Innovation Patent

Taking IP on a spin – round 1


The lines below (emphasis: mine) are taken out of a letter (see here) dated August 2nd, 2013 sent by 4 US Senators requesting the US International Trade Commission (USITC) to investigate India’s international trade (read: IP) policies.

“Based on the survey and analysis of results, and to the extent feasible, a summary of U.S. firms’ perception of (1) recent changes in India’s trade and investment policies in selected sectors and (2) the effects of these changes on U.S. firms’ strategies towards India …” … “In preparing its report, we do not expect the Commission to make findings regarding the legal merits of any Indian laws or policies.”

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What can this thread be spun into?

These lines, interestingly enough, show exactly the approach that the major IP lobbies in US have held since pre-TRIPS up till the USITC and USTR Special 301 Public hearings held a couple of weeks ago. This approach being – focusing on creating and then spreading a strong perception of what needs to be done according to industry players that benefit from unregulated IP policies and then lobbying for policies based on these perceptions, rather than on ground realities and facts. While this has happened in a number of ways over the years, in this two part series I shall focus on two main ‘perception’ changing moments – (1) the initiation of substantive IP harmonization around the world; and (2) the recent fear mongering happening around India’s game-changing pharma patent regime. Interestingly enough, the ‘perception’ creation in part 1 leads to a somewhat historical and theoretical discussion which directly feeds into the more practical discussion of the ‘perception’ creation discussed in part 2.

Initiation of substantive IP harmonization

As we all know, after the signing of the WTO Agreements, the TRIPS Agreement now forms the bulk of international IP norm. It’s also now common to hear that the TRIPS is the minimum accepted baseline for IP norms as all (WTO) countries have signed on to it. However, the story behind how the Agreement came about reveals much about why (non-developed) countries are often reluctant to go beyond this minimum baseline. Given that exercising IP rights are a type of (limited) monopolistic behaviour, (regardless of whether justified or not), it is also worth examining how these became an integral part of the global trade agreements aimed at lowering barriers to the marketplace which one would assume would be against any type of monopolistic behaviour.

As IP rights weren’t something most governments or general academia had had much experience with at the time, most of the ‘expert advice’ inevitably came from the only ones who were then engaged with it – attorneys and corporate counsels who had much to gain from maximalist IP policies.  Six months prior to the launch of the Uruguay round (Sept, 1986 – which led to the creation of the WTO Agreements, and hence, TRIPS Agreement), twelve heads of various MNCs got together to form the Intellectual Property Commission (IPC). These MNCs included Pfizer, IBM, Bristol Myers, Johnson & Johnson, Hewlett-Packard, Warner, Merck and GM – all companies which benefited from strong IP protection. Well aware of the possibilities that the enthusiasm for a global trading institution opened up, these IPC members quickly mobilized their (MNC) counterparts in Britain, Germany, France and Japan – stressing that ‘IP matters were too important to be left to their governments’ ¹ – effectively building a strong transnational coalition of lobbyists who stood to gain from maximalist IP policies, and who didn’t have any note-worthy countering voices.

Thus when the IPC teamed up with the UNICE (Union of Industrial and Employers’ Confederation of Europe – a conglomerate of 32 pan-European federations, now renamed as BusinessEurope) and Keidanren (a similar Japanese organization that represents nearly all branches of industry in Japan), the trio made a formidable lobby group, with governments being swayed very easily by their voices. For the first time, industry players from different sectors (e.g., Hollywood, Pharma, etc) were brought together in a strategic move to present their demands as a combined package under the umbrella of a ‘strong, harmonized IP regime’. The IPC ended up drafting the document which went on to form the basis of the TRIPS Agreement – and got nearly everything they wanted in the final document. It’s interesting to note that one of the things they specifically did not want was the allowance of compulsory licenses (CLs) in the Agreement. However, UNICE and Keidanren insisted that CLs be in the Agreement and the IPC dropped their anti-CL claim to keep the Europeans and Japanese on board with them for everything else.

