INTERFACE BETWEEN SUSTAINABLE DEVELOPMENT LAW AND

INTELLECTUAL PROPERTY PROTECTION

Abstract:

Intellectual property rights as an independent legal subject is very much contemporary in

comparison with the other areas of law. It is only in the year 1967 when the WIPO came into
being, brought the Intellectual Property Rights to the forefront with global consensus towards
encouraging creativity and to promote the protection of intellectual property throughout the
world. Even today; one can very easily say that Intellectual property right is at the stage of
infancy and has proliferating prospects for future; with the rapid and simultaneous growth of
creativity and technology. Even in this considerable short span, the area of Intellectual property
has shown tremendous prospects of denuding the environment and its constituents. As such this is
a very crucial stage in the field Intellectual property rights to adopt practice and intrude the
concept of sustainable development inherently as the spine of the subject. On the other hand, in a
common parlance Sustainable development refers that development which is sustainable; which
has clearly been defined in the Burntland Commission Report. Sustainable development has
traditionally been largely separate from intellectual property protection. However; sustainable
development is such a broad notion that legal framework in this subject span a wide area which
goes far beyond the original focus on environment related issues. As a result, even though
sustainable development is not directly concerned with the promotion of technological
development, a number of links with intellectual property protection have developed over time.

Therefore, this paper is an attempt to analyze the interface between intellectual property rights
and sustainable development; with the help of relevant legal and institutional framework as
existing between these two areas of law.

Key Words: Intellectual Property Rights, Sustainable Development, Law.

 I

Development can be seen as a process of fair opportunity between countries and non-
discrimination between people within these countries. According to the World Bank, the basic
goal of development is the reduction of poverty. Development is, however, a multi-dimensional
process of which economic growth is a necessary condition. Osofsky has noted that at least
twenty-five definitions of sustainable development surfaced between 1979 and 1988. Although
these definitions vary, they all focus on some notion of balance to be attained among competing
claims. It has been noted that the most compelling definition of sustainable development remains
the original one, namely: ‘... sustainable development is development that meets the needs of the
present without compromising the ability of future generations to meet their own needs’. The
tensions inherent in the term ‘sustainable development’ are exacerbated by the differing
viewpoints of the north and the south, as a nation’s sense of how to achieve sustainable
development is largely determined by where it lies in the spectrum of ‘development’.

Historically, literature on sustainable development law has focused almost exclusively on

environmental issues in developed countries. During the past decade the focus has shifted to an
integration of international economic, social and environmental law to reduce poverty in
developing nations. Important for the purposes of this paper, is, however, the fact that the
Johannesburg Declaration explicitly recognised social development in addition to economic
development and environmental protection. From a broad sustainable development viewpoint,
intellectual property protection and intellectual property policy relate to important aspects of a
country’s social and economic development. The protection of traditional knowledge and
indigenous practices has become an increasingly important topic in global politics. If protected,
such material would affect a wide variety of policy areas, all closely linked to sustainable
development. These areas include agricultural productivity, biological diversity, food security,
environmental sustainability, global competition, public health, and wealth distribution.

