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PAVING PATHWAYS FOR PROGRESS: HARMONIZING PATENTS AND TRADE FOR WORLDWIDE INNOVATION EQUITY
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PAVING
PATHWAYS FOR PROGRESS: HARMONIZING PATENTS AND TRADE FOR WORLDWIDE INNOVATION EQUITY
AUTHORED BY - KAPIL SINGH
Trade related aspects of intellectual
property rights (herein after to be known as TRIPS) come into force on 1
January 1995,after coming into force the TRIPS creates the perennial tug war
between the developed and developing countries, especially in the sector of
pharmaceutical. To achieve industrialized harmonization of intellectual
property regimes, it is imperative to ensure that they conform to the minimum
standard of goals which are set in the agreement. Developing countries often
perceive the agreement as lacking specificity and clarity, emphasizing the
importance of encouraging a flexible approach to its interpretation.
Patent rights is considered to be the
one of the strongest rights which gives the patent holder the exclusive rights
for manufacturing, selling, distributing and using of the said invention for
the limited period of time. Local working of patent is considered to be the unique
features for the development in the industrial growth of the country. The
patent holder is required to produce the patented product or perform the
patented process inside the nation where the patent was granted.
Paris convention provides the ground
on the failure to work or insufficient for utilizing the invention by granting
them compulsory license for the working of the patents within the country. But
after coming of the TRIPS agreement this become one of the highly controversy
issue as what extent Article 27 (1) of
the TRIPS agreement repeals all the pre-existing rights of the member which
they continue to treat for the non-working of the patent which is mentioned
under the article 5A(2) of the Paris convention.[1]
The issue of local working requirements
under Article 27.1 of the TRIPS Agreement has sparked debate between developed
and developing countries. Developed countries argue that the sub-clause intends
to exclude the working obligation from the scope of the TRIPS Agreement. However on the other hand it was argued by the
Developing Countries, that Article 31 of the TRIPS Agreement does not prevent the
granting of compulsory licenses in cases of inadequate or insufficient working.
Article 31 of the TRIPS agreement also provides the medicines to every people
in the case of national health crises.[2]
3.1. TRIPS
and its Compatibility with GATT.
GATT, which was created in 1947, is
primarily concerned with trade in goods and the reduction of trade obstacles.
TRIPS, on the other hand, concerns intellectual property rights and their
influence on trade. Despite its disparities in subject matter, TRIPS is
regarded as an essential component of the WTO's legal structure, alongside
GATT.[3]
One of the foremost issue that arises
as why the Intellectual property rights was concluded under the framework of
trade. The world trade organization and general agreement of trade and tariff
are the agreements which are dealing with the matter related to the
international trade. The major goal was to create circumstances for free trade,
in which market forces decide trade conditions, and to reduce the impact of
artificial, state-sponsored trade restrictions.
The World Trade Organization's
intellectual property rights agreement is not only seems to be incongruous, but also contradictory. IPR confers the monopoly rights, which
prevent other from engaging in the trade of the same product which they had
acquired the rights . This seems to be in conflict with the objectives of the
GATT as their main aim was to have the free trade agreement.
The incorporation of the TRIPS
agreement within the GATT framework may be viewed as a divergence from the
general objectives of minimizing state intervention in trade. While the
majority of GATT rules strive to reduce such intervention and establish ideal
trade conditions, the TRIPS agreement requires the state intervention for
ensuring that any trade advantage taken by the person are not negated by any
unauthorized use of the technology of their competitors.[4]
Intellectual property protection was
included within the GATT as the developing countries could use their trading
power for negotiate their scope, nature and extent of the intellectual property
systems. The final GATT draft was submitted and accepted in its entirely, all
the negotiation on the intellectual property which were linked to the
international trade negotiation. The access to developed countries by the
developing countries made the contingent upon providing adequate IPR
protection. Secondly the GATT and the TRIPS Agreement has the strong dispute
settlement mechanism .As a result, members who fail to meet the requirements
established by the intellectual property rights regime may face trade
sanctions. This thing would be possible only when if the regime is outside the
scope of the GATT. Further since the developing countries were not well
organized for the WTO and there were no collective opposition made by such.
