Intellectual Property Rights (IPR) on Monopoly Super Profits

By Prabir Purkayastha

Reproduced from

People’s Democracy

, January 10, 1999, with thanks.

The current controversy on the changes to India’s Patent laws, the resistance to the Monsanto seed trials and Microsoft’s troubles with the anti-monopoly authorities are all aspects of the drive of global MNCs [multi-national corporations] to derive monopoly super profits. The basis of such monopoly profits is the Intellectual Property Rights (IPR) regime ushered in under World Trade Organisation (WTO). The huge monopoly profits of companies such as Microsoft, pharmaceutical MNCs and agri-business companies is bringing home the dangers of such an IPR regime. To this has been coupled the danger of applying genetically engineered products without appropriate safeguards. Increasingly, it is becoming clear that the issue is not one of US and advanced countries versus the developing countries as posed during the GATT [General Agreement on Tariffs and Trade] negotiations, but one of monopoly super profits at the expense of the people all over the world, particularly those of poorer countries.

There is an extremely important unifying principle which binds together pharmaceuticals, bio-tech and software companies. In all these areas, the cost of reproduction of the products is small, the cost of developing the “prototype” is large. Thus, the cost of developing, testing and providing a drug is very large, varying between 100 million to even 500 million dollars. The cost of reproduction of the drug compared to its selling price is comparatively much smaller. Thus Ranitidine dropped to one tenth its value within six months of going off patent protection, indicating that it was selling at least 10 times over the cost of its manufacture. The justification of the MNCs is that they have to recover the development cost from the price of the drug, even if facts show that generally the development cost is recovered within the first six months of the drug entering the market.

This phenomenon – the cost of reproduction being a small portion of the price of the product – is even sharper in the case of software. The cost of reproduction is the cost of the media – CD ROM or floppies – and is not more than 5 per cent of the price of the software. This is true also for genetically engineered seeds which are reproduced by the plants themselves. Here also the cost of the first generation of seeds is the basic cost, any successive cost is a minor cost in the overall cost of the product.

The current importance of the intellectual property rights regime stems from the need of MNCs to control the reproduction costs artificially so that they can continue to reap super profits for a much longer period. Of course, software companies such as Microsoft have a larger agenda. This is to use the software monopoly over their operating system – DOS and WINDOWS, the layer through which all other software accesses the machine – to generate a complete monopoly over the entire software market. That Microsoft makes super profits is clear from existing data: sales of the first three months of WINDOWS 95 paid for the entire development cost. It is the monopoly super profit, coupled with its monopoly over the operating system software, that is deriving the Microsoft juggernaut, and made it a 120 billion company.

The Bio-Tech Challenge

The bio-technology developments started initially with independent bio-tech companies. They were start-up companies, many of them coming from the university research environment. However, the need for capital and access to the market has led to a spate of acquisitions. Both pharmaceuticals, chemical and agri-business companies have acquired most of the bio-tech companies. As a result, the MNCs today control the emerging bio-tech market completely. The key issue for the MNCs is to acquire genetic resources and control the market for such products. For the people at large, they have to face two other issues apart from the monopoly price of the bio-engineered products. They are

(1.) how to save their biotic resources from piracy (bio-piracy) by the MNCs; and

(2.) how to impose safety standards on the MNCs on conducting field trials with potentially hazardous bio-engineered products. The Monsanto seed trials with Bollgard cotton and the farmers’ resistance are examples of this conflict, where seed companies can experiment with potentially hazardous genetically engineered products without appropriate sanctions.

The significant difference between the green revolution and the current genetically engineered products lies in the nature of the science applied. The green revolution came out of public domain science. Thus its products came out of the public domain – Universities, Agricultural Research Institutions, etc. However, the predicted bio-tech revolution is all coming out of private domain science. It is the bio-tech, pharmaceutical and agri-business MNCs that dominate the current genetically engineered products, whether drugs, vaccines, seeds, etc. While private domain science is a familiar phenomena in drugs, pharmaceuticals and chemicals, it is the first time that in agriculture and food production – whether new plant varieties or new breeds of livestock – that the world will have to depend on privatised entities. Thus food security will not be only a question of fertilisers and water, but also of seeds and breeding livestock which belongs to agri-business such as Monsanto.