II

This leads to the discussion of the impact of intellectual property law on sustainable development.
For developing countries, the development of an indigenous technological capacity is a key
determinant for economic growth and poverty reduction. This capacity also determines the extent
to which foreign technology can be assimilated and applied within a developing country. Some
argue that clear empirical evidence demonstrates that the strengthening of intellectual property
protection in developing countries, notably in Brazil, China and India, after the adoption of the
TRIPS Agreement has led to a dramatic increase in investment in research and development in
these countries. It is noted 63 that the adoption of patent legislation in 1996 in Brazil resulted in
enormous advantages for the Brazilian pharmaceutical industry. Similarly, China’s adoption of
intellectual property laws from the early 1980s onwards, and its accession to the WTO have
played a decisive role in the country’s growth as an economic power and a spectacular increase in
foreign direct investment. The economic growth of India and the increase in foreign direct
investment is also tied to its revision of its intellectual property laws in accordance with TRIPS
standards, together with other steps to liberalise the economy. Statistical data of PCT patent
applications for 2006 supports this view. The most remarkable growth rates came from countries
in North East Asia. It would seem as though developing country economies are increasingly
influencing both the geography of the patent system, and of the future of global economic growth.
However, certain realities closely related to developing countries’ state of development, render the
sustainable impact of intellectual property protection uncertain. The spectacular results attained in
India and China are not mirrored in all developing countries. Du Pless is demonstrates that the
advantages intellectual property protection is supposed to deliver, namely the stimulation of
innovation, the enhancement of competitiveness, reaping of financial rewards, the dissemination of
knowledge, technology transfer and its spill-over effects, are subject to qualifications in the
context of developing countries. First, in developing countries lower innovation capability means
that copying and reverse-engineering, rather than advanced innovation take place. The second
advantage does not logically follow because in developing countries lower industrial capacity
means that the new technology is seldom assimilated. Thirdly, the advantages which intellectual
property protection is supposed to offer developing countries will depend on the extent to which
the technology is actually transferred. There is little doubt among economists that technology and
knowledge are the most significant sources of growth and development. The extent to which
empowered knowledge and skills transfer takes place is a factor that is often neglected. In this
respect, the extent to which local enterprises are capable of purchasing licences and deploying
new technologies are determining factors. If local enterprises and an existing local technological
capacity are absent, then technology transfer does not take place. Fourthly, in developing
countries the spill-over effect does not provide any benefit unless a strong local innovative basis
exists . This is also supported by econometric evidence presented by Maskus. He has
demonstrated that stronger intellectual property rights in major industrialising economies such as
China, Brazil, India and South Africa, should produce a significant growth bonus through
enhanced inflows of trade, FDI, and technology transfer. He notes that such gains will not
necessarily follow for least-developed countries. Least developed countries may be harmed by the
increased exercise of market power. For some countries, it may not make any difference at all.
Therefore, the impact of strong intellectual property protection for developing countries is
marginal, if not negative, unless the countries are able to sustain industrial development. This
marginal effect is exacerbated by the fact that the differences in the levels of intellectual property
protection amongst developing nations will continue to diminish because of the global
harmonisation that the TRIPS Agreement has brought about. Intellectual property law is an
indispensable tool for development but may also hamper sustainable development. As noted
above, rule diversity is conspicuously absent in the intellectual property protection regime. Least-
developed countries have gained very little from implementing the TRIPS Agreement, and
stronger intellectual property rights have not led to sustainable development. Once again, this
supports the argument that a more flexible standard should be applied to developing countries to
offer fair opportunity and to enable them to benefit from the advantages which a global system of
harmonised intellectual property rights promised. This is especially true of least-developed
countries and developing countries that have not yet developed an indigenous technological
capacity. The important role which the Development Agenda will play in the future shape of the
intellectual property regime, cannot be overemphasised. The ‘one size fits all’ approach is ill-
suited to developing countries. Evidence has shown that ‘one size doesn’t benefit all’, it bypasses
some.