This makes the developed nation to push through the requirement as far as
possible.[5]
The compatibility of TRIPS with GATT
demonstrates that intellectual property rights are now seen as a significant
part of international trade. TRIPS seeks to find a balance between preserving
intellectual property rights and facilitating global trade by establishing
baseline criteria, promoting non-discrimination, and giving flexibility.
3.2. Barriers
to entry and market access for developing country firms in developed country
markets
The developing countries faces the
difficulties while entering into developed countries due to number of legal or
non-barriers which are imposed by the developed nation to the developing
countries. The following are the barriers which are imposed by the developed
nation upon the developing countries.
·
Tariff and Non-Tariff Barriers
Imports are frequently subjected to
high tariffs in developed countries in order to protect native industry. Tariffs
like this can make the products more expensive for the developing-country
companies from exporting their goods to the developed countries and competing
there. Non-tariff barriers, such as import restrictions, licensing
requirements, and technical rules, might also prevent these enterprises from
entering the market.[6]
·
IPR Laws and their Issues
Firms must preserve their
intellectual property in order to safeguard their inventions and products.
However, IPR systems in developed countries can be complicated ones as it,
requiring large more of investments in the field of IPR which includes patents,
trademarks, and copyrights etc. Firms from developing countries may encounter
difficulties navigating these institutions, securing their intellectual
property, and enforcing their rights in developed-country market.
The following are the challenges
which may face by the developing countries related to the IPR:
a. Patent protection and patentability
criteria.
The Patentability criteria in the
developed countries are more complex one as compared to the developing
countries. Companies might face the difficulties in fulfilling the said
criteria like novelty, inventive steps and capable of industrial capacity etc.
Plus the examination process of the invention is more stringent.
b. High cost involved in Protecting
Intellectual Property Rights.
Acquiring and preserving intellectual
property rights can be expensive, including filing fees, legal fees, and
regular maintenance payments. Firms in developing countries, which frequently
have low financial resources, may find it difficult to bear these costs. This
can make it difficult for them to obtain effective intellectual property
protection and discourage them from entering in the developed-country
c. Enforcing of Intellectual Property
Rights
If the developing countries firm is
able to get the protection in the intellectual property rights, then the
enforcing of these rights in the developed countries is very complex and costly
procedure. Moreover if there are any legal disputes related to patent in
foreign country then the litigation cost and procedure is more complex one.
·
Lack of Market Information of
Developed countries
Companies from developing nations
trying to enter the market in developed countries may encounter difficulties
due to a lack of market information. Accessing this information can be
expensive and challenging for companies, which can result in errors of judgment
and poor investment choices.[7]
·
Quality and standard compliance
In order to access developed
countries' market products must often meet severe quality and standards
regulations. Meeting these criteria can be difficult for enterprises in
developing nations, particularly if they lack with the appropriate
infrastructure, resources, and technical expertise. Costs which is related to
compliance will significantly, affects the enterprises competitiveness.
·
Limited Access to distribution
Channel
Firms from developing countries may
face barriers to accessing established distribution networks in developed
nations. Local or larger international corporations often dominate these
networks, making it difficult for smaller or lesser-known firms to gain
distribution channels for their products or services.[8]
Reducing barriers and enabling market
access for developing-country companies in developed-country markets requires
both firms and policymakers to work together. This can be accomplished through
a various means such as trade agreements, capacity-building programmes,
increased access to financial resources, technology transfer initiatives, and
complete market entry support. These steps are crucial in encouraging equitable
and inclusive trade, allowing companies from developing countries to
successfully compete and thrive in developed country markets.
3.3. Trade for Sustainable Development: Unleashing the
Potential for Economic, Social, and Environmental Progress
The pursuit of economic growth,
social progress, and environmental protection in a manner that meets the
demands of the current generation without jeopardizing future generation’s
ability to satisfy their own needs is referred to as sustainable development.[9]
There are the various ways in which
trade helps for achieving the sustainable development which are as follows:
·
Economic Growth
Trade may encourage economic growth
by encouraging countries to exchange goods and services. It enables countries
to specialize in the production of goods and services in which they have a
competitive advantage, resulting in higher productivity and efficiency. This, in
turn, can lead to more job possibilities, higher earnings, and higher living
standards, all of which contribute to long-term economic development.
