University of California, Davis - School of LawAnupam Chander,
Madhavi Sunder, University of California, Davis - School of Law
In 1848, the Great Mahele established fee simple rights in Hawaiian land, dividing that land among the king and chiefs. Two years later, a statute granted the common people who worked the land the right to apply for title. At the same time, the ban on the sale of land to foreigners was lifted in order to attract foreign capital. The combination of the establishment of Western-style property rights and the sanction of sales to foreigners had a marked result on land distribution: “The land fairly quickly passed out of the hands of both [chiefs] and [commoners], reducing many to the status of landless laborers.” Relatively few commoners acquired title to the land in part due to their unfamiliarity with this new system of land tenure and the difficulty of filing claims and surveying land. By 1896, whites owned 57% of the land area generating taxes, and Native Hawaiians owned just 14%. Today, many descendants of the native Hawaiians see the move from more communal to more private property tenure as a key to the impoverishment of their forbearers. The Mahele land division was crucial to the project of colonizing Hawaii.
For many in the developing world, TRIPS—the Agreement on Trade Related Aspects of Intellectual Property Rights—is today’s Great Mahele. Like the Mahele, TRIPS establishes both Western property rights and the right of foreigners to own property. To establish a property regime, TRIPS requires substantial standards of protection for intellectual property in all member states. To enable foreign ownership, TRIPS imposes national treatment obligations, requiring states to treat foreigners as equals of their own citizens. This cocktail of robust private property rights and foreign access thereto is leading to a steady transfer of the “ownership” of intellectual “products” from the developing world to the developed world.
Indeed, the numbers may be more dramatic than those resulting from the Great Mahele. A 1974 United Nations study concluded that 84% of the patents granted in developing nations were held by foreigners. Such disparity continues: In Sub-Saharan Africa (excluding South Africa), resident Africans received thirty-five patents in 1998, while nonresident foreigners received 741. In 2001, persons from developing nations received less than 1% of patents granted in the United States. Between 1999 and 2001, persons from developing nations accounted for less than two percent of patent applications received under the international system of the Patent Cooperation Treaty.
Part of this story is quite familiar. It is well understood that the international legal regime for intellectual property currently favors the Western world. But the role of the commons in creating and preserving global inequality is less remarked upon. Our contribution to this story is to disclose what TRIPS has deliberately left unenclosed. TRIPS has upset the balance in the global public domain. Prior to TRIPS, both West and East effectively benefited from a public domain in the other’s inventions and expressions—the West, because the East did not formally protect its knowledge, and the East, because international intellectual property laws were weak and ineffective at protecting property across borders.
Medicines and pesticides do not usually spring divinely from the heads of pharmaceutical and agricultural company scientists. Companies often seek inspiration both in nature and in the knowledge developed in traditional communities, leading them to distant lands and peoples. Even a drug as commonplace as aspirin derives from the active ingredient in willow bark, salicin. Indeed, aspirin is named in part for the spirea plant, which yields salicin.  In medicine, this search for inspiration even justifies a field, ethnopharmacology, with its own journal founded in 1979.  The field is premised on the belief that “[e]arly people confronted with illness and disease, discovered a wealth of useful therapeutic agents in the plant and animal kingdoms.”  The editors of the Journal of Ethnopharmacology note that “[m]any valuable drugs of today (e.g., atropine, ephedrine, tubocurarine, digoxin, reserpine) came into use through the study of indigenous remedies.”  Medicinal or agricultural innovations, held as intellectual property, often rely upon knowledge and genetic resources in the public domain.
The neem controversy offers one example of this process.  Indigenous to India, the neem tree is known in Sanskrit as “sarva-róga nívarini” or “curer of all ailments.”  The Sanskrit name suggests the myriad applications of the products of the neem tree; traditional uses include “an almost ridiculous variety of pesticidal, agricultural, medicinal, contraceptive, cosmetic and dental applications.”  In the 1980s, various Western countries began patenting applications of neem extracts.  The neem incident demonstrates that the problem of the exploitation of traditional knowledge and genetic information predates TRIPS. Indeed, TRIPS would not have affected the above account. Nor can TRIPS be held responsible for the wide disparity in patents obtained by persons in developing versus developed states.
