Finding the Right Balance: International Disputes over Intellectual Property Rights
Justus Dreyling
Free University Berlin
Justus Dreyling was a DAAD/AICGS Research Fellow in May and June 2016. He is a PhD candidate in Political Science (International Political Economy) at Freie Universität Berlin. He holds a master’s degree from Freie Universität Berlin and was a DAAD Visiting Junior Researcher at the BMW Center for German and European Studies at Georgetown University in 2013. His research focuses on how flows of data, information, and knowledge shape today’s economy.
At AICGS, Mr. Dreyling is conducting research on a number of current and controversial cases in the international regulation of intellectual property, access to agricultural seeds, cultural works, and educational material. In exploring these topics, he focuses on the emerging civil society movement advocating for consumer rights in the U.S., Germany, and Europe and how these groups collaborate with societal groups and governments from the developing world.
How do the political struggles on intellectual property rights play out at the international level? Conventional wisdom holds that business interests in the European Union and the United States dominate global economic governance. Indeed, historically, rights holders have been the driving force behind international intellectual property regulation.[1] However, more recently, materially weaker actors with diffuse interests have been able to shape regulatory outcomes in ways preferable to them in a number of cases. To unravel this puzzle, two cases are discussed, one in education and another one in agriculture. The first case study addresses the fiercely contested international negotiations on copyright protection and access to cultural and educational materials for people with disabilities. The second case study looks at the longstanding dispute on property rights over crops and seeds and the conditions of use for smallholder farmers. Particularly in the education case, consumer and user groups from the European Union and the United States in coalition with developing countries have been able to challenge regulatory capture. In contrast to medicines, these cases have attracted little attention by the general public. Yet they have important implications for how to think about the political economy of knowledge production.
What Is at Stake?
In recent years, intellectual property rights have become a hot-button issue on both sides of the Atlantic. Technological advances and resulting economic transitions have made knowledge a more, if not the most, important production factor. An increasing proportion of commodities traded is knowledge-based.[2] In many cases, the value of the intellectual property used to produce a good by far exceeds the costs of labor and raw materials. In the digital economy, goods, such as e-books, music, and software, can be reproduced at zero marginal cost as printing and pressing plants are no longer required.[3] Yet the same infrastructure that makes global marketplaces possible facilitates the illicit dissemination of copies of copyrighted works on a worldwide scale. It comes as no surprise that knowledge-based industries have been pushing for stricter enforcement and higher standards of protection for their most valuable assets. On the flipside, an emerging consumer and user movement in the United States, Germany, and the European Union has criticized their governments for overprotecting rights holders at the expense of public welfare.
Intellectual property rights are premised on the idea of a balance. Ownership rewards individuals and companies for their intellectual labor, allowing for the commercial exploitation of creative works and inventions. Ideally, this encourages more creativity and innovation, which benefits the general public. Moreover, protection is temporary to accommodate the public’s interest in access to knowledge.[4] Lastly, intellectual property rights are subject to limitations and exceptions to improve the availability of knowledge goods in cases of market failure or in emergency situations (e.g., medicines in a public health crises). Such flexibilities are of particular importance to striking a balance between private interests and public concerns. Yet how can a balance be determined in practice? This is the distributional as well as normative question actors fight over in the cases discussed in this essay.
A Brief Primer on International Intellectual Property Rights
Countries answer (and have answered) this question very differently, depending on their growth model, level of development, and view of the role of the state in providing public goods. Consequently, important differences remain on what can be owned, what is the appropriate duration of protection, and what exceptions are granted for public use. Even the intellectual property systems of the most developed countries vary in important ways. For instance, civil law authors’ rights, such as the German Urherberrecht, differ significantly from copyright laws in common law countries, such as the United States.[5]
Attempts at creating international standards for intellectual property protection date back to the late 19th century. While a multilateral framework has existed for over a hundred years, the entry into force of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) in 1995 constituted a quantum leap. TRIPS was negotiated as one pillar of the newly created World Trade Organization. Consequently, all countries that want to partake in global commerce must provide a minimum level of protection. Knowledge-exporting industries in the global North argued that effective international protection would help create global markets for creative and innovative goods and facilitate the transfer of technology to the South. Developing countries and even a number of free trade advocates, such as Jagdish Bhagwati, heavily criticized TRIPS.[6] They argued that limiting the possibility of technological imitation would slow down economic development. Moreover, the HIV/AIDS crisis in the early 2000s made clear that intellectual property rights have a real effect on the availability and affordability of medicines and other essential knowledge goods, particularly in the developing world.
