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  August 17, 2017

Intellectual Property Rights Protect Massive Profits of Corporations


We need to debate and revise the intellectual property rights regime, which is not only dysfunctional for us, but especially for developing countries, says Dean Baker, co-director of CEPR
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biography

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being "Rigged: How Globalization and the Rules of the Modern Economy Were Structured to Make the Rich Richer".


transcript

Intellectual Property Rights Protect Massive Profits of CorporationsGREGORY WILPERT: Welcome to The Real News Network. I'm Gregory Wilpert coming to you from Caracas, Venezuela. Intellectual property rights is a fairly obscure issue, but one that is central to the development of an economy. This intellectual property can involve pharmaceuticals, technology, software, genetically modified organisms or other kinds of intellectual productions.

The issue is often framed as one of ensuring a legal framework that incentivizes innovation versus ensuring that intellectual work is disseminated throughout the economy and that it thereby supports economic development. Now a recent study authored by the Nobel Prize winning economist Joseph Stieglitz, and also the co-director of the Center for Economic and Policy Research, Dean Baker, as well as Arjun Jayadev, looks at this issue as it applies to developing countries. We are joined today by one of the study's authors, Dean Baker. Thanks for joining us Dean.

DEAN BAKER: Thanks for having me on.

GREGORY WILPERT: Let's start with this paper just briefly, just to look at it. Then we'll look at some more current issues relating to it. Your paper begins with an analysis of what is problematic with the existing intellectual property regime for developing countries of the North. That is, even though they developed the system in their interest, many people are finding that the system is breaking down and not exactly helping innovation anymore. Can you just give us a brief summary of what are some of the main problems with the system as it exists today?

DEAN BAKER: Well first off, this again, it's written from the standpoint of the developing countries. There's been a big effort in trade deals really dating back at least to NAFTA if not further, to impose longer and stronger patent, copyright, and related protections on the developing world. Basically what this means is a lot of money going from poor countries to rich countries because it doesn't cost a lot of money in almost all cases to get, say, a drug produced, to get things transferred over the internet. It's basically free. There's a wide range of items that they could get for little or no cost which we're trying to make very expensive for them by saying we have patent rights, we have copyrights, other types of intellectual property that they have to pay us for.

Basically, intellectual property in these trade deals is about transferring money from poor countries to rich countries, often at the expense of their health since one of the biggest areas, of course, is prescription drugs. There you often have ratios of 100, even 1000:1 where drugs that could be produced as generics for two, three hundred dollars for a year's treatment could sell for over $100,000 when you have a patent-protected product. We think it's a very bad idea for them just to wholesale transfer the regime of intellectual property that we've developed in the United States and West Europe to the developing world.

GREGORY WILPERT: The New York Times actually just recently had an article in which they were complaining about China's violation of intellectual property, which is an issue that keeps coming up over and over again. You responded to this recently in a blog post of your own. What are some of the issues that are involved in that? What's the problem with complaining about China in this regard?

DEAN BAKER: Well, there's two issues here. One of the things that most immediately upset me was just that the numbers they were using were just blatant lies. No reason to use any other term. They're lies. They said that we're losing $600 billion a year due to intellectual property theft. To put that in some perspective, that's more than a quarter of all of our exports. That's almost 40% of annual after-tax corporate profits. That's just an astounding number. They give no source for it. I don't know where exactly they got this number.

I've seen past numbers calculated like that where they say, "Imagine that every unauthorized copy of Windows was sold at the US price," or "Imagine every drug, a generic version, where we claim a patent right, that was sold in India or other developing countries, was sold at its US retail price." These are nonsense numbers. It's just absurd that this would be a basis for the debate.

The New York Times has pretenses of being serious. It's outrageous they would allow that. But the deeper issue ... You know, okay, fine. We're going to assert intellectual property rights with China. Obviously China doesn't want to pay us more for our patent claims or copyright claims. The point I would make about that is we have to decide what we're going to go to bat against China over. We could go to bat over currency values and try and protect manufacturing jobs. Well people who do that are ridiculed in places like the New York Times.

Instead when we go, "Oh we're going to go to bat for Microsoft and their copyrights on Windows. We're going to bat for Pfizer and its patents on drugs. Well, that's really good and important." I'm sorry. I find that pretty disgusting because it's bad for China and I don't see any particular reason why we should use the government's resources to make Bill Gates even richer.

GREGORY WILPERT: Just returning to your study, I mean, one of the issues of course is that I guess the New York Times is claiming that this is just the property regime. Of course there's other issues behind it, but I mean one of the bases of their claims is that this is the property regime that we live under and therefore they should stick to it. What alternatives are there? Your study does talk about a reconfiguration, a possible reconfiguration, because the current regime actually doesn't work neither for the developed countries nor for the developing countries. What are some of the ideas that you developed? How could things work differently?

