G-8: HEALTH NEEDS TRUMP INTELLECTUAL PROPERTY RIGHTS, G-5 SAYS

Leaders from the five strongest developing countries forced a key change Friday to the Group of Eight's final statement about intellectual property rights.

The "Group of Five" emerging powers -- China, India, Brazil, South Africa and Mexico -- pushed the Group of Eight most industrialized countries to recognize the need to address "public health" in the balance between grave health emergencies and protection of patent rights of pharmaceutical companies.

The developing countries' victory constituted a setback for the G-8's plan to strengthen intellectual property rights through "promoting innovation -- protecting innovation."

German Chancellor Angela Merkel admitted there was a change from the earlier text, saying with "China and India present at the table, there will be some changes."

She said at the concluding press conference "the changes are simple yesterday it was a G-8 statement and today it includes both G-8 and other emerging economies."

In the summit declaration on "Growth and Responsibility in the World Economy" issued on Thursday, the G-8 leaders who were gathered at this resort on Germany's Baltic coast, spelled out explicitly what they expect in protections for intellectual property rights (IPRs).

The issue is a hot one, with raging debates in several developing countries, especially Thailand, Brazil and Philippines, following moves to relax IPR provisions in order to provide the latest HIV/AIDS drugs to their patients.

The pharmaceutical companies such as Merck and Abbott, among others, have protested the decision by developing country governments to issue compulsory licensing provisions, which revoke the patent rights on the drugs, as allowed by World Trade Organization rules. Under these provisions, a government can stop buying patented medicines from a pharmaceutical manufacturer and directly import from a generic drug producer in a third country at sharply reduced prices.

The G-8, however, had omitted any mention of public health in its "promoting innovation -- protecting innovation" strategy that cleared the decks for "establishing a new international dialogue on innovation and intellectual property protection as part of the Heiligendamm Process" to be carried out at the Organization for Economic Cooperation and Development (OECD).

The G-8 move has some dangerous implications for developing countries, according to health rights activists as well as some trade analysts.

"This is the most dangerous development from the Heiligendamm meeting," said Tido von Schoen-Angerer, a senior official of Medicines Sans Fronti?res (MSF -- Doctors Without Borders), arguing that it "would negatively affect access to health in Africa through more burdensome rules on HIV/AIDS medicines."

"On one hand the G-8 wants to provide generous aid and assistance to African countries to fight HIV/AIDS, tuberculosis and malaria, and on the other hand, it wants to ensure that generic drug companies in India and China are stopped from supplying latest medicines at affordable prices in Africa through stronger provisions for intellectual property rights," he said,

Before the G-8 meeting, several international companies, among them Microsoft and Pfizer, told Chancellor Merkel that the industrial leaders must launch a tough initiative to further strengthen the IPR protection, according to a German news daily.

"The new dialogue on Innovation and Intellectual Property Protection," according to the G-8 statement, will address "the crucial role and economic value of intellectual property protection and implementation as a central framework condition for the development of a future-oriented economy based on technological progress and innovation." It underscores the need to focus on "effective market incentives for innovation and the diffusion of knowledge at the national level, taking into account recent developments in technology markets."

And finally, the G-8 highlights "the crucial importance of efficient innovation value chains that promote business commercialization of patented research results and exploit licensing as a major driver for the international transfer of technology."

The dialogue at the OECD will also suggest measures for the industrialized and major emerging economies to protect IPRs within their own territories.

The industrialized countries have already launched a major battle with China over its weak enforcement of IPR provisions, accusing Beijing of failing to crack down on its counterfeit manufacturers of items ranging from DVDs to consumer items to drugs and pharmaceuticals.

Recently, the United States filed a dispute against China at the WTO alleging that Beijing's failure to uphold the Trade-Related Aspects of Intellectual Property Rights agreement has undermined market access opportunities for the U.S.-based companies.

Against this backdrop, the G-8 announced that while it respects "the mandate, function and role of competent multilateral organizations, in particular the WTO and the WIPO [World Intellectual Property Organization] the participants in the [OECD] dialogue may also discuss initiatives aimed at strengthening intellectual property rights protection, which should then be addressed in the appropriate international fora."

"The G-8 Summit 2009 will take stock of the progress made by that date," the statement said.

Clearly, the G-8 is targeting two birds with one shot, a Geneva-based IPR analyst said. "It wants to curtail the space for flexibilities to waive patent provisions in vital drugs and pharmaceuticals as needed for HIV/AIDS patients in Thailand, Brazil, and South Africa, and simultaneously ensure that future technology transfer in both health and climate change issues are safeguarded through 'licensing as the major driver,'" said the analyst, who requested anonymity.

But strong opposition from the G-5 developing countries forced the G-8 to include public health, one source said.

Currently, rules governing IPRs -- such as patents, copyrights, trademarks and geographical indications -- are codified and administered at the WTO and WIPO, which are multilateral organizations with wide-ranging participation from industrialized, developing and least-developed countries.

But the G-8 now wants to "shift the forum" from a neutral multilateral setting to a body such as the OECD in which its members can dictate the outcomes, said Rohit Malpani, trade policy adviser from the development charity Oxfam. He said that "whenever they face a problem in safeguarding IPRs, they shift the forum."

"First they moved administration of IPRs through what is called the trade-related intellectual property rights to WTO in 1995, and when they are faced with a problem such as the Doha declaration on public health [at the 2001 WTO conference in the Qatari capital], they want to move it to OECD," Malpani said.

"Obviously, they are disturbed with the ongoing Development Agenda dialogue at the WIPO which is being spearheaded by Brazil, India and Argentina, among others, and want a more neutral forum which goes in line with their thinking," a trade envoy from Geneva said.

"Even though this is a start of the process which the G-8 wants to commence at OECD, it only speaks about the 'forum-shifting' culture of the powerful countries," Malpani said.

In the past, the OECD's reputation suffered because of the controversial dialogue in the multilateral agreement on investment, and now it faces the same prospect on IPRs, he said.