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4-Patents: UNDP on "the relentness march of intellectual property rights"

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TITLE:  New Technologies & the Global Race for Knowledge
        excerpt from chapter 2
SOURCE: Human Development Report 1999, Chpt 2, pp 66-76
        sent by GRAIN
DATE:   July 16, 1999

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"The relentless march of intellectual property rights needs to be
stopped and questioned."
UNDP, Human Development Report 1999

UNDP's annual Human Development Report focuses this year onglobalisation. It may be downloaded in full from

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[Excerpt from Chapter 2]


The knowledge sector is a fast-growing area of the global
economy: between 1980 and 1994 the share of high-technologyproducts in international trade doubled, from 12% to 
24%. Yet in the 1990s, with many governments facing a squeeze on
budgets, the proportion of public funding for research and
development in science and technology has fallen around the
world, to be replaced by private industry. Research and
development has also shifted away from developing countries.
Their share in the global total dropped from 6% in the mid-1980s
to 4% in the mid-1990s.

The trend has been particularly strong in agriculture and
biotechnology. In the early 1980s most crop and seed development
in the United States was under public research. Patents were
rarely sought and rarely enforced; saving and trading of seed was
commonplace. This changed when new legislation encouraged closer
cooperation with the private sector, enabling companies to profit
from products developed largely with public funds. The
intellectual property of public and university research was
increasingly passed over to private industry: the portion of
public sector patents in biotechnology sold under exclusive
licence to the private sector rose from just 6% in 1981 to more
than 40% by 1990.

With increasing privatization of research and rising costs for
risky innovations, the 1990s have seen a boom in the number and
value of mergers and acquisitions. The biggest year ever was
1998, especially for biotechnology, telecommunications and
computing industries. As a result economic power has consolidated
among a very few players. By 1995 the world's top 20 information
and communications corporations had combined revenue of more than
$1 trillion -- equivalent to the GDP of the United Kingdom.

In biotechnology genetic engineering underlies the new direction
of pharmaceuticals, food, chemicals, cosmetics, energy and seeds.
This is blurring the boundaries between the sectors, creating
mega "life sciences" corporations. Indeed, across all knowledge
intensive industries, a select group of corporations controls
ever-growing shares of the global market. In 1998, how much of
the global market did the top 10 corporations in each industry
control? In commercial seed, 32% of a $23 billion industry; in
pharmaceuticals, 35% of $297 billion; in veterinary medicine, 60%
of $17 billion; in computers, almost 70% of $334 billion; in
pesticides, 85% of $31 billion; and in telecommunications, more
than 86% of $262 billion. The lesson is clear: privatization does
not automatically lead to competition.


At the creation of the World Trade Organization in 1994, the most
far-reaching multilateral agreement on intellectual property was
drawn up: Trade-Related Aspects of Intellectual Property Rights,

The past two decades have seen a huge rise in patent claims. The
World Intellectual Property Organization's Patent Cooperation
Treaty accepts a single international application valid in many
countries. The number of applications made annually soared from
less than 3,000 in 1979 to more than 54,000 in 1997 -- and those
applications in 1997 were equivalent to nearly 3.5 million
individual national applications. According to the director of
research and development at one of the largest biotechnology
corporations, "the most important publications for our
researchers are not chemistry journals but patent office journals
around the world."

Yet the claims to intellectual property are concentrated among
very few countries.

Industrial countries hold 97% of all patents worldwide. In 1995
more than half of global royalties and licensing fees were paid
to the United States, mostly from Japan, the United Kingdom,
France, Germany and the Netherlands. Indeed, in 1993 just 10
countries accounted for 84% of global research and development,
controlled 95% of the US patents of the past two decades and
captured more than 90% of cross-border royalties and licensing
fees -- and 70% of global royalty and licensing fee payments were
between parent and affiliate in multinational corporations. By
contrast, the use of intellectual property rights is alien to
many developing countries. More than 80% of the patents that have
been granted in developing countries belong to residents of
industrial countries.


