| Module 1 Basic Concepts of Intellectual Property RightsR. Silva Repetto and M. Cavalcanti Legal Office |
To review the general principles and notions governing Intellectual Property Rights (IPR) and the differences between copyright and industrial property. The relationships between IPR and trade, and between IPR and plant genetic resources, are emphasized. Positive and negative implications of intellectual property protection are identified and the current debate between the South and the North of the world with respect to IPR is briefly described.
1.1 Introduction
1.2 Means of protection and categories of IPR
1.3 IPR and their relation with trade
1.4 IPR and their relation with plant genetic resources
1.5 IPR and the North-South debate over plant genetic resources
Balancing private and public interests in intellectual property protection
Humanity has always relied on technological know-how derived from intellectual performance. The incentive for development may be viewed as an inherent characteristic of human nature. Where economic and financial interests interfere, this spirit for innovation is substantially conditioned. Where society is based on economic structures, financial success determines the main interest for the development of new technologies; the high costs of development, usually inherent to inventive success, make this inevitable. Where this is not valid for the inventor, it undoubtedly is for his promoters.
It is implied by this scenario that existing know-how is a valuable asset. Where there is no means of protection for innovating technology, it is exposed to exploitation by any third party. There is no incentive to invest funds and efforts for new technologies where there is the opportunity to exploit results elsewhere available. High costs of development are eventually deemed unnecessary where low-cost reproduction leads to the same results. This represents a substantial deterrent for research and development in a market economy. This is why Intellectual Property (IP) has been created as a means of protection and reward for inventiveness.
On the other hand, there are public use interests that should be considered in developing IP legislation. Innovation is essentially a public good. It is a key task for authorities establishing means of protection for IP, to find a sustainable balance between these aspects.
This module covers the following aspects:
On the basis of the concepts set out above, IPR have been developed in several countries and in manifold forms. Rights are accredited to persons over the creations of their minds. IPR give the creator an exclusive right over the use of her/his creation for a certain period of time within a certain territory, normally that of the State recognizing the protection.
Copyright
Intellectual property legislation customarily recognizes two main categories of protection. One category of rights consists of copyright and rights related thereto. These are mainly concerned with the rights over the creations of people's minds, over the expressions of their thoughts (i.e. the rights of authors over their literary and artistic works, the rights of programmers over their computer programmes, the rights of composers over their musical compositions, etc.).
The development of new methods of propagation for intellectual output has led to the necessity to extend protection as to the subject-matter in question. Copyright and related rights are therefore likewise extended to producers of phonograms and broadcasting organizations and any similar products. In any case, the main social purpose of protection of copyright and related rights is to encourage and reward creative work and to assure its equitable and sustainable exploitation.
Industrial property including trademarks and geographical indications
The other category of IPR, namely industrial property, can usefully be divided into two main areas. The first area can be characterized as the protection of distinctive signs, in particular trademarks and geographical indications. The protection of such distinctive signs aims to stimulate and ensure fair competition and to protect consumers, by enabling them to make informed choices between various goods and services. Within a constantly expanding market where consumers are submitted to a broad quantity of different products, distinctive signs ensure distinctness of products.
A second area of industrial property is protected primarily to stimulate innovation, design and the creation of technology. Inventions (protected by patents), industrial designs and trade secrets fall into this category. The social purpose is to provide protection for the results of investment in the development of new technology, thus giving the incentive and means to finance research and development activities. Such intellectual property regimes also facilitate the transfer of technology in the form of foreign direct investment, joint ventures or licensing.
While the basic social objectives of intellectual property rights remain those outlined above, it should also be noted that the exclusive rights granted are generally subject to a number of limitations and exceptions, aimed at fine-tuning the balance that has to be found between the legitimate interests of right holders and users.
International IPR policy coordination is likely to imply a change in global trade relations. The demand for general legal protection against unfair imitation of creations, inventions, marks and names has to be understood as a product of the commercial revolution. That demand has swollen immensely with the development of modern advertising and large-scale retailing.