But while the neem incident offers an example of the Western world exploiting intellectual products of the East and South, we must recognize that the East and South also exploit the intellectual products of the West. Computer software, Disney films, and pharmaceutical products developed in the West have long been copied and commercialized in the developing world, often without any flow of royalties. The Western pharmaceutical giant GlaxoSmithKline, for example, alleged that it lost some $50 million in potential sales of its patented ulcer-treatment drug Tagamet because of local generic copying in Argentina and other developing countries. 
Developed states have, of course, long sought to thwart such copying. Copyright and patent conventions have existed for more than a century. The Paris Convention for the Protection of Industrial Property of 1883 and the Berne Convention for the Protection of Literary and Artistic Works of 1886,  both administered by the World Intellectual Property Organization (WIPO),  promised intellectual property holders some international protections. But for the most part, despite widespread accession, these systems of protection under the aegis of WIPO proved ineffective in practice. Developing states often failed to uphold their obligations.  Equally important, the copyright and patent conventions did not mandate high levels of minimum protection for intellectual property, requiring only “rudimentary” standards for patentable inventions.  Finally, the systems provided neither effective domestic nor international dispute resolution mechanisms for rights holders to redress violations.
The result was that, from the perspective of the Argentine drug manufacturers, the formula for Tagamet was effectively in the public domain. Generic drug manufacture has flourished in large developing countries, as has copying of other inventions. This reflects a system that has been in place for many decades; the international regime governing intellectual property has been effectively one of rampant exploitation of knowledge developed in all corners of the world.
TRIPS changed this. In place of an international commons where all intellectual products were available for exploitation by all—or at least exploitation by people outside the country of origin—TRIPS mandated strict protections for intellectual property throughout all member states.  Developing countries initially resisted the linkage of intellectual property to trade. During the Uruguay Round trade negotiations, the developing states sought to permit maximum flexibility on the part of each state to determine the scope of protection that intellectual products might receive.  The developing states lost this battle: TRIPS requires a robust set of minimum standards for intellectual property. The developing countries were, however, given transition periods during which to implement most of their obligations. 
That TRIPS would require significant changes in developing countries became clear soon after the birth of the World Trade Organization. The very first dispute brought under TRIPS was a claim by the United States against India, classified as a developing country under the treaty,  for violating its obligations to provide certain patent protections. Even though TRIPS entitled developing countries to extra time in which to implement some of their treaty obligations, several measures were required immediately. The United States accused India of failing to provide a mailbox system in which patents could be filed to establish an order of priority for the time when the law permitted full patentability. In addition, the United States accused India of failing to offer exclusive marketing rights to the foreign patent holder. The dispute resolution body’s report in favor of the United States, followed by India’s subsequent amendment of its laws to conform to its obligations, demonstrated the binding power of TRIPS.
With the advent of TRIPS, the global commons of intellectual products has been radically transformed. For the developing world, the intellectual products of the developed world are to be firmly protected, on pain of loss of trade privileges. Argentina, for example, can no longer fearlessly snub Western pharmaceutical companies. But while TRIPS may make “fair followers” out of “free riders” in the developing world,  it leaves the developed world free to exploit the efforts and resources of the developing world, where the global commons of intellectual products remains intact. Because traditional knowledge and genetic resources in the developing world are unpatentable, at least in their raw state, such knowledge and resources remain open to exploitation. 
Thus, the public domain in traditional knowledge and genetic resources still remains, post-TRIPS. And this public domain is bound to be exploited asymmetrically. Why cannot companies in the developing world exploit such resources equally with companies in the developed world? After all, a company in Mumbai is likely to be more familiar with the traditional Ayurvedic system of medicine and local flora than a company in Switzerland.