These new rules of globalization -- privatization, liberalization
and tighter intellectual property rights -- are shaping the path
of technology, creating new risks of marginalization and

- In defining research agendas, money talks louder than need --
cosmetic drugs and slow-ripening tomatoes come higher on the list
than a vaccine against malaria or drought-resistant crops for
marginal lands. Tighter control of innovation in the hands of
multinational corporations ignores the needs of millions. From
new drugs to better seeds for food crops, the best of the new
technologies are designed and priced for those who can pay. For
poor people, the technological progress remains far out of reach.

- Tighter intellectual property rights raise the price of
technology transfer, and risk blocking developing countries out
of the dynamic knowledge sector in areas such as computer
software and generic drugs.

- New patent laws pay scant attention to the knowledge of
indigenous people, leaving it vulnerable to claim by others.
These laws ignore cultural diversity in creating and sharing
innovations -- and diversity in views on what can and should be
owned, from plant varieties to human life. The result is a silent
theft of centuries of knowledge from developing to developed

- Despite the risks of genetic engineering, the rush and push of
commercial interests are putting profits before people.


Genetic engineering is largely the product of private commercial
research in industrial countries. The top five biotechnology
firms, based in the United States and Europe, control more than
95% of gene transfer patents. It can take 10 years and $300
million to create a new commercial product -- so, not
surprisingly, companies want to protect their innovations and
ensure that they reap profits. But this approach focuses research
on high-income markets. In 1998, of the 27 million hectares of
land under transgenic -- genetically altered -- crops, more than
95% was in North America and Europe. Research has focused on the
wants of rich farmers and consumers: tomatoes with longer shelf
lives or herbicide-resistant soya beans and yellow maize to be
used mainly for poultry feed. Seed varieties are engineered to be
suitable for mechanized mass production with labour-saving
techniques, designed for industrial and intensive farming

Far less time and money have been given to the needs of farmers
in developing countries: increasing nutritional value, disease
resistance and robustness. Similarly, research is lacking on
water-saving plant varieties for smallholders. Instead, many
major corporations are seeking patents for the innovation of
linking genetic characteristics to chemical triggers. What for?
One likely use is to create seeds that will germinate and bear
fruit only when used with the company's brand of fertilizers or
herbicides -- increasing sales through dependency on inputs. With
agrochemical, plant breeding and seed distribution companies
merging into mega-corporations, farming communities risk becoming
caught in a chain of biological and licensing controls.

Local plant breeding is essential for adapting seeds to the
ecosystem and maintaining biodiversity. The 1.4 billion rural
people relying on farm-saved seed could see their interests
marginalized. With increasing control and homogenization of the
market by major agri-businesses, the competitiveness of
alternative varieties and the scope for producing alternative
crops will most likely decline, depleting local genetic

In the pharmaceutical industry private interests cannot be
expected to meet all public needs. Almost all research on
diseases in developing countries has been done by international
organizations or the military in industrial countries. Of the
annual health-related research and development worldwide, only
0.2% goes for pneumonia, diarrhoeal diseases and tuberculosis --
yet these account for 18% of the global disease burden. In the
United States between 1981 and 1991, less than 5% of drugs
introduced by the top 25 companies were therapeutic advances.
Some 70% of drugs with therapeutic gain were produced with
government involvement. Vaccines are the most cost-effective
technologies known in health care, preventing illness in a one
time dose. But they generate smaller profits and have higher
potential liabilities than treatments used repeatedly. As a
result a consortium of US pharmaceutical companies has united to
develop antiviral agents against HIV, but not to produce a
vaccine against AIDS.


The costs of industrial catch-up for Japan and the first-tier
newly industrializing economies in East Asia were greatly reduced
by the weak enforcement of intellectual property rights in the
region before the mid-1980s. Tighter control under the TRIPS
agreement has closed off old opportunities and increased the
costs of access to new technologies.

In the pharmaceutical industry, prior to the TRIPS agreement,
countries such as China, Egypt and India allowed patents on
pharmaceutical processes but not final products. This approach
supported the development of domestic industries using different
methods to produce mainly generic drugs, similar to but far
cheaper than the original brand names. The difference is
highlighted by contrasting drug prices in Pakistan, where there
are patents, to India, where there are none.

