[A2k] Speakers warn against patent harmonization at WIPO Forum

[Sangeeta]

SUNS #5978 Friday 3 March 2006

Speakers warn against patent harmonization at WIPO forum

Geneva, 2 Mar (Sangeeta Shashikant) -- Several speakers at the opening day
of the WIPO open forum on its draft Substantive Patent Law Treaty (SPLT)
warned about the dangers of the global harmonization of patent laws that the
SPLT is aiming at.

They warned that there were serious problems with the quality of patents in
developed countries, and if the SPLT is based on that system, it would
"export a dysfunctional system to the rest of the world". Some of them
suggested alternative ways of approaching intellectual property and
innovation that are more suitable for developing countries.

The speakers who cautioned against the upward harmonization of the patent
regime included Nobel Prize winner Sir John Sulston, Professor Jerome
Reichman from Duke Law School, and Prof. Carlos Correa of the University of
Buenos Aires.

The three-day forum, which started on Wednesday (1 March), was mandated by
the WIPO General Assembly to discuss issues related to the draft SPLT in an
attempt to break the impasse in the negotiations in the treaty.

The forum was opened by Philippines Ambassador Enrique Manalo, the Chair of
the 2005 WIPO General Assembly, and Francis Gurry, Deputy Director General
of WIPO. Ambassador Manalo said he had held consultations to draw up the
program which aimed to have geographical balance and that the forum is
designed to give a broader understanding of the issues involved in the SPLT.

The first speaker, Nobel Laureate Sir John Sulston of the Human Genetics
Commission, said that his experience in the human genome project highlighted
tensions between the public and private sectors "over whether the human
genome sequence should be freely released". Sulston noted that harmonisation
of IP is desirable in that it simplifies the process, and avoids duplication
in the work of patent offices, but it may not be so good for the rest of us,
the ultimate users of the results, and for all patent holders equally.

He added that the world is diverse, and we are not yet in a position to
agree easily on the details of the ideal system, as solutions need to be
effective overall, not just for the few. Balance is needed between developed
and less developed countries, discovery and exploitation in science, private
and public interests, free release and monopoly.

Sulston also stressed that patents are only one instrument of incentive
among many and should exist in balance, adding that most of the great
discoveries of science were not made with IP in mind at all but for fun and
the joy of exploration.

He cautioned against giving patents too much credit for industrial success.
He added that generally developing countries that have shown the fastest
economic growth are those that retained relatively protected markets until
they reached a position of strength and the same is the case for Europe and
the US a century ago. "Regrettably, harmonisation is a way for those who
have already arrived at a prosperous situation to pull up the ladder and
stop others joining them."

Sir Sulston noted that given the imperfections of the patent system,
harmonisation should not be "the first thing to think of and indeed may do
more harm than good". The diversities of national law and practice are
needed to make the system bearable particularly with regard to less and
least developed countries. He also added that the flexibilities of TRIPS are
good on paper but difficult to apply.

Harmonization, "is obviously desirable in the long term provided at the same
time the world becomes egalitarian", he added. He favoured gradual and
piecemeal introduction where there is mutual benefit.

Progress, he said, will be greatly helped by restoring the remit of WIPO to
promote creative activity as a whole rather than being entirely focused on
the policing of existing IP law. Some, he said, saw these themes as
diversions from the real business of WIPO, but he saw it as a "positive
impetus taking on board the range of existing and proposed instruments for
handling IP."

He gave the examples the General Public License of the Free Software
Foundation, CAMBIA's Biological Innovation for an Open Society (BIOS) open
licences adapted for patent technologies in the life sciences, Creative
Commons, and the WHO resolution submitted by Kenya and Brazil which
"proposes better methods for handling IP in biomedical research and
development".

He added that the US and EU efforts to negotiate bilateral agreements are to
bypass international treaties and to promote stringent IP relationships with
a number of smaller countries. The irony is that these free trade areas are
a "return to old systems of most favoured nations and indeed imperialism".
"It's a disturbing development, and needs a collective response", he added.