Shifting Lines of Conflict
Today, it would be inaccurate to portray the dispute over intellectual property rights as a North-South conflict only. Actors are increasingly divided among multiple, crosscutting lines of conflict. In the education case, interests have shifted over the past twenty years as a result of technological developments and related changes in knowledge and information markets. This process has been longer-term and more incremental in the agriculture case. In both cases, the growing complexity of interests has changed the dynamics of the debate by enabling coalitions that would have been unlikely before. Three developments are key to understanding these disputes.
First, emerging economies such as China, Brazil, and India have become homes to commercially successful creative and innovative industries. On the one hand, these countries have as a consequence developed a more favorable attitude towards intellectual property protection. On the other hand, for developing countries broad flexibilities to intellectual property rights remain an important tool to promote public interests. The increasing significance of emerging economies has chipped away at the ‘go-it-alone power’ of the European Union (EU) and the United States in international fora for intellectual property standards.[7]
Second, consumers in developed countries have grown more critical of intellectual property rights. An emerging consumer movement holds the view that protection has reached excessive levels and causes prohibitive prices for patented medicines and copyrighted educational materials. Moreover, users take issue with copyright enforcement policies that come at the expense of privacy protection on the Internet. In 2012, for instance, massive rallies took place in Europe against the proposed Anti-Counterfeiting Trade Agreement (ACTA), which has been sidetracked since.[8] Even in the late 1990s, very few civil society groups addressed intellectual property rights. Today, the consumer and user movement provides expertise and a large mobilizing potential.
Third, new digital business models have developed around Internet platforms that allow users to search and access knowledge and information. For example, Google benefits from flexibilities to copyright for the provision of services, such as Google Books and YouTube. Authors and rights holders in the audiovisual sector, news media, and the publishing industry, by contrast, accuse Google of free riding.[9] Similar conflicts between incumbents and radically innovating new entrants can be observed in other branches of the economy as well. New businesses have become important proponents of maintaining or even broadening flexibilities.
In both cases under study, transnational coalitions have formed among developing countries and civil society groups from the EU and the United States. Support by new businesses has been indirect but observable, particularly in the education case. These coalitions have been able to shape outcomes at the international level—albeit to varying extents. In the education case, the result has been a legally binding copyright treaty that improves access for people with visual disabilities. In agriculture, the outcome is more ambivalent. Here, general principles for seed access have been introduced to a number of agricultural and environmental treaties, creating conflict with the international system for plant protection.
Education
Sighted people can generally find the books they are looking for in the marketplace or in libraries. The same does not apply to people with visual or other disabilities that prevent them from reading normal print. Even today, only about five percent of all books are available in accessible formats and even fewer are commercially available.[10] Above all, the shortage of accessible educational materials, most notably textbooks, poses a barrier to employment and full social participation.
Copyright has been an important obstacle to a greater availability of accessible books. This particularly applies to developing countries where about ninety percent of all visually impaired people live.[11] Many countries do not have robust copyright exceptions that allow for an effective distribution of accessible books outside of a malfunctioning market, e.g., through specialized online libraries, such as Bookshare in the United States. While international copyright law permits such exceptions, many developing countries lack the expertise to draft them in a way that is compliant with international treaty obligations. More importantly, the export of accessible works has been subject to legal uncertainty. This has resulted in great inefficiency. Allowing the circulation of accessible books among countries that share a language would increase the number of beneficiaries and reduce redundancy in production. Despite digitization, the conversion to accessible formats can be costly and time-consuming and in many places resources and know-how are lacking.
