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Info Service on Intellectual Property Issues (Jun14/02) WIPO: New patent fee reduction eligibility criteria approved Geneva, 16 Jun (Alexandra Bhattacharya) – New eligibility criteria for fee reductions for “international” patent applications have been approved with concerns raised by the African Group. This took place during the seventh meeting of the Working Group of the Patent Cooperation Treaty (PCT) held on 10-13 June, whereby five European Union countries will benefit from the new criteria. The PCT is one of the treaties administered by the World intellectual Property Organization (WIPO), and the issue of eligibility criteria for fee reduction had been on the table since 2010. At issue was whether fee reductions are to benefit developing countries and whether per capita Gross Domestic Product (GDP) and the number of patent applications are appropriate indicators of innovation. However, in a show of flexibility, the African Group accepted the proposed amendment to the Regulations under the Schedule of Fees of the PCT on the last day of the session on the condition that the eligibility criteria would be reviewed by the PCT Assembly at least every five years and that a progress review of the implementation of the fee reduction would take place after two years in order to assess its impact. Currently, nationals and residents of countries who meet the necessary criteria are entitled to a 90% reduction of certain PCT fees. However, discussions on the updating of the criteria used for determining the eligibility criteria for the purposes of fee reduction have been on going since the third session of the Working Group in 2010. Least developed countries would remain unaffected with the proposed changes. The “Proposed Amendment of the Regulations under the PCT: Schedule of Fees” (as proposed to be amended with effect from July 1, 2015) is currently found in PCT/WG/7 Paper No 2 Rev. (E). Importantly, Para.5 of the proposed amendment includes the new eligibility criteria and states that: “The international filing fee under item 1 (where applicable, as reduced under item 4), the supplementary search handling fee under item 2 and the handling fee under item 3 are reduced by 90% if the international application is filed by: (a) an applicant who is a natural person and who is a national of and resides in a State that is listed as being a State whose per capita gross domestic product (GDP) is below US$ 25,000, according to the most recent ten-year average per capita gross domestic product (GDP) figures at constant 2005 US$ values published by the United Nations, and whose nationals and residents who are natural persons have filed less than 10 international applications per year (per million population) or less than 50 international applications per year (in absolute numbers) according to the most recent 5-year average yearly filing figures published by the International Bureau; or (b) an applicant, whether a natural person or not, who is a national of and resides in a State that is listed as being classified by the United Nations as a least developed country; provided that, if there are several applicants, each must satisfy the criteria set out in either sub-item (a) or (b). The lists of States referred to in sub-items (a) and (b) shall be updated by the Director General at least five years according to directives given by the Assembly. The criteria set out in sub items (a) and (b) shall be reviewed by the Assembly at least every five years.” [The Patent Cooperation Treaty creates a system that allows an applicant to seek patent protection for an invention simultaneously in its 148 contracting states by filing an "international" patent application. The application is then subjected to an "international search" carried out by offices designated as International Searching Authority (ISA) and optionally followed by a preliminary examination, performed by an International Preliminary Examining Authority (IPEA). The granting of patents remains under the control of the national or regional patent offices in what is called the “national phase”. According to the WIPO Program and Budget 2014/2015 the PCT system accounts for 75 per cent of WIPO’s income which for 2014/15 is projected at the level of 713.3 million Swiss francs. In 2013, PCT filings amounted to 205,300 increasing by 5.1%.] Chair circulates non-paper with decision for PCT Assembly In order to initiate a decision, the Chair, Victor Portelli from the Australian Intellectual Property Office, circulated a non-paper which included a possible decision to be transmitted to the PCT Union Assembly in September 2014 and urged member states to consult further with their capital and to return to the discussion. The agenda item remained open till the last day of the session in the hopes of agreement from the African Group. This proposed amendment, including the criteria, is based on the proposal by the International Bureau (WIPO Secretariat) set in document PCT/WG/3/4 Rev, which was presented during the third session of the Working Party. These proposals are also replicated in document PCT/WG/7/26, which includes updated country profiles with 2012 figures and was the basis of discussion for the 7th session of the PCT. The Chair stated that the Secretariat proposal would not “solve all problems” but “at least this working group has something to decide upon”. He urged the PCT Working Group to positively consider the proposals The applicability of the 90% reduction, for both the current and proposed criteria, is on the international filing fee (including the fee per sheet over 30 sheets) of currently 1,330 Swiss francs plus 15 Swiss francs for each sheet of the international application in excess of 30 sheets; the supplementary search handling fee is 200 Swiss francs and the handling fee 200 Swiss francs. The current eligibility criteria for the 90% fee reduction is based on “States whose per capita national income is below USD 3,000 (according to the average per capita national income figures used by the United Nations for determining its scale of assessments for the contributions payable for the years 1995, 1996 and 1997), as well as the following States: Antigua and Barbuda, Bahrain, Barbados, Libya, Oman, the Seychelles, Singapore, Trinidad and Tobago and the United Arab Emirates. The
current schedule for the applicability of the 90% fee reduction is
