ITSSD Journal on Intellectual Property Rights

ITSSD 'Geneva Diary' of the Proceedings of the 16th Session of the WIPO Standing Committee on the Law of Patents Reflects Efforts to Move Development Agenda Forward at Expense of IP Rights

noreply@blogger.com (ITSSD Charitable Mission) — Mon, 13 Jun 2011 03:54:00 +0000

[The ITSSD, an ad hoc observer to the WIPO Standing Committee on the Law of Patents (SCP), recently attended the 16th session meetings of the SCP that took place during May 16-20, 2011 in Geneva, Switzerland. As an ad hoc observer, the ITSSD heard, observed and contributed to the discussion during the SCP's Plenary sessions. The ITSSD has transcribed its notes of these Plenary sessions to the best of its ability in the interest of providing a reportage of the proceedings for the public interest. The ITSSD acknowledges that its 'Diary of the Proceedings' is incomplete and reflects in some cases a summary of the statements made by particular delegations; but it does provide an accurate assessment of those discussions the ITSSD was able to gather and report. To assist the reader in better understanding the context of those discussions the ITSSD has provided annotations containing SCP/WIPO document references and, in some instances, excerpts of those documents.

As noted above the ITSSD intervened in the discussions at various points. However, since those interventions were made in a contemporaneous and impromptu fashion, they are not fully reproduced in this Diary. The ITSSD has been assured that its interventions (or a summary thereof) have been recorded by the SCP and will be transcribed and incorporated within the Secretariat's Report for the SCP's 15th session.]

ITSSD Geneva Diary

16^th WIPO SCP Plenary Session

May 16-20, 2011

Geneva, Switzerland

Day 1 - Monday, May 16, 2011:

Introduction by Secretariat/Pooley - The purpose here is to secure the agreement that might otherwise not be.

There is growing interest in patent policies at the multilateral level

We must take advantage of opportunities to address issues which will contribute to a better patent environment internationally.

The Secretariat invites all to work in a politically positive way with goodwill and friendship.

Agenda Item #2 - Election of Chair and Two Vice Chairs:

The Secretariat seeks recommendations.

Poland – proposes Tramposh as Chair and representative from China – Ms. Dong Chang as vice chair.

Chile – seconds Poland’s proposal.

Switzerland – supports Poland’s proposal.

Hungary – supports Poland’s proposal.

Tramposh is new SCP Chair.

Agenda Item #3: Adoption of the Agenda of SCP 15:

France – wants to speak re: Agenda 12 – at SCP 15 agreed to specific item to be included in SCP 16 to allow member states to express views on Development Agenda recommendations. [See Summary by the Chair, Par. 10 (SCP/15/5) (10/15/10) available online at: http://www.wipo.int/edocs/mdocs/scp/en/scp_15/scp_15_5.pdf . (“Agenda Item 6: Future work - 10. Following the decision of the 2010 WIPO General Assembly on the coordination mechanisms and monitoring, assessing and reporting modalities of relevant bodies on the implementation of the Development Agenda recommendations, Member States will be given the opportunity to express their views on this issue under a specific item to be included in the agenda of the 16^th session of the Committee. These views will be considered in the context of the standardized procedure that WIPO will propose for relevant WIPO bodies.”].

France speaks for Group B – thanks for Item 12 – should adopt for this item a new label – contribution of committee to development agenda recommendations - “Contribution of this committee to implementation of respective development agenda recommendations”. The words in Agenda Item 12 currently are deleted.

Spain – expresses displeasure with non-translation of annexes of 15/3 which was not translated into Spanish. Item 13 of Chairman’s report noted this request but it was ignored.

Secretariat – translation work not finished but well under way.

Brazil – Re: suggestion of France with respect to Item 12 – supports France’s suggestion. More precise language approved, which should be used in other SCP committees.

Hungary – supports French proposal.

India – prefers different wording – “Contribution of committee to implementation of development agenda” but supports change – looks forward to having this wording serve as template in other WIPO committees.

Proposal from France adopted.

Agenda Item #4: Accreditation of Observers:

Medicines Patent Pool seeking ad hoc observer status. – contained in SCP 16/6. SCP invited to take position on request for ad hoc status.

Chile – supports Patents Pool ad hoc observer.

Agenda Item #5 - Adoption of the Draft Report of the Fifteenth Session:

Proposed Adoption of Draft Report of 15^th Session by SCP as Final.

Mexico

– reform of industrial law should be included in paragraph 1.5.7 of Draft Report.

Egypt – Delegation not properly represented in report for 15^th session. Will provide full list to be included in Draft Report.

Australia

– one word correction.

Chair - Proposed changes will be adopted as a Final Report.

Agenda Item #6 - Report on the International Patent System:

Revised Annex II – SCP/16/2 – “Certain Aspects of National/Regional Patents Laws” available online at: http://www.wipo.int/edocs/mdocs/scp/en/scp_16/scp_16_2-main1.pdf and http://www.wipo.int/edocs/mdocs/scp/en/scp_16/scp_16_2-annex1.pdf - document continues to be open and can be updated.

South Africa, representing the African Group – wants to discuss patents & health, quality, tech transfer, exceptions, limitations. Balance of patent holders and users necessary. The Public Interest is extremely important. Public health is one of key priorities of the African continent. The proposed studies on patents and public health and the prior study on compulsory licenses (CL)’s - ; database on communicable & noncommunicable diseases; technical assistance; and other studies eac need to address development needs.

The UK and Canadian proposal for patent quality is appreciated. Flexibilities for patents are emphasized and supported. Brazil’s proposal for a questionnaire on exceptions and limitations - SCP/16/3 - Draft Questionnaire on Exceptions and Limitations to Patent Rights - http://www.wipo.int/edocs/mdocs/scp/en/scp_16/scp_16_3.pdf is appreciated and supported. Tech transfer is important to the African group – climate change, WHO, ITU, other groups. WIPO should actively participate in interaction between patents and technology transfer discussions. Capacity building, tech assistance, cooperation with academia for R&D discussions necessary to ensure tech transfer and that patent system contributes to innovation, tech dissemination and public interest.

Patent quality initiatives should take into account national patent systems.

SCP should focus on issues of common interest to membership. The Non-Exhaustive List ( http://www.wipo.int/edocs/mdocs/scp/en/scp_15/scp_15_inf_2.pdf )should be held open and any additions thereto should be approved by consensus. The same result should obtain for the Report on the Int’l System - http://www.wipo.int/meetings/en/doc_details.jsp?doc_id=160949 .

France, representing Group B. 16^th session initiates new stage with adoption of new work program adopted last fall. There is a great opportunity for the SCP to implement its mandate. The SCP/16/3 - Draft Questionnaire on Exceptions and Limitations to Patent Rights - is very interesting. France has suggestions for its improvement. Regarding the UK and Canadian Proposal - SCP/16/5 -http://www.wipo.int/edocs/mdocs/scp/en/scp_16/scp_16_5.pdf , a program on the quality of patents, Group B supports it. Tech infrastructure development, info exchange on quality of patents and process improvement are all important matters. This work program is complimentary to what is being done in the PCT system – processes. This program intends to improve quality at the national level. As concerns Item #9 – Patents & Health of the Agenda - SCP/16/1 -
http://www.wipo.int/edocs/mdocs/scp/en/scp_16/scp_16_1.pdf , WIPO can contribute based on its technical expertise to work on this issue. But WIPO should NOT replicate the efforts of other fora. Agenda Item #10 - Client-Patent Advisor Privilege - SCP/16/4 Rev. - http://www.wipo.int/edocs/mdocs/scp/en/scp_16/scp_16_4_rev.pdf (See also: SCP/14/ 2 - http://www.wipo.int/edocs/mdocs/scp/en/scp_16/scp_16_ref_scp_14_2.pdf - is of interest to users. As concerns Agenda Item # 11 - on Transfer of Technology – SCP/14/4 Rev. - http://www.wipo.int/meetings/en/doc_details.jsp?doc_id=165339 – i.e., - the revised version of study 14/4Rev. – France and Group B appreciate the revision. There is a need to focus on which projects on the same subject are being undertaken in the CDIP to avoid duplication of efforts.

India, representing the Development Agenda Group (DAG) makes the following statement. India joins other delegations in congratulating the new chairmanship. Since 2009, the SCP has provided a valuable forum for useful exchange of views on various issues. Patents have most direct impact on innovation, economic growth and national development – the SCP discussion has been very important.

India

has followed closely the discussions on exclusions, tech transfer, patents & standards and anticompetitive practices. India is interested in how patent systems can be calibrated to suit national needs and dismisses dogma that by not granting & enforcing patents strictly would cause problems. Countries face challenges in getting their patent system right – this has been exposed in the SCP.

It is important to have good provisions and to implement them wisely in sight of the broader goals of the patent system. India looks forward to safeguarding the fundamental balance in the patent system between the private rights of holders and the public interest. India also looks forward to continuing the consideration of the proposed work program on exclusions, limitations, tech transfer, client-attorney privileges and the opposition system, and patents/health and quality of patents. Discussions should lead to a work program that leads to balance and acceptance by all member states. There should be recognition of the linkages between patents and development. The SCP will report to the General Assembly to see how the WIPO Development Agenda will contribute to its work.

This SCP should remain abreast of new and emerging issues – the non-exhaustive list of issues should remain open. Background papers considered by the SCP and related discussions should be captured in a pragmatic manner on the WIPO website so they can be used by researchers, members, etc. Hyperlinks to relevant studies should be provided.

Hungary

, speaking for the EU and its Member States, appreciates the summary of the study on exceptions, attorney-client privilege, and patent quality. The Non-Exhaustive List ( http://www.wipo.int/edocs/mdocs/scp/en/scp_15/scp_15_inf_2.pdf ) SCP/15/INF/2 update is appreciated. Hungary also appreciates the SCP’s contribution to the harmonization of patent law. Hungary wishes to point out the growing overlap between the work of the SCP and that of other WIPO committees. Hungary seeks coordination with other committees before SCP work is undertaken. The EU will cooperate with the Chair during forthcoming discussions this week, including with respect to the draft questionnaire.

Poland

, speaking for central European and Baltic states, appreciates the attorney-client privilege document.

Poland

also appreciates questionnaire and study on exceptions & limitations. The UK/Canada proposal for opposition systems to ensure high quality patents will enhance better access to more patent information and a user-friendly int’l patent system. Poland was disappointed during the last meeting that members did not reach compromise/consensus on a Development Agenda implementation mechanism, and wishes to focus on substantive issues during this coming week.

U.S. – wishes to thank the secretariat for its hard work in preparing for this meeting, and supports the Group B statement of France. The U.S. looks forward to rich discussion on the issues: exceptions, patent quality, patent/health, attorney-client privilege & tech transfer. Technical discussions on patent policies should be discussed to engage in work that results in a productive efficient int’l patent system. The U.S. hopes that discussion of all issues will be undertaken to improve the functioning of the patent system. There should be robust dialogue on tech transfer issues to highlight the incentives & mechanisms in place within the int’l patent system.

Mexico – The SCP reports have increased the general understanding of the issues, particularly, the report of the experts group. The Brazilian draft questionnaire also assists members to better understand the issues, and to help the SCP prepare a program for immediate implementation. The UK & Canada proposal on patent quality is appreciated. Mexico would like to develop the issue on patents/health through the questionnaire and/or a study, and to refer to work on this issue undertaken in other fora.

Egypt – All documents must be prepared in the Arabic language. Egypt supports the statements of South Africa &

India

concerning the SCP’s important work dealing with the matters of development. The SCP must push the issues forward to reach the advanced and complete conviction that development is a protected area within the vision of WIPO. Many studies of this session – exceptions, patents/health, tech transfer & patent quality & opposition systems contain important issues. The SCP is obliged to implement the recommendations of the DAG, namely the central link between patents and development. Exceptions & limitations & tech transfer issues are quite important b/c they are linked to development efforts and the recommendations of the DAG. Patents/health – health is a basic question of national policy and requires the necessary flexibilities to deal with related patents. Egypt supports the African Group proposal - SCP/16/7 - Proposal Submitted by the Delegation of South Africa on Behalf of the African Group and the Development Agenda Group - http://www.wipo.int/edocs/mdocs/scp/en/scp_16/scp_16_7.pdf ; SCP/16/7 CORR. - Corrigendum: Proposal Submitted by the Delegation of South Africa on Behalf of the African Group and the Development Agenda Group - http://www.wipo.int/edocs/mdocs/scp/en/scp_16/scp_16_7_corr.pdf, and the UK/Canada (patent quality proposal - SCP/16/5, supra) as a contribution dealing with development issues. Studies and discussions are the best way to advance the work of the SCP.

KEI – James Love – SCP/16/2 Revised annex II of 12/3/Rev. – wants the opportunity to comment on its contents. Agenda items should also include within the area of public health – an exploration of the conflicts between patents and standards and ways to address anticompetitive practices in this area.

AIPPI – seeks coffee break.

SAIFI - Curchod – exceptions & limitations; attorney-client privilege wants to focus on this week.

AIPPI – Statement - attorney-client – constructive comments should not be taken as detracting from AIPPI’s support of this report. The report discusses how civil law applies professional secrecy and common law applies privilege from forcible disclosure to protect attorney-client privilege. Privilege has nothing to do with the ability to seek access to the courts. Privilege derives from the need for trust & confidentiality to secure correct legal advice. Both systems of law recognize open dialogue between client and counsel necessary for securing correct legal advice. This principle has been accepted and applied in both civil and common law nations for centuries. Confidentiality actually protects the broader public interest in the administration of justice – lawyers need to help governments to address the burden on the courts to prevent disputes from arising that reach the courts. The protection for communications of non-lawyer patent advisors – is not an extension of confidentiality of protection for patent lawyer advisers. Both perform the same service. This is a new profession that deserves the same protection. AIPPI is concerned with the loss of privilege from the non-lawyer side to the lawyer side. Third World Network (TWN) questioned the privilege applied in the Nobel Pharma case – involved fraud not privilege. Privilege is not catalyst of such fraud, dishonesty is. Frank and open discussions are at risk. An uncertain privilege is better than no privilege at all. How does privilege relate to development? AIPPI observes most IP owners are companies. To develop trade, countries need to develop conditions through their laws in a way that does not create barriers there. The onus is not to create laws that impair trade, such as where confidentiality of legal advice is placed at risk. Failure to fix this problem is more pronounced in developing countries. Nearly every country protects confidentiality to some extent from forcible disclosure. Cross-border confidentiality must be solved by international agreement. National laws can resolve this problem. Two major forms are privilege for common law and professional secrecy for civil law. Protection from forcible disclosure does not conflict with patent law and implicate exceptions and limitations.

Chair – must provide statement in writing if make it verbally.

Substantive Discussion

Agenda Item #7 – Exceptions and Limitations to the Right

Secretariat – The documents submitted during last session - SCP/13/3 - Exclusions from Patentable Subject Matter and Exceptions and Limitations to the Rights - http://www.wipo.int/edocs/mdocs/scp/en/scp_16/scp_16_ref_scp_13_3.pdf; SCP/14/7 – Proposal from Brazil - http://www.wipo.int/edocs/mdocs/scp/en/scp_16/scp_16_ref_scp_14_7.pdf - Brazil proposal on exceptions/limitations - ; SCP/15/3 – Experts' Study on Exclusions from Patentable Subject Matter and Exceptions and Limitations to the Rights - http://www.wipo.int/meetings/en/doc_details.jsp?doc_id=154817. The main document is Draft Questionnaire on exceptions/limitations – prepared by secretariat for consideration by member states - SCP/16/3 - having 11 sections (supra). Member states should address in their response to the general questions: The source of law; rationale of law; scope or entitlement to limitation/exception; must explain particular legal framework for each that is adequate to secure the government objective sought; the practical problems of implementing exceptions/limitations. These are the most common exceptions/limitations, but others can be provided under Section XI.

Switzerland – Member states need more time to review this lengthy document to make substantive comments.

Hungary – on behalf of EU & Member States – strong IP system with enforcement system is consistent with exceptions/limitations. Int’l system governed by TRIPS and the Paris Convention. Considerable harmonization can be achieved by int’l law and EU patent cooperation. The TRIPS and Public Health Declaration governs public health.

Morocco – There is a public ordre exception to patentability. The Morocco-US FTA excludes from patentability and the protection of industrial property – scientific discoveries, aesthetic creations, software, animal breeds which could affect public morals or public order. As a matter of Moroccan IP law, computer software is excluded by proposing patentability of those inventions which require use of computer. There is also the considered possibility of patenting plant species. It is timely if WIPO would clarify these issues through the work of the SCP.

India

– DAG statement –

India

and the DAG have been following the discussion on exceptions and limitations, which is important to the work of the SCP and the WIPO as whole, specifically after Development Agenda discussions allowed for a constructive exchange of views. It is instructive for how developing countries should calibrate patent law according to development needs. These discussions are paramount for countries seeking to develop national IP systems – balance between IP rights holders and the ‘public interest’. The goal is to achieve the highest innovation with the lowest social cost. The WTO which produced TRIPS made these goals more important given the narrowing of policy space on patent limitations/restrictions. More is needed on the theory behind exceptions/limitations. DAG welcomes cooperative work to implement Brazil’s proposal for a questionnaire. The questionnaire compliments the first element of the Brazil Proposal – the exchange of detailed information about exceptions/limitations at the national level and countries’ implementation thereof. It should address why & how countries use or understand the possibility of using exceptions/limitations provided for in their national legislation. It serves as a good starting point for the exchange of information. The results of the survey should not serve as the basis for the exercise of finding common positions which has an independent source. There are other phases of inquiry. The survey can be used as a single basis in addition to a second phase to provide developing countries with the means to adopt useful patent systems. It is important to evaluate how national capacities affect the ability to use exceptions/limitations. The goal is to lead to a non-exhaustive manual for exceptions/limitations which can be used by developing countries to create policy space to adopt exceptions/limitations for development needs. U.S. needs are not suitable to developing countries. India seeks contributions from other developing country member states for input into this discussion.

Brazil is happy with the questionnaire – it is one step into the implementation of the first phase of

Brazil

’s Proposal (SCP/14/7 supra). India explained well the 2^nd and 3^rd phases which would lead to a manual on exceptions and limitations. One added element can be included but discussion will be delayed until later.

Japan – The questionnaire is very detailed and there is a long list of questions. Ample time is needed to review it before discussion.

Spain – supports

Hungary

’s statement. Regarding the questionnaire, it is better if it is responded to by all member states – this would provide a clearer picture around the world. The lack of resources available to many countries would limit the usefulness of questionnaire responses.

Chair – What is the burden on developing patent offices? What should the length of the optimal questionnaire be?

South Africa, representing the African Group - Supports the 3-phase Brazil Proposal on exceptions/limitations: Phase 1 – questionnaire; Phase 2 - what exceptions are effective; Phase 3 – a manual on exceptions. Supports practical activities based on the results of the questionnaire.

China – Exceptions/limitations are an important part of the patent system. The Brazil Proposal is important & useful. Compiling information from all countries will help the discussion of this issue and lay a good foundation for further work in this regard.

Russian Federation

(RF) – The Item 7 SCP/16/3 questionnaire is to cover all exceptions/limitations on patents. It is most important to use the national information to understand the international system. The SCP must study the experience on use of technical criteria and practice on the application of law to ensure the impact of provisions on ecology, freedom of trade. Special attention is attached to acts for obtaining regulatory approval and responses. Also the use of exceptions/limitations by some countries is important. The RF Seeks analysis of the experience of states on some of these subjects – there is interest for prompting scientific innovation. This document deserves full scrutiny.

Korea

– More interplay is needed between patents rules and applicable treaties – e.g., TRIPS, and bilateral FTAs place limits on limitations/exceptions to patents. Korea would like to examine government limitations on the use of limitations/exceptions nationally. Certain elements of the questionnaire are not clear to his delegation. For example, with respect to Section X – UPUV treaty – there are gray areas between trade agreements and UPOV agreements. There are gray areas between patent rights and breeder rights also, and farmer’s privilege and breeder’s rights.

Canada

– Exceptions and limitations to the patent right are not clear in certain jurisdictions. For example, in

Canada

the exception for experimental use is not clear; therefore member states cannot answer the questionnaire with the level of specificity requested. Believes there is a need for more sufficient time to respond due to many technical questions posed.

France – Supports the EU statement and

Spain

’s statement. The questionnaire is very detailed and difficult to fill in. Questions should be made briefer and should focus on essential points and existing frameworks.

Chile – This is a very detailed questionnaire which focuses on the very important issues concerning exceptions & limitations. The Brazil Proposal presents an interesting baseline for what must be undertaken.

SAIFI – Couchod – Recommends the book entitled IP Rights in Fair World Trade Systems – Proposals for Reforms for TRIPS – Max Planck Institute for Property Rights + Institute for IP Law – University of Stockholm. Amend TRIPS Article 30 to introduce mandatory limitations for patent rights. [Proposals to amend Articles 7 and 8, and add New Article 8a can be found online at: http://www.ip.mpg.de/shared/data/pdf/proposed_amendments_to_trips_20110504.pdf.

The paper describes but does not amend existing limitations and exceptions under TRIPS Article 31. The book is written by academics [authored by Annette Kur and Marianne Levin] and deals with what is desirable - http://ictsd.org/downloads/2011/04/agenda-may4.pdf;

[An abstract of this book can be found on Google and reflects academic efforts to reshape IP law so that it is more ‘in line’ with the enhance of ‘public goods’ and the ‘public interest’:

'This book is essential reading for anyone interested in intellectual property, global trade, international law, human rights, development, and competition. While many have lamented the impact of the TRIPS Agreement on the creative environment and social welfare, the heart of the volume is a deeply thoughtful, well-considered proposal for modifying the Agreement. The lead-up is equally compelling: essays by renowned experts describing the substantive, procedural, and institutional problems encountered post-TRIPS and an examination of socially responsible ways to promote innovation.' Rochelle Dreyfuss, New York University School of Law, US'. This book culminates Professor Annette Kur's longtime engagement in critique and reform of dominant IP patterns. Throughout several authoritative essays many by Professor Kur herself the book provides a comprehensive and in-depth overview of the ever growing academic efforts which, at an international level, struggle to reshape IP law paradigms in tune with the enhancement of public goods and interests even beyond the mere perspective of IP law's intersections with competition and consumer welfare in strict sense. This work constitutes a "must" for all those who, at any level of function and responsibility, engage in overcoming an historic unbalance that has so far basically precluded an adequate reconciliation of IP law with fundamental societal needs.' Gustavo Ghidini, University of Milano, and LUISS University, Rome, Italy. This important new book constitutes a serious examination of both the positive potential, as well as the deficiencies, of the TRIPS agreement. In the light of their analysis, the editors and their colleagues make a powerful case for wide ranging reforms. Intellectual Property (IP) law particularly in relation to international trade regimes is increasingly finding itself challenged by rapid developments in the technological and global economic landscapes. In its attempt to maintain a responsive legislative system that is interacting successfully with global trade rules, IP is having to respond to an increasing number of actors on an international level. This book examines the problems associated with this undertaking as well as suggesting possible revisions to the TRIPS agreement that would make it more relevant to the environment in which today's IP mechanisms are operating. The overall aim is to find an adequate response to the 'IP balance dilemma'. The theme is pursued throughout various topics, including a look at what this means in relation to the economy in a country like China, and also considering how IP is increasingly having to reconcile itself with human rights issues.This book will appeal to academics, policy makers and post-graduate students in IP and international trade law, as well as related fields, such as development and human rights.

http://books.google.com/books/about/Intellectual_Property_Rights_in_a_Fair_W.html?id=yKNXrdRp6nIC .

Another abstract can be found online on the Max Planck Institute website, at: http://www.ip.mpg.de/ww/en/pub/news/amendment_of_trips.cfm . An excerpt reads as follows:

“The project took its cue from the growing discontent with the development of Intellectual Property (IP) in the post-TRIPS era. Indeed, what appeared to be the ultimate breakthrough of IP-oriented law and policy-making on a global level also marked a culmination point in the sense that the broad public esteem previously commanded by IP gradually lost ground. Fuelled by frustration of expectations raised with regard to the impact of IP on economic welfare, and resenting the restrictions imposed on communication and exchange of technology, deep skepticism towards the functioning of the system nowadays governs the perception of IP by large parts of the public, in particular when it comes to sensitive issues such as public health, nutrition, and dissemination of knowledge. IP is often seen as a mere tool for securing economic dominance of a few over a world of many, and as impeding rather than promoting a sound and sustainable socio-economic development...The proposals are structured as follows: Given the paramount importance of the general provisions in Part I for the interpretation of the TRIPS Agreement, the current wording of Articles 7 and 8 – Principles and Objectives – is fleshed out and amended so as to reflect the entire spectrum of policy goals to be aspired in a sound and thriving IP system, and to ensure its full application. In addition, a new provision – Article 8a – has been added, as an instrument modulating the balancing of interests between right holders, competitors, and the public at large.”

François Curchod was involved in the project as temporary or permanent group project member.

KEI – 28 USC 1498 – is a limitation of remedy as well as right – the forfeiture of the right to seek an injunction. There is also a limitation on damages.

ITSSD - Intervention with respect to the Limitations and Exceptions Questionnaire concerning the lack of questions on adequate remuneration in Section II, IX. There is also a lack of questions on the protection of trade secret information and proprietary confidential data and clinical testing data. [ITSSD submits written comments to the SCP concerning these and other concerns about the questionnaire.]

India – Question 4, Section II. – should be rephrased by capturing the public policy objective of legislation – reference to legislative history and judicial interpretation – 4, 11, 23, 31, 51, 66, 84 questions should be amended. “What is the public policy objective for providing the exception”? Delete the reference to the term ‘rationale’ and replace it with the term ‘public policy objective’. Please explain with reference to the “legislative decision, parliamentary debates and judicial decisions, where possible.”

U.S. – The Questionnaire being discussed is too long and overwhelming. To encourage completion of the questionnaire, treat new language separate from question – 4a – public policy objective; 4b – give explanation.

India – does not object to the US suggestion.

South Africa – agrees with India.

Brazil – Scholars divide limitations into two classes = intrinsic limitations – within framework of system (research exception) – extrinsic limitation – outside IP framework (competition policy) with remedies including CLs. Include certain exceptions not intrinsic to the IP system (e.g., competition) within the questionnaire.

ITSSD – As concerns the India proposal, we recommended that the term ‘legitimate’ modify the recommended language change – “public policy objective” - to reflect that this language is contained in WTO agreements.

India – Responded by asking the Chair whether the meaning of ‘legitimate’ recommended by the ITSSD was a formal proposal?

Chair – Responded that an ad hoc NGO can only make non-binding ‘recommendations’ which members can take up if they so choose – they can’t make ‘proposals’.

Korea – Could there be provided references to WTO and other agreements along with questionnaire?

TWN – Would like to make a statement on exceptions & limitations. Patents are statutory monopoly affecting lives of people living in developing countries to enjoy the right of health, information, etc. The TRIPS Agreement has been used to hamper the use of exceptions and limitations.

Chair Section III - Items 9-14; 15-20 – No comments.

Section IV –

Switzerland – What does this exception mean? Seeks clarification of what this section is directed at.

Secretariat - Preparation of prescribed medicine – that appearing in a number of countries – Where “medicine is prescribed by medical practitioner” then a prescription for an individual patient preparation of medicine by a pharmacy would be considered a non-infringement of the patent right. See: Para. 115 within SCP/13/3.

U.S. – “Preparation of medicines” is the correct language for the exception irrespective of whether a medicine was prescribed by a doctor. Delete the word ‘prescribed’ from the title.

Chair – interprets this as a formal proposal for amendment.

Section V –

Russian Federation – Russian law – there are no patent licenses in this area b/c coverage under Civil Code. No right of post-usage of patents. Subsequent use and prior use would be split into two. There are exceptions for use after patent is issued. For right to use either prior use or after application of patent. This right pertains to the usage after the patent – a period which allows the right to be conserved after a first use has been completed.

Chair – is Russia referring to continuing use from before patent or only to use after patent grant?

Russian Federation – After the patent has been granted.

El Salvador

– Russia referring to ‘second-use’ patents which were patented once and then with new inventive step, another patent was issued with respect to.

Chair – There is a lack of full clarity on a complex issue. The Chair will seek clarification by the Secretariat for the next discussion of the text.

Section VI –

ITSSD – How to treat IP rights in the global commons – UNCLOS? For example, any IP developed by a member state national in the global commons will be considered ‘public goods’ under the ‘common heritage of mankind’ regime of the UNCLOS. How do WIPO member states address this issue in their national patent regimes? Is there a mechanism for such an eventuation? Is there agreement at the national level?

Brazil

– doesn’t understand.

Chair – recommends clarification of issue with ITSSD. [ITSSD submits written research and comments to the SCP on these issues.]

Section VII

Russian Federation – Nothing is found on the secrecy of manufacture and process protection. Law determines level of secrecy here. E.g, pharmaceutical, pesticide – Must receive authorization from relevant authorities governing the law of pharmaceuticals to secure security of usage of pharma/chemicals. There are prohibited uses of chemicals/pesticides that have not received regulatory authorization.

Section VIII – no comment.

Section IX – CLs

Russian Federation

– CL and gov’t noncommercial use are completely different issues under Russian law.

Chair – Would Russian propose dividing this section into two to reflect this difference?

ITSSD – Noncommercial use – Section II and Section IX – are they the same or different concepts?

Secretariat – they were referring to non-working and noncommercial use – different concepts. Section IX – refers to non-working, while Section II refers to noncommercial use.

Section X -

Russian Federation – Russian law provides limitations to holder’s rights depending on usage of said rights. Whether commercial or experimental use? There are limitations on those who obtain breeder’s rights. There are no specific limitations on farmers.

Chile – The Questionnaire refers to exceptions & limitations on patents but there are no restrictions on rights not falling under the patent system. TRIPS Article 36.3 can apply. Section X, as it stands, is not entirely straightforward when dealing with vegetables which do not fall under patent law. Section X should specify that it deals only with patent law and not with non-patent rights. Section should not prejudice limitations and exceptions in other bodies of law.

Secretariat – The Questionnaire is only intended to deal with patents.

Chile – Not trying to include vegetable intentions under other legislation.

Chile

wanted to be clear that this section applies only to patent law.

Korea – The Korea delegation has similar problems understanding Section X. Based on common law, it is not described as a ‘privilege’. Breeder’s rights are protected under breeder’s rights law and not under patent law. ‘Privilege’ is a new concept/term. This delegation proposes to rephrase this section as ‘exceptions and limitations to farmers & breeders’.

Chair – Secretariat agrees in principle. Limitations on rights that were originally ‘extended’ look the same but are legally different than exceptions/limitations to ordinary patent rights.

Congo –

Chair – cannot extend questionnaire to IP rights other than patents given scope of SCP mandate. It would NOT apply to UPOV protections.

Section XI

Russian Federation

– Certain exceptions and limitations in Russian law are not considered. For example, there is the Civil Code provision for licensing patents for discoveries with municipal contracts.

El Salvador

- Spanish-speaking country = exceptions contained in case law – judicially created exceptions included.

Cambodia

– Section X – Breeder right contained in ‘other’ law, NOT patent law.

Syria – Different answers will result b/c developing countries looking forward to investment to ensure their development. Support

Egypt

statement, need translation of questionnaire into Arabic.

Chair – Arabic language will be included in translation as of 2012.

U.S. – Thanks

Brazil

for suggestions concerning questionnaire. The

U.S.

has reservations about the questionnaire. Since there are no questions concerning base line rights to which exceptions and limitations should apply, the usefulness of the questionnaire will be limited. For example, Development Agenda recommendations 37 and 38 make reference to such a baseline – “Upon request and as directed by Member States, WIPO may conduct studies on the protection of intellectual property, to identify the possible links and impacts between intellectual property and development” - http://www.wipo.int/export/sites/www/ip-development/en/agenda/recommendations.pdf . The U.S. looks forward to further revisions of this document.

