UNCTAD/CD-TFT 1

The Development Dimensions of Intellectual Property

21 September 2007Short Courses on Key Economic Issues

Geneva, Switzerland

Kiyoshi Adachi, Legal Officer and Team Leader, IPDivision on Investment, Technology and Enterprise Development

UNCTAD/CD-TFT 2

DITE’s IP program

Objectives:• build capacities (Geneva & capitals) to help DCs

participate more effectively in international discussions on IPRs, in line with their development objectives

• help DCs to better integrate into and benefit from the world economy

Activities:• research and analysis• training and capacity-building• consensus-building• cooperation with interested governments

UNCTAD/CD-TFT 3

The Raison d’ Être for Intellectual Property Rights

(IPRs)

IPRs are designed to encourage innovation by balancing private rights for reward with public needs for the

unconstrained availability of important knowledge and information.

UNCTAD/CD-TFT 4

IP Trade is Growing

Payments: Royalty and licensing fees

0

5

10

15

20

25

30

35

40

LAC Africa Asia Europe EMU North America

$ bi

llion

s

1998

2004

Source : World Development Indicators, 2006

Whether we like it or not, IP has ended up being discussed as an economic trade/investment issue

UNCTAD/CD-TFT 5

Tracking trends- R&D expenditure by TNCs overseas

R&D expenditure by US TNCs abroad

0

500

1000

1500

2000

2500

1994 1996 1998 2000 2002

$ m

illio

ns

Asia

LAC

Aus/JP/NZ

Source : NSF, Science and engineering indicators, 2006Aus/JP/NZ: Australia, Japan and New Zealand

UNCTAD/CD-TFT 6

IPRs and Striking a balance

IPRs (and patents in particular) provide exclusivity as an incentive for inventors to engage in R&D

But, technological development also needs competition and follow-on innovation

Balance between IP protection and essential information is needed in various areas of public policy

• Health (access to affordable medicines)• Biotechnology (use of genetic research tools)• Food & agriculture (food security & preservation of biodiversity)

UNCTAD/CD-TFT 7

Striking a balance: Patents as a Policy Measure

Protection (P) vs. Innovation (I)Maximal innovation level

Optimal protection levelMinimal protection level P

ISource: Swiss Federal Institute of Intellectual Property, October 2006

UNCTAD/CD-TFT 8

Striking a balance

• Where is the optimal protection level to reach maximum of innovation?

• Historical evidence: no «one-size-fits-all» model• Early stages of technological development

require broad public domain for indigenous learning

• Advanced stages of development require higher level of protection of technological assets

• Even technologically advanced economies depend on competition and follow-on innovation

UNCTAD/CD-TFT 9

How is IP manifestedas a trade/investment issue?

• The Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement) is a condition of WTO membership; it establishes minimum standards that must be adhered to by members

•Practically all bilateral investment treaties (BITs) have a broad definition of “investment” that encompasses IP rights

•Increasingly there are provisions in many free trade agreements (FTAs) and economic partnership agreements (EPAs) that deal with IP rights, sometimes going beyond the minimum standards established under TRIPS (TRIPS-plus)

UNCTAD/CD-TFT 10

TRIPS - Objectives

IPRs should contribute to• the promotion of technological innovation;• the transfer & dissemination of technology;• the mutual advantage of producers and users of

technological knowledge

IP protection is not an end in itself, but one means to promote public policy objectives

UNCTAD/CD-TFT 11

TRIPS - Minimum standards of IP protection

TRIPS provides for mandatory minimum standards of protection in most IP categories

• Members in domestic laws may generally not provide less protection than under TRIPS

• Members may provide higher protection than under TRIPS

UNCTAD/CD-TFT 12

TRIPS Flexibilities

TRIPS obligations are drafted in general terms •Example: patents available for inventions that are new, inventive & industrially applicable (4 undefined terms)

•In order to become operational on national level, most TRIPS provisions need further elaboration by domestic law makers

This leeway in implementation is referred to as« TRIPS flexibility »

UNCTAD/CD-TFT 13

TRIPS-plus developments Limitation of available TRIPS flexibilities

• Through bilateral & regional free trade agreements (FTAs): «TRIPS-Plus» obligations (= higher levels of IP protection, reduction of public domain)