He concluded that "simply heading uncritically down a road of more and
stronger exclusivity is wrong for many of us: wrong for science, wrong for
many small businesses, wrong for reducing the poverty gap. Wrong indeed for
our very survival - for injustice breeds discontent wherever it comes from".

Kenji Kamata, a leading member of the Japan Intellectual Property
Association, spoke on how the patent system was an indispensable part of
industrial advancement and the importance of international harmonization of
the patent system for the industrial development in the world. The benefits
of harmonisation include improving the patent quality, timely examination,
reduction of costs in applying a patent and elimination of duplication of
patentability examination.

He said that the harmonization process should focus on the four issues of
definition of prior art, grace period, novelty, non-obviousness/inventive
step, which is the US-EU-Japan proposal in the SPLT.

At question time, Brazil asked why the developed countries did not harmonize
among themselves if that is the way they wanted to go, and why should they
insist that it take place in developing countries as well?

An official of the Danish Patent and Trademark responded that there had been
several meetings in WIPO and it was looking forward to harmonization, for
the benefit of the users.

A representative from Third World Network commented that what was important
for development is "policy space". She said that a study commissioned by the
IPR commission set up by the UK revealed that in Japan, food, beverage,
pharmaceutical products and chemical compounds were excluded from the scope
of patent protection until 1975 and there were other features such as that a
patent application must be limited to a single narrow claim (until 1988).
Studies also confirmed that the weaker patent system employed by Japan
facilitated its absorption and transfer of technology by allowing reverse
engineering.

She pointed out that because of this policy space, Japan was able to put in
place policies suitable to its needs and to build its capacity.
Unfortunately, the developing countries now have a shrinking of their policy
space, due to the TRIPS Agreement which has led to a significant harmonizing
of IP standards.

What is being negotiated in the Draft SPLT treaty is the "dissolution of
policy space" as it aims at further upward harmonization of IP policy, going
very much beyond the TRIPS Agreement. This will result in a
one-size-fits-all law, irrespective of individual countries' level of
development. She did not see how this treaty will be beneficial to
developing countries.

Chile said that harmonization was being advocated on the grounds of
efficiency, but asked what is the argument for asking countries to change
their IP norms.

To both these questions, Kamata simply said that IP does increase the entry
of foreign technologies and stressed the importance of harmonization for
increasing efficiency.

Narendra Zaveri, an advocate from India, asked whether developed countries
were willing to raise the standards of patentability because otherwise
trivial patents will lead to chaos for their system.

In another morning panel, the discussion on international patent law
harmonization continued. Jonathan Zuck, President of the Association for
Competitive Technology, said the small and medium sized enterprises (SMEs)
want fewer but better quality patents. SMEs need from the system "access and
predictability." Predictability means that if a patent is granted it is
worth something and if it granted to someone else it will be a good patent.

Daeshik Jeh, director of the Korean Intellectual Property Office, made the
case that stronger IP protection is linked with economic growth. Korea
introduced the modern IP system in 1961 and enhanced the system in the 1980s
and after, and patent applications increased along with growth since the
1970s. The negative effect of the IP system was that large amounts of
royalties had to be paid; on the positive side is the increase in the ratio
of technology export to technology import. Korea is in favour of
harmonization of patent laws.

Professor Jerome Reichman from Duke Law School, USA, said that he was deeply
sceptical of the Draft SPLT treaty. It is both unwise and premature to
undertake another major substantive patent harmonization barely 10 years
after the TRIPS agreement.

He said that it would have adverse impacts on developing countries which
have just begun to absorb the social costs of higher standards in TRIPS and
they stand to lose most of the flexibilities in the TRIPS Agreement by
engaging in the SPLT process. He gave the example of the low standard of
"non-obviousness" in the draft SPLT, and this would be imposed on developing
countries.

