1          Index

Introduction

How IPR became an international issue: A historical outlook

Agreement on Trade-Related Aspects of Intellectual Property Rights

What is TRIPS

Critics on TRIPS

Transformation of international agreements into European law and further transformation into national law

Conclusion

Sources

2          Introduction

This chapter examines the development of intellectual property rights (IPR) in a globalized world and how national states reacted to the globalization. Obviously, in a world where intellectual goods have a growing share on the gross domestic product of a state, particularly developed countries try to protect intellectual goods. This is problematic, as different countries have different interest on intellectual property. D’Amato/Long (1997: p. 2) pointed out that some countries have commercially desirable works and inventions (the “haves”) in contradiction to other countries (the “have-nots”). They ask “What reasons would motivate the have-nots to pay substantial licensing fees to the haves instead of simply pirating (stealing, appropriating) the intellectual property?” (p. 2)

Inequalities between national states have a high potential for disagreement. Nevertheless, there are reasons why not-haves still agree on common intellectual property rights:

1. The inequality in one field (like films) could be counterbalanced by dominance in other fields (like novels or music)
2. Inequalities can shift over time, for example, the USA is leading in the film industry but other competitors are evolving such as India
3. Haves threat not-haves with trade barriers on conventional goods and merchandise
4. It is not always clear where the boundaries are between intellectual property rights and conventional property rights
5. If intellectual goods are not protected and thus turn into “free goods”, this could even undermine the understanding of (capitalist) world markets
6. One could argue that an intellectual good is the property of its creator, not paying him is immoral (D’Amato/Long, 1997: p. 2f)

IPRs cover a scope of rights. The WIPO (World Intellectual Property Organization) divided intellectual goods into:

Industrial property: Inventions (patents), trademarks, industrial designs, and geographic indications of source

Copyright and related rights: literary and artistic expressions (e.g. books, films, music), the rights of performing artists in their performances, producers of phonograms in their recordings, rights of broadcasters of radio and television programs. (WIPO, 2011)

With digitalization, industries and countries have to face one huge issue: intellectual goods are virtual goods and therefore can be transported very easily, for example via Internet. In other words: intellectual goods are the manifestation of thoughts and thoughts do not have borders. Accordingly, the utilization of intellectual goods can only succeed if the different national laws are going to be harmonized. This harmonization is already happening. One of the most important treaties in this sector is TRIPS (Agreement on Trade-Related Aspects of Intellectual Property Rights). The history of IPRs shows the transformation from very different national laws (with the only focus on protecting national economic interest) to harmonized international standards.

3          How IPR became an international issue: A historical outlook

For May (2002, p. 160) the beginning of intellectual property rights (in form of a “modern patent system”) started in 1474 in Venice. Controversially, Bainbridge (2002, p. 29) even mentions a copyright case in the year 576, and the University of Paris legalized duplication of texts for use within the university in 1223. The date of birth of intellectual property rights depends on the viewpoint of an author and if he is focusing on copyright or patent law. Nevertheless, the philosophical discussion about intellectual property is much older. Aristotle sharply criticizes Hippodamus of Miletus for his idea of a reward for the creator of useful things. Aristotle argues that this may reduce social welfare and if the information is revealed to the state, public officials could claim the discovery for them. On the opposite Hippodamus argues that a reward encourages the creator to invent more useful things, which are valuable contributions for society. However, for a long time intellectual property rights were considered as not necessary. From the Ancient World to the Middle Ages one could only reproduce a limited amount of intellectual goods. A monk in the Middle Ages wrote approximately 15 books in his lifetime. (Bainbridge, 2002: p. 29)

Gutenberg’s invention of moveable type in 1455 changed everything. As early as in the year 1500, 20 million copies of 27.000 works were published. (Häyback, 2009: p. 95) Now protection for intellectual goods was urgently needed. The first right in this sector was a printing privilege for the publisher Johann von Speyer in Venice. A printing privilege was the exclusive right to publish. Publishers had to have this printing privilege otherwise, the printing was illegal and punished by law. The printing privilege for publishers was an effective instrument to censor the press. The first intellectual property rights were used to politically control the printing production rather than protect economic interests.

