Intellectual Property Right

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Chan Chiu Tung Carmen   2008677665                   Trade law final assignment

Introduction

This article presents a debate on the topic of intellectual property rights. You will probably find it interesting to start off the topic with this quote: “The public will learn that patents are artificial stimuli to improvident exertions; that they cheat people by promising what they cannot perform; that they rarely give security to really good inventions, and elevate into importance a number of trifles...no possible good can ever come of a Patent Law, however admirably it may be framed.” (The Economist, 2002) You may be thinking who would have had this subjective and extreme standpoint. One can hardly imagine or expect The Economist endorsed such an argument back then in the 1851, in a passage issued, which it was the mouthpiece of British economic liberalism at the time.

In the mid-19th century, The Economist argues that by restricting the free use of one’s ideas by another, patents hindered rather than promoted economic growth.   Patents as a protectionist’s measure were an enemy of free trade. Speaking about IPR, it is indispensable to include the interest party—developing countries. This sets off the argument of whether the current IPR laws and systems should be imposed in and are essential for every state especially in terms of economic and technological development. I believe that the patent system has a lot of defects and inadequately, it is only the partial solutions to the problems it aims to solve. It creates vested interests, widens and speeds up inequality. In this essay, I will post the main arguments namely: market failure dilemma of IPR, intense competition, developing phases, human rights and inequality. Also, I will provide examples to support my stance.

Market failure dilemma of IPR—under supply vs. under consumption of knowledge

It is crucial to identify the purpose of the IPR protection. It aims to provide solution to the problem of the under-supply of knowledge (as it is a public good which causes market failure), by creating incentives to develop knowledge. The patent system aims to promote innovation, hence economic growth, by creating incentives for inventors to disclose the details of their technological breakthroughs in exchange for a limited period exclusive usage of their knowhow i.e. being a monopoly in the market. This enables them to charge above the competitive market price. In other words, the reward is the right to extract additional economic rent from the consumers.

Some argue that the modern system of IPR law is causing the adverse effect—delaying the diffusion of new technology. By imposing more restrictions, agreement like TRIPS prevent the spread of knowledge. This is because they prevent other people from using the knowledge that is created, even though the cost to society of them doing so is zero (O. Abroad (2009). There is inefficiency and resources are not fully utilized. Knowledge will be under-consumed as a result of the distorted price, and this reduces economic welfare of society.

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The IPR laws which are designed to counteract one type of market failure have themselves fallen into another type of market failure.

The economic impact of this phenomenon is becoming more prominent as the value of knowledge and innovations increases which become main contribution to various economic activities, as inequality increases, and as knowledge sharing and transmission costs fall due to the rise of internet etc.

Intense competition

In today’s competitive market and environment, firms in developing countries are not able to compete with the developed countries in terms of the technologies and producing them behind tariff barriers, especially ...

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