He added that no one in the developed world at the moment really knows what
a proper functioning patent system for the 21st century should look like.
This can be seen in the tensions among developed countries with regard to
just a few basic issues under the SPLT, such as the novelty,
non-obviousness, and research exemption, as well as the growing difference
in the treatment of compulsory licenses.

There is agreement that the US patent system is in a mess, he said, quoting
numerous studies. For example, a book by Jaffe and Lerner complained that
the US is handing out patents to anyone who asks for one, resulting in a
trend that "now undermines rather than fosters the crucial process of
technological innovation". This trend is particularly acute in biotechnology
and software patents.

He added that upstream patenting on experimental science has led to
difficulty, with serious disruptions of biotech research efforts due to
patent thickets, anti-commons effects and refusal to share research data or
materials. He quoted studies that show that patents are actually decreasing
the incentive to invest in innovation.

The amount of litigation has also tripled between 1987 and 1997, and the
costs of patent litigation now outweighs the value of patents to owners by
about 2%, constituting a tax on overall research and development investment.

On alternative regimes, he said there should be examination on the need to
supplement the patent system with new kinds of intermediate or second tier
protection systems more attuned to present day technological realities than
either full patent protection or utility model laws.

He said we have entered a new technological epoch, in which experts have
only tentative and divergent ideas about how to treat business methods,
software patents, DNA patents, bioinformatics, small molecule compounds,
micro-arrays and diverse other novel technologies.

At best, Reichman added, we are operating with a set of rudimentary working
hypotheses that different countries are putting to the test and the focus
should be on the experimentations and new empirical findings based on the
TRIPS standards. What is needed is not a closed-minded, premature adoption
of standards based largely on ignorance and power politics that would in
effect "export a dysfunctional system to the rest of the world".

WIPO, he said, should consider many other issues or initiatives such as
dissemination of information about weak or bad patents, possibilities of
defensive patenting, and facilitate open source and similar collaborative
undertakings, identify and study different patent trends and practices that
are emerging in both developed and developing countries to test empirically
the different approaches to critical new technologies, etc.

In another panel on Prior Art-Related Issues, the speakers were Ms Anne
Rejnhold Jorgenson of the Danish Patent and Trademark Office, Professor
Carlos Correa, Director of Faculty of Law and Social Sciences of University
of Buenos Aires, and Ms Begona Venero of the Peruvian Institute for the
Defense of the Consumers, Competition and IP.

Jorgenson favoured having an SPLT treaty saying that otherwise it would be
detrimental for users, especially small companies with limited resources.
Patent offices were frustrated with the complexity and dissimilarities of
the various patent systems. She added that harmonization in the definition
of prior art, novelty and inventive step is in the interest of users.
However, any kind of harmonization instruments including best practices and
opt out clauses should be carefully considered thus allowing all parties to
adhere to the instrument when they feel ready to do so.

Speaking on "inventive step", which is a crucial issue targeted for
harmonization, Correa said the draft SPLT proposed a low standard for
determining what was an inventive step. The claimed invention would be
assessed against the general knowledge of an ordinary skilled person, not
the specialized knowledge in a field of technology.

One question is how to define a person having ordinary skill. Even in the
US, many of the patents that were challenged in courts were found to be
invalid, and on appeal many of the original decisions were also revoked.
Thus, even in the US there was not an agreement on how to define an ordinary
skilled person. It was difficult then to apply the definition or standard
internationally.

He added having low standards of patentability would overload patent
offices, increase litigation, promote ever-greening of patents, permit
aggressive abuse of the patent system, and result in less competition and
negative impact on social policies such as access to medicines.

He also said that a global patent policy should increase the level of
inventive step in order to reduce overload in patent offices, to reward
genuine contributions, improve patent quality and raise R & D in industries.

He questioned whether the SPLT treaty is the best way to achieve WIPO's
objectives as it does not address the problem of opportunistic patenting and
abuse of the system. He asked whether the SPLT is desirable, since it could
lead to there being less room for the design of innovation policy and
adaptation to levels of development, to patent proliferation and less global
competition and innovation in developing countries.