Protection against counterfeit and pirated copies
An adequate protection of IPR reduces trade distortions and barriers to international trade, in particular trade in counterfeit goods and pirated copyright goods. IPR give the framework for a free and fair competition. They also protect consumers since it is thanks to IPR that consumers are able to make informed choices between the various goods and services available.
IPR support creativity by being the means through which imagination, ability and inventiveness are rewarded. IPR promote the use of creations, inventions, expressions of ideas and distinctive signs to create wealth, through their application in trade, industry and culture development.
Encourages exports and technology transfer
IPR favour exports and facilitate technology development and transfer since they encourage investment and at the international level they enforce the position of exporting industries.
Measures and procedures to enforce IPR however should not themselves constitute barriers to legitimate trade through practices of unfair competition, restriction of trade and international transfer of technology, etc.
Provides incentive for private investment in innovation
Knowledge that can be classified as innovative typically implies high research and development costs. The reason why industries undergo such investments is the expectation of a technological advantage in relation to other market competitors and, as a result thereof, higher profits.
Given the ease of reproducing IP-protected goods, this objective might be severely endangered. If investors are not given a means to protect their results and recover their costs, the development of new technologies will be retarded.
IPR are considered a reliable mechanism for recovering investment. The inventor/investor is thereby accredited a "monopoly-like" position as to the invention, permitting exclusive exploitation, i.e. precluding others from it. This results in the establishment of a safe market position, assuring the yield to its promoter and creating an incentive for private investment in innovative technology.
IPR are a matter of national jurisdiction. A literary or artistic work, or an invention, is protected only in the country where the relevant IPR has been granted. If a company is doing business in many countries, it is compelled to apply for protection in all those countries. If this is not the case, each transaction, which crosses borders, bears the risk of counterfeiting or piracy in absence of remedies. This scenario represents a substantial deterrent for any international trade involving innovative knowledge, eventually impeding a sustainable technology transfer between States.
Notwithstanding the positive connotations of IPR, some negative effects are inevitable. Particularly governments of developing countries express doubts about the introduction of a strong international IPR regime in the framework of negotiations on mutual IPR policy.
Raises costs of technology acquisition to developing countries
Developing countries frequently base their economy and scientific research on the employment of foreign basic technology imported from industrialized countries. Both areas may be negatively affected by strong IP protection. The granting of the respective rights allows the inventor to receive high economic rents for the use of the invention. This results in higher end-product prices and leakages from the domestic economy in the form of royalty payments, license fees, etc.
Likewise, subsequent innovation will be deterred by unaffordable foreign basic technology. Companies holding IPR will see their capital value rise and will be in a position to buy out competing firms to consolidate their market positions1. Industrial innovation eventually becomes a developed country monopoly countervailing the purpose of technology transfer, i.e. the widespread diffusion thereof.
Damages basic scientific research
Other problems may be encountered where scientific institutions (e.g. universities) are confronted with IPR regimes. In many countries, any advanced disclosure of an invention, e.g. by publication, precludes patentability and thus any means of protection2. Strong IPR thus creates an incentive for confidential handling of innovative knowledge and the development in several scientific fields would be adversely affected by such a policy. Knowledge share or exchange is of substantial importance for technological innovation in several fields of public relevance (e.g. pharmaceuticals, medicine, surgery, agriculture etc.). It becomes therefore a substantial task for IPR policy to avoid such side-effects.
Distorts technological choices
The introduction of strong IPR may also result in a focusing of efforts on only economically valuable knowledge. This would eventually result in neglecting several technological fields, causing a "market-niche development"3.
Need for detailed case studies on IPR impact on growth
It is difficult to make predictions as to the nature of IPR-related implications. Defining the role of IPR or predicting any retarding or driving effect thereof on international trade relations or technological development is extremely difficult. IPR regimes are one of numerous circumstances varying over time and across countries correlated to economic structures. The impacts will vary where countries with different levels of development or diverging economic structures are subject to mutual IPR policy. Hence, there is a considerable need for specific national case studies on how various types of IPR systems affect growth.
