Intellectual Property and Diversity in World Trade
Background notes prepared by Susan Crean, April, 2002*
* This paper is based on a study done for the B.C. Ministry of Employment and Investment by Susan Crean, B. Laurie Edwards and Marian D. Hebb in 2000.
Table of Contents
INTELECTUAL PROPERTY IN CANADA AND ABROAD
The rights collectively known as "intellectual property rights" (IPR) relate to the creative output and invention of individuals which is viewed as a form of property for the purpose of protecting both the creators and the public. The public’s interest is in accessing the knowledge these creative people—authors as they are called in the Copyright Act—contribute. Most Intellectual Property rights require registration and state approval before coming into being; patent applications are further subject to examination and evaluation before being granted. Furthermore, intellectual property rights (IPRs) are typically conceived of as monopolies, which is to say exclusive property rights conferred on the applicant for a specified period of time in the interest of encouraging further creativity. Copyright, however, distinguishes itself among IP regimes in that it arises automatically upon the creation of a work and does not depend on the assessment or approval by any government office.i
Canada came of age as a sovereign state in the twenties and thirties when she entered the international arena on her own authority, signing agreements such as the Paris Convention on patents in 1925, and the Berne Convention on copyright in 1928. Rights holders in industrialized nations were moved to establish these treaties in the late nineteenth century because of the emergence of publishing as a mass medium and the growth of international trade in goods. It is often pointed out, for instance, that the American book publishing industry was founded on pirated editions of British books. (Although the U.S. always favoured international trade treaties in this sphere, it did not join the Berne Convention for 100 years because its own law did not provide for National Treatment, but until recently.) The need for co-operation around IP enforcement increased as the means of replication and imitation advanced and the costs of production declined.
The next stage of development came in the 1960s when the World Intellectual Property Organization (WIPO) was established to administer all IP agreements jointly. The organization was originally a club of fifty-one industrialized countries, but in 1974 it elected to join the UN system and thus open itself to universal membership. Its threefold mission since then has been to help member states create multilateral standards, to assist developing countries design and administer national IP laws, and to serve the membership by administering the treaties, a number of which have been added to its roster in recent years. Significantly, WIPO’s service to patent applicants under the Patent Cooperation Treaty (PCT) has become a major source of income, lessening its dependence on member contributions, and buying it an independence few other UN agencies have.
Though international co-operation in the field of intellectual property has a long history, IP as a subject in trade discussions does not. The change came as the IP-based industries led by the pharmaceutical and information industries began pressuring governments to deal with the growing incidence of piracy, particularly prevalent in developing countries. Worldwide these corporations claimed they were being shortchanged US$24 billion a year. The US Trade Representative took up their cause, identifying the lack of IP protection as a barrier to trade, and a disincentive to investment. As a result IP was included in the Uruguay Round talks in 1986, which ultimately led to the TRIPs, the Agreement on Trade-Related Aspects of Intellectual Property Rights. The story of how the TRIPs came about illustrates not only the political differences involved (and the resistance of developing countries to the requirement that they adopt IP laws to conform to the developed world’s idea of how to handle knowledge) but the growing awareness of the economic potential of IP. By 1995 when the TRIPs was concluded, trade in IP represented 20 percent of world trade. It was becoming clear that IP would have a particular role to play in the emerging electronic world dominated, as it obviously was going to be, on the nternet. ii
TRIPs and the WIPO Treaties
By the mid-eighties, advances in biotechnology combined with the effects of the information revolution (biopharmaceuticals, PCs, and cellphones) were visibly transforming economies as well as popular culture. The US, in particular, heralded the knowledge industries as the cutting edge of its future prosperity, identifying the sale of IP-based goods and services world wide as a source of revenue to offset continuing trade deficits, and the exploitation of IP as a means of creating wealth. Given the opposition, the TRIPs was an extraordinary achievement. This was due to the combination of the GATT system of negotiation which works by consensus (as opposed to WIPO’s voting system which would never have permitted such an accord), and WIPO’s expertise and history of association with the developing world on IP matters. The agreement allowed for a transition period of four years for developing countries, and eleven years for the least developed nations—which means that, in theory, only the countries in the latter category should remain outside the circle today. Until 1989 developing countries and the Third World had refused to enter into detailed negotiations on the subject of IP standards. It was the threat of unilateral retaliatory action on the part of the US (in the form of trade sanctions mandated by the infamous "Special 301" section of the US Trade Act) which changed minds, and the promise of increased trade rights and the benefit of greater inflows of technology and foreign investment. At the time, there was a growing conviction that the foreign investment strategies of countries like Singapore and Korea were more propitious for development than the old import substitution approach. TRIPs was seen as the key to this future. It is apparent now that the true significance of IP was not fully appreciated in 1989, and that TRIPs was consummated without a broad understanding on the part of many participants and the general public, of what was at stake or, indeed, what was being accomplished.
