Strict International Patent Laws Hurt Developing Countries

Please note that this post is from 2009. Evaluate with care and in light of later events.

Strict International Patent Laws Hurt Developing Countries, an article in YaleGlobal from 2002 by Amy Kapczynski:

In 1998, 39 pharmaceutical companies filed a lawsuit against South Africa. They hoped to stop the government from producing the generic drugs that would have made treatment affordable for the country’s AIDS victims. A public outcry ensued, and critics accused pharmaceutical companies of valuing profit over human life. Although these same companies were eventually pressured into dropping the lawsuit, the conflict illustrates a problem inherent in recent free trade agreements – inflexible patent regulations can prevent developing countries from obtaining or producing affordable versions of the medicine they need.

Understanding the lawsuit requires a bit of background. Patents are temporary monopolies granted by governments. They give the inventor a right to exclude everyone else from producing, selling, or distributing a product in that country. Monopolies are generally viewed as a bad thing, because they create what economists call “deadweight losses.” So why are governments granting them? The theory is that the higher prices that patents allow companies to charge provide incentives to develop and commercialize new products. The dirty secret about patents, as a law school professor of mine once put it, is that no one knows how strong patents have to be to serve this purpose. For example, are twenty years of patent protection necessary to provide sufficient incentives for research? Or is ten years sufficient? Under international rules, patents must now be granted for a minimum of twenty years – although until recently, patents were often much shorter, even in the U.S.

Here is another dirty secret: Patents cannot generate innovation where there is no market.

Faced with a potential public health crisis [during the anthrax crisis], Congress recognized what many other countries have been arguing all along: that patents are not “rights” but rather privileges – and that they do not come before the rights to health and life.

How might this kind of logic apply to patents (or other forms of IP) outside of the medical context? And what would be a rationale approach to resolving it?