The Current System of Intellectual Property Rights Aims to Promote Trade and Not Innovation

Abstract

This paper challenges three widely spread misunderstandings about the international protection of intellectual property: the TRIPS Agreement should not be blamed for failing to promote invention in developing countries because that was not its aim—its aim was (and still is) to promote free trade of goods and services bearing or displaying intellectual property. In this regard, the TRIPS Agreement has actually been very successful. Besides, the patent system should not be blamed for its alleged inadequacy in fostering innovation. There is no data that show the patent system works in one direction or the other. The patent system is a proprietary tool, a free market mechanism, and its purpose is to reduce costs as regards the transactions involving inventions, as compared to the significant transaction costs stemming from trade secrets and the enormous transaction costs arising from government patronage. Therefore, it is imprudent to suggest that the patent system should be abolished in the pharmaceutical field and replaced by open innovation and prizes. These mechanisms are already available, and inventors should be left free to select those that best serve their interests.