Brazil – Responds to El Salvador – question already dealt with.

Panama

- Understands concern of El Salvador – case law is stronger than legislative law for many countries.

El Salvador

– Does not intend to change the statement and didn’t intend to “open up a can of worms.”

Switzerland – Agree with U.S. to revise questionnaire which would take into account their questions and problems.

Japan – We need ample time to respond to the questionnaire; need more time to discuss the questions. Japan invites the Secretariat to revise the questionnaire as suggested by U.S. When deal with exceptions & limitations it is useful to know where the starting point is.

Hungary

– Supports U.S. proposal.

Brazil – The U.S. referred to

Korea

’s recommendations. Korea wanted specific articles in treaties referred to so it can understand specific exceptions & limitations. Is this what the U.S. referred to? How much time will the Secretariat require to revise the document and then to distribute it to the members? How much time will members have to respond??

Chair – Secretariat would send out revised questionnaire by next SCP meeting. The U.S. should clarify its proposal.

U.S.

– Speaking of underlying patent law – conditions under which patent would be granted and rights associated with such patent right. Need a starting point.

Chair – The International Bureau should prepare questions in line with these comments with clarification from the

U.S.

Brazil

wants the questionnaire revised before the next meeting. Is it important for delegations to see questionnaire revisions before having it distributed?

[Pursuant to Article 9 of the WIPO Convention, the International Bureau was established “as the Secretariat of the WIPO organisation under the direction of the Director General as the chief executive assisted by two or more Deputy Directors General. The International Bureau is very active. It plays a significant role in determining the vision of the organisation, shaping the nature and final outcome of treaty and other negotiations and discussions, drafting the recommendations by various bodies on various matters, admitting observers to various WIPO bodies and in preparing the draft agenda for the General Assembly.” See Sisule F Musungu and Graham Dutfield, Multilateral agreements and a TRIPS-plus world: The World Intellectual Property Organisation (WIPO), TRIPS Issues Papers No. 3, Quaker United Nations Office (QUNO), Geneva (© 2003), at pp. 7-8, available online at: http://www.geneva.quno.info/pdf/WIPO(A4)final0304.pdf].

Secretariat – Feasible to do whatever SCP requires.

Switzerland – Wants to reexamine questionnaire based on modifications to be made in the next meeting.

Chile – It is possible for the Secretariat to circulate a revised draft before the next meeting. Also it may be possible to have responses by next meeting.

Denmark – Why not just distribute questions with revisions suggested?

Chair – Are all in favor of Brazil’s proposal?

Japan – prefers a second look at the questionnaire because they have questions of their own.

U.S.

– Supports an opportunity to have a second look at the questionnaire. In the Committee on trademarks there was confusion about some of the questions. If provide revision in 2012 can then put out in Arabic and receive more complete and robust responses to questions.

Chair – Secretariat will offer delegations a minimum of 6 months to answer the questionnaire given the need for interdepartmental coordination in many governments. A revised document will not likely be ready by the next SCP meeting. Would it be acceptable to revise questionnaire ‘as expeditiously as possible’?

Brazil – This would mean secretariat would need 1 year to revise the questionnaire. Could it have the questionnaire available within a shorter timeframe?

Switzerland – There is a problem with the timetable as proposed. We would need more time during the next meeting to evaluate questions revised in the questionnaire.

India

– There are not many questions to the questionnaire. There will always be questions that will require clarification. We don’t need a perfect document. Can a revised questionnaire be provided before week’s end so that could take stock on Friday?

Chair – Allow the Secretariat to consult amongst themselves. Secretariat will do what they can and get a fairly rough draft out within the next few days. Many delegations did not have time to review this document as reflected by the lack of questions being posed today.

Brazil

– There is no need to delay for a year.

Chair – does not see a consensus yet. Wishes to delay decision until tomorrow or Wednesday and consult with different groups to see if they are comfortable going forward.

India – Agrees with need to secure consensus. But also thinks Secretariat should be able to make revisions discussed today. Director General says he could have questionnaire back to delegations by late Wednesday. Only if consensus exists afterward will it be sent out to delegations. Translations will further delay delivery of revisions.

Hungary Group B meeting tomorrow morning at 8pm.

DAG meeting tomorrow morning.

Agenda Item #8 –

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Day 2 - Tuesday, May 17, 2011:

Agenda Item #8 – Quality of Patents, including Opposition Systems

Canada

– introduces proposal of patent quality – the UK and Canadian Proposal - SCP/16/5 -http://www.wipo.int/edocs/mdocs/scp/en/scp_16/scp_16_5.pdf , a program on the quality of patents.

Past efforts to achieve consensus to move the work program along has been stymied.

This problem has since been overcome.

All member states despite their level of development have patent systems granting patent rights.

The question is how IP regimes including patent offices can enhance patent-based innovation.

Nat’l patent systems must seek to achieve appropriate balance between holders, users and the public to promote social, economic development.

This proposal was created to focus SCP expertise on work to produce tangible benefits by creating a framework for patent quality including technical assistance and infrastructure development – items #10 and 11.

It sets forth a broad framework with three foundational components:

1. Technical infrastructure development – leveraging existing ICT mechanisms to maximize information resources; IT development is not the most efficient use of SCP resources.

2. Information Exchange – intended to help offices gain a better understanding of the processes that patent offices employ within the patent system at large for the purpose of leading to an improved quality of granted patents.

3. Process Improvement – identifying elements that national patent offices have been implementing to improve the patent grant process. National search and opposition processes and techniques used to enhance quality of documentation of submitted applications – quality in, quality out.

Encourage member states to contribute elements towards this process.

The issue of quality of patents including opposition systems was determined to be important enough for this committee to consider in-depth.

The proposal is deemed consistent with the mandate and core expertise of the SCP.

Norway

– Supports the Canadian/UK proposal. In order for the patent system to deliver according to its purpose, patents granted must be robust and of high quality, subject to a wide set of tools and procedures and to constant improvement. Focusing on information exchanges between member states is very practical and useful approach to further common goals within the SCP. In the Norwegian IP office, the application process is covered by quality management system ISO 9001 – a web-based system entitling all employees capability of submitting comments to improve the system. It has dynamic and easy to use features and can be employed to review the compliance rate and to review measures taken to ensure high quality. The sharing of knowledge is essential to improving patent quality and to improving search and examination processes. Sharing of search strategies by examiners is essential and the SCP should look for ways to increase such sharing of strategies – which sources are used and how they are used. It is also necessary to find practical mechanisms to improve sharing search strategies between patent offices.

Korea

– Thanks UK/Canada for submitting a constructive proposal which it supports. The problem of patent quality is no longer a domestic issue – it is international. There is duplication of application of patents worldwide. The same inventions are being filed within different national patent offices around the world. Duplication of national workloads and lower quality patents result. The patent prosecution highway [See: Patent Prosecution Highway (PPH) - Fast Track Examination of Applications, USPTO website available online at: http://www.uspto.gov/patents/init_events/pph/index.jsp] and PCT reform reflect international efforts to cure the quality of patent problem. Korea recommends the introduction of another element for this work program –international work-sharing – PPH and other regional operations for sharing work between and among national patent offices. Korea wishes to make a proposal of its own to the UK/Canada.

Denmark

– Supports the UK/Canada proposal. Have an ISO 9001 certified patent process system. It is benchmarked to other patent offices on patent prior art searches to learn and gain experience from other offices to improve the quality of its own work. Exchange of information and experiences on three main elements is called for and constructive to improving the quality of patents.

India

– Wishes to make comments, representing the DAG, on the UK/Canada proposal and the SCP opposition study. On behalf of DAG, the question of patent quality is an important issue for developing countries. It is a complex offering. Patent quality means – linked to compliance with three criteria for patentability – novelty, inventive step and industrial applicability. It varies from country to country. Quality is finally determined by the domestic law of each country. The underlying issue is how far patent offices should apply the patent criteria and thresholds used. This depends on the ability of patent offices to apply domestic patent law effectively. Improvement cannot be achieved simply by the adopting of practices used by other offices. This would lead to harmonization only, not quality necessarily. Quality is much broader than that discussed in the UK/Canada proposal – SCP/16/5. India, on behalf of the DAG, seeks more clarity of the meaning and intent of the term ‘patent quality’ as used in proposal.

The first fundamental step should be focused on developing a commonly agreed upon definition of ‘patent quality’. We must look at the problem of ‘low quality patents’ first. Paragraph 3 of SCP/16/5 refers to the position that the SCP is in to make a meaningful contribution to the Development Agenda.

India

, however, cautions against the duplication of effort in the WIPO. A proposal is already underway within the DAG project, concerning the PCT process and capacity building and infrastructure development programs. How is the present proposal different from other activities already underway within WIPO, and how should this proposal links up to them? Paragraph of SCP/16/5 contains “appropriate balance of interest” language.

India

wishes to highlight that the goal of the patent system is to contribution to transfer and dissemination of technology. Paragraph 6 of SCP/16/5 places the patent quality issue solely on the shoulders of patent office. India believes that the judicial system also has an important role. Paragraph 7 of SCP/16/5 points to the link between patent quality and the DAG agenda. However, this issue goes beyond this narrow view to other issues – norm-setting, flexibilities, public policy/public domain/ technology transfer, ICT and access to knowledge.

The UK/Canada Proposal’s focus on technical infrastructure development to enhance existing sources of information can be considered similar to prior proposals. Developing countries without resources would need to rely on patent offices in developed countries which have networks with other offices and resources which would permit fast-track filing processes. Work-sharing could be problematic for developing countries could undermine the flexibilities existing in domestic patent law at the policy level. Providing access to the quantum of information available to patent offices to conduct high quality patent search and examination would be the better solution. A study should be conducted on the current state of affairs among patent offices of WIPO member states to access information and various databases. Also such a study should look at the cost of patent examination. To enhance the quality of search and examination, it is necessary to provide free access to databases to private and public domains in developed countries. Feedback from users should be part of prior art and examination processes. Users may be interested in securing faster and more secure grants of patent. This would lead to questions on reliability of other patent office processes rather than on patent quality. The function of the patent office is to scrutinize patent examination extensively before granting a patent right. Patent offices must institute rigorous examination processes with a view toward granting high quality patents and avoiding the grant of frivolous patents. Patent offices must seek the widest prior art search and examination possible. India supports improvement in patent office processes to improve patent quality, and to avoid mistaken grants of patents which are difficult to correct post-hoc.

The key problem with patent quality is how to prevent the ‘ever-greening’ of patents and the grant of ‘frivolous patents’ that do not make a significant contribution to society. The ‘test’ should be – what is the contribution of patented invention to society? The exchange of information between governments should deal with this issue. Patents are often used to prevent competition rather than contribute to innovation. In the pharma sector, in the EU, patents have been used to prevent introduction of competitive patents. The U.S. FTC has also called for improvement of the patent system given patent use based on competition rather than innovation objectives. Focus on patent quality should not result in national patent office use of policy space.

Hungary – The adequate application of patentability criteria is critical to patent quality. The quality of examination and enforcement functions also important.

South Africa – Is pleased that the UK/Canada Proposal makes reference to DAG recommendations. The patent quality definition is open to different meanings. Each country defines patentability requirements differently in accordance with its own domestic laws. The adoption of patent examination and prior art search processes of other countries will simply lead to harmonization of patent processes, and will not lead to achievement of DAG recommendations. South Africa agrees with SCP/16/5 Paragraph 5. But, the key function of the patent system is to contribute to the transfer and dissemination of technology to the public leading to the promotion of innovation. What is the meaning of the term ‘quality of patents’ set forth in the proposal? There is no universal definition. It is not clear how granting ‘quality patents’ delivers economic and social policy objective as quoted in paragraph 5. What is the meaning of the interplay between quality of patents and technology infrastructure? The reference to enhancing existing examination processes is akin to work-sharing between patent offices discussed in other work programs of the WIPO which is problematic for developing countries. Information exchange will focus narrowly on administrative processes rather than other stakeholders of patents – ‘users’ may have different interests than members of the public. What else in the patent system not well functioning? How will information sharing contribute to public policy interests? What is intended by Paragraph 12 of SCP/16/5 regarding process improvement intended to improve patent granting processes? What flexibilities are provided by international agreements to improve patent granting processes?

Chair – requests written versions of their interventions.

Russian Federation – Patent quality involves not only offices but also inventors who seek to protect their work against 3^rd party infringement. Offices wish to reduce costs as much as possible while delivering quality patents. Russian studies in 2006 resulted in the department’s examination of patent applications with a view towards patent quality and in its monitoring of administrative procedure implementation when rights are transferred and/or are registered by rights holders. Quality of patents is closely linked to international bodies dealing with issues with which national patent offices cooperate. There is a need for an internal monitoring process undertaken by experts as well as an external audit to monitor patent services provided by patent offices focusing on the quality of patents at different levels of the patent application and enforcement review processes. There is a need for programs to train inspectors and to standardize criteria for consideration of patent applications – concerning innovations for which patents are applied for. There is a need to reduce the duration of the procedure and the highest possible quality of patents. There is a need to standardize the establishment of the date on which patents are applied for. The RF supports UK/Canada Proposal focusing on sources of information, technology transfer elements. There is a need for national patent office cooperation to improve the quality of examinations. There is a need to seek the harmonization of patent practices/processes in this area. The RF supports the proposal of Korea containing additional elements.

Australia – The UK/Canada Proposal is a good starting point. It provides a good source of information and reference for developing countries. Australia recently introduced a rigorous quality system nationally and is willing to share it with the SCP. Australia suggests with respect to the issue of technical infrastructure that the SCP could request information on current activities in this area – patent scope and access to research and development resources and patent office sharing of experiences.

Brazil – Associates with statement of India on behalf of DAG, and welcomes discussion on the quality of patents. Brazil places priority on high quality patents. There is a need to agree on a clear definition of ‘quality of patents’. Brazil cannot otherwise accept what is being proposed on info exchange and process improvement. What is meant by ‘technical patent law’ in Paragraph 6 of SCP/16/5, or by ‘Quality of applications file’ in Paragraph 12? Brazil cannot understand the proposal of Korea that this should include some harmonization of law. Brazil wants to know ‘where’ we are going with the UK/Canada Proposal.

Japan

– The patent granting procedure includes an examination and review procedure. There is a need to look at these issues practically. 3 pillars are necessary to achieve high quality patents. IT infrastructure contributes to the patent search process. Info exchange is useful through the sharing of experiences. The EU delegation considered the issue of technology which is important.

Germany

– supports the UK/Canada proposal. The establishment of a fair balance between quantity and quality is key. An overview of quality management is needed which differentiates between public and internal work. Externally, a specialty department for information services to the public is needed to improve quality of patent applications. It should offer public brochures and solicit individual feedback. Internally, an office established working group is needed to promote quality management.

Germany

has drafted a basic concept promoting continuous further development of quality management. It is essential that patent examiners have a profound scientific and technology knowledge. The ongoing training of patent examination staff is key. Patent examiners should also have a high degree of independence and autonomy. There must be an awareness of the need for high quality work among all staff of the patent office. The German patent office has liaison with other national patent offices on quality issues.

New Zealand. – The UK/Canada Proposal forms good basis for discussion.

Spain

– supports Hungary’s statement on behalf of the EU & the Member States. Quality can be defined as fulfillment of patentability requirements by national patent offices. There is a need not only to look at the technical infrastructure and exchange of information, but also to focus on the improvement of the patent grant process of exclusive rights. The provision of documents on prior art must be but is not being detected by examiners. The substantive issue of patentability must be considered. In evaluating innovation, patent offices must eliminate doctrine and must proceed with defining various definitions. There must be innovative activity and it must be publicly divulged. Consistent with Chap. 21 of the Patent Cooperation Treaty (PCT) international search guidelines- the SCP should consider its substantive elements. [See: PCT International Search and Preliminary Examination Guidelines (Guidelines for the Processing by International Searching and Preliminary Examining Authorities of International Applications Under the Patent Cooperation Treaty) as in force from March 25, 2004 (PCT/GL/ISPE/1) (March 11, 2004), accessible online at: http://www.wipo.int/pct/en/texts/pdf/ispe.pdf ].

India –SCP/16/5 does not define the term ‘patent quality’. What does it mean? Paragraph 9 of SCP/16/5 – its main competence does not speak to exclusions and exceptions followed by each country. India has seen divergent opinions from established authorities. Whose quality is better? How is it possible to ascertain ‘quality’ when patents are granted on different grounds in different countries? How does one look into the quality of a patent? In

India

, the patent examiner examines the case and gives an opinion to the authority which can be agreed or disagreed with. One must look at disclosure given – not just at the quality of the drafting. One must look at key words and then, when one gets a hit of certain documents one must examine the quality of the documents and the citations. The analysis of ‘patent quality’ comes down to the interpretation of the individual examiner. India is struggling how to assess the ‘quality’ of a patent application. There are simple and complex applications which have a bearing on the search process and therefore patent quality. For example, under Article 8.2 of the Patent Cooperation Treaty [which deals with claiming priority for prior patent applications – See: Patent Cooperation Treaty, Article 8, available online at: http://www.wipo.int/pct/en/texts/articles/a8.htm#_8 and Regulation 4.10 of Regulations under the PCT (as in force from July 1, 2010), available online at: http://www.wipo.int/pct/en/texts/pdf/pct_regs.pdf ], when the controller has doubt he can ask the patent holder which country (countries) the patent was granted in, and the patent holder must explain why the application was allowed or refused in that country. International search reports and preliminary examination reports are not binding on the India patent office.

China – There is a need to improve patent quality. Different offices should improve their own capabilities. There is also a need for different countries to exchange information.

Venezuela

– The quality of patents issue is an issue of public interest versus the rights of property holders. It focuses on the effects of patents on development. There is a need for flexibility for patents – access to drugs, food and other areas of life and human development. In line with the MDGs [Millennium Development Goals], it is important to assess the issue of patent quality b/c patents cannot be taken in isolation of society and the process pursuant to which patents are granted.

France – Supports the UK/Canada Proposal and the intervention of Japan seeking additional studies on the state of technology and inventive techniques.

Mexico – Supports the UK/Canada and Korean Proposals.

U.S.

– Strongly supports the UK/Canada proposal. High quality patents provide certainty to the rights secured and promotes innovation and contributes to capacity building. As we implement the Canadian/UK proposal we can better understand the meaning of ‘quality patent’. Harmonization of quality management practices should not be goal, but rather, learning from others should be the goal. The proposed program is consistent with DAG recommendations. This proposal would help SCP return to technical discussions of the three foundations rather than to addressing political issues which are better handled in other fora. The term ‘Technical’ in Paragraph 6 of SCP/16/5 reflects that we are at SCP as technical experts. U.S. experience could be referred to as an example. The Office of Patent Assurance – Patent Quality Office is comprised of highly technical experts focusing on patent prosecution. It provides timely, reliable and meaningful quality, trends in examination quality, developing data driven improvement processes, etc. The measure of ‘quality’ has changed at USPTO over time. There are new procedures to develop patent quality as of 2012 and expanded quality metrics. There is a new composite metric composed of seven different factors - factors designed to provide an overall picture of patent quality.

Hungary – The proposed work program can meet the needs of national patent offices around the world. Our national office obtained quality certification within the framework of its management system - prior art search and examination has been the focal point. We would be willing to share our own experience and to learn the experiences of other national patent offices.

Singapore – SCP can tailor work to compliment and enhance the work of other fora. Patent Quality should be defined as the ‘Proper examination of patent applications based on criteria set up by respective patent offices – quality of patent examinations would reflect focus on the work of patent offices and on the need to properly examine patent applications based on national law.’ Information exchange should be changed to ‘information access and exchange’ - access to reports, opinions of current applications, necessary training for use of databases and tools, then supported by technical infrastructure. India’s proposal for a study of current national patent office access to information is complimentary to UK/Canada proposal. Member states should be able to choose what is best for them. Members of the public must have certainty about whether they can clearly ‘work the invention’. Patent offices would not simply adopt practices and procedures of other offices. They must only adopt useful practices/processes that are suitable to them.

Poland – Development of commonly recognized high quality patents would significantly contribute to backlog reduction, and would ensure the issuance of high quality patents. Central European and Baltic States represented.

European Patent Office - supports the statement of

Hungary

. The EPO would be willing to share with the SCP information about the European Quality Management System experience - management of resources, quality assurance, two-way communications between examiners and users, etc. – i.e., the ‘end-to-end processing of patent applications. There is a continuous dialogue between the EPO and users of the patent system under the Partnership for Patent Quality.

[See: About Us - The European Patent Network - Cooperation (2011), at: https://www.epn-cooperation.org/about-the-epn ; Patent Offices of United States, Europe, and Japan Reaffirm their Commitments to Cooperation, at 28th Annual Trilateral Conference, European Patent Office Press Release (Dec. 6, 2010), at: http://www.epo.org/news-issues/press/releases/archive/2010/20101206a.html; Quality through Partnership, European Patent Office website (Nov. 11, 2009), at: http://www.epo.org/news-issues/news/2009/20091111.html .]

CIPA-EPI – fully support UK/Canada proposal – external and internal quality management.

FICI- Fully supports the UK/Canada work program. Quality patents require good search and supplementary searches made by other offices before criteria are adjudged by the national patent offices. There is growing consensus of the basic criteria of ‘novelty’ and ‘inventive step’. Increased transparency should enable examiners in one office to see how a previous search was made in another office to avoid wasted efforts. Final determination should be made in view of local law. The PCT system is an ideal vehicle to improve prior art search practices. Details will be shared of data bases searched, classes searched in various national offices, key word combinations and key word class combinations used with national applications and PCT applications. We should seek to examine based on relevant prior art found by other national offices. Ongoing feedback mechanisms would be helpful as being discussed by PCT authorities.

KEI – More information on the cost of litigating patent disputes in different countries is necessary. The cost element of challenging poor quality patents has an impact on the quality of patents. There are better ways to share information on patents – in particular, information about those patents that have been challenged in litigation in different member countries. A database of proceedings in different countries where patents have been challenged would be very useful. The PCT propagates patents around the world with the presumption of validity. Countries should be permitted to reverse the presumption of validity if a patent is challenged in other countries. The ability to undo bad patents more efficiently is important. Historical references to patent quality show that today’s discussion on patent quality is the same. We can’t eliminate all bad patents, so must manage a system to address the management of bad patents.

KEI – side-bar – patent & health – Carlos Correa 1-3:30pm this afternoon.

Panama -

ALIFAR – The patent quality issue is at the cornerstone of discussion. Tech transfer and infrastructure development will not solve the problem. National patentability criteria are the key issue dependent on the national policies of each country. The current system is being undermined – patents are being filed reflecting very little innovation in certain sectors. In the pharma sector, for example, many patents have little innovation – these minor patents are filed aggressively to prevent competition from other enterprises and trigger creation of trade barriers. Enormous multinational monopolies impair access to medicines. Industrial patents do not create such concerns in other industries. Examination criteria should reflect health and industrial policy. Each country should be able to decide on patentability based on their respective national examination criteria. They should also be able to identify the criteria for selection of material of shared information.

TWN – Poor quality patents lead to backlogs and unnecessary litigation, and increase levels of monopoly in markets and prevent competition. The highest criteria and thresholds are necessary. In developing countries, granting patents based on the highest level of criteria should not be based on incremental innovations. Only real inventions on which patents are based should be granted. Patent offices should be able to apply exclusions directly without accommodating through the ‘back door’. Patent quality cooperation should not result in the virtual harmonization of patent law around the globe. Rather, it should lead to substantive harmonization of patent law. TRIPS Article 27 reflects a trend to lower the threshold for patentability criteria. Some countries don’t use all prior art available. Traditional knowledge is not being considered adequately. The disclosure element is important in a patent application. Patent offices should have a mechanism to review decisions to grant patents throughout life of patent.

EAPO – Patents granted under national and regional systems is possible. Support governments seeking to impose standards as a condition to granting patents. Patents granting stemming from domestic and regional legislature can result in conflicts.

ICC – The ICC would like to refer delegates to a report issued by the ICC Commission on IP dealing with the coordination of patent office efforts to undertake prior art searches, dated 6/28/10. In particular, the ICC would like to draw delegates’ attention to Section IV. Searching – What ICC Would Like to See: An “Early Comprehensive, Coordinated Search”. [See: Cooperation Between Patent Offices: Prior Art Searching of Patent Applications, ICC Commission on Intellectual Property (6/28/10) at pp. 5-7, available online at: http://www.iccwbo.org/uploadedFiles/ICC/policy/intellectual_property/pages/ICC%20Statement_Patent%20Work%20Sharing_28%2006%2010.pdf .]

UK - Numerous delegations have raised questions about the UK/Canada Proposal. The

seeks to preliminarily respond. We will follow up bilaterally with such parties. The aim of the proposal is to suggest a general framework which will guide discussions on this topic. Three areas were chosen to generate a broad interest irrespective of the level of development. We never intended to be prescriptive. Sharing information and what to do with information is subject to the decision of particular national patent offices. Exchanges of information on quality can be very useful and contribute to national office improvements. We did not intend to be prescriptive concerning the definition of the term ‘Quality of Patents’. There is no single definition that would be helpful since we all come from different national systems and have different notions of quality. The duplication of work effort is a very important issue. The proposal is intended to compliment the work being done elsewhere. As a contracting state of the PCT, UK has a strong interest in improving the PCT system. But, it is also constantly striving to improve its national patent system. The SCP should seek to complement the work of other bodies since it is a useful forum to discuss issues including this one.

Canada

– suggestion about responding to questions and next steps to take.

Opposition Systems -

India, representing the DAG, wishes to address the subject of ‘Opposition Systems’ within Secretariat study SCP/14/5 at: http://www.wipo.int/edocs/mdocs/scp/en/scp_16/scp_16_ref_scp_14_5.pdf. The DAG attaches much importance to the role that opposition systems can play in addressing invalid patents. In addition to pre-grant opposition and post-grant opposition, there are also grounds that can be pursued in favor of development. Not only should opposition systems enhance patent quality, but they should also support the broader public policy objectives of developing countries. In the

U.S.

, reexamination procedures are rarely used and the common practice is litigation. Modeling national post-grant review processes after those of the European system would improve the review of prior art and would reduce the cost of litigation. Paragraph 21 of SCP/14/5 refers to the lack of resources at patent offices [“On the other hand, the opposition system also incurs costs, and is not always free from criticism. First, in order to set up an opposition procedure, the administration (the patent office) needs to have relevant resources, such as technically qualified examiners who are capable of reviewing the initial decision”]. And, in footnote #3 of SCP/14/5, patent offices which lack adequate resources can enter into cooperative mechanisms with other patent offices. [“As an alternative, a patent Office which does not have resources to conduct substantive review may conclude cooperation agreement with other offices.”] How could examiners in one office be sufficiently qualified to contribute to patent examination in other offices subject to other standards of patentability and other issues of national patent law? The lack of sufficient patent examiners makes a stronger case for a robust patent opposition system. How do opposition procedures can impose significant systemic delays in patent examination? Delays in granting patents b/c of opposition systems delay can impair innovation. We should evaluate the contributing factors of an enabling environment for a strong opposition system. Sufficient information in published patent applications, fees for proceedings and availability of qualified patent examiners contribute to good functioning of patent opposition system.

India

calls for dedicated page on the WIPO website where studies about patent opposition systems can be posted and questions posed.

Chair – will leave issue open for further discussion.

Switzerland – supports topic of patent quality. Patent opposition is closely linked to patent quality. Switzerland wants a new document from the Secretariat on Patent Quality for the next meeting referring to available mechanisms.

Hungary

– EU + Member States – Opposition procedures must be cost-effective and an efficient system is needed to allow for challenges of patents. There should be a third party observation system under the PCT. The SCP should keep opposition systems on its work program.

Russian Federation

– Opposition systems SCP/14/5 requires further study. Use questionnaire to evaluate different patent opposition systems. The RF requests from the Secretariat the preparation of a draft questionnaire on ‘opposition systems’ deliverable possibly during the next session.

South Africa

is concerned about the study on opposition systems. The study interprets pre-grant and post-grant opposition as an impediment to the grant of patents. A strong opposition system helped local innovation in Japan. South Africa agrees with India. The SCP should focus on how opposition systems can be strengthened and the experiences of countries can be shared in using opposition systems.

Chair – There is sufficient consensus to keep this item on the agenda and for the international bureau to revise the work it has done.

Secretariat/ Pooley – Appreciates member state interventions and comments on SCP/14/5, and promises that the Secretariat will revisit the study and provide an update to it during the next meeting. Member states are invited to provide information and experiences they have that would help the Secretariat to revise their document.

KEI – would be helpful to get costs of those using the opposition system.

ALIFAR – The opposition system study should go into more detail about pre-and post-grant opposition and review the obstacles to greater use of opposition systems.

Agenda Item # 10 - Client-Advisor Privilege -

Secretariat - SCP/16/4/REV [http://www.wipo.int/edocs/mdocs/scp/en/scp_16/scp_16_4_rev.pdf ] must be read together with two prior documents [SCP/16/4 - http://www.wipo.int/edocs/mdocs/scp/en/scp_16/scp_16_4.pdf; SCP/14/2 - http://www.wipo.int/edocs/mdocs/scp/en/scp_14/scp_14_2.pdf ]. It covers common law AND civil law countries, the preservation of confidentiality between clients and patent advisors, the feasibility of applying the same protections between lawyer and non-lawyer patent advisors, the mutual recognition of confidentiality cross-border, how confidentiality relates to the disclosure of proprietary information, the contribution of confidentiality to development and the ‘public interest’. There are five main issues. There is a diversity of national laws on this topic. Chap. 4 provides examples. [See SCP/16/4Rev. and SCP/16/4, at Chapter IV – “Sharing a Common Understanding”, at pp. 17-18; See also Chapter IV – “Rationale for Client-Patent Advisor Privilege”, in SCP/14/2 at pp. 52-56.]

Switzerland – Switzerland has a patent advisor law coming into force in June 2011. The SCP could consider it a possible guide for representatives.

Hungary – Freedom of communication requires confidentiality between clients and advisors and other third parties. Also there must be confidentiality between EU advisors and clients in third countries.

Australia – A key issue concerns how to maintain confidentiality in third countries. Principle 1 [of the non-exhaustive list of principles identified by the WIPO International Bureau for consideration by the SCP] pertains to the cross-border aspects of confidentiality. [See: SCP/16/4 and SCP16/4Rev. at par. 64(i), at p.18]. Principle 2 [of the non-exhaustive list of principles identified by the WIPO International Bureau for consideration by the SCP] reflects that the flexibility of countries to employ their own measures concerning confidentiality should not be reduced [See: SCP/16/4 and SCP/16/4Rev. at par. 64(ii) at p. 18]. There should be consideration of extending attorney-client privilege to clients in third countries without requiring the practitioner to have additional qualifications under that country’s laws.

Russian Federation

– The RF supports the proposal for a list of principles considered by the SCP – looks further to SCP drafting recommendations in this area. The form of information required – written and/or verbal; the volume of information (e.g., what is contained in an application or subject matter for which protection is sought); time limits; provisions to require advisor to inform client; interactions between client patent advisor and lawyer – how far should the attorney disclose information received from client or patent advisor? 16/4 – par. 32 – maintaining patents in force in foreign countries requires consultations with patent attorneys in each such country. Certain countries, including Russia, require that foreign applicants should be represented by national patent attorneys. In some cases there are bilateral agreements between Russia and CIS countries based on a mutuality principle. Consequently, there is no need for a foreign attorney patent advisor. Russian particularities can be included in SCP/16/4REV.

