Was IP necessary for Development?

This part examines the history of IP laws and their relation to development in NDCs.

The main argument is that there are various examples from NDCs which indicate that the level of IP protection offered by the currently dominant systems, particularly IP provisions in FTAs, was not needed to promote development, progress and social welfare in the NDCs. On the contrary, development was achievable with weak IP protection and in some cases without IP protection. Accordingly, the introduction of IP laws, especially according to the current international standards, does not necessarily promote the development of society as Islamic Shari’a requires.

It is widely observed that developed countries are extremely eager to introduce strong IP laws. The central argument for the proposed strong protection is that:

strong IP laws promote the progress of society and secure the good of all. Developed countries introduced this argument in the negotiation that led to the making of the TRIPs Agreement as well as in their FTAs with developing nations. However, one might raise the following questions to examine the soundness of that argument:

1. Did the NDCs need IP laws by the standards of today to promote their progress?

136 Ida Azmi, above Ch 1 n 13, 307.

137 Chad M. Cullen sheds the light on two aspects of the TRIPS Agreement, these are, its impact on access to medicine and food. He concludes that it opposes the principle of maslaha mursala:

‘[Restricting] access to patented medicines and various agricultural products creates more of a problem. Although the argument has not been prominently voiced by legal scholars, restricting such access may violate the principle of Maslaha, which requires Muslims to care for and share with those less fortunate or facing hardship. By preventing the sick from using vital medicines or depriving the starving of an efficient and plentiful food source, enforcement of such patent rights stands directly opposed to Maslaha and may be considered a violation of Shari’a.’ Chad M. Cullen, ‘Can TRIPS Live in Harmony with Islamic Law: An Investigation of the Relationship between Intellectual Property and Islamic Law?’ (2010) SMU Science and Technology Law Review, 58.

127 2. What if the TRIPS-standards / TRIPs-plus IP regimes were introduced and enforced in 1800s, when NDCs were in the early stages of development?

Would those countries stand firm to their arguments?

Cambridge economist J. H. Chang has conducted extensive research on the history of NDCs.¹³⁸ He points to examples where some NDCs have employed policies on IP that are different from what they demand from the developing countries today.

Chang states that:

Most now-developed countries established their patent laws between 1790 and 1850, and established other elements of their IPR regimes, such as copyright laws (first introduced in Britain in 1709) and trademark laws (first introduced in Britain in 1862), in the second half of the nineteenth century. All of these IPR regimes were highly ‘deficient’ by the standards of our time. Patent systems in many countries lacked disclosure requirements, incurred very high costs in filling and processing patent applications, and afforded inadequate protection to the patentees. Few of them allowed patents on chemical and pharmaceutical substances (as opposed to the processes) — a practice that continued well into the last decades of the twentieth century in many countries. (Emphasis added).¹³⁹

The early IP system in the United States was highly deficient by present day standards. Lawrence Lessing has gone so far as to describe the United States as ‘a pirate nation’¹⁴⁰ as, in the words of William Alford, it ‘was notorious for its singular and, in many regards, cavalier attitude toward the intellectual property of

138 J. H Chang’s research in this area has been included in several books and journal articles: J. H Chang, ‘Intellectual Property Rights and Economic Development: Historical Lessons and Emerging Issues’ (2001) Journal of Human Development, Vol. 2, No. 2; J. H Chang, Kicking Away the Ladder:

Development Policy in Historical Perspective, (Anthem Press, 2003); and J. H Chang, ‘Under-explored Treasure Troves of Development Lessons: Lessons from the Histories of Small Rich European Countries’ in Monique Kremer et al, Good or Doing Better: Development Policies in a Globalizing World (Amsterdam University Press 2009). However, the most famous among these works was Kicking Away the Ladder. In this book Chang digs deep in the history of different rich nations such as US, UK, Netherland and Switzerland, in terms of the policies that they have employed in trade, industry and property. He observes that these policies were tailored to suit the local needs at that time and amounted to the development and prosperity of the mentioned nations. However, by the standards of today these policies are fought by the developed countries. And that is why he concluded that NDCs is kicking away the ladder which they have initially climbed, at 10.

