FTAA sign-on IP position paper

[James Love <love@cptech.org>]

-     Draft Sign-On Position Paper

-    For the Free Trade Area for the Americas (FTAA) Working Group 
     On Intellectual Property Rights, Fourth Trade Ministerial And 
     Americas Business Forum, San Jose, Costa Rica, March 1997
     (Document on Web at http://www.cptech.org/ip/draftipwg98.html)

      Jamie Love <love@cptech.org>

Introduction

The Free Trade Area for the Americas (FTAA) is a proposed trade
agreement for the Western Hemisphere, which is like a super NAFTA. 
There are currently 34 countries involved in the negotiations.  Like
NAFTA, the GATT and other international trade agreements, it will
largely be focused on non-tariff issues.  Some journalists continue to
write about these trade accords as though the were turn of the century
agreements about tarriffs, but this misses the larger and more important
issues. 

In 1998 there are several important negotiating meetings, including
meetings of trade ministers and their staffs, plus the so-called
"Business Forum," which will be held in San Jose, Costa Rica on March
16-18, 1998. The process for the FTAA negotiations is anything but
open.  Many of the key documents and papers  have not been released to
the public, and hardly anyone is aware of that the negotiations are
taking place.

The Business Forum is for the public, and in theory are open to anyone. 
The Business Forum is organized into 13 working groups, including
working groups on Intellectual Property Rights, Investment, Services,
Competition Policies, Government Procurement, Sanitary and Phytosanitary
Standards, and other topics. 

I attended last year's Business Form meeting in Belo Horizonte, Brazil,
where I distributed a paper to the Working Group on Intellectual
Property (http://www.cptech.org/pharm/belopaper.html).  I was permitted
to participate in the discussions.   The public sessions are called the
"Business Forum," and most of the non-profit organizations are trade
groups.  Of the 2,500 delegates attending the Business Forum, I did not
meet another person representing a consumer or environmental group.  
Most of the attendees represented very large firms. The two leaders of
the working group on Intellectual Property Rights worked for
pharmaceutical and biotechnology firms.  Surprisingly, the firm with the
largest number of representatives at the IPR working group was
Microsoft, which was pushing an aggressive anti-piracy agenda that
included "special forces" for copyright violations, special IP courts,
and provisions that would give private corporations the right to obtain
warrants to search for unregistered software or other copyright
violations.  These provisions have strong support among the U.S. trade
negotiators. 

You can find some information about the FTAA process on the Web.  The
Organization for American States has some information at:
http://www.sice.oas.org/Ftaa/Belo_e.stm (no period), but it is not very
complete, and omits many controversial issues which were are being
discussed. Information about the Costa Rica meetings are also on the Web
at: http://www.alca.co.cr/indexi.htm (no period).

The deadline for submission of Working Group position papers was January
31, 1998, but it was just extended to February 15, 1998, after criticism
that few persons were informed of the deadlines.  February 15, 1998 is
also the putative deadline for registration, however, last year, this
too was extended.  

CPT has drafted a set of positions to present at the IPR Working Group
on (I) IP and health care, (II), information technologies, copyright and
neighboring rights, and (III) general IP issues.  The way the process
works, groups typically jointly submit comments, to demonstrate a
broader base of support.  We are seeking endorsements of these
recommendations from other groups.  However, since our recommendations
cover a wide range of topics, we don't expect blanket endorsements, but
rather endorsements of particular points.  For example, to endorse the 
position that  "Legislation to protect copyrights or neighboring works
should seek solutions which are least invasive of personal privacy," a
firm or group would endorse draft position II.2.  Those who are not
concerned with health care should skip to sections II and III, which are
relatively brief.
                                
Individual's cannot submit position papers, but just about any private
sector business or organization can, no matter how large or how small.

I would appreciate very much endorsements of any of our draft IP working
group positions, and I also encourage groups to write their own position
papers, for any of the working groups.  These may be/ sent by as a word
processing file (WordPerfect format), as an attachment to electronic
mail, to: oduran@cariari.ucr.ac.cr (no period).  As noted above, the
deadline is February 15, 1998.