On 28 June 2013, after more than five years of negotiations, the members of the World Intellectual Property Organization (WIPO) adopted a path-breaking treaty. Once it enters into effect, the so-called Marrakesh Treaty will introduce a mandatory exception to international copyright law for people with print disabilities and facilitate the cross-border transfer of accessible works. To some observers this outcome was nothing short of a miracle. Creative industries as well as the EU and U.S. executive branches had for a long time opposed a binding treaty.
The story goes back a long way. Visual impairment was first discussed in the international copyright context more than thirty years ago. In 1982, a joint working group between WIPO and UNESCO agreed on a set of non-binding recommendations that had little traceable effect on national policymaking.[12] Visual disabilities did not resurface on WIPO’s agenda until an intervention by the World Blind Union in 2002. Although the United States and the European Union in the meantime had adopted statutory exceptions for people with visual disabilities, low availability of accessible books remained a serious problem for most countries.[13] At the same time, digitization and the expansion of the internet created a huge potential for the international dissemination of accessible books. In the following years, a change coalition formed between disability organizations, consumer and user groups from the European Union and the United States, and developing countries. The coalition supported the issue on its own merits. Yet access to knowledge groups and developing groups at the time also saw an opportunity to halt the ratcheting-up of international protection and to shift the international agenda towards flexibilities in a broader sense. Creative industries, which had been the main beneficiaries of raised protection standards in the 1990s, by contrast, feared that an international exception could undermine the multilateral copyright framework. Although the change coalition has represented more diffuse interests than the rights holders, it has been able to achieve its goal through a collective effort. From 2008 onwards, the various participating civil society groups lobbied their representatives domestically. The involvement of a wide range of actors slowly secured the support of key government agencies in the European Union and the United States. At the international level, the large group of developing countries kept the pressure high on EU and U.S. negotiators.
Almost to the day three years after the adoption of the Marrakesh Treaty, on 30 June 2016, Canada became the twentieth nation to accede. As a result, the treaty will enter into force on 30 September 2016. The United States and the European Union still lag behind on ratification. The Obama administration has submitted the Marrakesh Treaty to the Senate. Although the disability organizations and their supporters have made great efforts to accomplish ratification before the 2016 presidential election, a decision is likely to be adjourned. In Europe, treaty ratification has advanced slowly and, according to reports, particularly Germany has acted as a brake in the process.[14] A group of countries led by Germany questions whether the treaty falls under the exclusive competency of the European Union and argues that the consent of all member states is needed. The group’s opposition could result from a mixture of factors, disagreement on the specifics of the ratification package and a conflict of competence between the European Commission and this group of member states. The effectiveness of the Marrakesh Treaty depends on the participation of the major providers of accessible books in the most common languages, i.e., the United States, the United Kingdom, Spain, and France. However, the Marrakesh Treaty already has had an impact on the international debate on copyright flexibilities. While no outcome is anticipated at this stage, WIPO members are currently discussing exceptions and limitations for educational institutions as well as archives and libraries.
Agriculture
Access to agricultural seeds is another major area of contestation in the international dispute over intellectual property rights. Historically, seed and crop improvement has been the domain of farmers. Beginning in the 19th century, farming and breeding in industrialized countries have become increasingly separated. In the 20th century, as a result of the commercialization of scientific breeding and technological advances, legal systems for the protection of the increasingly valuable intellectual assets have emerged in the United States and Europe.[15] Beginning in the 1960s, the European Union and the United States have sought to create an international framework for the protection of plant varieties. In developing countries, however, farming and particularly breeding are far less commercialized. Smallholder farmers still play an important role in the provision of food in local contexts.[16]
Developing countries criticize that the increasing price of proprietary seeds has grave consequences for their farmers and the affordability of food. Moreover, they charge that American and European biotechnology companies reap the profits of traditional knowledge about the beneficial effects of native plants without compensation for the groups holding such knowledge. A number of consumer organizations in the European Union and the United States are also concerned with the public costs of intellectual property protection for plant varieties, yet from a different perspective. They point to the high degree of market concentration, arguing that the overprotection of intellectual property has an anticompetitive effect and promotes cartelization in the industry. In addition, consumers in the European Union are particularly opposed to genetically modified foods for both environmental and health reasons. However, as interests are more diffuse and solutions are less evident than in the education case, transnational coordination between developing countries and actors from developed countries has been more occasional and short-lived.
