of agricultural biodiversity and common property resources is therefore crucial to the livelihood and food security of poor people in rural areas, particularly women and girls, who are responsible for family welfare but tend to fare worse than the male members in food intake and nutrition. Privatisation of biological resources directly affects women, who lack resources to purchase them and are left relying on shrinking and increasingly degraded common property resources.

-- Traditional knowledge and benefit sharing

The 1992 Convention on Biodiversity promotes the need to 'respect, preserve and maintain' traditional knowledge for 'the conservation and sustainable use of biological diversity' and encourages the 'equitable sharing of benefits arising from the utilization of such knowledge' (article 8(j)). Many developing countries have lobbied for an expansion of IP concepts to enable more effective 'protection' of traditional knowledge. In recent years, there has also been increasing attention to the importance of greater recognition of the value and contribution of traditional knowledge to public health and community development.

Traditional knowledge and indigenous knowledge are not the same. Traditional knowledge can refer to knowledge that is in some way nationally held (such as ayurvedic medicine and Chinese herbal medicine), while indigenous knowledge is often associated with groups that are or have historically been marginalized or are trying to pursue a traditional lifestyle. Both traditional and indigenous knowledge have been used for generations by local communities and have contributed to the development of crop varieties, food security and medicines, as well as the emergence and continuation of artistic work in the form of music, handicrafts and artisanship.

Traditional knowledge tends to be passed down over generations and held collectively (at the community or national level). It provides legitimacy, as a first step towards benefit sharing of the knowledge and the resources that these communities possess. Further, it is important for the economic development of indigenous communities, since recognition of traditional knowledge protects them against misappropriation or loss, and compensation can also help in broadening its use. But, as Correa also points out, protection could also reduce access to and sharing of this knowledge. Many indigenous communities express concern about traditional knowledge being in the 'commons' because that exposes it to private interests that could steal from this commons and use the knowledge as a tool for their future exploitation. Governments need to design protection systems that balance out these costs and gains for their communities' futures.

Unlike other intellectual property, protection for traditional knowledge is not a prerequisite for encouraging future innovation. It is aimed at preserving ownership and sharing the benefits from the commercial exploitation of this knowledge rather than rewarding its creators. From a human development perspective, it is important to prevent corporate misappropriation of knowledge that is already in the public domain. It is also important to codify this knowledge and place it in the public domain with the cooperation of the communities to which it belongs and to clarify rules for benefit-sharing following the same principles that apply to all other sectors -- that of balancing the rights of owners and consumers. Indigenous peoples have their own ways of managing and sharing their knowledge, and this will require an acceptance of different models of property rights (collective, customary, community-based rights as opposed to individual rights).

-- Sui generis systems

Several models of sui generis legislation have been proposed and enacted by various countries. They demonstrate the heterogeneity of developing country intellectual property requirements for best preserving the interests of their populations. Specifically, these systems depart from (but do not conflict with) TRIPS in one of the following manners: they explicitly recognize collective or community rights; they establish different criteria for different product forms and services (separate systems for traditional knowledge, plant varieties, artistic creations) and they define rights in terms of remuneration and benefit sharing. TRIPS provides the flexibility for countries to adopt appropriate sui generis systems depending on their specific needs.

TRIPS 'PLUS'

Apart from TRIPS, there are several other regional and bilateral IP agreements that have troubling implications for human development. Many of these agreements are more stringent than the TRIPS Agreement and considerably diminish the room for maneuver for developing countries. Countries that have signed onto these agreements cannot take advantage of the flexibilities in TRIPS discussed above either.

-- Stricter IP provisions that set the wrong precedents

These agreements go beyond TRIPS in terms of IPR protection. The revised Bangui Agreement of 1999, for example, recognizes regional exhaustion of IPRs and therefore restricts parallel importing to countries that are part of the agreement. The Bilateral Free Trade Agreement between the US and Jordan limits the scope of compulsory licensing to remedies against anti-competitive practices, for non-commercial, governmental use, or in the case of an emergency when the licensee is either a government agency or a government designee, and for failure to meet working requirements (where imports are included in the definition of 'working'). By signing these treaties, developing countries are restricting their policy options without adequate evidence on the impact of these higher standards on human development outcomes.

