IP strategy for developing nations

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.