139 J. H Chang, ‘Intellectual Property Rights and Economic Development: Historical Lessons and Emerging Issues’ above n 138, 290. Elsewhere Chang states that ‘in the early days of their industrialization, when they needed to import technologies from abroad, today’s rich countries all protected IPRs of foreigners only weakly. Many of them explicitly allowed the patenting of foreign inventions’ J. H Chang, ‘Under-explored Treasure Troves of Development Lessons: Lessons from the Histories of Small Rich European Countries’, above n 138, 2.

140 Lawrence Lessig, Future of Ideas: The Fate of the Commons in a Connected World (Random House, Incorporated, 2001), 106. In my view the description of pirate nation used by Lessig applies to the standards of today. What is deemed to be piracy today is a technology transfer similar to taking something from the common reserve of human knowledge in 1800s.

128 foreigners’.¹⁴¹ Various examples can be advanced to demonstrate the weakness of the IP system in the United States in its early stages of development.

Before 1891, under United States Copyright Law, it was not possible for publishers from foreign countries to acquire copyright protection for their creative works.¹⁴² Even after that date, protection was denied to ‘publishers of English language books unless their works were printed in [the United States] or Canada’.¹⁴³ This explains why the famous English novelist Charles Dickens travelled to the United States to complain about the piracy of his works by American publishers.¹⁴⁴ However, Dickens’ trip to the United States was not successful and the Americans continued to copy and publish his works until they considered it was in their own best interests to protect copyright.¹⁴⁵

Prior to 1836, patents were granted in the United States without requiring any proof of originality, which led to the patenting of imported inventions. ¹⁴⁶ It also

‘encouraged racketeers to engage in ‘rent-seeking’ by patenting devices already in use (‘phony patents’) and by demanding money from their users under threat of suit for infringement’.¹⁴⁷ William Alford points out that after ‘every other nation in the world’ adopted the unified first-to-file system for patent applications, the United States’ approach continued to be based on the first-to-invent system ‘which discriminated against foreign inventors’.¹⁴⁸

Likewise, the history of the patent system in Switzerland reveals very interesting facts that serve as a lesson for developing countries in the present day.¹⁴⁹ H J Chang

141 William Alford, ‘Making the World Safe for What: Intellectual Property Rights, Human Rights and Foreign Economic Policy in the Post-European Cold War World’(1997) 29 N.Y.U. J. Int'l L. &

Pol, 135, 146.

142 Ibid.

143 Ibid.

144 Rami Olwan, above n 2, 56.

145 Larisa Castillo, ‘Natural Authority in Charles Dickens's Martin Chuzzlewit and the Copyright Act of 1842’ (2008) Journal of Victorian Fiction, 437. Larisa cites Welsh who suggest that ‘the American piracy of Dickens’s novels was … arguably the primary reason for his American journey’. See also Gerhard Joseph, ‘Charles Dickens, International Copyright, and the Discretionary Silence of Martin Chuzzlewit’ (1991-1992) 10 Cardozo Arts & Ent. L.J, 532.

146 Chang, Kicking Away the Ladder, above n 138, 57.

147 Chang, ‘Intellectual Property Rights and Economic Development: Historical Lessons and Emerging Issues’, above n 138, 291.

148 Alford, above 138, 146.

149 Dominique S. Ritter, ‘Switzerland’s Patent Law History’ (2004) Fordham Intell Prop, Media &

Ent L. What could be of particular importance to this research in this article are developments that have taken place in the period from 1888 to 1907. In that period there have been massive defiencies in the Swiss patent law due to the lack of adequate protection by the standards of today, at 478 et seq.