Correa proposed an alternative agenda, which discourages the proliferation
of opportunistic trivial patents, improves patent quality and the public
domain, differentiate according to innovation systems and countries' use of
the system in line with their economic growth.

Begona, speaking on the treatment of traditional knowledge in the definition
of prior art, gave examples of 3 patents granted in the US on a genetic
resource that is traditionally known in Peru. He said the definition of
prior art should take into account traditional knowledge in written and oral
forms in any part of the world. The patent system should not be used to
validate piracy of genetic resources.

During discussion, a participant said that the European patent system had
harmonized the systems of its members, removing many differences, thus
showing that harmonization is desirable. The idea of harmonization came from
users of the system and "we work for users", he said.

Another participant rebutted that point, saying that the users' interest is
secondary. The patent system is an incentive system, and the real interest
is to generate output, and to qualify to use this system certain criteria of
patentability have to be fulfilled.

This view was supported by Correa who said that it is mistaken to believe
that patent offices should be working with users. It should work for the
public good. Those working on patents should change the way they see the
issue and their paradigm of the IP system.

Another participant, Professor Fred Abbott, said that there seems to be
consensus that there is a problem with patent quality in developed
countries. The current draft of the SPLT really mirrors the developed
country standards, and so how will harmonization improve the patent quality?

The US challenged this, saying there is no such consensus about patent
quality. There have only been a number of criticisms on individual cases.

Correa said that the US seemed to have confirmed that the proponents of
harmonization had the hypothesis that the process of harmonization will be
based on standards currently existing and there is no systemic problem with
these standards. He added that proponents of harmonization have to clarify
on which standard should the harmonization be based since there are many
different standards within or between the countries.

Jorgenson responded saying that in a system that is handled by humans there
will always be mistakes and this problem will not be overcome by the
harmonization process.

Another participant insisted that the US government had studies, in
particular the study by the Federal Trade Commission in 2003, which showed
that the quality of patents granted in the US is questionable. She said that
a study on litigation cases revealed that 72% of cases filed were won by
generic companies, an indication of the quality of patent that have been
granted.

In the final session, on the Disclosure of Origin of Genetic Resources,
Joshua Sarnoff said that in any further initiative to harmonize substantive
patent laws, the issue of mandatory disclosure of origin requirements should
be addressed. This is because the patent system itself should deter rather
than reward and perpetuate unjust conduct.

Individuals, indigenous peoples and governments from which genetic
resources/traditional knowledge has been acquired illegally should not have
to shoulder the entire burden of preventing and remedying unjust conduct but
rather the patent system should take some responsibility to address unjust
conduct. Moreover, mandatory disclosure will help to develop and potentially
to harmonize the complex legal and equitable principles that govern rights
to own and to benefit from patents.

He added that issues about patentable subject matter, wide scope of claims,
experimental use/academic use/product regulatory approval use/fair use,
relationship of patent laws to other laws, compulsory licensing, government
use and injunctive remedies, patent misuse and contractual license
restrictions, and patent terms should be carefully addressed to better
assure that technological and scientific progress is not impeded.

Yin Xintian, Director General of Legal Affairs in the China IP Office, said
that the improvement of the patent system should not only focus on
increasing efficiency but on a more important goal, to "contribute to the
promotion of technological innovation and to the transfer and dissemination
of technology, to the mutual advantage of producers and users of
technological knowledge and in a manner conducive to social and economic
welfare and to a balance of rights and obligations (Article 7 of TRIPS)".

He said it is sensible to limit properly the scope of the future discussion
(in the WIPO patents committee) but the topics should include at least some
of the issues of concern to most developing countries. He proposed that the
disclosure of origin issue be a top priority in the SCP.

Two of the other speakers, Benjamin Zycher from Pacific Research Institute
and Andre Bourgouin from Corporate Intellectual Property, were not in favour
of having disclosure of origin of genetic resources in patent applications.
+