Comment: Intellectual Property Rights and free world trade. (1996, 20 Marks)
Intellectual property rights (patents, copyright, trademarks, designs, geographical indications, trade secrets) are state-granted, time-bound monopolies over knowledge. Free trade is the removal of barriers to exchange. The Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), in force with the WTO from 1 January 1995, fused the two, and the fusion is paradoxical: a free-trade organisation now enforces monopolies.
Why IPR entered the trade system
- The Northern case. Counterfeiting and piracy were said to distort trade and erode the returns of knowledge-intensive economies. Kenneth J. Arrow (1962) had shown that knowledge, being easily copied, is under-produced unless its creator can appropriate the return.
- Forum-shifting. The United States moved the subject from the World Intellectual Property Organization, which had no enforcement, to the GATT, where trade retaliation stood behind every rule. Susan K. Sell (Private Power, Public Law, 2003) traced the agenda to a small committee of American corporate chief executives.
- The bargain. In the Uruguay Round developing countries accepted TRIPS as the price of access in agriculture and textiles; the single undertaking allowed no opting out.
What TRIPS requires
Minimum standards for all members: patents for twenty years on products and processes in all fields of technology, plant-variety protection, enforcement procedures, and cross-retaliation through dispute settlement. Articles 7 and 8 promise a balance with technology transfer and public interest; transition periods ran to 2005 for India’s pharmaceuticals and are extended for least developed countries to 2034.
The tension with free trade
- Protection in disguise. Jagdish Bhagwati, a free-trade economist, argued that IPR is not a trade issue and that TRIPS made the WTO a collector of royalties for rich-country firms.
- Distribution. Industrialised states hold the vast majority of patents, so TRIPS transfers rent from net technology importers to net exporters; Peter Drahos and John Braithwaite called the result information feudalism (2002).
- History. Ha-Joon Chang’s Kicking Away the Ladder (2002) shows that Switzerland had no patent law until 1888 and the Netherlands abolished its patents between 1869 and 1912 while they industrialised.
- Access to medicines. Indian generics cut first-line HIV therapy from about $10,000 a year to under $350 in 2000–01, which product patents would have blocked.
- Biopiracy. Foreign patents on the uses of neem and turmeric, later revoked, showed traditional knowledge unprotected while corporate knowledge was protected. The WIPO treaty of May 2024 requiring patent applicants to disclose the origin of genetic resources and traditional knowledge is a belated partial remedy.
India’s response: flexibility inside the treaty
India’s Patents Act, 1970, built on the Ayyangar Committee’s report of 1959, allowed only process patents for medicines and created the generics industry. The 2005 amendment restored product patents but wrote in Section 3(d) against evergreening, upheld in Novartis v. Union of India (2013), and compulsory licensing, used for Natco over Bayer’s sorafenib (2012). India helped secure the Doha Declaration on TRIPS and Public Health (2001), built the Traditional Knowledge Digital Library, and co-sponsored with South Africa the 2020 COVID-19 waiver, which yielded only a narrow vaccine decision at MC12 (2022). The US Special 301 report of 30 April 2026 again kept India on its Priority Watch List: unilateral pressure continuing alongside TRIPS-plus demands such as data exclusivity.
Evaluation
Liberals respond that strong IPR attracts investment and licensing, and India’s own innovators now need protection. The evidence favours a middle position: protection calibrated to development level, not a uniform standard.
Conclusion
IPR and free trade are compatible only when protection is balanced against diffusion. TRIPS made protection the rule and access the exception; the Doha Declaration, Article 31bis (in force 2017) and India’s statutory design have partly restored the balance. The live question is whose development the rules serve.