India, representing the DAG, comments as follows. The purpose of the study is to further discuss issues noted first in SCP/4/2 dealing with attorney-client privilege not acknowledged in all countries and in countries with privilege but employing different practices. The current study is not presently consistent with international norms. The DAG does not share the understanding of the Secretariat regarding this document. In many countries the law of privilege falls within the province of the law of evidence and thus not a substantive patent law issue and should not be discussed in SCP. WTO GATS could be a better forum to discuss this matter, more so than the WIPO. SCP/14/2 goes beyond patent protection and patent system of each country. Concerning par. 261 of SCP/14/2, it is not practical to seek a uniform rule on confidentiality which would abrogate national differences. Patent advisors render technical as well as legal advice. There is a significant difference in judicial opinion within countries concerning the existence of such privilege. Studies assume a broad stroke of privilege even though attorney-client privilege is not based on the legal work of a lawyer per se, but rather on the fiduciary relationship between attorneys and the courts. Extending this privilege to non-lawyers that do not have fiduciary relationship with courts can lead to abuses. Q.163 – Attorney-Client Privilege – Report AIPPI Q-163.

[See: Report of AIPPI Special Committee Q163 - Attorney-Client Privilege and the Patent and/or Trademark Attorney Profession, International Association for the Protection of Intellectual Property (March 2002), available online at: https://www.aippi.org/download/commitees/163/Report_Lisbon_2002English.pdf. “The following general results obtained from the study and informal survey. a. Countries which seem to recognize that the attorney client privilege extends to patent and trademark attorneys: United Kingdom, United States, Germany [others] b. Countries which seem to recognize that no such privilege exists as between patent and trademark attorneys and their clients: France, Italy, Korea, [Others] c. Countries in which the question is unclear, and which are proposing internal legislation/rule changes to clarify the situation to make it clear that such a privilege exists: Japan, [others] d. Countries with laws making it a crime or violation of professional obligation rule for a patent or trademark attorney to disclose his clients confidences: Japan, United States, [others].” Id.]

Some members wanted to leave control over implementation of an international rule to individual countries. While they make recommendations to countries, they nevertheless respect the authority of the country to apply its own national law. The extent to which privilege is needed depends on the extent of discovery permitted in each legal system. If there is no broad power of discovery worldwide, there is no need to adopt a broad privilege worldwide. What is the implication of having a broad attorney-client privilege applicable to non-lawyer patent advisors?

Morocco – Legislation should be amended with a view toward regulating the profession relating to IP. Professional secrecy should be reformed in cooperation with patent officials to develop a fixed professional code which should be enshrined in the code of national patent offices. IP offices have particular constraints relating to professional secrecy, including with respect to information from WIPO.

France – We should focus on the trans-border aspects of this issue.

Japan – Confidentiality of communication between attorneys and clients in common law countries is quite an important issue. Civil law countries should also cover this issue.

Denmark

– There is no regulation in laws on this issue. But Denmark has the view that this is needed and is exploring various approaches. Changing national patent law is one option like the EPC [European Patent Convention]. Changing civil procedure law is another option. The broader approach the better as concerns countries covered by the regulation. A Solution within the WIPO framework would present the best outcome and what Denmark would prefer.

Philippines – Constitutional prescription Article 12, Section 14 – limits practice of professions to local citizens. The Supreme Court promulgates the sole rules to practice law and integration into law. Law is more than a profession, but also a public trust. Attorney-client communication is privileged but not confidential. The non-lawyer client-patent advisor privilege is not recognized in this country and is not possible in the Philippines. [See 1987 Constitution of the Republic of the Philippines, available online at: http://www.lawphil.net/consti/cons1987.html].

U.S.

–Differences in international application of procedures especially concerning the handling of non-lawyer patent advisors can create uncertainties to innovators and affect the quality of patents. The question of how best to evaluate non-legal patent advisors and their clients is warranted. The U.S. fully supports the suggestion that experiences of countries that provide privilege to patent advisors including non-lawyer advisors can be shared with the SCP. The AIPPI study for such a mechanism can be helpful.

Venezuela

– Supports Indian comments from the DAG. The privilege of professionals has a very specific legal context and moral criteria and so does the need to safeguard important information. This is different from protecting confidentiality.

Norway – There are some very important challenges to finding uniform solutions to this issue. Confidentiality – horizontal procedural law.

Norway

supports exploratory work on exchanging national practices and protection of confidential information between client and attorney patent advisor, and in seeking ways in which to extend attorney-client privilege to non-lawyer patent advisors.

South Africa – on behalf of the African Group, believes that attorney-client privilege once recognized should be extended to confidential communications and to foreign attorneys and patent advisors on the basis of reciprocity or even if not privileged in their own country. Privilege falls within the law of evidence and national jurisprudence. The Secretariat should invite member states to share their experience in extending privilege to non-lawyer patent advisors mindful of the differences in national laws on this matter.

China

– Attorney-client privilege is a value in protecting public order, however due to differences in different countries, this should be taken into account. The SCP can conduct a study but there should be agreement not to rush to a conclusion on this subject.

Chile

– In our country this area goes beyond patents and IP and so any discussion should cover all other elements in legal traditions enforced in other countries.

New Zealand

affords a generous attorney-client privilege for lawyers and non-lawyer patent advisors. Third country lawyers and non-lawyer patent advisors are also entitled to privilege. Cross-border recognition of privilege and the extent to which non-lawyer patent advisors’ communications are deserving of privilege are among the few issues that should be considered.

El Salvador – Collegiate attorneys discussed. Don’t have that system in our country. In El Salvador you can be a lawyer without belonging to any particular college. Under civil and common law there should be confidentiality for information an attorney obtains from its client. But what happens if client authorizes disclosure?

India – Section 10.4 of the Indian Patents Act dealing with patent disclosure, requires that every complete specification disclose the ‘best method of performance’ of invention. The applicant cannot have a confidential matter. Harmonization of attorney-client privilege would lead to de facto grant of patent.

[“(4) Every complete specification shall... (b) disclose the best method of performing the invention which is known to the applicant and for which he is entitled to claim protection;” - See: THE PATENTS ACT, 1970, (39 of 1970, dt. 19-9-1970) (As amended by Patents (Amdt.) Act, 2005 (15 of 2005), dt. 4-4-2005) at p. 13, available online at: http://www.spicyip.com/docs/statute-combined%20patents%20act%202005.pdf].

AIPPI – By the introduction AIPPI made on Monday it wished to mark progress made by the SCP on the protection against forcible disclosure of IP legal advice. Common & civil law public interest is the foundation of protection - to limit disputes brought before the courts and to allow advice to resolve disputes before they get to court. This protection is centuries old. There is no SCP proposal that it be abrogated. WIPO has nailed to the wall the non-recognition by one country of protected legal advice protected under the laws of another country. AIPPI supports member states in mandating WIPO to do whatever information gathering they require to obtain information about how to maintain confidentiality of legal advice cross-border. AIPPI accepts w/re to SCP/16/4/REV – par. 64 non-exhaustive resources - #4 (iv) that there is no conflict between disclosure in patent law and maintenance of client confidentiality. Disclosure under patent law is statutory requirement and cannot be influenced by existence or nonexistence of attorney-client privilege. AIPPI will assist the WIPO and the SCP with respect to the questionnaire process if it goes ahead, as it had done with respect to AIPPI Resolution Q163. The Indian delegate referred to process in reaching resolution. Some members of AIPPI expressed reservations concerning matters reserved to national law. The Indian delegate’s comments leave the impression that within AIPPI there have been doubts. Actually, this was not so. The Indian delegate also raised the issue of GATS. We recommend that the Indian delegate review the AIPPI’s submission to WIPO concerning this issue – dated August 2009, which is available on the WIPO website. GATS Mode IV, concerning the provision of services of an employee of one country in another country requires national treatment. GATS does not affect the national ability of country to regulate legal services.

[See: Paragraphs 6.9 and 6.10 of the AIPPI Submission to WIPO on WIPO Report (Preliminary Study) SCP/13/4 – Client-Attorney Privilege (CAP): Protection against forcible disclosure of communications relating to intellectual property professional advice (August 2009), at p. 27, available online at: https://www.aippi.org/download/onlinePublications/AIPPI_Submission_SCP13-4_280809.pdf . (“GATS 6.9 GATS Mode 4 relates to the provision of the services of employees from one country to another. The agreement gives individual governments the ability to choose which services are included, and as to those services selected, to ‘set limitations specifying the level of market access and the degree of national treatment they are prepared to guarantee’.75 GATS does not affect the national ability of a country to regulate services. Legal services are normally governed by national laws requiring citizenship and/or residency in that country plus locally obtained qualifications. 6.10 Accordingly, GATS Mode 4 does not affect or in any way embargo the potential for making an agreement between countries to harmonise their laws relating to privilege, professional secrecy or any form of protection against forcible disclosure of IP professional advice... 75 See at 10 July 2009.)]

ICC – Client privilege is IP advice administered in the general interests of justice. Frank opinions should be able to be provided in writing without fear of disclosure. Client privilege in IP advice is truly a global issue going beyond national borders. The ICC proposal for an international instrument is referred to in secretariat’s report. The ICC looks forward to having the SCP go forward with this project. [See: Client Privilege in Intellectual Property Advice, ICC Commission on Intellectual Property (ICC Position Paper 450/1040 (Oct. 9, 2008)), available online at: http://www.wipo.int/scp/en/meetings/session_13/pdf/icc.pdf].

India

– Appreciates the Chair’s call for mutual respect, and seeks to clarify our GATS Mode IV statement. Insofar as this involves cross-border recognition of foreign patent attorneys the issue is one of international recognition of cross-border services and has nothing to do with what AIPPI stated. GATS proposals in 2006 and 2007 were raised similarly in WTO.

TWN - Extension of attorney-client privilege to non-lawyer patent advisors is problematic. Any information that is part of a patent application process is public information and falls within transparency for the benefit of the public interest. The extension of privilege would compromise governments’ ability to protect the public interest. The SCP is not the proper forum to discuss attorney-client privilege.

FICPI – Patent advisor-client privilege are no longer related to one country but are of an international character. IP advisors and their clients must be able to have frank, honest and open consultations so that the highest level advice can be provided. Attorney-client privilege is an award to the client, not to the attorney. Sufficiency of disclosure in patent applications and issue of privilege are distinct issues. There is a presumption here that the grant of privilege will adversely impact disclosure in patent application. A client cannot hide behind privilege with respect to his own knowledge, as the example in Paragraph 53 of SCP/16/4REV relates.

[This statement refers to the case of Nobelpharma Ab Usa v. Implant Innovations Inc (141 F.3d 1059 1998-1 Trade Cases P 72100, 46 U.S.P.Q.2d 1097), which was cited as an example of “where a patent agent, who had received from an inventor a draft patent specification containing a reference to a book that could become critical prior art for the determination of the patentability of an invention, had deleted the reference to that book from the patent application as filed, and the patent was granted.” The paragraph continues as follows: “As this example suggests, although the deletion of the reference to the prior art book from the patent application does not remove the existence of that book as prior art, the privilege or the professional secrecy obligation for patent advisors might be misused and could result in keeping critical information for the determination of the case away from public inspection. However, it

could be argued that the patent advisor’s advice to delete a relevant reference from the patent application was not in conformity with his professional ethics and code of conduct.”]

CIPA – EPI – IP Federation supports FICPI and AIPPI.

CIEPI – Let’s move forward not backward.

Chair – There is no clear consensus about whether to go forward on this issue. The Chair will prepare a summary of the discussion. A number of delegations agree that attorney-client privilege is a matter of national jurisprudence. No delegation advocated in favor of setting international norms concerning this issue. The SCP would need to recognize international differences in laws and rules regarding attorney-client privilege. There is no readiness to adopt common principles. There is a great deal of support for having the International Bureau collect more information about national practices and experiences regarding cross-border activities. There is also interest in hearing about countries’ bilateral agreements such as between Russia and the CIS. There is also interest in looking at particular country remedies for addressing cross-border reciprocity.

Hungary – supports Chair summary and direction.

Philippines -

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Day 3 – Wednesday, May 18, 2011:

Agenda Item #9 – Patents and Health:

South Africa – Submits the African Group Proposal [See Proposal Submitted by the Delegation of South Africa on Behalf of the African Group and the Development Agenda Group, (SCP/16/7) (May 18, 2011), available online at: http://www.wipo.int/edocs/mdocs/scp/en/scp_16/scp_16_7.pdf]. WTO TRIPS does not prevent member states from taking measures to protect public health. See also: WHO Global Strategy on Public Health, Innovation and Intellectual Property (GSPOA) [WHA61.21, Agenda item 11.6 (May 24, 2008) accessible online at: http://apps.who.int/gb/ebwha/pdf_files/A61/A61_R21-en.pdf]. IPRs should not prevent member states from taking measures to protect public health. Safeguards provided by TRIPS should be incorporated into national legislation. Bilateral and regional agreements should not undermine these safeguards.

Promotion of web program – Seeks to enhance capacities of developing countries and LDCs to adopt patent regimes to fully make use of flexibilities to promote public policy priorities related to public health. 3 elements: 1) elaboration of studies to be commissioned by SCP from renowned experts; 2) information exchange among member states experts; and 3) technical assistance to member states particularly LDCs.

1) The SCP was requested to commission a framework study to examine constraints and challenges faced by developing countries in pre-grant and post-grant stages. There is to be a component on the use of CLs (compulsory licenses) and government non-commercial uses of patented inventions/medicines and study of practices. The study was to identify the challenges faced and their impact on public health and the empirical data on royalty-rates imposed. The extent to which countries use exhaustion of patent remedies, a review of the use of generic names, and a cost-benefit analysis of the admissibility of Markush claims – criteria for patentability - would also be covered. [See: SCP/16/7 Para. # 8].

2) SCP should invite UN human rights liaison to present his study on human rights and medicines. Experience-sharing exercises of member state practices to promote public health. SCP should organize a technical workshop on the application of TRIPS articles dealing with flexibilities. SCP should create database on communicable and non-communicable diseases identified in consultation of member states and the patent status of medicines for these diseases to show how greater access to medicines can be had through use of TRIPS flexibilities. [See: SCP/16/7 Para. #s 9-12].

3) To enhance the outcomes of studies and information exchanges, the Proposal invites SCP and member states to develop targeted technical assistance examples – to create a new module relating to the grant of CLs pursuant to Parts 2 and 3 of TRIPS. TRIPS Article 44 [relating to Injunctions] is not subject to the restrictions limiting Articles 30 and Articles 31. The web program should have links to the DAG Agenda. [See: SCP/16/7 Para. #s 13-14].

Wants this proposal to be a working document of the SCP.

Panama – Seeks copy of South Africa proposal.

Hungary

– EU & Member States – Need time to evaluate WIPO’s added value on this issue. The Secretariat should provide preliminary oral remarks on current works and projects with other international organizations concerning patents and health.

France – Group B needs more time to first review a copy in writing of South Africa’s proposal. Under Agenda Item #9 we should concentrate on the added value that WIPO can bring to this issue based on its expertise and should not attempt to import discussions from other fora. SCP should present its current works and programs on patents and health including projects carried out with other international organizations.

Secretariat – The Secretariat would be pleased to create a WIPO document with respect to that proposal by today, but without all translations. With respect to Hungary and France’s request, the SCP is willing to bring colleagues in to discuss international/global challenges addressed by this committee.

Chair – It is useful to have only an informal copy of the South Africa proposal available to all delegations during the coffee break.

Agenda Item #11 Technology Transfer –

India

– Many gaps in the initial study continue to remain [See: Transfer of Technology, SCP/14/4/REV, available at: http://www.wipo.int/edocs/mdocs/scp/en/scp_16/scp_14_4_rev.pdf; SCP/14/4, available at: http://www.wipo.int/edocs/mdocs/scp/en/scp_16/scp_16_ref_scp_14_4.pdf]. The study focuses narrowly on the availability of patent information, on publicly funded institutions for technology transfer and on how patents contribute to technology transfer. This addresses only situations where the system actually operates the way it is intended to operate. In most cases, the system doesn’t operate the way it was intended to. India wishes for the SCP to consider points made during the 15^th session. It is therefore important to highlight the following paragraphs in SCP/14/4REV: Paragraph 24 –impairing innovation – points to the need of absorptive capacity of the transferee to facilitate reverse engineering. The SCP should focus on helping to create absorptive capacities in LDCs. The more patents on existing technologies the less able national firms are to experiment and innovate. Paragraph 26 – tech transfer thru licensing – the problems of obtaining licenses for technology are inadequately addressed. Contracts tend to be secret and the negotiation of terms tends to be between unequal entities. The holder of the patent knows more about the patented invention and the contract is too stringent on users – users don’t know how many patents cover a given technology and how many licensees are necessary. The SCP should develop model contracts based on competition law and an international mechanism explaining the status of expired patents on given technologies. Paragraph 35 – international tech transfer - while middle income countries collected royalty income of $12.7 billion from OECD countries in 2001 the amount collected by low income countries was $2billion. This fact is misleading because it doesn’t discuss the growing royalties being paid by developing countries, which has increased due to the growing number of developed country patents. Paragraph 55 – designing patent rights under national law - much depends on whether patents rights are designed based on national patent laws and how they are used by the transferor and transferee. This paragraph highlights the point why it is necessary for countries to maintain their autonomy to control transfer of technology.

The patent applicant’s disclosure of a patented invention is of key importance to technology transfer. There is presently an incentive to disclose as little as possible to freeze competition after the patent expiry. WIPO should help build capacity to examine patent applications with the objective of preventing the grant of applications where there is not full disclosure. Paragraph 59 – measuring the impact of patent protection on technology transfer – There is no conclusive evidence of any impact of patent protection on technology transfer. This should be looked at again. There is no evidence of a positive relationship between FDI and technology transfer. The study does not reflect studies indicating a negative impact of patent protection on technology transfer. EU biotechnology – strengthened the patentability standard b/c it found that broad patentability was impairing innovation. India wants further revision of this study, and wants the former proposals of DAG incorporated within it. India values the technology transfer created by patents. India wants the international commission or experts group nominated by member states to address issues relating to technology transfer particularly on use of patent flexibilities. SCP should organize a forum to exchange countries’ national experiences on technology transfer during the upcoming SCP meeting.

Hungary

, on behalf of the EU & the Member States – It is not possible to draft a one-size-fits-all solution with equal impact on every country. The study includes many issues, strategies that could be used locally to achieve tech transfer. This committee should take stock of other WIPO projects without duplicating efforts.

Russian Federation -

South Africa, on behalf of the African Group – SCP/14/4/REV provides useful insight into these complexities. It points to accessibility of information and the capacity of recipients to absorb technology. There is a need for access to information and skilled lawyers involved in technology licensing and public funds/universities. The studies are confined to these areas only, however. There remains concern that the patent system falls short regarding how patents can serve as a barrier to technology transfer. Patents allow holders not to exploit the technology. Patent trolls and patent thickets impair innovation. The study limits its analysis to improving the availability of patent information. It does not analyze how the patent system impedes technology transfer or how to preserve the public domain for the development goals of developing countries. Future work by SCP should consider studies to identify measures available in TRIPS on tech transfer and to alert experts about their availability. These include the R&D efforts of developing countries and mechanisms to facilitate tech transfer pursuant to TRIPS Art. 66.2. Developed countries must meet their requirements /obligations under this provision. What are they doing?

Chair – This agenda item is fairly advanced. Requests for further revisions of this document the SCP could undertake for availability during the next SCP meeting may be possible. At that point, the study would be fully cooked and member states should then decide whether there are other activities the SCP could undertake as reflected by consensus.

ITSSD – If we are speaking of changes, perhaps there should be more mention of the impact of national legislation/restrictions on the exercise of patents and contractual licensing rights on trade to restore some balance to the report. Obviously tech transfer is a complex multi-step process most of which deals with issues other than patents and related IP rights that goes beyond the expertise of the SCP.

ALIFAR – The SCP should examine how the quality of patents and patentability criteria could be obstacles to technology transfer. Businesses are not willing to share knowledge. TRIPS Article 66 has not had effects on technology transfer. TRIPS Articles 7 and 8 are also not effective. IP itself should not be allowed to create a barrier to knowledge transfer.

KEI – Tech transfer goes to the problem of development itself. It is useful to have the WIPO Economics Bureau – Carston Fink - to begin to identify what kind of statistics are needed to look empirically at the effectiveness of various technology transfer initiatives and the respective capacities in various developing countries. We need to look at the performance of various mechanisms where different countries have different legal regimes.

Singapore – Patents with incomplete disclosure should not be granted. There is a need for technical capacity building to help develop patent examination capabilities to train examiners to identify ‘incomplete’ disclosures’.

Venezuela –

India – Tech transfer relates directly to socio-economic development in developing countries. Trained economists should be available to contribute to this subject matter. Internal WIPO economists would be helpful based on the KEI proposal.

France

– Tech transfer is also being studied in CDIP. We should consider linking with the work on CDIP projects.

Secretariat Expert from WIPO on Patents & Health – Global Challenges Division – WIPO is a specialized UN agency focusing on IP and endeavors to lead the IP dialogue at the intersection of IP and global security issues. Problems are borne most by developing countries and LDCs. The global life science program includes coverage of public health issues. WIPO has established a strong relationship between the WHO and the WTO to look at the international program on global health. WIPO looks at UN agencies such as UNCTAD, UNDP and others as well as the private sector. WIPO has organized seminars, and has been engaged in public ‘IP landscaping’ and public IP management.

[‘IP Landscaping’ – is essentially an analysis of a particular technology area or set of companies in the context of patents or other IP. This includes identifying the areas that are public domain, proprietary, or unclaimed. IP Landscaping allows for educated decision-making about patent strategy, product development plans, R&D initiatives, licensing programs, or acquisition targets.]

With respect to biotechnology and the evolution of the regulatory framework on clinical test data, WIPO works to help with th\e Implementation of WHO global strategy and plan of action. With respect to access to medicines and medicines pricing the joint WIPO-WHO-WTO seminar 2010 brought forward good information. The Feb. 18, 2011 symposium looked into available patent information resources and looked at their use for public health purposes. This symposium was preceded by a workshop on patent searches and the ‘freedom to operate’ – basic patent searches and freedom to operate analysis.

[A ‘Freedom to Operate’ analysis entails a determination of whether a particular action, such as testing or commercializing a product can be done without infringing valid IPRs of others. Since IPRs are specific to different national jurisdictions, such an analysis should focus on particular countries or regions where operations may take place.]

A Dec. 2010 WIPO patent search report was prepared and submitted to a meeting of an open-ended working group. It was published on the WHO Avian Influenza website and on the WIPO website. There is a special program for research and training on tropical diseases. The African Union pharmaceutical manufacturing plant Unit 8 expert working group illuminated pertinent issues relating to licensing. Medicines patent pools were examined in connection with retroviral medicines. Trilateral cooperation between WIPO-WTO-WHO provides input into training activities and national and regional seminars on implementation of the TRIPS Agreement.

India / Brazil – There is a need for greater consideration of the activities of intergovernmental organizations on these issues which member states often do not consider.

U.S. – The report on pandemic influenza is valuable.

Switzerland – Can WHO/WTO representatives discuss in more detail what is being done on this subject in their respective organizations?

Secretariat Expert – We must be cautious to deal with expectations. We appreciate the feedback.

WHO Expert – The strategy points out how WHO shall place the strategic relationship between IP and public health and trade. Requests Directorate General of the WHO to coordinate with WIPO, WTO and UNCTAD to implement global strategy and plan action. There is an agreed effort to coordinate collaboration more effectively. Regular joint coordination meetings are organized where training programs, work programs etc. have been or are being scheduled with each entity’s respective expertise being contributed. There are a series of joint technical symposia to provide more facts of overlap between IP, public health and trade (procurement and access to medicines and freedom to operate). Work together on patent information, CDIP – WIPO to mandate patent landscaping to identify which diseases researchers are focusing on and where innovation is taking place. The WHO is doing research and is doing patenting. WIPO has provided patent search reports on endemic avian influenza preparedness. The WHO is considering the notion of ‘virus-sharing’ this week at the WHO Assembly.

WTO Expert – The WTO ensures that existing medical technologies get to patients needing them and that further progress is made by future innovation in the pharma sector. The WTO can offer effective tools to achieve this objective. IP and trade issues deserve full coverage as they intersect with public health. The WTO can consolidate available data and valuable experiences for the benefit of policymakers, and can provide access to technical capacity building initiatives. The basis of the WTO and the starting point for its engagement is the Doha Declaration on TRIPS and Public Health. There is increased focus in technical cooperation activities on IP. There is mutual participation from the WHO and the WIPO. Activities include: workshops to provide information and share experiences (on IP & Public Health last year); an advanced course for government officials taking place this week – on IP & Public Health; a colloquium for teachers with a module on IP & Public Health to spread knowledge within academic community; and national workshops. To provide factual and technical information, and to address flexibilities extensively, there is an annual review of the Doha Declaration on TRIPS and Public Health “Paragraph 6” system every year in October. During 2010, this moved beyond analysis of the operation of the system into broader aspects of public health, including IP rights. Look into the minutes of the report for this annual review.

WTO solves disputes also. There was the regulatory review exception case almost 10 years old (Canadian case). A recent WTO report contains a section on the activities relating to public health. Comprehensive oral reports by WTO secretariat are included as part of the review of the “Paragraph 6 system”. The October 2010 TRIPS Council meeting and March 2011 meeting addressed how to accept the protocol amending the TRIPS Agreement and national implementing legislation. In-training manual and handbook on TRIPS matters. There is a stand-alone module on TRIPS & public health.

[See: Little-used ‘Par.6’ system will have its day, WHO tells intellectual property and health review, (WTO: 2010 News Items (Oct. 26-27, 2010), available online at: http://www.wto.org/english/news_e/news10_e/trip_26oct10_e.htm; See also Members’ laws implementing the ‘Paragraph 6’ system, Intellectual Property: TRIPS and Health, WTO website at: http://www.wto.org/english/tratop_e/trips_e/par6laws_e.htm ; TRIPS Council: Members Debate Biodiversity, Access to Medicine, International Center for Trade and Sustainable Development (ICTSD) - Bridges Weekly Trade News Digest, Vol.15, No. 8 (March 9, 2011), available online at: http://ictsd.org/i/news/bridgesweekly/102136/].

KEI - Element 5.3a WHO Strategy cited. What has WHO done to implement this recommendation? What data does WHO have on cancer drugs?

[See: Global strategy and plan of action on public health, innovation and intellectual property, WHA61.21 Agenda item 11.6 (May 24, 2008), at: http://apps.who.int/gb/ebwha/pdf_files/A61/A61_R21-en.pdf . See Element 5.3a – “The actions to be taken in relation to this element are as follows... (5.3) exploring and, where appropriate, promoting possible incentive schemes for research and development on Type II and Type III diseases and on developing countries’ specific research and development needs in relation to Type I diseases (a) explore and, where appropriate, promote a range of incentive schemes for research and development including addressing, where appropriate, the de-linkage of the costs of research and development and the price of health products, for example through the award of prizes, with the objective of addressing diseases which disproportionately affect developing countries.”]

WHO Expert – The WHO is exploring alternative mechanisms to finance innovation (e.g., including prize awards). The IP system is not sufficient to deal with ‘neglected’ diseases b/c the market is not there. It is also exploring why investment in innovation is lacking as well as other mechanisms to finance such innovation – this is the matter addressed by such paragraph. The WHO has installed a new expert working group to look into this and the results of their research will be submitted to the WHO General Assembly next year. There is no data in the WHO’s possession relating to cancer drugs.

[Lunch Recess]

Hungary

– EU & Member states will have coordination meeting at 2pm.

U.S. – Group B coordination meeting at 2:30.

Medicine Patent Pool side-bar

Secretariat – There is no budget for establishing a separate committee of experts as proposed. The WIPO Office of Chief Economist has established a series of discussions and presentations on economic related activities and issues.

ITSSD – Relating back to the discussion on technology transfer, there is a need for that study to highlight how patents can be positively used to realize the benefits from the triple helix relationship between the government, academic and private sectors to undertake joint R&D and technology commercialization efforts.

=Msu � m l � s PWHO Expert – The strategy points out how WHO shall place the strategic relationship between IP and public health and trade. Requests Directorate General of the WHO to coordinate with WIPO, WTO and UNCTAD to implement global strategy and plan action. There is an agreed effort to coordinate collaboration more effectively. Regular joint coordination meetings are organized where training programs, work programs etc. have been or are being scheduled with each entity’s respective expertise being contributed. There are a series of joint technical symposia to provide more facts of overlap between IP, public health and trade (procurement and access to medicines and freedom to operate). Work together on patent information, CDIP – WIPO to mandate patent landscaping to identify which diseases researchers are focusing on and where innovation is taking place. The WHO is doing research and is doing patenting. WIPO has provided patent search reports on endemic avian influenza preparedness. The WHO is considering the notion of ‘virus-sharing’ this week at the WHO Assembly.

TWN –

KEI – As concerns the role of the WIPO economist – reporting data obtained regarding how patent system is working out with respect to technology transfer. Would the economist report to the SCP?

Secretariat – if members of the SCP agreed, we can invite a representative of the Office of the Chief Economist to attend an SCP meeting and to address issues concerning where the data is available and how to obtain it, subject to that office’s schedule.

India – The meetings thus far to be convened to discuss issues surrounding technology transfer must be scheduled at a time when SCP member state delegates could attend. Often time delegates are unable to attend. Would like to schedule meetings more conveniently.

Bulgaria – This was an excellent paper on technology transfer. The factual information is good but not enough. I have worked on technology transfer 30-40 years. LES and AUTM university technology transfer officials should be consulted for their experience. Tech transfer should be promoted nationally between universities and commercial enterprises. There is a need to know how these officials achieve technology transfer, and a need to see if there are practical impediments in the patent system that have been found to impair technology transfer.

[This statement inadvertently opened up a discussion which follows that led to South Africa, India and Brazil distorting the emphasis of the Bulgarian delegation’s comments. It led to a debate and to an improperly refocused inquiry. The ITSSD spoke with the Bulgarian representative and he admitted this was not his intent. The focus of the inquiry should be on what has been ‘successful’ with the technology transfer system, and NOT, as the DAG has sought, to focus on what is ‘wrong’ with the technology transfer system.]

South Africa

– Speaking in national capacity. Focus must be placed on the impediments to technology transfer. Endorses what Bulgaria said.

India – Speaking in its national capacity, endorses Bulgaria, focusing on practical impediments/constraints to technology transfer and possible solutions to overcome them.

Chair – interesting area of IP/trade aspects of technology transfer. Problems of absorptive capacity and funding/capital, import and regulatory restrictions and other obstacles can stand in the way of effective technology transfer.

India

– there is much literature on this subject. Should have brief section listing the impediments/challenges and identify those relating to patents and the work of the SCP, elaborating them in detail. Patent-based impediments to technology transfer.

El Salvador – Case studies would help developing countries LDCs. Concur with what Bulgaria and India said. The SCP can invite other international organizations which have competence in these areas – e.g., UNCTAD and WTO.

Brazil

– Supports Bulgaria proposal.

Australia – Summarize proposal please.

Chair – Draw on associations with particular expertise on technology transfer – LES and AUTM, to seek a symposium on this.

Bulgaria

– India clearly identified first that if there are impediments and seek solutions to such impediments. It is not within province of committee to discuss technical standards.

Australia – Seeks more clarification. Will Bulgaria proposal conclude this interim study? Will this preliminary study launch a future work program?

Norway – Aligns with France and Group B – There is a project launched in CDIP and if we wish to secure progress there we must avoid duplication of work. Agrees with Bulgaria. First identify whether there are obstacles and what they are to technology transfer. A previous study looked at possible impediments to technology transfer.

Switzerland – Fully supports Norway statement. Avoid duplication of work undertaken elsewhere.

Germany – Fully supports what Norway and Switzerland have said. We should fully await the results of CDIP activities.

Japan – Supports Norway, Switzerland and Germany statement – avoid duplication of work.