The Terminator Gene

The recent controversy about Monsanto’s terminator gene is particularly imporant here. Monsanto has acquired a bio-tech company, Delta & Pineland Company, which seeks to introduce a gene that will make the next generation of seeds sterile. This will ensure that no biological reproduction is possible of the plant. Thus, the farmers cannot keep a part of their produce for the next season as seed even for their own use. Thus, apart from the control exercised by the TRIPS/WTO regime, an entirely new strategy of rendering reproduction of the product impossible is being tried. If successful, the seed corporations will own exclusive control of the world’s food resources as they will control the seeds.

The TRIPS/WTO regime also seeks to do the same, albeit through legal means. The latest modification made in the US, restricts the farmers’ rights to keep seeds for his own use and takes away the plant breeder’s rights to the second generation seeds. In the US, plant breeders have virtually ceased to exist, and it is the seed MNCs, such as Monsanto, that are controlling seed production. The farmers’ rights being taken away is a new assault by the MNCs on age-old rights under the guise of intellectual property rights.

Invitation to Disaster

The criticism of the Monsanto seed trials in Karnataka stem from the fear that such genetically engineered products can cause havoc in the existing pattern of agriculture. Thus, they may lead to super-pests rather than leading to pest control. Further, the genetically induced anti-pest property could lead to a reduction of bee and other insect populations that are beneficial to the farmer. The issue here is not whether such fears are correct. The issue is that has any agency of the Government been set up to examine such possibilities? It is interesting that companies such as Monsanto will argue that the genetically engineered products are close to natural products and therefore completely safe, while also arguing that these are completely new and therefore come under TRIPS/WTO protection as Intellectual Property. A case of having their cake and eating it too.

The Intellectual Property Rights regime under WTO has been portrayed as a one-time exercise. Thus, according to these arguments, if India agrees to change its patent laws, India will fall in line with what is happening globally. What is being hidden is that the TRIP/WTO regime is like a ratchet. No sooner do you succumb to their current demands, than a new set of demands will be made.

The US has continuously changed its patent laws to provide more and more


in the last decade and a half. Patents for life forms, micro-organisms and software are all new inductions in the pantheon of intellectual property. Recent modifications in US law take away the right of plant breeders and farmers. These are the new demands that are constantly being made. India has already been asked to adhere to the UPOV regime which seeks to undercut farmers’ and plant breeders’ rights. Therefore, those who argue for conforming to the WTO regime, do not either understand this process or are colluding with the powerful MNC lobby in the country. The stark fact is that intellectual property rights are nothing but contention between MNCs and the people. And the WTO regime is continuously enlarging the scope of the monopoly of the MNCs.

Review issue in its Entirety

WTO comes up for review in 1999. It is time that developing countries ask for the review of the whole issue of intellectual property rights. While countries such as India have been asked repeatedly to change their patent laws under WTO, no pressure has been put on the US for violating the Convention on Bio-Diversity. This Treaty had made it obligatory for advanced countries to make their MNCs share the profits of biological resources with those countries and communities from whom these resources have been taken. The US has refused to accept any such obligation and stated that this is a matter between the MNCs and the

“bio-donor countries”

, officially therefore abetting the rampant bio-piracy that MNCs are indulging in. Further, US has also stated that the WTO regime has primacy over the bio-diversity treaty.

Thus, the issue of WTO is not one of merely changing this or that provision of the Patent Act. The issue is to confront the US and the advanced countries on the entire gamut of issues regarding intellectual property and biotic resources. Without doing with, we shall slip into a neo-colonial regime: we will be the markets for and suppliers of raw materials while MNCs make super profits.