The WTO's Agreement on Trade-Related Aspects of Intellectual Property Rights sets out the kind of protection that different kinds of innovation should receive (for example, books must be protected by copyrights, industrial processes must be covered by patents), and holds all WTO members to the same minimum standard of protection. The Agreement is unique among the WTO rules in that it is positively proscriptive. That is, all other WTO rules describe what countries should not do, whereas TRIPS describes what countries should do.

Intellectual property rights are patents, copyrights or other means of protecting an innovator's exclusive ability to control the use of his or her innovation for a specified period. During that time the intellectual property rights holder will usually try to market and sell the idea, seeking to recoup his or her investment in research and development. Intellectual property rights trade off the welfare of the innovator, whose efforts deserve compensation, against the welfare of society at large, which would benefit by having unlimited access to the innovation. For sustainable development, properly balancing that trade-off is crucial. Innovations, whether in energy efficiency, new medicines or improved agricultural varieties, are at the heart of sustainable development, but they do little good unless they are widely disseminated.

How do strong intellectual property rights, such as the WTO TRIPS Agreement, affect that balance? On the plus side, they may help ensure that more innovation will take place. Without the guarantee of such protection, who would bother to spend millions of dollars developing, for example, new software or new drugs, which could then be copied at will by others and distributed at minimal costs? (Intellectual property tends to have very high costs of development, but low costs of reproduction once developed.)

Strong intellectual property rights also help new technologies—the products of innovation—get disseminated. Technology transfer is usually a commercial venture, and happens through a number of means:

• Direct investment (for example, building a factory);
• Joint ventures with domestic firms;
• Wholly owned subsidiaries;
• Licensing (selling the rights to use the technology);
• Training and information exchanges; and,
• Sales and management contracts.

Innovators will be more comfortable using these mechanisms in countries that are obliged to enforce strong protection of intellectual property rights. That obligation assures them that their innovations will not be freely pirated. So strong intellectual property rights increase the willingness of firms to disseminate their technologies in countries that adopt them.

On the negative side, TRIPS-style protection of intellectual property rights can have a number of undesirable effects. First, if it is too strong, it tilts the balance too far toward the innovator. Critics of the TRIPS Agreement argue that its long terms of protection—20 years for patents and other intellectual property rights—over-reward the intellectual property rights holders, and punish the public by keeping the protected good too expensive for too long. Overly strong protection may thus slow down the spread of new technologies. Improperly applied, it may also stifle innovation; section 5.7.2 on agriculture gives examples of how this might work. Finally, TRIPS-style protection may work against sustainable development objectives by making goods such as pharmaceuticals more costly and less accessible to the poor. Several developing countries, when implementing TRIPS, have had to dismantle domestic industries based on cheap copying of foreign-patented drugs, forcing up prices dramatically. Patents in some of those countries used to protect only the process used to make a product, not the product itself, so it was legally possible to make the same drug in a slightly different way without paying royalties. But TRIPS demands product patents as well as process patents, putting an end to this kind of production.

Recognizing the potential negative effects from granting intellectual property rights, TRIPS contains an exception whereby WTO members are not obliged to grant patents for products or processes where "the prevention within [national] territory of [their] commercial exploitation ... is necessary to protect ordre public [law and order] or morality, including to protect human, animal or plant life or health or to avoid serious prejudice to the environment." This may be an important exception for the environment but it is not well defined, never having been tested.

The sections that follow will examine the implications of intellectual property rights and the TRIPS Agreement for efforts to preserve biodiversity, and to promote sustainable agriculture.

5.7.1 TRIPS and the CBD