DEAN BAKER: Well, they already do work differently to some extent. Again, this is one of the incredible failures of our political debate, that we don't even talk about this. This is a massive amount of money. Let's take their $600 billion. How much do we ever discuss that comes to $600 billion a year? I'll answer that for you. Nothing. Nothing. It's rare we even debate something that's one-tenth that amount.

Here's this number. Again, it's an invented number. It's an absurd number. But if anything like that were true, the idea that we're not debating this as a matter of policy is kind of incredible. But in terms of alternatives, one of the things, direct funding. Take a look at prescription drugs. We spend about $32 billion a year on biomedical research that goes through the National Institutes of Health.

Most of that, not all of it, but most of that's for more basic research. Well, why couldn't you double or triple that amount and have it go for funding, the development of drugs, the clinical testing, right through the FDA approval process and then have all these new drugs available as generics? Another route, you know because we talk about intellectual property for creative work, movies, books. I understand those people have to and should be paid. Well, one of the things we do now is we have a tax exemption for artistic contributions to charitable causes, which can include things like museums, operas. In other words, supporting creative work. Suppose we made that more democratic. We had a tax credit, say $100 per person. We give it to the creative worker of our choice or an organization that supports creative workers, and everything they do is in the public domain. No copyright. It's really available over the internet.

I mean there's lots of things that we can do like this. We already do them to some extent. It's just a question of thinking about more systematically and try to find a better mechanism and to enlarge it. But again, unfortunately we're not having that discussion.

GREGORY WILPERT: Well, there seems to be, and I don't know if you would agree with this, but there seems to be already ... Well, you kind of suggested it but there's already movements are out there that are undermining so to speak the existing intellectual property regime. Particularly I'm thinking of the whole Creative Commons licensing system and the whole free software system. Do you see that as perhaps part of this way to go, that that might help change the regime, even though we're not publicly debating, so to speak, by a stealth means undermining the existing regime through these others systems, Creative Commons and free software?

DEAN BAKER: Oh, absolutely. I mean the point is, it's harder to enforce copyrights in the internet age. The analogy I like to make if you think back to the Soviet Union, their system of central planning. Well, they had a black market there. They tried to outlaw it. You'd get arrested for selling blue jeans on the street, but people sell blue jeans on the street because there's a lot of money in it.

It's the same sort of thing here. We're like the Soviet Union insisting, oh we have copyrights. Oh we have patents, but people are ignoring them. It's very difficult. That's why we have such great efforts to try to enforce copyright on the web and we have more punitive measures. We're trying to make third parties--I'm responsible on my website to make sure someone doesn't post copyright-protected material.

Well, I really don't want to work for Time Warner. That should be their problem. Why is it my problem? But the law says it's my problem. In the case of generic drugs, when you have these cancer drugs here, that they're patent protecting and they're selling for hundreds of thousands of dollars and there are generic versions available in India for a few hundred, it's pretty hard to keep those cheap generics away from the people who need them here and in other countries. Yeah, I mean I think the system is going to be undermined. It will fall of its own weight, but we should be having the discussion. It is a legitimate concern in a sense. We do need incentives for innovation, so we should be talking about that and thinking of better more modern structures than the patent and copyright system.

GREGORY WILPERT: I mean one more place where some debate is happening but it seems to be mostly secret is in TRIPS Treaties. That is the Trade Related Intellectual Property and Services, I think? I can't remember the full title, but anyway. Where do you see that going? What are the latest developments there that we know of?

DEAN BAKER: Well, there is growing effort. I mean, drugs are a central theme here because drugs obviously are directly related to people's health. There is a growing effort, certainly coming largely from the developing world, but aid organizations as well, to try and push back on efforts to impose patents and related protections on prescription drugs.

There you've actually had explicit statements. The UN came out with a statement. There was a statement approved by the group of 20 saying we should be looking to alternative mechanisms that de-link the funding of the research from the price of the drug. The U.S. always resists that. This is even under Obama, so this isn't a blame Trump story. This has been both parties have been opposed to that.

The logic of it is very compelling. You even had the head of Glaxo-Smith Kline. He's now the former head, but while he was still head of Glaxo-Smith Kline, he said that we have to look to de-link drug prices from the research and development costs. It literally makes no sense. No one in their right mind would say, "Okay, it's expensive to develop these drugs. How are we going to pay for it? Well after we've developed it, the people who are sick and dying of cancer and other horrible diseases, we're going to make them pay." That's close to nuts.

GREGORY WILPERT: Okay. Well thanks so much, Dean, for talking to us about this important issue today.

DEAN BAKER: Thanks for having me on.

GREGORY WILPERT: And thank you for watching The Real News Network.



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