Discussion Of Intellectual Property Rights Essay Example

IPR-under supply vs.

under consumption of knowledgeIt is crucial to identify the purpose of the IPR protection. It aims to provide solution to the problem of the under-supply of knowledge (as it is a public good which causes market failure), by creating incentives to develop knowledge. The patent system aims to promote innovation, hence economic growth, by creating incentives for inventors to disclose the details of their technological breakthroughs in exchange for a limited period exclusive usage of their knowhow i.e. being a monopoly in the market.

This enables them to charge above the competitive market price. In other words, the reward is the right to extract additional economic rent from the consumers.Some argue that the modern system of IPR law is causing the adverse effect-delaying the diffusion of new technology. By imposing more restrictions, agreement like TRIPS prevent the spread of knowledge.

This is because they prevent other people from using the knowledge that is created, even though the cost to society of them doing so is zero (O. Abroad (2009). There is inefficiency and resources are not fully utilized. Knowledge will be under-consumed as a result of the distorted price, and this reduces economic welfare of society.The IPR laws which are designed to counteract one type of market failure have themselves fallen into another type of market failure.The economic impact of this phenomenon is becoming more prominent as the value of knowledge and innovations increases which become main contribution to various economic activities, as inequality increases, and as knowledge sharing and transmission costs fall due to the rise of internet etc.

Intense competitionIn today's competitive market and environment, firms in developing countries are not able to compete

with the developed countries in terms of the technologies and producing them behind tariff barriers, especially when IPR acts as a protectionist measure justified by the standards of the mechanism. The IPRs lift up the standards of demand conditions, lead to constant innovations and intense competition which require much capital to stay in the market. Firms become more cautious to prevent transferring technology which can increase the competition they face. The problem is the difficulties to gain access to the sophisticated technologies that are required to be competitive in the international market. TRIPS has 'strengthened the global protection offered to suppliers of technology, but without any counterbalancing strengthening of competition policies globally'.

(Commission on IPR, 2002)Human rights issues and inequalityIPR laws fail to strike a balance of public and private interests. They are an instrument of public policy, which are supposed to be designed to benefit the society, for examples through the invention of a new drug or technology. However, the IPR is a private one that its financial benefits go to individuals and firms while the costs fall on different groups within the general public. Trade off has to be made that in many occasions IPR laws cannot fulfill the social rights and benefits of the people in the society especially in the developing countries where the extra costs they impose may be at the expense of the necessities of life for poor people. And in some occasions, even the economic welfare is not optimized.

There should be no circumstances in which the most fundamental human rights should be subordinated to the requirements of IPR protection. It is not just that the western patent rules exploit

the human rights for instance by prevent poor people from getting life-saving drugs, interfere with age-old farming practices etc. (economist) Nowadays, most IP rights are treated as economic and commercial rights, and are more often held by companies rather than individual inventors.This contributes to the proliferation of global inequality that we can see in the fastest rate than at any time in history. The distributional impact of intellectual property rights and the social welfare costs are constantly enlarging.Therefore, rich countries should take into consideration of how IPR protection potentially affects the poor countries.

Higher IP standards should not be pressed on developing countries without assessing their impacts on the society and poor people.Developing countries and phases of developmentIs IPR system the only essential tool or a major tool to stimulate economic growth and innovation? Is it necessary for countries to adapt to it? America advocates that patents can help to foster growth in poor places, stimulate domestic innovation, enhance foreign investment and gain access to new technologies. '(The Economist, 2002)In reality, there is little evidence to show that marginalized places which introduce robust IP protection can benefit from it. 'Standardized IP protection can produce more costs than benefits when applied in developing countries, which rely in large part on knowledge generated elsewhere to satisfy their basic needs and foster development.

' (Commission on IPR, 2002) Undoubtedly, patents matter greatly to some industries, such as pharmaceuticals.But by putting in a rigorous patent system, the developing countries which are dependent on the resources and knowhow of the developed countries become even more fragile. It does not make sense when someone simply stating that the IPR reforms will stimulate domestic

innovation and invention. This is because the prerequisite of human resources and technical capacity may be absent in those countries just as a driving license has little use if there is nobody who knows how to drive or without a car. 'Technology transfer and the development of a sustainable indigenous technological capability are determined by many factors, including but by no means limited to IPRs.

' (Commission on IPR, 2002)IPR is not a new thing. There was a time when countries could choose their way on IPR and make independent decision on when to introduce legal protection or if it is appropriate to do so. These are some examples: for most of the 19th century, America provided no copyright protection for foreign authors. The Americans argued that they needed the freedom to copy for educational purposes in order to develop the knowledge nationally.On the other side of the world, some parts of Europe built their industrial bases by copying the inventions of others.

This model gave rise to many nations' technological growth. Some countries for example South Korea and Taiwan followed suit after the Second World War and was proved to have had a great success. The examples mentioned do not necessarily suggest that the abandonment of patent protection is always the precondition for early development, but they also mean that without IPRs, economic growth can be prominent and prevent from exposing to the unfair competitions that IPRs are likely to bring to the developing countries.Countries such as Korea which are innovative leading countries specialized in high-tech industry nowadays, started at a low level of technological expertise many years ago. Comparing those countries at that time to

many developing countries today, there is not much difference. It is inevitable for a country to go through these stages of development.

Acknowledge the country difference is very important. The 'standard' of IPR imposed by western countries is NOT fair and NOT representative. Developing countries are far from homogeneous; the fact is that they are distinct and self-evident in terms of social and economic structures, phases of development, technological capacities as well as the inequalities of income and wealth etc. The reasons of poverty vary between countries according to their social problems, and hence the choices made to carry out suitable policies to address them, will vary accordingly between countries. Similar to that, IPR policies are also needed to be customized in order to be consistent with country's conditions e.

g. some socio-economic circumstances and meet the needs of its people. For examples, China and India have relatively advanced technological capabilities, when compare with Indonesia that with a weak capability. The model works in India may not work in Indonesia.If the IPRs are adapted to fit individual countries' circumstances, they can play a helpful role in nurturing the domestic industries that lasting growth requires. To a certain extent, depends on the country's condition, IPR protection is appropriate at some stage for developing countries.

Hence, universal, one-size-fits-all patents should not be applied to all countries which were proposed to be enacted and enforced since 2006.ConclusionAll in all, patent systems can be a tool of economic growth effectively when flexibility is given and used properly which adapt according to the objective assessments of different countries. There are a few concerns that I addressed in the essay, market failure dilemma of

IPR, intense competition, human rights and inequality, prevention of technological transfer, developing countries and phases of development. The existing IPR laws and systems are almost certainly unsustainable in the long run, diverse set of economic instruments to reward invention and research is needed.