III

Pro-development intellectual property policies The ILA noted the importance of two events that
aptly illustrate the pivotal role that intellectual property law and policy play in the promotion of
sustainable development. The first is the Doha Declaration on the TRIPS Agreement and public
health and solutions to the problem of insufficient manufacturing capabilities and the effective use
of compulsory licencing provisions. Secondly, 80 the ILA notes the importance of the progress on
the development of an international regime to promote and safeguard the fair and equitable
sharing of benefits arising from the utilisation of genetic resources. These topics will be used 81 to
illustrate how intellectual property law and policy may promote sustainable development. Non-
state actors played leading roles in both these developments.82 Access to essential medicines
Developing countries are net importers not only of technology, but also of the products of
technology, such as HIV/AIDS medicines. Virtually all HIV/AIDS drugs have been patented,
including patents granted in African countries, and the 83 result is a pricing system which makes
most imported antiretroviral medicines unaffordable and thus inaccessible for treating the infected
population in African countries. The escalating health crisis and the intensifying debate around the
84 issue of intellectual property rights, the availability of affordable medicines, and the urgent
need for large-scale treatment have highlighted the divergent perspectives of the north and the
south. The acrimonious debates were intermingled with hard-hitting moral and emotional issues,
such as the attrition of human life and dignity against economic values. South Africa was the first
85 country to find itself in the eye of a health-related storm after a dramatic surge in the national
HIV/AIDS infection rate. From 1997 onwards, the South African government adopted an
innovative procurement programme and a number of regulatory reforms to facilitate affordable
access to essential medicines. It was realised at an early stage that the drug regulation regime and
the patent system had to be addressed in tandem to address affordable access to essential
medicines. Initially, from 1997 to 1999, draft regulations were promulgated under the Medicines
and Related Substances Control Amendment Act 90 of 1997, which contained a controversial
section 15(C)(a) in terms of which the minister could approve the parallel importation of more
affordable medicines into South Africa, irrespective of the fact that this constituted an
infringement of patent rights.87 Widespread criticism, notably from the US, as well as court
action by the Pharmaceutical Manufacturers Association, followed. It was argued that section
15(C)(a) constituted a significant derogation of the non-discrimination principle contained in
article 27 of the TRIPS Agreement and a disregard for the rights of patent holders. The court
proceedings became the focal point of an emotional 88 human rights battle. The pharmaceutical
companies settled as they realised they had become embroiled in a public relations fiasco. In terms
of the Joint Statement 89 of Understanding, the government undertook to honour its TRIPS
obligations and to consult widely on amending regulations, whilst the pharmaceutical companies
granted voluntarylicences to a generic manufacturer to produce three HIV drugs. Substantially
similar regulations, which permit the parallel importation of affordable medicines into South
Africa, were promulgated in 2003. The Competition Commission was also drawn into the conflict.
In 2002, the South African AIDS Law Project lodged a complaint with the Competition
Commission against two of the largest pharmaceutical manufacturing firms. It was alleged that the
firms’ pricing structure for certain medicines amounted to an abuse of their dominant position.
The Competition Commission found that the two firms had abused their dominant positions in
their respective antiretroviral (ARV) markets in contravention of the Competition Act of 1998.93
Before the matter could be referred to the Competition Tribunal, the parties settled. The
settlement agreement allowed four South African firms to manufacture generic AVR medicines at
a significantly reduced royalty rate for both the public and private health sectors. The significance
of the South African dispute regarding access to affordable medicines lies in the fact that it acted
as a catalyst for the adoption of principles in recognition of the importance of public health by the
Doha Ministerial Conference of 2001. The gravity of the public health problems afflicting
developing and least- developed countries was recognised, as were the concerns regarding the
pricing of medicines. It was stated that the TRIPS Agreement must preferably be interpreted to
support members’ rights to gain access to affordable medicines. It was also noted that members
have the right to grant compulsory licences on such grounds as each country decides. Members
have the right to determine what constitutes a national emergency and a public health crisis can
constitute a national emergency. Although the existing provisions of the TRIPS Agreement permit
the granting of compulsory licences to enable the generic production of medicines, countries
without domestic manufacturing capacity cannot use this flexibility. This is because the TRIPS
Agreement requires production under a compulsory licence to be predominantly for the supply of
the domestic market. The TRIPS Council was therefore tasked to find a solution to the problem
of how countries without manufacturing capacity, may be able to grant compulsory licences in
accordance with article 31(f) of the TRIPS Agreement. The General Council endorsed the
proposal to transform the August 2003 ‘waiver’ into a permanent amendment of the TRIPS
Agreement in the form of article 31bis and annex of the TRIPS Agreement. The amendment will
be formally built into the TRIPS Agreement when two-thirds of the members have ratified the
change. Five members had ratified the change by March 2007. South Africa is to be commended
for the crucial role it has played in addressing access to affordable medicines and the multi-faced
approach it has taken although health-related problems will remain central to the debate in Africa,
these remedial steps taken by South Africa will have a meaningful effect on sustainable
development.

IV

Bio-piracy and benefit sharing Biodiversity prospecting (‘bioprospecting’) is the exploration of