When Glaxo Wellcome launched AZT as an inhibitor of AIDS, it cost
$10,000 per patient each year. As sales increased, the price fell
to $3,000 -- still far out of reach for most people in developing
countries. An Indian company then produced a generic -- Zidovir
100 -- and exported it to Belgium, Tanzania and Uganda at less
than half the price. The TRIPS agreement requires 20-year patents
on both processes and products, so India and others must change
national patent laws, making such opportunities impossible in the
future. As gene therapy comes to dominate the pharmaceutical
industry, this will significantly limit the industry's potential
in developing countries.

Countries can choose to require patent holders to give licences
to competitors -- but the process is long and the fees may be
prohibitive. Imposing price controls on industry, calculated as a
mark-up on costs, is another option, but multinationals often
avoid low prices by using loopholes in transfer pricing --
artificially inflating the cost of inputs transferred from
country to country within the multinational's domain. In India
multinational companies have sometimes charged 2, 4 or even 10
times the prices they would charge for inputs in Europe and the
United States in order to avoid controlled low prices. They have
little interest in pricing drugs for the market in developing
countries because they are maximizing global, not national,
profits and do not want to set a low-price precedent.

In the computer industry, software is one of the fastest-growing
areas and can be a way for new countries to get into producing
for the knowledge sector. In 1994 the global market for final,
packaged software was $79 billion, of which OECD countries
accounted for 94%. With a small but growing number of developing
countries entering the competition, it is not surprising that the
battle over intellectual property rights for software is a fierce
one. Protection is certainly needed: programmes are expensive to
develop, while pirating them is cheap and easy. Even before
Microsoft launched Windows 95 at $100, it was on sale on the
streets of Beijing for $9. Many firms have lost billions of
dollars of trade in this way. At the same time excessively tight
intellectual property rights would eliminate competition and
innovation in this industry underlying global communications. A
careful balance needs to be struck.

The TRIPS agreement followed the United States in placing
software, like music and novels, under copyright law, with strong
and universal protection. The United States has started to grant
patents on software in addition to copyright, creating stronger
control over programme interfaces and tightening control over the
industry. But there is leeway. The TRIPS agreement does not
prohibit making copies for reverse engineering -- a process of
unravelling computer programmes to see how they work, generating
ideas and innovation. With programmes such as Word and Excel
becoming computing standards, reverse engineering is essential
for smaller producers to create software that is compatible and
competitive, and it must be protected in future reviews of the
agreement. If it were forbidden, the development of competitive
products would be drastically limited. And different computers
around the world would not be able to interact with one another 
- defeating the aim of connecting the network society.


Biodiversity is of great importance to drug development, and
developing countries are the source of an estimated 90% of the
world's store of biological resources. More than half of the
world's most frequently prescribed drugs are derived from plants
or synthetic copies of plant chemicals -- and this trend is
growing. Plant-based drugs are part of standard medical treatment
for heart conditions, childhood leukaemia, lymphatic cancer and
glaucoma, with a global value over the counter of more than $40
billion a year. In the same way that many Arab states benefited
from industrialization's thirst for the petroleum that lay
beneath their land, so now biorich countries could have the
chance to benefit from biotechnology's demand for the rare
germplasm found on their land. Many indigenous communities have a
further claim to biotechnology's bounty because they have been
the cultivators, researchers and protectors of their plants --
indeed, it is their long-acquired knowledge of nature's potential
that is valuable to pharmaceutical companies today.
Bioprospectors have for many years taken samples of plant
material and documented their traditional medicinal uses. Without
the consent of local people, this knowledge has been used to
develop highly profitable drugs. In any other situation this
would be called industrial espionage -- theft of both the genetic
materials and the long-acquired knowledge of using them to
develop medicines.

The rosy periwinkle found in Madagascar, for example, contains
anti-cancer properties, and drugs developed from it give $100
million in annual sales to a US-based multinational
pharmaceutical company, Eli Lilly -- but virtually nothing for

Plant material was once treated as common property, but a
landmark US legal case in 1980 awarded a patent on a genetically
altered organism, launching the first step in the race to patent
life. Yet patent laws were drawn up in 19th-century Europe during
the industrial revolution; their legal frameworks have been
extended to cover global markets during the information
revolution. Three fundamental concerns:

- The inventions born of genetic engineering bring radically new
characteristics. Can a framework of property rights first
designed to protect industrial machinery really cope fairly and
effectively with the complexities of genetically manipulated

- Scientific research now takes place under a regime based on
ownership and control. It rewards research according to short
term profitability, not according to the needs to protect
biodiversity, ensure sustainable and ethical use of genetic
resources or meet the essential needs of people.