The basic effect of the agreement was to introduce a set of minimum standards in intellectual property rights protection worldwide, obliging their enforcement. In the first instance, the agreement binds signatory countries to the provisions of the main international treaties dealing with intellectual property, including the Paris Convention on industrial property (amended in 1967), the Rome Convention on performers, producers, and broadcasters (1961), the Berne Convention on literary, and artistic works (amended in 1971), and the Washington Treaty on integrated circuits (1989), covering seven categories of IP. But unlike Berne, Paris etc, the TRIPs is enforceable because it was negotiated within the framework of the World Trade Organization and has access to a disputes resolution procedure and, if need be, sanctions. In addition to defining minimum standards, the agreement requires parties to provide fair and effective judicial procedures and remedies for rights-holders claiming infringements {Articles. 42-49}. To "national treatment" it adds the "most-favoured nation" principle commonplace in WTO/GATT agreements. The first requires that Members not discriminate against foreign property owners but provide the same protection to the citizens of signatory countries as to their own nationals {Article. 3}. The second requires that any new or preferential treatment accorded another country be immediately and unconditionally granted to all members. {Article. 4} Finally, it sets up a Council to monitor the IP situation worldwide, and to report on the non-compliance of members with the terms of TRIPs. {Article 68}
In addition to these general provisions, there are specifics. For example, the agreement requires countries to recognize patents on most products and processes including pharmaceuticals, modified micro-organisms and "microbiological processes." It allows protection for plant varieties either through patents or an "effective sui generis system" or both, but leaves it to individual countries to decide whether or not to patent plants and animals. {Article 27} It requires that patents be made available for inventions in all fields of technology "provided they are new, involve an inventive step and are capable of industrial application," and it provides for a minimum patent term of twenty years{Article 33}. In addition, TRIPs prohibits compulsory licensing of trademarks {Article 21}iii, and ignores moral rights under copyright {Article 9}.
The TRIPs came about because of the pressing need to "promote effective and adequate protection for intellectual property rights and to ensure that measures and procedures to enforce intellectual property rights do not themselves become barriers to legitimate trade." So states the preamble to the agreement which also emphasizes the need to reduce trade distortions, and to recognize IPRs as private rights serving the "underlying public policy objectives of national systems of protection of intellectual property, including developmental and technological objectives." Historically, IPRs have not been burdened with objectives other than the protection of creators’ rights and the public interest in access. The TRIPs would seem to add new obligations.
The TRIPs is a departure in other ways. Not only does it usher in a new regime governing IP internationally, it has precipitated the harmonization of domestic legislation, affecting the administration of justice in some cases, and imposing a property regime on indigenous and local cultures in others. For this it has been criticized for reaching beyond principle and intruding in the domain of public policy.iv
The WIPO treaties were concluded in 1996 after a five year process of discussion and negotiation. They came into being because of the need to update copyright law (the Berne Convention having been revised last in 1971), and more specifically the need to deal with digitization which was not covered by TRIPs. The WIPO Copyright Treaty and the WIPO Performances and Phonograms Treaty were intended to adapt existing standards and copyright systems to the new media, and the internet in particular. Their purpose was to preserve the traditional intent of copyright law, which has been summarized as conferring exclusive rights of authorship and distribution as an incentive to risky investment in "expression products" subject to constraints imposed to ensure the public’s access to information and expression.v The treaties achieve this through a new right of communication to the public which includes the right of "making available to the public", and through the protection of rights management systems and technological devices with respect to the circumvention of piracy.vi The new right contemplates the internet in clarifying that material may be made available to the public in such a way that it can be accessed by individuals at places and times chosen by them. The technical provisions have to do with protecting security systems and copyright information identifying material which would make the distribution of protected material and its use feasible in cyberspace.
