This chapter is a tribute to Pedro Roffe who has been a central figure throughout the technology transfer negotiations at the United Nations Conference on Trade and Development, and has since then, worked intensely on numerous questions of balance in the global intellectual property rights system. This chapter is as personal as it is scientific to me: it reminds me of fond mutual interactions, professional debates and thought exchanges on technological learning, transfer, development, dissemination and the role of intellectual property rights that I have shared with him. The chapter begins by tracing the technology transfer debate since its inception to analyze its relationship with the protection of intellectual property rights. Tracing the developments from 1948 to the adoption of the Agreement on Trade Related Aspects of Intellectual Property Rights in 1995, it identifies two distinct approaches—the developmental approach, as put forward by several developing countries in the 1960s and the welfare approach, which positions IPRs as a reward for inventors for the creation of socially useful information. It argues that the failure of the Code, the inception of the TRIPS Agreement and the subsequent ratcheting up of intellectual property norm setting through free trade agreements (FTAs) that provide TRIPS-plus provisions, are all symptoms of a wider malaise: the persistent (and worsening) lack of balance in the global intellectual property system. An analysis of this wider phenomenon, which the chapter terms the “welfare bias” in the current intellectual property rights system, shows that it is spreading beyond the traditional North-South divide to skew the dividends of innovative activities worldwide. The chapter provides empirical evidence to show how patent reforms may cement returns from innovative activity disproportionately in some contexts to argue that there is a need to re-conceptualize and revitalize the technology transfer debate in the context of the sustainable development goals (SDGs).
The author works at the United Nations Conference on Trade and Development currently. She is also adjunct Professor at the University of Aalborg, Denmark. This chapter contains her personal views.
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Article 11(1) states thus: “Progressive industrial and general economic development, as well as reconstruction, requires among other things adequate supplies of capital funds, materials, modern equipment and technology and technical and managerial skills. Accordingly, in order to stimulate and assist in the provision and exchange of these facilities: (a) Members shall co-operate, in accordance with Article 10, in providing or arranging for the provision of such facilities within the limits of their power, and Members shall not impose unreasonable or unjustifiable impediments that would prevent other Members from obtaining on equitable terms any such facilities for their economic development or, in the case of Member countries whose economies have been devastated by war, for their reconstruction; (b) No Member shall take unreasonable or unjustifiable action within its territory injurious to the rights or interests of nationals of other Members in the enterprise, skills, capital, arts or technology, which they have supplied.”
United Nations (1964).In economic thought, there has long been a debate on whether a property rights-based approach that acts as an incentive to innovate through the grant of temporary monopoly rights to the inventor (that restricts competition), is better than the elimination of all barriers to free competition in order to promote innovation, see Schumpeter (1942), pp. 84–85.
WIPO (2009), paras. 41–46. See for example, Chang (2002), Amsden and Chu (2003).As considered in this paper, the developmental approach to intellectual property is broader but encompasses the human rights considerations espoused in recent analyses of IPRs, which look at how human rights norms and frameworks can be made to bear upon particular issues, such as access to medicines, access to information, etc. See for example, Brennan et al. (2013).
The review of major policy milestones also reveals that while developed countries explored stronger IPRs protection, a number of developing countries began to experiment with new legal and institutional mechanisms to achieve similar goals. The Andean Group of countries, for example, adopted a common set of policies for the original six countries. These policies were based on the central concept that a common regime was required on foreign direct investment (FDI), industrial property and transfer of technology. The Indian model included guidelines on foreign collaboration agreements to regulate technology transfer transactions. Other countries that enacted similar laws included Argentina, the Dominican Republic, Ghana, Nepal, Nigeria, Mexico, Portugal, Spain, Yugoslavia, and Zambia (see also Patel et al. 2001). See Gehl Sampath and Roffe (2012), Table 1 on pp. 9–11.
In this period, although developing countries managed to resist revisions to the Paris Convention, the Stockholm Protocol that watered-down copyright protection to address the needs of developing countries began highly untenable and was reversed in 1971 by the Paris revisions to the Berne Convention, in coordination with the Universal Copyright Convention. For an extensive review, see Okediji (2003), p. 187.
