Ecuador: A Global Solution For The Protection Of Inventions: Proportionality

Last Updated: 26 September 2016
Article by Esteban Donoso

With only one change to the current international system of protection of innovation, which is the insertion of direct proportionality regarding the years of exclusivity given by each country in accordance with each country economical capacity, could the system become fairer, more effective and could it potentially increase its global validity?

The hypothesis is that proportionality regarding the reward that mankind gives to innovators is the solution for the universal system, and that it is politically plausible. This hypothesis does not ignore current global agreements (the political issue should be recognized with pragmatism, as it is further on developed). It seeks to optimize the current system, taking into account the interests of developed and developing countries.

Proportionality could potentially unlock the door to a renewed global agreement on a matter that since 1994 has been closed. The current universal standardization of the rules regarding the protections of innovation was achieved through the subscription of one of the main agreements of the World Trade Organization -WTO, the Agreement on Trade Related Aspects of Intellectual Property Rights –TRIPS (1994). The TRIPS Agreement has been heavily criticized, but basically all of its shortcomings are subsumed in one aspect: a uniform duration of the exclusivity of innovation protection expressions regardless of the economic status of the different countries.

Regarding patents, for example, it is a contradiction that people from Canada (just to take the example of a developed country with citizens and governments with deep social conscience), with an annual income per capita of about thirty thousand dollars, "suffer" the existence of a legal monopoly of 20 years the same as the people of Sierra Leone (when the waiver ends), a country with an income per capita of just over five hundred dollars. Just by stating the above, the inadequate treatment about the regulation is revealed. By applying the obvious corrective to this situation (proportionality), other aspects for the protection of innovations may be analyzed with an axiological perspective. All previous analysis will be insufficient.

It is probable that one more year in the duration of the exclusivity in the European Union could serve to cover the reward that all Sub-Saharan Africa contributes for a decade. The exact proportion needs to be determined. Economic parameters as income per capita and the size of the market could be suitable indicators that reflect the extent to which a country (its population) is able to contribute to the technological development (innovation in general), and how much that contribution will amount to.

Innovation in a broad sense does not only pertain to patents, but using patents as the main example serves this Dissertation Proposal to convey the point. The arguments presented for the case of patents should be understood mutatis mutandis for other expressions of protections of innovation. Copyright is set to reward new cultural expressions or even new software in most of the schemes that apply the droitd'auteur system. New plant varieties are in many countries protected under a specific system distinct form patents (the TRIPS Agreement requires protection for plant varieties either by patents or other effective sui generis system). The same happens with industrial designs, and layout designs (topographies) of integrated circuits. In all of these cases the hypothesis of this Dissertation Proposal could apply, but the case of a differentiated period of protection attached to the economic capacity of each country seems clearer for patents, due to their nature. With exclusive rights, while innovation is encouraged free trade is restricted with the application of a legal monopoly (with all that it entails). With inventions (more so with pharmaceutical patents) the confrontation between free trade and innovation encouragement, two congruous objectives, is worsened and intensified. During the investigation a specific analysis should be done for every single innovation protection expression, those contemplated in the TRIPS Agreement and even those that are not (this obviously does not include trademarks, trade names, geographical indication, etc.).

The hypothesis is that the term of protection should be the highest possible (this will encourage innovation), limited by any evidence of unjustified reduction of general welfare (at that moment it would become unfair). In the case of patents, for example, if the proposal is understood simple as extending the patent term as much as possible, monopoly pricing could extract rewards far in excess of research and development costs to the detriment of the general consumer. From a consumer point of view, it is impossible to appreciate a priori whether a given period of exclusivity is per se just (from the point of view of innovators, and to a certain extent of the society, the more the better). However, it is possible to notice whether it becomes unjust if facts show that this is happening (lack of general access to innovation, for example). Proportional reward may result in that humankind as a whole could even be more generous with creators and innovators, bearing the burden that this generosity would mean in a proportional way. All countries will carry the same "burden", regardless of their economical condition, because the weight of the burden will be proportional to their wealth.

Although this hypothetical corrective seems debatable (at the very least), no proposals worldwide in this regard have been identified in the doctrine so far. The only precedents are my previous publications, centered in patents (writing sample). Many have criticized the current international scheme since it was instituted, like Correa, Remiche, Rao, Reichmann, Posner, Scherer, etc. A few months ago, for example, Gary Becker stated "the current patent length of 20 years (longer for drug companies) from the date of filing for a patent can be cut in half without greatly discouraging innovation" (Becker-Posner Blog). Some have long before stated that not even from the economic point of view the utility of the IP regime is conclusive, opinion which is based on the so-called theory of the Patent Paradox. This theory was first developed in 1939 by Robinson and then subsequently addressed by Hayek, Marshal, Burns, Jewkes, Sawyers and Stilerman, Taylor, Silberston, Siebeck, Evenson, Lesser, Abbott, Braga, Vernon, Hirschand, Thurow, etc. Nonetheless proportionality has not been stated (not even to discard it).

