For a long time there has been an argument whether IP enhances or stifles innovation (creativity), technological transfer and development. On the one hand it is argued that IP acts as a protective and reward mechanism to creators. In sectors such as the pharmaceutical industries for instance there is evidence to suggest that investment and development would be seriously limited if patent protection were to be removed. Part of the reasoning is that there are usually heavy upfront or sunk costs or investments before a drug can be developed. Examples of this sunk costs include initial research, initial development of the drug, clinical and related trials.
It has been argued that intellectual property especially patents stifles innovation, access and development. Some have argued that the Swiss Pharmaceutical Industry development without pharmaceutical patents. Secondly relatedly it has been argued that IP and particularly patents increase the cost of medicines because loyalties have to be paid. HIV drugs have been very expensive because of patents. When one takes an example of painkillers the active ingredient is Paracetemol but the moment it is given a brand name, they start charging for it. It does not necessarily mean that a generic drug is fake, it just doesn’t have brand name.
Modes or channels of technology transfer:
From 1960s through 1980s there was a debate regarding technology transfer. Developing countries argued that there was limited transfer of technology to developing countries and that most of the technology was controlled by the West and Transnational Corporations. Developing countries persuaded UNCTAD to initiate a process for drafting an international code of conduct for technology transfer (ToT Code). This draft instrument was negotiated up to about 1985 when it ended in a stalemate. Some of the core perspectives were as follows:
Developing countries argued for concessions or preferential treatment in technology transfer transactions e.g. more favourable pricing and generally easier and more favourable terms in transfer of technology. On the other hand developed countries preferred a market-based approach whereby ToT transactions would be based on market or arms length bargains and therefore a limited role for the state in regulating ToT. They argued that most of the technology was developed by private enterprises and was therefore proprietary i.e. they were not within the control of the State and so the State could not make decision on their transfer.
Socialist countries especially of Eastern Europe or the Soviet Satellites ideologically agreed with the developing countries because they were opposed to Western Imperialism. But when it came to voting on the draft, Soviet Satellites voted with the Western World. This was because most of these countries had developed some technology and they needed a market and therefore to them the idea that they could give their technology for free was unthinkable. Some of the most important export from the Soviet Systems were wine arms and liquor. The Soviet empire was not too keen on transfer of technology.
The negotiations on the draft International Code of Conduct on Technology Transfer ended in a stalemate in 1985. However 2 major lessons were learnt from this process
Promulgation of laws
Many developing countries including Kenya have since promulgated laws to regulate technology (ToT). Most of these laws begin with a market based approach to ToT e.g. the laws will saying that the parties who are negotiating the transfer should decide the terms of the transfer and if there is a problem with the transfer then the state can come in. Part X S. 64 onwards of IPA 2001 has provisions on contractual licensing. It gives party the freedom to determine the terms of the licence. However it indicates about 33 terms which may make a contractual licence voidable and therefore unregistrable by the MD of KIPI. The 33 terms may render a licence voidable because the are oppressive, inequitable or
Four pronged typology
If the price is unreasonably high then that price shall not be registered by KIPI. For a long time KIPO as KIPI then was and CBK emphasised a lot on the price clause partly because there was the argument that Kenya was losing a lot of money. After 1995 CBK and KIPI are no longer keen on scrutinizing licensing agreements although they are responsible for scrutinizing what technology is being brought into Kenya. They had only focussed on foreign exchange which was a narrow perspective.
- if the contract requires one to import technology that is already available in the country, KIPI can refuse to issue a contractual licence. This clause also helps us in deepening our own technology and helps in building linkages i.e. forward and backward linkages