The second boost for the need of intellectual property rights was the British Industrial Revolution. The British Industrial Revolution started in the eighteenth century. At the beginning, the technology transfer was managed through emigrant workers, who embodied the knowledge. To stop the transfer, Great Britain invented a law, which forbids workers to work in a foreign country by the threat of punishment. Unpredictable, with time the technologies got embodied with machines, therefore Great Britain banned exports of machines. Although Great Britain was the technology leader of this time, also other advanced countries tried everything to stop the transfer of technological knowledge. In contrast, less advanced countries tried everything to gather this knowledge, even with illegitimate efforts like industrial espionage. (Chang, 2001: p. 288-290)

Chang (2001: p. 290) mentions that: “By the late nineteenth century, the observation (or not) of patents and other intellectual property rights became a key issue in technology transfer (and knowledge transfer in general).” With time Great Britain had to delete its ban on worker migration and export of machines – the laws were simply ineffective. Following, the developed countries implemented patent laws in the eighteen century and trademark laws in the second half of the nineteenth century. Nevertheless, these laws were also very insufficient and foreign citizens were inadequately protected. Many countries even allowed and encouraged national citizens to patent imported inventions. In this situation, the pressure for an international IPR started to rise. The first official meeting of representatives of several national countries was held 1880 in Paris. (Chang, 2001: p. 290-292) The results of the convention were ratified 1883 by eleven countries “(…) in the form of the Paris Convention of the International Union for the Protection of Industrial Property (the original signatories were Belgium, Portugal, France, Guatemala, Italy, the Netherlands, San Salvador, Serbia, Spain, Switzerland). In 1886, the Berne Convention on copyrights was signed. The Paris Convention was subsequently revised a number of times (notably 1911, 1925, 1934, 1958, and 1967) in the direction of strengthening patentee rights and, together with the Berne convention, had formed the basis of the international IPR regime until the TRIPS agreement.” (Chang, 2001: p. 292)

In 1967 the World Intellectual Property Organization (WIPO) was founded. (Grossmann/Lai, 2004, p. 1635) For the first time in history of intellectual property, national states agreed to establish an organization with an own international legal personality. Since 1974 WIPO has been a special organization of the United Nations. (Stoll, 2007: p. 6f) The WIPO administered all the treaties on IPRs made before TRIPS. The next big step was the “Agreement on Trade-related Aspects of Intellectual Property Rights”.

“During the 1980s and early 1990s, the United States and several European countries expressed strong dissatisfaction with what they deemed to be inadequate protection of intellectual property in many developing countries. The developed countries made the upgrading of intellectual property rights (IPRs) one of their highest priorities for the Uruguay Round of trade talks.” (Grossmann/Lai, 2004, p. 1635) The result of these negotiations was TRIPS. WIPO and the WTO agreed on cooperation concerning the implementation of the TRIPS Agreement in its member states.

4          Agreement on Trade-Related Aspects of Intellectual Property Rights

4.1         What is TRIPS

The “Agreement on Trade-Related Aspects of Intellectual Property Rights” or short “TRIPS” came into effect in 1995. It was one of the main achievements of the Uruguay Round. (Juma, 1999: p. 3) The Uruguay Round was “(…) quite simply the largest trade negotiation ever, and most probably the largest negotiation of any kind in history.” (WTO, 2011a)

TRIPS took place in the year 1986. The only reason why it was possible, were the long preliminary negotiations of the GATT member states. (WTO, 2011a) The negotiations were difficult, mainly because of the differences between developed and developing countries.

TRIPS covers “(…) copyright and related rights (i.e. the rights of performers, producers of sound recordings and broadcasting organizations); trademarks including service marks; geographical indications including appellations of origin; industrial designs; patents including the protection of new varieties of plants; the layout-designs of integrated circuits; and undisclosed information including trade secrets and test data.” (WTO, 2011b)

According to Nguy?n (2010, p. 2) the “(…) TRIPS Agreement brought … major changes to the development of global IP protection (…)”. It is part of a global rule-based trading system named WTO (World Trade Organization) and is qualified through a very powerful instrument for disputes in IPRs: the “Dispute Settlement Understanding (DSU)”. Member states agreed not to revenge violation of the agreement by their own, but instead calling the “Dispute Settlement Body” (DSB), an organ of the WTO. The decision of the DSB is compulsory. If a member state does not accept the decision it could face consequences such as trade blockades. (Busche, 2007: p. 32)

