TWN Info Service on WTO and Trade Issues (May05/7)

11 May 2005

WIPO seminar debates intellectual property and development
An international seminar on Intellectual Property and Development held at the World Intellectual Property Organization (WIPO) on 2-3 May 2005 discussed the theme "intellectual property and public policy", with sessions on public health, biodiversity and traditional knowledge, copyright and competition policy.

The two-day seminar was mandated by the WIPO General Assembly last October, as part of the activities of the Development Agenda for WIPO initiative taken by several developing countries.

Below is a report on the first day of the seminar. We will also send out a report on the second day separately.

With best wishes
Martin Khor


WIPO seminar debates intellectual property and development

By Meena Raman, Geneva, 3 May 2005

An international seminar on Intellectual Property and Development held at the World Intellectual Property Organization (WIPO) on 2 May discussed the theme "intellectual property and public policy", with sessions on public health, biodiversity and traditional knowledge, copyright and competition policy.

The two-day seminar is organized by WIPO jointly with the UN Conference on Trade and Development (UNCTAD), the UN Industrial Development Organization (UNIDO), the World Health Organization (WHO) and the World Trade Organization (WTO). The holding of the seminar was mandated by the WIPO General Assembly last October, as part of the activities of the Development Agenda for WIPO initiative taken by several developing countries.

In a session on public health, Sisule Musungu of the South Centre drew attention to the WIPO Development Agenda and the submission by the Group of Friends of Development that stated that WIPO must address all features of existing IP rights, including the economic and social costs that IP protection may impose on developing countries, as well as on consumers of knowledge and technology. WIPO must also consider alternative non-IP systems for fostering creativity, innovation and the transfer of technology while recognizing the benefits and costs of each system.

In taking the WIPO Development Agenda forward on public health issues, Musungu stressed the need for WIPO to establish principles and guidelines to safeguard the protection of public health; technical assistance on developing principles and guidelines to ensure public health-sensitive policies and laws; and to have evidence-based objective analysis through a proposed WIPO Evaluation and Research Office.

Richard Wilder, a US lawyer, spoke on the development of medicines for developing country diseases and the role of IP. "When diseases afflict mainly patients in developing countries, the free market may not support the development of a new medicine, even with patents and data protection," he said.

Pointing out that of 1,393 medicines approved between 1975 and 1999, only 13 medicines were for the treatment of neglected diseases that most impact developing countries, he advocated "public-private partnerships" to develop medicines for neglected diseases to be made available at lowest cost. He spoke on IP as "a tool to manage public-private partnerships to develop medicines for the treatment of neglected diseases."

William Hare, a lawyer for the Indian drug company Ranbaxy Laboratories, said the newly amended Indian Patent Act has struck a balance between protecting public health interests and the promotion and protection of innovation. Hare said that the amendments provided stricter patentability criteria, pre-grant opposition and compulsory licensing provisions, adding that "India's ability to be a supplier of cost-competitive drugs to the developing world has been safeguarded."

Mohga Smith, Health Advisor of OXFAM UK, said that in the light of serious health crises in the developing world, peoples' needs should dictate research and development &D) for medicines, especially for neglected diseases, and pricing mechanisms to ensure peoples' access to medicines. "There is a need for another model away from IP protection to ensuring R&D in new medicines," she said.

In advancing the WIPO Development Agenda, she called for IPRs to be seen as only one means to innovation and not an end in itself. She said that there was resistance in WIPO to change but WIPO needs to wake up to the realities. "There should be no more high standards for IP rights in developing countries, and there is a need to look at the implications of the TRIPS agreement before imposing higher standards," she added. "In the longer term, TRIPS needs to be reformed according to health and development needs."

On biodiversity and traditional knowledge, Graham Dutfield from the Queen Mary IP Research Institute in the University of London said that from the 1980s, the knowledge, innovations and practices of indigenous and local communities have been barely tapped as a source of technologies. However, said Dutfield, patents, copyrights and other currently existing IP formulations are inadequate in providing positive protection for traditional knowledge and technologies, and in some ways also make defensive protection more difficult.

