Feature Article: Secure property rights for all

Every product in every sector of society today has some form of intellectual property associated with it. Sound Intellectual property (IP) rights are a necessary requirement for any country or person to achieve better economic outcomes and living standards, but without the vital components of complementary laws and institutions they are not sufficient.

In September 2013 the Department of Trade and Industry (DTI) published “The Draft National Policy on Intellectual Property of South Africa” (Draft Policy) and both domestic and international parties have shown a keen interest in it.

Governments worldwide, with well-meaning intentions, attempt to speed up and increase access to essential developments and discoveries by introducing new laws and regulations. Too frequently, however, the consequences of such laws and regulations deliver the opposite. And when it comes to pharmaceutical products especially, their well-intended new laws and regulations actually reduce access to medicines.

IP refers to creations of the mind for which exclusive rights are recognised and applies to all manner of property. The DTI’s Draft Policy states, “Compulsory licensing should be introduced in South Africa...”. Compulsory licensing allows a competitor to use or produce a patented product without the consent of its owner and is thus a form of government-sanctioned theft.

Consider the following analogy. Mr Chibale runs a successful taxi service. One day a concerned citizen in Mr Chibale’s neighbourhood notices that children are not attending school because the nearest school is too far away. The concerned citizen approaches government pointing out that education is a right enshrined in our constitution. To honour this right, government decides that, for the sake of the children, the concerned citizen should take possession of Mr Chibale’s bus on weekdays to transport the children free of charge to and from school. In return for this appropriated use of his bus, Mr Chibale may retain the right to use his bus on weekends. This “benevolent” action is clearly a case of theft – the bus is Mr Chibale’s private property yet he has been robbed of his right to exclusive use of his vehicle.

It is wonderful that the children are now able to attend school. What is not evident is that without being able to use his bus during the week, Mr Chibale can no longer make the living he needs to sustain his business and service the loan on the vehicle. He will probably have to give up his business and the vehicle and may even leave the neighbourhood. The result? No other bus service will be prepared to enter the neighbourhood for fear of receiving the same treatment as Mr Chibale. Hence, all of Mr Chibale’s existing passengers, including the children’s parents will have to resort to walking to their place of work or to carry out their daily affairs.

A more workable solution to this problem would have entailed the concerned citizen entering into an agreement with Mr Chibale to transport the children for a negotiated fee instead of resorting to stealing his bus. With so many children in the neighbourhood, Mr Chibale would have been able to offer a special discount. Other companies seeing the way this neighbourhood was doing business would offer their services, encouraged by the knowledge that their business is welcome and their property protected.

The proposals contained in the Draft Policy vilify companies that want to earn a return on their investment in this country. South Africa will not remain a poor developing country forever. If we want to build up this country’s global trademarks, brands and exports, and aspire to be a global player in research, development, and manufacturing, and an exporter of high value-added, innovative products, our legislators must scrap this Draft Policy and get to grips with the real barriers.

The Draft Policy’s focus on pharmaceutical products is unfortunate and diverts attention from basic issues of healthcare. If the government wants a healthy nation to provide the manpower and energy to grow the economy, they need to eliminate the barriers that impede access to essential, already proven, off-patent medicines. Countries characterised as “winners” have strong IP rights. To lower South Africa’s IP rights standards would be tantamount to relegating its citizens to the levels that characterise “loser” countries. If we do not respect international investors, they will simply invest elsewhere. To them, South Africa is not a special case. A cornerstone of the international agreement that governs IP, to which South Africa is a signatory, is the issue of national treatment. The principle effectively states that the South African government cannot discriminate against foreigners. If South Africa limits IP rights, it will be limiting the IP rights protection of its own citizens.

Over 160 years ago Frederic Bastiat summed the situation neatly when he wrote, “It is impossible to introduce into society a greater change and a greater evil than this: the conversion of the law into an instrument of plunder. It erases from everyone's conscience the distinction between justice and injustice. The safest way to make laws respected is to make them respectable. When law and morality contradict each other, the citizen has the cruel alternative of either losing his moral sense or losing his respect for the law. These two evils are of equal consequence, and it would be difficult for a person to choose between them. The nature of law is to maintain justice. This is so much the case that, in the minds of the people, law and justice are one and the same thing. There is in all of us a strong disposition to believe that anything lawful is also legitimate. This belief is so widespread that many persons have erroneously held that things are "just" because law makes them so. Thus, in order to make plunder appear just and sacred to many consciences, it is only necessary for the law to decree and sanction it”.

Throughout its thirty-eight year history, the Free Market Foundation (FMF) has fought more resolutely and consistently than any other role-player for the unambiguous recognition and protection of all property rights, including intellectual property rights, for all South Africans. Without the FMF’s intervention during the drafting of South Africa’s new constitution, it is unlikely that our constitution would have included a property rights clause to protect all forms of property and the rights of all South African citizens regardless of race.

If enacted the Draft Policy will be the thin edge of the wedge. Today pharmaceutical companies are the main target of government policy but tomorrow it could be the food in supermarkets, the clothing in chain stores, or the house that you live in.

Source: This article may be republished without prior consent but with acknowledgement to the author. The views expressed in the article are the author’s and are not necessarily shared by the members of the Foundation.


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