Technology Transfer is a dead god

Denis Borges Barbosa

In a most keen analysis of the Industrial Property System, Edith Penrose [i] remarked that a patent system must be international to be effective. If in a country a patent as granted for a novelty the industry benefited with the right will have the opportunity of recovering the prior research expenditures by means of the exclusivity under the patent, the result shall be a higher price than what will amount the cost of inputs plus average profit level; probably, as it was shown by Vaitsos in connection with the pharmaceutical industry, much, much more [ii](2)

If a neighboring country, however, denies patent protection to the same product or process (provided that its industry is capable of utilizing the novelty), its consumers will benefit from the new technology at competition prices; a better situation therefore, than the consumers of the country where the invention was made; moreover, to recoup the costs or to enhance the profit margin the patentee will probably try to extract from his exclusive market what he is losing elsewhere.

Thus, in a purely national protective system the country investing most in technology will be the more injured in its world competitive power, as the general prices would tend to be higher, social pressures more demanding and the domestic market less flexible. This may be easily extended to the effect of copyright on technological products, as software.

Penrose also noted that, even if the patent system must not be purely national, it can be and historically has been nationally limited to some countries. For long years, Switzerland (already a member of the Paris Convention) refused to grant any patents although her nationals abroad could get protection for which was denied in their own country; and persisted doing so until her industry reached an internationally competitive level [iii].

In fact, in most cases the technical inability to exploit an invention was a much better deterrent than any patent system; but even in undeveloped countries without technical capability a patent was always desirable to keep as exclusive their markets for exports from abroad.

At the present moment, the paramount element is certainly the globalization of the world market. Homogenization of the single markets through standartization of demand and universal offer, the lowering of tariff barriers, the new communication technologies, the managerial talent of the multinational corporations, and the growing cultural uniformity of the various countries, all those characteristics of the new times facilitate the productive organization in really global terms. Technology, specially information technology, is an essential requirement therefor.

Inner structural stimuli also impose globalization: the large competitive growth in a not too expansive global economy seems incompatible with market fragmentation caused by tariff and other legal barriers. Investment resulting from prior existing legal barriers is similarly affected. Raising research costs also require a larger market to target the new products and services.

Globalization leads almost inexorably to legal uniformity. In the field of intellectual property, this means a minimum unequality requirement, whereby no industrial plant should be required by the pertinent legislation to work in a place where it would not be otherwise located, nor any commercial or industrial outfit denied entry to markets where they would naturally bloom.

National legislations are being actually changed in the last times, and not surprisingly, to the benefit of the holder of the patents, copyrights and trademarks. The privatist trend expressed itself by the multiplication of property titles, some of them actually statutory creations, but others the result of judicial constructionism - mostly by extending old law to new objects.

At the same time, objective uniformization of the various national interests of the industrialized countries led to legal uniformization of intellectual property laws. Until the 80s, several OECD countries denied full patent protection to inventions, on the basis of peculiar national characteristics. With the supervening economic and cultural uniformity, full protection was generalized among industrialized nations for the first time in history.

The more recent technologies brought also a new standard of protection, with different rights and duties attributed to parties and the community at large. New patterns of technology disclosure and reinforced trade secret rules compose this framework.

Most significant cause of the changes of the national legislations in the Third World countries, however, was the direct, U.S. unilateral diplomatic and economic action. The privatist trend added to other restrictions imposed to the spread and use of technology, deriving from the national security or foreign policy rules of the industrialized countries. Export of technology, including patent documents, was subject to stricter controls; access of Third World scientists, students and institutions to segments of scientific information - including scientific conferences and research experience -, is being more and more restricted.

These were the times to see the private property blooming in the realms of knowledge, undisturbed by the simultaneous growth of military and political control of technology.