TWN Info Service on WTO and Trade Issues (Mar06/10)

10 March 2006

WIPO Forum on draft SPLT 1-3 March Report 3

Problems for South from SPLT highlighted at forum

Basic problems and practical difficulties in the attempt by WIPO members to globally harmonise patent laws were highlighted on the second day of the WIPO open forum on its draft Substantive Patent Law Treaty (SPLT) on 2 March.

The difficulties brought up by various speakers included differences in approach by countries on requirements for disclosure of the claimed invention by the patent applicant, and differences of views on what materials should be excluded or exempted from patents.

Several speakers pointed out the problems that would arise should WIPO adopt a new SPLT that requires the developing countries to take on the standards and features of the patent system of developed countries, particularly the US.

Below is a report on Day 2 of the WIPO Forum

With best wishes
Martin Khor


Problems for South from SPLT highlighted at forum
Published in SUNS #5979 Monday 6 March 2006

By Sangeeta Shashikant (TWN) 3 Mardh 2006

Basic problems and practical difficulties in the attempt by WIPO members to globally harmonise patent laws were highlighted on the second day of the WIPO open forum on its draft Substantive Patent Law Treaty (SPLT) on 2 March.

The difficulties brought up by various speakers included differences in approach by countries on requirements for disclosure of the claimed invention by the patent applicant, and differences of views on what materials should be excluded or exempted from patents.

Several speakers pointed out the problems that would arise should WIPO adopt a new SPLT that requires the developing countries to take on the standards and features of the patent system of developed countries, particularly the US.

In the first session on "Sufficiency of Disclosure," Professor Carlos Correa from the University of Buenos Aires referred to the text in the draft SPLT on disclosure: "The application shall disclose the claimed invention in a manner sufficiently clear and complete for that invention to be carried out by a person skilled in the art. The disclosure of the claimed invention shall be considered sufficiently clear and complete if it provides information which is sufficient to allow that invention to be made and used by a person skilled in the art on the filing date, without undue experimentation."

He said that this text generally reflects the US view. He asked whether "effective harmonization is feasible", adding that there were ambiguities in this provision. Firstly, it allows the invention to be "made and used", but what is the level of information that is needed for the invention to be made and used, asked Correa.

Much, he said, depends on how one defines "person skilled in the art". He said the outcome would be different if the person is an expert than if he is of "average" skill. Regarding the phrase "with undue experimentation", he asked what is the degree of "undue experimentation".

Correa added that there is disharmony within national systems on disclosure requirements. In the US, there are different standards of disclosure applied to DNA patents as compared to software patents. In the former, sequences must be disclosed under a stringent written description rule, while in the later case patents need to disclose virtually nothing about the detailed workings of the inventions.

In DNA patents, a low skilled "person having ordinary skill in the art" is required for "non-obviousness" while for software patents a highly skilled "person having ordinary skill in the art" is required. This, Correa added, shows diversity in standards applied in the US.

He also asked that if harmonization continues, which standard of disclosure should be adopted. He referred to text in the US free trade agreements which states: "Each Party shall provide that a claimed invention is sufficiently supported by its disclosure if the disclosure reasonably conveys to a person skilled in the art that the applicant was in possession of the claimed invention as of the filing date".

He also referred to the law in China which in relation to disclosure of chemical process invention states: "For the substance of the raw material used in the process, not only the chemical components and property parameter(s) etc., but also its source, shall be disclosed to make it identifiable ".

It also states: "If the substance of the raw material is a natural substance, besides its origin, disclosure shall be made of its basic chemical components or the basic parameter(s) capable of identifying the said substance".

He also referred to the text of the TRIPS Agreement which states in Article 29.1 that "Members... may require the applicant to indicate the best mode for carrying out the invention known to the inventor at the filing date or, where priority is claimed, at the priority date of the application", while in Article 29.2, it states that "Members may require an applicant for a patent to provide information concerning the applicant's corresponding foreign applications and grants".

Referring to these different texts, Correa called the US standard ambiguous, and also said that if harmonization is done using the TRIPS text, he would recommend changing the word "may" to "shall". This, he said, is important to reduce the work of the patent office.

He concluded by saying that the differences in disclosure requirements are unlikely to be effectively harmonized. Disclosure requirements may also need to vary by sectors, skills in the country of application, and disclosure of best mode and of information relating to foreign applications should be mandatory.

Tim Roberts, a Council Member of the Chartered Institute of Patent Agents in London, appeared to agree with Correa about the importance of a sufficient disclosure requirement.

He said that the object of disclosure was to teach the public something new and useful. It is the only consideration for exclusive right that the patentee gets and the information is for immediate use for private and some experimental purposes and any purpose outside the scope of claim. Thus, a good disclosure is in the public interest.