Syria – Importance of tech transfer. Syria supports Hungary, India & Japan.

Hungary – Fully supports what Norway, Switzerland, Germany and Japan.

Ecuador – What is the duplication of work that has been mentioned? Ecuador supports

India

’s proposal to go into greater detail about such hurdles.

Secretariat – CDIP project referred to in this discussion CDIP/6/4REV was adopted at the penultimate session. [See Project on Intellectual Property and Technology Transfer: Common Challenges – Building Solutions (Recommendations 19, 25, 26 AND 28) [of the Development Agenda], CDIP/6/4 REV. (Nov. 26, 2010), at: http://www.wipo.int/edocs/mdocs/mdocs/en/cdip_6/cdip_6_4_rev.pdf.] CDIP/6/4REV has 5 components: 5 regional consultation meetings; elaboration of several peer-reviewed studies; high-level int’l expert forum on tech transfer & IP; web form created on tech transfer; see how outcome of all phases can be streamlined into WIPO. The document speaks of a series of studies on IP and tech transfer focusing on areas receiving less attention in the literature and on possible obstacles to tech transfer and how obstacles can be overcome; studies on IP policies and initiatives that would promote tech transfers; favorable incentive policies; all well focusing on economic aspects of tech transfer.

India – The SCP study should focus on possible obstacles to tech transfer and possible ways to overcome them. Some delegations asked for the CDIP project to be completed before SCP undertakes work on this subject. The CDIP project is a two-year project; does this mean that the SCP will do nothing for two years?

Uruguay

– We should avoid the tendency to limit the work of this SCP to draw up legal norms – if we did then we would be making the mistake that patent laws could be drawn up independent of how the patent law works. TRIPS said the purpose of the patent system is to promote innovation and technology transfer. We must identify how the working of the patent system achieves technology transfer. How a certain system governed by certain roles achieves its stated aims – this requires a practical focus not abstract ideas. We can’t avoid dealing with these issues. SCP will end up dealing with issues that do not fall within their expertise. Tech transfer study should look at the impacts of the present system.

Dominican Republic – Supports India proposal together with

Bulgaria

delegation.

South Africa

, speaking on behalf of African Group, believes the India proposal is a positive way forward. CDIP and SCP have different mandates; hence we must avoid duplication. But SCP work on this issue can compliment CDIP work on this issue.

Chair – There is no consensus yet to go forward. It is clear that there is information which needs to be obtained especially concerning the work of the CDIP. Were patents excluded from CDIP and relegated to SCP? If not, there would be duplication of effort were SCP to undertake to fulfill these proposals. The WIPO Chief economist should become involved. A tech transfer study may possibly be revised to take into account these proposals and consideration of the CDIP’s work.

Switzerland – India asks whether patents have anything to do with tech transfer. Does CDIP deal with this?

India

– goes along with Chair recommendation. The study should be revised, focusing on intersection of patents and technology transfer. The WIPO Chief Economist should focus on how the international patent system affects tech transfer and the manner in which it impedes tech transfer and the possible solutions to such impediments.

Spain

– Supports the Chair’s statement. And it should avoid duplication of work. But subjects not being dealt with in the CDIP and falling within expertise of SCP should be addressed by SCP.

Bulgaria

– Supports statement by Spain.

Iran – Supports

India

proposal.

Chair – The Secretariat will modify the summary to reflect if members are at a consensus. It will ask the International Bureau to look at possible impediments to technology transfer in the revised study. Member states should not prejudge that patents are impediments to tech transfer b/c the absence of patent can serve as an impediment to tech transfer. The revised study will include all types of impediments. The Secretariat must evaluate whether there is an overlap with work of CDIP.

Norway –

Norway

asks the Secretariat to provide more guidance regarding overlap between CDIP and SCP work on these issues. We must have an in-depth consultation with CDIP to determine the focus of their initiative.

Korea – Supports the Chair’s proposal. SCP/14/4REV – Pars. 50-59 reflect that patents are not a barrier itself to tech transfer but patents may serve as impediment. Par. 169 provides an example of activity undertaken in CDIP. The Secretariat should direct the WIPO Chief Economist and researchers to conduct a study on how and whether patent system acts as impediment to tech transfer. The study should also focus on how patent information and patent disclosure can act to promote tech transfer.

U.S.

France –

Chair – No study will be conducted by the Office of Chief Economist. That office would only undertake work that would gather expertise for a forum or seminar. Such a forum would gather and discuss evidence of many possible impediments to tech transfer to ascertain whether a study should be commissioned.

Chile – Chair proposal well balanced.

The CDIP project is a two-year project; does this mean that the SCP will do nothing for two years?

Uruguay

Angola – CDIP program put forward has a section on patents. The present discussion has focused on adopting a holistic approach. There is no duplication of CDIP work. If there are no patent system impediments to tech transfer there will be no need to go forward on a study of impediments.

France - Group B – can go along with a revision of the study proposed by the Chair. However, it is more logical to lead with in-depth consultations within CDIP to see if there is adequate coverage before proceeding forward.

Algeria

– CDIP/6/4/REV – the five elements do not refer to patents and the implications of the patent system for transfer of technology. Thus, SCP is the most appropriate forum in which to discuss these matters; thus there will be no duplication of work of CDIP at SCP. SCP is a rulemaking committee. Algeria is in favor of India’s suggestion, as chair of the DAG, to invite the WIPO Chief Economist.

Chair – The revised study will reflect the interventions of this meeting. The Secretariat will look into the overlap between CDIP and SCP. CDIP does mention IP which includes patents. Ambiguity will be clarified.

India

– The study should be revised to include how patents could be used as an impediment to technology transfer. For example it could point out how patents are an issue in the current climate change negotiations. There are no collations of general references to how the patent system can impede tech transfer. We want more elaboration in detail of the role of patents as impediments so it is balanced. What type of data is important to evaluate the usefulness of the patent system, whether it is actually performing vis-à-vis technology transfer? The seminar should be a side event scheduled before the SCP convenes.

Brazil – There may very well be an overlapping/duplication of work. The CDIP commissioned the project at the beginning of the year and it is now on its way. The study we are discussing today may already have been done. The SCP Secretariat can determine if such study has been done even by tomorrow. If not, the SCP can deal with these questions.

Chair – The understanding is that such project has not yet been done. Does it fall within terms of reference that CDIP has decided? Would it fall within the CDIP’s term / scope of work?

Egypt

– Regarding SCP/6/4REV., the project was supposed to start with a document drafting project paper 3-1. It was slated to be completed by the first quarter of this year. If it is not yet complete, the vast bulk of work would already have been done. The Secretariat should request that the office responsible for this elaboration guide/inform SCP regarding what was done to avoid duplication. CDIP and SCP have clear mandates but we believe in this case that the SCP will be guided by the CDIP project guideline. The focus of the project was the Development Agenda recommendations. The focus of the SCP’s work should be of different perspective of perhaps the same issue of tech transfer.

Chair seeks to clarify these relative scopes of activity on the same issue.

Switzerland supports

France

’s statement on behalf of Group B. Consistent with Algeria’s statement, the work here should be focused on patents and not on the industrial designs focused on at CDIP.

Angola – Mandate of SCP is very clear. CDIP/16/4/REV p. 4 - 2.3

Chair – I have lost track of who has done what study on tech transfer and patents.

Brazil – If there is no study done at CDIP that was commissioned why not then do the study here?

Chair – We have a tech transfer study here.

India

– The Bulgaria proposal is to have exchange of best practices of how to overcome patent impediments to tech transfer. That study would be possible if there is no duplication with what CDIP is/was doing.

Norway

is concerned that there be no duplication of work. When the project on tech transfer was discussed and adopted in CDIP it was understood that the study would be launched in the 3^rd quarter of this year [2011]. The mandate of the study was to cover the IP related issues of tech transfer and to discover possible IP impediments. The SCP decision to conduct a study would take into account what CDIP has already done and is commissioned to do.

Egypt supports India’s understanding. The SCP should run in good harmony with CDIP and other committees. Whatever study is agreed upon in SCP should be coordinated with study undertaken by CDIP.

Chair – A study focusing on best practices and experiences is good. A study focusing on patents as impediments is not good. We cannot look at patents and tech transfer in isolation. Tech transfer is much more than a license to use a patent. Tech transfer entails the adaptation of technology to the local environment and to local regulations, to a level of funding, etc. We must look at the issue broadly and see what is necessary to undertake technology transfer. We can’t just separate out one aspect of patents on this issue.

France would need to discuss with Group B to agree to ‘best practices and experiences’.

India

– focusing on challenges that patents pose to technology transfer.

Chair – We won’t find a consensus in the SCP that focuses on how patents serve as barriers to tech transfer.

Egypt

doesn’t feel that the SCP tech transfer study already done is neutral b/c it didn’t address ‘impediments’.

Chair – It is intended that the revised study will include a section on impediments to tech transfer.

Switzerland – not prejudging the outcome of study was also raised in Group B discussions – studies should remain neutral and discover positive and negative points.

South Africa – The study does not focus on impediments, but should include that element.

Denmark – Inserting something / chapter into a study done in another forum?

Chair – actually talking about study SCP/16/4.

Secretariat – The DDG – i.e., the International Bureau understands the request for additional elaboration, more citation, and more clarity whether the international patent system acts as a barrier to technology transfer.

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Day 4 - Thursday, 5/19/11:

ITSSD travels to Brussels for the day.

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Day 5 – Friday, 5/20/11:

Chair – As concerns the informal summary on 5 informal agenda items, we will gavel down and close out these items when we have full consensus.

Later there will be a formal presentation of the Summary by the Chair which reflects the sense of what has been agreed to at the meeting.

Agenda Item #7 – Questionnaire on Exceptions & Limitations to the Right –

Korea requested clarification of farmers’ and breeders’ rights.

Chair summary of Denmark proposal – Denmark proposes that the Chair provide as much time as possible for Member States to respond to the exceptions and limitations questionnaire. Only answers without analysis would be presented to the SCP. Only after the SCP has answers, they will determine if further analysis of the answers is necessary. September 30 would be a reasonable deadline.

Spain – agrees with Chair proposal.

India – agrees, whether or not there will be a follow-up questionnaire later?

Chair – Chair’s summary reflected this.

Norway – agrees with Chair proposal.

Agenda Item# 11 – Tech Transfer –

Chair – We will consult with the Office of WIPO Chief Economist on the margins of the next SCP. It remains uncertain whether following the conclusion of the proposed seminar the Chief Economist will be invited to sit alongside the SCP and to give a report to the SCP on the seminar.

India – Tech transfer is complicated issue, which was why the Chief Economist should be invited to give oral presentation given his academic rigor and knowledge. India wants to bring back the results of the seminar and make them useful in the SCP. It needn’t be a formal report to the SCP.

France – doesn’t want the seminar conducted in connection with the SCP. There is no need to have a report to the SCP. This would be duplicative of SCP work.

Egypt – This is first time the SCP is ‘mandating’ the WIPO Chief economist to undertake a seminar; therefore the results of the seminar would be essential to contribute to progress of SCP.

Secretariat/Pooley – The word ‘mandate’ was never used by the SCP in discussing this possibility. The proper term that was used was to ‘invite’ - it was only an ‘invitation’.

France – The WIPO chief economist is an expert but it is not necessary to have him produce an independent report. Therefore it should not be a ‘mandate’.

Brazil – We would like a short summary of the seminar.

Chair – A summary of the meeting should be available on the website for all member delegations of SCP.

“Suggestions by the Chair”

Canada – made suggested to changes to paragraph 2.

South Africa – We are concerned that our proposal is not being treated similarly to the UK/Canada proposal on quality of patents discussed previously.

Chair – The UK/Canada proposal is of a different status than S. Africa patent/health proposal. It was submitted prior to this meeting.

India – We endorse the interpretation of South Africa on its interpretation of the UK/Canada proposal on quality of patents. We need a common definition of ‘patent quality’ before undertaking discussions substantively on that document. Par. 2(a) addition – ‘and other comments/proposals presented by member states’. Par. 2(b) deadline to Sept. 15.

Brazil – What does ‘patent quality’ mean? We agree with India that the UK/Canada proposal in the Chair Suggestion sheet (Item 2) is not a ‘formal proposal’, which the Chair subsequently confirmed.

Canada

– Extra time is okay if it is amenable to the Secretariat. The language India added for 2(a) is fine. The Canadian proposal for a change of 2(b) recognizes the different status between Member States and observers, the latter of which can make only ‘recommendations’ and not ‘proposals’.

Chair – We have presented consensus-based changes to Par. 2(a) and (b) of the Chair Suggestion Sheet – a/k/a – “Suggestions by the Chair”.

South Africa – We want the same new language used for Par.2(a) to be used in Par. 3(a). “Discussions will be based on the proposal submitted by the Delegation of South Africa...”

Chamber of Commerce of Russian Federation – What is deadline for revised Par. 2?

Philippines – Given significant diversification of laws and practices of Member State delegations concerning Client-Patent Advisor Privilege, there is no need to bring up this topic again at the current meeting or at the next meeting of the SCP. Any exchange of information by member delegations about their laws and practices would not be used at all for norm creation/setting purposes.

Chair – The Chair confirms the

Philippines

’ understanding of Chair Suggestion Sheet Par. 4 [relating to Agenda Item 10 - Client-Patent Advisor Privilege – set forth as Paragraphs 16 and 17 in the Summary by the Chair].

India – makes proposal for changes at Par. 4(b).

Hungary – The EU and its Member States must discuss this proposal before it can agree.

Brazil –

France – On behalf of Group B,

France

wishes to replace (d) 2^nd statement of Par. 5 of the Chair Suggestion Sheet [relating to Technology Transfer] as follows: “The secretariat will review the work under the CDIP to make sure there is no duplication of efforts concerning transfer of technology.” [ultimately not adopted, but replaced with the language found at Par. 18(d) of the Summary by the Chair].

India

– DAG – Par. 5(b) – Member states inputs reflecting comments at sessions of SCP ... addressing (not expanding) the gaps in the discussion on impediments and elaborating further on incentives to technology transfer...

Egypt – wants a REV of Chair summary to review upon return from coffee break.

Secretariat – will prepare in English only.

Secretariat – changes to Par. (c)

France – Group B does not approve of India’s proposed changes. Satisfied with Chair’s suggestion on Par. 4. India proposed language prejudges outcome.

Poland – supports original Chair text.

India – not willing to accept text of Para. 4 as proposed.

Philippines – supports India position.

U.S. – US not a demander on this issue and believe discussion should continue. India’s proposed text presupposes that we won’t do any further work on this matter. Chair’s text is balanced and is supported by U.S.

Philippines

– does not favor current Chair text.

Phillippines - Supports Chair’s text on Par. 5.

India –

Agenda Item #12 – Contribution of SCP to Implementation of Development Agenda Recommendations:

Secretariat – Member states will be given the opportunity to express their reviews on this topic through a special mechanism at the 16^th SCP. The Secretariat has agreed to revised language on Agenda Item #12 [as noted earlier: “Contribution of this committee to implementation of respective development agenda recommendations”, supra at “Day 1”].

Brazil – There is as of yet an agreed mechanism to do so. In CDIP, delegations expressed their views which were reflected in the Secretariat report which was to be sent to the WIPO General Assembly.

India – India is comfortable with the process outlined by Brazil. The DAG attaches great importance to this item and is pleased to see that it is consistent with the Development Agenda and that there are efforts to bring this issue forward. India is concerned that the current IP system ensures rights to IP holders without adequately considering how such rights contribute to the public as part of the quid pro quo for a patent right grant. The patent system’s shortcomings must be addressed before social and economic conditions of developing countries can improve. We must recover the essential balance inherent in the patent system which can happen only by revising old incorrect presumptions of the patent system for the benefit of Member States and the future viability of the patent system. India is pleased with the intellectual discussions about the patent system. There is a need to go beyond theoretical discussions and we must address post-grant realities. We must better understand how patents are actually used in the markets today and how they are impeding tech transfer and economic growth. The actual inventor is separate from the patent. This allows developed countries to grow richer at the expense of developing countries. The issue of patent quality is an essential issue to address – high quality and credible patents are of importance to all nations. What is meant by ‘patent quality’? This must be universally understood in order to move it forward in a work program.

Patent/health issues have been addressed constructively in the WHO and the UN, but not in the WIPO. Hopefully constructive WIPO engagement in this issue will accelerate. More discussions in the SCP are necessary about how patents can affect societal welfare. There is an ongoing naïve presumption that ensuring stronger IP rights will ensure economic growth and development. This has been rejected in global experiences. Using exceptions and limitations and flexibilities has so far been an academic discussion in this committee. Formulation of the questionnaire is hopefully a first step to creating a working program to assist developing countries to adopt. Tech transfer is quite important as a manifestation of the impediments of the patent system. The SCP must show how tech transfer can be effectively accomplished. Identifying how patents can be impediments to tech transfer is at the heart of this committee’s work program. This is necessary for a ‘balanced’ SCP work program.

Brazil – The SCP has agreed to a work program which is quite balanced in line with the recommendations of the Development Agenda. The SCP is making a positive contribution to the implementation of the Development Agenda. Our approval of the questionnaire is consistent with Brazilian Proposal [SCP/14/7, supra] Par. #70 – i.e., to eventually elaborate upon a manual of exceptions and limitations to the patent right. The SCP should develop a work program to enhance the capacities of developing countries to enable their patent systems to exploit the limitations and exceptions, in line with the Brazil Proposal Par. #22 and the Development Agenda Recommendations.

South Africa

– There is an assymetrical dynamic between IP rights holders and the public interest. The list of issues for exploration by the SCP should remain non-exhaustive. A mechanism to facilitate coordination between the SCP and CDIP is quite important as reflected by the extensive discussion on technology transfer.

France

– SCP adopted a new work program subject to later comments. The SCP, by the very nature of its mandate, contributes to the implementation of the Development Agenda in a variety of ways. SCP work is dedicated to the improvement of the patent system which promotes innovation and technology transfer. We should be careful not to duplicate the efforts of the CDIP.

Egypt – supports South Africa’s statement.

Hungary - Supports French statement and additional elaboration. The EU’s Member States will contribute with detailed comments after the SCP’s work program has been implemented to a greater extent. SCP/15/INF2 [See Status of Work Relating to the Non-Exhaustive List of Issues Agreed By the Standing Committee on the Law of Patents (SCP) SCP/15/INF/2 (July 20, 2010), available online at: http://www.wipo.int/edocs/mdocs/scp/en/scp_15/scp_15_inf_2.pdf].

Spain

– There is no doubt that the SCP has already integrated development activities into the work of the SCP. The work of the Development Agenda is widespread in the SCP. For example, there are two projects on the relationship between patents and the public domain – e.g, #16 and #20. 19, 25, 28. #7, #8, 30, 31, 1, 7, 9, 40, 41, 22, 23, 28, 29, 31, 39.

[See The 45 Adopted Recommendations under the WIPO Development Agenda, WIPO website, available online at: http://www.wipo.int/ip-development/en/agenda/recommendations.html].

The aspects reflect social reality. We must avoid duplication. The inclusion of development agenda items should not preclude discussion of other business in the SCP. The resulting lack of balance would convert this committee into a duplication of other committees.

U.S. – supports France, Hungary and Spain statements concerning how the SCP has been supportive of Development Agenda 12.

Australia – supports France statement. Most discussions in SCP currently implement Development Agenda recommendations.

Chair - Meeting suspended. The Chair seeks advice concerning how to reach consensus.

[The Chair subsequently published its summary of this week of meetings. See: Summary by the Chair, SCP/16/8 (May 20, 2011), available online at: http://www.wipo.int/edocs/mdocs/scp/en/scp_16/scp_16_8.pdf].

ITSSD Director's Guardian UK Article - 'A Call for Caution on Open Source Software' Triggers FOSS Community Backlash & ITSSD Responses - Part 2

noreply@blogger.com (ITSSD Charitable Mission) — Thu, 09 Jun 2011 17:34:00 +0000

As noted in a very recent ITSSD Journal entry - ITSSD Director's Guardian UK Article - 'A Call for Caution on Open Source Software' Triggers FOSS Community Backlash & ITSSD Responses - Part 1 - available at: http://itssdinternationaliprights.blogspot.com/2011/06/itssd-directors-guardian-uk-article.html , many within the European FOSS community were visibly upset by the publication on May 23, 2011, of the ITSSD Director's Guardian UK article entitled A Call for Caution on Open Source, available online at: http://www.guardian.co.uk/government-computing-network/2011/may/23/lawrence-kogan-itssd-caution-open-source-government-ict .

Indeed, several members of the European FOSS community responded with accusations that the publisher had succumbed to software patent corporate lobbying pressure and proceeded to attack this author with ad hominem critiques. In particular, one well-recognized FOSSie blogger, Glyn Moody, was so distraught about the Guardian UK's publication of this author's article that he set out to personally malign this author in a specially drafted rancorous blog attack article entitled, Caution on that ‘Call for Caution on Open Source’. The Moody blog article, which was accompanied by a number of additional ad hominem critiques from other FOSSie malcontents, appeared in the 'Open Enterprise' section of the ComputerworldUK- the 'Voice of IT Management' website on the same day - May 23, 2011. It is available online at: :

The About Us section of the Computerworld UK website claims that "Computerworld, the 'Voice of IT Management', is the largest and most trusted source for the information needs of enterprise IT management across the globe" (emphasis added) - http://www.computerworlduk.com/about/ .

Considering the reach of this website, the curious almost cult-like influence of Mr. Moody and the lack of rigorous journalistic critique leveled at this author's Guardian UK article, this author has sought to provide the Computerworld UK readership with detailed substantive responses which neither Mr. Moody nor his followers (i.e., "the Moodies") have yet to match:

Dear Mr. Moody,

I write to thank you for the attention you have paid to my recent UK Guardian Professional article which I interpret as a complement.

If you would be interested in assailing my other writings on this subject matter bearing a significant number of footnoted sources and other referenced titles, I'd be extremely grateful.

See, e.g.: http://www.mondaq.com/article.asp?articleid=129510 ;

http://www.mondaq.com/article.asp?article_id=131628 ;

http://itssdinternationaliprights.blogspot.com/2010/04/how-smart-are-standards-that-sacrifice_18.html

Sincerely,

Lawrence Kogan

P.S. - Furthermore,

By referencing the article of Mr. Gijs Hillenius (NL: Court of Audit 'failed' in its independent review of open source - http://www.osor.eu/news/nl-court-of-audit-failed-in-its-independent-review-of-open-source , are you insinuating that he, a university professor and a news editor at the OSOR.euproject of the European Commission (dealing with the use of open source by public administrations in the EU) without any formal accounting or auditing training himself, is more of an authority on the Netherlands Audit Court practices and procedures leading to the compilation of report data and the methodology for interpreting such data for reporting purposes than the report's authors themselves?

Government reports usually emanate from one to a few civil servant authors - and such reports are usually reviewed by superiors with an eye for methodology and verification of findings. What Mr. Hillenius does not mention is that there is a difference in the findings between the reports that has led him to conclude that the first report was correct and the second report was not.

And, beside Mr. Hellenius' own questionable credibility on matters of this type, he refers to the opinion of Hans Sleurink, the perennial editor of the Open Source Jaarboek, a known pro-open source 'rag' with a decidely biased view and perspective on these matters.

Please tell me that you sincerely believe Mr. Hillenius' reporting to be objective and unbiased...

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"Dear Glyn Moody and the Moodies,

I set forth below Subpart[s] [A &] B of Part I of my rebuttal encompassing Points [1-3 and] 4-5 [, respectively]:

Part I of my response:

1. Your first claim states that “...nobody had claimed anything of the sort” when referring to the final sentence of my article.

“The UK coalition government should take considered note that the procurement of open source software buys neither governments nor taxpayers a cost- and indigestion-free lunch.”

In response, I must profess that none other than the Netherlands Court of Audit reached these conclusions, not I.

2. Your second claim(s) states that,

“The reason [EIFv2.0] it was rejected was because of massive lobbying by traditional software companies afraid of real competition from free software. And it's not true that the European Commission chose “technology and business model neutrality”. As I've explained in detail, EIFv2 is inherently incompatible with the GNU GPL: it therefore excludes solutions that are based around it - not at all neutral, but tilting the playing field in exactly the way that those same large software companies wanted to ensure.”

In response, I must respectfully disagree with your conclusion. The prior draft of EIFv2.0 was rejected because it sought to eliminate virtually all government procurement of proprietary software systems carrying features distinct from (you say incompatible with) OSS – e.g., FRAND licensing restrictions as well as royalty-based licensing usage terms. I would be pleased to make reference in my follow-up answer to the precise language contained within the ‘informal memorandum’ (NOT ‘report’) entitled, “Sorry We’re Open” prepared by Dutch Ministry of the Interior officials during 2010. The language contained in that memo reads as if it was borrowed from the several reports prepared by UNU-MERIT Professor Rishab A. Ghosh, a biased OSS advocate who happens also to be a board member of the U.S. lobbying group Open Source for America (OSA describes itself as “a broad cross-section of more than 50 companies, academic institutions, communities, related groups and individuals that serve as a unified voice for the promotion of open source in the U.S. Federal government sector”, including the “GOR” of “IGOR” – Google, Oracle, Red Hat - http://opensourceforamerica.org/organizations . The memo’s language also appears as if it had been blessed by FOSS/OFE counsel Andy Updegrove – an OSA Advisory Board member and a Fellow of the OpenForumAcademy think-tank, an affiliate of OpenForumEurope (OFE).

Predictably, the traditional software companies objected to the prior EIFv2.0 draft version’s use of the 2010 Dutch Sorry We’re Open informal memorandum language, which apparently was being heavily pushed by the “IGOR” OSS// Saas industry members financing the OpenForumEurope lobby in Brussels. If successful such lobbying effort would have established as official EU regional government procurement policy the expressed preference for OSS in the ‘name of open standards’, even though “OSS” and “open standards” are distinct terms and concepts. And, as you are well aware, the goal of “IGOR” lobbying was also to disrupt and reshape the private markets for proprietary software in their favor. Unwilling to find itself caught in the crosswinds of such lobbying and counter-lobbying efforts, the EU Commission wisely opted for ‘neutrality’ as concerns BOTH technology (functional standards that can accommodate proprietary as well as non-proprietary OSS products) and business model (royalty-based as well as service fee-based). Let us all take a look at COM(2010) 744-2 final, (12/16/2010), supra at Sec. 2.12 at p. 12. “2.12 Underlying principle 11: Technological neutrality and adaptability... Recommendation 8. Public administrations should not impose any specific technological solution on citizens, businesses and other administrations when establishing European public services.” http://ec.europa.eu/isa/strategy/doc/annex_ii_eif_en.pdf . The EU Commission simply followed the will of the European Parliament and Council which had been clearly expressed in legally binding DECISION No 922/2009/EC http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2009:260:0020:0027:EN:PDF . For example, the Parliament and Council had determined that all solutions established or operated, and all actions launched or continued, under the ISA program, as a matter of principle, shall be technologically neutral and adaptable. According to Preambular Paragraph 21, “(21) Solutions established or operated under the ISA programme should be based on the principle of technological neutrality and adaptability with a view also to ensuring that citizens, enterprises and administrations are free to choose the technology to be used.” And according to Article 4(a), “Actions launched or continued under the ISA programme shall be based on the following principles: (a) technological neutrality and adaptability...”

Indeed, it is now arguable, in light of two recent studies released following the issuance on December 16, 2010 of final EIFv2.0, that the EU Commission’s ‘neutrality’ decision has since been vindicated. In addition to validly refuting the March 2011 Netherlands Court of Audit report’s conclusions against which you and others have howled, which cast serious doubt on the acclaimed cost-savings of OSS, you will likely need to reformulate your line of argumentation which states that “EIFv2 is inherently incompatible with the GNU GPL: it therefore excludes solutions that are based around it - not at all neutral, but tilting the playing field in exactly the way that those same large software companies wanted to ensure” http://blogs.computerworlduk.com/open-enterprise/2010/12/european-interoperability-framework-v2---the-great-defeat/index.htm . In particular, you will also need to adequately refute (not merely by ad hominem) the conclusion drawn by one recent study that, “not only is the notion that FRAND discriminates against all [F]OSS wrong, it would perhaps even be fair to claim that it is the GPL that discriminates against FRAND.” (See: Jay P. Kesan, The Fallacy of OSS Discrimination by FRAND Licensing: An Empirical Analysis, Illinois Public Law and Legal Theory Research Papers Series No. 10-14 (Feb. 2011), at pp. 15-16, available at SSRN: http://ssrn.com/abstract=1767083 .

3. Your third claim states that, “Traditional software companies have used monopolistic lock-in to proprietary formats to ensure that the British government has had no effective choice about buying their products, and to lock out open source alternatives. The Cabinet Office procurement policy is simply designed to ensure that a completely level playing field is available for all players to submit tenders, and that requires open standards based on Restriction-Free licensing.”

As with your prior comments, you overreach a bit by using the term ‘monopolistic’ in referring to the behavior of traditional software companies (a monopoly is a legal ‘term of art’ – i.e., an abuse of market power rather than merely employing an exclusive patent right to impose licensing royalties on third party uses of one’s proprietary technology in a competitive but legal manner; it is not simply reducible to the value judgments of non-lawyers or media sycophants). You also over-generalize without factual foundation that traditional software companies have sought both to ‘lock-in’ the British government to proprietary formats and to ‘lock-out’ open source alternatives. Could it be the case that, as with FOSS vendors, that they are making follow-on sales offerings that are more competitive in terms of price, service, reliability and other dimensions than that which is being offered by their competitors? Or, is it possible that the British Government is merely seeking to protect a nascent and currently non-competitive UK-based FOSS industry at the expense of SME and/or more established proprietary software vendors from other EU and non-EU countries? You clearly are advocating that governments should shape procurement markets based on other than technical specifications and performance criteria, equal opportunity criteria, and/or cost-criteria. What you and other OSS advocates are seeking is for government to preordain what the market for IT e-Government software interfaces should look like, and to secure from the British Government, in particular, a fixed predominant, and perhaps, overwhelming allocation of public funds for OSS procurements without adequate proof of the actual superior performance, reliability and/or cost-savings they are alleged to bring. What disturbs you and the FOSSies most about the March 2011 Netherlands Court report is that it dares to question the ‘unspoken’ cost-savings aspect of OSS as it relates to the performance and reliability aspects of OSS, casting serious doubt about the questionable findings contained within the informal memorandum prepared by officials at the Dutch Ministry of Interior, which alleged, without much more, projected but unsubstantiated cost-savings. We will discuss that report soon enough.

As concerns the second statement in the italicized remarks above, there is NO such thing as a “completely level playing field” in the markets. While extremely naïve at one level, this notion (metaphor) quite nuanced at another level, as it is repeatedly and conveniently relied upon by those seeking greater regulation (protection) to portend (typically without substantiation) the existence of perceived “market failures” that justify more and more government intervention.

4. Your fourth claim, in which you review the following passage from my article, expresses frustration in not being able to locate the source of the final quoted statement below:

“At the request of the Dutch House of Representatives, during 2010 the Audit Court investigated "whether the phasing out of closed standards and the introduction of open source software would improve the operation of market forces and save costs for the government". In March 2011, it released the results of its investigation in a report, Open Standards and Open Source Software in Government. It "concluded amongst other things that the potential savings the government could [realise] by making more use of open source software were limited", and that the "switch to open source software...does not necessarily... lead to cost savings" at all.”

May I relieve you of your frustration? Please See: National Savings with open source software may be limited, Netherlands Court of Audit Press Release (March 15, 2011) ((English Translation) at: http://www.rekenkamer.nl/Actueel/Onderzoeksrapporten/Introducties/2011/03/Open_standaarden_en_opensourcesoftware_bij_de_rijksoverheid?informatietype=persbericht .

