The innovation of IPR protection

According to US Special Report 301, 2008, Thailand is still on the Priority Watch List (PWL). To justify this, the US government explains that Intellectual Property Rights (IPR) protection by the Thai government is still weak. This situation pushed the Ministry of Commerce to show their “integrity and effort” by having nearly 100 officers rush to block the entrance and exit of Patphong Road to suppress piracy commerce. This action culminated in a fight between officers and pirated goods merchants in Patphong Road.

IPR protection is important to the building of innovation incentives, and has a positive effect on productivity growth, value added process and, ultimately, economic growth. To gain innovations, research and development is inevitable and innovators must bear the costs. Copyright and patent play an important role to protect innovators’ benefits, whose benefits and incentives will suffer loss with broken IPR, thus reducing R&D investment.

On the other hand, excessively strict and long term IPR protection will lead to monopoly power and excess profit for innovators, with consumers bearing exorbitant prices for IPR protected goods. Consequently, on the equality issue, the poor will be unable to access some IPR protected necessities.

I propose that a new concept of IPR should balance innovators’ incentive protection with consumer rights to access necessities, by categorizing goods under IPR protection and treating each of them specifically.

First case necessities, especially medicine, under IPR protection should be treated specifically, as follows:

Limit the protection period to the optimal interval to prevent exploitation by innovator monopolists. After the protection period, that intellectual property should be public.

Set fair consumer prices by negotiating with IPR owners to lower their prices for some group or region. For example, cutting the price of medicine, especially for the poor in developing countries by adapting the appearance of certain medicine depending on where it is sold. Governments in developing countries must have effective systems to prevent arbitrageurs from selling back to developed countries cheap medicine from their own countries.

Intervene in necessity goods pricing by conducting joint ventures with the private sector in order to create innovations with necessity goods. Governments should buy IPRs from innovators and distribute them to many firms that will support competition, thus leading to cheaper price and higher quality goods, rather than letting innovators be monopolists. Government cost may be compensated by corporate tax and value added tax collected from the production and distribution of necessities.

Second case general goods (for example, CDs, VCDs, brand name products) should be under strict IPR protection. Since nowadays there are many pirated goods, governments would have to bear high transaction costs to suppress these illegal actions. Ways to reduce the cost of suppression may include:

Cost sharing by IPR owners for suppression rights. Governments may collect a special fee from IPR owners in order to reduce their own costs.

Allow government supervised plagiarism. Governments may negotiate with IPR owners for legalized plagiarism under government supervision. The plagiarists must pay tax to the government. A portion of this revenue would be transferred to IPR owners, and the rest used to compensate government suppression costs.

Piracy suppression may not be the only way to protect IPR. The above proposal may bring new solutions for IPR administrators to reconcile benefits among innovators, producers, consumers and governments by reducing plagiarism incentives and the costs of suppression.

Dr Kriengsak Chareonwongsak
Senior Fellow, Harvard Kennedy School , Harvard University
kriengsak@kriengsak.com, kriengsak.com, drdancando.com