Moreover, change actors have been limited by the global governance architecture in the field. Intellectual property protection of genetic resources is very differently regulated than copyright. In international copyright law, all treaties are administered either by the WTO (TRIPS) or WIPO and these conventions are generally coherent. TRIPS requires WTO member states to adopt either a patent-based or an effective sui generis system of plant variety protection. The European Union and the United States hold that a different treaty, the 1991 revision of the International Union for the Protection of New Varieties of Plants (UPOV) convention, sets the standard for an effective system of protection and they have promoted UPOV 1991 through bilateral and plurilateral trade agreements. A number of developing countries however argue that the more flexible 1978 revision of UPOV constitutes an equally appropriate standard of protection. Although UPOV 1978 does not contain an explicit exception for seed use by farmers, it is widely interpreted as allowing for a lower level of protection. More recently, developing countries and, at least initially, a number of civil society organizations have pushed for the International Treaty on Plant Genetic Resources for Food and Agriculture, which was adopted in 2011 by the UN Food and Agriculture Organization. This treaty more explicitly addresses exceptions for farmers, a global seeds common, benefit-sharing between communities and biotechnology companies, and a host of further issues related to environmental protection. It is in many regards a follow-up treaty to the 1992 UN Convention on Biological Diversity, which also links environmental conservation to intellectual property rights. Importantly, these treaties enshrine a very different conception of property in the context of genetic resources than intellectual property treaties, such as TRIPS and UPOV. How these conceptions and rules can be implemented in a coherent and effective manner is subject to much debate.
Considering the fragmentation of governance and the highly diffuse interests of all stakeholders involved, it remains unclear what a coherent solution would look like.[17] On the one hand, this creates some leeway for emerging economies. Economically and politically more independent countries have more bargaining power to resist unilateral and bilateral pressure. They may thus adopt legislation that diverges from the expectation of developed countries and is less consistent with the core international rules. On the other hand, low and lower middle income countries have less wiggle room.[18] This leads to the paradoxical situation that countries with a greater need for flexibilities are effectively more restricted in applying them. Yet the question remains whether high levels of protection also translate into enforcement at the local level. A very specific exception, as in the education case, has the advantage of greater legal certainty for all parties.
Intellectual Property Rights in the Knowledge Economy
Intellectual property rights have profound effects on social welfare as they govern access to essential knowledge goods. The costs of knowledge goods affect ordinary people all around the globe. However, the effect is most pronounced on the underprivileged. The dispute over intellectual property rights also reflects changing production and consumption patterns in the developed and the developing world. In the transition to the knowledge economy it has become apparent that intellectual property rights can both stimulate and stifle innovation and that regulatory inertia leaves some potential of technological change untapped. Some rapidly innovating industries may be better served by lower standards of protection or regulation that facilitates market solutions, such as licensing.[19] Startups in particular often rely on both the imitation of existing technologies as well as the prospect of protecting and selling their invention. This poses an important conundrum for policymakers who seek to promote innovation. The same applies to creativity in the digital realm.