- The attempt to create a global market in property rights
imposes one conception of ownership and innovation on a
culturally diverse reality, benefiting private industrial
research but not public institutes or farming communities.

In 1995 two researchers at the University of Mississippi Medical
Center were granted the US patent for using turmeric to heal
wounds. But in India this was a long-standing art, common
knowledge and practice for thousands of years. To get the patent
repealed, the claim had to be backed by written evidence -- an
ancient Sanskrit text was eventually presented as proof and the
patent removed -- but this only highlighted the absurd imposition
of one culture's systems on another culture's traditions.

As a result of these problems, there has been increasing
recognition of the need to protect the knowledge of indigenous
people. The Convention on Biological Diversity of 1992 recognizes
the need to protect property rights but also the need for
companies to gain prior informed consent before conducting
research -- but this convention is not legally binding until
countries translate it into national law, and indigenous
communities have often received little attention or protection
under national law.

In the absence of legislation, more and more strategic alliances
are being struck between pharmaceutical firms and governments or
indigenous groups in resource-rich countries. Merck
Pharmaceuticals has an agreement with the non-profit National
Institute of Biodiversity, INBio, in Costa Rica to pay $1.1
million for access to 10,000 plant and insect samples. If any
leads to a successful drug, Costa Rica would receive a 23%
royalty share, yielding a possible $20-30 million each year.

>From Australia and Ecuador to Thailand and Uganda, bioprospectors
have made agreements with local communities, taking out patents
based on local knowledge in exchange for a share of profits.
Royalties promised are commonly 12%, though sometimes as low as
0.1% and as high as 34%. Even if just a 2% royalty were charged
on genetic resources that had been developed by local innovators
in the South, it is estimated that the North would owe more than
$300 million in unpaid royalties for farmers' crop seeds and more
than $5 billion in unpaid royalties for medicinal plants. But
this rate is low because negotiations are on an uneven footing.
When one company wanted to bioprospect in Yellowstone National
Park, the United States Park Service secured a 10% royalty share.
Negotiating power is everything.


Genetically modified foods come from plants to which extra genes
have been introduced to add qualities such as resistance to pests
or frost. The genes are taken from other plants, animals or
micro-organisms and are often introduced by attaching them to a
virus. There are several risks in this process. Genes introduced
to make plants tolerant to herbicides and insecticides could
escape in pollen and create highly resilient weeds that displace
other wild plants and change the balance of the ecosystem.
Similarly, over time powerful new strains of insects and weeds
resistant to herbicides and insecticides could develop. New
toxins could have damaging effects in the food chain, and viruses
could escape from virus-containing crops. The impacts could be
particularly serious in developing countries where biodiversity
is high and essential for sustainable agriculture. Yet it can
take 10-15 years before environmental damage becomes evident.
Despite the promised commercial gains, many developing countries
are extremely concerned about the potential impact.

The growing use of transgenic crops raises important issues --
about the safety of transferring organisms into new environments,
questions of liability for damage that are not covered under
international law and the need for far more transparency in
information. Responses to these issues have varied dramatically.

The United States, exporting $50 billion of agricultural products
a year and planting transgenic varieties for 25-45% of its major
crops, claims that strict safety rules will impede billions of
dollars of global exports annually in seed, grains and even
products like breakfast cereals and cotton clothing. But consumer
movements and farmers have often reacted strongly to transgenic
crops, pulling them out of fields and rejecting them in shops.
Ten years ago the risk of humans being infected by bovine
spongiform encephalopathy (BSE, or mad cow disease) was said to
be negligible -- but it happened. Once bitten, twice shy,
European consumers especially are now questioning altered foods.
Science is moving so fast and so little information has been
shared, it is not surprising that people fear that technology is
out of control.