Examples: • Exclusion of low-priced parallel imports• Limitation of grounds for authorization of compulsory

licenses• Exclusivity of pharmaceutical test data• Mandatory pharmaceutical patent extension for delays on

the grant of the patent or regulatory approvals

UNCTAD/CD-TFT 14

TRIPS-plus developments

Freedom of WTO Members to give up flexibilities

Limitation of available flexibilities reduces scope for development-oriented balancing of IP protection vs. public access

Governments may be ready to compromise on IP flexibilities for other policy considerations • Market access (agriculture, etc.)• Bilateral pressure

UNCTAD/CD-TFT 15

Intellectual Property in Preferential Trade and

Investment Agreements (PTIAs)

Based on model agreements• IP issues in PTIAs often similar among the set of IP issues in PTIAs often similar among the set of

treaties to which a major economic country is a partytreaties to which a major economic country is a party Usually containing TRIPS-plus provisionsUsually containing TRIPS-plus provisions

• US FTAs typically include IP provisions relating to US FTAs typically include IP provisions relating to protection of pharmaceutical products; EU protection of pharmaceutical products; EU agreements typically require adherence to agreements typically require adherence to multilateral conventions such as the International multilateral conventions such as the International Convention for the Protection of New Varieties of Convention for the Protection of New Varieties of Plants (UPOV)Plants (UPOV)

UNCTAD/CD-TFT 16

Intellectual Property in PTIAsSpecific provisions on IP

Over 50% of the agreements contain TRIPS-plus Over 50% of the agreements contain TRIPS-plus provisionsprovisions

51% 40%

9%

Provisions that go beyond TRIPS ("TRIPS-plus") Provisions on IPR cooperation (reaffirming TRIPS obligations) ) No provisions on IPR

<Forms of IPR provisions in PTIAs>

Source: UNCTAD survey of 158 PTIAs, 2007

9%9%

40%40% 51%

UNCTAD/CD-TFT 17

Intellectual Property in PTIAs

But, there is often leverage to negotiate even when negotiations are based on a model agreement:

Japan – Malaysia EPA (2005): Contracting parties must ensure that rights relating to new plant varieties are adequately protected, and having due regard to the concerns of the other Country, endeavour to protect as many plant genera or species in a manner stated in paragraph 1 of the Article within the shortest period of time.

Japan – Philippines EPA (2006): Each party shall within its capabilities, endeavour to increase the number of plant genera and species that can be protected under its laws and regulations and that in this regard, each Party shall consider the concerns of the other Party.

UNCTAD/CD-TFT 18

Conclusions

IPRs may provide important incentives for innovation but may also prevent access to essential information and prevent competition

TRIPS provides important tools to strike a balance between protection and access

• TRIPS flexibilities to promote local production & access to pharmaceutical substances (latter session)

TRIPS flexibilities are being limited through <<TRIPS-Plus>> provisions in PTIAs; there is room to negotiate, however, and developing country negotiators need to be aware of implications of IP provisions

UNCTAD/CD-TFT 19

Forthcoming Events – Fall ‘07

27 October 2007A Commonwealth Secretariat - UNCTAD National Training Workshop on Regulatory Frameworks for Better Access to Medicines (Mombassa, Kenya)

15 November 2007An UNCTAD – BMZ – InWEnt Multistakeholder Dialogue: Mobilizing Resources and Harnessing Knowledge for Development: Investment and the Local Production of Essential Medicines

21 November 2007A Joint UNCTAD – South Centre - Stockholm Network Debate - Negotiating Pharmaceutical IPRs – International Governance In Need of Coordination?

26-30 November 2007UNCTAD-Action Medeor Workshop on TRIPS Flexibilities on Public Health for EAC Countries (Moshi, Tanzania)

UNCTAD/CD-TFT 20

Contact

Kiyoshi AdachiLegal Officer and Team Leader, Intellectual

Property

Policy Implementation SectionPolicies and Capacity Building Branch

Division on Investment, Technology and Enterprise Development (DITE), UNCTAD

E-mail: Kiyoshi.Adachi@unctad.orgTel: ++41 (0) 22 917 14 13Fax: ++41 (0) 22 917 01 97