The Problems of Perspective

February 21, 2006

The Problems of Perspective

This post has been updated where indicated

It is amazing to me how often I disagree with one Dash Brannigan, as I do in this little to and fro (my first post, Dash’s reply). It occurred to me the other day that probably the reason for this was one of perspective. The Law Thoughts is written by a budding lawyer, who aims to examine, explain and critique law from the perspective of law. As far as I know, under his enigmatic guise, Dash is fairly focused on economics. This presents a diffculty because, from my perspective for example, human rights (yes, including property rights) are at the apex of all law and are universal and inalienable. Their satisfaction should be a primary outcome of lawmaking.

Whilst Dash is not heartless (I recently found cause to call him a smoochie, whatever that may be), he is very focused on economic growth. Dash uses complicated economics and game theory to analyse laws. I don’t. We lawyers, when thinking about law, don’t find it necessary for laws to be made with growth in mind, whereas Dash seems to see growth as a matter of fundamental importance in lawmaking. That is fine, but we are coming from different perspectives. I believe that laws should be made to obtain a particular outcome, rather than to achieve a state or environment in which that outcome might or might not be provided by the decisions made by individuals or, more likely in case of IP, by corporations.

This is a subtle but important distinction and the example we have been using is illustrative. In terms of protecting the right to health, my position is that laws should be made with health protection in mind, rather than creating a state of economic activity in which it becomes profitable for an entity to provide that protection of their own bat. Call me a socialist, call me a commie, whatever. This is my point about perspective and I think that, whilst we both implicitly understand these assumptions, Dash and I don’t ever make them explicit. Discount rates, perfect price discrimination, and other high level economic terms simply do not come into my consideration of what a law should be.

Our theft example is a good one. I see the law from the law’s point of view. For me, theft is ‘dishonestly appropriat[ing] property belonging to another with the intention of permanently depriving the other of it’. I don’t see a failure to enforce IP rights as theft, it is a failure to enforce IP rights. It allows infringment of those rights, but that is not theft. It is best illustrated by those video piracy ads, which say ‘Piracy is stealing’. That, unfortunately, is complete rubbish. Piracy is a copyright infringement and subject to economic damages, not a criminal offence as is made out by the media. Small differences, but important. I am the first to admit I am not one to talk about loose use of language and I have been critisised before. However, it is important to see what my perspective is.

Whilst Dash has a go about my assertion that IP companies do not lose anything where people who cannot buy the product ‘steal’ it, I stand by it. Yes, people derive a benefit from the drug. However, it is the manufacturer making the drug and the government not enforcing the property rights who are the actors here. People do not ‘steal’ these drugs, the model in fact is governments paying manufacturers to produce, because people are too poor to buy the drug. This is, of course, a theory, because nobody has yet taken out a compulsory licence. ***In any case, I stand by my assertion that where a consumer was not going to buy the product in question, the drug company is not losing profits by governments issuing a compulsory licence and paying some small amount to the drug company. In fact, they are gaining money. Everyone has to remember that there are strict terms and conditions on the issuing of these licences. They don’t just happen automatically. One of the conditions under TRIPs is that fair remuneration is paid to the IP holder. The question of ‘fair’ is the pivotal discussion point.***

In terms of law, Dash’s argument about parallel importation is a standard one against allowing developing countries better access to drugs. However, this argument is purely economic and in my opinion has no basis on which to found law. Yes, incentives are created to reimport the drug. Stopping this, however, becomes a matter of criminal and customs law. Why is it not possible to pass laws with tough criminal penalties for those who import drugs on which lower prices have been placed? This is an economic justification for a legal position, which can sometimes cause trouble. The law should have no problem dealing with this kind of argument. In the end, there is a black market in everything and I don’t see why the chance of parallel importation is a justification for blocking poorer countries from making drugs. I guess if you want to use words like utility, then it is at least arguable that there is greater utility in allowing people to have access to medicine as there is in maximising profit by strict enforcement of rights. I am not saying I am right or wrong, I am just saying that the media in particular only present one side of the argument. Is it relevant that the media make much of their profit from copyright material?

My further point in response to Dash’s post is that, whilst I understand the link between growth and IP protection, there is little examination of the proper balance point. Yes, the US Constitution gives the Congress the power to make laws relating to copyright, but it prohibits perpetual copyright terms. IP is important, yes, but it is only mentioned to give the legislature the power to make laws in respect to copyright. Our own Constitution does the same (s51(xviii)). There has to be a sensible balance in drafting these laws, however. Further, when patents were invented, they were a monopoly right over a whole industry. A throwback to this is why it seems playing cards are all the same design. This does not mean there was explosive growth. It was only when a balance began to be struck between what you call dynamic and static rights (I think) that innovation became connected with such protection.

As another side issue, you are right in terms of FDI going elsewhere when countries don’t provide proper legal protection and sound legal institutions. It is interesting that nowadays, least developed countries tend to negotiate at the WTO as a big block, probably for that exact reason.

My point all along is that there must be a balance. IP rights must be protected to SOME extent, but not to every extent. My original post centred upon the question of why Brazil should enforce in its domestic law WTO obligations when more powerful countries were not willing to. However, I understand how these things are interconnected. I don’t know the answer to this question, but I always ask people who use economic growth as a reason to enforce IP rigidly:

“Does the greatest economic growth come in the profit flowing to the IP holder due to high drug prices, or the production created when sick people are made well by drugs which have been manufactured contrary to patent rights?”

I don’t know the answer, but I sure as hell would like to find out.

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