TITLE: World Bank calls for a fairer deal on patents and knowledge AUTHOR: Declan Butler --- TITLE: Urgent thinking required about development AUTHOR: Editors, Nature Magazine PUBLICATION: Nature Magazine, Vol. 395 DATE: 8 October 1998 SOURCE: MacMillan Publishers Ltd URL: http://www.nature.com WORLD BANK CALLS FOR A FAIRER DEAL ON PATENTS AND KNOWLEDGE By Declan Butler Developing countries which are unhappy with new international treaties tightening intellectual property rights (IPR) received unexpected support this week from the bastion of capitalism, the World Bank. In "Knowledge for Development", the 21st report in the bank's annual series on world development, the bank argues that stronger international IPR legislation risks "shifting bargaining power towards the producers of knowledge, and increasing the knowledge gap" between industrialised and developing countries. It called on developing countries to take a more proactive and hardline stance in international IPR negotiations. Traditionally the World Bank, established at a meeting of world leaders in 1944 as part of efforts to reconstruct the world economy after the Second World War, has focused largely on promoting economic development, for example through increased free trade. The new report identifies "knowledge" as a less tangible, but central, factor for improving health and living standards. "Knowledge can make the difference between sickness and health, between poverty and wealth," Lyn Squire, director of development economics at the bank, told a press briefing in Paris last week. Internet access alone will have a revolutionary impact on Third World development, Squire predicted. And the report warns that the vertiginous growth in global knowledge creates the risk that poor countries may fall further behind. The 1994 agreement on trade-related aspects of intellectual property rights (TRIPS) has created a global regime which sets minimum standards for IPR protection. It also sets, for the first time, an international legal mechanism, through the World Trade Organization's dispute settlement procedure, to sanction countries which fail to abide by the legislation. The report points out the need to strike a balance between providing incentives for generating new knowledge, and creating conditions for its dissemination. A bank study of drug and chemical companies in the United States, Germany and Japan found that more than a quarter felt that IPR protection in developing countries was too weak to allow investment or technology transfer. But it warns that there is now a risk of excessively strict IPR adversely affecting follow-on innovations that draw on patents, and actually slowing down the pace. Of particular concern is the current tendency for patents to cover not just products but broad areas of technology, in particular biotechnology. "So many industrial-country firms are acquiring strong IPR positions, often covering fundamental research tools as well as marketable products, that it may prove hard for new firms and researchers to elbow into this new global industry," says the report. Furthermore, the report argues that IPR is not an appropriate mechanism to stimulate research in many areas of health and medicine, such as AIDS or malaria, where, as it points out, the "social return" of an innovation -- to all those benefiting from it -- far exceed the returns to investors. Here, it says, public authorities have a responsibility to subsidize research or provide financial incentives to the private sector, as recently proposed for development of antimalarial drugs (see Nature 395, 417-8; 1998). At the same time, the bank points out that such concerns need to be balanced against the advantages of stricter IPR. These include greater access to foreign markets and technology for countries which enforce international IPR standards, compared with those whose lack of legislation deters investors. The report proposes no solutions, but calls on developing countries "to negotiate internationally for intellectual property right regimes that give adequate consideration to their urgent need to narrow the knowledge gap," while maintaining incentives for knowledge producers to invest in research. They should also keep up to speed on "new issues for negotiation, such as biotechnology and information technology". In a bid to practice what it preaches, the bank -- which agreed to loans of $28,594 billion in 1998 compared with $19,147 billion last year -- has now set itself the objective of becoming a clearing house for information on development. It plans to make its vast inhouse expertise and archives, such as staff reports on various developmental issues, available on the Internet by 2000. Developing countries need to be assertive in defending the terms under which companies are given access to their resources, says the report. In 1990, world sales of medicines derived from plants discovered by indigenous peoples amounted to $43 billion, with hardly any financial return to these groups (see Nature 392, 535-540; 1998). Declan Butler Nature - Vol 395 - 8 October 1998 p 529 © Macmillan Publishers Ltd URGENT THINKING REQUIRED ABOUT DEVELOPMENT A report from the World Bank has highlighted the dangers of a growing knowledge gap between rich and poor nations. The issue needs to be placed at the heart of development aid strategies. [Editorial] The philosopher of science Francis Bacon put it succinctly at the dawn of the scientific revolution when he wrote, "knowledge is power". The World Bank put forward the same idea in a slightly different way this week when it devoted its annual report [1] on world development to the central role of knowledge in the development process (see page 529). Its interpretation of the word is somewhat broader than Bacon's; while the latter was speaking primarily of what we would