·
Poverty Reduction
Trade has a critical role in poverty
alleviation by establishing income-generating opportunities and employment. It
allows producers, particularly those in poor countries, to access larger
markets and benefit from economies of scale. The consequent growth in trade
promotes market integration, allowing SMEs and marginalized groups to actively
participate in global value chains, expand their businesses, and improve their
general well-being.
·
Technology, Transfer and Innovation.
Trade fosters the cross-border
interchange of knowledge, technology, and innovation. When countries trade,
they gain access to new technology, machinery, and expertise from other
countries. By enabling countries to adopt cleaner and more effective industrial
methods and technologies, this technology transfer can help in improving the
productivity, boost competitiveness, and promote sustainable development.[10]
·
Environmental Protection.
Trade can help to advance
environmental sustainability by incentivizing governments to implement and
enforce stringent environmental standards and regulations in order to meet the
demands of international markets. Furthermore, trade promotes the spread of
ecologically beneficial goods and services such as renewable energy
technologies and sustainable agriculture practices. This widespread adoption
promotes more sustainable resource utilization and effectively mitigates
environmental consequences.[11]
There are numerous Acts and
International Agreements relating to trade and sustainable development. In
India, there are many act which aims at
promoting trade which are as follows the Foreign Trade (Development and
Regulation) Act of 1992, the Customs Act of 1962, the Indian Trade Act of 1927,
and the Environment (Protection) Act of 1986. Furthermore, international
accords such as the World trade Organization (WTO) and the United Nations
Sustainable Development Goals (SDGs) address the links between trade and
sustainable development.[12]
3.4. Disparities of Trade between Developed
and Developing Countries.
The main aim of the Trips Agreement
was to ensure that the protection and enforcement of Intellectual Property
Rights properly exist in the country. Rather than focusing primarily on the
protection of private rights, the Trips Agreement's principal goal is to
enhance the overall benefit of society. Thus according to Article 8(1) of the
TRIPS agreement states that member nation has the full liberty and discretion
for adopting that method which helps them in protecting the public health and
interest in the society so that there is proper implementation of the Trips
provisions.[13]
Many year India has evaded the
responsibility of complying with the TRIPS Agreement until the complaint which
was lodged by the USA government against the India at the Dispute Settlement
Unit of the World Intellectual Property Rights Organization (WIPO) it having
the lack of appropriate transitional
provisions. The pharmaceutical company of developed countries alleged that they
had huge losses on the account of imitation of their invention by the
developing counties.
The framework of the TRIPS agreement
suggest that the stringer IPR system would help in boasting the foreign
investment in research and development
in the developing countries and thus it helps in growth of the economy. Many countries government opposed this system
as they worries about the potential negative detrimental impacts on the
indigenous industries due to higher price and
that stronger IPR system. In
spite of many opposition made by the developing countries, many of the
developing countries has signed this agreement and implement the provision of
patent in their laws.[14]
The ideology of free trade principles
has frequently been criticized for its involvement in the development of giant
industries by prohibiting of imports on cheaper goods from other countries
and placing limits on the flow of goods through the market.. It is the common misconception that the rich nations become rich through
free trade. The developed countries are actively involved in the implementation
of the product patent regime under the TRIP agreement, which permitted only
product patented to be granted only when their own pharmaceutical sector have
reached their level of self-reliance. The opening of their boarders for the
foreign trade can only be done when they become stronger in economics and they
also suggest that every nation should do the same.[15]
The industrial world is going to gain
immensely after the adoption of the TRIPS agreement by the developing nations.
