IP strategy for developing nations

Mohamad Mova Al 'Afghani, Jakarta

Makarim Wibisono wrote a pair of interesting articles titled The role of IPR in developing the economy in this daily on Nov. 28th and 29th. These articles were in general intended to explain the urgency of formulating and promoting international property (IP) strategies in developing states to help develop their economies. Here, I will try to provide alternative ideas on how developing states should treat the IP regime.

As international relations are governed by international law, the first and foremost step developing states concerns the question of what determines the existence of "intellectual property rights" under international law. Is intellectual property absolute? Does it constitute a peremptory norm under international law? Is the right to intellectual property, for example, similar to the right to life, the right to speak freely or the right to own property? Certainly, a state can be held guilty under international law if it conducts or condone genocide, but can a newly independent state such as East Timor be held guilty if it refuses to admit intellectual property rights within its territory?

If international law is seen as a hierarchy where peremptory norms are at the apex of the triangle, followed by the UN Charter in the second layer and treaties and customary international law in the third, then intellectual property will obviously not be at the top of the barrel. The top-most levels should consist of inalienable rights such as the right to life, the right to speak freely, and other basic human rights. In reality, IP is therefore made up of a mix of treaty provisions and customary obligations imposed upon states.

In other words, IP rights are not absolute and unquestionable obligations that states must comply with in the same way as peremptory norms. The IP regime evolved on a voluntary-mutual consent basis. Hence, states should have "sovereignty" to reject its application or to prescribe their own IP standards.

In theory, states can actually demonstrate their "persistent objection" to the IP regime. In addition to this, TRIPS and other IP instruments will only be binding on states that wish to be bound by them. It is unfortunate that in reality states are forced to adhere to IP -- not as a matter of law-- but simply to fulfill the prerequisites for foreign financial aid or to entice foreign investment.

The tickling question is, why is it that suddenly this 17th century English concept becomes some sort of ultimate truth that every state must adhere to? My next explanation may be oversimplified, but in some ways developed states may be seen as male and developing states as female. When these "female" states are born (by declaring their independence from the colonizing powers, or from the then "developed" states), they enter a global structure that the "males" (developed states) have fashioned.

To this extent, international law and globalization are clear examples of tyranny. The legal infrastructure in developing states has often been designed by a minority of developed states, backed by minority of "influential" legal scholars. Law-making is performed in a top-down manner by representatives of states sitting in international institutions. There's nothing that the legislatures of third-world nations can do but to sit and adopt what has been "agreed". This, in turn, creates multiple problems.

The notion of ownership, which covers the area of intellectual property, is an example of this. Eastern states value a culture of sharing. Every form of "ownership" in their cultures entails social functions and is not as individualistic as in Western states. Conflicts at the grass roots will occur if governments blindly accede to international instruments that prioritize individualistic values.

There have been cases in Indonesia where farmers have been convicted and even sent to jail for distributing certified and patented seeds. The relevant legislation provides up to seven years in jail and a maximum fine of up to Rp 2.5 billion for those who distribute, propagate, reproduce, advertise or sell protected seed varieties without an express license from the registered owners of the intellectual property (article 71 of Law No. 29 of 2000).

Unlike sophisticated, government-subsidized modern farmers in developed states, traditional farmers in Indonesia do not know -- and would be surprised to learn -- that distributing and propagating certified and patented seeds is a criminal offense. They have practiced the art of farming and seed propagation since time immemorial and are not used to being subjected to legal- formal restrictions.

Social conflicts are not the only risks that are run when adopting international instruments that are out of line with local values. In Indonesia, every law that has anything to do with the economy will always be overshadowed by Article 33 of the Constitution, and therefore can always be subjected to a test of its constitutionality. Thus, it is always open to the Constitutional Court to determine that the protection of patented seeds is incompatible with the socialistic people's economy envisaged by the Constitution.

Thus, rather than spending time and money on educating traditional farmers about restrictions on propagating seeds, it would be better for the governments of developing nations to unite and push for more acceptable and culture-friendly IP instruments at the negotiating table.

There, officials could explain to their counterparts that there are certain aspects of IP that are not acceptable. As a consequence, the regimes that will be adopted in their national legal systems must give plenty of room for the utilization of those inventions designed for personal/non-commercial and communal purposes.

Worries that uncompetitive legislation will drive away foreign investment are misplaced. Surveys conducted by risk consultants often show that investors prefer to invest in countries that have reliable judicial and legal systems compare to those that offer incentives in the form of investment-friendly laws, low taxes or low wage levels. A reliable legal system will only be achieved if the laws enacted really reflect the will of society, from top to bottom.

Also, let's not forget that developing nations are primarily "IP consumers" while developed nations are "IP producers". The World Bank suggests that most developed countries would be major beneficiaries of TRIPS in terms of the enhanced value of their patents, with the benefit to the U.S. estimated at an annual US$19 billion. According to various reports issued by the U.S. Department of Commerce, between 1991 and 2001 the net U.S. surplus of royalties and fees (which mainly relate to IP transactions) increased from $14 billion to over $22 billion.

Figures from the World Bank in 1999 indicate a deficit for the developing countries for which figures are available of $7.5 billion on royalties and license fees. This means that third world citizens will be in the position of paying for rather than prospering from the regime.

IP could be beneficial for developing countries if the regime allowed free utilization for educational and humanitarian purposes and gave permission to everyone to modify and modernize protected products without having to fear accusations of piracy.

The writer is a lawyer and lecturer and can be reached at movanet@yahoo.com.