economics of piracy final paper
TRANSCRIPT
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Lex Calaguas
Economics of Piracy
Professor Kozel
11 December 2015
The Intersection of Intellectual Property Rights and Human Rights: A Legal, Economic, and Political Analysis
The philosophy behind human rights and intellectual property (IP) rights have
existed for many years. Controversies, various theories, ideologies, and debates within
each specialty have always existed. Both of these human rights and intellectual property
rights are valid and have the ability to profoundly affect the global community in its
entirety. However, it has not been until recently that the once independent concerns
found themselves intertwined. The confliction of intellectual property rights and human
rights consists of numerous components and involves analysis from multiple intellectual
disciplines such as economics, political science, and international law. Additionally, the
intersection can be examined and explained by a myriad of diverse theories within each
discipline. This is a primary reason why the emergence of this newfound debate
regarding which should have precedence has occurred. This has lead to inconsistent
practices and varying interpretations of state obligations.
In order for one to fully evaluate these different arguments and perspectives,
rudimentary knowledge of both human rights and intellectual property rights is
necessary. Human rights are rooted in the principle of basic human dignity and are
therefore, indivisible, universal, and non-derogable.1 Human rights seek to protect every
1 Daniel Chong, Debating Human Rights, (Boulder: Lynne Rienner Publishers, Inc., 2014), 1.
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individual from dropping beneath a certain minimum standard of treatment and living.
Within the scholarly field of human rights, there are various schools of thought
including: realists, liberalists, universalists, cultural-relativists, and constructivists.
Additionally, a scholar can hold a combination or variant of these different views. It is
near impossible to create a universal norm with these competing views, especially when
the validity of various rights are also contested. An example of this would be the
discussion on whether or not intellectual property rights are covered under the
umbrella term of human rights.
The philosophy which intellectual property rights are rooted in is most often
attributed to the property principles of John Locke.2 Locke birthed the idea of natural
property rights, which eventually sparked intellectual property rights through the
argument that intellectual property is “no less the fruit of one’s labor than is physical
property”, as scholar Easterbrook puts it.3 Similarly to human rights, intellectual
property rights likewise can be examined with unique lenses to explain and rationalize
certain ideas. In addition to Locke’s reasoning, another basis for IP rights is the need to
maximize the utilitarian good of a society to incentivize innovation, overcome collective
action problems, and minimize the free rider problem.4
The intellectual community of experts continue to expand their theories which have
crossed over into other areas such as law and politics. Some argue intellectual property
rights should be protected internationally under human rights or believe protecting IP
2 John Locke, Two Treaties on Government, (Book II, Chapter 5: Of Property, 1680-1690), Section 25. 3 Richard Spinello, “Intellectual Property Rights,” Library Hi Tech 25, no. 1 (2007): 12.4 Ibid.
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rights fosters the advancement of other essential human rights.5 Conversely, others
relentlessly refute the idea by presenting theories where IP laws and rights only hinder
and conflict with human rights. However, many scholars and positions in between.
Because of scholars pondering these issues and new industries constantly growing, it is
apparent why laws protecting IP were created. However as industries, nations,
economies, and legislation evolve, so does the IP regime. Retrospectively this has not
always been beneficial, and critics may argue that it has sparked a “tragedy of the
anticommons.”6
This paper will analyze a wide array of arguments and theories regarding which
actions should be taken by the international community in order for these two
principles of human rights and intellectual property right to remain adequately
protected. Because of the complexity of the issue, this paper will utilize a multifaceted
approach and examine the debate from a variety of perspectives within the disciplines
of economics, politics, and law. This approach is used in the hopes of achieving a holistic
understanding of the root causes as well as in an attempt to present the most realistic
and beneficial solution. Nevertheless, it is imperative that international intellectual
property laws be reformed in order to accommodate human rights because it is the
optimal solution to appease the needs of the global community legally, politically, and
economically.
Unfortunately, a concrete international legal precedent does not exist presently. En
masse it has been left to the countries to struggle with their law, definitions,
5 Daniel Chong, Debating Human Rights, (Boulder: Lynne Rienner Publishers, Inc., 2014), 212.6 Michael Heller, The Gridlock Economy: How too much Ownership Wrecks Markets, Stops Innovation, and Costs Lives, (New York: Perseus Books Group, 2008), 1.
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enforcement, and priorities. However, countries as well as international law
organizations such as the EU or the UN have taken a stance on the issue differ
tremendously. It is imperative for international law’s immense room for ambiguity as
well as their lack of enforcement mechanisms to be considered. International law is
essentially a political game of strategy and self-interest. A significant portion of political
scientists concur that nations tend to seek their own self-interests first and foremost
and only then pursue the interest of the common good. Countries lean on each other
maintaining a delicate tension allowing them to name and shame each other into
compliance with the international norm. They may collectively apply economic sanctions
or even militarily intervene as well. Maintaining the international status quo is vital to
the international legal system because our international governing system is anarchical.