Local knowledge notwithstanding, there are a number of reasons that such a disparity will be likely to obtain:
Limited local opportunities for commercialization. Because of the limited consumer purchasing power in domestic markets, companies in the developing world often find it difficult to justify the extensive investment in research and development required to transform traditional knowledge and genetic resources into patentable pharmaceutical or agricultural products. In countries such as India, Nigeria, and Ecuador, with 2002 Gross National Income per capita averaging $480, $290, and $1,450 respectively,  the domestic consumer base cannot afford the drug prices charged to Western publics. Here, India and Nigeria have an advantage to some extent over Ecuador because they at least have large potential domestic consumer bases, with populations of 1,032 million, 130 million, and 13 million, respectively. But even so, how much could a Bangladeshi company, for instance, hope to recover even from its vast domestic population of 133 million from the sale of a drug it innovated, given an average GDP per capita of $360?
Lack of extensive public investment in research. In advanced industrialized states, government-funded research programs at universities and research institutes support local companies. Governmental policy often mandates programs of technology transfer from public institutions to local enterprise. Developing nations generally do not have such extensive, publicly funded research and development programs.
Capital constraints. Weak internal capital markets across the developing world make the process of raising capital quite expensive. Given the large capital investments needed to patent pharmaceutical and agricultural products and the long time frame within which profits from the investment can be realized, high interest rates make companies in developing countries less competitive. Even where the company seeks funding through the international credit markets, it is likely to face high interest rates because rates for corporate borrowing are generally tied to those for their home state (corporate risk is thought to include sovereign risk). The fact that borrowing is quite dear, domestically and internationally, makes capital-intensive activity difficult to undertake.
Unfamiliarity. Companies in WTO Member States that are making agricultural and pharmaceutical products patentable only under the coercive force of TRIPS will not, as a matter of course, be as familiar with the patenting process for such products as are Western companies, who have long enjoyed the right to patent such products. The unfamiliarity of native Hawaiians with Western real property systems, as we have seen, disadvantaged them when it came to claiming their rights when such systems were introduced.  Even in the United States, patent lawyers, universities, and corporations expend significant resources to train scientists to patent inventions. Asserting exclusive rights to invention does not come naturally.
It may be offered that companies in developing countries need not restrict themselves to domestic markets. Companies in the developing world can seek buyers in the large and deep markets of the West. These companies can enjoy the protections of TRIPS as they endeavour to sell their products abroad. But this is too sanguine a view. First, these companies may find it difficult to compete with the big pharmaceutical companies of the West on their home turf, at least outside the domain of generic drugs. The big pharmaceutical companies hold the advantage of brand name recognition. Second, selling branded products in Western nations requires large outlays for advertising and for patenting, both of which are made more difficult for the company from a developing country by the capital constraints described above. Despite these odds, companies in developing countries do obtain patents both at home and abroad. But cases of this sort are relatively rare, as the wide disparity between patenting by developing states versus developed states demonstrates. 
Indeed, the argument of the Western pharmaceutical industry in favor of strong international patent rights often implicitly relies upon this disparity in the patent-seeking capacity of companies in the developed and developing world. Only big pharmaceutical companies, they point out, have the capital and know-how to transform traditional knowledge and genetic resources into proven cures.  And such companies can operate only if they stand to recoup their investment through strong monopoly rights in inventions. 
The result is an international intellectual property regime that is sharply tilted in favour of the developed world. The intellectual products held in the developing world rest in a global public domain, while the intellectual products of the developed world are held closely by corporations. Though Indian enterprises were certainly aware of the commercial value of the neem tree, they were unable to invest the resources to patent its derivatives throughout the world. Thus, the likely beneficiaries of the public domain resources of the traditional knowledge about the properties of the neem tree and the neem tree itself are multinational companies that are capable of converting these public domain resources into valuable patentable products. As James Boyle writes, “Curare, batik, myths, and the dance ‘lambada’ flow out of developing countries . . . while Prozac, Levis, Grisham, and the movie Lambada! flow in . . . .”  The former are unprotected by intellectual property rights, while the latter are protected.  In the end, the international intellectual property regime leads to a transfer of wealth from the poorer countries of the world to the richer countries. In 1999, developing countries paid some $7.5 billion more in royalties and license fees than the royalties and license fees they received, even though this year was well before the deadlines for full implementation of TRIPS obligations in the developing states.124 The U.S., by contrast, saw an $8 billion increase in its surplus of royalties and fees related mainly to intellectual property transactions between 1991 and 2001.125 It is a strange world, indeed, where technology and resources flow for free from poorer to richer states, rather than from richer to poorer.
