Several recent high-profile cases have had industry experts questioning whether morals and ethics can sit happily alongside the rigorous business demands of IP practice. IP consultant Jeremy Phillips sheds some light on the matter

Everyone agrees that making money is the primary objective for the majority of commercial and industrial activities. But in today’s ethical age of fair trade and human rights protection, does IP actually have a conscience?

Money. Without it, we cannot feed and clothe ourselves and provide for our basic needs. So IP, which helps us make money, and provide, must be a good thing, yes? The answer is not so simple. The money motive remains the driving force behind business, but it has to be shared with morals – with both fighting for control of the IP steering wheel.

Each IP monopoly was created to do long-term good by charging a short-term cost. Shortest but most powerful is the patent right, which lets the innovator keep all rivals out of his market for anything up to 20 years (occasionally more for pharmaceutical and agrochemical inventions). Copyright is much weaker, since it doesn’t protect against competitors who independently create and market their own works, but it rumbles on for much longer. Trademarks don’t stop anyone competing (you can make and sell a drink that’s identical to Coca-Cola, but you just can’t call it Coca-Cola), but they can be renewed for all eternity.

So is this protection too long, too strong and out of keeping with today’s morality? The press is never short of tales of the rich and powerful abusing their IP Rights. These tales make good copy since they’re guaranteed to raise the hackles of any fair-minded reader. Horror stories include accounts of how the major drug companies refuse to let their expensive patented medicines be made and sold at prices at which the world’s poorest nations can afford them; how rapacious recording companies embrace the all-controlling technologies of digital rights management and hound children and students who innocently download their favourite music for personal consumption; big-brand operations like Wal-Mart and McDonald’s exploit their size and  their enormous goodwill so as to block out competitors, and so on. But are these stories true? In the vast majority of cases, yes… and no.

Rights for all?
The IP system consists of rights that both businesses and individuals wield in their battle for survival in a world where morals have the best lines, but money has the louder voice. Yet every IP Right comes with its own built-in morality. By international treaty and in the laws of all IP-protecting countries, each IPR has its checks and balances. A patent which is not used, or for which a public health need arises, can be licensed out for use by others even if its owner objects.

Copyright laws are full of provisions to insure that ideas are open for all to use and that free speech and private non-commercial use are generally respected. Trademark laws leave businesses free to use even trademark-protected words and images for necessary or descriptive purposes. Even the laws protecting secrecy refuse to allow that same protection to cover up crime or suppress information the public needs to know about. The truth is that IP Rights are no different to any other rights. In the hands of a tyrant they are oppressive; in the hands of a philanthropist they are a blessing. But it is easy to lay upon IP Rights the responsibility for the acts of their owners. If John hits Harry on the head with a wooden cudgel, the blame lies with John and not with the cudgel.

So why, when John sues Harry for infringing his patent, should any blame be attached to the patent rather than John if he unfairly seeks to enforce it?

The IP system consists of rights that both businesses and individuals wield in their battle for survival in a world where morals have the best lines, but money has the louder voice.

Drug culture
Often, when looking at a story of alleged IP abuse in greater depth, it turns out that there is more to it than first meets the eye. The reluctance of big pharmaceutical companies to license the cut-price sale of life-saving drugs to sufferers in the poorest countries is a case in point. On the surface, one witnesses the rich refusing to help the poor, invoking patent rights in order to preserve their privileges. But in reality, the commercial story is often a very different one. Here the problem is much wider than the IP system, but it is still the IP system that gets blamed.

For example, the profits that can be made by selling patented drugs in the West are tempting enough for ‘entrepreneurs’ in developing countries to illegally obtain medicines that have been sent to relieve illnesses in the developing world and place them back in those wealthy markets. When this happens, at a stroke, the poor are deprived of their medicinal needs and the pharmaceutical companies are deprived of the first-world profits which, they maintain, subsidise the colossal research and trial costs they must incur  before anyone – rich or poor – can benefit.

This doesn’t mean that no pharmaceutical company ever hides behind a patent or that no patented medicines ever reach their destination. It does, however, mean that there is an issue of product pricing and supply that is bigger than the patent system itself. In the event, after the Doha Declaration in 2001 addressed the need of developing nations to fine-tune the balance between drug creators and developing nations, the patent system has proved sufficiently flexible to tolerate the continued existence both of patent monopolies and of ways to break them where a greater good can be invoked.

The Starbucks coffee saga of 2007 reflects a rather different side of the money and morals debate. The high-profile coffee chain was castigated for its opposition to Ethiopian government plans to register the names of three of the best-quality Ethiopian beans – Sidamo, Harar and Yirgacheffe – as trademarks in the United States. The Ethiopian government’s view was an understandable one. It seemed to them that Starbucks was cashing in on the reputation of its beans and making vast profits while many millions of coffee growers in that country lived in poverty.

Better not worse
Starbucks initially maintained that the marks should not be registered. However, following a powerful and far-reaching media campaign orchestrated by charitable organisations such as Oxfam, tweaking the strings of the company’s self-declared conscience, the coffee chain and the government got together and struck a mutually beneficial deal. Starbucks, which needed the all-important bean names, would be granted a wide license to use them, while the government, which needed Starbucks’ profits, would receive considerable royalty income. The fascinating thing about the Starbucks deal is that the morality issue did not oppose the IP debate, but actually complemented it, allowing both sides to strike a lucrative and satisfying deal through the grant of a trademark and the implementation of a license scheme.

From Starbucks’ point of view there is an even greater benefit. After the deal, the company is still making its profits, but the question ‘why aren’t the coffee pickers being paid more?’ is now one that has to be levelled at the Ethiopian government.

So what can we learn from this? There are two conclusions that can be drawn from such a lengthy and complicated case. The first is that no IP Right is any better or worse, in moral terms, than whoever holds it. The second point to be made is that, so long as seemingly opposing groups are heading in the same direction, monopolists and moralists can both work together to share that steering wheel without ever coming off the tracks.

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