now call 'natural science', the bank uses the term to embrace both technical know-how and knowledge of attributes, ranging from the quality of a worker to the credit-worthiness of a company. But its main theme is surprisingly similar: "knowledge is development". The message is an important one to remember at a time when the global economic system is facing its severest crisis since the Second World War. Ironically, the bank's conclusion is based directly on those East Asian economies whose current problems have been at the heart of this crisis; comparing their previous growth rates to that of others, such as the Soviet Union, better endowed with natural resources, it suggests that the reason for their previous success was an ability to work not harder but more smartly. Being able to generate useful knowledge, or take advantage of others', has become almost by definition the key to survival in a knowledge-based global economy. In one sense, that isn't new. Western nations, many taking a lead from the Asian economies, have long accepted the need to focus on the generation of scientific knowledge in a way that such efforts are relevant to underlying social and economic needs (see, for example, page 534). But the central role of knowledge, and particularly scientific knowledge, in economic and social development has yet to be properly integrated into the policies of those global institutions responsible for the welfare of developing nations -- or indeed into the policies of such nations themselves. Intellectual property Take, for example, the question of intellectual property. Almost everyone accepts that without proper legal protection for innovative ideas, the private sector would not invest in the research needed to produce them, as it would lack the means to secure a profit on its investment. But writing the international rules in a way that those who benefit from them most are those already the most economically powerful is not necessarily in the best interests of those who are excluded. Indeed, as the World Bank report points out, the current rules may in fact be hindering the technological development of developing countries. Helping poor countries make the transition to a knowledge-based economy is a tough challenge when the industrialized world increasingly holds all the cards in the form of patent portfolios on which are based not only individual products but whole swathes of technology. A similar recognition in the limitation of the market lies behind the recent acknowledgement by the World Bank and other international organizations of the failure of market forces -- and with it the patent system -- to encourage the investment needed to develop antimalarial drugs (see Nature 295, 417; 1998). Again, this has highlighted the broad need for more innovative approaches to investment in research and development into Third World problems, including in this case the careful application of that anathema of free marketeers: public interventionism. Sustainable development A meeting of the G7countries last weekend emphasized the need to think innovatively about global economics in the light of the current crisis. Less dramatically, perhaps, new approaches are required to the role of science and technology in development. It is not merely a question of pumping technical aid into the poor nations of the world; too often this aid fails to take root, and its impact evaporates with the departure of Western technical experts. Nor is it a question of leaving the choice of technological priorities to the market-place. For the World Bank itself, 'sustainable capacity-building' has now replaced infrastructure projects, such as financing big dams and bridges, as the focus of its development strategy. But there is an urgent need to understand better just what sustainable development requires of international science and technology networks -- whether academic, government or private. Next year sees a number of important meetings at which such issues will be on the table, and at which developing countries will have the opportunity to push their case for better terms adapted to closing rather than widening the knowledge gap. One is the renegotiation of the 1994 Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), which requires members of the World Trade Organization to abide by agreed standards of patent and copyright protection, while the poorest developing countries have been given until 2006 to draw their national laws into line. A second opportunity will be the World Science Conference being organized by Unesco in Budapest next May. It is important that this conference does not become trapped in an agenda devoted to science as a primarily cultural activity or the purely ethical issues raised by biomedical research, at a time when narrowing the North-South knowledge gap is the most pressing social and economic aspect of science requiring attention. The World Bank's report has focused a welcome spotlight on the need for international organizations -- including the bank itself -- to give the issues of technology transfer and the central role of science and education in development the same attention as free trade issues have commanded in the past. Ultimately, what may be needed is a new set of ground-rules for research and innovation between the industrialized and developing world. Such an initiative would be particularly timely, given that foreign investment in developing countries is likely to become one of the major victims of the current world financial crisis. [1] World Bank, "World Development Report 1998/99: Knowledge for Development" (Oxford University Press). Nature - Vol 395 - 8 October 1998 p 527 © Macmillan Publishers Ltd [The World Bank Development Report 1998/99 may be downloaded in PDF format, or ordered by mail, from http://www.worldbank.org ]