The world trade organization has favored the decision which is taken at the
Doha declaration summit where they waive the requirement of the Article 31(5)
(f) of the TRIPS agreement, which allowed the African countries to import the lifesaving drugs and
medicines from the nation that possess
the ability to grant compulsory license
for the export of such medicines. This waiver was granted by the TRIPS
agreement was of the short term measure. There was no longer term measures from
the world trade organization for granting this welfare and benefit to the poor
countries particularly in the health sector.[16]
3.5. Roles of Patents and Global Economy
Patent play an important role in
economic growth and development of countries as it improves the living
standards, better infrastructure and more employment and investment in the
country. The developing countries are protecting the patent rights as it helps
in faster innovation and the development of the market in the economy which
helps in promoting the economic growth. There are the following ways which
impact the economic growth which are as follows:
·
Patent helps in encouraging the
investment in the research and development
Private sector industries in
developing nations are well-known for investing in research and development
(R&D). These countries are mainly focused on the agricultural commodities,
extraction of minerals, low manufacturing etc. here most of the scientist and
engineers in the developing countries are employed in the public sector either
through state run laboratories or university. The developing countries have
been lacked with the institution and the policies that encourage patenting and
commercialization of inventions. Countries like USA has the well-developed
policies which help them for making more invention as compared to other nation. Recently the data which has been
published by IP index 2023 which shows that USA has top in this list.[17]
·
Patent has the positive impact on the
GDP Rate of the economy as it helps in increasing the Economic growth in the society.According to the
Indian context which has been published by the WIPO states that in 2011, the
patent count was 15,914, and the GDP (in US $) stood at $5,501.13. In 2012,
when the patent count increased to 18,250, the GDP increased to $5,801. By
2020, the patent count increased to 37,880. Simultaneously, the GDP increased
to $8,443.36.[18]
As per recent intellectual property right index 2023 shows
that the USA has top in the IPR Index with 95. 48 IPR index Score which was
followed by the United Kingdom and France whereas the India ranks is 42 which
has improve from the last year IPR index. Thus the data shows there is playing
one of the important roles in the Growth of the economy.
·
Patent is the Major source of Employment
Investing in research and
development (R&D) can encourage businesses to spend funding to R&D
activities, thereby helping to create more jobs in the developing
nation. The creation of new products and technology can result in increased
employment in fields such as marketing, sales, and production. Furthermore,
organizations that invest in R&D might attract investor funding and obtain
a competitive advantage in the market, resulting in employment creation.[19]
·
Patent Encourages the
competition and investment
Consumers benefit from
lower prices, larger quantities, and higher quality goods and services when
enterprises compete. Patents help to limit the replication and copying of
inventions and products, boosting industry rivalry and promoting ethical
business practices.
·
Patent encourages the technology
transfer between the developed and developing nation
According to the data
which has been published by the WIPO shows that around 3.4 million patent has
been filed in the 2020-21, which shows the growing importance of the patents in
the economy.[20]
3.6. Challenges
of patent law Implementation
in
Developing Countries
Patent rights is considered to be the
one of the strongest rights which gives the patent holder the exclusive rights
for manufacturing, selling, distributing and using of the said invention for
the limited period of time, but there are many challenges which is faced in the
developing countries for implementation of patent law due to many factors like
economic, technology and institution limitation etc. There are various factors
that affects the challenges which are as follows:[21]
·
Lack of Infrastructure
In developing nations, the execution
of patent law is hampered by insufficient infrastructure, which shows
insufficient resources for patent inspection, registration, and enforcement.
Furthermore, many countries confront barriers to obtaining databases and
information technologies which are required for effective patent-related
activities.
·
Limited Technology Capacity
Understanding and implementing
sophisticated technological principles related to patent assessment may be
difficult for developing countries. Inadequate technical competence and
resources might make it difficult to evaluate patent applications and determine
novelty, inventive step, and industrial usefulness.[22]
·
Institutional Weakness
Patent law application
in developing nations can be hampered by weak or underdeveloped
institutional structures, particularly in legal and judicial systems.
These deficiencies generate the potential for corruption, lack of
transparency, and bureaucratic inefficiencies, all of which endanger the patent
system's integrity. As a result, intellectual property rights protection and
enforcement are hampered, reducing the overall efficacy of patent law
implementation.
