The Brave New World of Intellectual Piracy | Citizens Against Government Waste
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The Brave New World of Intellectual Piracy

The WasteWatcher is the staff blog of Citizens Against Government Waste (CAGW) and the Council for Citizens Against Government Waste (CCAGW). For questions, contact

By any standard, the Pirates of the Caribbean have nothing on the antics of the pirates of India.  An April 2013 Indian Supreme Court decision has handed over the keys to the castle, and declared open season on pirating intellectual property (IP).  The booty in that case was for a drug to treat cancer that was developed by Novartis, a Swiss drug manufacturer.  The decision opens the door for future denials of drug patents and IP infringement for other industries.

At first glance, one might ask why this is such a big deal.  The decision only affects one drug patent in India for a potentially life-saving drug.  But the denial of the patent to Novartis followed the rejection of previous efforts by other drug companies to protect their pharmaceuticals from patent infringement.  In November 2012, the Delhi High Courts ruled in favor of Cipla, a generic drug with the same active ingredients as a patented Roche cancer drug.  In October 2012 Pfizer’s cancer drug Sutent had its patent revoked by the Indian patent board, even though Sutent has a valid patent in 90 other countries.  On August 17, 2013, Roche announced it would drop plans to patent a breast cancer fighting drug called Herceptin in India after a health ministry committee urged the government to issue a “compulsory licence” obligating the company to license an Indian generic drug manufacturing company to make a cheaper version of the drug. 

On April 30, 2010, the Office of the U.S. Trade Representative issued its 2010 Special 301 Report, which listed India on its Priority Watch List.  The report called for India to improve its intellectual property rights regime by providing stronger protection for patents, and raised a particular concern about the country’s prohibition on patents on certain chemical forms absent a showing of increased efficacy, which limits the patentability of potentially beneficial innovations, such as temperature-stable forms of a drug or new means of drug delivery.  As attested by the results of the Indian Supreme Court ruling on Novartis, these concerns have come to fruition.

The pharmaceutical industry is not alone in facing attacks on intellectual property.  An August 2007 report by the Institute for Policy Innovation estimated that millions of illegally downloaded songs have cost the U.S. economy $12.5 billion, 70,000 lost jobs and $2 billion in lost wages, as well as $422 million in tax revenue ($291 million in personal income tax, and $131 million in lost corporate income and production taxes). 

The Motion Picture Association of America’s website states that 90 percent of newly released movies are pirated by thieves who use a digital recording device in a movie theater to literally steal the image and/or sound off of the screen.  To combat this type of theft, major motion picture studios have employed technology such as watermarking films in order to discern the source of a stolen film through forensic analysis and trace it back to the theater in which it was recorded.  In 2011, the software industry reported a 63 percent rate of PC software piracy with a commercial value of more than $2.9 billion. 

In addition to the adverse financial consequences caused by counterfeit goods, they can also cause physical harm.  On July 13, 2010, CNBC reported that the World Health Organization found that a counterfeit drug used to fight diabetes contained six times the normal amount of its active ingredient, resulting in nine hospitalizations and two deaths in China.  On May 13, 2013, a Chicago ABC News story on a raid on a Los Angeles store selling counterfeit goods included an interview with Underwriters Laboratories (UL) in Northbrook, Illinois.  UL experts demonstrated the hazards of counterfeit extension cords that caught fire when in use, and suggested that counterfeit products that are be used in everything from toasters to even the wall outlets in homes also have the potential to also cause damage or injury.

Protecting personal and intellectual property rights, both domestically and internationally, is critical to the nation’s economic future, millions of jobs, and the health and well-being of consumers all over the world.  Therefore, the federal government must to continue to work with its trading partners, and India in particular, to ensure that intellectual property is respected and protected. 

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