Apart from the basic conceptual and practical challenges in applying western formulations of IP to traditional knowledge, for many traditional societies the incompatibilities go very deep, said Dutfield. "Consequently, any legal system of protection must somehow accommodate the holistic nature of traditional knowledge and technologies. It must avoid imposing notions of authorship that are alien to the beneficiary communities."

In a session on copyright and related rights in the digital environment, Teresa Hackett, Project Manager of Electronic Information for Libraries (which advocates for the wide availability of electronic information for libraries in the developing world), said that as the world switches to digital technologies to create and distribute knowledge and culture, questions of digital copyright become central.

While there are new opportunities, users now have less rights in the digital environment than in the analogue world. The traditional copyright balance has been severely eroded in the digital environment, where IP rights holders have clear rights but unclear responsibilities. "The constant whittling away of the 'fair use' exceptions and limitations to copyright is deeply damaging to the development of society since the future is ever increasingly digital," she said.

She added that the 1996 WIPO Copyright Treaty confirmed that existing exceptions and limitations may be extended to the digital environment. "In reality, however, where librarians have lobbied to extend traditional copyright exceptions, they have met with stiff opposition from rights holders. We call for a global minimum mandatory exception to ensure that libraries and their users get a fair deal in future," she stressed.

"A rich and robust public domain provides the raw material for future creativity, innovation and research. Increases in the term of copyright protection, in the name of harmonization, have removed access to a huge range of content from millions of people around the globe who need it for research, for study or for educational purposes.

"This hits developing countries particularly hard where the issue of accessing information is a key determinant for their development. Information that traditionally belonged to everybody is removed from collective ownership with serious consequences for education and innovation. Worse still, the retroactive extension of the term protection in some jurisdictions is in my opinion a betrayal of the copyright bargain between rights holders and society.

"We believe that the current 'one size fits all' approach to copyright law is unjust and inequitable. It is simply unfair that developing countries are expected to adhere to very strict regimes which developed countries did not have when they were in the developing stage." Hackett supported the development of alternative models such as open access journal publishing which offers great benefits to developing countries. "We believe that an international Treaty on Access to Knowledge and Technology would be a valuable first step in taking the concerns of the library community further," she concluded.

Dr. Sheriff el-Kassas from the Centre for Academic Computing in the American University of Cairo spoke on the merits of the open source model for software which he said has established itself as an important and successful alternative to proprietary development models.

Open source software lowers the entry bar. Since it is free, it also counters monopoly. It represents a different way of doing things, and a technological paradigm shift. Thus, he concluded, it makes sense for developing countries to base their development efforts on a suitable open source model.

In the session on competition policy, Martin Khor of the Third World Network said that a discussion on competition policy and IPRs should look at whether IPRs affect the competitiveness of developing countries and their enterprises, as well as the access of their consumers to essential goods and services and the access of small enterprises to technology and production inputs. Both IP and competition policies at global and national levels should assist and not hinder developing countries' quest for industrial development and access to essentials.

There has to be proper balance between IP and development and the balance between IP holders' interests and the public interest, said Khor. However, this balance had significantly shifted against development and the public interest due to inappropriate upward harmonization of IP standards resulting from the TRIPS agreement (which removed or eroded policy space for developing countries) and some recent WIPO treaties, and this could worsen if more IP treaties are concluded along the present lines at WIPO and in bilateral and regional agreements.

Khor said that studies showed that there were problems arising from recent trends in the US patent system, with the rise of patents on trivial "inventions", the use of patents by big companies to extract payments from competitors and run them out of business, and the inappropriate extension of patents to new areas and discoveries. For example, a big food company had obtained a patent for the making of sandwiches with the bread crust removed, and had sued small grocery shops for selling sandwiches.

Many small firms had been forced to pay up as they could not afford legal fees, and this reduced competition. Farmers were also being sued large amounts for using genetically-modified seeds, even if these seeds had blown over from neighbouring farms. The system was also granting patents for naturally occurring lifeforms and for biological resources originating from other countries.

