Furthermore, moves are now afoot at the World Intellectual Property Organization (WIPO), a UN specialized agency, to go much further than TRIPS by intensifying substantive patent law harmonization in the inerests of helping well-resourced companies acquire more geographically extensive and secure protection of their inventions at minimized cost.

One of the earliest calls for the harmonization of substantive patent law came from the United States in 1966, when the President’s Commission on the Patent System declared that “the ultimate goal in the protection of inventions should be the establishment of a universal patent, respected throughout the world, issued in the light of, and inventive over, all of the prior art of the world, and obtained quickly and inexpensively on a single application, but only in return for a genuine contribution to the progress of the useful arts.”

The Commission did not expect this to happen overnight. Consequently, initial demands for harmonization focused mainly on procedural matters and on reducing the duplication of effort caused by different patent offices examining applications for the same invention. The US, European, and Japanese patent offices have been in close contact with each other since 1983 and are cooperating in a number of areas to coordinate their approaches to searches, examinations, and other procedures.

Substantive harmonization is more than just making the patent systems of countries more like each other in terms of enforcement standards and administrative procedures. It means that the actual substance of the patent standards will be exactly the same, to the extent of having identical definitions of “novelty,” “inventive step,” and “industrial application.” Given the rich countries’ interests in harmonization, it is likely to result in common (and tightly drawn) rules governing exceptions to patent rights, and the universal removal of any options to exclude types of subject matter or fields of technology from patentability on grounds of public policy or national interest.

Today, WIPO is attempting to harmonize patent law by drafting a Substantive Patent Law Treaty (SPLT) that is under deliberation by representatives of WIPO members and other participating organizations representing business and legal interests. Although such initiatives may never go much further than defining the key patentability criteria, Shozo Uemura, WIPO’s deputy director-general, recently suggested as a future possibility “the establishment of basic principles regulating an ideal global patent system, according to which a patent granted in a civil procedure would have effect in different countries, and it would co-exist with existing national patent systems.” For any such system to work, it would have to provide agreed standards on the scope of patentable subject matter. And it is likely, given their economic dominance, that what the United States, the European Union, and Japan agree upon, the rest of the world will have to accept.

It is somewhat ironic that Japan is probably the most ambitious proponent of substantive harmonization since only a few decades ago, the government’s technology licensing policy was quite aggressive and foreign companies often felt discriminated against by the patent system and by the country’s nationalistic trade and industry policy. For example, post-war Japan adopted a policy of pressuring foreign high-technology firms to make their technologies available to domestic industries. In the late 1950s, a vice minister at the Japanese Ministry of International Trade and Industry allegedly warned IBM, “We will take every measure possible to obstruct the success of your business unless you license IBM patents to Japanese firms and charge them no more than a five percent royalty.” IBM had little choice but to comply.

The Historical Record

So might it be the case that by depriving developing countries of the freedom to design patent systems according to their level of industrial and technological development, we are, to use the title of a recent book by Cambridge University economist Ha-Joon Chang, “kicking away the ladder” after we in the developed world have scaled it ourselves? Or, to be even more skeptical about harmonization, would “the setting up of a world patent system … mean the end of patent policy as a tool for national development strategies,” as Genetic Resources Action International claims?

The economic evidence yields no certain answer. In fact, it is impossible to reliably calculate the long-term economic impacts of TRIPS on developing countries and their populations. We can be certain that developing countries incur short-term costs in the form of administration, enforcement outlays, and rent transfers, and that these outweigh the initial benefits. The cost-benefit balance will vary widely from one country to another, but in many cases the costs will be extremely burdensome. According to a recent World Bank publication, TRIPS represents an annual US$20 billion plus transfer of wealth from the technology-importing nations, many of which are developing countries, to the technology exporters, few if any of which are developing countries. M.J. Trebilcock and R. Howse suggested in The Regulation of International Trade that this situation indicates that “a country would have little or no interest in protecting intellectual property rights in products of which it is solely an imitator and intends to remain so—here the national interest is above all consumer welfare, that is, sourcing the product as cheaply as possible.” This is the case for many poor countries. One might add that such products include not just software programs and music CDs but also life-saving medicines and educational materials.

Some people might claim that the world has changed considerably and that historical experiences of the kind described at the beginning of this article provide little guidance for present day policymakers. One way the world may have changed is that developing countries need investment and technology transfers as never before, and secure patent protection will encourage companies to share their technologies and carry out more research and development outside the countries in which they are headquartered. But what empirical evidence exists to support the notion that stronger IP rights encourage inward investment flows, research and development, and technology transfers?

Again, conclusive data is lacking, though it is likely that foreign direct investment (FDI) decisions depend on a whole host of factors including the general investment climate. A study by Keith Maskus of University of Colorado claimed some evidence of a positive correlation, while conceding that IP rights are one of several factors that may facilitate technology transfers, and also that strengthening IP rights will involve unavoidable costs as well as benefits for developing countries. Evidence from Turkey found that the banning of pharmaceutical patents appeared to have no significant effects on levels of FDI, technology transfers, or domestic innovation. Similarly, a study on Brazil, examining the manufacturing industry as a whole, found no evidence that FDI levels were greatly affected by patent protection. On the other hand, Edwin Mansfield’s influential study for the International Finance Corporation based on interviews with intellectual property executives of US corporations in several industrial sectors indicated that a large proportion of respondents from the chemical and pharmaceuticals industries claimed that their FDI decisions were affected by the levels of IP protection available.