With new technologies, profits should not come first -- but nor
should panic. Precaution is needed, and this was the motivation
for the Biosafety Protocol under the Convention on Biological
Diversity. The protocol would require exports of genetically
manipulated organisms to be approved in advance by the importing
country. The negotiations collapsed in February 1999 after the
main exporting countries -- the United States, Canada, Australia,
Argentina, Uruguay and Chile -- fell into open disagreement with
the European Union and many developing countries. Biosafety is
still critical -- all the more so as transgenic crops become more


Policies are urgently needed to turn the advances in the new
technologies into advances for all of humankind -- and to prevent
the rules of globalization from blocking poor people and poor
countries out of the knowledge economy.


Intellectual property rights were first raised in GATT in 1986 to
crack down on counterfeit goods. Their reach has gone far beyond
that into the ownership of life itself. As trade and intellectual
property law increasingly come to determine the path of nations 
- and the path of technology -- questioning present arrangements
is not just about economic flows. It is about preserving
biodiversity, carefully considering the ethics of patents on
life, ensuring access to health care, respecting other cultures'
forms of ownership and preventing a widening of the technological
gap between the knowledge-driven global economy and the rest
trapped in its shadows.

At a time of such dramatic breakthroughs in new technologies, it
is indefensible that human poverty should persist as it does.
What is more startling is that the current path could be leadingto greater marginalization and vulnerability of poor people
 The relentless march of intellectual property rights needs to be
stopped and questioned. Developments in the new technologies are
running far ahead of the ethical, legal, regulatory and policy
frameworks needed to govern their use. More understanding is
needed -- in every country -- of the economic and social
consequences of the TRIPS agreement. Many people have started to
question the relationship between knowledge ownership and
innovation. Alternative approaches to innovation, based on
sharing, open access and communal innovation, are flourishing,
disproving the claim that innovation necessarily requires

Broader governance is also needed in the communications industry.
Governance of the Internet has until recently been ad hoc and
largely biased towards the needs of high-tech countries. Debates
over taxing electronic commerce, allocating domain names and
creating privacy laws need to be opened up to include the needs
and concerns of developing countries, which have an equal
interest in the evolution of this tremendous tool.

Participation in the governance of technology must also be
widened. Race car drivers would not be the best advisers on
public transport, and scientists at the cutting edge of the
technological revolution cannot alone decide its path. This calls
for collaboration -- in national and global forums -- between
industry, independent scientists and technicians, governments,
regulators, civil society organizations and the mass media.


The path of technology must be reshaped if developing countries
are to see an advance in sustainable agriculture, wide access to
global communications and improvements in the health of their
populations. The new structure of science requires new
initiatives. New technologies promise many advances for human
development, but public institutions cannot afford them alone and
private industry will not develop them alone. Jointly they can.
Innovative policy is needed to ensure that much-needed solutions
for human development are pursued. Incentives are needed to turn
research towards the pressing needs of the world, not just of
those who pay. One proposal is for the Consultative Group on
International Agricultural Research (CGIAR) to reroute genetic
research to wider needs.

A representative group of independent scientists is needed to
identify the critically important technological challenges --
those that, if solved, would substantially improve the human
development of the world's poorest people and address the global
challenges to human security faced by all. Every five years the
group could offer financial incentives and public recognition to
researchers, public and private alike, for innovations that would
be used for global public interests. What would be high on the
list? In agriculture, sustainable, robust and biosafe crops. In
medical research, vaccines for malaria and HIV. In communications
technology, personal computers powered by solar strips and wind
up or dynamo drives, resistant to sand and humidity; software for
touch screens; and prepaid chip card software for electronic
commerce without credit cards. In environmental science, diverse
sources of renewable energy. What would fund such initiatives? A
levy on patents registered under the World Intellectual Property
Organization is one possibility. A levy of just $100 on each
patent would have raised $350 million in 1998 alone, equivalent
to the annual budget of the world's largest international
research organization in agriculture, the CGIAR. Alternatively,
funding could be reallocated from the research subsidies, grants
and tax breaks now given to industry.