He added that the "flexible approach" is best, as it allows disclosure to be adapted to the needs of the technical field and the nature of the invention. Principles governing disclosure should be uniform for all patent offices. He was sceptical whether this was an area where there can be legislation.

Another panel on 'Exclusions from Patentability, Industrial Applicability and Technical Effects' comprised of Dr. Graham Dutfield from Queen Mary College, University of London, Hugh Laddie, an IP Consultant from Rouse & Co International and Jeffrey Hawley, past president of the Intellectual Property Owners Association.

Dutfield said it has never been the case that "anything under the sun made by man" is patentable. Many ideas are filtered out, through the patentability criteria, or statutes or the courts that may define or interpret "invention" in ways that exclude certain classes of original ideas such that they are not considered to be inventions at all.

Further, certain subject matters are just excluded. Another filtering device is the requirement for the invention to have a "technical effect". It is not easy to define what is "technical".

He said there were various reasons for excluding certain things from being given patents, including to protect the public domain, to prevent foreign monopoly power in strategic fields, and to encourage copying for more local innovation.

He added that what "leaders" (i. e. the developed countries leading the harmonization process) want is harmonization based on globalizing or exporting their own standards. This is their idea of a level playing field. However, in contrast, the "followers" want differentiation based on levels of economic development.

He posed the issue of what the SPLT means, whether it is creating a level playing field or "kicking away the ladder" (i. e. rich countries preventing poorer ones from taking their route to success).

Dutfield referred to the section in the draft SPLT on public interest, which was bracketed, indicating disagreement. "What is the SPLT for, if its purpose is not to protect the public interest," he asked.

Laddie stressed that in the history of economic development, "competition" has played a very significant role. In the European Patent Convention (EPC), patents are not given for methods of doing business but in the draft SPLT, everything is patentable. Schemes, rules and methods for performing mental acts are valuable exceptions in the EPC and if the draft SPLT goes through, Europe will have to allow patenting of these. He added that America became the biggest commercial power without giving patents on business methods.

There has been vigorous commercial development over the years without the benefit of patent monopoly that is now being advocated. Giving the example of Microsoft, he said that it became a multi-billion-dollar industry without the benefit of any computer program patents. The reality is that development is not dependant on the existence of patent rights.

He advised that those involved in the drafting of the SPLT must ensure that it does not protect subject matter that does not promote technological growth.

Responding to a question, he said that the motor of western economic development in most fields has been competition. He added that there would not be Word 2005 today if there had been patents on word processing. "We would be at Word Perfect 1.2," he said, because the company having the monopoly would not have the incentive to change.

He said it is competition that drives growth, and "unless we get this clear, we will cripple industries." One hundred years of economic development has nothing to do with patents, he stressed.

Dutfield said there was "confusion at the highest level, what the patent system is for", especially in the US. He added that some people are even saying that IPR is a human right.

Hawley indicated that he favoured patent rights even for business methods and schemes, stating that since investments had been made, there was no reason for not granting exclusive rights.

However, following a spontaneous debate with Laddie, he agreed that patents should be granted for some inventions but not for others.

In another session, Sisule Musungu from the South Centre spoke on "Exceptions to Patent Rights". He said that exclusions of certain subject matter from patentability were found in TRIPS, as well as exclusions of certain acts from the scope of the exclusive rights of the patent holder.

He said that exceptions were prerequisites for achieving the aims of Article 7 and 8 of TRIPS and similar objectives which justify patents. In the WIPO, such exceptions are necessary to discharge the constitutional functions of WIPO as a UN agency responsible for promoting creative intellectual activity and facilitating technology transfer to developing countries. Further, virtually all national laws and practices recognises exceptions in one form or another.

He listed and countered arguments that have been presented against the inclusion of exceptions in the SPLT. The first argument is that WIPO's Standing Committee on Patents (SCP) agreed to limit the scope to exclude exceptions because the purpose of the SPLT is to establish best practices and deeply harmonize the substantive requirements.

Musungu said it is difficult to believe that Member States had bound themselves not to exercise their sovereign rights to make proposals for including exceptions in the treaty. He said there was no such record of such a binding in the SCP.

The second argument is that the WIPO Intergovernmental Committee (IGC) was created to address issues related to genetic resources and associated traditional knowledge and so the SCP should not deal with them. Musungu said that in 2003, when the mandate of the IGC was renewed, the WIPO General Assembly specifically decided that the IGC's work is "without prejudice to the work pursued in other fora."

The third argument is that matters relating to the Convention on Biological Diversity (CBD) and TRIPS and to public health are being dealt with at the WTO (implying that WIPO need not deal with them). Responding to this argument, Musungu said that WIPO does not answer to the WTO and not all members of the former are members of the latter. He also said that just because the TRIPS Council is discussing these issues cannot be the basis for excluding them from WIPO.

