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Ethical Considerations in IPR

Abstract:

Intellectual property (IP) refers to the creations of the mind or ideas expressed in a tangible format. It encompasses the work produced by scholars and can be documented even if its immediate value is not apparent. IP includes inventions, creative works, discoveries, know-how, show-how, and artistic creations that have value and are generated through human activity by individuals or entities. 


In education, intellectual property includes patentable inventions, trademarkable symbols, copyrightable works, and licensable materials. Faculty outputs such as books, publications, syllabi, presentation files, and lecture notes are examples. Course materials like readings, assignments, tools, simulations, student contributions, discussions, and exams constitute intellectual property. 


Key categories of intellectual property are patents, plant breeder's rights, copyrights, trademarks, and trade secrets. Research is vital in creating intellectuals. Funders of research projects may seek to disseminate technological advancements broadly. While the funder supports securing international IP protection, the researcher retains copyright and full licensing rights.

 

The creator of intellectual property (IP) holds two fundamental rights: economic and moral. Economic rights enable the creator to sell, profit from, or retain exclusive rights to the benefits derived from their work. Moral rights affirm the creator's ownership and connection to the work, remaining with them throughout their lives and often upheld even after death. Editors or others seeking to modify the work must obtain the original author's consent, preserving the integrity of the creator's vision. For example, royalties from William Shakespeare's works continued to benefit his family long after his passing, with moral rights ensuring that no alterations could be made even after the copyright entered the public domain.


The Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), established during the 1986 Uruguay Round under the General Agreement on Tariffs and Trade (GATT), standardized significant protections for Intellectual Property Rights (IPRs) in the global trade system. Developing-country members of the World Trade Organization (WTO) were mandated to adhere to these stringent patent standards by 2005, except for certain least-developed countries granted extensions exempting them from patent protection until 2013 and from pharmaceutical patents until 2016. Over the past decade, the United States has actively pursued bilateral and regional Free Trade Agreements (FTAs) worldwide, known as ‘TRIPS-plus’ agreements, such as NAFTA and CAFTA-DR. These agreements incorporate IPR standards surpassing those set by the TRIPS agreement, aiming to enhance IP protections in international trade.



Related Conventions and Problems Associated with It

A large body of contemporary academic literature suggests that IPRs implemented in the TRIPS agreement and various US FTAs give rise to several ethical problems. This review paper aims to overview the problems associated with intellectual property rights (IPRs). Additionally, it outlines and discusses various proposals for mitigating these issues. The paper adopts a primarily descriptive approach. While it occasionally presents personal viewpoints, its main objective is not to advocate for or defend any specific solutions to the issues discussed. Instead, the paper seeks to illuminate, clarify, and contextualize several significant arguments regarding the ethical nature of IPRs. This is intended to equip policymakers and other stakeholders with the information needed to form their own informed opinions on the matter. The ethical problems raised by IPRs are most pertinent when it comes to socially valuable goods such as life-saving medicines and genetically modified seeds that are given intellectual property (IP) protection. The discussions in this paper will almost exclusively revolve around just one product type to bring out the broader theoretical problems/issues caused by implementing IPRs. In line with much contemporary literature on the ethical dimensions of IPRs, the product type in question is life-saving medicines. The TRIPS agreement incentivizes innovation but can lead to ethical issues. Developing new, safe drugs is expensive, time-consuming, and financially risky. Pharmaceutical companies, bearing all development costs, are willing to invest in R&D with strong financial incentives. IPRs on pharmaceutical innovations are crucial for ensuring these incentives exist. 


