TRIPs, A Question of Balance

(IPRinfo 2/2005)
Dr. Daniel J. Gervais
Vice-Dean (Research)
Faculty of Law (Common Law), University of Ottawa

Everyone is in favour of balance. Being against balance is akin to supporting war, famine or poverty. But like so many buzzwords, the question which comes to mind is whether ”balance” actually has any useful meaning in making intellectual property policy.

”Balance” is not, contrary to what often reads in policy debates concerning intellectual property, a simple axis with rightsholders at one end, and users of intellectual property on the other. For one thing, there is no uniform categorization that holds up to serious scrutiny. All rightsholders had to find inspiration somewhere.

Creators and inventors draw, consciously or unconsciously, from the pool of existing literary and artistic creations, patents, scientific literature, etc. Even ”research-intensive” pharmaceutical companies carefully read each other’s patents.

No, balance is not a simple game of pulling covers to one side. Balance means achieving an optimal degree of protection, which appropriately protects and rewards creativity and ingenuity, thus providing a good incentive to continue, while not deterring others’ creativity and inventiveness.

This is true whether one takes a Lockean view of intellectual property (where one gets the fruits of one’s labour) or a more common instrumentalist/utilitarian view that intellectual property is necessary as an incentive for creators and inventors. Utilitarian theory would say that the level of protection must be adequate to reach the stated objective without endangering general welfare. In John Locke’s proviso, there must be enough left in the commons for others to create/invent.

If that is what balance means, then it can be assessed using several different tools. From an economic perspective, one may thus look for the level of intellectual property protection which is the most efficient. That is, however, a Herculean task. First, there are several issues that arise when deciding how efficiency will be gauged and measured in that context. Options include job creation in intellectual property sensitive industries, increase in foreign investment (FDI); increase in domestic R&D spending, reduction in piracy, etc.

How to measure ”good” or ”bad” results?
The metrics chosen will change the evaluation of the data of course. For example, a reduction in piracy may be viewed as good but it may or may not produce tangible, measurable gains. The unavailability of counterfeit luxury goods, for example, may not translate into increased sales of genuine articles, and in any case, not on a 1-to-1 basis.

Additionally, none of the options mentioned above produced clean results, and one would have to parse other relevant factors. For example, increase in FDI is also dependent on the general corporate and tax structure, the labour market, etc.
Even if a particular set of metrics can be agreed upon, one can still argue endlessly about the concept of efficiency. Would one adopt a Pareto-optimal model, where gains of one sector are sufficient, or Kaldor-Hicks, where negative impacts are acceptable provided they are compensable? Or using a raw cost-benefit model, in which case one would ask whether the country or region concerned will gain by, say increasing the protection of pharmaceuticals, knowing that it may drive consumer prices up and thereby increase health care costs?

Then assuming one can agree on metrics and the proper notion of efficiency, how can one isolate and implement changes? Would, for example, a 25-year patent on pharmaceuticals increase research? If so, why has it not been implemented? While there may be ”intuitive” (for lack or a better term) resistance to increased patent protection, I would argue that any decision to lower or increase protection should be based on credible economic analysis consonant with available empirical data.

TRIPs implementation requires careful analysis
As to the current situation, the policy dilemma is that current norms are embodied in a multilateral instrument that is unlikely to be rewritten in depth anytime soon, namely the Agreement on Trade-Related Aspects on Intellectual Property Rights (TRIPs).

Of course it can be argued that existing TRIPs rules were not for the most part elaborated based on the type of ex ante analysis just mentioned; and that ex post analyses of its impact in various countries have tended to produce mixed results. This probably means that if more refined analyses, in various countries and regions, with different industrial, social and cultural parameters, becomes available, there may come a time when those rules can be reshaped.

We may find that the optimal protection point varies from country to country based on such factors. But for the time being, TRIPs is a given member of the policy equation, a constant as it were, and an enforceable one at that (using the WTO Dispute-Settlement mechanism).