biodiversity for commercially valuable genetic resources. Indigenous knowledge systems (IKS)
are both diverse and abundant. They include, for example, knowledge systems in artistic
expression, ecology, agriculture, medicine, animal husbandry, and cloth weaving and span different
cultures. In recent years, 101 the piracy of a specific type or manifestation of IKS, namely
traditional knowledge on the medicinal use of plants, has come into direct conflict with intellectual
property rights. Traditional knowledge of the medicinal use of plants, is useful to several
industries, such as the pharmaceutical, beauty, health care, and agricultural industries. Intellectual
property law is often regarded incompatible with traditional knowledge systems because
traditional knowledge is typically based on collective knowledge and prior use. Where patents
have been granted for traditional 102 knowledge, the patent owners have generally not been
members of the local community, no recognition was given for the use of the traditional
knowledge, and benefits were not shared equitably. A case in point is the patent that was granted
to a US researcher on the South American vine ayahuasca, Banisteriopsis caapi, which is widely
used in traditional religious and healing ceremonies in South America. Patents, granted for
traditional knowledge of Azadirachta indica, the 103 neem tree, have been revoked in the
European Union for their lack of novelty.104 A growing movement recognises the rights of
developing nations to protect their traditional knowledge against exploitation or piracy. In 2000,
WIPO 105 established the Intergovernmental Committee on Intellectual Property and Genetic
Resources, Traditional Knowledge and Folklore that has become an important forum for studying
the prospects for action at the international level. Industrialised nations were dismissive when this
issue was first raised, 106 but now appear to be moving towards reluctant concessions.107 The
TRIPS Agreement establishes a global regime for the protection of the intellectual property rights
of biological resources. Article 27.3(b) provides that member states ‘shall provide for the
protection of plant varieties either by patents, or by an effective sui generis system, or by any
combination thereof’. The 108 interface between intellectual property rights and biological
resources is also addressed by the Convention on Biological Diversity (CBD) which recognises
the sovereign right of countries over their biological resources, and their right to determine access
to these resources. The CBD has also developed guidelines on access and benefit sharing. There
are certain differences between members’ 109 obligations under article 27.3(b) of the TRIPS
Agreement and the protection of indigenous knowledge, traditional knowledge and biodiversity
under the CBD.110 The CBD notes that access to genetic resources should be based on prior
informed consent from providers of resources and knowledge, and on mutually agreed terms that
provide fair and equitable sharing of the results of research and development and the benefits of
commercialisation and use. It also calls for the fair and equitable sharing of benefits derived from
the use of traditional knowledge. It thus addresses equitable sharing of benefits between state 111
actors and non-state actors. In contrast, the TRIPS Agreement contains no provisions requiring
prior informed consent and benefit sharing. Members have reiterated their call for the TRIPS
Agreement to be amended so that patent applicants are required to disclose the origin of genetic
material and traditional knowledge, and show that they have complied with the host country’s
requirements on obtaining consent and sharing benefits.113 The process of enacting legislation to
promote, develop and protect indigenous knowledge systems (IKS) is in its infancy in South
Africa. The legislative 114 developments were preceded by a South African case of bio piracy that
drew worldwide attention. The CSIR, a South African state research institute, developed an
appetite suppressant derived from species of Hoodia, succulent plants indigenous to Southern
Africa and long used by the San, indigenous peoples of the region, to stave off hunger and thirst.
Up until 2001, the San remained oblivious to the fact that their knowledge of Hoodia had a
commercial application, and that this knowledge had led to the development of a compound, P57,
that was patented internationally by the CSIR. In 2003 115 following intense negotiations, an
agreement was reached between the CSIR and the San, to give the San a share of royalties from
potential drug sales. It has been noted that the failure to obtain the prior informed consent of
communities holding knowledge about biodiversity fromthe very outset of the project, was a
serious oversight. If the people of the San had been involved 116 from the outset, they could have
been co-owners of the patent. The San were clearly prejudiced by their exclusion. 117 The furore
surrounding this case once again highlighted the importance of protecting traditional
knowledge.The need to establish mechanisms that could ensure equitable benefit sharing was also
highlighted. At an international level, the settlement agreement is widely considered to set
precedents for the development of sustainable benefit sharing agreements. At a national level, 118
this case gave prominence to biodiversity, and renewed impetus for the adoption of an IKS Policy
and other legal measures to address the exploitation of biodiversity. The National Environmental
Management Biodiversity Act 119 10 of 2004, requires prior informed consent for any
bioprospecting involving indigenous biological resources; regulates the export from the Republic
of such materials; and provides for fair and equitable benefit-sharing by stakeholders of any
benefits that flow from bioprospecting involving indigenous biological material. A mandatory
disclosure requirement has been introduced to the patent system, as has been done in other
countries.120 The South African Patents Amendment Act 20 of 2005, has introduced definitions
of genetic resources, indigenous biological material, and traditional knowledge. A new filing
requirement is set out in section 30(3A). Every applicant who lodges an application for a patent
accompanied by a complete specification, must lodge a statement declaring whether or not the
invention in question is derived from an indigenous biological resource, a genetic resource, or
makes use of traditional knowledge. Where such a patent application is based on bioprospecting,
the applicant is required to comply with all the requirements of chapter 6 of the Biodiversity Act
as prescribed by the amended Patent Regulations. Non-compliance in the form of a false 121
statement, is a new ground for the revocation of the patent. 122 The amendment to the Patents
Act does not create new substantive requirements for patentability of inventions in South Africa.
Could it be argued that the amendments to the Patent Act introduce formalities and procedures
inconsistent with the TRIPS Agreement? Although no provision is made in 123 the TRIPS
Agreement for prior informed consent and benefit sharing, important policy considerations should
be heeded. First, this approach is supported by the rationale underlying the patentability of
inventions, namely that contributions to innovation should be rewarded. Secondly, the recognition
of contributions by others and equitable benefit sharing is dictated by public policy. Furthermore,
the protection of traditional knowledge from unscrupulous exploitation and biopiracy is halted,
but bioprospecting is made possible and advantageous. The Patents Amendment Act of 2005
ensures that all role-players are duly recognised and secondly, that all role-players benefit.