Finally, the dispute over access to knowledge is here to stay. Neither of the two cases discussed in this essay has been fully resolved. The issue of patents for medicines continues to be highly contested. Moreover, intellectual property rights remain high on the agenda of trade negotiations. Business sees the bilateral and plurilateral level as a more effective forum to advance their interests than the multilateral level. Civil society initiatives, particularly in Germany, have criticized the closed-door talks on agreements, such as the Transatlantic Trade and Investment Partnership (TTIP) between the European Union and the United States. Some NGOs have expressed concern about the possibility that the proposed Comprehensive Economic and Trade Agreement (CETA) between the European Union and Canada could be used to bring back ACTA through the backdoor.[20] While the European Commission has rebuffed these claims,[21] this will hardly dispel all fears as long as the negotiating parties do not allow for more transparency. The story of ACTA shows that public opposition can derail a completed trade agreement. Reforms and international solutions are certainly needed. Intellectual property rights become dysfunctional if they do not reflect technological advances. Yet a balance must be kept. The framework of protection should not disproportionately benefit business interests at the expense of consumers, users, and not least creators.
Justus Dreyling is a PhD candidate in Political Science (International Political Economy) at Freie Universität Berlin and was a DAAD/AGI Research Fellow in May and June 2016.
This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.
[1] See Peter Drahos, Information Feudalism: Who Owns the Knowledge Economy (New York: The New Press, 2003); Ruth Okediji, “The International Relations of Intellectual Property: Narratives of Developing Country Participation in the Global Intellectual Property System,” Singapore Journal of International & Comparative Law 7 (2003): 315-385; Susan K. Sell, Private Power, Public Law: The Globalization of Intellectual Property Rights (Cambridge: Cambridge University Press, 2003).
[2] Trade in knowledge-intensive goods and services grows at a higher rate than trade in labor-intensive goods and services. The compound annual growth rate for trade in knowledge-intensive goods (7.9 percent) was 1.3 times higher than for trade in labor-intensive goods (6.1 percent) between 2002 and 2012. Trade in knowledge-intensive services (7 percent) has been growing 1.7 times faster than trade in labor-intensive services (4.1 percent) in the same period. See James Manyika, Jacques Bughin, Susan Lund, Olivia Nottebohm, David Poulter, Sebastian Jauch, and Sree Ramaswamy, Global Flows in a Digital Age: How Trade, Finance, People, and Data Connect the World Economy (McKinsey Global Institute, 2014), 34. Trade in knowledge assets has also grown faster than GDP in most OECD countries between 2009 and 2013. See OECD, OECD Science, Technology and Industry Scoreboard 2015: Innovation for Growth and Society (Paris: OECD Publishing, 2015), 140-141.
[3] The significance of the digital economy for the creative industries cannot be overestimated. For instance, in the recording industry digital revenues have surpassed physical sales for the first time in 2015. See “IFPI Global Music Report 2016,” IFPI, last modified April 12, 2016 http://www.ifpi.org/news/IFPI-GLOBAL-MUSIC-REPORT-2016.
[4] Christopher May and Susan K. Sell, Intellectual Property Rights: A Critical History (Boulder: Lynne Rienner Publishers, 2006).
[5] While copyright systems emphasize the economic dimension of authorship Urheberrecht and other authors’ rights regimes, e.g., the French droit d’auteur, grant creators certain moral rights over their works. See Peter Baldwin, The Copyright Wars: Three Centuries of Trans-Atlantic Battle (Princeton: Princeton University Press, 2014). Particularly U.S. copyright law, at least in principle, allows for greater flexibilities for public use. The doctrine of fair use in U.S. copyright law provides for an open-ended approach to determine what non-authorized uses of a copyrighted work serve the public interest and should be permitted.
[6] See Jagdish Bhagwati, In Denfense of Globalization (Oxford: Oxford University Press, 2007), 183.
[7] Lloyd Gruber, Ruling the World: Power Politics and the Rise of Supranational Institutions (New Jersey: Princeton University Press, 2000).
[8] Shortly before the ACTA protests in Europe, users in the U.S. had demonstrated successfully against two similar proposed pieces of legislation, the Stop Online Piracy Act (SOPA) and the PROTECT IP Act (PIPA). See David Jolly, “A New Question of Internet Freedom,” New York Times, February 5, 2012, accessed June 16, 2016, http://www.nytimes.com/2012/02/06/technology/06iht-acta06.html?_r=0.