Okediji (2003), p. 318. In the same context, May (2013), p. 17, notes: “When thinking about the incidence of property and property rights there are two issues that need to be explored. First, there is the actual appearance of property as an institution which protects certain interests in society in a specific manner. And second, and by no means less important, there is a parallel history of the ways in which the institution of property has been legitimized and justified within the social relations in which it appears.”
At the start of the Code negotiations, the original intent of developing countries was to have a binding treaty on the topic. During the course of the negotiations, developing countries eventually accepted that the Code would be a set of guidelines on the topic of technology transfer.
Reichman (2008), p. 79.Article 7 provides that: “The protection and enforcement of intellectual property rights should contribute to the promotion of technological innovation and to the transfer and dissemination of technology, to the mutual advantage of producers and users of technological knowledge and in a manner conducive to social and economic welfare, and to a balance of rights and obligations.” Article 8(1) provides that: “Members may, in formulating or amending their laws and regulations, adopt measures necessary to protect public health and nutrition, and to promote the public interest in sectors of vital importance to their socio-economic and technological development, provided that such measures are consistent with the provisions of this Agreement.”
Anderson (1998), p. 660. Dreyfuss and Frankel (2015), p. 559. See discussion in Dreyfuss and Frankl (2015).In addition to recourse to the WTO Dispute Settlement Body, the TRIPS Agreement obliges members to provide for extensive domestic enforcement of IPRs.
See Articles 3 and 4 of the TRIPS Agreement. Okediji (2014), p. 209.A few important exceptions abound. Ginarte and Park (1997) and Park (2008) outline an index of patent rights that in conjunction with other variables, offers the possibility to measure the welfare effects of patents in different industries.
See for example Cottier (2017a), Correa (2000), Matthews and Correa (2011), Abbott (1989).Dreyfuss and Frankl (2015) argue in this context that a predominant interest in the TRIPS Agreement was the possibility for inventors to enforce the same level of protection in all countries in order to ensure that profits remained amongst the original design and equipment manufacturers of global value chains, p. 557.
See Footnote 14. See for example Matthews and Correa (2011). See for example, Slade (2011).Cottier (2017a), p. 19 notes: “These objectives, however, are locked in by treaty law and language and bound to respect the essence of intellectual property rights.”
See again, Cottier (2017a).In the pharmaceutical sector for example, the grant of spurious patents through national standards that allow local firms to evergreen their patents secures them longer periods of monopoly on the national market and also enables them to fight for similar rights abroad.
Gehl Sampath and Roffe (2017).In contrast with the EU, the US has followed a clear strategy of aligning the regulatory regime of the partner countries in FTAs with those of its own. See Gehl Sampath and Roffe (2017) for a detailed discussion.
See for example, Watal (2001), Drahos (2002), Cottier (2017b).Gehl Sampath (2018). The TPP and US-Korea Free Trade Agreement (KORUS) for example, both have extensive IPRs chapters, in addition to references to IPRs in other chapters such as investment, e-commerce and enforcement, among others.
Cottier (2017a), p. 21.See Correa (2017). This does not take into account any new changes introduced by the new Comprehensive and Progressive Agreement on the TPP (the CPTPP or the TPP 11) that has been agreed upon by the Member countries of the TPP in November 2017.
On this point, it is debatable whether all countries—especially developing countries—need the same kind of checks and balances that exist in major trading economies of the world, or whether they need more stringent measures to safeguard their local economic interests.
Roffe (2014), p. 25.Noting the same, Roffe (2014) discusses the case of US-Peru Free Trade Agreement where the said situation was the case and Peru underwent a period of uncertainty and domestic law revisions to meet the standards of its FTA partner.
For example, Singapore-Australia, Thailand-New Zealand, the TPP, South-Korea-Singapore are all FTAs that contain regulatory templates on IPRs, enforcement and digital trade. See also Baldwin and Jaimovich (2012) for a general exposition.
Abbott (1997) notes that the TRIPS Agreement became an agenda point in the WTO when it became clear that the World Intellectual Property Organization (WIPO) was unable to shepherd revisions to the Paris and Berne Conventions to accommodate globalization.
Buckman (2005), p. 94, for instance, quotes an interview with a Chief Executive of Pfizer stating “…[o]ur combined strength allowed us to establish global private sector/ government network to lay the ground for what became TRIPS.”