Other such bilateral agreements that go beyond TRIPS include US agreements with Cambodia, Ecuador and Singapore; EU agreements with Morocco, Palestine and South Africa; and the Swiss-Vietnam treaty. These agreements are setting a dangerous precedent. By committing to higher standards of protection than mandated under TRIPS, these countries become unable to take advantage of the flexibilities offered under TRIPS. Any attempts to make TRIPS more human development friendly, therefore, will be meaningless for these countries unless they can ensure that their commitment to TRIPS overrides their bilateral and regional commitments.

-- Harmonization of intellectual property laws

Some agreements seek to harmonize intellectual property laws; the EU-Tunisia agreement requires Tunisia to join the Budapest Treaty by 2002 and binds it to UPOV 1991 as the model sui generis system for protection of plant varieties. The EU-Bangladesh Treaty obliges Bangladesh to make 'best effort' to join UPOV 1991 by 2006. The US-Vietnam treaty has similar conditions on UPOV and extends protection to encrypted program-carrying satellite signals apart from the IPRs covered under TRIPS.

SETTING THE AGENDA

TRIPS is clearly the most controversial of WTO agreements because of its scope and nature. Despite its exceptions and flexibilities, it has the potential to restrict access to medicines, technology and knowledge, with disturbing implications for indigenous knowledge and food security. An alternative to TRIPS, either within or outside the ambit of the WTO, ought to be debated at the highest level. In the interim, TRIPS can be made more development friendly through key changes to the design of the agreement and in its interpretation and implementation.

-- Alternative models of intellectual property rights

The relevance of TRIPS is highly questionable for large parts of the developing world. Its asymmetric nature makes it unsuitable to be included in a trade bargaining and negotiation context. While benefits can arise from protecting intellectual property, certain preconditions need to be in place before the gains can be expected. The underlying issue is deeper: countries at low levels of human and technological capability cannot benefit significantly from TRIPS. The experience of developed countries has also shown that strong patents follow industrial development rather than lead it. In Pareto optimal welfare terms, the preceding analysis shows that developing countries are not likely to be even at least as well off under TRIPS as they would be outside it. From a development perspective, therefore, TRIPS should be revisited as a required agreement in the multilateral trading regime.

While there has been substantial thinking on alternative models for intellectual property in the last few decades, clearly much more research is required to generate models relevant to the development context of different countries. A related question is how the intellectual property discussions, even if they are to remain a part of the WTO, can be delinked from trade sanctions. This is particularly important because WIPO, which should be the appropriate organization for this function, has an extremely narrow and technical mandate that restricts it to 'promoting protection'. It needs to do much more to help countries design development friendly regimes. Member nations need to begin dialogues to replace TRIPS -- and equivalent top-down schemes of substantive IPR harmonization -- with alternate intellectual property paradigms that are unrelated to trade sanctions and may include, but are not restricted to:

* An intellectual property ladder, where more stringent laws apply to countries at higher levels of income and technology use, and countries progress from one level of protection to another with improvements in their Human Development Index/Millennium Development Goal indicators.

* A TRIPS-minus model that significantly reduces the length of protection and scope of coverage and increases national decision-making authority on standards and coverage of protection while maintaining a minimalist agenda at the international level.

* An IPR regime with specific opt-out clauses for certain kinds of property rights and specific industries.

* Separate IP regimes for collective and individual rights.

To strengthen the case for replacing TRIPS, there is an urgent need to undertake extensive research and monitoring programmes to measure the potential welfare implications of TRIPS (and alternative intellectual property regimes) on different sectors and segments (consumers, small farmers, large entrepreneurs) of the population.

Admittedly, replacing or fundamentally altering TRIPS will not be easy or sudden, given the differences in national positions on this issue. However, it is critical to begin serious thinking about it at an inter-governmental level.