[9] For two diametrically opposed views on the issue, see Robert Levine, Free Ride: How Digital Parasites Are Destroying the Future of the Culture Business (New York, NY: Random House, 2011); William Patry, How to Fix Copyright (Oxford: Oxford University Press, 2012).
[10] Accessible formats include Braille, large print, and navigable talking books.
[11] 285 million people are estimated to have some form of visual disability worldwide. This figure does not include people with dyslexia or other learning, cognitive, developmental, or physical disabilities who cannot effectively read print. “Visual Impairment and Blindness,” World Health Organization, accessed June 16, 2016, http://www.who.int/mediacentre/factsheets/fs282/en/.
[12] Before the adoption of TRIPS, international copyright law was regulated by two major treaties, the more stringent WIPO Berne Convention and the more flexible UNESCO Universal Copyright Convention. The Berne Convention’s membership was largely made up of European countries and a number of former colonies while many developing countries and the U.S. for a long time preferred the Universal Copyright Convention. As the Berne Convention was incorporated in TRIPS the Universal Copyright Convention has become practically obsolete.
[13] Arguably, the U.S. approach has been more impactful. While the 1997 Chafee Amendment to U.S. copyright law provides a strong exception for people with disabilities the 2001 Information Society Directive merely permits but does not require EU member states to adopt some form of limitation.
[14] “Germany, Italy Leading Resistance to EU Ratification of Marrakesh Treaty, Blind Union Says,” Intellectual Property Watch, December 10, 2015, accessed June 16, 2016, http://www.ip-watch.org/2015/12/10/germany-italy-leading-resistance-to-eu-ratification-of-marrakesh-treaty-blind-union-says/.
[15] See Jack R. Kloppenburg, First the Seed: The Political Economy of Plant Biotechnology (Madison: University of Wisconsin Press, 2004).
[16] See Graham Dutfield, “Turning Plant Varieties into Intellectual Property: The UPOV Convention,” in The Future Control of Food: A Guide to International Negotiations and Rules on Intellectual Property, Biodiversity and Food Security, ed. Geoff Tansey and Tasmin Rajotte (London: Earthscan, 2008), 27-47.
[17] See Kal Raustiala and David G. Victor, “The Regime Complex for Plant Genetic Resources,” International Organization 58 (2004): 277-309.
[18] See Carolyn Deere, The Implementation Game: The TRIPS Agreement and the Global Politics of Intellectual Property Reform in Developing Countries (Oxford: Oxford University Press, 2008).
[19] Kal Raustiala and Christopher Sprigman point to what they call the ‘piracy paradox’. Some industries, such as fashion, have rapid innovation cycles although there is little or no intellectual property protection. In industries where innovators enjoy strong first mover advantages, other market players will imitate to stay competitive. However, even without protection there is a powerful incentive for market leaders to further innovate to stay ahead of the pack. See Kal Raustiala and Christopher Sprigman, The Knockoff Economy: How Imitation Sparks Innovation (Oxford: Oxford University Press, 2012). See also Daron Acemoglu and Ufuk Akcigit, “Intellectual Property Rights Policy, Competition and Innovation,” Journal of the European Economic Association 10 (2006): 1-42.
[20] “Canada-EU Trade Agreement Replicates ACTA’s Notorious Copyright Provisions,” Electronic Frontier Foundation, last modified October 13, 2012, https://www.eff.org/deeplinks/2012/10/ceta-replicates-acta.
[21] “The EU’s Free Trade Agreement with Canada and its Intellectual Property Rights Provisions,” European Commission, last modified October 18, 2013, http://trade.ec.europa.eu/doclib/docs/2012/august/tradoc_149866.pdf; “How Much Does the TTIP Have in Common with ACTA,” European Commission, accessed June 16, 2016, http://trade.ec.europa.eu/doclib/docs/2013/july/tradoc_151673.pdf.