129 observes that Switzerland was able to create strong innovation capabilities and become a world leader in technology in the 1800s without a patent system.¹⁵⁰ The Swiss did not introduce a Patent Law until 1888 and, even after that time, the Swiss Patent Law protected only mechanical inventions (that is, inventions that could be represented by mechanical models).¹⁵¹ The 1888 Patent Law was introduced only after Switzerland had established technological supremacy over other nations. Patent law can thus be seen to have been introduced as a result of technological progress, rather than being the cause of it.¹⁵²

The Swiss Patent Law was not extended to protect pharmaceutical and chemical inventions until 1907, following threats of sanctions by Germany. Only after 1907 did ‘a patent law worth its name [come] into being’.¹⁵³ Even the Patent Law of 1907 was not strong by today’s standards, as there were ‘[several] exclusions, especially the refusal to grant patents to chemical substances (as opposed to chemical processes)’. It was not until 1954 that the Swiss Patent Law was amended to bring it into line with that in other developed countries ‘although chemical substances remained unpatentable until 1978’.¹⁵⁴

Eric Schiff concludes that the absence of a patent law in Switzerland (and its weakness until 1978) did not prevent the Swiss from being ‘one of the most innovative [countries] in the world’. It was during that period that the Swiss produced world-famous inventions in fields such as textile machinery (eg the Honneger silk loom), food processing (eg milk chocolate, instant soup, stock [bouillon] cubes, baby food) and steam engines.¹⁵⁵ Schiff indicates that the absence and then the weakness of Swiss Patent Law contributed to attracting foreign direct investment (FDI) to the country in areas like food processing, as it was more

Another highly cited authority on the history of patent in Switzerland in Eric Schiff, Industrialization without national patents: the Netherlands, 1869-1912; Switzerland, 1850-1907, (Princeton University Press, 1971). Mentioned in J. H Chang, Chang, ‘Intellectual Property Rights and Economic

Development: Historical Lessons and Emerging Issues’ above n 138, 309.

150 Chang 2009, above n 138, 94.

151 Ibid.

152 Ibid. This conclusion should be remembered when studying the importance of IP in actualising economic growth.

153 Ibid.

154 Ibid.

155 Eric Schiff, above n 149, 108–112, cited in Chang, ‘Intellectual Property Rights and Economic Development: Historical Lessons and Emerging Issues 295, and Under-explored Treasure Troves of Development Lessons: Lessons from the Histories of Small Rich European Countries, above 138, 94.

130 efficient for corporations wanting to produce patented food to establish plants in Switzerland than in other countries with stronger patent protection.¹⁵⁶

Another example of the weakness of NDCs’ IP system can be found in the history of Patent Law in the Netherlands. The Dutch had enacted a Patent Law in 1817, although as a result of the widespread anti-patent movement in Europe, the Law was repealed in 1869¹⁵⁷ ‘on the grounds that patents are artificially created monopolies that are not compatible with its free-trade principle’.¹⁵⁸ Due to absence of a Patent Law in the Netherlands, Philips — the world electronic giant, which was founded in 1891 — made the most of Thomas Edison’s light bulb inventions without being concerned about being sued for patent infringement.¹⁵⁹

The Germans used to infringe British trademarks. Ernest Edwin Williams, in his 1896 book Made in Germany, provided various examples of German violations of British trade marks in the 1800s.¹⁶⁰

The history of IP laws in NDCs demonstrates that, even after the introduction of the pillars of the international IP system, namely the Paris and Berne Conventions,

156 Ibid, 102-103.

157 Chang, ‘Intellectual Property Rights and Economic Development: Historical Lessons and Emerging Issues’ above n 138, 291.

158 Chang, Under-explored Treasure Troves of Development Lessons: Lessons from the Histories of Small Rich European Countries, above n 138, 94.

159 Chang, Under-explored Treasure Troves of Development Lessons: Lessons from the Histories of Small Rich European Countries, above n 138, 94.

160 Ernest Edwin Williams, Made in Germany, William Henemann (London, 1896). Availabe online at: <http://www.archive.org/stream/cu31924031247830/cu31924031247830_djvu.txt>.

