April 26 marks World Intellectual Property (IP) Day. The day celebrates the role that IP rights play in spurring innovation and technological progress. The theme of year’s event is: Innovation – Improving Lives.
The World Intellectual Property Organisation director-general, Francis Gurry, states, "IP is a crucial part of a successful innovation system. It provides a return for those who take the risk to introduce the ‘new’ — in terms of products and services — into the economy. It provides a framework for the rather difficult and challenging journey that any idea has to undertake before becoming a commercially available product or service."
Innovation in medical technology, over the past five decades, has given scientists access to powerful tools to develop new procedures and drugs that have resulted in unprecedented advancements in human longevity. World-wide, life expectancy at birth has increased dramatically from an average of 53 years in 1960 to an average of 72 years in 2015. There can be no doubt as to the extraordinary benefits that advances in medical innovations have conferred upon humanity — helping people live longer, healthier and happier lives.
Between the 1920s and 1940s, huge advances in medical procedures were made, including discoveries such as penicillin, sulpha drugs, bacitracin, streptomycin and chloroquine. In the post-Second World War years, such drugs became widely available and their application brought about the remarkable decline in the crude death rates experienced in many developing countries. By the 1950s and 1960s, fewer and fewer children and young people were succumbing to the easily preventable diseases that, historically, had depressed the health indicators of developing nations. Throughout the world, life expectancy was on the rise.
This process continues today. New drugs and medicines invented in one place are made available throughout the world via international markets. Most drugs start off protected by patents which eventually expire and open the market for generic competition. As a result, many off-patent medicines are available at extremely low prices, allowing people in poorer countries to benefit from the knowledge and innovation of more affluent countries. Recent examples of this include antiretroviral drugs, statins and insulin, as well as neo-natal intensive care units, kidney dialysis equipment, screening equipment and myriad other modern medical devices.
Many patented drugs are also subject to competition from other medicines in the same class, which puts downward pressure on price, and the strategy of price differentiation practised by manufacturers allows many developing countries to access patented drugs at prices close to the cost of production or for free.
Patent laws were developed to encourage people to share their inventions with others for the benefit of all. The logic was obvious: if people could own the right to their creative endeavours they would earn more by sharing them with others rather than by concealing them. Innovations would spread more rapidly to the benefit of society. Perceptive entrepreneurs would recognise their potential and develop them further. As competition and financial rewards build up, it encourages more and more people to invest in innovation.
Countries that followed the patent law path went on to become the world’s first advanced countries, after being, at the time, less advanced than those countries that now doubt the wisdom of patent laws. For a country, such as SA, that aspires to reduce poverty and boost income levels, innovation is a critical cornerstone for economic growth. Innovators and creators need to be able to secure their investment in developing their creations — or they simply do not create. They certainly will not invest in commercialising and bringing products to market if they can freely be stolen and copied.
IP laws are only one of the factors among several that influence innovation. Successful implementation of IP rights depends on complementary factors such as the quality of legal institutions, markets and infrastructure. Simply put, the efficacy of IP reform is ultimately subject to the environment in which IP rights operate. National prosperity is achieved when countries implement a positive policy paradigm — of which an important component is IP rights.
World IP Day provides an opportunity to celebrate the efforts of the innovators, scientists and risk-takers around the globe who are working to make our lives healthier, safer, and more comfortable. SA’s economy and, more important, the lives of all South Africans, can only improve if we are free to innovate, knowing full well that government is committed to protecting our lives, hard won freedoms and private property rights, both physical and intellectual.
• Urbach is an economist and director of the Free Market Foundation.
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