Frankel (2011), pp. 39–40 notes: “The fundamental conflict between trade liberalisation and intellectual property barriers lies awkwardly within the TRIPS Agreement framework. The failure of the TRIPS Agreement to deal effectively with parallel importing is a stark example.”
See for example, Anderson and Gallini (1998). Frankel (2011), p. 36. The Economist (2016a). See Lemley (2002). Kur and Grosse Ruse-Khan (2011), Cottier (2017a).Bessen and Meuer (2008) make the point in the context of the US, arguing that IPRs have become subject to regulatory capture by large companies dominating the knowledge-intensive industries, with a view to raising institutional barriers to entry and thus defend or expand their market power.
See Tirole (2015).Bessen (2016) argues that the rising corporate profits are also due to corporate success at political lobbying.
The Economist (2016b).Market concentration, in this context, can be simply denoted as a share of the market held by the top firms in that particular sector.
Gehl Sampath and Park (2019) (forthcoming). A cross-section of the evidence generated by the analysis has been presented in UNCTAD (2017).
The analysis uses data from data sources on global companies. Data for US foreign affiliates is taken from the US Bureau of Economic Analysis, which conducts annual and benchmark surveys of US multinational parent companies and their foreign affiliates around the world (BE-10 and BE-11 surveys), as well as annual and benchmark surveys of US affiliates of foreign MNCs (BE-12 and BE-15 surveys). For a guide, see https://www.bea.gov/surveys/pdf/a-guide-to-bea-direct-investment-surveys.pdf. Accessed December 10, 2017. The second is Thomson Reuters Eikon and Datastream, which provide data on private and public companies, with headquarters around the world.
For market concentration trends in these sectors, see Bouhia (2018) (forthcoming). For a discussion on the reliance of patents in these sectors, see Ivus et al. (2016).
Sectors are identified by four-digit NAICS codes (2002 version). ICT includes semiconductors, electronics, hardware and software. Given the relatively small number of US pharmaceutical companies’ affiliates in the developing world, we pool the pharmaceutical firms with the non-pharmaceutical chemical firms.
Park (2008). The Patent index is the unweighted sum of five separate scores for: coverage (inventions that are patentable); membership in international treaties; duration of protection; enforcement mechanisms; and restrictions (for example, compulsory licensing in the event that a patented invention is not sufficiently exploited).
See footnote 67. Although ideally, profitability data for US MNC foreign affiliates in Brazil, India and China would have been better for this analysis, given its unavailability, sales per worker thus provide a second-best approximation of profitability performance.
These results could not be discussed here at length. See Gehl Sampath and Park (2019) (forthcoming) for full details of the econometric model, estimation and results.
For the entire empirical analysis, see Gehl Sampath and Park (2019) (forthcoming).India has been highly cautious about IPRs protection beyond what is contained in the TRIPS Agreement, whereas China’s patent system has several specificities, including that utility models are widely used in China, which are more easily registered than invention patents that take anywhere between 3 and 5 years to register on an average. China also does not recognize designs unless they are registered as design patents in which case a protection of 10 years is granted (as opposed to 25 years in the EU).
See Council of Economic Advisors (2016). See WIPO (2017), Thun and Sturgeon (2017).See De Vries et al. (2017) who find, in a study of 4703 start-ups in the US, that in heavily concentrated industries characterized by higher barriers to entry and greater technological investments, start-ups rely on patents as their initial IP strategy, whereas in other sectors where this is not the case, they begin by filing trademarks.
The 3D printing industry, for instance, is rather concentrated with a handful of firms, where 3D Systems Corp (NYSE: DDD) and Exone (NASDAQ: Xone) are in the lead, as is the case of robotics where most of the companies are situated in the industrial economies (see Gehl Sampath (2018)). For an account of how concentrated the robotics market is, see Keisner et al. (2016).
A good example is the increasing emphasis on e-commerce in FTAs, and the important role played by IPRs in the development of the e-commerce industry. New e-commerce applications, such as the Internet of Things require multiple layers of technologies to interact for the creation of applications where many patents coexist potentially and there may be a number of other IPRs at play as well.
In contrast, the Agenda does not mention IPRs except in the context of access to medicines and the Doha Declaration on Public Health.
