Intellectual Property and Globalization: 3 usual mistakes

(Version de travail; destinee a lecture orale)

Three usual mistakes about IP & globalization.

A few days ago, the US told Russia it would be impossible for the country to join WTO if it doesn’t shut down a website selling western music without any licence. At the same time, the European Union told China it was high time to stop being comprehensive with all the counterfeiting goods exported from the country.

Why intellectual property -copyrights, patents, trademarks- is so important in globalization today? It’s one of the main topics because the developped countries decided it was. For them, globalization lead to a new worldwide specialization: China, India and the South would manufacture cheap products, and Western countries would specialized in high value added work: innovation and creativity. That’s a simple globalization projet: knowledge, culture, innovation and global trademarks for the North; cheap labor and manufacturing for the South.

That was a kind of naïve vision, as we see right now with China or India, which are more and more able to produce and export high value works. But that’s the vision still used by Western countries to push for worldwide rules of protection for knowledge and innovation.

And they ask for a special kind of protection: they say that knowledge, culture and innovation deserve to be protected, in the same kind of manner we protect a car, a house or a piece of land, by property. That’s what IP now is: a property-like rule of law on an immaterial stuff. An exclusive right given to someone to forbid the copy of something it would be easy to copy without IP rules. It now very easy to duplicate a book or a film, only copyrights forbids that. It’s nearly easy to build a car imitating the way Renault or General Motors do it. But hundreds of patents forbid it. The most important shift in IP these years was the TRIPS treaty, which is part of the WTO negociations. TRIPS aims at harmonizing patents and copyrights all around the world, in an unprecedent move.

I won’t talk for a long time tonite, as I’m eager to have a debate with you. I’d just ike to briefly sort out three usual mistakes about IP in our globalization context. Of course, some of them will seem very obvious for the audience, but I think it’s still important to say it again.

First mistake: intellectual property is about free trade

IP is not about free trade. It’s a monopoly guaranteed by the state and laws on a specific invention or piece of creation.And you know it in India, ’cause you must comply to the Trips rules since first january of last year; so the pharmaceutical domestic industries don’t have the right to produce generic copies of the newest drugs from the West. So, let’s sum up this case: before this law, India couldn’t sell the copycat drugs in the US, because the US had strong patents laws. But India could sell these copycat drugs in India and export them in countries without patent laws.

By the way, these copycat drugs were far cheaper than the ones sold by the western companies. So it was great for the poorest countries in the world, which were unable to buy them at full prices.

Now, with Trips, it’s still impossible to sell in the US and now, it’s even impossible to sell these copycats in India. Would you call that free trade? Western pharmaceutical companies are free to sell in India, without fearing to be imitated. But Indian pharmaceutical are free of what? Of course, they are free of investing money in research and ask for patents themselves! How many thousand years do you think it will take for indian pharmaceutical companies to compete at a global level with Pfizer, Novartis or Sanofi? And do you really think that Burkina Faso or Mongolia will have soon a pharmceutical industry without any copy? That’s obviously nonsense.

And that’s obviously not free trade. That’s protectionnism, but in a different manner (and I don t think protectionnism is a bad word, by the way) not with tarrifs or so -as we use for manufactured goods- but with exclusive rights given on different fields, by rule of law. And these laws are often arbitrary, depending of the lobbying of some industries. Why patents (or not) on genes or software? In the West, there are strong debates about what should be patentable and what shouldn’t be. In Europe, a software patent is theoritacally forbidden. In the US, it’s legal. In Europe, we give an IP protection on database, not in the US. And guess what: the software industry is very powerful in the US, meanwhile the database industry is very powerful in Europe.

It’s important to have that in mind: IP has nothing to do at all with free trade. It’s only a set of rules, stricter and stricter, common in western countries and that western countries decided to promote everywhere in the world.