The TRIPs agreement is now generally regarded as one of the strongest achievements of the Uruguay Round. Though it was a subject the international community discussed mainly in relation to pharmaceuticals and computer software, it has since come to have a central importance to world trade, and as such is the most far-reaching of all the WTO agreements, cutting across sectors, implicating trade in goods and services as well as investments, and, despite its title, affecting far more than just the trade-related aspects of intellectual property rights. It affects IP everywhere, whether or not it ever leaves its country of origin. TRIPs’ focus is less on the traditional detail of trade treaties (tariff tables and the like), and more on principle. It is the point where two divergent tendencies meet, for if IP law institutionalizes government intervention in the market, in another sense, trade law has been the means of institutionalizing the withdrawal of national governments from the market. International trade agreements might be described as departure schedules, but in the case of the TRIPs and intellectual property, the movement seems to be in the opposite direction, towards more rigorous regulation and enforcement.
The Biodiversity Convention
The Convention on Biological Diversity (CBD) grew out of the United Nations Environment Programme which convened an Ad Hoc Working Group of Experts on Biological Diversity in 1988. This group eventually became an intergovernmental negotiating committee which brought the Convention to the UN Conference on Environment and Development (the Rio "Earth Summit") in July 1992. By 1993 when the Convention closed for signatures, 168 countries had signed. The United States, a key party to any such international effort, signed the Convention but has refused to ratify it since. The main reason for its objection is its belief that the CBD’s provisions compromises the protection of intellectual property rights.
The core of the Convention is Article 8(j) which gives recognition to indigenous and local communities for the role they play in the conservation and sustainable use of the materials of biodiversity (genetic resources.) The paragraph reads:
"[Each Contracting Party shall, as far as possible and as appropriate, and] subject to its national legislation, respect, preserve and maintain knowledge, innovations and practices of indigenous and local communities embodying traditional lifestyles relevant for the conservation and sustainable use of biological diversity and promote their wider application with the approval and involvement of the holders of such knowledge, innovations and practices and encourage the equitable sharing of the benefits arising from the utilization of such knowledge, innovations and practices."
This obligation, and the Convention as a whole, highlights the relationship between conservation and biological diversity, and between sustainable use including genetic resources and the issue of the "fair and equitable sharing of benefits arising out of the uses of genetic resources." {Article 1}
At the time the Convention was being negotiated, there were two other sets of multilateral discussions underway having to do with IP and the protection of life forms. One was at the GATT’s Uruguay Round (which led to the TRIPs), and the other was at the combined FAO (UN Food and Agricultural Organization) and UPOV (International Union for the Protection of New Varieties of Plants) effort around plant genetic resources. Common to the three was the transnational treatment given IPRs and their related technologies. The common context was the changing conceptualization of biological resources. Prior to the CBD, these had been conceived of as the common heritage of all mankind, and therefore freely accessible to everyone. This included access to traditionally cultivated and developed crops, as well as to plants occurring in nature. According to an Industry Canada study, in the eighties and early nineties developing countries began to see access to genetic resources being increasingly restricted by technological processes (biotechnology) because of the expansion in the number and scope of patent claims by biotechnology companies in the North. This led to the perception "that the biodiversity rich South was providing genetic resources free to the North, which was then selling back products developed from these resources subject to exclusive patent rights."vii
In the debates that accompanied the CBD into being, the most divisive and contentious provisions related to IPR. On the one hand this led to the articulation of the new doctrine of "common concern of mankind" in the place of the old "common heritage" principle governing the approach to the control of genetic resources. The shift means that instead of seeing genetic resources as a common human heritage, the state is recognized as having sovereign rights over the genetic resources found within its borders, and assumed to have the power to control access to them. On the other hand, the vast imbalance of vested interests has also led to the effort to limit the patent rights over life forms by the biotechnolgy industry. (One percent of the world’s patents are controlled by Third World interests while 74 percent are controlled by interests from OECD countries.) Article 16(5) in the section dealing with technology transfer states,
"The Contracting Parties, recognizing that patents and other intellectual property rights may have an influence on the implementation of this Convention, shall cooperate in this regard subject to national legislation and international law in order to ensure that such rights are supportive of and do not run counter to its objectives."