A good summary what TRIPS is, gives us Correra (1996):

• It established minimum standards of protection.
• The Agreement supplements the Paris, Berne, Rome and Washington conventions
• Substantive rules on IPR have been harmonized, but some important aspects remained at the national level
• It contains detailed measures related to the enforcement of rights and specific rules to combat misuse of trademarks and ‘pirated’ works
• It is possible for developing countries to delay the implementation of most of the TRIPs rules (because the agreement could have negative effects on the economy of developing countries)
• TRIPS implemented a dispute settlement procedure
• TRIPS is not self-executing, which means that national states have to transform the provisions of the agreement in national law. Article 8 implied that members can adopt measures necessary to protect public health and nutrition, or to promote sectors of vital importance to their socio-economic and technological development
• Member states shall use appropriate measures to prevent abuse of IPRs by right holders and stop practices which restrain trade or the international transfer of technology
• The exhaustion of intellectual property rights is not regulated (Article 6)

4.2         Critics on TRIPS

Archibugi and Filippetti (2010, p. 9) outlined that TRIPS “(…) widening the technological gap between western and emerging economies.” They conclude in general that IPRs can be advantageous for countries with a technological infrastructure but have negative effects for poorer countries. Nevertheless, IPRs are overestimated for the importance of technology transfer, because there are other factors: “(…) size of the market, development of appropriate capabilities, endowment of cheap and ? or skilled human resources and the presence of a reliable institutional environment.” (p. 9) Exceptional, in the pharmaceutical industry it seems that IPRs have a great influence in avoiding coping. The authors doom TRIPS as an agreement pushed only by few western multinational companies which wanted to hold their privileged position. Nevertheless, the authors argue that TRIPS “(…) has not and could not change the nature of knowledge and the ways in which this can be transferred among economic agents.” (p. 10) Archibugi/Filippetti argue that the transfer of know-how is attached with the willingness to invest time and money. The power of companies derives from their economic monopolist position and not so much from their legal protection through IPRs. Finally they summarize their reflections in four theses:

“First Thesis: TRIPS aims to impose the western and broken IP regime on the rest of the world. The IPRs regime has become stronger in the western world. This trend began in the United States (…) But other western countries have imitated the same trend. Through TRIPS, the US and other western governments are trying to expand western logic to all countries. (…)

Second Thesis: TRIPS is the outcome of a nondemocratic process driven by a club of US corporations. (…) In particular, it is the outcome of the pressures made by a handful of US corporations which have successfully asked their government to act on their behalf.

Third Thesis: TRIPS may serve the interest of western corporations but not necessarily of western economies. (…)

Fourth Thesis: TRIPS alone will not lead to an increase in the technology gap between western countries and emerging countries. (…) It is much more important to concentrate on the economics rather than the legal conditions that allow or impede countries from maintaining or acquiring their knowledge base.” (p. 10)

First, it is agreeable that the “Agreement of Trade-Related Intellectual Property Rights” was demanded by developed countries, particularly from the USA. This is reasonable, because the US has many high-tech companies; the success of this companies is founded on the knowledge they have. This is the case for companies in the computer industry such as Apple, Google, Microsoft, IBM and many more. Equally known are US companies in the pharmaceutical industry: Pfizer for example is worldwide market leader in terms of sales in 2010. (see IMS, 2010) It is also agreeable that the IPRs regime has become stronger in the western world. For instance, Austrian copyright laws were revised fourteen times after the II World War. This is a high amount in scope of law. (Tonninger, 1998: p. 41ff)

Archibugi and Filippetti criticize the expansion of western logic [to handle intellectual property] to all countries. In general, this is reasonable, as “western countries” were the first countries which developed a sophisticated protection for intellectual property. (see chapter 3) Many third world countries did not have the need of intellectual property rights, because the commercialization of knowledge was not yet developed. Additionally, it seems reasonable that a creator has certain rights on his work and therefore should be protected.

The authors lack to explain a.) why this concept is an exclusive western concept, b.) if other intellectual property rights concepts even exist and c.) if they exist, how these concepts handle intellectual property.