5. Your fifth claim reads as follows: “The first part of that last comment can be found on this page, but I can't find the second part anywhere. However, it turns out that's pretty irrelevant, since the entire Auditors report has been widely dismissed as being superficial and lacking in rigour, unlike the work that preceded it:”

You then proceed to quote the summary provided by Mr. Gijs Hillenius ("NL: Court of Audit 'failed' in its independent review of open source" - http://www.osor.eu/news/nl-court-of-audit-failed-in-its-independent-review-of-open-source , to which I responded in brief in my prior comments of last week. Following my review, once again, of the 2010 informal memorandum prepared by officials at the Dutch Ministry of Interior to which Mr. Hillenius and you obviously refer, I am more convinced now that the Netherlands Court of Audit was squarely within its rightful jurisdiction and discretion not to pay it much deference. My responses to your fifth claim are provided below:

First, unlike the Netherlands Court of Audit “Report”, this 2010 Ministry of Interior document was NOT a “report” at all, as you, Mr. Hillenius and others have misrepresented (e.g., Jasper Bakker of WebWereld.com - http://webwereld.nl/nieuws/105998/geheim-rapport-open-ict-offline-gehaald.html ; http://webwereld.nl/nieuws/105966/---open-ict-bespaart-overheid-1-miljard---.html – English translations). Rather, the document was an informal ministry “memorandum” prepared by “a civil administrator from the ministry of the Interior, a civil administrator from the ministry of Finance, a civil administrator at the ministry of Defence and two IT consultants” As an English translation of the first page of the “Summary” section quite clearly reveals, “This memo shows how the government can achieve significant savings the introduction of market forces by breaking down closed standards for generic ICT facilities and flexible ICT solutions using open source software.”

Second, if it was anything, the document was most likely a private report issued TO the Ministry by these authors who were deeply disappointed that their document was not embraced by the Dutch Ministry of Interior, and therefore, NOT officially issued in the name of and BY that Ministry, as the letter of J.P.H. Donner, Minister of the Interior and Kingdom Relations, and Mr. Hillenius’ blog comments quite clearly reflect http://www.osor.eu/news/nl-court-of-audit-failed-in-its-independent-review-of-open-source .

Third, it is quite revealing, as Mr. Hillenius and Mr. Bakker have indicated http://webwereld.nl/nieuws/105964/geheim-onderzoek-open-ict-toch-onthuld.html - English translation), and which you have conveniently omitted from your critique of my article (because it would undermine your critique), that the one person in the Dutch Parliament who objected to the Interior Minister’s refusal to treat the memorandum as an official Ministry document, and the Netherlands Audit Court’s subsequent dismissal of the informal Ministry of Interior “memorandum”, was none other than a “socialist party kingpin”. I am speaking of Dutch Socialist Party MP Rik Janssen http://www.osor.eu/news/nl-moving-to-open-source-would-save-government-one-to-four-billion ; http://www.sp.nl/economie/nieuwsberichten/8734/110217-janssen_eist_openbaarmaking_notitie_open_standaarden.html - English translation). A brief review of the Dutch Socialist Party website reveals that the party platform of the SP International in the Netherlands calls for “Public Ownership” of all privately generated activities, innovations and know-how relating to the healthcare, education and transport sectors, among others:

“In a society where the market is acquiring ever more power and the state and public authorities ever less, the SP stands firmly behind the principle of public ownership. Where the free market rules, the thickness of a person’s wallet determines whether he or she will have access to health care, education, cultural events, social security and transport. This kind of social divide should have no place in a civilised society. It is for this reason that we oppose the sell-off of publicly-owned enterprises, the farming out of public services and the giving up of any democratic control over the direction of our society.” (See: SP International – An Active Party”, at: http://international.sp.nl/activities/ .

This fact alone constitutes a rather ironic validation of the ITSSD’s work and an undermining of your scornful critique of it!

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Dear Glyn Moody and the Moodies:

Below is Part II of my rebuttal:

As concerns the informal memorandum prepared within the Dutch Ministry of Interior entitled, Sorry We’re Open - How the government can improve the ICT market, available online at: http://www.leugens.nl/wp-content/uploads/2011/03/ICT-rapport-Sorry-we-re-open.pdf , it is quite clear that it was other than objective and precise.

i) First, an English translation of the memorandum’s “Summary” section indicates plainly how such “note [was merely intended as] an exploration of how a significant [and]...necessary savings in IT can be realized”.

ii) In addition, as the ‘note’ or memorandum itself states, its putative conclusions were based on “rough” prognostications bearing a rather broad range of outcomes – from between 60 million and four billion euros worth of savings:

“Rough calculations show that the potential to achieve economies fundamental: from approx. 60 millions Euro per year in a scenario where only minimum closed standards replaced by open standards in the generic ICT facilities to approx 1 Billion Euro a year in addition to the scenario in which a maximum introduction of open standards, open source software is introduced in areas where possible.”

iii) Interestingly, Section 2 of the note/memorandum entitled “Introduction” posits some very biased assumptions and conclusory statements that lack substantiation and are without reference to any peer-reviewed research and/or quantitative assessments:

“For some years it is generally acknowledged that the government through the many vendor lock-in programs ICT area has a poor negotiating position as a purchaser of software and services. The government is strongly dependent on a few suppliers of ICT components which currently provide this "vendor lock-in" no alternatives considered come. These components are often so interwoven that using alternatives impossible, or at least prevented serious.”

No evidence is provided within the report or references made therein to external studies and their findings to support this conclusory statement/assumption.

iv) Once again, there is no evidence-based substantiation of the claims made. Obviously, there is an effort to exaggerate conditions in the private markets in order to invoke the “market failure” rationale in justification of greater government intervention in both the private and public procurement markets.

“Not only the government knows this problem, a number of areas of software market has macroeconomic proportions so that there is hardly existence of market competition, high prices... It is clear that changing the market [is] a long-term approach, but also achieving full independence from suppliers by integrating the ICT in the primary processes of government a matter for the long haul.”

v) Where is the evidence supporting the following conclusion? And how is “appropriate” defined and by whom?

“The use of open standards and the use of software under open source licenses is seen as the most appropriate means to break through this situation.”

vi) Indeed, within Section 4 entitled, “Improving the Market”, the note/memorandum provides the following unsubstantiated assessment without reference to any peer-reviewed research performed and embraced by the government and/or its contractors:

“Market forces in the disturbed software market is sustained by the strong vendor lock-in: closed standards of some suppliers are deep in the primary processes of user organizations intertwined. Often not consciously chosen for this situation but it is grown historically. Even within the government in the past "standardized" on products that use closed standards which a large supplier dependency is created.”

Once again, as they say in the States, ‘Where’s the beef?’ Furthermore, this section of the note/memorandum clearly evinces a desire by its FOSS/‘IGOR’-orientated contractors/authors to eliminate all proprietary technology-based standards in addition to mandating only FOSS-based IT standards, and to even reduce those to a few. Behold the following conclusory statement:

“Dependence on the supplier to build the market and thus its work to do is the reduction of closed standards a prerequisite. This does not to introduce more open standards, but the actual dismantling closed standards. Until the last closed standard is used, the vendor lock-in remain. Moreover, an environment with different standards usually result in additional (management and operating) costs and interoperability problems.”

Curiously, the prior conclusory statement precedes the following assumption (in formal logic, assumptions usually precede conclusions), which strongly suggests tautological reasoning is at play:

“This all leads to the following assumption: Vendor Independence and the introduction of market forces is achieved by Reducing closed standards.”

vii) The note/memorandum next lists a number of software applications limited to a few large software companies that are claimed (without substantiation) to dominate 99% percent of the market for government IT systems – which is intended to serve as ‘evidence’ of the “market failure” the note/memorandum is intended to cure.

“These areas are at 99% of the state, but represent only 1% of the applications. Besides these known applications, there is a long list of applications that run on smaller widely used, which may or may not there is a malfunctioning market closed standards.”

viii) The note next boldly claims that considerable taxpayer/government savings can be achieved once ‘market conditions’ are restored via use of FOSS-based open standards, which improve government’s negotiating position vis-à-vis proprietary software vendors.

“By closed standards to build and market introduction may considerable savings...Importantly, these savings are not necessarily achieved by switch to alternative products, the significant price reductions achieved by improved position of the government as buyer in a competitive market.”

Unfortunately, there is, once again, no direct evidence to support this proposition (and no references to peer-reviewed or government studies referenced) other than the proposition itself, save for a broad, non-quantitative and incorrect analogy to the aviation industry.

“The situation outlined here is easy to illustrate the deregulation in the aviation in the 70 years of the last century. Intermezzo: The introduction of market forces in aviation. In the seventies of the last century made a start on improving the market in international aviation. Until that time, the conditions under which such carriers could be started very heavily regulated by governments. Contracts are routes between airports to fly were agreed by states with their own national carriers were strongly protected. Impact: high prices and a inflexible system. Deregulation was in the 70 years begun to make public are largely from the 'air play' withdrawal, the was much easier for new (small) companies to join, there were no exorbitant amounts for routes asked etc. By opening up the market with many new parties, the competitive pressure on big companies so fierce that they saw no other option than the prices are very strong reduced. Result: price reductions of 40 to 80%.”

Obviously, one assumption underlying this analogy is that the more Dutch/European government procurement vendors there are, the more competitive software pricing will be in the government procurement market. However, for this assumption to have any validity, it must also be assumed (which the note/memorandum fails to do) that the additional vendors so introduced will offer software products that are at least equal, and perhaps, superior to the currently used software products in terms of performance - functionality, reliability, manageability, upgradeability, flexibility and interoperability, and that such vendors will be able to service their FOSS offerings better than proprietary software vendors service theirs. Once again, however, no evidence is provided to substantiate this.

Another assumption underlying this analogy with the aviation industry is incorrect on its face. The note/memorandum attempts to create the false impression that the current proprietary software industry’s success in Dutch/European government procurement markets is other than the result of natural competition, and alleges that the perceived domination of proprietary software vendors in Dutch/European government procurement markets is comparable to the prior monopolies enjoyed by the aviation industry in private markets as the result of government-granted licenses to operate. The note, however, fails to candidly distinguish between a government-granted ‘license to operate’ and a government-qua-customer executed license to purchase and use from a private vendor a proprietary software product and related know-how in particular markets.

Apparently, the note/memorandum employs this incorrect analogy to make its next point – namely, that in addition to Dutch/European governments opening up bidding for government procurement e-Government contracts to many more vendors (i.e., increase vendor supply - here, FOSS vendors), governments can also simultaneously impose greater regulations to ‘break’ the alleged monopoly of traditional software companies on Dutch/European government procurement markets (i.e., decrease government demand for proprietary software systems) so as to create new opportunities for FOSS-based vendors – to ensure that FOSS-based vendors secure their (subjectively determined) ‘fair share’ of contracts, irrespective of the quality and performance of the offerings and of whether the vendors are qualified to deliver and maintain them.

“Remarkable fact in this development is that the safety is not deregulated. This is still a very strict and tightly regulated involving national governments have broad powers and responsibilities. In summary, competition in the air for a more efficient interaction between government and companies resulted in not at the expense of safety. An important distinction is that the interlude with the above software market by a government-regulated market that needs to be deregulated. It is a monopoly and vendor lock-in 's dysfunctional market where the government Launching customer can occur.”

ix) Section 5 of the note/memorandum entitled, “Flexible reusable IT solutions”, evidence an effort to criticize and eliminate FRAND/RAND licensing terms from Dutch/European e-Government software procurements. Since FRAND/RAND contractual licensing terms accompanying most proprietary technology-based standards reflect arms-length negotiations and embody the freedom of contract, it must be assumed that the authors of the note/memorandum seek to eliminate the freedom (property right) of contract in e-Government solutions procurement markets. This is entirely consistent with the platform of the Dutch Socialist Party, which stands firmly behind the principle of public ownership of private technology and know-how, and consequently, with the beliefs and objectives of Dutch Socialist Party MP Rik Janssen and like-minded Dutch parliamentarians, as discussed above. The remainder of this section is devoted to instructing the Dutch government how to reduce the use of ‘closed standards’.

x) Section 7 entitled, “Preconditions for success” is rather clear on its face – it is a cookbook recipe for reshaping the e-Government procurement market to suit the economic and political interests of the FOSS community and FOSS-based industry (“IGOR”/OFE), even though said recipe is based on ‘soft’, imprecise and extrapolated (non-rigorous) cost-savings projections supplemented by “general indicators”.

“The introduction of market forces and dismantling of restrictive licenses in places where advantage will not be easy and in a short time can be handled.”

“These are savings improvement of market forces (cost 1) and flexible savings ICT solutions (cost 2)... The calculations in this note presented is chosen for a global approach: it assumes a number of existing contracts, which are extrapolated and where necessary supplemented with general indicators.”

“...If, besides the demolition of closed standards, proprietary Packages were also replaced by open source alternatives, the savings on licenses would be relatively higher.”

xi) The note/memorandum next provides the following caveat to its calculations which informs readers that only ‘license’ costs have been considered and approximated and acknowledges/admits that any comparison of costs beyond license acquisition costs would be uncertain at best:

“The calculations are based on a number of recent contracts where the total licensing Generic functionality is divided by the number of workstations...Important to note that the calculations for open-source, only the direct license costs are calculated secondary costs such as license and upgrade costs are not included. Certainly the replacement by open source software in these areas fundamental savings can be achieved. The various aspects will be explained in more developed. License and application access management Exact figures in this field can not be given. Gravity of the management domain is per license different.”

“...Calculating flexible ICT environment of the (national) government is even more complex calculations than the generic ICT. The variation of current ICT systems / services that are eligible are many times larger than those in the generic ICT. To still be able to make calculations, it was decided to sample an application to be taken and can be calculated. By extrapolation, the calculated figures then be generalized.”

Yet, despite the complexities entailed in making these calculations due, in part, to the extensive variations in proprietary-based ICT systems currently used by the Dutch Government, and the lack of evidence to support their hypothesis, the authors of the note/memorandum nevertheless were able to draw the following remarkable conclusion:

“Large savings can be realized with the introduction of market forces through the use of open standards, and by introducing open source software for generic and specific applications. It varies from approx.115 M € per year for introduction of generic competition on ICT to 500-750M € per year for replacement of locally implemented proprietary software applications through centrally facilitated open source variants. By focusing on achieving both possibilities savings of between 500 million and 1 billion € per year are achievable. The actual realization of these savings will require a significant effort and a long time (at least 10 years)”.

If this is THE quintessential document that you and the other FOSSies have relied upon to ‘shred’ the Netherlands Court of Audit report, then you are all on far weaker ground (more like sand) than you have a right to claim. No wonder why the Dutch Interior Minister and the Netherlands Court of Audit acted the way they did!

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Dear Glyn Moody, and the Moodies:

Let’s try finally to set the record straight for your readers who, are no doubt, anxious about your ability to hold your own in substantive debate.

You said in your original blog criticizing my Guardian article that the “EIFv2 is inherently incompatible with the GNU GPL”.

You NOW say in your most recent response to my reference to Professor Kesan’s study entitled, The Fallacy of OSS Discrimination by FRAND Licensing: An Empirical Analysis, Illinois Public Law and Legal Theory Research Papers Series No. 10-14 (Feb. 2011), at pp. 15-16, available at SSRN: http://ssrn.com/abstract=1767083 , that you agree with his study’s findings – namely, that “the GPL and the Lesser GPL license conflict with the FRAND model”, exactly as I said. You then state that “That matters, because GPL and LGPL are by far the most important open source licences – well over half of all projects use them...” (emphasis added)”

However, you must admit that these two statements are different from one another and that each refers to a different subject matter.

If you are endeavoring to conflate them, then you are being as intellectually dishonest as the those OSS advocates conflating the FRAND/OSS Debate with Patent Holdup, as Professor Kesan lays bare on pp. 19-20 of his study.

1) As concerns the first statement above, I will repeat in paraphrased form what I previously stated in my Guardian article: the fact that the EIFv2 permits both FRAND and OSS-based IT licensing with respect to a technical specification contained in a standard reinforces the technology and business model neutrality of EIFv2. In other words, by permitting BOTH FRAND AND OSS-based licensing, EIFv2 discriminates against neither software license and business model.

However, as a Stallman ideology torch-bearer, you emphasized that “over half of all OSS projects use them” - GPL and LGPL – and cited in support of your statement Black Duck statistics which reflect that of the top 20 commonly used OSS licenses, 45.32% are GPL2.0, 8.02% are GPL2.1, 6.69% are GPL3.0, .62% are LGPL3.0 – or, in other words, 60.65% of the top 20 OSS licenses are GPL and LGPL.

My first question is how many other types of OSS licenses are there, and what are their usages – individually, collectively, relative to GPL and LGPL licenses, and relative to the total number of ALL OSS licenses now used? According to Professor Kesan there 67 OSI-approved licenses – “The [eight] most popular OSI-approved OSS licenses are Apache 2.0, BDS, GPL, LGPL, MIT, MPL, CDDL, and Eclipse Public License.” [fn 13, p.8]. And, “Of the eight most popular OSS licenses, only the GPL and the Lesser GPL license conflict with the FRAND model. And only a small fraction of the remaining 59 OSI-approved licenses have any conflict with FRAND.” [pp. 1; 26] So, Glyn Moody, please refer to the actual number of ‘at-risk’ GPL and LGPL licenses – i.e., those placed at risk by the EIFv2! Are we really speaking here about a fraction of a fraction???

My next question is are you trying to say that by permitting FRAND-based IT licensing as well as OSS-based IT licensing, that EIFv2 has consigned over half of all OSS licenses in Europe to irreconcilable conflict with and impairment by FRAND licenses?

And, for my final questions relating to the first statement: Are there not available workarounds, and have they not been successful? And, notwithstanding their success hasn’t Stallman, due to ideology, revised the GPL yet again to prevent such workarounds? The answers to all these questions are YES. YES. YES.

According to Professor Kesan,

“Companies have spent the last decade trying to reconcile GPL version 2 with traditional commercial licensing practices related to patents. One possible approach to reconciliation is the concept of a fixed or lump sum royalty, which would avoid violating GPL by not conditioning further redistribution upon payment of additional per-unit royalties.29 Other approaches to maintaining compatibility between patent royalties and GPL include basing royalties on market-share or other non-unit based criteria, or using hybrid architectures. ―Hybrid architecture‖ refers to a design in which a commercial distributor builds its proprietary functionality in separate components or modules and distributes them in a manner such that those separate modules need not be licensed under the GPL.30 Finally, an agreement announced between Microsoft and Novell in November 200631 illustrated another potential mechanism. Instead of directly cross-licensing each other, Microsoft and Novell each covenanted not to sue the other party‘s customers, thereby avoiding the reach of GPL v2 Section 7.” [pp. 17-18]

“As a result of these bridges between patents and the GPL, the GPL license was explicitly revised to tear down those bridges. The attempts at achieving compatibility were seen at loopholes, with one group in the OSS community describing the Microsoft/Novell deal as ―a deliberate attempt to frustrate the aims of the [Free Software Foundation] while remaining technically in accordance with the GPL v2.‖32 The revised license, GPL v3, includes clauses aimed at eliminating the ability of distributors to use hybrid architectures to keep certain components outside the reach of the GPL33 and restricting various third party patent license solutions that industry participants had crafted. In light of these actions, it is clear that the GPL‘s incompatibility with FRAND is by design and spurred by ideology, and not a result of any discrimination by the FRAND licensing model or the result of sound innovation policy analysis.” [p.18]

2) This brings me to the second statement above. As Professor Kesan has confirmed, it is only the GPL and the Lesser GPL – i.e., “the GPL family of licenses” that conflict with FRAND and third party rights; it is NOT FRAND that conflicts with OSS.

Professor Kesan clearly points this out:

“... Only the GPL family of licenses and a few others have clauses that conflict with FRAND. In the case of the GPL, the miscellaneous provision Section 7 (the ―Liberty or Death‖ clause) conflicts with FRAND.” [p.8]

“...[T]he ―Liberty or Death‖ clause [was] so named by its creator, Richard Stallman, the founder of the Free Software Foundation and outspoken critic of intellectual property rights. This clause was introduced in Section 7 of the open source license, GPL version 2,10 and essentially states that ―if somebody uses a patent or something else to effectively make a program non-free then it cannot be distributed at all. Stallman later explained that the goal of the clause was to prevent distributors of GPL code from taking patent licenses from third party patent holders to resolve allegations of infringement. Again, this provision does not serve the core purpose of an OSS license, but rather reflects a philosophical opposition to patents, particularly those relating to software.” [pp. 6-7]

“...[T]his clause...directly conflicts with FRAND terms. The ability to distribute the software is conditioned upon a firm‘s freedom to satisfy all the terms of the license, particularly its obligation to pass on to recipients, royalty-free, all of the license rights that it received in relation to the software. Notably, the clause does not merely prohibit restrictions, including royalties, placed on the recipient by the distributor, but restrictions placed on the recipient by third-parties, as well. If a firm implements a FRAND standard subject to patent royalties, or if a firm has some code already licensed under GPL and seeks to combine that code with an implementation of a FRAND standard, the resulting software cannot be distributed under GPL. Distribution of the resulting software would require the payment of a patent royalty to a third-party. Because the software could not be forever redistributed royalty-free by all recipients, the clause prohibits distribution entirely.”[p.7]

“... GPLv2‘s ―Liberty or Death‖ clause effectively prohibits distributors of GPL code from taking a third-party patent license if they cannot pass all of the license rights they get from the patent holder to downstream recipients. The scenario most commonly raised in the FRAND-based standards context is that in which the distributor cannot take a license that requires payment of a per unit royalty for each copy of the program distributed, but the tension is not necessarily limited to the royalty. It could extend to other common license terms like prohibitions on sublicensing, field of use restrictions, and terms conditioning the license on conformance with the specification of the standard.21 If these terms can be interpreted to further restrict the rights of the potential-recipient of GPL code, then that code cannot be distributed under GPLv2 Section 7, even if the distribution is royalty-free.” [p.10]

“...As well, a downstream reciprocal condition as applied to derivative works conflicts with a FRAND model. The downstream reciprocal condition in GPLv2 Section 6 states that all GPL-licensed code must be distributed under the same royalty-free license, regardless of whether it has been modified or combined with other code.14 Thus, any combination of GPL code and proprietary software would be incompatible with this clause.” [p.8]

“...[T]his potential conflict is largely limited to the GPL family of licensing. A FRAND license may prohibit sublicensing altogether, but this term will not necessarily conflict with common OSS terms, like reciprocal distribution restrictions. For example, an OSS license‘s reciprocal restriction might require that if a licensee does distribute the software, then he must do so under the same license, but it does not actually require distribution to begin with. Thus, a license prohibiting redistribution of the software will not conflict with an OSS term that merely places conditions on redistribution should it occur.

Another common FRAND term, a field of use restriction, is similarly compatible with most OSS licenses. A technology or program may be licensed for usage in one field, but not in another. For example, a firm may license technology for a touch screen to a cell phone manufacturer while reserving the exclusive right to license the same technology to another firm manufacturing medical equipment. Both licensees would be restricted from using the technology outside of their specified field. The only way this would conflict with an OSS license is if the license has an expansive reciprocal restriction, and the recipient‘s rights cannot be restricted in any way. Most OSS licenses either have no conflicting terms or have the aforementioned ―Larger Works‖ clause that makes an exception for OSS/proprietary software combinations. Only the GPL family of licenses and its clones have clauses broad enough to prevent the addition of a field of use restriction for any product incorporating OSS-licensed code.

A third common and largely compatible FRAND term is a condition requiring the software to conform to the specification of a standard. Again, there is only a conflict if the license subscribes to the GPL's philosophy and contains a blanket statement that prohibits any restriction of rights. For example, the OCLC Research Public License 2.0 contains multiple miscellaneous provisions that would conflict with frequent FRAND terms. In addition to a Liberty or Death clause, the license states, "Any patent obtained by any party covering the Program or any part thereof must include a provision providing for the free, perpetual and unrestricted commercial and noncommercial use by any third party."22 This clause prohibits third-party restrictions of any kind. As a third measure, if a distributor learns of a third-party restriction, he must "promptly redo [the] Program to address the issue.‖23 But again, this conflict is limited to the few OSS licenses that embrace GPL‘s philosophy.”[pp.11-12]

“...GPL was in fact designed to conflict with FRAND. This is evidenced by both the public statements surrounding the license‘s release and the revisions made to the license. As companies have strived to make it compatible, the designers of GPL have revised the license to impede success. Thus, not only is the notion that FRAND discriminates against all OSS wrong, it would perhaps even be fair to claim that it is the GPL that discriminates against FRAND.

A. GPL and FRAND—The Continuing Tension

Richard Stallman has made numerous public statements outlining his philosophy and criticism of intellectual property rights and royalties for software patents. As a driving force behind GPL, his rhetoric undoubtedly coincides with GPL‘s essential purpose. He described the motivation behind the ―Liberty or Death‖ clause as follows:

We can‘t prevent [assertion of claims of patent infringement] by what we put in the license for the program itself, but we can prevent something that‘s even worse. A fate that‘s worse than death for the program and that is suppose the patent holder says to every distributor ―I‘ll sue you unless you take out a license and pay me‖ and thus in effect, people will have to get permission and pay for permission to distribute the program, it would not be a free program anymore. We can‘t write our license to make software patents go away, but we can write our license so that they can kill the program but they can‘t enslave it.28

Stallman‘s comparison of demanding money for usage of patented software to enslaving the program illustrates his, and GPL‘s, ideological opposition to royalties of any kind, even those that are reasonable, non-discriminatory, and fairly negotiated.

In fact, the Preamble to GPL version 2 itself makes this ideology even more clear:

Finally, any free program is threatened constantly by software patents. We wish to avoid the danger that redistributors of a free program will individually obtain patent licenses, in effect making the program proprietary. To prevent this, we have made it clear that any patent must be licensed for everyone‘s free use or not licensed at all.

This ideology certainly deserves its place in the ICT ecosystem, but imposing it upon others by requiring standards to be royalty-free is unnecessary, against market competition, and not good innovation policy.” [pp. 16-17]

3) This brings me to final point, which is simply that the remainder of your response the other day was devoid of substance and consisted merely of an ideological recitation of the Stallman credo:

“The central issue here is...about freedom. It's about the freedom of governments to choose software that does not lock them into proprietary standards, forcing them to upgrade when the owner of that standard requires it, and with little choice about the price to be paid. It's about the freedom to choose alternative suppliers for software – something not possible with proprietary programs, which by definition are owned by one entity. It's about the freedom to customise software to meet local needs rather than putting up with a one-size-fits-all approach. It's about the freedom to make decisions based on the interests of European citizens, not on the shrill demands from US companies and their highly-paid lobbyists for higher profits...Finally, and most importantly, it's about a fundamental right: the freedom to share knowledge with our fellow human beings.”

However, the formulation of freedom which you and Stallman embrace is the freedom, in the absence of a market abuse, TO DENY OTHERS (i.e., those other than FOSS and environmental adherents), directly through oppressively restrictive contracting and standards development AND indirectly through intrusive government regulations mandating particular types of contracts and standards, the exercise of: their freedom to operate, their freedom to contract, their freedom to exclude others from the unauthorized use of their property, their freedom to associate, their freedom of speech, etc., which have long served as fundamental individual rights of economic and political life in the United States and, to a large extent, in most western European nations. Ultimately, the brand of freedom that you and Stallman are peddling is the freedom to impose your will and that of your fellow ‘Borg’-like FOSS and environmental collectivists on global society-at-large in order to establish “public ownership” and quash the institution of private property rights.

In other words, your brand of freedom is actually spelled “S-O-C-I-A-L-I-S-M” – but not the ‘hard’ socialism of the Marxist Soviet era or Mao’s China, but rather the ‘soft’, ever-creeping and encroaching communitarian socialism sought by many within today’s social democratic Europe to forever change its social market economies for the worse.

See Vaclav Klaus, The Intellectuals and Socialism: As Seen from a Post-Communist Country Situated in Predominantly Post-Democratic Europe, (8/22/2005) available online at: http://www.klaus.cz/clanky/2171 ; Paul Belien, Czech President Warns Against ‘Europeanism’, The Brussels Journal (8/27/05), available online at: http://www.brusselsjournal.com/node/206 ; Svetozar Pejovich, From Socialism to Socialism: A Property Rights Analysis of The Transition in Europe, Presentation delivered at The Wieser Memorial Lecture of the Prague Conference on Political Economy, “New Perspectives in Austrian Economics and Political Economy of Freedom” (April 24-26, 2009), excerpts available online at: http://www.itssd.org/NEGATIVE%20SUSTAINABLE%20DEVELOPMENT%20IS%20SOCIALISM.pdf .

ITSSD Director's Guardian UK Article - 'A Call for Caution on Open Source Software' Triggers FOSS Community Backlash & ITSSD Responses - Part 1

noreply@blogger.com (ITSSD Charitable Mission) — Thu, 09 Jun 2011 16:14:00 +0000

Many within the European FOSS community were visibly upset by the publication on May 23, 2011, of the ITSSD Director's Guardian UK article entitled A Call for Caution on Open Source, available online at: http://www.guardian.co.uk/government-computing-network/2011/may/23/lawrence-kogan-itssd-caution-open-source-government-ict .

Indeed, several members of the European FOSS community responded with accusations that the publisher had succumbed to software patent corporate lobbying pressure and proceeded to attack this author with ad hominem critiques. These responses are to be found following the article at the website url noted above.

For the most part, this author refrained from responding in kind, and in an effort to both inform and educate the broader Guardian readership, provided detailed substantive comments in dialogue with two of the commentators.

Set forth below are this author's substantive responses, (also accessible online at: http://www.guardian.co.uk/discussion/user-comments/InformedCounsel ) one of which focuses on one of the commentator's apparent reliance on a March 2009 report prepared by the Netherlands Bureau for Economic Policy (CPB). The report, which is entitled, Competition, Innovation and Intellectual Property Rights in Software Markets, can be found online at: http://www.cpb.nl/sites/default/files/publicaties/download/competition-innovation-and-intellectual-property-rights-software-markets.pdf :

"Dear Arjen Kamphuis:

I appreciate your efforts to contribute ‘knowledge’ to the Netherlands Audit Court; however, considering that you responded to solicited government comments via a specially formed ‘Linked-In Group’ rather than as a paid or specially invited unpaid advisor to government, you served as an informal adviser at best, and more likely as a member of the general public whose views on the subject matter were given no greater weight than other such views so contributed. If you can establish otherwise, please do. If you cannot, we must apply the necessary discount factor to your comments.

You claim rather boldly the following: “The report has been pretty much shredded to bits by a wide range of expert both in- and outside government. It is flawed in methodology, lacking basic understanding of the relevant strategic questions and reports ‘facts’ that are just plain wrong.” But, you don’t provide any evidence of such “shredding”, other than by referencing and applauding your own opinions and comments (https://bit.ly/eEqesQ ; http://bit.ly/hbW5ku ). Is there more evidence that you are holding back from us?

1) As concerns your comments regarding the March 2011 Netherlands Audit Court report, it is perhaps advisable to take a step back in time in order to analyze the Netherlands Bureau of Economic Policy’s March 2009 report lauded by the FOSS community and its industry and media sycophants as the more credible report (http://blogs.computerworlduk.com/open-enterprise/2011/05/caution-on-that-call-for-caution-on-open-source/ ).

The plain fact is that the March 2009 report prepared by the CPB – Netherlands Bureau for Economic Policy (CPB Document No. 181 - http://www.cpb.nl/sites/default/files/publicaties/download/competition-innovation-and-intellectual-property-rights-software-markets.pdf ) was itself an aspirational and academic document the purpose of which was “to analyse the economic effects of promoting open source software on competition and innovation. Based on existing insights from the economics literature, this study analyzes policy options in the light of software market characteristics, such as the incentives to innovate under different software licensing regimes and market failures that may occur in these markets. The document proposes guidelines to determine under which circumstances various types of policy intervention may be desirable to improve dynamic efficiency.”

