Technology is a vital component of industrialisation and growth. Historically, countries have explored every avenue to obtain technology, imitate and/or reverse engineer and gradually develop indigenous capacity. It is only when they have reached a fairly sophisticated level of technological development that they can consider providing intellectual property protection.
THE well-publicised visit of the Director General of the World Intellectual Property Organization (WIPO) to Bangladesh from July 19-21 has revived a myth that intellectual property protection is good for Bangladesh's development prospects. Having been, for many years, at the forefront of Bangladesh's efforts at the international level to protect our interests on intellectual property matters, I find it important that the facts be placed before the public.
Definition of intellectual property
Intellectual Property (IP) refers to inventions, literary and artistic works, and symbols, images and designs used in commerce. IP is generally divided into two categories: (a) Industrial property, which includes inventions (patents), trademarks, industrial designs, and geographic indication of source; and (b) Copyright, which includes literary and artistic works such as novels, poems, plays, films, musical works, drawings, paintings, photographs, sculptures, architectural designs, etc.
For industrial property, the basic multilateral agreement is the Paris Convention; for matters of copyrights, the basic agreement is the Berne Convention. Bangladesh became a member of the Paris Convention in 1991, and of the Berne Convention in 1999.
WIPO administers several other agreements, many of which deal with specialised topics. The fundamental feature of these agreements is that they provide guidance for domestic legislation based on national needs; in case of dispute, the domestic courts rule.
The Trade In Intellectual Property Rights (TRIPS) agreement of the World Trade Organization (WTO), which came into force on January 1, 1995, changed the whole landscape of IP. It laid down detailed, compulsory, common standards for all countries, and handed over its enforcement to the dispute settlement system of the World Trade Organization (WTO). With one act, individual national interest and the primacy of domestic laws and courts was swept aside, in favour of the WTO system.
As per TRIPS agreement, developed countries were to apply the new rules
from 1996; developing countries from 2000 (except for product patents, which could be applied from 2005); and, LDCs to apply them from 2006.
However, in 2001, LDCs were able to get an extension of the transition period for pharmaceutical products till December 31, 2015; and, in 2005, an extension of the transition period for all other products till June 30,2013.
The special arrangement for the LDCs was obtained after the most difficult negotiations in the WTO, where Bangladesh led the negotiations on behalf of the LDCs. The option for further extensions has been left open. It will require considerable negotiating capability to obtain further extensions. IP application in selected countries
There are many lessons we can learn from history, particularly from the experience of the developed countries in the 19th century and the emerging economies of East Asia in the 20th century.
Between 1790 and 1836, as a net importer of technology, the US restricted the issue of patents to its own citizens and residents. Even in 1836, patent fees for foreigners were fixed at ten times the rate for US citizens. Until 1891, US copyright protection was restricted to US citizens.
Despite subsequent relaxation, severe restrictions remained in force. For instance, all books sold in the US had to be printed in US typesets. In was only in 1989 that these restrictions were removed, allowing the US to join the Berne Copyright Convention (roughly 100 years after the UK).
In the 1880s, Swiss industrialists did not want a patent law because they wished to continue to use the inventions of foreign competitors. This opposition was maintained in spite of the fact that the Swiss were themselves enthusiastic patentees in other countries.
Switzerland did eventually adopt a patent law, with various exclusions and safeguards; chemicals and textile dyeing were excluded from patent protection (two areas where the Swiss still excel). In Holland, from 1869 until 1912 no patents were issued, to allow for rapid absorption of foreign technologies.
The best examples in recent history
are in East Asia, which used weak forms of IP protection tailored for the stage of their development. Throughout the critical phase of rapid growth in Taiwan and Korea, between 1960 and 1980, both emphasised the importance of imitation and reverse engineering as an important element in developing their indigenous technological and innovative capacity.
Korea adopted patent legislation in 1961, but the scope of patenting excluded foodstuffs, chemicals and pharmaceuticals. The patent term was only 12 years. It was only in the mid-1980s, particularly as a result of action by the US under Section 301 of its 1974 Trade Act, that patent laws were revised, although they did not yet reach the standards to be set under TRIPS.
A similar process took place in Taiwan. In India, the weakening of IP protection in pharmaceuticals in its 1970 Patent Act is widely considered to have been an important factor in the subsequent rapid growth of its pharmaceutical industry, as a producer and exporter of low-cost generic medicines and bulk intermediates.
Financial transfers to developed countries
Developing countries, taken as a whole, are net importers of technology, mostly supplied by the developed countries. Econometric models have been constructed to estimate the global impact of applying the WTO's TRIPS agreement (i.e. globalising minimum standards for IP protection). The World Bank estimates (in 2001) that developed countries are beneficiaries, in terms of the enhanced value of their patents, with the benefit to the US estimated at an annual $19 billion. Developing countries would be the net losers.
The effect of applying patent rights globally will benefit very considerably the holders of patent rights, mainly in developed countries, at the expense of the users of protected technologies and goods in developing countries. Between 1991 and 2001, the net US surplus of royalties and fees (which mainly relate to IP transactions) increased from $14 billion to over $22 billion (US Department of Commerce figures).
Conclusion
The lesson from history is that countries adapted IPR regimes to facilitate technological learning and promote their own industrial policy objectives. Because policies in one country impinge on the interests of others, there has always been an international dimension to debates on IP.
With the advent of TRIPS, the policy space available to developing countries has been reduced sharply. Countries no longer are allowed the opportunity of following the paths so successfully
adopted by the US, Switzerland, Korea or Taiwan in their own development.
They can no longer follow a process of technological learning, in which they progress from imitation and reverse engineering to establishing a genuine indigenous innovative capacity. The world does not provide a level playing field for the late-comers.
Countries need to use the IP system in broader human and institutional contexts. Most of the OECD countries started with "flexible" systems. They became more IP sophisticated as they became technologically and culturally more advanced. IP is not the condition to become developed, but the outcome of a particular development path (OECD countries, and more recently China, India).
In other words, industrialised countries developed their IP regimes in the context of checks and balances that allow the system to operate beneficially. But this requires continuous changes and adjustments. And, these checks and balances do not exist in most developing countries (skilled personnel, academics, courts, competition authorities, etc.).
Having reviewed the newspaper reports on his visit, it appears the Director General of WIPO never actually said that intellectual property protection was beneficial for Bangladesh's economic growth. In fact, at a press conference, when asked for his personal opinion, he replied that as the Director General he was obliged to take the position of his Organization — it was enough indication of his views.
He knows, only too well, all the issues I have outlined above! I have no doubt that, despite all this, some interested quarters in Bangladesh will continue to advocate the position that IP protection is necessary.
LDCs, including Bangladesh, have transition time before applying the TRIPS provisions; till 2016 for pharmaceutical patents, and till mid-2013 for all others. The LDCs fought very hard in the WTO for these extensions of the transition time; let that hard-earned achievement not be wasted.
We should try to develop the local technological capacity and institutions that will enable us to benefit from IP, and only after we have done that should we apply protection. Until such time, which will be in decades if the experience of other countries is any guide, we should negotiate to have our TRIPS transition period extended.
To apply IP protection of the TRIPS standard, as suggested by some developed countries, would have severe adverse consequences on the prospects for rapid economic growth.
Dr. Toufiq Ali is a former Secretary, and a former Ambassador in Geneva. E-mail: toufiqali@hotmail.com