The second thesis argues that TRIPS is a product of US corporations. It seems obvious, that US corporations pushed the US government to improve worldwide intellectual property standards. The reasons have been mentioned before: particularly the US has high-tech industries which rely on protection of intellectual goods. But if or how much US corporation influenced the process remains an assumption; there is no verified empirical material available about this matter. Indeed, TRIPS is an undemocratic process, if we consider that no citizen could vote on the agreement. However, the Agreement was made voluntarily by representatives of state governments. Of course, voluntarily should be considered critically, as the US and Europe probably used their economy strength to “convince” other countries to sign the agreement. But still, not every country of the world is in the WTO (to join the WTO -and with it get access to international markets – a country has to agree on TRIPS). The Russian Federation, for example, is still an observer. (WTO, 2011c)

Secondly, critics often fail to mention the positive effects of the agreement. Laws protecting knowledge worldwide could be also beneficial for developing countries. There are huge efforts of developing countries to get economically independent from exports of natural resources. If developing countries succeed in establishing high-tech companies they need a harmonized law to trade and sell their new products. For a prosper development, these countries have to make extra efforts for increasing the knowledge of their citizens. Otherwise they will remain in the industrial era, while the western countries already live in a knowledge based era.

The third and fourth thesis claims, that TRIPS only helped few western corporations and TRIPS would has little effect on the technological gap between western and emerging countries. The most important condition is still the economy and not the law. These two theses are very vague. Why should US corporations try so hard to create a harmonized intellectual property law (see second thesis), if it has so less effect? Of course, the economic power is still the most important condition for protecting and developing new technology knowledge. But with increasing investments on knowledge, it becomes increasingly important to have an international framework for intellectual goods. The (western) societies turn from industrial to knowledge based societies. Therefore, the importance of protection of intellectual property will emerge. Even if international intellectual property rights do not play a major role now, this will happen in the future. The authors already admitted that IPRs had an effect for the protection of intellectual property in the pharmaceutical industry. Additionally, it is the first time in history that a minimum standard of rules for IPRs are established. For example we can rely on the fact, that the copyright is protected at least 50 years after death of the author.

4.3         Transformation of international agreements into European law and further transformation into national law

The “European Copyright Directive” (EUCD) is based on two WIPO treaties concerning copyright and related rights. The directive is a good example, how international agreements are transformed into European law and after that transferred into national law. Mainly EUCD deals with reproduction rights, the right of communication and distribution rights. First, it provides legal protection against “hacking”. Second, member states have to guarantee reproduction rights for authors. Third, in the field of communication, member states have to provide the exclusive right of the author to authorize or exclude any communication to the public about his work. Finally, the Directive harmonized the exclusive right of the author of distribution of his work to the public. But this right is limited until the first sale or other transfer of ownership of a copy – permission of the author is of course necessary. (Lucchi, 2006: p. 52f)

The “European Copyright Directive” is called in German “Informations-Richtlinie”. (2001/29/EG) It was implemented in Austrian law in 2003. The revision of the Austrian copyright law through the European directive was adapted in accordance with the WIPO treaty 1996. (Haybäck, 2009: p. 100) The Austrian copyright law is named “Urheberrechtsgesetz” short “UrhG”. The reproduction rights can be found in § 15 Abs. 1 UrhG which determines that the author has the exclusive right to reproduce. § 16 UrhG is about the exclusive right of the author to authorize or exclude public from his work.

5          Conclusion

The chapter examined the development of Intellectual Property Rights (IPR) in a globalized world. Short after the invention of the printing press in 1455, intellectual property laws were introduced because rulers at the present stage feared loss of power. With the printing privilege rulers were able to control as well as to censor the printing production. In the eighteenth century the British Industrial Revolution made modern intellectual property rights necessary. First, states only protected their (economic) interests, therefore national citizens enjoyed better status under the law as people from abroad. Nevertheless, with the ongoing development of new technologies this strategy became obsolete. The USA and Europe instigated an international intellectual property framework. Undoubtedly, the “Agreement on Trade-Related Aspects of Intellectual Property Rights” (TRIPS) was the most successful attempt to establish minimum standards for intellectual property worldwide. The European Union released also a couple of directives to harmonize the intellectual property laws in its member states – according to the treaties. The most important one is the European copyright directive. Directives have to be transformed into national law. This happened in Austria in 2003, with the revision of the copyright laws. (“Urheberrechtsgesetz-Novelle 2003”)

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