The WTO is planning a review of the TRIPS agreement. But these
discussions must not simply push into new issues. Intellectual
property rights agreements were signed before most governments
and people understood the social and economic implications of
patents on life. They were also negotiated with far too little
participation from many developing countries now feeling the
impact of their conditions. There is a clear need for a full and
broad review of existing legislation, not an additional,
unsustainable burden of new conditions.

The choice is not between patents on everything or on nothing.
Rather, the question is, how much should be patentable? How can
the system be structured to take into account diverse interests
and diverse needs?

The review needs to ensure that the room for manoeuvre granted in
the TRIPS agreement is respected in practice. Interpretation of
the agreement is obviously not a unilateral matter, and proposals
by developing countries have often been rejected by G-7 countries
keen to maintain their industrial interests. In the event of
disagreement, dispute resolution mechanisms involve intense
negotiating among lawyers -- expensive and complex. The advantage
in costs and expertise clearly does not lie with developing

To strengthen their bargaining positions in pushing for change,
countries need to present frameworks that provide alternatives to
the provisions of the TRIPS agreement. Work is already well under
way. Many countries are exploring possible sui generis
legislation for plant varieties to protect farmers' rights. The
difficulty is the need for legislation to meet many diverse
interests within each country. One strong and coordinated
international proposal is the Convention of Farmers and Breeders
(CoFaB). It offers developing countries an alternative to
following European legislation by focusing legislation on needs
to protect farmers' rights to save and reuse seed and to fulfil
the food and nutritional security goals of their people.

For indigenous people's interests, too, open debate is needed
across countries to bring together the most up-to-date thinking
for use by negotiators and policy-makers. The framework needs to
consider collective rights to knowledge and resources, the need
for prior informed consent for use of materials and knowledge --
not just the consent of the government but also of the indigenous
groups concerned -- and the need for transparency in the findings
of research. Some initiatives have already been taken. Indigenous
people's organizations around the world such as the Indigenous
Peoples Biodiversity Network are seeking guidelines for legal
recognition of their intellectual property. Thailand, the
Philippines and Australian aboriginal groups have all taken steps
to protect indigenous knowledge.

Developing countries facing similar challenges can benefit from
consultation and cooperation to create model laws, collaborate in
training public officials and devise strategies to help
industries adversely affected by the new regime. Spreading
awareness of the issues at stake is important in building
coalitions among national interest groups, regional organizations
and international civil society campaigns. Presenting counter
proposals as a united negotiating bloc would greatly strengthen
the possibility for change. In March 1999 the International South
Group Network drew together representatives from 17 southern and
East African countries to discuss a joint position on the
upcoming World Trade Organization round and the review of the
TRIPS agreement, greatly strengthening the clarity and force of
the message to be delivered from countries in the region.

The TRIPS agreement was drawn up with remarkably little analysis
of its expected economic impacts. The costs of implementation --
revising laws, training officers, testing and enforcing patents 
- are high, yet the benefits are unclear. If the agreement is to
be reviewed, then let it be a review in everyone's interests. A
transparent cost review mechanism should be established within
the World Trade Organization, to track the costs of implementing
the TRIPS agreement, the effects on consumer prices, the cost of
anti-competitive effects and the impact on technology flows. And
most important, it should examine the impact on biodiversity, on
farming communities and on access to medical resources and
scientific information.


The potentially great benefits of the new biotechnology come with
risks attached: national and international guidelines are
urgently needed as transgenic crop production grows. Each country
needs to draw up biosafety measures, to monitor changes in
biodiversity, demand transparency and labelling of products,
consider the social, economic and ethical impacts and promote
research into areas of national need. Regional coordination is
needed for sharing data and experience, for sharing in the costs
of training officials and for developing rules of trading.

Much greater attention must be given to understanding the
potential environmental and health hazards of genetically altered
crops -- an especially important task in countries where the
science base and media coverage are narrow and there is extensive
fragmentation of the food chain into many smallholders,
processors and traders.

