By weakening a major intellectual property right, Europe is at risk of confirming its growing reputation as an inhospitable place for innovation, more concerned with protecting the low-value manufacturing industries of yesteryear. The move is doubly baffling considering that emerging competitors are moving in the opposite direction and bolstering their IP frameworks in a bid to develop competitive advantage in knowledge-based industries.
China, for instance, correctly senses that future prosperity will come from a knowledge-based economy, not manufacturing products invented elsewhere. Beijing has been steadily improving the quality of its IP framework over recent years, only last June instituting its own form of SPC to grant five-year patent extensions for medicines.
Against this backdrop, it is an enormous act of self-harm for the European Union to be weakening intellectual property rights by introducing the manufacturing export waiver.
Despite the risks posed by this waiver, others propose that the Commission should weaken European intellectual property rights even further by allowing generic companies to begin the process of manufacture and stockpile them while the SPC is still in force. The proponents of a stockpiling provision argue this would allow for launch in the EU the first day the SPC expires, levelling the playing field with non-EU manufacturers not constrained by an EU SPC.
The EU has rejected SPC stockpiling provisions before
However, they may be surprised to learn that the EU has argued against manufacturing for stockpiling in previous trade disputes, acknowledging that it weakens intellectual property rights and thereby harming European innovators.
In a WTO dispute with Canada in 2000, the EU successfully argued that stockpiling would be a de facto shortening of patent protection and would therefore be inconsistent with Canada’s obligation under TRIPS.
Would the EC’s current changing of the rules to allow manufacturing for stockpiling not represent the same shortening of patent rights granted under an SPC? Absolutely.
This all points to a weakening of Europe’s reputation as hospitable place for innovation, more concerned with protecting the low-value manufacturing industries of yesteryear. It’s hard to see Europe’s generics industry – a business where margins are razor thin – being competitive in the long term with the likes of India and China where production costs are much lower. This makes the Commission’s preoccupation with boosting it at the expense of innovation all the more confusing.
The EU’s precautionary, risk-averse attitude to regulation has already chilled investment in innovative sectors such as chemical and agricultural biotechnology, and is currently holding back Europe’s role in the Artificial-Intelligence based “Fourth Industrial Revolution”.
The introduction of the SPC manufacturing export waiver is already a bad idea for a continent seriously in need of innovation. Further weakening IP rights through stockpiling provisions would make this bad idea worse. European parliamentarians should reject it.