                                            
           James Love
           Consumer Project on Technology
           love@cptech.org  | http://www.cptech.org
           202.387.8030; fax 202.234.5176
 

I.      Selected Recommendations for Healthcare and IP 

1.   Intellectual property regimes for healthcare should achieve public
health goals. It is not appropriate to treat healthcare is a matter of
commerce only. 

2.   In the area of healthcare, the focus of trade agreements on
intellectual property should be the equitable and reasonable sharing of
the costs of research and development, rather than the particular
mechanisms for R&D support, such as patents or exclusivity marketing
provisions.

3.   An important measure of equitable sharing is per capita
expenditures on healthcare R&D. Countries with higher per capita incomes
should assume higher burdens for R&D expenditures. 

4.   Countries should have discretion to choose mechanisms that raise
per capita R&D expenditures.   R&D by commercial firms is important, but
so is R&D spending by governments, non-profit entities and other public
health entities.

5.   Policies should encourage R&D for pharmaceuticals and other new
therapies and medical devices, as well as items less likely to attract
private investment.  There are important market failures in R&D. 
Research on basic medical science, adverse reactions to pharmaceuticals,
dietary practices, appropriate technologies for rural healthcare,
epidemiology, therapies for low income patient groups, and more
generally, research which is not likely to lead to profitable
inventions, is also important.  Public health goals reflect research
priorities which differ in important respects from investor priorities. 

6.   Countries should have discretion to limit or eliminate patent
protections for areas of public interest, such as healthcare or life
forms. 

7.   Countries should have discretion to use compulsory licenses to
achieve public interest goals.  This is particularly important in
complex fields of technology, where inventions are essential inputs for
other inventions.

8.   Countries should have discretion to require minimum levels of
reinvestment in healthcare R&D.  A program of minimum reinvestment in
R&D, or a required contribution to a national R&D program (as has been
proposed by the U.S. Senate) may achieve fair burden sharing for R&D.

9.   Countries should avoid overbroad patents and other approaches which
discourage innovation and lead to anitcompetitive practices. 

10. Protection of trademarks should not be interpreted a limitation on a
government's ability to regulate marketing of products or services. In
the area of healthcare, governments clearly have the power to require
plain paper packaging of cigarettes, bar billboard ads for cigarettes or
alcoholic beverages, require standardized packaging of infant formula,
promote generic drug use, and other matters which protect the public's
health. 

11.  "Sweat of the brow" protections for health care research should not
be excessive, or create inappropriate anticompetitive barriers to entry.
Protections based upon investment, rather than genius, should be limited
to avoid anticompetitve effects, and subject to compulsory licenses,
where licensing fees are related to the costs (and risks) of the
unpatented research.   Firms seeking sui generis marketing exclusivity
for unpatented investments in research should be required to make
financial disclosures about investments which receive exclusivity
marketing privileges.  Such disclosures are needed to evaluate the
reasonableness of the exclusivity privileges.
        
12. A blanket five year period of exclusivity for reliance upon health
registration data is excessive.
        
13. Health registration data should be disclosed to the public,
following the principles presented by the International Working Group on
transparency and accountability in drug regulation.

14. Patent, copyright and trademark provisions of the FTAA should not
create barriers to parallel imports.  Parallel imports of
pharmaceuticals are particularly important for smaller economies which
suffer from inadequate competition.  (See CPT's October 16, 1997
comments to the Portfolio Committee on Health, Parliament, Cape Town,
South Africa, on the Medicines and Related Substances Control Amendment
Bill and South African Reform of Pharmaceutical Policies, on the web at:
http://www.cptech.org/pharm/sa/sa-10-97.html).

15. Patent or other IP rights should not be used to prevent persons from
engaging in health care research.  When necessary, governments should
provide for policies on material transfers or compulsory licenses which
expand opportunities for medical researchers.