Wiliams gives some interesting example of how the Germans used English logos on products manufactured in Germany one of which was in the cutlery industry :

‘Here was an opening for the German genius: and the world now glitters with German cutlery adorned with elegant suggestions (reproductions even) of the best praised Sheffield marks. Let me cite as a clamant and scandalous example, the Rodgers cutlery aforesaid. The maker of this firm have so exalted a reputation all over the globe that the customs of more than one State have put them in a special category in their scale of import duties. Need I add that in Germany this brand has been steadily marked down for fraudulent trade? To say nothing of direct imitations — (and, considering that the firm has been spending £1,000 a year in Fiqhting trade-mark thieves, we may assume that these are pretty extensive) — ingenious devices of a more indirect kind exist in shoals to testify to the German cutler's wit. To give an instance of the German commercial imagination: one firm has invented (for British India) a pretty trade-mark, a trade-mark figuring a pair of crossed dumb-bells and a wheel. It sounds original; but it looks so remarkably like the cross and star of the Sheffield house that purchasers have bought large quantities wherever it is shown, under the agreeable delusion that they were stocking their houses with the finest Sheffield steel. Other Germans have developed a taste for pseudonyms; and cutlery of their make may be met with bearing the legends, ‘Eudgens,’

‘Eottgens,’ and the like, designed (I fear) ‘ with intent to deceive’ unwary customers in Oriental and other lands, where the niceties of European orthography are not known.’ 54.

131 NDCs’ attitude remained unchanged for many years.¹⁶¹ Some of them did not join the international IP system until recently, while others did not introduce strong protection until it suited their level of development. This indicates that for a long time, the NDCs neglected the international framework of IP protection. Today, most of them would deny that this is the correct approach for developing countries.

Additionally, the history of NDCs, shows, according to J. H. Chang, how ill-informed the defenders of the current international IP system are in relation to the importance of IP in promoting the development of society.¹⁶² For instance, the US based National Law Center for Inter-American Free Trade argues that ‘[t]he historical record in the industrialized countries, which began as developing countries, demonstrates that IP protection has been one of the most powerful instruments for economic development, export growth, and the diffusion of new technologies, art and culture’.¹⁶³

On the contrary, it can be argued that if the TRIPs standards were introduced in the early stages of development in NDCs such standards would have negatively impacted the industrial progress of those countries,¹⁶⁴ given the strong substantive provisions for protecting of IP and the enforcement mechanism provided by the WTO’s Dispute Settlement mechanism. This might imply, as Chang concludes, that lenient intellectual property protection ‘may even be beneficial, or necessary, in the early stages of economic development’.¹⁶⁵

161 Chang ‘Intellectual Property Rights and Economic Development: Historical Lessons and Emerging Issues’ above n 138, 292.

162 Ibid 291.

163 National Law Center for Inter-American Free Trade, Strong Intellectual Property Protection Benefits the Developing Countries, available online at:

<http://natlaw.com/interam/mx/ip/sp/spmxip11.htm> In stark contrast, one commentator states that

‘The historical record strongly suggests that many of today’s economic leader countries were themselves ‘knowledge pirates’ in the past, and benefited from being so’, Graham Dutfield and Uma Suthersanen, Global Intellectual Property Law (Edward Elgar, 2008) 8. Available online at:

<http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2011343>. I disagree with the description

‘pirates’ for the reasons given the in previous footnote; however, the above historical narration supports the latter conclusion.

164 Hiroyuki Odagiri et al, Intellectual Property Rights, Development and Catch-Up: an International comparative Study (Oxford University Press, 2010). The automobile industry in Japan has been used as an example. The Japanese car manufacturer giant (Toyota) started its successful and impressive, journey toward success by disassembling and copying imported cars, such as Chevrolet and Fiat. If the TRIPs had been concluded at that time (1960s) in the case Toyota, the activites carried out and participated in Toyota success would definitely will be faced by the barriers of TRIPs and might be brought to dispute. The author is of the opposite opinion.123-125.

165 Chang, above n 138, 82.

132 History shows that the path to development, progress and social welfare in the NDCs was achievable without IP laws or with weak protection. Accordingly, the introduction of IP laws, especially according to the current international standards, does not necessarily promote the development of society as Islamic Shari’a requires.

Therefore, a study of IP and Islamic Shari’a has to treat claims of a positive relationship between the current IP system, maslaha mursala and Islamic Shari’a with great skepticism. This is because what promoted the development of NDCs was not the type of protection offered by the current IP system; rather it was lenient IP protection that was sensitive to their level of development. This might indicate a negative impact of the current system on the process of development as will be discussed below.