Away from ‘Old IP’? A Discussion on an International Expert Group Report

The International Expert Group on Biotechnology, Innovation and Intellectual Property recently released its report titled ‘Toward a New Era of Intellectual Property: From Confrontation to Negotiation’. The Report is available here. The Report contains several important policy suggestions, arguing for a move toward ‘New IP’ – “… the emerging area of IP in which IP stresses sharing and collaboration instead of increased protection, leading not only to greater levels of innovation, but better access to new products and services…” – from the present-day ‘Old IP’. It focuses primarily on IP in biotechnology and related areas; nonetheless, its recommendations are applicable throughout the IP spectrum.

The Report concentrates on several failures of the Old IP system. Fundamental amongst these are the fact that the Old IP system exaggerates the importance of patents. It suggests that the Old IP system has “failed to recognize that knowledge leads best to new products and services if shared.” Further, it argues that Old IP has failed to come to terms with issues of public health and health-care systems. The Report recommends that the New IP system ought to be based on sharing rather than secrecy. It argues that sharing would encourage innovation. Innovation is encouraged by building on the knowledge of others, and thus requires sharing and collaboration. This is an interesting argument; importantly, the report relies on empirical data to back up this claim. Additionally, the Report argues for the creation of “independent trust builders”. These trust builders would encourage dialogue between stakeholders, mediate disputes and develop joint research initiatives. Further, the Report also puts a focus on public health issues – particularly in considering biotechnology patents – in the New IP system.

It is worth noticing that several of the findings of the Report are not entirely novel in themselves. To give merely one example, Justice Bhat’s decision in Cipla (discussed earlier on this blog) does seem to stem from a concern for public health and public interest issues in patent protection. While Justice Bhat’s decision may well be interpreted as incorporating a ‘public interest’ factor in granting temporary injunctions as such; it does appear that the factor assumed greater importance because of the subject-matter involved. In short, the decision can very well be read as incorporating a public interest criterion in granting injunctions in patent cases specifically. This would mean that the judiciary is not entirely averse to thinking in terms of New IP even under the existing legal framework. (Several other examples from a variety of jurisdictions are detailed in the Report.)

Further, the Report highlights the problems with assuming that promises of secrecy and exclusivity would encourage innovation. Of course, from a viewpoint of economic analysis, it may be rational for innovators in the current set-up to argue for secrecy. However, it needs to be appreciated that this is so because they have (in the present system) no guarantee of access to another innovator’s ideas and processes. Without such guarantee of future access, it is rational to insist on secrecy and protection. However, assuming that access to another’s ideas and processes is available, it would be rational for innovators to do away with the cloak of secrecy. The relative success of the open-access movement may be seen as a testament to this. Doing away with Old IP systems of secrecy will result in lowering input costs as well. Re-inventing the wheel is not always necessary; while innovators will disclose their ideas, they will also have access to ideas of other innovators.

Another finding of the Report is particularly relevant – several organizations do not seek patents for their inventions because they cannot afford to defend them against high-income infringers. This does not mean that those organizations have no impetus to innovate. It appears that the link between IP protection and innovation is psychological rather than real. In such a scenario, Old IP systems of protection may well result in strangulating competition rather than in promoting innovation.

(Several posts and comments on this blog have also seen discussions on the “IP-innovation” link – the discussion on the ‘Indian Bayh-Dole’ is particularly interesting in this context:.

Broadly speaking, it may well appear that a framework built on the recommendations of the Report would be beneficial to all stakeholders. At the same time, the Report does not provide any clear answer to the question of how to put its recommendations into practice. Several of the recommendations point to what stakeholders should do. For instance, the Report recommends, “Working together, governments, universities and industry should develop new measures of the success of technology transfer, and other means of development and social investment that better correspond to desired social and economic return…” This requires co-operative action by several participants, as do several other recommendations.

Governments may well put into practice the recommendations – but how, and why, will private institutions comply? In deciding to comply, it would appear that stakeholders (particularly private actors) would be stuck in a classical paradox. If all actors act collectively to adopt the recommendations, that will be beneficial to all; but to expect individual actors to do so without a guarantee that other actors will also do so, is unrealistic.

Nonetheless, the Report is an important step ahead in the IP dialogue. While not providing a clearly workable solution, it does at least give us a glimpse of a desired situation. Also, it does highlight two important issues. What is the justification for intellectual property rights? And is the justification sufficiently strong so as to provide for strong Old IP protection even when balanced against strong counter-weighing factors including public interest, transparency etc.? The strongest justification of Old IP has been the utilitarian justification that IP provides incentives to innovation. The Report does provide empirical evidence to significantly undermine at least this justification. In doing so, it throws up several challenges to Old IP systems. The transition from Old IP to New IP is not easy; nonetheless, it is a matter which is certainly worthy of deeper consideration.