Unforced Errors

It’s easy enough to fall into the trap. In hot pursuit of an argument we sometimes grasp at evidence that isn’t quite what it seems.

Jane”>http://www.janegalt.net/blog/archives/004357.html”>Jane Galt has put an odd spin on the probable WTO deal on patents and drugs

” The WTO has just cut a deal to let countries that break patents, such as India and Brazil, export their drugs.  The agreement is very limited in scope.  But it goes to show that pharma companies are right to be worried about the support from governments—ours and others—for maintaining their intellectual property. “

Although I agree with her that drug patents should be protected, it’s misleading to suggest that India or other countries that may be using, or threatening to use compulsory licenses to manufacture drugs are “breaking patents”. Compulsory licensing is a long-established feature of the global patents system that has a legitimate rationale related to competition policy goals.  Far from endangering patents, the WTO Agreements in fact provide the only enforceable rules limiting the use of compulsory licenses. You’ll find more about this on my “World Trade Rules(link to the TRIPS Manual on WorldTradeRules.com)”:http://www.inquit.com/wtr/trips/TripsManual.html#Patents%20-%20compulsory%20licensing site. Does the new WTO proposal favor the greater use of compulsory licensing? Not as much as Jane implies …
The TRIPS(Trade Related Intellectual Property Rights) Agreement is, in part, about is limiting the “compulsory licensing provisions of international patent treaties that have been around for over a century to ensure that governments do not abuse these powers.  The pre-eminent international treaty on the creation and maintenance of Patents is the Paris Convention of 1883.  “Article 5 of the Convention(link to the text of Art. 5 on the WIPO site)”:http://www.wipo.int/clea/docs/en/wo/wo020en.htm#P121_15034 says that governments may, in effect, acquire the right to exploit a patent for various reasons that go to the national interest; for example, if the patent owner is using the monopoly right in an anti-competitive way. The TRIPS Agreement makes two crucial changes to this established system. First, it makes it possible to enforce the international rules on patents. There is no effective international enforcement of the Paris Convention rules, except through the WTO. The second innovation of the TRIPS Agreement was to “spell out(link to the TRIPS Manual on WorldTradeRules.com)”:http://www.inquit.com/wtr/trips/TripsManual.html#Patents%20-%20compulsory%20licensing some reasonable limits on the use of this compulsory licensing power, as it affects patents on traded goods including # Adequate remuneration of the rights holder: TRIPS says a government may not just ‘rip-off’ the patent. It must pay for the private rights it is acquiring
# Judicial or other independent review: TRIPS says that the patent owner must have the right to an independent review of a government’s actions in acquiring the patent
# Predominantly for supply of domestic market: Compulsory licenses must be predominantly for the supply of the domestic market of the country in which the government compulsorily acquires the patent You can probably see now where the conflict arose between the TRIPS provisions and drugs that are needed for public health: the third of these entirely reasonable conditions on the use of the compulsory licensing powers turned out to have some unexpected consequences. If compulsory licenses were not restricted “predominantly” to the domestic market of the country making the acquisition, then the international patent system would quickly break down. All patents would be under the threat that a single compulsory license in one state would supply goods embodying the patent world wide, undermining the patent wherever it still held. The ‘TRIPS and public health’ issue is a conflict between this provision of the TRIPS agreement and the wish of governments in poor countries to access drugs that have been manufactured under compulsory licenses issued in other countries. In truth, it’s not much of a public health problem at all. More than 90% of the drugs on the World Health Organization’s list of essential public health medicines are not patented anywhere. Of the others, some are not patented in e.g. African countries. Most are already available under preferential pricing arrangements (typically free) between the global drugs companies and governments of poor countries. The legal conflict in the TRIPS Agreement, too, is pretty small beer. You can probably think of a couple of sentences that could be added to the TRIPS Agreement to work around specific problems with a small number of patented drugs without undermining the global patent system. So why the agony? The real problems appear to have been * ideological NGO’s who have been pressing exaggerated claims about the public health consequences of the patents and
* a legalistic approach by the officials and lawyers advising the drug companies that seemed to exaggerate the threat to the companies’ global interests Most of the negotiators at WTO in Geneva share the general incredulity that this basically simple issue was not solved a year ago. Let’s hope it’s now behind us.

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