States rely on states to keep each other in check; they are the legislators, enforcers, and
rebels who hold the power to ensure either the global ecosystem runs smoothly or to
disrupt it when necessary.
An international norm which has been emerging from the relationship between
human rights and IP rights concludes with human rights ultimately “trumping” IP rights
because the basic right to health is often a literal matter of life or death.7 The majority of
states are parties to the World Trade Organization which requires members to have
ratified the Trade Related Aspects of Intellectual Property Rights Agreement (TRIPS
Agreement) which legally binds states to protect intellectual property rights equally
across international borders.8 Consequently, it has made many of the pharmaceutical
7 Daniel Chong, Debating Human Rights, (Boulder: Lynne Rienner Publishers, Inc., 2014), 208.8 Ibid.
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drug prices increase rapidly, causing many people in developing countries to die due to
the lack of affordability and access to life-saving medicines.9 Additionally, a significant
number of countries opted to sign bilateral free trade agreements placing additional
restrictions on intellectual property virtually perfecting the monopoly of the
pharmaceutical industry as well as inhibiting the ability for generic alternatives to exist
and compete.10 However, countries have been able to circumvent certain provisions of
the TRIPS Agreement in specific circumstances as to not break international human
rights norms. The allowance of exceptions is generally referred to as the TRIPS loophole
or TRIPS flexibilities which only allow for the suspension of patents in a public health
emergency.11
Even though there are “loopholes” in the various agreements, countries who have
utilized these flexibilities have received a substantial amount of backlash from
government and private actors, externally as well as internally.12 Canada implemented
new domestic laws to allow for a Canadian drug company to manufacture generic
versions of AIDS medication to be distributed in Rwanda.13 South Africa used the TRIPS
loophole to distribute affordable HIV/AIDS medication, but received a negative
international response via diplomacy and sanctions.14
When Brazil and India violated the TRIPS agreement justifiably through the same
provision, they were met with the same adverse reactions from many Western 9 Ibid, 209.10 Gillian MacNaughton & Lisa Forman, “Human Rights and Health Impact Assessments of Trade-Related Intellectual Property Rights: A Comparative Study of Experiences in Thailand and Peru,” Journal of Human Rights 14, (2015): 126.11 Ibid, 125.12 Ibid, 126.13 Ibid.14 Ibid.
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countries.15 In response to the general public, developing countries governments, and
human rights activists’ dissatisfaction, the Doha Declaration on the TRIPS Agreement
and Public Health was adopted in 2001. It states that the WTO is committed to public
health and access to medicines therefore allowing more flexibilities in the agreement.16
In 2003, the WTO began allowing least developed countries (LDCs) to import generic
medicines for domestic use, but the circumstances it was allowed in and the production
requirements were highly restrictive and have only been utilized one time in the
Canada-Rwanda case.17
In addition to solely relying on international norms as a source of international law,
domestic and regional court decisions can be used as a point of jurisprudence. For
example, the European Court of Human Rights has heard cases regarding the breach of
intellectual property rights within the European Union (an intergovernmental
organization).18 The European Union requires EU law to trump a member country’s
domestic law if there is a contradiction. International law is particularly complex since
there are no universal standards. Each country is free to choose whether or not
domestic law or international law carries more weight. For example, in the United States
federal law comes before international law if there is a dispute. Even though there is no
hierarchy within international law, human rights can arguably fall under jus cogens
which would mean it is a fundamental norm no state is allowed to violate for any
15 Daniel Chong, Debating Human Rights, (Boulder: Lynne Rienner Publishers, Inc., 2014), 209.16 Gillian MacNaughton & Lisa Forman, “Human Rights and Health Impact Assessments of Trade-Related Intellectual Property Rights: A Comparative Study of Experiences in Thailand and Peru,” Journal of Human Rights 14, (2015): 126.17 Ibid.18 David Welkowitz, “Privatizing Human Rights? Creating Intellectual Property Rights from Human Rights Principles,” Akron Law Review 46, no. 675 (2013): 16.
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reason.19 Under this legal argument, human rights would indisputably override any claim
to intellectual property if there was an overlap.
From a human rights legal perspective, there are two documents of particular
relevance in terms of the debate between human and intellectual property rights, the
Universal Declaration of Human Rights (UDHR) and the International Covenant on
Economic, Social, and Cultural Rights (ICESCR)/International Covenant on Civil and
Political Rights (ICCPR).20 This is where human rights scholars and countries tend to split.