Whether private incentives would be sufficient to generate the optimal flow of additions to the stock of scientific and technological knowledge must be considered. Practice shows that private contracts for technology transfer often succeed in sustainable knowledge exploitation coupled with sufficient public availability of innovative information. However, in the absence of special provisions, any result remains unpredictable and substantially subject to the equitable trade-related conduct of concerned parties. The abuse of strong market positions remains an inherent risk. Public intervention thus remains necessary.
The aforementioned aspects are of relevance in developing international and domestic IPR regimes.
At first sight, it might appear difficult to make a connection between IPR and plant genetic resources (PGR). However, the importance of biomaterials for industrial purposes is expanding significantly. The constantly expanding domains of the pharmaceutical, biotechnological and agricultural industries, establish a direct link between economic and environmental issues.
Possibility of gene typing made patenting possible
Genetic resources were originally recognized as the "common heritage" of mankind committing the global community to its preservation and sustainable exploitation and excluding living material from the concept of private property. This ideal reflected the impossibility of genetically defining plant and animal species, thus eliminating any possibility of specification, a prerequisite for protection under IPR. Developments in genetic science and technology now make possible the determination of single species, opening the doors for IP related to living matter. The ethical aspects of this issue are not discussed in this framework. However, the environmental impacts should not be neglected.
Advantages of patenting difficult to realize in gene-rich countries...
Biological and genetic resources, including plant germplasm, clearly have an economic value. Genetic resources comprise a vast reservoir of hereditary characteristics that have actual or potential economic use. The employment of IPR in relation to living matter may create a direct financial incentive for countries rich in genetic resources to protect, preserve and control the exploitation thereof, where the beneficiaries would be mainly developing countries. Although positive, this ideal is deemed difficult to achieve. A precise attribution of rights as to specific genetic material could result in complicated disputes between countries, especially where the origin of plant species or genetic material thereof cannot be defined within politically settled geographical areas (an issue peculiar to most plant species). Further complications arise searching for an unambiguous right holder, since genetic variability was mainly bestowed by community efforts or the interaction between populations. The granting of IPR related to genetic material implies the right to exclude others from its use, which may eventually act as an active deterrent to the exchange of genetic material within the global genetic pool, leading to unpredictable environmental consequences.
...while drawbacks in terms of loss of genetic diversity are evident
Industries relying on PGR undertake expensive research and development efforts to create technologies that allow the effective utilization of natural species' genes and to market the improved products that result. The same industries will thus make intensive use of any IPR regime in force to recover their investments. Applying IPR to plant genetic material could therefore result in constraining farmers to use specific, mostly genetically engineered seeds over longer periods. In this way, breeding alternatives for local and indigenous farmers and communities will be substantially limited to genetic material of artificial origin. This eventually results in increasing genetic uniformity in crops or other extremely commercialized plant species. The latter are alarmingly vulnerable to pests and diseases and genetic variability is important to ensure continued survival. Strong IPR systems eventually promote genetic erosion thus bearing fatal implications for the genetic pool. It is necessary to ensure sustainable exploitation and conservation of biological diversity when designing an IPR system4.
Due to the widespread diffusion of biotechnology within the different industrial domains, the industrialized world has massively increased its demands for IP protection of living organisms.
In fact, the genes of living organisms, i.e. PGR, are the basic "raw material" of the new biotechnologies. The 'Gene Rush' has thus become a new version of the old 'Gold Rush' in the scramble for future profits (Khor, n.d.).
According to the World Resources Institute, more than half of the world's plant and animal species live in the rainforests of the Third World and nowhere else (Kimbrell, 1997). The primary holders of this resource are thus found in the southern hemisphere, a situation with a massive potential for disputes between the gene-poor but technology-rich global north and the gene-rich but technology-poor global south.
Conflicts between indigenous resources and biotech companies
Many companies have been granted patents on domestically bred plants in developing countries and often also on indigenous knowledge about their use. This is occurring in many parts of the developing world, where the folk wisdom of indigenous peoples is used to locate and understand the use of medicinal plants and then exploit them commercially by systematically patenting the results. IPR are being claimed on plant species long used by Africans, pain killers used by Chinese, Andean crop species and traditional rice varieties nurtured by Indian farmers. Developing countries call that kind of patenting "biopiracy" (GRAIN, n.d.). Under their domestic legislation industrial breeders can get the commercial gains of exploited PGR without necessarily sharing them with the indigenous communities of the countries from which the genetic material originates.