In the absence of intellectual property rights (IPRs), market prices for pharmaceutical products will likely be driven down to just above marginal production costs, preventing firms from recouping their R&D investments and leading to undersupply in pharmaceutical innovation. IPRs create a temporary monopoly, allowing firms to charge prices significantly higher than marginal costs, which helps recoup R&D expenses and encourages further innovation. However, high prices resulting from IPRs can exclude potential buyers who would purchase the product at a price slightly above marginal cost but cannot afford it at monopoly prices, leading to an exclusion or access problem. This issue is particularly problematic for life-saving medicines, as many potential buyers in low-income countries need more financial resources to afford them. Consequently, there needs to be more R&D investment in drugs for diseases prevalent in these regions, such as malaria, leishmaniasis, and Chagas' disease, highlighting the 'availability problem' imposed by the TRIPS agreement, which enforces strong IPRs.


The availability problem arises because the incentive mechanism for innovation under IPRs links innovation motivation directly to product pricing. The TRIPS agreement ensures that profits come solely from sales, thereby increasing the incentive to invest in R&D based on the market price a product can command. Consequently, TRIPS' strong IPR protection does not promote investment in R&D for products beneficial to poor or small populations. Thus, socially valuable goods, including life-saving medicines, are produced at a different rate for these populations than for wealthier and larger populations.


The availability problem arises because the incentive mechanism for innovation under IPRs links innovation motivation directly to product pricing. The TRIPS agreement ensures that profits come solely from sales, thereby increasing the incentive to invest in R&D based on the market price a product can command. Consequently, TRIPS' strong IPR protection does not promote investment in R&D for products beneficial to poor or small populations. Thus, socially valuable goods, including life-saving medicines, are produced at a different rate for these populations than for wealthier and larger populations.


Solution To the Problem

According to Pogge (2005), two standard solutions to the access problem are differential pricing and compulsory licensing. Differential pricing involves selling IP-protected products at different prices based on regional income levels. This allows firms to maintain high profits in wealthy markets while offering lower prices in poorer regions, theoretically improving access to essential products like medicines. However, this method faces issues such as the risk of parallel trade, where cheaper drugs are smuggled into high-income countries, and social justice concerns, where wealthy individuals in low-income countries access cheaper drugs while poorer individuals in high-income countries do not.

Compulsory licensing permits governments to authorize the production of generic versions of patented drugs in response to public emergencies. However, it has several drawbacks. Initially, the WTO only allowed compulsory licenses for domestic production, disadvantaging countries without manufacturing capabilities. The 2003 WTO amendment allowed the export of generic drugs, but this process has proven cumbersome and inefficient. Furthermore, compulsory licensing may discourage direct investment and innovation, as pharmaceutical companies may avoid markets perceived as legally hostile and reduce R&D for drugs likely to be subject to such licensing.


Given these challenges, neither differential pricing nor compulsory licensing fully addresses the access problem. Alternative solutions must be explored to amend the current IPR system under the TRIPS agreement to address both access and availability issues better.


The ethical dilemmas posed by intellectual property rights (IPRs) under the TRIPS agreement, particularly concerning life-saving medicines, underscore significant access and availability issues. While differential pricing and compulsory licensing offer partial solutions, they face substantial limitations and challenges. To address these shortcomings, it is imperative to explore alternative mechanisms that balance the need for innovation incentives with broader access to essential medicines. Policymakers must work towards reforming the IPR system to ensure that socially valuable goods are available and affordable to all populations, regardless of their economic status.

 

References:

  • Okwilagwe, O. A., Obasuyi, L., Oyelude, A. A., & Rafu, J. (2016). Developments in the digital age: Issues and themes in library & information science

  • Sonderholm, J. (2010). Intellectual property rights and the TRIPS agreement: an overview of ethical problems and some proposed solutions. World Bank Policy Research Working Paper, (5228).

  • Timmermans, K. (2003). Intellectual property rights and traditional medicine: policy dilemmas at the interface. Social Science & Medicine, 57(4), 745-756.

  • Loggie, B., Smith, J., & Johnson, K. (2006)

 

*This article is authored by Anushkha Srivastava, Student of Symbiosis Law School, Noida and reviewed by Agam Tandon, Student of Symbiosis Law School, Noida.


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