Ipr protection – two polar views:

• Proponents: more R&D, more FDI, more rapid economic growth

• Opponents: forestalled access to new technologies, higher prices and rent transfers

• High implementation costs?

• WTO+ commitments in the accession process?

IpRs in open economies

Basic asymmetry:

• Northern countries are both producers and consumers of intellectual assets

• Southern countries are mostly consumers of these assets

Patents: a second best solution

Through time-bound exclusivity, creators of knowledge can charge prices above marginal costs and thereby recoup initial investment in generating information

• Second-best: because static market distortion

• But: decision-making decentralized and driven by profit motive

• Government can, in principle, fix the length of protection, such as to maximize social benefits and minimize associated economic costs

Practical complications

1. Lack of information on parameters needed to optimize scope of protection

2. Optimal scope of protection differs across economic sectors, depending on the availability of other means to appropriate knowledge-generating activities (e.g., technology, first mover advantage, etc.)

3. Patents and the diffusion of knowledge:

   1. Restrict imitation

   2. Disclosure of knowledge; tool for licensing

Trademarks are different

• Market failure of asymmetric information

• Trademarks assure consumers that they purchase what they intend to purchase

• Trademarks thus offer an incentive to invest in reputation and superior quality

• Trademark protection can co-exist with competitive markets

• Protection is not time-bound

Practical complications

• Special case: status goods, which confer prestige on their owners (apart from any utility derived from their function and physical characteristic)

  • Brand ownership can confer substantial market power to producers

• Should trademark protection also be considered as a tool to stimulate inventive and creative activities?

21. Discuss pluses and minuses of stronger ipRs protection. Pharmaceutical debate

Intellectual property refers to the exclusive rights granted by the State over creations of the human mind, in particular, inventions, literary and artistic works, distinctive signs and designs used in commerce. Intellectual property is divided into two main categories: industrial property rights(patents, utility models, trademarks, industrial designs, trade secrets, new varieties of plants, geographical indications); copyright and related rights (relate to literary and artistic works).

Governments in many developing countries justify stronger IPRs by claiming hopefully that this policy reform will result in greater inward flows of technology, a flowering of local innovation and cultural development, and faster ability to close the gap in technological sophistication between themselves and rich countries. But improved IPRs by themselves are highly unlikely to engender such salutary effects.

Over the past twenty years, there has been a global trend toward stronger

intellectual property rights (IPR). By the mid-1990s, a minimum global standard for

intellectual property rights had been enshrined in the WTO Charter through the

incorporation of the Agreement on Trade-Related Aspects of Intellectual Property Rights.

The shift in international economic policy making from its traditional postwar focus on

the lowering of tariff and nontariff trade barriers to the embrace of strong IPR is deeply

controversial. Some, (Lanjouw(1997); McCalman (2001)), have argued that

the move toward stronger IPR in developing countries may work against national

economic interests, transferring rents to multinational corporate patent holders

headquartered in the world’s most advanced countries, especially the United States. IPR

advocates counter that strengthening IPR will induce more innovation in the global

economy, thereby fostering more rapid economic growth. Furthermore, these advocates

claim that even if the additional innovation is mostly concentrated in advanced countries,

a strengthening of IPR will accelerate the transfer of technology between countries,

ensuring that all countries benefit.

Industrial property (IP) rights are extremely important for the pharmaceutical industry. The use of the IP system by SMEs in the pharmaceutical industry depends largely on the business strategy of a company, its size, resources, innovative capacity, competitive context and field of expertise. Research-based, innovation-led companies that seek to develop new drugs, improve or adapt existing drugs or develop new pharmaceutical/medical equipment or processes, tend to rely heavily on the patent system to ensure they recover the investments incurred in research and development. Companies that rely on licensing in or licensing out of pharmaceutical products will need to be knowledgeable about the patent system to so that they are able to negotiate fair and balanced licensing contracts. SMEs in the pharmaceutical industry may use the wealth of information contained in patent documents as a crucial input to their R&D work, to get ideas for further innovation, to ensure their "freedom to operate" or to find out when a patent is due to expire opening the door for the introduction of generics.

In the pharmaceutical industry, types of inventions that are patentable in many countries (as long as the other criteria are met) include new pharmaceutical compounds, new or improved products for diagnostics, new dosage forms of known therapeutics, microorganisms, novel combinations of known compounds, processes and methods used for manufacturing a particular product, new and/or improved manufacturing equipment and new and/or improved drug delivery mechanisms or technologies. The list is by no means exhaustive and not all of the above are patentable in all countries.

Virtually all countries have some regulation of prescription drug prices and budgetary costs. For example, prices and price increases in France, Italy, Spain are tightly controlled for drugs reimbursed by social insurance. Throughout the developing world, such regulations are extensive. Indeed, the unwillingness of many nations to provide drug patents may be seen both as a form of industrial policy ( to encourage local imitative industries) and as implicit price regulation. However, layered onto patent limitations are detailed rules covering pricing formulas and markups, which stem from negotiations among public health authorities, hospitals, pharmaceutical suppliers and etc. Regulations typically extend to regional distribution requirements, packaging and labeling, the size and strength of dosages.

Intellectual property may be described as rights to intellectual creations that allow the owner of those rights to prevent others from gaining economic and other benefits from the creation. These rights can be thought of as a form of limited monopoly.

Types:

-industrial property

-copyrights and related rights

-IPRs that stimulate inventive and creative activity (patents, copyright, trade secrets)

-IPRs that resolve information asymmetries (trademarks, geo indications).

IPRS consist of 2 main branches:

-Industrial property — This consists mainly of inventions, trademarks, industrial designs, and geographical indications.

- Copyright and related rights — This consists mainly of literary, musical, artistic, photographic, and audiovisual works.