While TRIPs does establish a common denominator of protection, its implementation can still be subject to a ”balance” analysis. Arguably, TRIPs implementation should be a combination of a careful analysis of the proper intellectual property policy of a country or region (especially efficient economic use of its strengths) and use of the flexibility left in TRIPs to achieve this policy objective.

The determination of the most appropriate TRIPs-compatible legal framework must be combined with corresponding policies concerning government assistance programs, compulsory licensing or use in publicly-funded research where appropriate etc., as well as training.

One of the most striking problems of a number of developing countries is the relative absence of research on determining an adequate and comprehensive intellectual property policy to maximize the country’s growth, culturally and economically. There are, however, signs that this is changing, in countries such as Brazil, China and India for instance.

WIPO’s Development Agenda
Balance is also on the WIPO’s (World Intellectual Property Organization) agenda. A more ”balanced” approach to intellectual property regulation was adopted by Argentina and Brazil who put forward a proposal for the establishment of the development agenda for WIPO in August 2004 (Proposal by Argentina and Brazil for the Establishment of a Development Agenda for WIPO, Aug. 27, 2004, WIPO Document WO/GA/31/11).

The proposal was supported by a number of developing countries, as well as civil society and non governmental organisations.

After intensive negotiations, the WIPO General Assembly adopted a decision on a Development Agenda based on the proposal by Argentina and Brazil (and eventually sponsored by other members now known together as the ”Friends of Development Coalition”).

A discussion in the Standing Committee on patents was held in Casablanca (Morocco) in February 2005. A Statement issued at the end of that meeting underlined, inter alia, the ”importance of the continued active pursuit of work within WIPO on issues related to development and intellectual property robust, effective and actionable WIPO Development Agenda could emerge” (the Statement appears as an annex to a document entitled ”Future Work Program for the Standing Committee on the Law of Patents”, issued on March 7, 2005, bearing number SCP/11/3.).

The Standing Committee considered the Casablanca statement at a meeting to be held in June 2005 and WIPO plans to table a report on this issue and a proposed course of action by July 31, 2005. It should in principle be submitted for decision to the WIPO General Assembly in September 2005.

Bilateral Trade Agreements and Intellectual Property
Post-TRIPs developments have taken two diverging paths. While WIPO and others are talking about ”balance”, and possible differential treatment for developing countries, in bilateral discussion focussing on trade, discussion have tended to centre on higher levels of protection.

Indeed, while at the multilateral level TRIPs related development within the WTO, as well as the recent developments in WIPO just mentioned, have tried to be more responsive to the specific needs of developing countries, and are unlikely to lead to any new intellectual property rights or higher levels of protection, except perhaps in the area of traditional knowledge and geographical indications, recent intellectual property developments in bilateral and regional trade agreements mirror the so-called ”maximalist” approach, which is predicated on a perceived need to continually increase the level of intellectual property protection.

For example, recent US Trade Agreements export the substance of the Digital Millenium Copyright Act, a specific piece of legislation concerning the protection and circumvention of Technological protection measures (TPMs) that fits into the whole of the US Copyright Act, with its various safeguards, including constitutional protections stemming from the Bill of Rights.

DMCA-like provisions may soon be part of national legislations in Central America and Asia as something of a stand-alone legislative instrument. These provisions are also being negotiation in a number of other agreements as well as within the Free Trade Area of Americas.

This trend to regulate intellectual property rights through bilateral regimes may not be immediately threatening to the emergence of a balanced approach within WTO or WIPO, but such bilateral initiatives likely will have a significant impact in the long run and create a new baseline for future multilateral discussions.
Whether that baseline is in fact ”balanced”, perhaps time will tell.

**************
The TRIPs Agreement was negotiated as part of the Uruguay Round of Multilateral Trade Negotiations. In fact, the Agreement is an annex, namely Annex 1C of the Agreement Establishing the World Trade Organization. For a detailed negotiating history, see Daniel Gervais, The TRIPs Agreement: Drafting History and Analysis (2nd ed., London: Sweet & Maxwell, 2003).

Agreement on Trade-related Aspects of Intellectual Property Rights TRIPS (.pdf), 33 p.:
http://www.wto.org/english/docs_e/legal_e/27-trips.pdf

Share: