Duck, Duck, Goose: The Potential Perils of “Intellectual Property” Conglomeration, by Patricia L. Judd

by Guest Blogger — Thursday, Oct. 4, 2018

As I stated in my introductory post a few days ago, Sam Halabi’s new book on Intellectual Property and the New International Economic Order engages us in a hopeful conversation, and I am grateful to him for that. It is crucial that scholars of various disciplines continue engage on these issues of vast importance. As I have highlighted in previous work, recent discussions about the intersection of intellectual property rights (IPR) and economic development have been characterized by an overriding (and perhaps unwarranted) sense of fatalism. Halabi refreshingly moves us away from a resigned attitude by showing that there is action toward goals that matter. For those of us who retain a sense of idealism that international law can and should make the world a better place, seeing some movement toward those goals is reassuring and uplifting.

A few of the previous posts have focused on the structural justifications for, and implications of, Halabi’s premise. I have thoughts on those, too, but I think I will focus today’s post on the particularities of intellectual property law. One area of Halabi’s work that deserves more attention in future projects or studies is the strength of the links between Halabi’s identified international intellectual property shelters and the basic needs they aim to serve. Halabi claims that the shelters give domestic regimes cover to push back on the dominant western-driven IPR instruments, to the benefit of key welfare-related goals. “Slow and steady wins the race,” he seems to say. And, though it is a stretch to claim that the instruments identified by Halabi—most of them non-binding, lacking enforcement mechanisms, and devoid of incentives for major powers to sign on and adhere to them—are actually winning the race against the likes of TRIPS and BITs, Halabi correctly notes that there is some influence emanating from these instruments, and indeed that there may be value in the journey they map, apart from the eventual impact of them individually.

However, I am inclined to push back on Halabi’s seeming implication that all of the shelters are equally successful and share equal causal connections to the societal goals they are meant to further. Halabi describes shelters in three principal areas of intellectual property law—patents, copyrights, and trademarks. Each of these disciplines has a discrete theoretical basis and an independent set of mechanisms used to achieve its respective goal. Patents incentivize disclosures, in hopes that others can build on the inventions, after a period of time. Copyrights walk a complicated tightrope that involves balancing incentives toward creative output with the desire that others can use works during the term of protection. Trademarks, in turn, strive to protect consumers by giving enforcement agencies the necessary tools to police the marketplace and incentivizing mark holders to channel their resources into preserving the integrity of their markets.

Given these disparate theoretical bases, structures, and goals, I am uncomfortable with Halabi’s ostensible equation of the different intellectual property disciplines. In short, Halabi seems to treat all categories of IPR as equals in his estimation of their detrimental effects on basic needs. Halabi makes his primary arguments about IPR’s impact on public health and welfare using examples from patent law, focusing on the pharmaceutical and agrochemical sectors. Patents on pharmaceuticals put medicine prices out of step with what patients in developing countries can afford, and agricultural dominance by large firms undercuts both independent farmers and indigenous populations. Halabi then acknowledges similarities, as to foundational principles and effects, between patent law and copyright law, claiming thus equivalent impact in the educational materials sector. Copyright protections put academic textbooks and journals out of reach of most students in developing countries. Halabi’s inclinations on both patent and copyright law are more or less sound. In both patents and copyrights, society tolerates monopoly-style rents on items in the name of spurring both innovation and the disclosure of the fruits of that innovation to the world. At some point, the cost of those rents exceeds the benefits to society of paying them, and Halabi does an admirable job of articulating that patents and copyrights on goods essential to human growth and development are pretty close to that line.

But trademarks are different, and I question the societal benefit of restricting them through use of international intellectual property shelters. One key difference between patent and copyright law on the one hand, and trademark law on the other, is the direct link between strong trademarks and direct societal benefits. In short, trademarks are designed to aid the public. They guide consumers in purchases, minimize transaction costs, and incentivize trademark holders to police the marketplace against confusing copycats. These functions are clearly consonant with the goals that the crafters of the international intellectual property shelters—and the domestic governments that use those shelters—hope to achieve.

I have touched on this difference in a previous review of Halabi’s work on the subject, and I develop the points further in a forthcoming article. In the upcoming piece, I detail the ways in which trademark restrictions in the name of public health in some instances actually undermine public health. In short, too many commentaries on plain packaging laws or similar trademark-inhibiting laws ignore the enforcement implications of restricting trademarks. These implications are serious, especially in the sectors at issue in Halabi’s analysis, where counterfeits can be dangerous or even deadly. Legitimate producers of consumer goods in key public welfare sectors—including consumables—must comply with regulatory practices governing their ingredients, disclosures, and advertising. Trademark restrictions risk opening the market to counterfeiters, who are not subject to the same regulatory structures as legitimate producers. Ultimately, when counterfeits invade markets directly relating to basic needs, consumers suffer. What is more destructive to infant health than mothers choosing infant formula over breastfeeding? Mothers unwittingly choosing counterfeit infant formula. What is more destructive (gasp) than even Marlboro® cigarettes? Unregulated, fake Marlboro® cigarettes.

The regulatory practices, not treated in detail in this post, are imperfect, and we need to talk separately about reform and refinement of those practices, as highlighted by Katja Lindroos in a post earlier this week. There is little doubt that trademark holders may use their marks as vehicles to circumvent those practices and commit fraud on the public. Given that reality, rules targeting those abusive trademark practices are appropriate. But I remain unconvinced that restricting trademarks whole cloth is the best answer to trademark abuses. By restricting the use of strong trademarks, domestic governments risk weakening their ability to curb a problem that may be far worse than the impressions made by a picture of a smiling, happy infant. If the salient public interest is protecting against fraud on the public, trademark-restrictive shelters may not accomplish that goal optimally. Such restrictions simply have too many side effects.

Furthermore, by restricting trademarks—which are many companies’ greatest assets—countries discourage well-funded, highly experienced, rich private firms from playing a role in those markets, a decision that can prove detrimental to consumers. Here, we must recognize that all trademark industries are not alike, vis-à-vis public health and welfare goals. While one may shout “hooray” at the departure of Phillip Morris International® from a given market (but see the counterfeiting argument, above), it is not really in society’s interests to drive infant formula producers from the market, or pharmaceutical manufacturers, or general food producers. Those who have touted the advantages of severe trademark restrictions on infant formula producers inadequately address the effects of banishing Nestle® from the market; it is not a desirable outcome. Not only will some subset of the market occupied by Nestle® be overtaken by counterfeiters, but by discouraging Nestle® from playing a role, governments are depriving their citizens of both the best possible food for their infants—apart from breastfeeding—and a potential partner in accomplishing the paramount goal of supporting healthy parents and infants. Assuming that all mothers will breastfeed if formula is less available or attractive is pure fallacy. Mothers decline to breastfeed for all sorts of reasons—many having nothing to do with the Gerber® baby.

Ultimately, my concern is not about Halabi’s characterization of the trademark-focused instruments as shelters. He is probably right that the origins and development of these instruments are on par with the other types of shelters he identifies. But to the extent that the discussion about shelters is intended to be laudatory—to the extent that Halabi is claiming that these shelters are not only good maps toward progress in the most general sense, but that they actually accomplish the goals of meeting basic needs—it bears noting that not all shelters are equal in this respect.

Halabi seems to acknowledge that the trademark argument is a bit different than the arguments pertaining to patents and copyrights, speaking of “indirect” connections between restricting trademarks and societal benefits, as opposed to the “direct” connections in the copyright and patent cases (pp. 214-215). He presents a very brief argument that the trademark shelters are effective, citing reductions in smoking rates in countries that have restricted trademarks or mandated warnings on cigarette packages. He points out increases in breastfeeding rates in countries that have banned pictures of chubby infants on formula cans. These are wonderful developments. But Halabi’s argument does not fully establish that banning the trademarks on these products resulted in the societal gains he mentions. He omits completely any discussion of complementary measures that these same countries may have taken in conjunction with these trademark-focused campaigns. One is left wondering whether taking the Gerber® baby off the formula container really caused a swell in breastfeeding, or whether something else caused that positive change, while the trademark restrictions had little effect. Halabi could elaborate on this point in more detail, and I encourage him to develop this idea further should he revisit this theme.

As noted above, I have an article in progress that elaborates more on these issues at the intersection of trademark protection and public health, so I will leave my comments here for now. Halabi states that he wishes to start a conversation about the nexus between IPR protection and public welfare. That, he has done, with a refreshingly optimistic set of claims. I look forward to engaging with him on the specifics for years to come.

Patricia L. Judd, a professor at Washburn University School of Law, focuses her scholarly work on the transnational regulation of intellectual property law, with a focus on the evolutionary relationship between intellectual property and international trade law. 

This post is part of a symposium reviewing Intellectual Property and the New International Economic Order: Oligopoly, Regulation, and Wealth Redistribution in the Global Knowledge Economy, a new book by Sam Halabi, Associate Professor at the University of Missouri School of Law and Scholar at the O’Neill Institute for National and Global Health Law at Georgetown University. All of the posts can be read here.

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