In a parallel vein and in the interim, governments will need to use TRIPS as

best as they can to further their social and economic development objectives. This requires modification in the way the agreement is interpreted and implemented.

-- Interpretation and implementation of TRIPS

There is little indication, apart from the Doha Declaration, that TRIPS has really been interpreted in the true spirit of balance between rights holders and users. From a legal perspective, the generalist language employed in TRIPS has worked both ways for developing countries; it has allowed for flexible interpretation, but also left the text open to dispute. The latitude in the text requires tremendous specialized legal capacity, which most developing countries lack. Moreover, the experience of Brazil has shown that efforts to use this flexibility provoke strong opposition from the developed world.

Finally, the enforcement mechanism -- the cross-retaliation mechanism of the dispute settlement process -- takes little account of differences in capacity to retaliate. This is costly and harmful for developing countries. Exceptions are limited and specific, and the burden of proof falls on the alleged violator. In practice, this considerably reduces the power of the exceptions.

TRIPS has not been implemented fully in most developing countries, and its future will depend on the decisions taken by the dispute settlement body, which will determine to what extent the agreement is implemented in line with the social and economic development objectives of member nations. On a priority basis, member nations need to:

* Facilitate implementation of exceptions to rights. Compulsory licensing procedures need to be simplified, made easier to invoke and made broader in scope. Human Development Report 2001 specifies five features of a suitable legal structure (administrative approach, strong government use provisions, production for export, reliable rules on compensation and dispute demand disclosure), which should be used as parameters to determine the ease of implementation of articles 30 and 31. There is also talk of countries invoking broader exceptions, for example, with respect to research tools, life forms, particular technologies of interest to poverty reduction in developing countries and indigenous knowledge.

* Set the correct precedents in disputed cases. Much of the impact of TRIPS will depend on how the dispute settlement body interprets the agreement with reference to its social and economic objectives, the first test being the use of the Doha Declaration. Although the text is clearly ambiguous, the manner in which decisions will be taken will indicate the actual latitude that the agreement allows. The multilateral trade regime has a responsibility to ensure that interpretation is in line with human development concerns so that further disputes, retaliation and litigation are minimized.

* Create alternative protection regimes as allowed under TRIPS. Sui generis regimes to protect plant varieties and integrated circuits need to be designed as appropriate, and there should not be multilateral pressure to promote a particular system (such as UPOV 1991) in countries in which it is not appropriate.

* Under the mandated review mechanism, extend the transition periods for compliance for all developing countries, not just the least developed countries. In addition, strengthen articles 67 and 66.2 to establish timebound, concrete and measurable parameters for technical assistance and technology transfers in accordance with the development needs of different countries.

-- Additional policy interventions

Finally, no multilateral intellectual property regime in itself can guarantee that human development objectives will be met. Active government policy intervention is needed in:

* Designing national legislation that addresses human development needs in terms of access to health care and the resources and opportunities for technological progress.

* Ensuring that products are priced to market and, irrespective of their patent status, are affordable to consumers. Part of this strategy should aim at encouraging growth of the generic drug industry and promoting a competitive market structure.

* Investing in research and development, which is critical to developing technological competence. Results of publicly funded R&D, in developed and developing countries, including patents, could then be voluntarily licensed to producers in developing countries.

Any multilateral agreement should reflect a balance of interests among countries and their constituents. An agreement will not be sustainable if the interests of one or more constituents are under- or overrepresented. TRIPS as well as any equivalent system of top-down harmonization needs to better balance the interests of its largest constituency: the poorest sections of the world population. Until the TRIPS Agreement allows their concerns to be adequately addressed -- or, at the very least, not actively harmed -- it will run counter to its own stated objectives.

GOING FURTHER (compiled by GRAIN)

UNDP, "New study explores ways that trade can maximize development", Newsfront, 5 February 2003.
http://www.undp.org/dpa/frontpagearchive/2003/february/5feb 03/index.html

Chakravarthi Raghavan, "A report that riled the WTO, caused 'lost sleep' for UNDP chief", SUNS, 31 January 2003.
http://www.twnside.org.sg/title/5275a.htm