Intellectual property rights (IPR) deal with the creations of the human mind. The intellectual property rights system has been developed in order to try to achieve two contradictory aims:
• to promote the publication of ideas, inventions and creations, in order to make them available to others, who can then further improve them; this will nurture scientific progress or artistic inspiration;
• to provide an economic incentive for people to invent or to engage in creative efforts, by ensuring that the originator can reap financial rewards from his/her efforts.
The solution adopted was to give the inventor or creator a temporary monopoly, in exchange for making his/her idea known to society.
Different types of IPR have been developed; the most well known are patents (for inventions with industrial application) and copyrights (for artistic and literary works), which confer time-limited monopoly rights. Other elements which are included in most IPR laws are trade secrets (offering protection against unfair competition with regard to information that is not disclosed) and trademarks (focussing on ‘competition on the merits’ and offering protection against misleading of consumers regarding the origin of a product).
In the pharmaceutical sector, patents are the most important form of IPR protection. Patents are more difficult to obtain than other forms of IPR (an application has to be filed at, and approved by, the patent office); they are only valid when issued and in the country where they are issued 2. For an invention to be patentable, it has to meet three criteria: novelty, inventiveness and industrial applicability or utility. In other words, apart from being new, an invention should not be obvious to people skilled in the art or field of technology and it should have a potential for industrial application in order to be patentable.
2 However, it is possible by filing an international application under the Patent Cooperation Treaty, to simultaneously seek protection for an invention in each of a number of countries. Other forms of IPR, for example trademark rights and copyrights, arise automatically in some countries.
A patent requires the inventor to disclose his invention, in exchange for a temporary monopoly on its use. Because of this (temporary) monopoly, the inventor will be able to earn a profit in case of commercialization of the invention, either through direct exploitation, or through royalties in case a third party is given a license to use the invention. So historically, a patent was perceived to be an inexpensive way for society to encourage innovation and reward the inventor.
A patent however does not in itself guarantee profits; a patented invention will only return profits if it is successfully commercialized - that is, if society finds the invention useful. Because patents are private rights, the costs of patent application, as well as of its protection (e.g. litigation in case of infringement by an unauthorized party) are to be borne by the patentee (patent holder). Furthermore, most legal systems contain provisions for government intervention, in case the patentee misuses the monopoly rights, e.g. when the availability of the patented product falls seriously short of demand.
Patents can be granted for a product or for a (production) process. A product patent confers monopoly rights over the product, regardless of the production method. A process patent on the other hand confers rights over the process and over the products directly produced by that process. Production of the same product via a different production method however does not infringe a process patent and is allowed.
Box 1 Patents for pharmaceuticals in India
The difference between process and product patents can be illustrated with the example of India. The Indian Patents Act of 1970 allowed only process patents for pharmaceuticals, but did not allow product patents. This allowed Indian pharmaceutical companies to produce medicines which were patented elsewhere, provided they were able to develop an alternative production method.