Intellectual Property Programme

Expanding Intellectual Property’s Empire: the Role of FTAs

by Peter Drahos (Regulatory Institutions Network, Research School of Social Sciences, Australian National University)

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Europe and to US and European pharmaceutical companies in the twentieth century. The relationship was one of mutual importance. Because these companies wanted intellectual property rights, especially patents they took an interest in lobbying governments on their design. A cycle of regulatory growth was thus created. As the chemical and pharmaceutical industries took more interest in the design of intellectual property rights, the strategies of the larger companies came to be more and more based on the use of intellectual property rights and this in turn meant that the companies had a greater and greater incentive to influence their design.1 The business model paradigm of these industries took it as axiomatic that there had to be strong intellectual property rights - the stronger the better.

In the 1980s this cycle of regulatory growth underwent something of a quantum jump. US, European and Japanese companies, including pharmaceutical and chemical companies set aside their differences and campaigned for the inclusion of an agreement on intellectual property rights in the Uruguay Round of Multilateral Trade Negotiations. Those negotiations produced an agreement known as the Agreement on the Trade- Related Aspects of Intellectual Property Rights (TRIPS). TRIPS, in the eyes of the chemical and pharmaceutical companies that had been amongst its prime movers, was a major step in the globalization of standards of patent, trade secret and trade mark protection, the three areas of most importance to these companies. Of major significance was the obligation on states to make available patents for products and processes without discrimination as to field of technology.2 TRIPS was, however, far from perfect. Ultimately the handful of multinationals that had steered TRIPS through the Uruguay Round wanted an even higher set of standards. A letter of 1994 from Pfizer Inc to the United States Trade Representative (USTR) captures this thinking quite nicely:

Finally, GATT does not do it. Many Indians mistakenly (often very honestly) believe that if they endorse GATT they will have solved their IP and pharmaceutical patent issue. Not so, particularly if they truly want to create an environment that attracts investment and provides better medicine – legalistically agreeing to something (GATT) that brings this into play in ten years or more achieves neither of these two objectives.

TRIPS did not turn out to be, as many developing countries had hoped, the end of multinational companies’ plans for the globalization of intellectual property rights. In fact, as this paper will show, in many ways it was only the beginning.

The remainder of this paper is divided into four sections. Section 2 draws on the considerable scholarship surrounding the genesis of TRIPS and tells the story of TRIPS concentrating in particular on the role that was played by Pfizer. Section 3 explains how the trade regime has been used to create a global regulatory ratchet for intellectual property rights. Section 4 shows how US industry uses the ratchet. As a result of this ratchet ‘TRIPS-plus’ standards are proliferating in the national laws of many developing countries. Section 5 discusses the effects of this proliferation from the point of view of development. A conclusion then follows.