In other words, its purpose was to identify a way to create a policy framework to achieve the end of promoting greater use of OSS in government and within society in general to achieve evolving policy ends of government influenced by the FOSS and industry communities.

As is commonly known the “document addresse[d] the following questions:

1. What are the incentives to innovate under different licensing regimes of software?

2. What are the market failures in software markets?

3. How do incentives and market failures affect welfare?

4. What can policy makers do to alleviate market failures and enhance welfare in software markets?”

Are you now saying that each of THESE questions did not “impl[y] a series of unspoken assumptions” or presuppose a certain outcome? Please be honest with the readership of this Guardian blog.

And, now, onto the merits of the Ministry’s March 2009 study itself which is rather ‘light’ in terms of research and analysis.

“17. Investigation into economic effects of open source software

The Bureau for Economic Policy Analysis (CPB) has been instructed to conduct an economic investigation into the relationship between the promotion of open source software and the effects of this on innovation and competition in the ICT sector. There is increasing academic interest in the economic impact of the introduction of open source software. It is sensible to survey what these effects are, particularly on the functioning of software markets (for example to what extent customers’ profit).”

“...For the sake of conciseness, this study exclusively focuses on open source versus proprietary licensing in software markets, and does not consider problems and issues related to open versus closed standards.”

This conditional phrase, in its own right, is suggestive of the ‘light’ nature of the research and the analysis performed.

In the section entitled “The Role of Intellectual Property Rights in the Innovation Process”, the March 2009 report very generally describes such role in conclusive fashion (with one footnoted reference to a few commentators) as extremely limited notwithstanding the abundance of evidence throughout global society to the contrary, and largely bypasses any substantive discussion of the subject matter:

“Loosely speaking, intellectual property right (IPR) protection ensures an exclusive right to market a product during a given time period. These exclusive rights effectively create the possibility of a monopoly position with regard to the product in question... From an economic perspective, an IPR regime is supposed to work as a mechanism to provide and protect the incentives to innovate. Such an incentive mechanism can take various forms. Hence, a fundamental issue concerns the optimal design of IPRs, in the sense that it minimizes the welfare loss from monopoly pricing, subject to the constraint that the incentives for innovation are not undermined.”

The March 2009 report then moves on to suggesting alternatives to IPRs as an incentive to innovation, adopting the same line of argumentation adopted by NGOs engaged in the famous patents and health public debates: “A more general question is whether there exist mechanisms next to IPRs that aim at maximizing the surplus generated by innovation. Examples of such mechanisms are prizes and procurement.”

Surely, there is no presupposed outcome here, is there?

Next, the March 2009 report warmly embraces the insights of academic Joseph Stiglitz, whose views are anathema to many in industry and government, whether US or European-based, upon which the report then bases its main proposition:

““The [...] intent [of the intellectual property regime] is to provide incentives to innovate by allowing innovators to restrict the use of the knowledge they produce by allowing the imposition of charges on the use of that knowledge, thereby obtaining a return on their investment” (p. 104). Nevertheless, one can argue that “[...] many of the most important intellectual advances are not covered at all by the patent system”(p. 105).”

As evidence, the report briefly cites two commentators who have allegedly analyzed the birth of the internet: “Bessen and Maskin (2004) make a similar observation related to the growth of the Internet: “[...] the economic model underlying this traditional argument is surprisingly limited. [Much] creative activity is not the work of lone creators. Rather, it is interactive and involves the contributions of many different parties. Indeed, innovation is often sequential, where each creator improves on the work of the previous iteration” (p. 2).”

The March 2009 report then provides the first tentative presupposed conclusion:

“The basic idea of this observation is that in the standard model, copying and imitation are equally “bad”. However, when the innovation process is interactive and sequential, imitation is not the same as copying, but it ultimately helps to create value for society.”

The March 2009 report next compares PS and OSS focusing on the psychological and emotional motivations underlying OSS development which it implies is an intrinsically valuable enterprise that also “creates a value for society”. Thereafter, the report discusses how OSS creates revenues:

“[U]nder open source licenses firms do not derive market power from their license because everybody can use, improve and distribute the product for free. Profit maximizing firms will therefore only invest in open source software if this is profitable for other reasons, or if they derive market power from other sources. One possible business model for commercial firms is what Lerner and Tirole (2005a) call ‘living symbiotically’. Suppose the open source product generates revenues in a certain complementary and proprietary activities (products or services). If the additional profits in these complementary activities outweigh the costs of ‘going open source’, then disclosing the source code can be an attractive strategy. [a/k/a/ creating a ‘loss leader’] Complementary activities may for example be technical support, education, training, but also increased sales of complementary and proprietary software...(22 Increased sales of complementary and proprietary products may be caused by network effects (see section 3.2.1), but also by a greater willingness of consumers to adopt the proprietary software.)...Private firms must convince volunteer contributors that the project is not simply abandoned to the open source domain if complementary activities become a commercial failure. One way of convincing participants is by making sufficiently large investments in open source development...Another source of revenues may stem from reduced development costs, for instance because of external development support, including the maintenance of the software by OSS communities (knowledge spillovers, see in section 3.2), and debugging.”

Thereafter in Section 3, the March 2009 report famously describes ‘the relevant market failures in the software market’ that call for a shift in government procurement from proprietary software to open source software, consistent with the ‘public interest’:

“This section described the relevant market failures in software markets. Market failures, if they remain uncorrected, may lead to market outcomes that deviate from the socially optimal choices. Policy makers therefore have to understand and take into consideration what types of market failures are present and how they affect welfare. Software markets exhibit several important market failures: customer lock-in caused by network externalities or switching costs; economies of scale caused by the need to purchase specific, complementary inputs at a substantial cost; and knowledge spillovers.”

There are no implied assumptions or value-laden presumptions reflected within this phraseology, are there? And, furthermore, where is the hard evidence of such market failures? The March 2009 report lightly references certain authors and materials but fails to submit them to rigorous analysis.

Furthermore, in the section entitled “Effects of incentives and market failures on welfare”, the March 2009 report, once again, takes a light broad-brush approach in identifying the marketplace ‘sweet spot’ for OSS. Apparently, without much analysis, it then makes the following conclusory statement:

“[I]f software development requires mainly programming skills and contracting about derived works is inefficient while a continuing stream of follow-on innovations is socially valuable, then open source business models perform better than proprietary business models.”

In addition to making such statement, the report also ‘concludes’, without much evidence, that there is only a limited role for proprietary software:

“[F]om a welfare point of view, market power might be needed and proprietary business models tend to dominate open source business models if specific inputs (such as non-programming skills) are needed so that development costs are high, or there are no obstacles (such as information asymmetries) with regard to contracting on follow-on innovations, or both.

This statement appears in the summary of the section notwithstanding that “open source licensing across the board would not necessarily bring any benefits compared to proprietary licenses, but would rather entail social costs”.

Moreover, the March 2009 report focuses on “[T]he potential role of the government” in addressing “market failures [which] lead to inefficient market outcomes” (no value-laden assumption here!).

Obviously, it is claimed that government intervention is absolutely necessary to ameliorate the software market failures, even where the market is operating as it should and market participants’ behaviors do not rise to the level of an ‘abuse’ (from a legal perspective) of their respective market positions.

“To correct for these market failures, policy intervention may be desirable. The question in this chapter is therefore what policy makers can do to alleviate market failures and enhance welfare in software markets. We assume that the government acts in the public interest, that is, it aims at maximizing welfare...To address market failures and enhance welfare, several policy options are available: stimulating demand, stimulating supply and lowering entry barriers.”

In assessing the most promising intervening role for government, the March 2009 report proceeds to discuss theoretical economic constructs, again without much empirical evidence to support the propositions made and conclusions drawn. Yet, the March 2009 report nevertheless clearly acknowledges the risk of, and lists several possibilities for, “government failures”; it also stresses that governments must undertake due diligence and an economic cost-benefit analysis prior to making any decision to intervene in software markets. It even admits that the use of competition policy in cases of market abuse may be preferable to government intervention in procurement markets:

“Before discussing the policy recommendations, let us stress that specific interventions require a strong motivation, the more so because of the risk of government failure. In practice, competition policy and making sure that consumers can ‘vote with their feet’, are the best candidates to counterbalance market power and reduce entry barriers. The reason is that consumers are better informed about their own preferences with regard to new products than the government. Nevertheless, there may be a case for additional, ex ante intervention. However, it should be verified that this type of intervention is not counterproductive with regard to competition law enforcement. A more precise analysis of policy interventions discussed in this document that complement competition policy, is beyond the scope of this study.”

The FOSS and pro-FOSS industry communities in which you reside seem to ignore these admonitions when supporting the March 2009 report and critiquing the March 2011 Netherlands Audit Court report.

Arguably, it is precisely because of the March 2009 report’s admonitions (and we must applaud the report’s authors for experiencing at least a moment of public conscience), the limited nature of the research and analyses undertaken and the lack of empirical evidence provided therein supporting the adoption of OSS across-the-board within government procurement e-Government systems on ‘public interest’ grounds, that the Dutch Parliament requested the Netherlands Audit Court to undertake cost-benefit study reflecting the actual rather than hypothetical performance of OSS relative to PS.

Unfortunately for the FOSS and industry communities seeking greater government intervention in national and municipal procurement markets in the name of the ‘public interest’, the Dutch Audit Court report did not say what they wanted it to say. Consequently, there have been ongoing efforts to “shred” the Audit Court’s report and the credibility of its authors. These ad hominem efforts are baseless and ring hollow, and they reflect nothing more than the same lobbying effort undertaken by such stakeholders (“IGOR” and the FOSS community) at the European Commission, the UK Cabinet, etc. to secure their private interests at the expense of the public interest.

Therefore, it would be a leap of faith and intellectually dishonest for you to continue to argue that the March 2009 report demonstrates an overall balanced approach to addressing a real/genuine public welfare issue. It would also be a stretch for you or anyone else to claim that the March 2009 report was, overall, a productive use of taxpayer funds.

2) As concerns your comment about asbestos (http://bit.ly/fzxuE7), you are well aware that the likening of closed proprietary systems to cancer-causing asbestos is a bit extreme. Yet the imagery that you seek for it to create is quite useful to your cause. It provides a convenient analogy for those who endeavor, through policy intervention, to severely restrict or eliminate the use of closed proprietary software systems in government procurement initiatives as many national governments within and beyond Europe have already convinced themselves was necessary.

The purpose of the Dutch Audit Court’s report was simply to verify such claims and to determine the extent to which such activities were undertaken at the expense of the Dutch public’s interest (i.e., at taxpayer expense) and whether the benefits obtained therefrom were actually (not hypothetically) commensurate therewith.

3) As concerns your studied review of the March 2011 Dutch Audit Court report, there DOES appear to be some additional evidence which you have thus far withheld from public view that casts serious doubt about your objectivity. Since you have freely provided readers with weblinks to your consulting firm website, it would seem appropriate to return to that website. And, when we do – Voila – we discover that one of your key industry clients is IBM Nederland! (http://www.gendo.nl/en/clients/industry ; http://www.ibm.com/nl/nl/ ). What more do you have to say about your objectivity with respect to such report?

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Dear ‘Brownie Boy’ (alias Michael Brown):

While you are entitled to your opinion, your ad hominem attack makes you appear to be more the wingnut...

Perhaps you should learn more about the different socio-political and economic theories underlying the

vs. EU regulatory approaches which would lay bare the distinct visions of private property, and IP by extension, within each legal jurisdiction.

The US Anglo common law/contentious justice-based legal system is far different from Continental European Napoleonic civil law/preventive justice-based legal system. While the former generally regulates what you cannot do, the latter generally regulates what you can and cannot do.

The US Constitution is premised on the notion of natural rights (civil and property-based) and on the proposition that “We the People” grant government the right/privilege of governing us. Unfortunately, for you, the constitution of Australia, like that of the UK and other commonwealth nations, and that of the continental European civil law nations, was given to the people by the royal governments, along with the rights conveyed thereby in order to secure their legitimate rule. Since such governments granted their peoples the right to be free, including the right to own and use property, including IP, under stipulation (or outright threat of withdrawal, historically speaking), legal and political scholars have determined that such rights were and remain attenuated in scope and exercise. In other words, scholars have compared property rights in the US which are ‘negative’ exclusive rights, whereas property rights in Europe and other third countries are ‘positive’ conditional/attenuated property rights. (If you would like I would be pleased to point you to the scholarship: http://world-intellectual-property-organization.com/edocs/mdocs/scp/en/scp_16/scp_16_ref_scp_12_3_rev_2-annex3.pdf (pp. 18-26))

Hence, when US exclusive private property right holders engage in business abroad and are subject to less robust private property right protections (or more stringent regulation) in civil and/or common law countries than are afforded (imposed) under US law, then, barring any treaty that would protect their rights as if they had been exercised within US territory, such assets are, as a matter of fact, deemed to be at greater economic risk; e.g., to the extent that the right to exercise them has been severely restricted, curtailed and/or otherwise eliminated. Such attenuation of the right to property can be extreme, as in the case of an outright expropriation; or it can be less extreme as in the case of an indirect regulatory ‘taking’ that restricts the use, exercise and economic value of the property right within the meaning of US constitutional jurisprudence.

Lastly, as concerns your comment that I refer to certain foreign regulations as ‘socialist’ in content or implementation, I confess that many knowledgeable Europeans with whom I have spoken in my career, especially within the past ten years, have admitted to the growing influence of ‘soft’ regulatory welfare state socialism (not to be confused with Marxism) within the European Continent. (Here, too, I can point you to the scholarship: http://www.itssd.org/NEGATIVE%20SUSTAINABLE%20DEVELOPMENT%20IS%20SOCIALISM.pdf ).

Comment: a call for caution on open source

noreply@blogger.com (ITSSD Charitable Mission) — Mon, 23 May 2011 13:21:00 +0000

http://www.guardian.co.uk/government-computing-network/2011/may/23/lawrence-kogan-itssd-caution-open-source-government-ict#start-of-comments

Comment: a call for caution on open source

Lawrence Kogan questions the oft-heard claims that
increasing the procurement of royalty-free ICT can
provide long term savings for government

Lawrence Kogan

Guardian Professional, Monday 23 May 2011 10.38 BST

In a recent Guardian Professional article, Government Takes Action on Open Technology, OpenForumEurope (OFE) president Graham Taylor revelled in the UK government's issuance of a January 2011 Procurement Policy Action Note that effectively reinstated, at least for the UK, the initial version of the European Interoperability Framework (EIFv1.0). This was despite its having been rejected by the European Commission and Council of the European Union in December 2010 in favour of technology and business model neutrality.

In stating that the UK government has not been open to lobbying pressure, it neglects the role of the Brussels-based OFE. Last year the New York Times reported that it has lobbied on behalf of US-based companies IBM, Google, Oracle and Red Hat – also known as IGOR – in quietly but unsuccessfully trying to shape the European Commission's EIF project. It has subsequently lobbied the UK government to express a preference for royalty-free open source platforms, as both the UK government's January document and its March 2011 follow-up Government ICT Strategy clearly demonstrate.

Similarly, his justifications for government intervention are broad and obtuse. He claims that the government seeks to prevent vendor lock-in and to save taxpayers' money. It leaves readers with the impression that the government has been called upon to protect its citizenry from the evil hand of the proprietary IT industry and has been convinced of the necessity of imposing interoperability mandates on government agencies for the deployment of open standards compatible with free and open source software (FOSS) "wherever possible...made irrevocably available on a royalty-free basis".

It is also unclear whose interests the government has in mind. Is it those of men and women on the street, or UK-based software SMEs (many of which develop proprietary software products and interfaces). Or is it the people managing OFE's very large IGOR member companies? Are non-UK-based SMEs included?

UK government 'skunkworks' may potentially drive some SME projects. But least one recent study has concluded that the government's goal of saving money by pushing open source software, splitting IT projects into smaller components, and eventually placing up to 25% of IT projects with SMEs, may prove fleeting if not impossible to achieve in the short term. According to the study's authors, there are significant barriers to immediate SME uptake of government IT projects, including but not limited to the "perceived risk of SMEs, [the] complexity of UK interpretations of EU procurement rules, self-interest from gatekeepers to preserve lucrative status quos and an underlying belief that big is safe."

There are also questions about how this would fit into EU procurement regulations and possible extra-European international trade tensions that might arise as the result of any action.

Graham Taylor says that "it will be for other governments to follow the UK's lead and develop their own practical procurement processes and frameworks", and gives due deference to the Netherlands as being one of only two EU member states (Belgium being the other) that "are already there." In so doing, he indirectly refers to the Dutch government's Open Standards and Open Source Software (OSOSS) Programme. By 2007, this had evolved into an affirmative procurement preference action plan that strongly urged all Dutch federal ministries and subsidiary government bodies to use open source software based on open standards wherever possible. Is this what the OFE president now has in mind for the UK?

If so, it is highly recommended that both he and the UK Cabinet, before proceeding any further, prudently review and digest the lessons learned by the Netherlands Court of Audit.

At the request of the Dutch House of Representatives, during 2010 the Audit Court investigated "whether the phasing out of closed standards and the introduction of open source software would improve the operation of market forces and save costs for the government". In March 2011, it released the results of its investigation in a report, Open Standards and Open Source Software in Government. It "concluded amongst other things that the potential savings the government could [realise] by making more use of open source software were limited", and that the "switch to open source software...does not necessarily... lead to cost savings" at all.

The Audit Court reasoned that, although there are no licensing or acquisition fees generally associated with open source software, there are other significant and accumulative fees. These include those relating to software implementation, management updates and maintenance. Moreover, in some other instances the switch to open source may even lead to "destruction of capital because the kingdom has many current licence agreements".

The Dutch Audit Court has spoken and issued a carefully worded warning that should not go unheeded. The UK coalition government should take considered note that the procurement of open source software buys neither governments nor taxpayers a cost- and indigestion-free lunch.

Lawrence A. Kogan is managing attorney of the Kogan Law Group, P.C., a New York City-based multidisciplinary professional services firm, and director of the Institute for Trade, Standards and Sustainable Development, Inc. (ITSSD), a US-based non-profit legal research, analytics and educational organisation.

[For a more in-depth review of this issue recently published on the Mondaq website, See: Lawrence A. Kogan UK Government Must Heed Dutch Audit Court Warning Prior To Implementing 'Open' IT Procurement Action (Mondaq, May 9, 2011), reproduced in part, ITSSD Journal on Intellectual Property Rights at: http://itssdinternationaliprights.blogspot.com/2011/05/uk-government-must-heed-dutch-audit.html .

UK Government Must Heed Dutch Audit Court Warning Prior To Implementing 'Open' IT Procurement Action

noreply@blogger.com (ITSSD Charitable Mission) — Wed, 11 May 2011 03:34:00 +0000

http://www.mondaq.com/article.asp?articleid=131628
UK Government Must Heed Dutch Audit Court Warning Prior To Implementing 'Open' IT Procurement Action

In the recent Guardian article entitled, Government Takes Action on Open Technology,¹ OpenForumEurope (OFE) president Graham Taylor revels in the UK Government's issuance of a January 2011 Procurement Policy Note that effectively reinstated, at least for the UK, the initial version of the European Interoperability Framework (EIFv1.0), despite its having been roundly rejected by the European Commission and Council of the European Union during December 2010 in favor of technology and business model neutrality.

OFE's IGOR

In alleging that the UK action had "shamed some other European countries", Mr. Taylor, however, shamelessly misrepresented how the UK Government hadn't been "open to lobbying pressure". This is a quite remarkable claim given the New York Times' revelation reported last year that the Brussels-based OFE has long served as a "lobbying front"/mask for U.S.-based industry members IBM, Google, Oracle and Red Hat - a/k/a/ 'IGOR' – which quietly but unsuccessfully endeavored to shape the European Commission's EIF project to suit their own interests. It rings all the more hollow considering the OFE's effective lobbying thereafter of the UK coalition government which was reported to have quickly warmed to its FOSS-centric ideas.² Indeed, given the size of the UK government procurement market (£16.9bn spend) and its growing influence over privatemarket behavior, it is no wonder that OFE's IGOR had worked diligently under cover of night within the UK Government's policy laboratory to align the parties' respective interests for purposes of ensuring that the UK government openly endorsed and expressed a clear preference for royalty-freeopen source software-based eGovernment platforms...

The Complementarity of Patents and Standards (c)

noreply@blogger.com (ITSSD Charitable Mission) — Wed, 27 Apr 2011 10:52:00 +0000

On April 24, 2011, ITSSD President Lawrence Kogan participated on two of three related panels of international legal experts convened at the Inter-Pacific Bar Association's 20th Annual Meeting/Conference which took place in Kyoto, Japan.

The panels focused on and were entitled, the "Intersection of IP, Competition and International Trade — Technological Innovation, Technology Standards" .

The abridged and unabridged versions of Mr. Kogan's presentation, entitled, The Complementarity of Patents and Standards (c) are available online at the following urls:

Abridged Version

http://www.itssd.org/The%20Complementarity%20of%20Patents%20and%20Standards%20-%20Abridged%20Outline.ppt

Unabridged Version

http://itssd.org/The%20Complementarity%20of%20Patents%20and%20Standards%20-%20Unabridged%20Outline.pdf

UK’s Promotion of Royalty-Free Government Procurement Standards - NOT AS REPORTED

noreply@blogger.com (ITSSD Charitable Mission) — Fri, 15 Apr 2011 02:13:00 +0000

http://www.mondaq.com/article.asp?articleid=129510

United Kingdom: UK’s Promotion of Royalty-Free Government Procurement Standards Not as Reported

April 14, 2011

By Lawrence A. Kogan

FOSS pundits have made much ballyhoo of the recent Procurement Policy Action Note issued by the UK Cabinet Office of Government Commerce (OGC) during January 2011 that defines 'open standards' as including only those which "have intellectual property made irrevocably available on a royalty-free basis" (emphasis added).¹

As an example, U.S. attorney Andy Updegrove, author of one recent article on the subject entitled,United Kingdom: U.K. Comes out for Royalty-Free Standards for Government Procurement,² waxed poetically about the UK government document's noteworthiness. To paraphrase the author's four main points, the UK government Procurement Policy Note is noteworthy because: 1) it includes informal regional as well as national standards consortia among the internationally recognized specification or standards organizations whose 'open' standards can and should be considered by the UK for government procurement purposes;2) its definition of 'open' standards constitutes a legally acceptable "repudiation" (allegedly consistent with the policy space afforded EU Member State governments vis-à-vis the European regional lawmaking institutions) of and permissible derogation from the final, binding European Interoperability Framework adopted by the European Commission during December 2010, following many years of thoughtful deliberation and contentious debate;3) it emulates and embraces a robust definition of 'open' standards that is very similar to that contained within the national interoperability framework adopted during November 2010 by the Indian Government; and 4) it proves that corporate lobbying and forum shopping undertaken at the EU Member State governmental level on behalf of the 'penguin' (open source) and 'software-as-a-service' (SaaS) industry communities can be successful, at least temporarily.

A closer examination of the UK Procurement Policy Action Note reveals that its ostensible noteworthiness and the author's observations relating to the legal and policy issues surrounding it are more nuanced than they have been depicted...

ITSSD Issues New Report Detailing How Foreign Government Regulatory and Standards Initiatives Seek to Convert Privately Developed Intellectual Property-Rich High Technologies into Virtually Free-of-Charge 'Public Interest' Assets Mostly at the Expense of U.S. Innovators and Investors

noreply@blogger.com (ITSSD Charitable Mission) — Thu, 16 Dec 2010 14:00:00 +0000

http://www.prnewswire.com/news-releases/itssd-us-high-tech-innovations-face-gathering-perfect-storm-of-compulsory-licensing-and-royalty-free-interoperability-frameworks-abroad-111988199.html

ITSSD: U.S. High-Tech Innovations Face Gathering 'Perfect Storm' of Compulsory Licensing and Royalty-Free Interoperability Frameworks Abroad

PRINCETON, N.J., Dec. 16, 2010 /PRNewswire-USNewswire/ -- In the Washington Legal Foundation Working Paper published today and in the Global Trade & Customs Journal article to be released in February 2011, international business and regulatory attorney Lawrence Kogan identifies and describes the growing number of foreign regulatory frameworks and national standards initiatives designed to convert privately developed intellectual property-rich high technologies into virtually free-of-charge 'public interest' assets mostly at the expense of U.S. innovators and investors.

These articles are based on Mr. Kogan's continuing involvement in the work of the World Intellectual Property Organization Standing Committee on the Law of Patents and a related event he recently convened on this subject while attending the body's 15th session meetings during October 2010 in Geneva, Switzerland.

According to Mr. Kogan, "such market intervention mechanisms are grounded in United Nations human rights, technology transfer and wealth redistribution soft law declarations and ambiguous UN environmental and World Trade Organization treaty provisions that have already begun to weaken the prevailing neo-liberal exclusive private property right basis for patents, trade secrets and copyrights which has long provided an invaluable incentive for undertaking high-risk technological research & development, innovation and commercialization activities. 'BRIC' nations, in particular, seek to replace the current international system with a state-centric utilitarian regulatory model that guarantees to their public constituents universal access to U.S. high technologies at pre-determined concession-rate prices," emphasizes Kogan. "However, the European Union, for economic competitiveness and trade protectionist reasons, is also involved."

"Capital-intensive technology development and commercialization already engenders significant economic and legal risks and other uncertainties. Given the precarious state of today's global economy, it simply defies logic and common sense that governments and civil society organizations would seek to create additional regulatory and policy risks capable of stifling discoveries and innovations that could lead to the job creation, knowledge dissemination and other downstream public benefits they desire," Kogan believes.

"Consequently, it would be unwise for the U.S. innovator and investment communities to be lulled into a false sense of security by U.S. and foreign government assurances that these frameworks are narrowly focused and applicable only in a limited number of instances," warns Kogan. "Much to the contrary, compulsory licensing and government procurement interoperability regimes are quite broad and expansive, applying to a number of technology industry sectors including, but not limited to, software, broadband, healthcare, energy, transportation, education, emergency and disaster management, and defense/national security. Thus, competent counsel should be retained as soon as possible to identify possible public and private law opportunities to mitigate such risks."

The Institute for Trade, Standards and Sustainable Development (ITSSD) is a non-partisan non-profit legal research, analytics and educational organization that examines international law relating to trade, industry and positive sustainable development. The WLF article is accessible at: http://itssd.org/KoganWP.pdf and http://www.wlf.org/0misc/KoganWP.pdf , and the GTCJ article Abstract at: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1721267.

Website: www.itssd.org

CONTACT: ITSSD, +1-609-658-7417, info@itssd.org

SOURCE Institute for Trade, Standards, and Sustainable Development

CAVEAT EMPTOR: "Let Us Conduct Your Research and Clinical Trials Said the Brazilian Spider to the Foreign Pharma Flies..."

noreply@blogger.com (ITSSD Charitable Mission) — Sun, 31 Oct 2010 15:02:00 +0000

[The following article reflects a concerted effort led by health and regulatory officials within the Brazilian government to entice U.S. and European-based pharmaceutical, biotech and clinical research organizations [CROs] with offers of attractive financing and a 'sound regulatory system' to relocate a portion of their R&D and manufacturing activities within Brazilian national borders. "The country boasts a large, ready patient population, a universal health care system with hospitals able to support clinical research, and rules to ensure adherence to ethical review standards...ANVISA has developed capacity to evaluate clinical protocols and monitor studies, while also conducting more plant inspections to ensure compliance with quality manufacturing standards, working with international authorities to approve new vaccines, and streamlining its registration process to cut the time to analyze new drugs to only 12 months." These offers are being made on the heels of a recently executed "information exchange agreement between the [Brazilian] drug regulatory agency, the National Health Surveillance Agency or ANVISA, and the [U.S.] FDA."

However, as this article readily admits, "One challenge is concern about the country’s poor record for recognizing and protecting intellectual property rights...[Indeed, Brazil is said to employ their domestic regulatory system in a manner that secures local pharmaceutical and biotech companies a 'home court advantage'. "US companies and key officials at the Office of the US Trade Representative [USTR] complain that the slow speed of patent reviews and regulatory overlaps make it difficult to enforce IP rights in Brazil. The biggest challenge is coping with the lack of coordination between regulatory approval staff and the patent office. Local generic players continue to take advantage by obtaining marketing rights from officials who do not certify whether the reviewed product is under patent or not. By the time an infraction of the patent terms is documented, the product is already on the market and competing with the originator." [Furthermore, the Brazilian government has undertaken considerable efforts within international intergovernmental venues within Geneva, Switzerland, such as the World Intellectual Property Organization (WIPO), to broaden in international law the bases and instances in which compulsory licensing flexibilities with respect to patent rights may be employed by 'BRIC' and developing country governments to appropriate/expropriate foreign patented medicines and medical devices for an ostensible 'public' use without payment to the rights holders of full, adequate and complete fair market value compensation. See, e.g.,:

ITSSD 'Geneva Diary' of the Proceedings of the 15th Session of the WIPO Standing Committee on the Law of Patents Reflects Developed Country IP Rights Under Third World Assault, ITSSD Journal on Intellectual Property Rights (Oct. 26, 2010) at:

http://itssdinternationaliprights.blogspot.com/2010/10/itssd-geneva-diary-of-proceedings-of.html;

Brazilian Demands for Broader Compulsory Licensing Internationally Generate the Kinds of Legal & Economic Uncertainties Driving the Restructuring of the CRO Market, ITSSD Journal on Intellectual Property Rights (Oct. 30, 2010) at:

http://itssdinternationaliprights.blogspot.com/2010/10/brazilian-demands-for-broader.htm;

New Survey of Global Pharma Companies Reveals Increasing Decision to Reduce R&D as Result of High Economic Costs and Regulatory and Policy Risks - Some Generated by Developing Country Governments, ITSSD Journal on Intellectual Property Rights (Oct. 28, 2010) at:

http://itssdinternationaliprights.blogspot.com/2010/10/new-survey-of-global-pharma-companies.html.

Thus, it is highly recommended that all U.S. and European pharmaceutical and biotech companies undertake significant due diligence before taking this kind of a leap into Brazil. In fact, they would be advised to read the

famous poem, authored by 19th Century English poet Mary Howitt, which holds as important a lesson for adults as it does for children. It is entitled, The Spider and the Fly which has been reproduced below for their benefit:

The Spider and the Fly

Will you walk into my parlour?" said the Spider to the Fly,

'Tis the prettiest little parlour that ever you did spy;

The way into my parlour is up a winding stair,

And I've a many curious things to shew when you are there."

Oh no, no," said the little Fly, "to ask me is in vain,

For who goes up your winding stair can ne'er come down again."

-----

"I'm sure you must be weary, dear, with soaring up so high;

Will you rest upon my little bed?" said the Spider to the Fly.

"There are pretty curtains drawn around; the sheets are fine and thin,

And if you like to rest awhile, I'll snugly tuck you in!"

Oh no, no," said the little Fly, "for I've often heard it said,

They never, never wake again, who sleep upon your bed!"

-----

Said the cunning Spider to the Fly, "Dear friend what can I do,

To prove the warm affection I 've always felt for you?

I have within my pantry, good store of all that's nice;

I'm sure you're very welcome -- will you please to take a slice?"

"Oh no, no," said the little Fly, "kind Sir, that cannot be,

I've heard what's in your pantry, and I do not wish to see!"

-----

"Sweet creature!" said the Spider, "you're witty and you're wise,

How handsome are your gauzy wings, how brilliant are your eyes!

I've a little looking-glass upon my parlour shelf,

If you'll step in one moment, dear, you shall behold yourself."

"I thank you, gentle sir," she said, "for what you 're pleased to say,

And bidding you good morning now, I'll call another day."