Developing nations have taken this to mean that signatory countries have an obligation to ensure intellectual property rights do not interfere with the transfer of technology and the sharing of profits. The Convention speaks about the benefits accruing to the exploitation of genetic resources. It talks about balance, makes a connection between cultural diversity and bio-diversity (the two combining in a critical process whereby the preservation of one assists in the preservation of the other), and identifies indigenous and local communities as primary custodians and sources of genetic material. The Americans were able to support the main ideas and responsibilities of the Convention, but not this perceived encroachment on the supremacy of IP rights.
IP AND CULTURAL POLICY
Culture is obviously implicated in the cornucopia of new goods, services and distribution systems made possible by digital electronics and the convergence of computer and communications technologies. The internet in particular has obliterated the distinctions policy makers were used to making between content and carriage, in the process threatening the viability of programs that were designed to protect the cultural sovereignty of nation states by privileging local content. The position of creators has been compromised because of the convergence; as the boundaries have blurred it has become hard to determine what material can be protected as original expression and what can’t. Despite the vastly increased opportunity for theft, most technologically advanced countries, including Canada, have eschewed regulation of the internet for fear of slowing the development of electronic commerce, if not for fear of being unable to do so. At the same time, attempts to exempt cultural products from trade agreements are proving ineffectual.
The expansion of the IP industries coincided with the growth of the information technologies, and the so-called "consciousness industries." As a result, we have entered the era of the knowledge-based economy where desire for content is the driving force in the marketplace. Citizens will purchase cultural content they identify with as national or local expression, or because it pertains to their specific needs. Otherwise they purchase it for quality, which is to say high production values, or because it is priced competitively and immediately available. In the long term the internet may permit cultural producers anywhere in the world to sell to the world. In the short term most cultural producers sell their wares to an ever shrinking group of industry giants who have the wherewithall to establish themselves as "go to" web sites in the otherwise chaotic electronic mall.
The internet started in the U.S., and American corporations and content dominate the world wide web. The American market for cultural goods and services is the largest in the world and the content of this traffic speaks to the tastes of American consumer culture. It seems likely that the impact of the internet on Canadian culture will thus be to minimize cultural differences as more and more Canadian expression is oriented towards the U.S. market, and as the US market increases in its importance to the Canadian economy. On the other hand, Canadian artists and producers may find substantial markets in other regions of the world.
The cultural sector suffers from many of the same difficulties that other sectors experience in Canada, notably the lack of investment capital without which innovative products and services are very difficult if not impossible to produce. For this reason there are both national and regional programs to subsidize investment in film and multimedia projects. Such programs tend to be export oriented so the ensuing cultural products and services speak to trade rather than cultural objectives.
The effect of the TRIPs along with the two North American free trade agreements (the FTA and NAFTA) has been to subordinate the cultural objectives of government policy in the area of culture to commercial goals. To the extent that this leads to vibrant domestic cultural industries, cultural objectives could be achieved, but the danger is the loss of the small scale, independent producers—the ones who produce the bulk of original Canadian content. The main impediments to the development of such industries, however, is their tendency to migrate physically or adapt imaginatively to the biggest export markets—and their sale to the content conglomerates who are taking control of the world of electronic commerce along with the conventional mass media. Two other important concerns for creators are the shrinking of the public domain—which is to say the storehouse of human knowledge—on which culture and art rely, and the pressure of globalization on Traditional Knowledge
The Americans have effectively set the world’s intellectual property agenda and in the wake of the TRIPS and the debut of e-commerce, there has been a flurry of domestic legislation entrenching the advantages of those transnational corporations which control rights to cultural goods and services. At the same time, culture has emerged to play a significant role in the evolution of Canadian trade agreements. It figured prominently in the negotiations leading up to the to the FTA and NAFTA, and in both cases was dealt with separately by way of an exemption which also sanctioned retaliation to an "equivalent commercial effect" should cultural policy pre-empt American revenues. Both exemptions were ignored, though, when the US took Canada to the WTO over our magazine policy.
