Patent Morality

Truth_000005659812XSmallIs there morality in the way patents are being enforced? Has morality to do with IP and if so how does that exactly work out? It crossed my mind reading Netherlands’ morning newspaper “de Volkskrant” heading on the front page “Douane legt beslag op pillen Derde Wereld” (“Customs seizes pills destined for Third World” ).  Organizations like Medicines sans Frontieres and Oxfam Novib have lobbied the WTO and the EU Commission to complain about pharma companies using the European Border Detention Regulation (EC Regulation no. 1383/2003) to stop the transport of generic versions of patented drugs from Indian manufacturers via Rotterdam or Antwerp harbor, Frankfurt airport or via the port of Hamburg to South America and Africa. The newspaper reports HIV medicines from the Clinton Foundation being seized as they allegedly infringe a pharma patent covering the drugs manufactured in India who makes generic version of the drugs, without permission of the patent holder and without paying royalties to the patent holders.  This lobbying is supported by countries like India and Brazil which have complained against EU actions against transit of generic drugs, believed to be infringing patents from pharmaceutical companies (see: India’s June 2009 intervention at TRIPS Council).

The article in the Dutch newspaper relates to a common theme where there seems to be a double standard when it comes to patent infringement.  How come we feel agonized when drugs that are infringing patents of third parties are being held from poor Third World countries where we generally agree copycat electronics from Far East companies, entering the EU are being held at the EU border?  The keyword here is “copycat”.  Is it moral to use an intellectual property right to stop the trade in generic drugs that serve people that traditionally have no access to cheap drugs? Is it moral then to stop someone using a patent to show his newly introduced MP3 gadgets on a trade show where he has not paid compensation to the party that owns the technology, where others do?  The answer is dependant on your political views, your appreciation of intellectual property rights in general and, of course, whether you have made yourself familiar with the facts rather then react based on emotions. Any good, be it a mp3 player or a drug for which a party has a legitimate intellectual property right, that has been infringed by making  a version that embodies the patented technology and for which no consent to use, nor any royalty has been paid, should be held as a “infringing” good. Although legally imperfect, the commonly used terms are all expressing the same thought, whether its called “fake”, “counterfeit” or “copycat”.

As  Germany, Netherlands and Belgium  are the main ports of entry into Europe, the European Border Detention Regulation was initially meant to stop counterfeited trademark and copyrighted products from China and Far east. Lobbied heavily by the fashion and cosmetics industry, this gave Europe ample legal ground to stop the entry of counterfeits into Europe. No worries and generally no protest either. The BDO was extended to also cover patent rights. In so far it was seen as the European equivalent of the US ITC section 337 trade remedy. Border Detention measures were largely a result of TRIPS and as such, of a wider trade policy under the WTO rules to prevent distortion of (in this case: the EU) market due to “counterfeited” products (the term is commonly used –but strictly incorrect – to include any infringement of any IP right, rather then for “fake” products[1].)

However as  IP grew more and more into means to regulate international trade in Western European countries favor, criticism came from countries like India and Brazil against such measures. They are also on the forefront of protesting against the use of BDO’s against generic drugs, not surprising as India has a flourishing generic drug industry. They are not shy of lobbying organizations like Medicines sans Frontieres and Novib, humanitarian organizations not known for their interest in, let alone sympathy for patent and other intellectual property laws.

The tension between the use of patent laws and public health is not new, as there has been an ongoing discussion in a campaign for access to essential drugs (Doha Declaration and TRIPS). There has been legitimate criticism against the way industry has used the BDO Regulation but generally the idea behind the BDO is still fair and is not specific for the EU, as US and Japan have similar arrangements. The EU has generally commented by pointing out the large numbers of “fake” medicines. Where it fails to address the concerns is to explain what the mechanics of patent laws are, what the difference is between “fake” and infringing third party rights, where the fine balance lies between protecting pharma investments and public health concerns. It falls short of explaining where IP is and where IP is not the proper answer to societal concerns. It’s not an easy subject, for sure. The IP community has not particularly helped the politicians either to try to find that balance between property rights and morality.

[1] Patent trials in the US get played out on an emotional playing field, as well as a legal and technical one. Veteran trial lawyers and jury consultants say that most Americans think that infringement means inventors claiming they’ve been copied, their ideas “ripped off” or stolen, hence the fluid line between “counterfeit” and “infringement”.