Seconde mistake: Strong IP rights is the key for creativity and innovation

Why should we prevent duplication of a book until 50 years after the death of the writer? Is it a good idea to let the major music companies shut down -thanks to a strict copyright- new means of disseminating culture with the Internet? Are we sure we’re promoting innovation and culture each time we use intellectual property? We should think twice before giving monopolies, and it’s what IP is about.

Innovation and science flourish primarely thanks to sharing, imitation and pooling of ideas. Not thanks to barriers on knowledge. The case of drugs is a strong example: before the first tritherapies againts AIDS, 20 billions of dollars were globally invested. Half from the public sector and the states, half from the private sector and the pharmaceutical industries. The rôle of the patents in bringing good drugs against Aids to market was not so important. But the big pharmas got the patents and they were able to sell the drugs at the price they wanted. Look at the EPO, which is an important hormon for the body. It’s sold by the US big biotech company Amgen, which earn more than 2 billions dollars each year thanks to it. But the principle of EPO was discovered in 1976 by Eugene Goldwasser at the university of Chicago, then synthetised at the University of Columbia in NYC, thanks to public money. Then came Amgen, who managed to put it in mass scale production, and got 90% of the profits…

Western countries went to far with patents: too many patents, without any merits, in too many fields. It becomes very difficult to innovate when each time you find something, you must check during hours and hours if there’s a patent on a technique you’re using. I was talking a few weeks ago with a biology professor in a great research center in France (Inserm): he told me he prefered not to think of patents while working. He knew it was like working on a landmine ready to explode. In the US, the cost of litigation because of the growing numbers of conflicts about patents is so high in high tech sectors that big companies like IBM ask for a strong reform of the system.

In the US also, they’ve decided they were ok with business method patents. That’s insane: a company called Netflix started renting DVD videos using Internet and mail. And they got a patent for that! That’s a successful company, with lots of clients and a good service. Is it good to prevent by law other companies to compete on that market?

IP is only a part of great innovations. And too much IP can hinder creativity.

Third mistake: intellectual property is a tool for development

That’s the motto right now. IP everywhere is good for every countries, even the poorest. That’s exactly the idea of the TRIPS treaty, established to harmonize patents and copyright all around the world. The magic formula is here: give exclusive rights to innovators and creation producers and let’s rock: everybody will find an interest in producing more and more culture and more and more new techniques, from Beijing to Los Angeles, from Bamako to Mombaï.

But that’s wrong, as history shows us. In Europe, we have used very very flexible rules of IP at the times WE were developing countries. In Holland, for instance, they had no patents at all at the begininning of the Xxth century. Thanks to that choice, a guy in his garage started to imitate the filament bulb invented and patented in the UK by Thomas Edison. Without any patent in Holland, the guy in his garage has sold thousands of bulbs. And his company was really sucessful and, after a few years, invented lots of stuff. Right now, it’s a global company, known as Philips.

Switzerland refused patents on drugs until late in the Xxth century and have learnt how to make drugs while imitating the german drugs: right now, it’s one of the most successful pharmaceutical industry of the world, with Roche or Novartis. And the United States? Once, they were as well a developing country, and they didn’t recognize the copyright on English book. The local published made lots of money copying for free the successful English writers. At the end of the XIXth century, when the US were more developed and when they had local writers to export to England, they recognized international copyright.

Harmonizing IP rules everywhere in the world is a dangerous idea: level of developments are very different from a country to another, and imitation is at the heart of the development path of countries. Too many patents, too strong patents, a stricter copyright is a way to make development more difficult -and at least, less fair.

Remember that a country like South Corea -which is now a developed country- is paying each year 15 to 20 billions of dollars in royalties on patents. The USA earn 90 billions dollars from IP royalties of patents. With IP, we’re now building a strange worldwide tax system: the tax is paid by the poorest and the money is given to the richest. Is it really the goal of IP?

Let’s here be clear: I think someone who is innovating or inventing something deserves to be recognized and helped by ANY MEANS and no IP at all is bad policy. But strict, worldwide and unbalanced IP as we have it today is a VERY bad policy. And it would be a mistake to make even more unfair an unfair globalization.

Thanks for your time.

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