The UNDHR does not explicitly mention the right to health, but advocates for the right
to health insist it is implied through the right to a minimum standard of living. Some
believe governments should be legally obligated to ensure economic, social, and cultural
rights for its population, while others only believe governments must provide the civil
and political rights laid out in the ICCPR (International Covenant on Civil and Political
Rights). This division in ideology is mainly rooted in the concept of positive and negative
rights; positive rights require a government to actively utilize scarce resources, whereas
negative rights simply entail government inaction (ex. Torture).21 While neither of these
covenants, nor the UNDHR are legally binding. Countries agree and commit to them
because of pressure to adhere to international norms.
Because of this division in human rights theory, whether or not healthcare should be
a right is disputed. Those who agree with the ICESCR believe in the government ensuring
a minimum standard of healthcare to all as a fundamental human right, but those who
19 Philippe Cullet, “Human Rights and Intellectual Property Protection in the TRIPS Era,” Human Rights Quarterly 29, no. 2 (2007): 418.20 Daniel Chong, Debating Human Rights, (Boulder: Lynne Rienner Publishers, Inc., 2014), 216.21 Ibid.
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only agree with the ICCPR do not agree that governments should be legally accountable
for providing this type of security.22 Article 27(2) of the ICESCR discusses the right to
“freely…participate in the cultural life of the community…” but also includes a provision
stating that the protection of “…material interests…” from a “…production of which he is
the author.” As a result of the seemingly contradicting rights, Chile brought up its
concern with the phrasing, but the Chair of the committee did not take notable steps to
resolve the issue.23
It is interesting to examine whether or not the protection of intellectual property
should be considered a legally protected right. At the beginning of this paper, it was
stated that the foundational ideas behind intellectual property rights originated from
John Locke. Conversely, John Locke also rallies behind the principles that a person
should only consume as much as they reasonably require and insists property be used
and not be wasted.24 This argument can be used to refute the idea of expanding
intellectual property protections even though they are derived from the same author.
Sources, data, and arguments have the ability to be interpreted in a multitude of
different ways depending on the type of lens one utilizes in the moment. It is beneficial
to evaluate the same source from as many perspectives as possible and to use
quantitative statistics to reinforce the argument.
22Ibid, 184-186.23Aurora Plomer, “The Human Rights Paradox: Intellectual Property Rights and Rights of Access to Science,” Human Rights Quarterly 35, no. 1 (2013): 160-165.
24 Aakash Shah, Jonathan Warsh, and Aaron Kesselheim, “The Ethics of Intellectual Property Rights in an Era of Globalization,” Journal of Law, Medicine, and Ethics 41, no. 4 (2013): 841.
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A lack in quantitative data has previously been an issue when arguing IP laws
infringe upon the human right to health, however in the late 20th century, the health
impact assessment (HIA) and the human rights impact assessment (HRIA) were
developed to predict the unintended health and human rights-based consequences.25
They are mostly used by various organizations within the United Nations or by human
rights-based non-government organizations in the hopes of educating policy-makers.26
In 2005, the HIA compiled a report regarding potential consequences and solutions for
Peru if it were to enter into an FTA with the United States.27 After their assessment they
predicted the increase in prices to name-brand drugs over a 13 year period would
increase by 132% which is unacceptable.28 Through these assessments, NGOs or
government officials are able to quantitatively predict the impact of protecting IP rights
on the access to medications which is crucial when formulating a case for a change in
international or domestic law, especially when it is being lobbied by powerful industries.
The most helpful recommendations the report suggested was to have the industries
who benefit from the trade agreement give a certain percent of their profits to a
collective fund which would be used to subsidize the cost of drugs for disadvantaged
people, however, this may not be a realistic option from a political standpoint in terms
of potential corruption.29
25 Gillian MacNaughton & Lisa Forman, “Human Rights and Health Impact Assessments of Trade-Related Intellectual Property Rights: A Comparative Study of Experiences in Thailand and Peru,” Journal of Human Rights 14, (2015): 127.26 Ibid.27 Ibid, 132.28 Ibid.29 Ibid.
