TWN Info Service on WTO and Trade Issues (Mar06/9)

10 March 2006

WIPO Open Forum on Draft SPLT (1-3 Mar 06) Report 2

Speakers warn against patent harmonization at WIPO forum

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.

Below is a report on Day 1 of the Forum.

With best wishes
Martin Khor


Speakers warn against patent harmonization at WIPO forum
Published in SUNS #5978 Friday 3 March 2006

By Sangeeta Shashikant, Geneva, 2 March 2006

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.