·
Limited Human resources
Developing countries may suffer a
shortage of professional personnel with knowledge in intellectual property law,
such as patent examiners, lawyers, and judges. Inadequate capacity-building
programmes and training opportunities may hinder successful patent
implementation and enforcement.[23]
·
Socio-economic factors
Poverty and a lack of capital can
stifle innovation and technology transfer. Lack of financial resources may
deter innovators and entrepreneurs from pursuing patent protection or investing
in R&D operations.
·
Access to Medicines
Innovation in the field of the
pharmaceutical sector brings the hope of saving the life of human being. The
development of the drugs was considered to be the cost-intensive process, which
resulting higher price of the drugs that cannot be affordable by every people.
So the grant of patent must be given to the patent holder on the basis that the
price of the drugs which will make available to the people will accessible and
affordable to the people. In additional Patent barriers can also limits the
production of generic drugs and restrict access to life-saving treatments.[24]
·
International Pressure in developing
countries
Developed countries and multinational
firms frequently put pressure on developing countries to align their patent
laws with worldwide standards, which may not be in the best interests of their
local industries and citizens. Balancing these constraints while encouraging
domestic innovation and development can be challenging one.[25]
To address these issues, a complete
approach is required, including capacity-building initiatives, technology
transfer programmes, public awareness campaigns, and policy reforms adapted
by each country's according to their needs and circumstances. International
cooperation and support from developed countries and organizations can
also play a critical role in assisting developing countries to
overcome these barriers of patent law implementation.
3.7. Fostering Cooperation: Moving Beyond Adversarial
Relations Between Developed and Developing Countries
Over the past few years the
relationship between the developed and developing countries remains
adversarial. However, a viable solution between the conflict
between the strong Intellectual property enforcement and developing country may
emerge through cooperation which aimed at fostering mutual benefits. There has
been little extensive research into how states might actively engage in a
developing geopolitical system, with the ability to transcend the zero-sum
nature of intellectual property and generate mutually beneficial outcomes.
There are three ways under it will open the door of cooperation between
developed and developing countries which are as follows:[26]
1. Psychological change
2. Reallocation of resources.
3. Promoting foreign direct investments.
·
Psychological
Change
Industrialized nations have
frequently interacted with other countries in a condescending manner, taking a
patriarchal position by emphasizing the importance of intellectual property
rights and holding them accountable for any misconduct. The global experience
since the GATT has proven that stringent intellectual property rights (IPR)
rules do nothing to stimulate innovation but rather they primarily serve to
protect the market interests of foreign owners.[27]
India's actions have shown that TRIPS
may be used to develop legitimate alternatives to Western paradigms, making
persuasive arguments in the face of a shifting global trade power dynamic. Developed
nations must recognize that their counterparts influential in shaping IPR
regime beyond the levels that were witnessed during the Uruguay round. To
navigate this changing landscape, they must embrace constructive engagement and
collaborate effectively with these states.
·
Reallocation of Resources
The reallocation of resources helps
to do away the enforcement issues and helps in improving the collaboration
between the patent office of the developed and developing countries.
Coordination between the United States of America and European countries patent
office allows facilitating the exchange of examiner of know-how and thereby
safeguarding genuine innovation from unwarranted challenges. The assistance
which has been provided is geared more towards the sharing of the patent
information for ensuring the compliance with the established standard in their
countries and helps the multinational company to follow the same rather than
the goal of improving the quality of the inventiveness by establishing the new
methods.[28]
The USPTO and EPO have been accused
by critics of just supporting developing nations in training patent officers
and strengthening capacity building activities, with the primary goal of
harmonizing methods of interpretation within a technical, rule-based framework.
However, this approach has raised concerns about the possibility for patent
scope to be expanded, which potentially leading to the patenting of lesser
invention
·
Foreign Direct Investment
Foreign direct investment plays a
crucial role in developing the research and development capabilities of the
developing countries. By increasing more
investment in developing countries which helps the developing countries to
develop more invention of patent, which
ultimately driving the economic growth of the country. [29]
FDI in IPR is important for global
economic activity since it allows for the cross-border transfer of technology,
knowledge, and innovation. It enables companies to grow their operations
globally, by entering into new markets, and obtaining a competitive advantage
by exploiting intellectual property assets.[30]
Foreign direct investment (FDI) in
intellectual property rights (IPR) has the ability to drive economic
development and foster innovation if properly handled. It has the potential to
foster collaboration and facilitate the sharing of knowledge between nations,
resulting in favorable consequences for all parties involved.