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Economically, granting intellectual property rights can be argued from either side of
the debate. Some economists believe patents and the protection of intellectual property
rights increase the competition in certain industries as well as spur economic
development.30 On the other hand, some economists feel that the creation of a
monopoly interferes with the principles of a free-market economy and removes
incentives for innovation because the opportunity cost with patents is high.31 Settling on
a midpoint between the two extremes would be ideal because it would allow for some
protection of intellectual property while still maintaining an environment suitable for
human rights and economic prosperity. Strictly protecting IP rights through medical
patents without a significant amount of flexibility has a direct effect on quality of life
and supports inequality through the restriction of access to important medicines.32
Potential foreign investors should see the increase of drug prices because of the
TRIPS Agreement as an opportunity because the lower level countries who require
affordable, generic medicines are an underserviced market. However, the challenge
occurs when the generic manufacturers attempt to balance making a profit with the
TRIPS Paragraph 6 compulsory license provisions.33 FDIs must see the return on their
monetary investments in order to continue investing in generic manufacturing,
therefore the compulsory licensing framework must strive to strike a balance between
the TRIPS’ requirements and the investor’s needs.34 This economic-based solution has
30 Philippe Cullet, “Human Rights and Intellectual Property Protection in the TRIPS Era,” Human Rights Quarterly 29, no. 2 (2007): 412.31 Ibid, 413. 32 Ibid, 416.33 Stacey Lee, “Can Incentives to Generic Manufacturers Save the Doha Declaration’s Paragraph 6?” Georgetown Journal of International Law 44, (2013): 1410.34 Ibid. 1411
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the potential to dramatically increase the accessibility and affordability of vital
medicines as well as to allow investors to profit.35 However, this may prove to be
unrealistic in terms of application because in order to profit with such a low profit
margin, manufactures would need a huge market which does not necessarily exist to the
required proportion.36
In recent years, considerable strides have been made in terms of research and
proposed solutions to the intersection between various human rights and various
intellectual property rights. The shortcoming is that many of these solutions do not take
a comprehensive approach to the issue and addressing the root causes. Additionally, the
majority of solutions are not pragmatic and do not have a high probability of being
adopted or effective. It is imperative for emphasis to be placed on addressing the core
causes of human rights issues rather than patching it up with a surface reform. Since the
IP laws must be changed to better integrate the protection of human rights, economists
who specialize in IP laws must create a framework capable of creating a prosperous
pharmaceutical industry while simultaneously catering to the underprivileged and lifting
them above the minimum acceptable threshold for living. A self-sufficient symbiotic
relationship would be the ideal solution.
Nonetheless, after exploring the different academic disciplines as well as the
theories contained within each discipline, it became apparent that no “right” solution
exists. The dilemmas outlined in this paper demand a multifaceted approach if they are
ever to be resolved. International law is complex and inconsistent on its own, but adding
35 Ibid. 141336 Ibid.
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the varying views on intellectual property rights creates a paradox consisting of various
trade-offs. The most difficult aspects needing to be tackled when reforming the current
IP regime will be to reach an international consensus on the objectives for the new
international IP regime standard and determining the enforceability of the various
solutions.
Fundamentally, it can be concluded from the research and case-studies that Global
South countries tend to agree human rights have priority over intellectual property
rights, while Global North countries tend to advocate for stricter IP laws. However,
Western countries are ultimately able to see the importance of human rights and often
do not follow through with their lawsuits, etc. because of pressure from the general
public as well as other countries. Even with the ever-changing technologies, economies,
political powers, and legal jurisprudence, both intellectual property laws as well as the
human rights laws will evolve in a desperate attempt to keep up with the demands of
society which will sanguinely incorporate human rights.
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Works Cited
1. Chong, Daniel. Debating Human Rights. Boulder: Lynne Rienner Publishers
Inc., 2014.
2. Locke, John. Two Treaties on Government. Book II, Chapter 5: Of Property,
1680-1690.
3. Heller, Michael. The Gridlock Economy: How too much Ownership Wrecks
Markets, Stops Innovation, and Costs Lives. New York: Perseus Books Group,
2008.
4. Lee, Stacey. “Can Incentives to Generic Manufacturers Save the Doha
Declaration’s Paragraph 6?” Georgetown Journal of International Law 44,
(2013): 1388-1420.
5. MacNaughton, Gillian & Forman, Lisa. “Human Rights and Health Impact
Assessments of Trade-Related Intellectual Property Rights: A Comparative
Study of Experiences in Thailand and Peru.” Journal of Human Rights 14,
(2015): 124-148.
6. Philippe Cullet, “Human Rights and Intellectual Property Protection in the
TRIPS Era,” Human Rights Quarterly 29, no. 2 (2007): 403-430.
7. Plomer, Aurora. “The Human Rights Paradox: Intellectual Property Rights and
Rights of Access to Science.” Human Rights Quarterly 35, no. 1 (2013): 143-
175.
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8. Shah, Aakash, Warsh, Jonathan and Kesselheim, Aaron. “The Ethics of
Intellectual Property Rights in an Era of Globalization.” Journal of Law,
Medicine, and Ethics 41, no. 4 (2013): 841.
9. Spinello, Richard. “Intellectual Property Rights.” Library Hi Tech 25, no. 1
(2007): 12-22.
10. Welkowitz, David. “Privatizing Human Rights? Creating Intellectual Property
Rights from Human Rights Principles.” Akron Law Review 46, no. 675 (2013):
1-50.