viii
Canadian cultural policy has always concerned itself with Canadian content. A variety of approaches have been used (grants, regulation, ownership rules), and while successful in the main, these have never solved the problem of inadequate returns to primary creators. It remains extremely difficult to make a living as an artist, though many more individuals are doing so than at any other time in our history. A better living can be had administering, producing or distributing art than making it. As the cultural sector has grown, the ranks of producers and corporate administrators have swelled, along with government programs supporting their activity; however, relatively little has been done for creative artists beyond the traditional grants programs and copyright policy.
Although copyright was conceived of as a right accruing to individual authors, the evolution of IP-based industries in the last decade has pulled copyright legislation and enforcement into the orbit of big business. It is evident that two classes of IP rights holders—giant corporations and small scale rights holders including individuals—are now developing internationally as a result, and that the emerging system and its designers are paying scant attention to the interests of the second class. Furthermore, a third class of creators exists, those using traditional styles and practices which do not conform to the norms of copyright law, who have no protection at all.
IP, Culture, Electronic Commerce
Intellectual property has been essential to the development of electronic commerce. At the same time, copyright law is the lifeblood of art and the cultural industries because it constitutes the legal basis on which all art and culture is produced. However, the principal beneficiaries of policies and agreements enacted in support of information technologies thus far have been the owners of copyright for software, text, databases, sound recordings, and audio-visual products. In other words, there are problems. To begin with, digital technology has erased the distinction between the means of transmission and the means of reproduction. ix On the internet, IP can be manipulated and distributed by agents over which rights holders have no control. The cultural community in Canada is attempting to deal with this situation , mainly through licensing by collective societies that obtain agreements or tariffs and collect revenues, or through the courts. x Furthermore, exploiting the internet requires packaging material according to the technical standards people have become accustomed to, including speed, navigation, and ease of manipulation. This necessitates an ever-greater reliance on technical middlemen who are, of course, creators of IP themselves and often among the most prosperous cyberspace tenants. Creators must either develop proficiency in these new fields or contract out an expanding array of tasks which are essential if their IP is to realize its market value. For primary creators there is a chance that the internet will present financial opportunity, but this may come with the requirement that the enterprise involve more services provided by third parties.
As well as these new technical costs, exploiting and defending one’s rights often means going to court. The world of electronic commerce is no golden goose for those creators who lack the resources to make the legal profession work for them. The irony is that as IP protection is getting better in theory, it is not necessarily getting better in practice for individuals who still find their work being used withoutrecompense and. Often the infringing users are other IP owners too; newspaper chains who do not want to pay freelance journalists extra for electronic rights, for example.
Along with its growing economic importance the ownership and management of IP has tended to concentrate to a remarkable degree. Since it is easier to acquire rights than to create original IP and since the easiest way to acquire rights is to buy the companies which own it, big companies keep getting bigger. The circumstances of creators in small markets, many of whom live at or below the poverty line, is vastly different than the circumstances of large corporations. Big companies can afford to litigate, and they likewise have a better chance of accessing the WTO system which, being at one remove from citizens, requires influence with government to effect. In the emerging world of e-commerce, small creators may also find it more difficult to obtain access to IP, some of which may formerly have been located in the public domain and now, because of mergers and acquisitions and the privatization of databases, costs money.