While it is certainly not their intent, scholars’ romantic portrayals of the public domain perpetuate this inequality. The romance of the public domain—the notion that when a resource is open to all by the force of law, all will be equally able to exploit it—obscures the harsh realities of a world fraught with inequality. But the trope of the romantic public domain goes even further. It offers a justification for leaving the developing world’s genetic resources and knowledge in the public domain: universal benefit from a rich public domain.
. Sally Engle Merry, Colonizing Hawai’i: The Cultural Power of Law 93 (2000).
. Id. at 93-94.
. Id. at 94.
. Id. at 95.
. Id. at 94.
. Agreement on Trade-Related Aspects of Intellectual Property Rights, Apr. 15, 1994, art. 67, Marrakesh Agreement Establishing the World Trade Organization, Annex 1C, Legal Instruments— Results of the Uruguay Round vol. 31, 33 I.L.M. 81 (1984) [hereinafter TRIPS]. For an overview of TRIPS, see J.H. Reichman, Universal Minimum Standards of Intellectual Property Protection under the TRIPS Component of the WTO Agreement, 91 Int’l Law. 345 (1995).
. The text of the TRIPS treaty organizes three categories of development status: “developed,”“developing,” and “least developed” countries. TRIPS, supra note 82. We use the term “developing” to refer to the latter two categories.
. A. Samuel Oddi, The International Patent System and Third World Development: Reality or Myth?, 1987 Duke L.J. 831, 843 n.61. . Commission on Intellectual Property Rights, Integrating Intellectual Property Rights and Development Policy 22 (2002), http://www.iprcommission.org/graphi... [hereinafter IPR Commission Report]. In the United States, by contrast, the corresponding figures for residents and nonresidents in 1998 were 80,292 and 67,228, an almost equal division of patent holders between the U.S. and the rest of the world. Id.
. Id. at 12. For a breakdown of United States patents by country of origin, see U.S. Patent & Trademark Office, Patent Counts by Country/State and Year, January 1, 1977 - December.31, 2001 (2002), at http://www.uspto.gov/web/offices/ac... (last visited Sept. 2, 2004).
. IPR Commission Report, supra note 85, at 12.
. See World Bank, Global Economic Prospects and the Developing Countries 133 tbl.5.1 (2002) (providing data that illustrates imbalance in favor of the Western world), http://www.worldbank.org/prospects/... (last visited Sept. 2, 2004).
. Bayer Aspirin, 100 Years of Aspirin, at http://www.bayeraspirin.com/questio... (last visited Apr. 8, 2004).
. Folk medicine has long employed this ingredient; as far back as 400 B.C., Hippocrates prescribed willow bark as a pain reliever in his medical tracts.
. For a description of the Journal of Ethnopharmacology, see Elsevier, at http://authors.elsevier.com/journal... (last visited Aug. , 2004).
. Contrary to the dynamics of the neem patents, the editors of the Journal of Ethnopharmacology “[r]ecogniz[e] the sovereign rights of States over their natural resources,” and observe that “ethnopharmacologists are particularly concerned with local people’s rights to further use and develop their autochthonous resources.” Id. at 91.
. Shayana Kadidal, Subject-Matter Imperialism? Biodiversity, Foreign Prior Art and the Neem Patent Controversy, 37 IDEA 371, 371 (1997) (internal italics omitted).
. Id. at 372-73 (citations omitted).
. Vandana Shiva et al., The Enclosure and Recovery of the Commons: Biodiversity, Indigenous Knowledge and Intellectual Property Rights 47-50 (1997) (listing some of the U.S. patents on neem).