16.  Patents should not be issued for surgical procedures or doses of
medications.


II  Information technologies, copyright and neighboring rights


1.   The Internet and other digital information technologies pose new
issues for copyright and neighboring rights.

2.   Legislation to protect copyrights or neighboring works should seek
solutions which are least invasive of personal privacy.

3.   Legislation to protect copyrights or neighboring works should avoid
barriers to the development of new information technologies.

4.   Legislation to protect copyrights or neighboring works should
protect non-commercial and commercial fair use.  Countries should be
given wide latitude to define fair use rights for educational and
research purposes, including non-commercial distance education programs.

5.   Efforts to protect "sweat of the brow" investments in databases
should not create ownership of facts, create excessive terms or scopes
of marketing exclusivity, authorize anticompetitive licensing practices,
or exclude fair uses of data.

6.   Efficient development of information technologies are enhanced by
policies which promote interoperability of computer and
telecommunications software and hardware. 

7.   Competition authorities should discourage anticompetitive software
licensing practices and other monopolistic practices.

8.   Mass market "shrink-wrap" or "click-on" licenses should not be
permitted to include anticompetitive provisions.  For example, mass
market licenses should not be permitted to contain restrictions on
reverse engineering, nondisclosure clauses, or restrictions on the use
of the product that stop the customer from creating a competing product.
(This recommendation adopted Cem Kaner, "Restricting Competition in the
Software Industry: Impact of the Pending Revisions to the Uniform
Commercial Code," Presented to the Appraising Microsoft conference,
Washington, D.C., November, 1997, on the web at: 
http://www.badsoftware.com/nader.htm).

9.   Avoid problems associated with overbroad patent or copyright
protection, and anticompetitive barriers to the development of
interoperable works.  Here it is useful to quote from the May 1996 U.S.
Federal Trade Commission staff report, Competition Policy in the New
High-Tech, Global Marketplace:

          Some participants expressed concern that 
          overbroad copyright scope might either 
          create disincentives for, or erect roadblocks 
          against, follow-on innovation. One computer 
          industry representative found overbroad copyright 
          scope "harmful to progress because software, more 
          than anything, is a series of inventions piled on 
          top of each other."[77] Another emphasized that 
          broad copyright scope can create a risk of 
          "overcompensation" in the sense that "[a]n author 
          or inventor with too broad a monopoly over a work 
          can seek compensation from authors of inventors of 
          [interoperable] works, driving up the cost of such 
          works, [and ultimately] resulting in fewer works 
          being produced."[78] Others suggested that broad 
          scope could thwart efforts to enhance interoperability, 
          which would in turn impact the growth of computer 
          networks, the anticipated source of substantial 
          innovation in the near term.[79] Some suggested 
          that the owner of a software copyright should be 
          prevented from enforcing its copyright as to the 
          interface, especially once that interface has become 
          a standard,[80] or they advocated compulsory licensing 
          of interface standards that dominate the market.[81]  
          [Footnotes are reported in original, and in CPT's 
          1997 position paper].   See: Anticipating the 21st 
          Century: Competition Policy in the New High-Tech, 
          Global Marketplace, a Report by the Federal Trade 
          Commission Staff, Vol. 1. May 1996.  The entire report 
          is on the Web at:  http://www.ftc.gov/opp/global.htm (no 
          period).



III  General IP issues

1.   Trademark, copyright or other IP rights should not be used to
discourage criticism, parody, or free speech.
        
2.      Patents should not be used to protect business practices from
competition.  Examples of business practices which have received patent
protection in the United States are bonds which base interest payments
on particular forms of inflation (U.S. Patent No. 4,839,804, "Method and
apparatus for the funding of a future liability of uncertain cost"),  or
the use of federal tax loopholes to minimize the costs of the loans from
pension fund assets (Patent No.5,206,803, for a "System for enhanced
management of pension-backed credits").  Business practices patents are
inappropriate and anticompetitive.


-- 
James Love
Consumer Project on Technology
P.O. Box 19367, Washington, DC 20036
love@cptech.org | http://www.cptech.org
voice 202.387.8030, fax 202.234.5176