Climate Change and Intellectual Property Rights?

The battle over “intellectual property rights” is likely to be one of the most important of this century. It has enormous economic, social, and political implications in a wide range of areas, from medicine to the arts and culture – anything where the public interest in the widespread dissemination of knowledge runs up against those whose income derives from monopolizing it.

Now it appears that international efforts to slow the pace of worldwide climate disruption could also run up against powerful interests who advocate a “fundamentalist” conception of intellectual property

According to Inside U.S. Trade, the U.S. Chamber of Commerce is gearing up for a fight to limit the access of developing countries to Environmentally Sound Technologies (ESTs). They fear that international climate change negotiations, taking place under the auspices of the United Nations, will erode the position of corporations holding patents on existing and future technologies. Developing countries such as Brazil, India, and China have indicated that if – as expected in the next few years – they are going to have to make sacrifices to reduce carbon emissions, they should be able to license some of the most efficient available technologies for doing so.

Big business is worried about this, because they prefer that patent rights have absolute supremacy. They want to make sure that climate change talks don’t erode the power that they have gained through the World Trade Organization (WTO).

The WTO is widely misunderstood and misrepresented as an organization designed to promote “free trade.” In fact, some of its most economically important rules promote the opposite: the costliest forms of protectionism in the world. The WTO’s rules on intellectual property (Trade-Related Aspects of Intellectual Property, or TRIPS) are the most glaring example. These are designed to extend and enforce U.S.-style patent and copyright law throughout the world.

Patents are monopolies, a restriction on trade that creates inefficiency in exactly the same way that tariffs, quotas, or other trade barriers do. The economic argument for relaxing patent rules is therefore the same as that for removing trade barriers, only times 50 or 100, or even 1000 — since the average tariff on manufactured or agricultural goods is quite small compared to the amount by which patent monopolies raise the price of a pharmaceutical drug. These restrictions cost U.S. consumers an estimated $220 billion a year compared to competitive pricing; many times the gains from trade liberalization that we could even hope to get from a successful completion of the current round of negotiations in the WTO. (This round of talks began in 2001 in Qatar and is called the Doha round).

It took years of struggle by non-governmental organizations to loosen the big pharmaceutical companies’ stranglehold on the WTO, to the point where the organization’s 2001 “Declaration on TRIPS and Public Health” reaffirmed the rights of member countries to produce generic versions of patented drugs in order to promote public health. But this was just a first step, and seven years later these rights have been applied almost exclusively to anti-retroviral drugs for the treatment of AIDS, in just a handful of developing countries. The power of the pharmaceutical companies, with their governments in the United States and Europe as advocates, still keeps life-saving medicines priced out of reach for hundreds of millions of the world’s poor.

The legal procedure that has been used – although very infrequently – to allow for the production of generic drugs for the treatment of AIDS is called a compulsory license. This means that a government can legally authorize the production of a generic version of a drug that is currently under patent, provided that this is done for public health purposes. A royalty is paid to the patent holder, but this is generally not very expensive.

Developing countries such as Brazil, India, and China want to make sure that such possibilities are open for new Environmentally Sound Technologies, e.g. in the areas of renewable energy, that might enable them to meet future targets for reducing carbon emissions. A Brazilian official noted that his country had only issued one compulsory license, for the anti-AIDS drug Efavirenz, produced by Merck.

But big business doesn’t want to take any chances. On May 20, they are scheduled to launch a new coalition called Innovation, Development and Employment Alliance (IDEA). (You’ve got to love the Orwellian touch of those marketing consultants). Members include General Electric, Microsoft, and Sunrise Solar; they will reportedly also be concerned with intellectual property claims in the areas of health care and renewable energy.

For the intellectual property fundamentalists, the income claims of patent holders are “property rights,” seen as analogous to a homeowner’s right to her house. But the framers of the U.S. Constitution (Article I, Section 8) didn’t it see that way, and neither, for the most part, have U.S. courts. Our legal system has long taken into account that protection for patent and copyright monopolies must reflect an important tradeoff: between rewarding innovation and creativity, on the one hand, and allowing for the dissemination of knowledge and the development of new technologies.

The WTO rules, driven by the protectionist interests of powerful corporations, have gone far to advance the fundamentalist view of intellectual property, at the expense of the world’s economy and public health. Now our corporations fear that negotiators at the United Nations, under the UN Framework Convention on Climate Change, might not share these fundamentalist views, especially when the future of the planet is at stake.

Ten years ago environmentalists played a major role in exposing the built-in prejudice of WTO rules, which tend to strengthen commercial interests against environmental regulation. A tipping point was reached when they helped organize large-scale protests that shut down the WTO negotiations in Seattle in 1999, raising alarm bells and building opposition worldwide.

Environmental awareness and a sense of urgency with regard to climate change are much more broadly shared today. The Obama administration should take note of this and place itself squarely on the side of promoting the spread of environmentally sound technologies.

MARK WEISBROT is an economist and co-director of the Center for Economic and Policy Research.

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Mark Weisbrot is co-director of the Center for Economic and Policy Research, in Washington, D.C. and president of Just Foreign Policy. He is also the author of  Failed: What the “Experts” Got Wrong About the Global Economy (Oxford University Press, 2015).

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