Thaumatropic interference

Taumatropio_fiori_e_vaso,_1825Aside from strategic alliances, another very clever and misleading tactic was the manner in which they presented the concept of IP as needing maximalist standards. Kapczynski has described this in an excellent way.² She uses the example of a thaumatrope. A thaumatrope refers to the perception caused when two separate images are spun about an axis so as to give the appearance of being one combined image. The thaumatrope in this case consisted of one image of ‘information economics’, and one image of ‘private property’ – though looking only at a partial picture of both. (It should be noted that I am only referring to IP maximalists who actually use this thaumatrope and not actual IP theory that discusses both these concepts in nuanced detail)

The image presented of information economics tells the story that where ‘information’ is concerned, there are not enough incentives to invest in the creation of more information (i.e., innovate) as the cost of copying information is so small that free-riding is encouraged. The ‘answer’ this image presents is that of IP rights. This image however is a limited one and does not present the full picture of how information economics views IP rights – with the complicated issues of static and dynamic inefficiencies (see my previous posts here and here for more on this) – as well as the various other methods of incentivizing the creation of information. The question then arises, why are IP rights chosen as the the way forward here?

This brings us to the second image – that of private property and the benefits associated with it. It presents an image based on the Chicago school of thought representing a system of private (tangible) property as the best solution to the tragedy of the commons – as an individual’s selfish actions allegedly lead to benefits that align with social welfare. While there is much to discuss on this account (see pages 29-48 of Kapczynski’s article cited below), it is significant that the distinction between ‘information’ and ‘material’ resources is one that isn’t presented at all, even though this is the distinction which led to the formation of the first image! This distinction is an important one though. It may be true, and is certainly a much stronger case to argue that property over material property leads individuals to take actions which inadvertently align with social welfare. However, the same argument needs a much stronger basis if it is to be imported into the realm of information or intangible property. Neglecting this distinction means that one ignores the vital importance of the public domain and the commons to creativity and innovation. In fact the great majority of knowledge that currently exists, exists in the public domain and in the commons, and to ignore them while discussing intellectual property does it a big disservice if it is to be taken seriously as an incentive for innovation. Yet, while this thought process relies on the intangible nature of information while presenting its first image, it disregards the same intangible nature of information in presenting the second image. (Related note: See Amlan’s post on “Infringement is not theft“)

So, spinning these two images of information economics and private property together, certain industry lobby groups, such as the IPC back then and the US Chamber of Commerce currently, present the thaumatropic and misleading message that maximizing IP rights leads to greater benefits.

Even though nearly 30 years old, these methods are still being used today – fortunately with rapidly increasing resistance. The following post will examine how these strategic moves and thaumatropic messages are being presented and how they’re being countered in the current USITC and USTR investigations.

References (not only for these footnotes specifically but also generally for this whole post)
1. See Chapter 5 (Structure, agents and institutions) as well as generally in Susan K Sell, “Private Power, Public Law: The Globalization of Intellectual Property Law”
2. See Chapter 1 (A Conceptual Genealogy) by Amy Kapczynski in “Access to Knowledge in the Age of Intellectual Property“.

Swaraj Paul Barooah

Swaraj Paul Barooah

Follow @swarajpb Swaraj has a deep interest in IP, Innovation and Information policy, especially when they involve issues relating to Access to Knowledge, Innovation incentive mechanisms, Digital Freedoms, Open Access, Education, Health and Development. After his BA, LLB (hons) from Nalsar Univ of Law, Hyderabad, he went on to do his LLM from UC Berkeley in 2010. He is now pursuing his J.S.D. degree from UC Berkeley where he is focusing on Drug Innovation Policy and Access to Medicines. Aside from SpicyIP, he is also engaged as a consultant on various IP matters, and is a visiting faculty member at Nalsar Univ of Law. He is also in the process of starting up a New Delhi based "IP, Innovation & Information Policy" focused think-tank.

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