Participation in the process must be widened. Knowledge is needed
not only of the latest technologies but also of local ecosystems
and food chains, local culture and systems of exchange, socio
economic conditions and political and market stability. This
calls for broad collaboration. Some countries are already on this
path with established and representative biotechnology advisory
groups. France's government has adopted the precautionary
principle, promising to survey the development of the genetic
revolution and increase public transparency on findings. The
European Parliament favours creating a registry of tested and
accepted transgenic products, making a database available to the
public. Information and communications technologies and
biotechnology hold great potential for human development. But
strong policy action is needed nationally and internationally to
ensure that the new rules of globalization are framed to turn the
new technologies towards people's needs. Thus questions need to
be asked on how it is used.

Does the control, direction and use of technology:
- Promote innovation and sharing of knowledge?
- Restore social balance or concentrate power in the hands of a
- Favour profits or precaution?
- Bring benefits for the many or profits for the few?
- Respect diverse systems of property ownership?
- Empower or disempower people?
- Make technology accessible to those who need it?

Global governance of technology must respect and encompass
diverse needs and cultures. Public investment -- through new
funding -- is essential to develop products and systems for poor
people and countries. Precaution is needed in exploring new
applications, no matter how great their commercial promise. Only
then will the rules of globalization allow technological
breakthroughs to be steered to the needs of people, not just



Innovation is one of the most important processes for human
development. It pushes human capability forward and keeps
cultures thriving. It is also at the heart of the human quest to
expand knowledge. But are patents always the best way to promote
innovation in new technologies? There are good reasons to
question this common claim.

- Experts question current trends -
Some scientists are appalled by the scramble for patents for
commercial gain, believing that it damages research openness
about discoveries that should be shared for the common good. With
the "stacking" -- tactical purchase -- of patents by
corporations, the terrain of medical and agricultural research is
quickly being carved up and fenced off. Ideas are no longer
shared across the boundaries of different research groups.

- History tells another story -
Many of today's developed countries -- ironically now the
strongest advocates of tighter intellectual property rights --
themselves had loose rules when they were setting up their
national industries, changing their tune only after they became
technology exporters. Canada and Italy had no trouble attracting
foreign investors even when they lacked patent protection. In
Switzerland in 1883, a leading textile manufacturer defended
loose laws, saying "Swiss industrial development was fostered by
the absence of patent protection. If [it] had been in effect,
neither the textile industry nor the machine-building industry .
. . would have flourished as they did."

- Empirical evidence shows no clear link -
Despite the fierce defence of the need for intellectual property rights in new technologies, there is no conclusive evidence to
back it up. Do tighter intellectual property rights increase
trade in knowledge-intensive goods? Unclear. A 1999 World Bank
study examining the experience of more than 80 countries found
that the effect of intellectual property rights on trade flows in
high-tech goods was insignificant. Do tighter intellectual
property rights increase foreign direct investment in high-tech
goods? Studies say yes for pharmaceuticals -- along with higher
prices -- but for other knowledge goods foreign direct investment
usually depends on market size, technological infrastructure and
macroeconomic policy. Do tighter intellectual property rights
spur multinational corporations to carry out in-country research and development? Apparently not: studies have found that competitive markets are the biggest influence on research and development, not patents. All this evidence is inconclusive -- but while the jury is still out, how can the judge decide?

- There is living proof of successful alternatives -
Alternative ways of innovating are alive -- and doing very well. The Internet is testament to the power of cooperative, decentralized approaches to solving problems. Rejecting the tight control over software given by copyright, a reverse movement has been launched -- "copyleft", turning standard practice on its head. Rather than guarding the source codes to programmes, software developers allow users to view, modify and innovate with them -- as long as they keep the new codes open too. The result? Arguably the best software around. Apache, a Web server developed communally by programmers in their spare time, is one of the most reliable and up-to-date products available -- and is installed on 50% of publicly accessible Web servers. Its no-secrets policy makes it an ideal tool for teaching and experimenting in programming.

Source: Gerster 1998; Fink and Braga 1999; Leonard 1997; GRAIN 1998; UNCTAD 1997. 

-| Hartmut Meyer
-| Co-ordinator
-| The European NGO Network on Genetic Engineering
-| Reinhaeuser Landstr. 51
-| D - 37083 Goettingen
-| Germany
-| phone: #49-551-7700027
-| fax  : #49-551-7701672
-| email:

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