. See supra notes 84-87 and accompanying text. Assemblies of the Member States of WIPO, The Impact of the International Patent System on Developing Countries: A Study by Getachew Mengistie, Thirty-Ninth Series of Meetings, Geneva, at para. 1.1.2, WIPO Doc. No. A/39/13 Add.1, 6 (Aug. 15, 2003) (“In developing countries, the proportion of patent grants to foreigners tends to be much higher than patents granted to their own nationals.”)
. See Oddi, supra note 84, at 845.
. Paris Convention for the Protection of Industrial Property, Mar. 20, 1883, 13 U.S.T. 2, 828 U.N.T.S. 107.
. Berne Convention for the Protection of Literary and Artistic Works, Sept. 9, 1886, 102 Stat. 2853, 828 U.N.T.S. 221.
. For a discussion of the role of these conventions and of WIPO on international intellectual property protection, see Lawrence R. Helfer, Adjudicating Copyright Claims Under the TRIPS Agreement: The Case for a European Human Rights Analogy, 39 Harv. Int’l L.J. 357, 366-67 (1998).
. For example, at crucial times in its own history, the United States ignored the intellectual property claims of foreign states as it freely appropriated from the store of foreign creativity and knowledge. Cf. IPR Commission Report, supra note 85, at 18.
. J. H. Reichman, Universal Minimum Standards of Intellectual Property Protection Under the TRIPs Component of the WTO Agreement, in Intellectual Property and International Trade: The TRIPs Agreement 21, 29 (Carlos M. Correa & Abdulqawi A. Yusuf eds., 1998).
. Martin J. Adelman & Sonia Baldia, Prospects and Limits of the Patent Provision in the TRIPS Agreement: The Case of India, 29 Vand. J. Transnat’l L. 507, 510, 524-32 (1996) (describing how the lack of pharmaceutical patent protection in developing countries like India enabled developing countries to take advantage of technology developed elsewhere).
. TRIPS, supra note 82, at arts. 9-40.
. Christopher May, A Global Political Economy of Intellectual Property Rights 87 (2000).
. TRIPS, supra note 82, at arts. 65-66; see also World Trade Organization, Press Release, WTO Council approves LDC decision with additional waiver, http://www.wto.org/english/news_e/p... (providing for an additional waiver for obligations of least developed countries until January 1, 2016).
. See supra note 83 for a description of classification system.
. WTO Appellate Body Report on TRIPS: India—Patent Protection for Pharmaceutical and Agricultural Chemical Products, AB-1997-5, WTO Doc. No. WT/DS50/AB/R (Dec. 19, 1997), http://www.wto.org/english/tratop_e....
. J. H. Reichman, From Free Riders to Fair Followers: Global Competition Under the TRIPS Agreement, 29 N.Y.U. J. Int’l L. & Pol. 11, 16 (1996-97) (asserting that, with the perpetuation of the protectionist trend in developed countries, developing countries can create a competitive edge by adopting a pro-competitive strategy in implementing the minimum standards of TRIPS to become “fair followers in the worldwide quest for technical innovation”).
. The same is true, of course, of traditional knowledge and genetic resources in the developed world, but given their limited reach and resources it is unlikely that companies in the developing world would be the first to exploit such knowledge and resources.
 World Development Report 2004: Making Services Work for Poor People 252 (2003).
. See supra notes 1-6 and accompanying text.
. See Gardiner Harris & Joanna Slater, Bitter Pills: Drug Makers See ‘Branded Generics’Eating Into Profits, Wall St. J., Apr. 17, 2003, at A1.
. See supra notes 9-12 and accompanying text.
. See Nadia Natasha Seeratan, Comment, The Negative Impact of Intellectual Property Patent Rights on Developing Countries: An Examination of the Indian Pharmaceutical Industry, 3 Scholar 339, 378-79 (2001) (presenting the Western pharmaceutical industry’s viewpoint that without strong patent protection developing countries would unfairly profit from the research done by developed countries).
. Boyle, supra note 22, at 125.
This article is an extract of "Romance of the public domain", which was initially published in the California Law Review [Vol.92:1331 2004] It is published under a Creative Commons licence.
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