[1]Daya Shankar, Access to medicines: Paragraph 6 of the Doha
Declaration on Public Health, and Developing Countries in international trade
negotiation. 2006, 2 IJLT(2006)8
[2]Daya Shankar, Access to medicines: Paragraph 6 of the Doha
Declaration on Public Health, and Developing Countries in international trade
negotiation. 2006, 2 IJLT(2006)8
[3] Gautam
Saha and Abhishek Malhotra , Biological Diversity of India as a
resource: A sui Generis system for protection of plant varieties, 11student Adv(1999)18.
[4] Ibid.`
[5]Ibid.
[6]2021
National Trade Estimate Report on Foreign Trade barriers by UNITED STATES TRADE REPRESENTATIVE, Available at https://ustr.gov/about-us/policy-offices/press-office/reports-and-publications/2021(
Last Visited on 1 June 2023).
[7]Ibid.
[8]Ibid.
[9] Antony Taubman ,
Framing a Multilateral Trade and Innovation Agenda to Advance the sustainable
Development Goals: the Intellectual Property Dimension, .(2020) 12 TLD363
[10] Ibid
[11] Ibid.
[12] Ibid.
[13] Mallika Iyer,
Pharma Patents: The New Regime and Pricing Implication (2004) 3 Law Rev GLC
111.
[14]Ibid.
[15] Ibid.
[16] Ibid.
[17]Role of patent in promoting innovation and economic
growth: Available at: https://www.linkedin.com/pulse/role-patents-promoting-innovation
Economic?utm_source=share&utm_medium=member_android&utm_campaign=share_via ( Last Visited on 30 May 2023)
[18]The Rise Of
Patents In The Indian economy And How It Promotes Innovation In Technological
Development Available at https://www.outlookindia.com/website/story/outlook-spotlight-the-rise-of-patents-in-the-indian-economy-and-how-it-promotes-innovation-in-technological-development/404464 ( Last Visited on
30 May 2023)
[19]Role of patent in promoting innovation and economic
growth: Available at: https://www.linkedin.com/pulse/role-patents-promoting-innovation
Economic?utm_source=share&utm_medium=member_android&utm_campaign=share_via.(Last Visited on 30 May 2023)
[20] IMPACT OF PATENT
LAW ON ECONOMIC GROWTH OF INDIA : A STUDY Available at
:https://www.journalijar.com/article/31495/impact-of-patent-law-on-economic-growth-of-india-:-a-study/(
Last Visited on 1 June 2023)
[21]Current and
Emerging Issues Relating to Patents Available
at :https://www.wipo.int/patent-law/en/developments/intro.html#:~:text=The%20system%20today%20faces%20two,impact%20of%20the%20patent%20system.
( Last Visited on 1 June 2023)
[22]Ibid.
[23]The Rise Of
Patents In The Indian economy And How It Promotes Innovation In Technological
Development Available at https://www.outlookindia.com/website/story/outlook-spotlight-the-rise-of-patents-in-the-indian-economy-and-how-it-promotes-innovation-in-technological-development/404464 ( Last Visited on
30 May 2023)
[24] Ibid.
[25] Ibid.
[26] Sumer Dayal,
Redefining Patentability: The Impact of Novartis v. Union of India on Trips,
Trade and the balance of Power Between Developed and Developing Nation. 6IJPL(2013)8
[27]Ibid.
[28]Ibid.
[29]Ibid.
[30] Ibid.
Article Information
PAVING PATHWAYS FOR PROGRESS: HARMONIZING PATENTS AND TRADE FOR WORLDWIDE INNOVATION EQUITY
Authors: KAPIL SINGH
- Journal IJLRA
- ISSN 2582-6433
- Published 2023/08/17
- Issue 7
About Journal
International Journal for Legal Research and Analysis
- Abbreviation IJLRA
- ISSN 2582-6433
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