Farmers and indigenous communities are protesting against IPR being granted on plants used for nutritional, medicinal or other functions, identified and developed by them. These communities also face the threat that in future they might become totally dependent on industrial supplies for vital inputs such as seeds.
Pros and cons of possible solutions to this conflict
IPR systems allow gene technology to be rewarded, but there is no equivalent legal system whereby the indigenous-related knowledge be rewarded. Several suggestions have been made by different proponents in an attempt to alleviate this controversy (Greaves, 1994). One approach is to protect the rights of indigenous farmer-breeders using industrial world IPR concepts and methods such as contracts, trademarks and patents. This faces great complications due to recurrent genetic likelihood in different plant species. In fact, because of the widespread seed sharing between neighbouring peoples, there may be little or no genetic differences between folk varieties of some plant species. The legal complication increases from the fact that the contributions are often made by entire communities and therefore cannot be attributed to distinct groups or even individuals. If a particular gene, critical to the success of a new variety, has origins in different areas, it is not possible to determine priority in recognition and reward. This could foster competition between communities in a region, raising potential for economy-based ethnic conflicts. Thus, current IPR mechanisms for indigenous peoples seem to be inherently unsuitable. Different procedures should be developed to recognize and reward community contributions to genetic resources.
A second approach is to balance private plant breeder's rights with farmers' rights defined as a group. For example, a fund could be created to be used to finance national or regional level genetic conservation and utilization programmes, particularly, but not exclusively, in developing countries, possibly involving some sort of technology transfer in exchange of the "raw materials" supplied.
A further suggestion is the antithesis to the first two in that it opposes control of crop genetic resources for profit, and aims to keep them freely available for everyone's use. This suggestion meets vigorous opposition from industrialized governments as conflicting with notions of private property, undermining economic interests of western industries.
An additional approach removes folk varieties from the same playing field as plant breeder's varieties and attempts to force the global community to recognize indigenous people's values as equal to those of the dominant society. This is deemed feasible by defining protection of natural, cultural and intellectual property as part of the overall protection of indigenous people's human rights. This implies protecting local communities' IP by asserting collective ownership of their land base establishing sovereign rights to manage their own traditional knowledge and resources. The sharing of these knowledge and resources with the rest of the world should therefore be on the condition that their rights to define and control their knowledge are internationally recognized and protected.
A last approach is that of bilateral agreements as a pathway for sharing of benefits. This would offer a case by case solution thus optimizing the management of the specific features in each situation. Notwithstanding this advantage, in the absence of legally determined conditions, the abuse of strong market positions would remain an inherent risk.
TRIPS Agreement leaves resolution of these conflicts open
The TRIPS Agreement will have the most decisive influence over national laws' approach to these questions. Still, the Agreement has an ambiguous language in the relevant clause on living organisms (Article 27.3). As intended by its architects, this provides a broad field of action. The outcome of the implementation and review processes will thus be of crucial importance for the recognition and solution of such disputes.
GRAIN (Genetic Resources Action International). Patenting, Piracy and Perverted Promises. ( available at www.grain.org/publications/reports/piracy.htm .)
Greaves, T. 1994. Intellectual Property Rights for Indigenous People, A Source Book, Society for Applied Anthropology, Oklahoma City OK, USA.
Khor, M. A worldwide fight against biopiracy and patents on life. Third World Network.
Kimbrell, A. 1997. Breaking the Law of Life: Raiding the Future, Patent Truth or Patent Lies? Vol.2, GAIA Foundation.
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1 http://www.iisd1.iisd.ca/trade/trips.htm.
2 Wallerstein, M.B., Mogee, M.E. and Schoen, R.A. 1993. Global Dimension of Intellectual Property Rights in Science and Technology, p. 7. Washington, DC, National Academy Press.
3 http://www.acephale.org/bio-safety/IoC-ipr.htm, p. 3.
4 Currently, existing IPR systems for the protection of new plant varieties require "uniformity" as one of the requisites for granting protection.