----

The Spider turned him round about, and went into his den,

For well he knew the silly Fly would soon come back again:

So he wove a subtle web, in a little corner sly,

And set his table ready, to dine upon the Fly.

Then he came out to his door again, and merrily did sing,

"Come hither, hither, pretty Fly, with the pearl and silver wing;

Your robes are green and purple -- there's a crest upon your head;

Your eyes are like the diamond bright, but mine are dull as lead!"

-----

Alas, alas! how very soon this silly little Fly,

Hearing his wily, flattering words, came slowly flitting by;

With buzzing wings she hung aloft, then near and nearer drew,

Thinking only of her brilliant eyes, and green and purple hue --

Thinking only of her crested head -- poor foolish thing! At last,

Up jumped the cunning Spider, and fiercely held her fast.

He dragged her up his winding stair, into his dismal den,

Within his little parlour -- but she ne'er came out again!

-----

And now dear little children, who may this story read,

To idle, silly flattering words, I pray you ne'er give heed:

Unto an evil counsellor, close heart and ear and eye,

And take a lesson from this tale, of the Spider and the Fly.

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http://blog.pharmexec.com/2010/10/27/brazil-profile-latin-americas-giant-repositions-for-pharma-growth/

Brazil Profile: Latin America's Giant Repositions for Pharma Growth

By William Looney

Published: October 27, 2010

Brazil claims a bright future as a drug research and clinical trials site — but IP issues continue to raise concerns among the multinational investor community.

Health and regulatory officials of Brazil are making the rounds with a message for pharmaceutical companies and clinical research sponsors about what a great place it is to do business. Most pharma companies have had operations in Brazil for years, but largely to import and sell products made elsewhere. Now Brazilian officials are offering attractive financing and touting a sound regulatory system and clinical research network to persuade R&D and manufacturing operations to expand their presence in the market.

Washington was a logical choice for conference hosted by the Brazilian Health Ministry last month, coinciding with the signing of a information exchange agreement between the drug regulatory agency, the National Health Surveillance Agency or ANVISA, and the FDA. Brazilian officials used the occasion to describe the opportunities offered pharma and biotech firms from its large ($50 billion) retail drug market and the capacity of its export-import bank to finance investment projects. Brazil wants active pharmaceutical ingredient producers to set up shop so domestic manufacturers don’t have to import these products.

One attraction to pharma companies may be growing opportunities to conduct clinical trials in Brazil. The country boasts a large, ready patient population, a universal health care system with hospitals able to support clinical research, and rules to ensure adherence to ethical review standards. A National Clinical Research Network is taking its cue from the U.S. National Institutes of Health in establishing a network of research centers (Pesquisa Clinica), many linked to universities or teaching hospitals able to evaluate and study new technologies, pointed out Reinaldo Guimaraes, Brazil’s secretary of science and technology. ANVISA has developed capacity to evaluate clinical protocols and monitor studies, while also conducting more plant inspections to ensure compliance with quality manufacturing standards, working with international authorities to approve new vaccines, and streamlining its registration process to cut the time to analyze new drugs to only 12 months.

IP: Still on the Radar Screen

One challenge is concern about the country’s poor record for recognizing and protecting intellectual property rights. Despite a lack of patent protection for medicines until 1996, Brazil is now in compliance with TRIPS, explained Jorge Raimundo, president of Interfarma, the country’s R&D-based pharmaceutical manufacturers’ association. More patents are being registered in Brazil, he said, acknowledging that this has created an immense backlog in patent applications.

However, US companies and key officials at the Office of the US Trade Representative [USTR] complain that the slow speed of patent reviews and regulatory overlaps make it difficult to enforce IP rights in Brazil. The biggest challenge is coping with the lack of coordination between regulatory approval staff and the patent office. Local generic players continue to take advantage by obtaining marketing rights from officials who do not certify whether the reviewed product is under patent or not. By the time an infraction of the patent terms is documented, the product is already on the market and competing with the originator.

Despite this implicit homegrown advantage, leading generic drug makers have not yet set up subsidiaries in Brazil, partly due to the complexity of Brazil’s generic policies. Prior to enacting a generics law in 1999, Brazil permitted marketing of “similaires” that did not have to document bioequivalence. In the past decade, generic drugs that meet standards for bioequivalence and interchangeability have become more common and are gaining a larger share of the market. The similaires are supposed to be eliminated by 2014, but are very cheap, and thus still very popular.

Ultimately, the real goal is to attract research operations able to spur development of new treatments that meet Brazil’s key areas of medical need. Brazil offers “spectacular areas for research,” said Raimundo, noting progress in stem cells, genetic engineering, and drugs for neglected diseases. A prime attraction is Brazil’s biodiversity, with 60,000 unique plant species.

Looking for Long-Term Gain

The transition to a new government next month is unlikely to force any dramatic changes in policy toward the sector, considering that the more conservative candidate in the run-off election has a record of supporting aggressive actions to require foreign drug-makers to make essential medicines available at low prices, investors can expect the next government to push for pro-generic policies on the international front while seeking to stabilize the environment for the innovative side of medicines in its domestic industrial strategy for the sector. A truly pro-patent approach to innovation may be too much to expect: although Brazil has weathered the global economic downturn relatively well, the government remains under pressure to reduce its spending, which could prompt cuts in pharmaceutical coverage. Still, taking a long term view of change, Novartis, Pfizer and other pharma companies are investing and purchasing local operations and launching clinical trials.

Brazilian Demands for Broader Compulsory Licensing Internationally Generate the Kinds of Legal & Economic Uncertainties Driving the Restructuring of the CRO Market

noreply@blogger.com (ITSSD Charitable Mission) — Sat, 30 Oct 2010 15:17:00 +0000

[The following article once again illustrates the significant legal and economic pressures faced by biotech and pharmaceutical companies and the contract research organizations/clinical research organizations (CROs) with which they collaborate while undertaking efforts to research and develop new blockbuster medicines and treatments that are ultimately patented and subsequently commercialized in order to secure the necessary economic return on investment that spurs future R&D and commercialization efforts by biopharma entities. These risks have only become more pronounced as the result of the recent global economic crisis. It is quite clear that the "drug development enterprise" is a risky enough enterprise from a financial/economic market perspective, especially in a 'down' market, that it can be adversely affected ("pushed over the cliff") by the added legal and economic uncertainties triggered in international markets by foreign government compulsory licensing demands that create added disincentives to engage in the types of R&D and patenting activities that benefit the 'public interest' through transparency and disclosure of new drug discoveries, transfers of technologies and knowledge dissemination and education. As noted in prior entries within this journal, these compulsory licensing efforts are being led for mostly political reasons by the Government of Brazil and a group of populist developing country governments known at the World Intellectual Property Organization (WIPO) as the "Development Agenda Group" that operate and sustain welfare state economies premised on the notion of 'entitlement'.) (CROs “provide support to the pharmaceutical and biotechnology industries in the form of outsourced pharmaceutical research services (for both drugs and medical devices) CROs range from large, international full service organizations to small, niche specialty groups and can offer their clients the experience of moving a new drug or device from its conception to FDA marketing approval without the drug sponsor having to maintain a staff for these services.” See Contract Research Organization, Wikipedia at: http://en.wikipedia.org/wiki/Contract_research_organization ).]

--------------------------------------------------------------------------------------------------------------

http://www.contractpharma.com/articles/2010/10/anticipating-structural-change-in-the-cro-market

Anticipating Structural Change in the CRO Market

Sponsor crises lead to an unstable landscape

By Kenneth Getz and Rachael Zuckerman

Tufts Center for the Study of Drug Development

October 2010

The global financial market crisis at the end of 2008, followed by a deep and lengthy recession worldwide, has affected every sector of the economy. The drug development enterprise has been hit particularly hard. Global economic and operating conditions have accelerated the implementation of portfolio diversification and operating strategies put in place prior to the crisis. These conditions have also facilitated the introduction of new — and in many cases reactive — strategies, many of which will result in structural changes in the clinical outsourcing market.

This article explores these structural changes and their implications. Although the short term has been, and will continue to be, a volatile period for both sponsors and CROs, the outsourcing market appears on track to become an even more integrated and collaborative environment in the long term.

Sponsors: Crisis on All Fronts

Over the next several years drug developers face an unprecedented $125 billion in revenue-at-risk due to patent expirations and competition from generic drug equivalents. Many of the largest blockbuster drugs in history — including Lipitor (atorvastatin), Plavix (clopidogrel), and Prevacid (lansoprazole) — are coming off patent with no blockbusters queued-up in the pipeline to replace lost revenue. Instead, pharmaceutical and biotechnology companies are anticipating managing a broader and more active portfolio of investigational treatments for smaller, more targeted illnesses. This ‘patent cliff’ has heightened awareness of the long-term need to contain rising R&D costs and accelerate drug development cycle time.

Weak consumer demand and restrictive price controls have dampened revenue and profitability. Facing far more limited resource availability, sponsors are cutting deeply across multifunctional areas — consolidating head count aggressively. Based on company announcements made between the beginning of 2009 and the first half of 2010, an estimated 100,000 pharmaceutical and biotechnology industry jobs have been eliminated or will not be filled. Of these reductions, approximately 9,000 jobs will be cut directly out of R&D functions.

Poor economic conditions and high market uncertainty have contributed to a major decline in global clinical trial volume. Many companies cancelled and delayed their clinical trials in 2009 through 2010. According to a recent analysis by the Tufts Center for the Study of Drug Development, new clinical trial starts worldwide — as measured by Form 1572s filed by clinical investigators — are down nearly 50% from their peak in 2Q08. Although many observers note that the volume of new clinical trial projects is now picking up, it is doing so sluggishly.

Facing difficult market conditions and the need to diversify their product portfolios, pharmaceutical and biotechnology companies initiated another major wave of mergers and acquisitions in 2009 that will likely continue through 2011. The largest deals: Pfizer’s acquisition of Wyeth for $68 billion, Merck’s purchase of Schering-Plough for $41 billion, and Roche’s completed acquisition of Genentech for $47 billion. Other notable M&A activity during the past 24 months includes Gilead Sciences acquisition of CV Therapeutics, BMS’ purchase of Medarex, Takeda Pharmaceutical’s acquisition of Millennium Pharmaceuticals, Eli Lilly’s acquisition of ImClone Systems, Teva Pharmaceuticals’ acquisition of Barr Pharmaceuticals, and King Pharmaceuticals’ $1.6 billion purchase of Alpharma. In early 2010, Abbot completed its $6.6 billion acquisition of Solvay Pharmaceuticals. And at press time, Sanofi-Aventis is aggressively pursuing the acquisition of Genzyme Corp., and BMS has announced its intent to purchase ZymoGenetics.

An Unstable CRO Market

Faced with an abrupt slowdown in global clinical trial volume and relatively weak sponsor demand, many major CROs struggled in 2009. CSDD’s evaluation of the aggregate performance of six large publicly traded CROs — Covance, Charles River Labs, ICON, Kendle, Parexel, and PPD — found that in the first half of 2010, revenue and earnings growth have slowed down substantially. Growth in the first half of the year between 2009 and 2010 was only 1.8%. This compares to a compound annual growth rate of 12.2% between 2007 and 2009 for large publicly traded CROs.

Operating profitability of major CROs saw an even sharper decline: the aggregate CAGR of those six companies from 2007 to 2009 was 3.1%. In the first half of 2010, operating profit decreased 58.1% in the aggregate compared with the first half of 2009. Individual companies saw their operating profits drop as much as 86%, and only one out of the six public companies evaluated had an increase in profitability in the first half of 2010 over 2009.

[CAGR = compound annual growth rate- "an imaginary number that describes the rate at which an investment would have grown if it grew at a steady rate. CAGR can be thought of "as a way to smooth out the returns." See Compound Annual Growth Rate, Investopedia Dictionary at:

http://www.investopedia.com/terms/c/cagr.asp .]

Project backlog, although still growing, has slowed down considerably. From the end of 2008 to the end of 2009, the aggregate backlog of the six companies grew 8.9%, but from mid-year 2009 to 2010, backlog grew 2%. Moreover, the aggregate market capitalization of the six companies grew only 4.3% during the first half of 2010.

In response to market conditions, several major CROs have moved to reduce their fixed operating costs and to focus their businesses — through consolidation of manpower, infrastructure and divestiture. Charles River Labs, for example, suspended operations at one of its large preclinical sites. Covance closed a preclinical and a Phase I unit. MDS Pharma Services sold its remaining clinical trial businesses to Ricerca Biosciences. In June 2010, PPD spun off Furiex Pharmaceuticals, its compound partnering division, as an independent company.

The overall CRO market structure is shifting; the 10 largest CROs dominate the market, contributing 75% of total contract clinical CRO revenue (not including pass-through investigator grant fees and central lab fees). In aggregate, these companies have increased their revenues from $5.2 billion in 2005 to $8 billion, a compound annual growth rate of 8.9%. Average revenue per top 10 largest CRO company is $1.3 billion. The next 10 largest CROs grew at a slightly lower rate of 7.2% between 2005 and 2010 (projected). This segment has an 11% share of the overall CRO market at this time. For scale comparisons, the average revenue for each company in the Next-10-Largest CRO segment is $220 million.

The largest surprise in the CRO market comes from the very fragmented, small, niche provider segment. Comprised of hundreds of companies, this segment in the aggregate has been growing by 20.5% each year between 2005 and 2010 (projected). The typical company in this segment is small with average annual revenue of $3.1 million. The niche CRO segment posted slow relative growth (7.6% annually) between 2000 and 2005. Given unusually high growth during the past five years, this segment now generates 14% of the total global market for contract clinical research services.

To what do we attribute such rapid growth among niche providers at a time when most sponsors are looking to consolidate the number of vendors they manage and to establish preferred pricing through longer-term multi-service agreements? Most sponsors and CROs concede that demand for highly specialized niche services and unprecedented access to local markets worldwide has been strong. As such, both sponsors and major CROs have increased their level of partnering with niche providers.

Tomorrow’s Outsourcing Landscape

Several years ago, pharmaceutical and biotechnology companies appeared poised to embrace common integrated alliance-based relationship structures with CROs. In a study conducted by Tufts CSDD in 2008, nearly half of all companies reported that they had entered into typical functional service provider arrangements. Approximately one out of five reported having entered into a strategic alliance. Adoption of these relationship structures, however, has not unfolded in a predictable or uniform manner.

Since the end of 2008, it appears that many sponsor companies have opted to pursue hybrid relationship models based on a wide variety of factors including corporate culture, pipeline characteristics, legacy systems, and internal operating structures and processes. Sponsors are picking and choosing elements from transactional relationships, full service relationships, functional relationships and alliance relationships with two primary objectives in mind:

1) to achieve higher levels of operating efficiency through integration and the transfer of non-core responsibilities, and

2) to lower the overall cost of outsourcing.

Distinctions between various relationship models are blurring. As companies move to mix and match elements, they rely on communication systems and unique governance structures to monitor and manage performance.

Integrated partnerships appear uniquely susceptible to market volatility. Operating challenges have disrupted the adoption and growth of integrated relationships — particularly for those organizations trying to revise their outsourcing strategies and practices. As the industry consolidates through mergers and acquisitions, outsourcing practices favor those organizations driving the transaction. Established sponsor-CRO relationships with those organizations being absorbed simply vanish, as acquiring companies and those directing a merger transaction drive the use of their primary outsourcing practices and partners.

Market volatility and weak demand has distracted CROs and prompted many to reduce their operating costs and capacity. Unless market demand improves markedly, there will be more CRO restructurings — including downsizing and divestiture.

Niche CROs continue to enjoy high relative demand among both sponsors and major CROs. Competitive intensity among the largest CROs is increasing, especially as they strive to win new integrated relationship contracts among a shrinking number of pharmaceutical and biotechnology companies.

Servicing large, integrated relationships, however, is expected to be much more demanding without uniformity in sponsor outsourcing models. Relationships will be more extensive and expensive to operate, involving more elaborate communication and governance. Sponsors will continue to apply downward pressure on margins and to demand a lower tolerance of variance from planned performance. These pressures may spur CROs to further lower their fixed costs and to consolidate their operations. Long term, CROs will be prompted to seek higher margin business opportunities to offset less economically attractive integrated clinical services relationships.

Ultimately, changes in the current landscape will result in a consolidated market with higher levels of collaborative efficiency. Sponsor demand will drive closer, more integrated partnerships between various niche and diversified CROs and between global and local CROs. Getting to this point, however, will no doubt be tumultuous and difficult.

Kenneth Getz is a senior research fellow, and Rachael Zuckerman a research analyst, both at the Tufts Center for the Study of Drug Development (CSDD), Boston, MA. The center can be reached at csdd@tufts.edu.

New Survey of Global Pharma Companies Reveals Increasing Decision to Reduce R&D as Result of High Economic Costs and Regulatory and Policy Risks - Some Generated by Developing Country Governments

noreply@blogger.com (ITSSD Charitable Mission) — Thu, 28 Oct 2010 15:09:00 +0000

[The following articles reflect not only that scientific and technical research and development costs/risks are particularly high in the life sciences sector, but also that the market cost/risk of innovation/commercialization of basic R&D can be much greater and subject to myriad regulatory requirements and obstacles in the marketplace during the normal course of introducing new medicines. It is clear that these costs and risks are significant enough to cause companies to reconsider their business models when they are unable to earn a fair rate of return on investment (ROI). The choice to consider new business strategies and/or business models becomes easier, however, when international regulatory and market risks are added to this calculus.

Indeed, global pharmaceutical companies, whether based in Europe, Japan, or the United States, are quite aware of the growing threat to their IP assets and overall economic interests as the result of developing country foreign government efforts, led by Brazil, to broaden their international human right to issue more 'compulsory licenses' in order to secure the patented medicines created and commercialized by such companies for less than fair market value. Such companies recognize that these foreign governments are being supported by the political and policy advocacy efforts of US and foreign nongovernmental organizations (NGOs) and liberal law professors, which eventually over time work together with such governments to transform 'soft' law declarations into hard law obligations. For example, these groups recently sought the assistance of the Special Rapporteur on the Human Right to Health housed within the Offices of the United Nations High Commissioner for Human Rights to commence an investigation against the Office of the US Trade Representative for international human rights law violations, allegedly committed as the result of the USTR's publication of its 'Special 301' Report and its continued efforts to ensure that foreign governments recognize and protect US citizens' patent rights abroad, consistent with the US constitutional and international trade law protections afforded patents and trade secrets. See Liberal Law Professor Files at UN Formal Allegations Against US Government's 'Special 301Program' Claiming US Laws Protecting IP Violate 'International Human Right' to Access to Medicines, ITSSD Journal on Intellectual Property Rights (Oct. 28, 2010) at:

http://itssdinternationaliprights.blogspot.com/2010/10/liberal-law-professor-files-at-un.html

The ITSSD recently attended the 15th session meetings of the World Intellectual Property Organization (WIPO) Standing Committee on the Law of Patents (SCP) during October 11-15, 2010, where it observed firsthand and reported how Brazil and a group of developing countries (the "Development Agenda Group" - (DAG)) had been quite vocal in calling for broad use of compulsory licensing and other government intervention (regulatory) flexibility mechanisms to reduce the scope and the strength of patents internationally. See ITSSD 'Geneva Diary' of the Proceedings of the 15th Session of the WIPO Standing Committee on the Law of Patents Reflects Developed Country IP Rights Under Third World Assault, ITSSD Journal of Intellectual Property Rights (Oct. 27, 2010) at:

http://itssdinternationaliprights.blogspot.com/2010/10/itssd-geneva-diary-of-proceedings-of.html .

Indeed, with these industry concerns in mind, the ITSSD convened and moderated a side-bar panel event during the WIPO SCP meetings that emphasized the added legal and economic uncertainties triggered by these and other recommended government intervention mechanisms which have the effect of dampening R&D and innovation efforts undertaken by high technology companies, including those in the life science, cleantech and information and communication technology sectors.

SEE:

ITSSD Event Flyer:

http://www.itssd.org/ITSSD%20October%2012,%202010%20WIPO%20SCP%20side-bar%20event%20flyer.pdf

ITSSD Event Handout Materials:

http://www.itssd.org/ITSSD%20WIPO%20SCP%20Side-bar%20Geneva%2010-12-10%20-%20Handout%20Materials.pdf

ITSSD Event Précis:

http://www.itssd.org/ITSSD%20WIPO%20SCP%20Side-bar%20Geneva%2010-12-10%20Precis%20Final.pdf

The following articles which report about the recent biopharmaceutical sector survey (see below) corroborate industry concerns and the ITSSD's research and observations.

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http://www.inpharm.com/news/101025/two-thirds-pharma-companies-face-strategic-crisis

Two thirds of pharma companies face 'strategic crisis'

By Ben Adams

October 25, 2010

The pharma industry is moving away from traditional in-house innovation and toward a more diversified business model, but will encounter problems on the road ahead.

A survey by German analysts Roland Berger found that 65% of companies are facing a “strategic crisis”, with diversification the most common ploy to avert it.

The analysts’ Fight or Flight? study identifies three dimensions of diversification - innovate, integrate and de-risk, with the latter two proving most popular.

“Big pharmaceutical companies are at a turning point,” says Stephan Danner, partner and pharmaceutical expert at Roland Berger Strategy Consultants.

“With more than half of the industry's sales going off-patent within the next three years, 65% of the companies surveyed think the pharmaceutical industry is facing a strategic crisis.

“In this context, 67% of pharma executives see diversification as a potential way forward.”

Roland Berger conducted a ‘high-level’ survey across 25 pharma companies representing over 40% of global pharmaceutical revenues and including 7 of the global top ten firms. The analysts also conducted 50 chief executive and board level face-to-face interviews.

Seventy-eight percent of executives questioned in the study perceived generics to be the most important area of diversification.

Pfizer and Novartis are two of the more recent examples of big pharma buying up generic companies to help offset looming patent expiries of their own.

This will come as a little surprise to the industry as almost half the pharma companies surveyed expect a negative return on current R&D investment and are losing faith in traditional patent-based protection.

Roland Berger said that there are two reasons for this. First, the industry expects the margins of innovative medicine to come under “tremendous” pressure, as government deficits need to be managed globally.

Second, the large R&D investments are no longer expected to bring the required level of return with many companies outsourcing their R&D to cut down on costs.

Danner said: “The future pharma industry will be more diverse, ranging from highly focused, innovative players to fully integrated healthcare conglomerates.”

He advised that companies considering diversification should start preparations today, concluding: “The first mover advantage provides an excellent position to shape the future healthcare environment.”

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http://www.ft.com/cms/s/0/d6fb3f60-dc9d-11df-84f5-00144feabdc0.html

Drugs groups diversify away from patents

By Andrew Jack

Financial Times

October 21, 2010

Two-thirds of large pharmaceutical companies are focused on diversifying away from patented drug development as they grow increasingly sceptical about the returns from future innovation.

A survey by Roland Berger, the strategy consultancy, of 50 top industry executives showed that 65 per cent considered their sector was facing a “strategic crisis” and 67 per cent saw diversification as a potential solution.

Almost half believed that current investments in research and development would yield a negative return, although two-thirds believed future scientific advances could yield positive returns over the next decade.

The negative perceptions towards innovation reflect the view of the financial markets, which are giving higher valuations to more diversified companies. “The industry does not trust its own innovative capabilities. We are burning money,” said one industry executive Roland Berger interviewed.

The report also highlights a growing divergence between companies.

Sanofi-Aventis of France placed greatest emphasis on diversification from 2004-2009, boosting non-patented drug sales from 5 per cent to 12 per cent.

Pfizer, Merck, Johnson & Johnson, Novartis and GlaxoSmithKline also moved in this direction. Groups facing a steep “cliff” of patents which expire in the coming years have generally moved furthest in diversifying in response, led by Sanofi-Aventis, which will soon lose exclusivity on its blockbuster Plavix.

Industry-wide, it estimates 57 per cent of 2008 sales will be off patent within three years and 75 per cent within five years.

But some companies with similar patent pressures, including Eli Lilly, have diversified far less, while Bristol-Myers Squibb has instead shed non-core activities to bet on enhanced innovation in its pipeline of experimental drugs.

A few other drug companies have also concentrated on pharmaceutical operations, led by Roche and – until recently – AstraZeneca, which since 2008 has also diversified a little and expressed some interest in generic drug sales.

The report stressed that there are significant variations in the approach taken to diversification, with the majority focused on de-risking through a shift into generics, consumer health and vaccines. While these tactics increase the scope to boost sales and expand into emerging markets, the report suggests greater value could come from diversification into more innovative areas, notably into personalised healthcare and diagnostics.

The report stresses the potential to increase efficacy and value in a way sought by healthcare systems and insurers – from integrating drugs with genetic markets, imaging and molecular markers, and with medical devices.

While integration into enhanced “healthcare value” could boost returns, Roland Berger concludes: “Most executives still shy away from this path due to the perceived magnitude of change required.”

One anonymous interviewee said the industry was a “victim of its own pipeline focus”.

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http://www.rolandberger.com/company/press/releases/Diversification_in_the_pharmaceutical_industry.html

"Fight or flight?": Roland Berger Study identifies diversification as one of the most prominent trends in the pharmaceutical industry

Press Release - Munich, Germany

Oct. 25, 2010

65% of the companies surveyed believe that the pharmaceutical industry is facing a strategic crisis
Diversification is one of the most prominent trends across the pharmaceutical industry as a way out of the crisis
Three dimensions of diversification can be distinguished: innovate, integrate and de-risk
Today's most important diversification area is the generics business
R&D productivity crisis drives diversification – almost 50% of companies expect a negative return on today's R&D investments

Big pharmaceutical companies are facing more and more challenges. The study "Fight or flight?" by Roland Berger Strategy Consultants identifies diversification as one of the most prominent trends across the pharmaceutical industry. The participating companies include seven of the global Top Ten and represent over 40% of global pharmaceutical revenues. The Roland Berger experts also conducted interviews with top executives to validate the findings and derive strategic implications. The study identified three dimensions of diversification: innovate, integrate and de-risk. At the moment, the most important area for diversification is the generics business. With innovative medicines coming under increased cost pressure and more and more R&D investments yielding a negative return, pharma is embracing the diversified business model as a potential way out of the crisis. In a break with the past, the financial community supports this move.

"Big pharmaceutical companies are at a turning point," says Stephan Danner, Partner and pharmaceutical expert at Roland Berger Strategy Consultants. Public cost containment measures, difficult market access as well as massive patent expiries require a fundamental review of the traditional business model."With more than half of the industry's sales going off-patent within the next three years, 65% of the companies surveyed think the pharmaceutical industry is facing a strategic crisis. In this context, 67% of pharma executives see diversification as a potential way forward," states Danner. For those companies currently pursuing diversification, the Roland Berger study "Fight or flight? – Diversification vs. Rx-focus in big pharma's quest for sustained growth" identifies three dimensions: the de-risk path, the innovation path and the integration path.

Pharma focuses again on generics

At the moment, the industry seems to be focusing on the rather conservative de-risking strategy. 78% of executives perceive generics to be the most important area of diversification followed by consumer health (50%) and vaccines (42%). Acquisitions in this context aim for top-line growth while preparing for opportunities in the BRIC countries. Diversification along the innovation path ranks second. It results from the trend towards personalized healthcare and diagnostics. Regarding the third dimension, integration strategies along the healthcare value chain would turn pharma companies into active healthcare solution providers. Most executives still shy away from this path due to the perceived magnitude of change required.

The art of managing a diversified business

Leveraging existing capabilities and realizing related synergies are key to creating value from diversification. Pharma executives are very cautious in this respect. The most successful transfer of skills and capabilities is expected in the areas of generics (45%) and diagnostics (43%). According to the managers surveyed, Rx companies lack capabilities for forward integration. In particular, despite huge investments, access to prescribers or branding concepts are not perceived as Rx capabilities to be leveraged in an effort to diversify.

R&D productivity crisis drives diversification

Among the executives interviewed, over 60% are reevaluating their traditional business model which focused on high margins and patent-protected drugs. There are two reasons for this. Firstly, the industry expects the margins of innovative medicine to come under tremendous pressure as government deficits need to be managed globally. Secondly, the massive R&D investments are no longer expected to bring the required level of return. Almost 50% of the participating executives expect a negative return on today's R&D investments. The ongoing restructuring efforts of R&D functions across the industry support this assessment.

The financial community and shareholders support diversification

Unlike in the past, diversified companies are no longer being penalized by the financial markets. With over USD 400 billion of market capitalization lost over the past 10 years among innovative pharma companies, the financial community has once again started linking high growth expectations to diversified companies. Today, the price-to-earnings ratios of diversified companies are already higher than those of more focused players.

Diversification is here to stay

Over 80% of pharma executives believe diversification is a long-term trend that will be pursued regardless of R&D productivity issues. For the rest, it will be a bridging strategy used to compensate for profit and growth shortfalls.

Danner: "The future pharma industry will be more diverse, ranging from highly focused, innovative players to fully integrated healthcare conglomerates. Companies considering diversification should start preparations today: the first mover advantage provides an excellent position to shape the future healthcare environment."

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http://www.rolandberger.com/media/pdf/Roland_Berger_Fight_or_flight_Shortversion_20101025.pdf

Fight or flight? Diversification vs. Rx-focus in big pharma's quest for sustained growth

SHORT REPORT VERSION

...For those currently pursuing diversification, the study distinguishes three alternative dimensions: the de-risk path, the innovation path and the integration path

At the moment, the industry seems to be focusing on the rather conservative derisking strategy. By acquiring particularly generics and consumer health companies, the industry aims at top-line growth while also preparing for the opportunities emerging markets offer.(p.5)

Diversification along the innovation path ranks second. It results from the trend towards personalized healthcare and diagnostics

Three dimensions of diversification can be distinguished

INNOVATE - • Continue on path of medical progress by investing into adjacent medical disciplines - "High risk, high fun"

INTEGRATE - • Defend existing top-line by forward integration along the healthcare value chain - "Maintain fun"

DE-RISK - • Reduce dependency on Rx business model by investing into other non-Rx life science businesses - "Low risk, still fun" (p. 13)

[CAVEAT: ITSSD research reveals that governments are now seeking to reduce the need for patented technologies in the area of SMART-healthcare - a/k/a - 'electronic health records and personalized health care.

See Lawrence A. Kogan, How SMART are Standards that Sacrifice Intellectual Property Rights?,
presented at the American National Standards Institute (ANSI) Intellectual Property Rights Policy
Committee (IPRPC) (April 15, 2010), at:
http://itssd.org/How%20SMART%20are%20Standards%20that%20Sacrifice%20Intellectual%20Property%20Righ ts%20-%20Full%20Outline.doc.]

Liberal Law Professor Files at UN Formal Allegations Against US Government's 'Special 301Program' Claiming US Laws Protecting IP Violate 'International Human Right' to Access to Medicines

noreply@blogger.com (ITSSD Charitable Mission) — Thu, 28 Oct 2010 14:09:00 +0000

[On July 20, 2010, Professor Sean Flynn of the Program on Information Justice and Intellectual Property (PIJIP) at American University School of Law, Washington, DC, representing various liberal clients including US and foreign nongovernmental organizations (NGOs) and two US law professors from Howard University, Washington, DC, filed a formal complaint against the U.S. government with the United Nations Special Rapporteur on the situation of Human Rights Defenders, Anand Grover, 'housed' within the Office of the United Nations High Commissioner for Human Rights.

See IN THE MATTER OF USE OF THE “SPECIAL 301” PROGRAM, SECTION 182 OF THE TRADE ACT OF 1974, TO LIMIT ACCESS TO MEDICINES IN VIOLATION OF THE INTERNATIONAL RIGHT TO HEALTH, accessible online at: http://www.wcl.american.edu/pijip/go/healthgap07202010 . The complaint assumed the form of an "Allegation Letter" which the Special Rapporteur typically uses to make contact with the State (country) alleged to have committed human rights violations. See Special Rapporteur on the situation of Human Rights Defenders - Submitting Allegations, Office of the United Nations High Commissioner for Human Rights website accessible online at: http://www2.ohchr.org/english/issues/defenders/complaints.htm .