found here (as of 19 November 2013): The proposed amendments consist of a mixture of income and innovation criteria, specifically: (i) GDP Per capita figures at constant 2005 US values using a 10 year average (2003- 2012) with a proposed threshold of USD 25,000. This is included as the “income criteria”. (ii) PCT applications by natural persons (per million population)- proposed threshold: less than 10 international applications per year per million population or (iii) PCT applications by natural persons (in absolute numbers) proposed threshold: less than 50 international applications per year in absolute numbers. These are the two “innovation criteria”. With the proposed fee reduction criteria, there are 10 countries whose applicants are not eligible under the eligibility criteria currently in force but would become eligible under the new eligibility criteria proposed in document PCT/WG/3/4 Rev., namely, Bahamas, Cyprus, Greece, Malta, Nauru, Palau, Portugal, Saudi Arabia, Slovenia and Suriname. This in effect would include 5 EU states to qualify for a fee reduction and this would raise issues regarding the overall objective of the fee reduction proposals especially as to whether it is aimed to target only developing and Least Developed Countries (LDCs). On the other hand, there are two countries whose applicants are eligible under the eligibility criteria currently in force but would no longer be eligible under the new eligibility criteria proposed in document PCT/WG/3/4 Rev, namely, Singapore and the United Arab Emirates. Other issues, which had also previously arisen with the criteria include whether income criteria with the use of GDP per capita figures could be misleading, as it would not take into account human development indicators such as education and health. Additionally, it is not clear whether the number of PCT applications per million population and in absolute numbers also cannot be considered as indicative of a country’s innovation status. The use of only PCT applications as innovation indicators does not take into account other factors such as R&D expenditure and technological capacity. Member States react to proposed fee reduction eligibility criteria Below are highlights of the interventions by member states at the 7th session of the PCT Working Group. Kenya, on behalf of the African Group, had stated that the use of GDP as an indicator for income criteria was not sufficient and held the view that fee reductions should only be considered for developing countries and LDCs. It added that countries with a per capita GDP of USD 25,000 already had a high level of PCT applications and in this context there was a need to ascertain the purpose of the fee reductions and which countries should really be benefiting from them. Kenya also referred to the need to look at the level of innovation as an indicator for the purposes of fee reduction in a more balanced manner. It also emphasized the need for the fee reductions to “help countries to integrate into the world economy”. Kenya underlined that the current proposal did not capture the original aim of fee reduction which would was to promote the participation of developing countries in the PCT system and enhancing their level of innovation. It also referred to the criteria put forth by the Secretariat particularly referring to the “innovation criteria” consisting of the use of PCT applications. Kenya noted that the Secretariat could also consider the Global Innovation Index as published by WIPO. During the last day of the session (13 June), after consultation with the Chair, the African Group stated that it could support the proposed amendment as a show of flexibility as the agenda item had been on the agenda for a number of years. This support was however conditional on a review of the eligibility criteria after five years and a progress report on the implementation after two years. Portugal stated that it would be one of the new countries eligible for the fee reduction under the new criteria and underlined its support for the proposal. It noted that the economic crisis had an impact on innovation in Portugal and the fee reduction would bring benefits. A similar view on the impact of the economic crises on innovation was stated by Greece, who would also be a new eligible country. Greece referred to the “principle of law” and that there should be no differentiation between countries if they fulfilled the criteria. Kenya in response stated that the PCT filing criteria was not precise criteria, as it did not cover all aspects of innovation. In particular, it noted that the economic crises had temporarily impacted the level of innovation, which would be overcome with time, however countries with low institutional levels of innovation needed specific measures to be taken. Japan, opening the discussion on behalf of Group B (comprising developed countries) stated that the current criteria of using GDP and number of PCT applications as criteria was a good basis for future “dynamic and fair fee reduction” and stated that it was a step in the right direction. It also proposed adding the following sentence in Para. 5 of the proposed amendment: “The criteria set out in sub items (a) and (b) shall be reviewed by the Assembly at least every five years.” The United States of America expressed its general support for fee reductions and noted the need to exclude high-income countries for qualifying under this new scheme. The US also expressed some concern regarding the proposed threshold of USD 25,000 for the GDP criteria which it said was higher than the World Bank average. It supported the use of the “two part test” for the criteria but also noted the need for the fee reductions to be “budget neutral” in these “challenging times”. The Republic of Korea, as in previous sessions, called for a “multiple level solution” with varying levels of fee reductions. It also indicated its preference for the use of Gross National Income (GNI) figures as opposed to GDP figures as the former “better reflected actual purchasing power” and both the World Bank and the IMF had recommended using GNI as an income index since 1993. The Russian Federation said that there was a need to look more closely at the relationship between income and innovation based criteria. It noted that income based criteria should have priority and should have the largest effect in determining whether someone was eligible for fee reductions. Fee Reductions for Small and Medium-Sized Enterprises (SMEs), Universities and Not-For-Profit Research Institutes Another agenda item also relating to fee reductions discussed during the PCT Working Group meeting was that of Fee Reductions for Small and Medium-Sized Enterprises (SMEs), Universities and Not-For-Profit Research Institutes (document PCT/WG/7/7). Here again, no further work was agreed upon and no concrete proposal on the way forward was put forward by member states. Therefore, the issue was deferred for discussion to the next session of the PCT Working Group. The United States favored moving forward on a fee reduction for universities, noting that as universities counted for less than 6% it would be good to pursue a reduction of filing fees for universities to increase their use of the system. Kenya noted that if one had nothing to file a patent application on and if there was a fee reduction it would be of no consequence especially if the level of research was inherently low in universities. The Chair noted that the PCT Working Group could ask the Secretariat to prepare a small subsidiary study on the potential impact of fee reductions for universities on WIPO’s revenue. This would be further considered at the next session of the PCT Working Group. Separately, Kenya speaking for the African Group also stated that there was a need to convene the Committee for Technical Assistance as mandated under Article 51 of the PCT. This was also supported by Brazil. The United States however, immediately replied that it was not ready to convene the Technical Assistance under Article 51.
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