The fourth argument is that it is more effective to evaluate the social and economic consequences of a patent on other areas of public policy at the stage of exercise of rights. There is also no basis for this argument, he said.

Another argument is that for exceptions to be workable in an internationally harmonized approach, the grounds upon which an exception may operate would usually need to be clearly defined to create sufficient certainty for a harmonized approach to be adopted.

He said that the proponents of the proposals were never given the opportunity to present the proposals exhaustively. There may be a need to separate and formulate specific language for exceptions for patentability and exceptions to patent rights. Only after an exhaustive discussion and revisions of the proposed provisions can there be a conclusion on whether the provisions are clearly defined.

There is thus no basis in the arguments to exclude exceptions from the SPLT, concluded Musungu. The first task in addressing exceptions in the SPLT is to understand the objectives and scope of the treaty. He outlined three methods of addressing exceptions in the SPLT. It could be by "silence" (which he said was not a good choice), or by enumerating the exceptions and defining each exception, or by incorporating a "general saving clause."

Two other speakers that made very pointed comments on the SPLT were Dr. Narendra Zaveri, an advocate from Mumbai, speaking on "Effective Mechanism to Challenge the Validity of Patents" and Prof. Frederick M. Abbott from the Florida University College of Law who spoke on "Contractual License and Transfer of Technology".

Zaveri said that three safeguards - pre- and post-grant opposition to patents as well as "no presumption of validity" - have to be effectively provided for in the SPLT, in view of the grave consequences for other stakeholders from questionable patent grants, the need to balance rights and obligations of all stakeholders; and the inherent problems and limitations of patent system.

He also said that a global patent system with weak standards of patentability would have disastrous consequences especially for developing countries. He gave the case of Zidovudine, an AIDS medicine, whose anti-viral effects were known since 1975 but which was patented by Burroughs Wellcome in the US and several other countries merely on the basis of its new use for treatment of HIV/AIDS.

The price of the drug was prohibitive, making it inaccessible to the many millions of people in need of it. Pre-grant opposition could have prevented the questionable grant.

He said there is also the problem of "me too" drugs, giving many examples of patents being granted on laughable claims with insignificant improvements such as patents for food slices and method for making the same; filled potato product; extruded potato casing; preservation of exposed cut fresh fruit; French-fry potato with improved functionality and process for preparing; drops of honey; ice-cream with fat containing coating; composite ice-cream cone, food slices and method and apparatus.

He said that the grant of frivolous/questionable patents deprives other stakeholders of their legitimate right with no reciprocal benefit and that the facility of acquiring global patents at least cost will provide a strong inducement for such frivolous claims. Thus pre- and post-grant opposition and no presumption of validity have to be provided to discourage the trend towards questionable claims and patent grants.

Addressing the inherent limitations of the SPLT, he said that unlike national patent offices under national laws, the SPLT will not have the jurisdiction or powers to require oaths, declarations/disclosures or enforce them, or the powers to punish claimants making false, fraudulent, frivolous, repetitive and excessive patent claims which is a serious handicap.

Also, as a result of the SPLT, national authorities will not be able to have the benefit of independent search and examinations by several national patent offices; or the benefit of review by way of appeal against decisions of national patent offices; or the power to limit the scope of adverse impact on other stakeholders by excluding some patentable subjects (business methods, methods for treatment etc).

He added that the US patent office has a workforce of 6,939 employees, including 3,538 patent examiners and about 4,000 contract employees. Despite its vast resources, the US patent office also has inherent problems in weeding out questionable claims and ensuring the validity of patent grants.

Prof Abbott spoke about the benefits of patent licensing, stating that it may facilitate access to and use of patented technologies and products. He also added that anti-competitive licensing is generally an accepted practice among states, giving examples of developed countries where it is practised. He referred to the TRIPS Agreement which recognizes that intellectual property rights may be abused and that authorizes Members to regulate anti-competitive licensing practices.

He added that rules regarding anti-competitive aspects of patent licensing are within the reasonable potential subject matter scope of an SPLT. Such rules, he said, could take a positive form, prescribing certain types of conduct or establishing presumptions regarding certain types of conduct as "anti-competitive". It could also take a negative form, making clear that governments are permitted to regulate anti-competitive licensing practices notwithstanding positive obligations regarding the grant of patents. Rules also could include illustrative list of potentially anti-competitive licensing practices, he added. Alternatively, he said that a combination approach could be used.

He also said that approaches to regulation of competition tend to vary over time within the same jurisdiction as industrial policy considerations shift and this may argue in favour of preserving regulatory flexibility. Further, he said that industrial policy considerations of developed and developing countries with respect to application of competition law to patent licensing may differ. Each developing country is also at a different stage which may also need differing industrial policy interests. Thus, he argued that taking a negative approach would permit the maintenance of regulatory flexibility.