Dean Baker: Ending patent and copyright protection in the developing world

Development Policy15 Feb 2010Dean Baker

Aid that gives back

Most debates on aid to the developing world focus on ways for wealthy countries to give money to poor people in developing countries. This is a worthwhile debate, however before we decide where best to give money, we might start by stopping taking money away from the developing world. Specifically, the rich countries should reverse their course from a path that dates back at least to the 1994 TRIPs [trade-related aspects of intellectual property rights] agreement in the WTO.

The purpose of the TRIPs agreement was to require the developing world to adopt patent and copyright protections that were modelled after those in the US and Europe. This would allow the pharmaceutical companies, along with the entertainment and software industries, to earn much greater profits in the developing world. Rather than being able to freely reproduce recorded music and video material, as well as software, developing countries would have to make payments to copyright holders.

TRIPs also prevents developing countries from producing or buying generic versions of newly developed drugs, which were now guaranteed as 20 years of patent monopoly. This restriction was not only an economic burden, but it also meant that many people in developing countries would be unable to afford life-saving medicines.

A great way to help developing countries would be to simply reverse the rules put in place through the TRIPs agreement. Patents and copyrights are archaic ways to foster innovation and support creative work. They lead to enormous economic distortions and provide perverse incentives for rent-seeking behaviour. In many cases, such as when drug companies conceal research findings that reflect badly on their drugs, this rent-seeking behaviour can carry enormous costs.

If developing countries are allowed to buy any and all drugs at generic prices, it will drastically reduce the cost of providing health care. In principle, it should mean that drug prices will never be a major obstacle to treatment.

Similarly, if recorded music and video material can be obtained at no cost over the internet, it will eliminate a drain on developing country economies, as they will no longer have to pay royalties for music and movies. Copyright-free software, together with copyright-free textbooks, should substantially reduce the cost of education in the developing world.

The creation of patent and copyright-free zones should not only benefit developing countries. It should also create an opportunity to test alternative mechanisms for supporting innovation and creative work. For example, insofar as public and private donors want to promote research into treatments for diseases that primarily afflict people in the developing world, this can be done on an explicit, open-source model. All the research findings would be placed in the public domain as soon as the results have been verified and put in a publishable form. Similarly, funders could also support the production of creative work of various types, all of which would be made available on the internet where it could be downloaded anywhere in the world.

Such contributions would directly benefit the developing world, while at the same time providing important information to the wealthy countries on how best to restructure their systems for supporting pharmaceutical research and creative work. Following this path for aiding developing countries may produce enormous rewards through the development of more efficient mechanisms for financing innovation and creative work in wealthy countries.