Criticisms agree upon the existence of axiological deficiencies of the system, but have not produced real solutions (frequently forgetting about the political issue and proposing un-pragmatic paths). They are enthusiastic to disapprove the TRIPS Agreement without recognizing that in comparison to the previous agreements, it has important advantages regarding the validity and effectiveness of the scheme. The dissertation will account for what current literature has denounced as failures of the current exclusive rights regime (neglected orphan diseases, disease mongering, efforts at ever-greening, me-too drugs, lack of recognition of ancestral knowledge of indigenous people, etc.). Nonetheless, it will be guided by pragmatism and this new hypothesis.

Concerning the international scenario there are two different groups of opinion, developed or industrialized countries in one side and developing countries in the other (a few countries are in a in-between status and approaches are not always the same among each "group", but for the sake of argument it is easier to generalize). It is worth bearing in mind that there is a consensus in the international diplomatic arena (in the current literature as well) that the international system has shortcomings. Nonetheless there is not a clear path, yet, to overcome these deficiencies. Both developed and developing countries' points of views and attitudes respond to an economic reality, not to ideological or academic conceptions. Developed countries are producers of innovations and developing countries are not. The proposed solution aims to bring these two opposing views closer together taking into account both sides' desires and addressing their discontents with an academic approach (which involves, according to the chosen methodology, analyzing the validity, effectiveness, and justice of the regulation).

To achieve the optimal IP global system of protection it should be globally valid (a desire of the developed countries and a necessity given the nature of the assets it protects), effective (a desire of developed countries and a key element for it to be better), and just (an inherent desire of humanity and a claim of the developing countries in regard to IP). Proportionality will contribute in every aspect. It will be convenient for both developed and developing countries, but ultimately for humankind as a whole.

To introduce proportionality as proposed in this Dissertation Proposal could be an outstanding accomplishment per se. Even though the justice of a rule is always a subjective issue, it seems clear that proportionality will make the global system fairer. In taxes, for example, who has more contributes more to general welfare (for the sake of words economy, it is not the moment to explain it further). Proportionality on regard to the duration of innovation protection expressions pertains in first place to the justice of the regulation; notwithstanding it could have a positive influence in the other two aspects. Mainly, it could change how developing countries perceive the system and their willingness to address and compromise in issues regarding the validity and effectiveness of the IP regulation. Politically, this will be quite an accomplishment.

There is an obvious tendency in developing countries not to apply the IP rules, maybe not officially by their governments but evidently by their people. This attitude undermines the effectiveness of the regulations, and produces distortions in the market (which is unjust per se; the ones that comply with the rule are summing the full cost of the protection). In order for the proposed scheme to be attractive to developed countries, developing countries should compromise to higher effectiveness.1 With proportionality as part of the system, these commitments could become possible. Regulations on this regard could be included in order for these commitments to be binding and verifiable.

Furthermore, because of the intangible nature of IP, it could hypothetically be argued that a genuine interest of individuals to respect it and of authorities to enforce it is required. In developed countries, where the benefits of the global system of protection are more tangible, the interest of citizens to respect IP is genuine, and so the effectiveness of the regulation is higher. So it is probably not audacious to suppose that a higher-level of justice of the global scheme of IP will imply a higher-level of effectiveness of the regulation in developing countries. This will be analyzed from a sociological perspective as explained in the methodology note of this Dissertation Proposal.

Finally it is worth addressing another desire of developed countries in the international scenario: a broader validity of the system. A broader validity is encompassed first in increasing the number of countries where the international system of protection is applicable (very little is left to be accomplished in this regard); second in decreasing the possibility of exceptions and limitations to the TRIPS Agreement's provisions; third in further harmonizing substantive rules (issues covered by the TRIPS Agreement and issues that are not); and finally in generating global procedures for the acquisition of Intellectual Property Rights. Developing countries push for waivers of the application of the international scheme (a scheme that they find unjust), to maintain or even increase exceptions and limitations, and are unwilling to talk about more harmonization of other issues or procedures (at least in the multilateral arena).

In a proportional system, equitable in the way the humanity as a whole compensates the innovators, the interest in finding the right balance of protection will be higher, as the effects that a disproportionate protection potentially carries will be felt equally in all countries regardless of their condition of development. This is a conceptual advantage of a proportional system on regard to the possibility of more harmonization.

Moreover, harmonization could mean more justice. It is not just, for example, that only the United States and Australia are rewarding the innovation on regards to diagnostic, therapeutic, and surgical methods for the treatment of humans or animals (all other countries have applied the exception that the TRIPS Agreement permit in this regard).2 Most of the innovation in this area is done in the United States, and American citizens assume the cost. Then, these inventions are used in the rest of the world freely. If the global reward is given proportionally, why not protect this expression of innovation globally? Proportionality is the global solution for the encouragement of innovation.


[1] The decision at the Bali Ministerial Conference 2013 was to extend the "moratorium" on non-violation disputes regarding IP. The pursuit of TRIPSAgreement's full effectiveness has beenleft aside once again.

[2] This is being negotiated in the Trans Pacific Partnership initiative. A lot of criticism has been generated about the intention to include diagnostic, therapeutic, and surgical methods in the negotiations.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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