Many academic experts had concluded that the system was getting more dysfunctional, and it would be ironic and inappropriate if elements of the system were to be transferred to developing countries through the harmonization process, for example, through new WIPO patent or copyright treaties.

Khor said that developing countries had characteristics that made it inappropriate for them to adopt IP standards existing in developed countries. Most patents are held by Northern institutions. As a result of TRIPS, developing countries had obligations to pay $60 billion extra annually, according to World Bank-related estimates.

Local researchers and firms in developing countries find it more costly and difficult to make use of patented materials or technologies, thus reducing the South's competitiveness. The cost of medicines and information had shot up, reducing consumer access and welfare.

Even well-known free-trade economists such as Jagdish Bhagwati and Sreenivasan have taken strong positions against the imposition of high-level IPRs on developing countries, claiming that they had become monopolistic royalty-collecting mechanisms impoverishing poorer countries.

Khor cited examples showing how inappropriate application of IPRs had increased monopolization of industrial structures, increased drug prices, affected farmers' rights and facilitated biopiracy in agriculture and led to wrongful patenting of naturally occurring genes and microorganisms.

He said the best way to control the anti-competitive effects of IPRs is to establish patent systems that prevent the wrongful granting of patents. It should be ensured that patents should not be given for "inventions" that are trivial or that are already in the public domain, nor for living organisms. Exceptions, limitations and flexibilities in IPRs should be expanded or strengthened in TRIPS and other global treaties, and technical assistance should stress their significance and use in developing countries.

Pro-competition elements in TRIPS should be fully used, and expanded, and competition policies could also be used to limit the abuse of IPs. However, the main changes had to come within IP law and practice itself. Khor also said there was a need to review existing global IP treaties in light of development and public interests, and further harmonization of IP laws and practices should be halted until there was a change in fundamental principles in the IP framework that makes it balanced.

Philippe Brusick of UNCTAD said there seemed to be a clear conflict between IPRs, which grant monopoly rights, and competition policy which aims to counter monopoly. In the longer term, there could be what he called "dynamic coherence" between the two since both IP and competition policy are essential for innovation.

Brusick said however that conflict situations do arise between IPRs and competition policy. For example, IPR holders can attempt to monopolise essential facilities. They can use patents to block all possibilities to develop the same kind of innovation, for example, patent pools aimed at blocking any R&D by competitors. Another example was a company obtaining a patent but not making use of it. There could also be excessive duration of IPRs, with attempts by rights holders to prolong control after expiry of the IPR.

Another conflict exists in abusive provisions in licensing contracts, a problem recognized in TRIPS Article 40. Such abusive provisions could be aimed at controlling and dividing markets by controlling inputs through tying of supplies; or by prohibiting exports through market allocation; or by price fixing of sales through collusive pricing.

Some companies use IPRs to artificially divide markets by prohibition of parallel imports. TNCs argue that differential pricing allows them to fix lower prices in poorer countries. However, critics point out instead that differential pricing does not always defend poorest markets as it depends on the bargaining power of the countries. For example, LDCs that have less bargaining power may have to pay higher prices.

Menzie Simelane, Commissioner of the Competition Commission in South Africa, said that competition law deals with abuses of dominance and this has relevance to IP issues as a patent holder is market dominant by nature. He gave a case study of the case initiated by his Commission against companies selling HIV/AIDS drugs for refusal to issue voluntary licenses to other companies, and charging excessive prices by abusing their market dominance.

The case was settled out of court and the firms were asked to issue three voluntary licenses each, with reasonable royalty fee (eventually agreed between the companies at 4-10%). Simelane concluded that both IP and competition laws were not ends in themselves and both had to serve the public interest.

From the floor, a question was raised as to whether it was better to tackle problems arising from IPRs through competition law or through changes in patent laws. Several of the speakers, including Simelane, Khor and Peter Plompen (of Phillips International) agreed that the problems arising from the patent or copyright systems, such as the issuing of wrong patents, would best be resolved through reforms to the IP laws and system, rather than expecting competition law to offset the problems.