TRADITIONAL KNOWLEDGE
The issues raised by culture in relation to IP and international trade are similar to those raised by indigenous peoples regarding the trade in genetic materials. As noted above, the Convention on Biodiveristy links biological diversity with cultural diversity. In Canada, the free trade agreements with the U.S. and Mexico were both publicly debated in terms of cultural sovereignty, and in regards to the ability of nation states to maintain policies which discriminate in favour of their own culture. More recently, international trade discussions have moved toward the issue of cultural diversity with the creation of an international network of culture ministers, spearheaded by Canada.
However, while the connection between IP and biodiversity is well understood and widely recognized, the parallel connection between IP cultural diversity is not. The term is itself often used as shorthand for national cultural policy and the right of countries to have their own in the interest of global diversity. However, for creators, is not just the diversity between ations that matters, it is the diversity within ations that is key. It can be said, for example, that cultural diversity begins with creators, and for this reason it is imperative that Canadian copyright law equally protect all Canadian creators. Copyright must not be used by third parties as a means of appropriating original material for private use and profit, a practise of particular concern in relation to Native culture. Just as the protection of traditional genetic materials (plants, medicines) has led to the demand that Indigenous Peoples participate in their management, and share in the benefits wrought by their exploitation, so too the protection of Native cultural resources has led to the demand that the trade in aboriginal art not only benefit the communities that produced them, but that the mode and manner of exploitation also be left to the community to determine. The inability of copyright law to provide such protection led the Snunymuxw (Nanaimo) First Nation to trade mark a group of petroglyph images in 1997. These ancient rock carvings appear in several secluded places on Gabriola Island on the West Coast, but since the 1970s the images had become immensely popular among non-Native artists and local people who had taken to putting them everywhere: on tee-shirts, in jewellery, on business cards and in ads as logos. Even the local museum made cement replicas of the glyphs and mounted them outside the museum in an effort to promote preservation of the originals. The Nanaimo Band was able to register the petroglyph images as a public authority meaning that the owners, instead of being a corporation doing business, wass recognized as a limited commons collectively responsible for, and having the exclusive right to control the use of the images.
The issues raised pertaining to Traditional Knowledge cover a vast territory and include many aspects of intellectual property, not only copyright. However, it is copyright that contains the concept of moral rights, stemming from the idea that creative work attaches to a person, and is a reflection of an individual personality and reputation. This is one fundamental way in which art is unlike all other forms of IP and all other kinds of goods. Although the IP issues raised by Native culture often refer to collective ownership, they also speak to moral rights as well as economic rights.
NOTES
i The situation is different in the United States where copyright traditionally had to be registered. In Canada there has been always been an option to register, but it was never required. Thus the term "copyrighted" has meaning in American law it does not here.
ii For a history of this agreement see Michael P. Ryan, Knowledge Democracy – Global Competition and the Politics of Intellectual Property Brookings Institute, 1999
iii Compulsory licensing though not prohibited is constrained in Article 31 so that it must be a non-exclusive license, "predominantly for the supply of the domestic market of the Member authorizing such use" with "adequate remuneration" and "subject to judicial review."
iv Ryan p.113-4
v ibid. p. 160
vi Although the TRIPs had recently come into being, it did not address these critical matters.
vii Barbara Laine Kagedan, "The Biodiversity Convention, Intellectual Property Rights, and Ownership of Genetic Resources: International Developments", prepared for Industry Canada, IP Directorate, January 1996, p 11
viii For a review of Bill C-55 see James McIlroy, "The International Implications of the Canad- United States magazine Dispute," Journal of World Intellectual Property Vol.2 No.6, November, 1999
ix Digital communication reduces all information to sequences of 1s and 0s which can be communicated by any transmission system which recognizes two possible states, such as an electric current which can be on or off. The technology reduces signal distortion, is capable of compression through the use of algorithms, and permits extra information such as copyright information to be encoded. It is digital communication on closed networks that permits $1.4 trillion every day to be traded on the world’s computer networks. (See Arun Kundnani, "Where Do We Want To Go Today? The Rise of Information Capital quot;, Institute of Race Relations, April, 1999)
x There are three class action suits in Canadian courts brought by freelance writers, one against the Thomson newspapers, one against Southam and CEDROM-SNI, and the third against French language newspapers and magazine publishers in Quebec including CEDROM-SNI.