UN Researcher Envisions Framework For IP, Innovation and Development

By William New
The impact of intellectual property policy on innovation and development may have been overstated, and a framework is needed for analysing the linkage between these concepts in developing countries, according to a United Nations researcher.

While intellectual property policy is a key element of innovation policy, “the focus has been selective, and has placed too much emphasis on one or the other,” according to Padmashree Gehl Sampath, a researcher at the United Nations University – MERIT in the Netherlands. The link between intellectual property and innovation is “very nuanced,” she said this week, and depends on a variety of factors.

Gehl Sampath has been conducting surveys in the developing world, including an extensive one of the pharmaceutical industry in India. There, most of the firms are small to medium-sized, but a few have gained international stature. The big firms have begun to pursue intellectual property rights as they move from unregulated to regulated markets through exports, she said.

But at a 4 September event sponsored by the South Centre, Gehl Sampath said intellectual property rights contributed little to the rise of the Indian pharmaceutical industry, though that might be changing with India’s accession to the World Trade Organization Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS).

“I think the Indian pharmaceutical industry would have proceeded more or less in the same direction without intellectual property protection,” she said. But an emphasis on innovation is necessary for firms to move from the status quo, she added.

Innovation, the process of acquiring technological knowledge and building on it, requires a variety of market and non-market institutions. It is not science or technology or invention, but rather the application of knowledge, she said.

Gehl Sampath said that in general, “I do not think IP is very important for development.” Intellectual property is only of use to nations once they reach a particular state of development, she said, as history has shown. Even Switzerland did not have a strong IP law until recently, she said.

Gehl Sampath also said that while patents can create markets for technology, there is little evidence that developing country researchers are on equal footing to those in developed countries.

“IP regimes and liberal trade will help to tackle underdevelopment only when the market for information (as facilitated by IPRs) are balanced with other non-market incentives for innovation. For instance, R&D subsidies, tax exemptions, promotions for scientists,” she said.

Developing countries tend to suffer from institutional failures, such as the inability to change as quickly as markets demand, provide instruction in key paths, and other administrative inefficiencies. Absence of infrastructure is a key issue for developing countries as well, she said.

Gehl Sampath said a difference between intellectual property and innovation is that IP is dominated by the market failure argument, and that the key source of technological advance, research and development, suffers from the “twin failures of uncertainty and low appropriability.” This means that policy intervention is necessary to correct low investments into socially useful information, she said.

At the event, Carlos Correa of the South Centre questioned whether India is ensuring that policies are not aimed only at protecting the most successful firms at the expense of the public interest. Growth in India’s industrial policy might have a negative impact on public health and access to medicines, for instance, he said.

Gehl Sampath also found that Indian pharmaceutical firms typically take a defensive approach to intellectual property rights, and most are focused on supply and demand, rather than on local diseases, which means the government needs to intervene to provide incentives for that focus.

But one thing is clear, she said: In India, much more than R&D goes into the development of drugs, and the growth is not from intellectual property.