January 30th, 2007

Thailand: Regressing on innovation and betraying their King’s legacy

Posted in  Health Care  Intellectual Property  Trade 
Author: Tom Giovanetti || Location: Lewisville, Texas, USA

Thailand is almost unique among developing nations in that the country's leadership has generally valued economic growth driven through innovation and protected by intellectual property.

Until lately, that is.

The King of Thailand, His Majesty King Bhumibol Adulyadej, is a noted musician, bandleader and composer. He holds numerous patents, copyrights and trademarks, and is the creator of over 1,000 creative works.

His Majesty the King feels very strongly about the importance of intellectual property:

His Majesty addressed the issue of intellectual property by stressing the importance of patent and copyright. The Department of Intellectual Property should support those with creative minds and encourage beneficial use of the intellectual property. His Majesty added that many items can be registered and people should do so. It is necessary to embark a new approach to development, that is to development, that is to develop the registration. with the intellectual property, Thai people will prosper.

The King has passed on a tradition of respect for innovation and intellectual property. His daughter, Professor Dr. Her Royal Highness Princess Chulabhorn Mahidol, is President of the Chulabhorn Research Institute, a major biotech research facility with significant funding.

Thailand has a strong intellectual property regime. Patents granted by the Thai Patent Office are valid for up to 20 years.

In fact, Thailand is considered such a shining example of intellectual property in the developing world that, just yesterday, the Thai King received the World Intellectual Property Organization's (WIPO) first Global Leaders Award. From the press release:

As an inventor and an artist, His Majesty is a strong advocate of intellectual property, owning over 20 patents and 19 trademarks. Many of his inventions have generated concrete benefits for Thai communities, having been put to practical use in a range of rural development projects in Thailand. His Majesty was granted his first patent in 1993 for a system to resolve water shortage problem in the dry season, making him the first member of the royal family to obtain a patent. His Majesty is also a recognized and prolific artist, having created over 1,000 works, including paintings, photos, musical and literary works such as songs and novels.

One must ask, then, why Thailand has suddenly stopped respecting the intellectual property of others, and has begun an official policy of stealing intellectual property in the form of compulsory licensing.

A compulsory license is a legal device that allows governments to take intellectual property by force, without the consent of the property owner.

On November 29, 2006 (two days before World AIDS Day), Thawatch Soontarajarn, the Director General of Thailand's Department of Disease Control, released his plan to seize the patent of Merck's AIDS drug Stocrin®. In the process, the Director General claimed:

"In other words, the government has a right to use any patent right for public health services."

Now, while the whole idea of compulsory licenses is harmful and destructive to innovation and economic growth, governments' efforts to combat AIDS and treat their HIV-positive populations certainly garner sympathy. In fact, that's why the relevant international agreements contain a provision that allows for compulsory licenses for public health emergencies.

Thailand could undoubtedly have negotiated a favorable pricing structure with Merck for access to Stocrin®. Let's face it: With the weapon of compulsory licensing at their disposal, countries have pharmaceutical manufacturers over-the-table, so to speak, in the negotiation process. But Soontarajarn seems to have put very little effort into attempts to negotiate.

But notice that Soontarajarn didn't use the public health emergency justification for this compulsory license. In fact, he asserted that they could take "any patent" so long as it was used for public health services.

In case you were wondering if he was serious about "any patent," he was. In fact, Thailand seems to be going crazy with compulsory licenses. On January 24th, Soontarajarn announced the seizure of Abbott’s AIDS drug Kaletra®, and the next day on sanofi-aventis’ drug Plavix®. Many more will likely follow.

Beyond the affront to the international patent regime caused by these seizures, what is particularly notable is the compulsory license on Plavix®, which is a drug for heart disease. So now we’ve moved from drugs necessary for treating the health emergency of AIDS, and are squarely in the realm of a willingness to seize “any drug.” Is Viagra® next?

Why is Thailand acting in such a malicious way toward the intellectual property of others when the country claims to care so much about intellectual property? A later blog entry will delve into that more. But for one thing, the King isn't in charge.

A military junta is in charge of Thailand since a September 2006 coup. The military cancelled the upcoming elections, suspended the Constitution, dissolved Parliament, banned protests and all political activities, suppressed and censored the media, declared martial law, and arrested Cabinet members.

Obviously, Thailand’s new military rulers don’t get democracy, much less what it takes to facilitate a thriving innovation-based economy.

I wonder if Thailand’s new rulers understand that they are simply being used by a cadre of international anti-pharma and and anti-IP activists who are constantly haranging countries to issue compulsory licenses? Thailand is a pawn in a campaign to undermine IP and pharmaceutical companies, which these activists in their moral confusion have determined are unsuitable.

Perhaps Thailand sees these attacks on the IP of Western countries as a chance to gain political points with their domestic population and make a popular anti-Western rhetorical point at the same time.

After all, Thailand is just hurting companies like Merck, sanofi-aventis and Abbott, right?

No. Thailand is mostly harming . . . Thailand. As Thailand becomes an international economic pariah by stealing intellectual property and implementing capital controls, foreign investment in Thailand will be reduced. The Director General of Thailand's Department of Disease Control has just raised the risk premium on pharmaceutical R&D, which affects the entire world, not just Thailand or the U.S.

But even worse, the King's efforts over many years to transform Thailand into a center of research and innovation will be undermined, as the rest of the world will interpret these compulsory licenses as attacks on the rule of law and on property as the basis of economic growth.

The King of Thailand had the country on the right path, at least as far as intellectual property is concerned. It's unfortunate that the military rulers of Thailand seem bent on undermining all his work over many years.