The Allegation Letter claims that the following US government practices violate the international human rights of the world's poor which foreign governments are responsible for protecting via exploitation of the WTO TRIPS flexibilities - (e.g., compulsory licensing, patent exclusions, exceptions and limitations to the patent right more generally, etc.):

"The United States has a long history of using Special 301, other trade negotiations, the Generalized System of Preferences, foreign aid, technical assistance and diplomatic pressure to promote intellectual property and pharmaceutical regulations that restrict access to affordable medications in developing countries. These policies are continuing in the present administration, and cause grave and needless suffering around the world. UN Human Rights officials have frequently affirmed that promoting access to medicines in poor countries is a human rights duty of all countries, including of donors and trade partners, and have reviewed country compliance with these mandates in human rights review proceedings."

In support of their creative argument that international human rights laws trump the United States Constitution and the protections that it guarantees to American citizens, including legal persons, pursuant to Article I, Section 8, Clause 8, of the U.S. Constitution (the 'inventor's clause') and the Fifth Amendment of the US Bill of Rights to the US Constitution (the 'takings clause'), namely, the protection of their exclusive private property rights, including patents and trade secrets, as against the arbitrary and capricious actions taken by foreign governments abroad (e.g., the threat to issue or the actual issuance of compulsory licenses for public interest purposes without payment of full, adequate and complete FMV), the complainants make the following claims:

"12. UN human rights officials and bodies have repeatedly found that the globalization of intellectual property rights can only be squared with human rights if countries are permitted and encouraged to utilize the full scope of intellectual property exceptions and limitations provided for in the TRIPS agreement to promote access to medicines and that even then the international intellectual property regime is ill-equipped to provide competitive and low-cost access to medicines to incentivize medical research on so-called neglected diseases primarily affecting poor people in developing countries."

"13. As described by the Special Rapporteur on the Right to Health, to promote access to medicines and the right to health while complying with the minimum standards of the TRIPS agreement, developing countries 'should incorporate the flexibility to: (a) Make full use of the transition periods; (b) Define the criteria of patentability; (c) Issue compulsory licences and provide for government use; (d) Adopt the international exhaustion principle, to facilitate parallel importation; (e) Create limited exceptions to patent rights; (f) Allow for opposition and revocation procedures. In addition, countries need to have strong pro-competitive measures to limit abuse of the patent system.'"

"14. Examining the human rights duties of states to take advantage of TRIPS flexibilities to promote access to medicines has been a frequent subject of human rights treaty monitoring bodies. Such reviews have included analysis of the duties of wealthy countries to promote the use of TRIPS flexibilities in poor countries."

"15. This body of human rights law was summarized by Special Rapporteur Paul Hunt as meaning that 'that no rich State should encourage a developing country to accept intellectual property standards that do not take into account the safeguards and flexibilities included under the TRIPS Agreement. In other words, developed States should not encourage a developing country to accept 'TRIPS-plus' standards.'” (boldfaced italics emphasis added).

Professor Flynn's UNHRC Allegation Letter sought the following 'relief':

26. The Special Rapporteur for the Right to Health should call on the U.S. halt its use of the Special 301 program and other elements of its foreign policy to encourage and coerce developing counties to adopt intellectual property norms that restrict access to medicines, including access to antiretroviral medicines for people living with HIV/AIDS. The Special Rapporteur should encourage the U.S. to use its trade and foreign assistance programs to promote full use of TRIPS flexibilities and to otherwise revise its foreign policies to promote access to medicines. The Special Rapporteur should call on the U.S. to provide a procedure for the appeal of human rights issues within the Special 301 report, to reverse its unlawful unilateral threats of trade sanctions via Special 301, and to reconsider and reverse the many decisions it has made that violate the right to health of poor people around the world.

The Allegation Letter followed Professor Flynn's previous submission of a formal complaint to the Office of the US Trade Representative (UTSR) prepared on behalf of other US and foreign NGOs this past February 2010. See IN THE MATTER OF 2010 SPECIAL 301 REVIEW: IDENTIFICATION OF COUNTRIES UNDER SECTION 182 OF THE TRADE ACT OF 1974 (Feb. 16, 2010), accessible online at: http://www.wcl.american.edu/pijip/go/ngos02182010 . This complaint essentially argues that as the result of fulfilling its US constitutional responsibility, as determined by US Supreme Court caselaw, to protect in international and multilateral venues the exclusive private property rights of US citizens, the USTR has violated international trade and human rights law:

"1. Using Special 301 to Promote Restrictions on Public Health Flexibilities in TRIPS Violates the Doha Declaration;"

and

"2. The 2009 Special 301 Report Violates International Commitments of the US and Fails to Adhere to Basic Administrative Justice Norms." Id.

[Unfortunately, Professor Flynn's Allegation Letter, however, ignores the following:

1. Property rights are natural, individual-based human rights, within the meaning of the 1948 Declaration, the 1948 American Declaration on the Rights and Duties of Man, the 1976 International Covenant on Economic, Social and Cultural Rights, and ultimately, the United States Constitution (1787) and its accompanying Bill of Rights (1791). Consequently, governments mustpay heed to the strict substantive and procedural conditions imposed on unauthorized governmental ‘takings’ of private IP rights set forth within TRIPS Article 31(a), (d), (h), (i), (j) and (k); 44.2; and 62.44.

2. Although the TRIPS Agreement may have grandfathered the highly disputed Paris Convention grounds for issuing compulsory licenses (incorporated by reference within TRIPS Article 2 and the Preamble to TRIPS Article 31 (‘the broad mouth of the funnel’), these bases remain tightly circumscribed by the substantive and procedural conditions imposed by the subsections to TRIPS Article 31. These provisions were arguably intended to ensure protection of patentees’ affirmative right to substantive and procedural due process of law against wanton governmental seizures of exclusive private property (human) rights within the meaning of theFifth Amendment of the U.S. Bill of Rights and other U.S. constitutional provisions (‘the narrow neck of the funnel’). See ITSSD Comments on ‘Desk Review of the Intergovernmental Working Group on Public Health, Innovation and Intellectual Property from a Right to Development Perspective’

(April 6, 2009) at:

http://itssd.org/ITSSD%20comments%20on%20Desk%20Review%20of%20IGWG%20CIPIH%20from%20a%20Rt%20to%20Development%20Perspective%20_2_.pdf

, in response to A/HRC/12/WG.2/TF/CRP.5 (27 March 2009), issued by the High-Level Task Force on the Implementation of the Right to Development, commissioned by the Intergovernmental Open-ended Working Group on the Right to Development, of the Office of the United Nations High Commissioner for Human Rights.

3. This means that when a government (e.g., Brazil, Thailand, Canada, France, India, etc.) or an intergovernmental organization such as the WHO, etc. wishes to ‘take’ patented private medicine or medical technology products for a ‘public use’ (i.e., on the basis of an identified and declared ‘public interest’), that government or intergovernmental organization must pay itself, or cause a selected third party licensee to pay, full, complete and adequate fair market value compensation for such patents. After all, this is consistent with established U.S. Supreme Court jurisprudence and with the understanding of the parties to the WTO TRIPS and WIPO Agreements. And, fair market value (FMV) means ‘arms-length’ pricing agreed to between a willing buyer and a willing seller; not some unilaterally predetermined price deemed to be ‘fair’ by a national or regional government or intergovernmental body. See ITSSD Comments Concerning Document (SCP/13/3) Patent Exclusions, Exceptions & Limitations, Institute for Trade, Standards and Sustainable Development (March 27, 2009), at:

http://www.wipo.int/export/sites/www/scp/en/meetings/session_14/studies/itssd_2.pdf .

4. The Special 301 statute requires USTR to address in its review foreign country practices that "deny fair and equitable market access to U.S. persons that rely upon intellectual property protection.” A country cannot be said to adequately and effectively protect intellectual property rights within the meaning of the trade statutes if that country puts in place regulations that effectively nullify the value of the patent rights granted. A patent gives the patent holder the exclusive right to sell his invention in a market, but that right can be undermined by government polices which work to push the price down toward the marginal cost of production. The Special 301 statute calls upon USTR to designate a trading partner as a priority foreign country ('PFC') even if there were no apparent clear-cut violations of the country’s TRIPS Agreement obligations in the operation or enforcement of its intellectual property rights laws. Section182(b)(4) of the Trade Act of 1974, as amended, requires USTR, in making a PFC designation, to take into account whether a country is providing “adequate and effective protection...of intellectual property rights.” A country that maintains IPR laws on the books but eviscerates the value of patented inventions through other regulations cannot be said to provide “adequate and effective protection.” This is further reinforced in section 301(d)(3)(F)(ii) of the Trade Act of 1974, as amended, which “includes restrictions on market access related to the use, exploitation, or enjoyment of commercial benefits derived from exercising intellectual property rights...”

5. The U.S. Supreme Court has held that the U.S. Government cannot act against, and must affirmatively protect, outside of the territory of the United States, any and all of the constitutional rights guaranteed to U.S. citizens by the U.S. Constitution and the Bill of Rights within the United States. The Fifth Amendment right against the taking of private property for public use without just compensation falls within this obligation. This has remained the law of the land for over 150 years. In the case of Reid v. Covert, 354 U.S. 1 (1957), the US Supreme Court explained its reasoning as follows: “[R]eject[ing] the idea that when the United States acts against citizens abroad it can do so free of the Bill of Rights. The United States is entirely a creature of the Constitution...When the Government reaches out to punish a citizen who is abroad, the shield which the Bill of Rights and other parts of the Constitution provide to protect his life and liberty should not be stripped away just because he happens to be in another land...The language of Art[icle] III, [Section] 2 manifests that constitutional protections for the individual were designed to restrict the United States Government when it acts outside of this country, as well as here at home...This Court and other federal courts have held or asserted that various constitutional limitations apply to the Government when it acts outside the continental United States. While it has been suggested that only those constitutional rights which are ‘fundamental’ protect Americans abroad, we can find no warrant, in logic or otherwise, for picking and choosing among the remarkable collection of ‘Thou shalt nots’ which were explicitly fastened on all departments and agencies of the Federal Government by the Constitution and its Amendments.”). Id., at , 5-9; See also Mitchell v. Harmony, 54 U.S. 115, 135 (1851).

6. The obligation of the federal government to protect the private property rights held by U.S. citizens outside of U.S. borders against unlawful appropriation also extends to takings effectuated pursuant to treaties. The U.S. Supreme Court recognized this hierarchy almost fifty years ago, in the case of While treaties and federal statutes constitute the “supreme law of the United States,” and are effective equal to one another in status, they are both inferior to the U.S. Constitution and the Bill of Rights. Reid v. Covert. Thus, according to the Court, it is arguable that the President cannot execute and that Congress can neither ratify nor enact legislation implementing a treaty with another nation that effectively violates any of the Constitutional protections afforded U.S. citizens. Furthermore, “the records of the Virginia Ratifying Convention contain specific discussions of thescope of the treaty power. These discussions confirm that the Framers did in fact envision [constitutional] limitations on the treaty power.”Consequently, the President, in the exercise of his Article II powers, and the Congress, in the exercise of its Article I powers,would therefore be constitutionally precluded from executing and implementing a treaty the provisions of which did not adequately protect U.S. citizens against non- or poorly compensable takings oftheir intellectual property by a foreign treaty party’s government. Reid v. Covert at p. 18 (“The prohibitions of the Constitution were designed to apply toall branches of the National Government and they cannot be nullified by the Executive or by the Executive and the Senate combined ...This Court has regularly and uniformly recognized the supremacy of the Constitution over a treaty.” (footnoteomitted)). See Lawrence A. Kogan, Brazil's IP Opportunism Threatens U.S. Private Property Rights, Inter-American Law Review, 38 (Fall 2006): 1–139, 114-116, accessible online at:

www.itssd.org/Publications/IAL105-II(frompublisher)%5B2%5D.pdf.

ITSSD 'Geneva Diary' of the Proceedings of the 15th Session of the WIPO Standing Committee on the Law of Patents Reflects Developed Country IP Rights Under Third World Assault

noreply@blogger.com (ITSSD Charitable Mission) — Tue, 26 Oct 2010 18:54:00 +0000

[The ITSSD, an ad hoc observer to the WIPO Standing Committee on the Law of Patents (SCP), recently attended the 15th session meetings of the SCP that took place during October 11-15, 2010 in Geneva, Switzerland. As an ad hoc observer, the ITSSD heard, observed and contributed to the discussion during the SCP's Plenary sessions. The ITSSD has transcribed its notes of these Plenary sessions to the best of its ability in the interest of providing a reportage of the proceedings for the public interest. The ITSSD acknowledges that its 'Diary of the Proceedings' is incomplete and reflects in some cases a summary of the statements made by particular delegations; but it does provide an accurate assessment of those discussions the ITSSD was able to gather and report. To assist the reader in better understanding the context of those discussions the ITSSD has provided annotations containing SCP/WIPO document references and, in some instances, excerpts of those documents.

As noted above the ITSSD intervened in the discussions at various points. However, since those interventions were made in a contemporaneous and impromptu fashion, they are not fully reproduced in this Diary. The ITSSD has been assured that its interventions (or a summary thereof) have been recorded by the SCP and will be transcribed and incorporated within the Secretariat's Report for the SCP's 15th session. This is the first time that the ITSSD attended SCP session meetings. The ITSSD will strive in the future to improve its reporting capabilities.]

ITSSD Geneva Diary

15^th WIPO SCP Plenary Session

October 11-15, 2010

Geneva, Switzerland

Day 1 - Monday, October 11, 2010 (Full day session):

A coordination mechanism with the WIPO Committee on Development and Intellectual Property Rights (CDIP) is being developed and is in the process of being added to the agenda and work plan.

The Draft Report of the SCP’s 14^th Session is adopted.

The French delegate questioned the adding of a new agenda item.

New additions include the following documents:

SCP/15/2/Add.

SCP/15/14

SCP/14/Add.

Discussion was begun on Agenda Item 5B - SCP document SCP/13/3 – “Exceptions and Limitations to the Right”, SCP/14/7 and SCP/15/3.

Brazilian Delegate took to the floor:

There is no proposal for harmonization of international patent law, yet there are interconnections. All studies submitted to the SCP must be of high quality and balanced. We wish to make a new proposal: All studies must reflect development dimensions. Member states studies and comments should be separately collated. The Development Agenda should be incorporated within SCP reports. Member countries did express views on this matter; e.g.: SCP/15/Add./2 relating to the status of the list of non-exhaustive list of issues its relationship to the Development Agenda. The SCP must approach its work in a manner supportive of the Development Agenda and provision and policy space must be made for development goals. Member countries need not agree on the contents of the report; their views need only be taken into account. This must itself be reflected as a new agenda item. The Brazil Proposal for a work agenda should be considered again during this session – immediately. [See for reference prior document WO/GA/31/11 Add. – “Proposal by Argentina and Brazil for the Establishment of a Development Agenda for WIPO” (Oct. 4, 2004).] As concerns Agenda Item 5B [“Exclusions from Patentable Subject Matter and Exceptions and Limitations to the Rights (documents SCP/13/3, SCP/14/7 and SCP/15/3], we refer to the proposal to advance progress on the issue of exceptions and limitations to the right.

The African Group Delegate took to the floor:

The delegate agrees with the Brazil proposal in respect of exceptions and limitations to patent rights (SCP/14/7). The attorney-client privilege issue should be addressed at the national level. As concerns patent information disclosure, PTO office efforts are needed to strengthen the capacities of national patent offices to foster increases in the dissemination of knowledge, technology investment and technology transfer. Such capacity building must be user-friendly, development oriented. Capacity building is needed to foster technology transfer in LDCs based on WTO TRIPS Article 66.2, which requires developed countries to provide assistance to developing companies to develop technologies. Joint ventures and other collaborations with universities, etc. are necessary to foster technology transfer. The non-exhaustive list of issues should remain open for discussion and issues should be added – e.g., a) the impact of the patent system on LDCs and food security; b) the proposed preliminary study on publish health.

The Slovenian delegate, on behalf of the Baltic States, commented that the move towards harmonization should rely on existing SCP reports.

The Belgian delegate speaking on behalf of the EU 27 took to the floor:

The EU confirms its commitment to the SCP and its recent reports – 4 new reports, and is thankful for the new Expert Study on Exceptions and Limitations to the Patent Rights. It wants to discuss these issues at this session. International harmonization of patent law should take place through this committee and a balance work plan sought. Third World consideration should be given before each subject is selected for a work agenda.

The Mexican delegate, speaking on behalf of the Group of Latin America and Caribbean Countries (GRULAC), took to the floor.

The recent studies provide a good point of departure for debate. A balanced work program is needed. The Brazil proposal on Exceptions and Limitations to the Patent Rights provides a good basis for discussions on the issues to achieve a balanced patent system. The SCP must make progress on topics set forth by developing countries in terms of implementation.

Presentation by Professor Lionel Bently, Herchel Smith Professor of Intellectual Property Law, Centre for Intellectual Property & Information Law, University of Cambridge.

[Professor Bently was commissioned by the SCP during January 2010 to lead a group of experts in preparing an external “study on exclusions, exceptions and limitations focused on, but not limited to, issues suggested by members, such as public health, education, research and experimentation and patentability of life forms, including from a public policy, socio-economic development perspective, bearing in mind the level of economic development, [t]aking into account the discussions at the thirteenth session of the SCP… See SCP/14/INF/2 (Jan. 26, 2010)]

Exclusions from patentability serve the purpose and are equivalent to defining the scope of a patentable invention. For example, there is the EU exclusion for "discoveries" per se, while inventions applying "discoveries" are okay. Sometimes an exclusion from patentability is a convenient way to address problems with patenting certain subject matter – e.g., due to the novelty of the invention or due to the difficulty in ‘disclosing’ the invention. They may also be useful where there is a problem with searching prior art relating to the invention – e.g., software programs and business methods. In other words, where there is an inability to search for ‘novelty’, as where there is no system in place to search novelty from the prior art.

If an invention is excluded from patentability, there is sometimes protection afforded by a separate intellectual property right – e.g., computer programs, aesthetic creations and plant varieties are adequately covered by copyright and/or the UPOV [The International Union for the Protection of New Varieties of Plants (UPOV) was established by the International Convention for the Protection of New Varieties of Plants (“UPOV Convention”). The UPOV Convention was adopted on December 2, 1961].

The existence of some exclusions also reflect economic cost-benefit analysis, especially with respect to reducing ex post costs without affecting the ex ante incentive. Inventions are not necessary where other incentives are provided – e.g., business method patents.

There is also a social dimension to exclusions as in the case of ordre public and morality exclusions.

Furthermore, there are ‘countervailing interests’ (‘public interests’) as in the case of trade, health, competition, education, privacy, customary expectations.

Finally, there are exclusions necessary for the working of the patent system – e.g., ‘experimental use’.

Private uses exemptions vs. public uses. Such uses can be accommodated by both exceptions and exclusions:

-protection elsewhere;

-patent protection too costly;

-undesirable invention;

-countervailing value/interest

Exceptions can meet the same policy goal as exclusions, but they are more permissive.

Software programs’ patentability may be permitted but subject to broad exceptions.

Exclusions offer certain benefits: 1) offer real clarity; 2) ex ante awareness.

Dangers of Exceptions:

1) Users placed on the back foot (burden of proof against the user);

2) Traditions of restrictive interpretation;

3) A broad interpretation of patentability narrows the public domain – courts will read back from an exception a broad rule of patentability. In the Bilsky case, the US Supreme Court majority declined to recognize an exclusion from business method patentability because of the availability of exceptions.

4) There is a danger of ‘private-ordering’. Similarly, copyright owners seek to limit the application of exceptions via private contracts that subvert exceptions.

Problems of Exclusions:

1) Most depend on the resources and capacities of patent examination offices;

2) They are rather blunt instruments;

3) They convey a lack of clarity in certain cases – there are continuing problems with computer- implemented inventions;

4) They depend on patent office examination;

5) International granting.

Benefits of Exceptions:

1) Avoid use of resources of patent examination offices – they are easier if a national government lacks the resources [SERVES AS A ‘DEFAULT MECHANISM’]

2) They allow for nuance, by organizations, payments, by whether profitable, etc.

3) Enforced by the courts, rather than by the patent office (i.e., no ex ante enforcement by PTOs);

4) There is room for local diversity;

Conclusions for National Legislatures:

In some cases exclusions are the only way to fulfill policy goals (e.g., immorality, defining inventions). In other cases there are benefits to using exceptions as alternatives or additionalities to exclusions. Exceptions provide a benefit where there is an overlap between different IP rights and IP systems.

Conclusions for International Lawmakers:

Facilitates interaction between provisions of treaties – e.g., if excludable under WTO TRIPS Article 27 (“Patentable Subject Matter”), it should be possible to operate as an exception under WTO TRIPS Article 30 (“Exceptions to the Rights Conferred” under WTO TRIPS Article 28 (“Rights Conferred”).

There are dangers with interpreting TRIPS Article 30 narrowly. In particular, ‘limited exceptions’ could impede positive development. For example, the Canadian Pharmaceuticals Patent case gave a rather narrow exception under TRIPS Article 30. This could impede positive developments outlined in the report.

[SCP document SCP/13/3 at pp. 22-23, discusses this:

“85. Article 30 allows Members to provide limited exceptions to the exclusive rights conferred by a patent, provided that such exceptions do not unreasonably conflict with a normal exploitation of the patent and do not unreasonably prejudice the legitimate interests of the patent owner, taking account of the legitimate interests of third parties… Article 30 establishes three conditions, namely, (i) that the exceptions to the exclusive rights must be “limited”; (ii) that the exceptions do not unreasonably conflict with a normal exploitation of the patent; and (iii) that the exceptions do not unreasonably prejudice the legitimate interests of the patent owner, taking account of the legitimate interests of third parties. In conjunction with the Canada-Patent Protection of Pharmaceutical Product case (DS114),29 the Dispute Settlement Panel provided some guidance with respect to the above three conditions in Article 30.

86. First, the Panel found that the three conditions apply cumulatively, and “the exact scope of Article 30’s authority will depend on the specific meaning given to its limiting conditions”. When examining the words of those conditions, “both the goals and the limitations stated in Articles 7 and 8.1 must obviously be borne in mind, as well as other provisions of the TRIPS Agreement which indicate its objective and purposes”.

87. Second, the Panel held that the ‘limited’ character of an exception should be ‘measured by the extent to which the exclusive rights of the patent owner have been curtailed’.

88. With respect to the expression ‘normal exploitation of the patent’, the Panel considered that it referred to the ‘commercial activity by which patent owners employ their exclusive patent rights to extract economic value from their patent’. The term “normal” was interpreted by the Panel as the combination of ‘an empirical conclusion about what is common within a relevant community’ and ‘a normative standard of entitlement’. Further, the Panel’s decision stated that, while the specific forms of patent exploitation by the patent owner are not static, ‘protection of all normal exploitation practices is a key element reflected in all patent laws’. In the specific circumstances of the case, the Panel concluded that the ‘additional period of de facto market exclusivity’ created by using patent rights to preclude submissions for regulatory authorization should not be considered ‘normal’. It was not a ‘natural or normal consequences of enforcing patents rights’, but rather an ‘unintended consequences of the conjunction of the patent laws with product regulatory laws’ that resulted in such additional period of de facto market exclusivity.

89. As regards the third criteria, the Panel concluded that the term ‘legitimate interest’ must be ‘defined in the way that it is often used in legal discourse – as a normative claim calling for protection of interests that are ‘justifiable’ in the sense that they are supported by relevant public policies or other social norms’. In the specific circumstances of the case, the Panel considered that the ‘interest claimed on behalf of patent owners whose effective period of market exclusivity had been reduced by delays in marketing approval was neither so compelling nor so widely recognized that it could be regarded as a ‘legitimate interest’ within the meaning of Article 30”.

Footnote 29 The dispute concerned the regulatory review provision and the stock piling provision under the Patent Act of Canada, which allowed generic pharmaceutical manufacturers to override the patent rights in certain situations. As regards compliance with Article 30, the Panel found that, while the stock piling provision did violate Article 30 because it was not a “limited” exception to the rights, the regulatory review provision was justified under Article 30 by meeting all criteria in that Article. [http://www.wto.org/english/tratop_e/dispu_e/cases_e/ds114_e.htm].]

The Venezuelan delegate commented that private interests benefit more than nations. The philosophy of patents is a problem.

The Bolivian and Argentine delegates agreed.

The Tanzanian delegate questioned how to reconcile exceptions and limitations with the application of national patent law.

The Indian delegate questioned whether exceptions can be more accommodated in the case of software with open source software.

Prof. Bently responded that open source systems may support some things, but may appear unpalatable for others.

The Brazilian delegate wanted the SCP to proceed with a substantive discussion of Agenda Item 5B [as noted above].

NGO Observer Free Software Foundation Europe intervened. Based on the European model if exceptions were applied to software patents they would violate the European Patent Convention Article 52.

NGO Observer Third World Network intervened. The shift from exclusions to exceptions is not reflective of developing country social policy interests. Exclusions are prone to pressures thrown upon the national patent office. EPO facilitated the grant of patents for computer implementations only after such inventions were better understood Exclusions should continue to exist where they can meet the policy goal not met by exceptions.

Professor Bently intervened - Exceptions for pharma patents were formerly exclusions. More exceptions are possible e.g., US academics are arguing for more exceptions analogous to ‘fair use’ in copyright.

NGO Observer ITSSD intervened.

Prof. Bently, your study seems to begin with the flawed premise of market failure such that exclusive private property rights are deemed an impediment to the public interest…

Prof. Bently Response to ITSSD intervention.

The right of exploitation and commercialization – these are concepts from neoliberal economics property rights theorists most prevalent in the United States. A focus on the exploitation of rights is premised on a logic that assumes a ready capacity for private transactions – i.e., the existence of a willing buyer and seller. Even neoliberal economics recognizes the need for exceptions and limitations. Bently states that he shares the view of the Lemley critique of the Posner study. The starting point in our study’s analysis is that there is a market failure. There are no effective willing buyers and sellers in LDCs; thus they cannot use neoliberal economics-based private transactions as the basis for IP.

The Chilean delegate commented that consensus is needed – no one will benefit – neither the advocates of flexibilities, nor the advocates of international harmonization. Brazil’s suggestion is a good one – to move forward with an in-depth analysis of the Brazil proposal in respect of exceptions and limitations to patent rights (SCP/14/7). We need a mechanism to report on the implementation of recommendations, including the development agenda.

The Ecuadorian delegate, speaking on behalf of the Group of Latin America and Caribbean Countries (GRULAC), commented that the Brazilian view is consistent with the Ecuadorian view.

The Venezuelan delegate commented that the social goals of IP serve the whole population not just the few individuals. We welcome the Brazilian document SCP/14/7. There is a need to review the WTO TRIPS system which allows governments to resolve medical treatments in LDCs which are not yet effective. We disagree with the TRIPS not being reconciled with the human rights to health, food security and the environment. IP is not an end-in-itself, but a means-to-an-end.

The Iranian delegate pointed out that IP must be development-friendly and that there must be an open discussion about the patent development agenda and public policy issues.

[ITSSD summary of Bently’s response and preparation for another ITSSD intervention: The Bently study and response presumes that a market failure exists with respect to information that would prevent willing buyers and sellers from being able to engage in private transactions to exploit a patent in the marketplace. If this is the case, there should be capacity building which takes place within the province of the CDIP, not the SCP. Capacity building should take into account education, technical training, infrastructure development, patent examination. There should also be training in establishing a rule-of-law ‘enabling’ environment that recognizes exclusive private property rights, and which can attract knowledge-based foreign direct investment (FDI). Where these capacities are lacking such that Exclusions wouldn’t be possible, Exceptions and limitations are viewed by developing countries including Brazil as a ‘default’ mechanism to be used without the need to look any further into the invention and its intended uses.]

NGO Observer ITSSD intervened.

The South African delegate commented that there must be a balance between IP rights and public policy. The Brazil proposal in respect of exceptions and limitations to patent rights SCP/14/7 is consistent with their view.

The Bolivian delegate echoed the Venezuelan delegate – IP is not an end-in-itself: it is a tool of policymaking.

The Brazilian delegate, on behalf of the Development Agenda Group (DAG), insisted that the SCP move the Development Agenda forward.

The Indian delegate stated that a focus on the access to knowledge and the public interest will permit LDC participation in the global knowledge economy. It approved of Brazil’s proposal contained in SCP/14/7, especially paragraphs 25-27, and with Brazil’s new proposal that a Development Agenda should be incorporated within all work of the WIPO – within the modalities and the substantive matters. And, the non-exhaustive list should remain non-exhaustive and open.

The Swiss delegate commented that the attorney-client privilege needs to be discussed.

The Egyptian delegate expressed their interest in the Bently Expert Study concerning exceptions and limitations and was looking forward to reviewing the forthcoming expert study on technology transfer due to be released during the Fall 2011, which should explain how to implement the development agenda.

NGO Observer International Chamber of Commerce (ICC) intervened.

There is a need for economic and legal certainty. The issues being addressed are of great importance to industries represented by the ICC. The broad use of compulsory licenses can lower judicial certainty and incentive to research and development. Attorney-client privilege must be maintained, as must confidentiality and transparency. Companies seek to harmonize their technologies through use of standards and to secure return on investment (ROI) through use of the patent system. There should be NO changes to the IP system. As concerns technology transfer, the private sector is still responsible for most of the investment and dissemination of knowledge. The public benefit depends on the private sector. Open innovation is an increasingly popular business model. IP (patents) support open innovation.

NGO Observer AIPPI (International Association for the Protection of Intellectual Property / Association Internationale pour la Protection de la Propriété Intellectuelle) intervened.

During the 2008 WIPO conference on privilege, the SCP took up the lack of protection against forcible disclosure. Attorney-client protection exists practically in all countries but it is inadequate in most. There is a need for international harmonization of such protection.

NGO Observer German Association for Industrial Property and Copyright Law (GRUR) intervened.

Attorney-client privilege must be protected. Patent attorneys are attorneys at law. Secrecy protection should be confirmed by a binding international instrument that bridges the gap between common law and civil law countries – PCT union members.

NGO Observer Free Software Foundation intervened.

FOSS relies on a license relying on copyright. Free software is incompatible with patents. We have practical experience and were instrumental in getting the EU Commission to reject the EU software patent. Licensing through RAND terms confers a monopoly that is not entitled to protection. We agree with the Development Agenda Group that patents should be granted only in areas where there is a market failure to provide innovation. We first proposed a three-step test for inclusion of an invention in the patent system during the 13^th session of the SCP during March 2009. In order for any subject matter to be included in the patent system, there must be: 1) a demonstrated market failure to provide innovation; 2) a demonstrated positive disclosure of the invention from patenting; and 3) a demonstrated effectiveness of the patent system in the area to disseminate knowledge. Software fails all three steps of this test.

Day 2 - Tuesday, October 12, 2010 (Half-day Plenary Session – Informal Work Group meetings):

The Uruguayan delegate commented that the Brazil proposal on Exceptions and Limitations to the Patent Rights (SCP/14/7) is a good beginning.

NGO Observer Knowledge Ecology International (KEI) intervened.

Public comments should be permitted on compulsory licensing. The U.S. has many compulsory laws and court decisions that permit the issuance of compulsory licenses against patents as well as administrative enforcement actions for the same purpose.

NGO Observer Third World Network intervened.

Patents and enforcement of intellectual property rights should be treated as a development issue.

NGO Observer Asian Patent Attorneys Association (APAA) intervened.

The attorney-client privilege is deemed important by all members.

NGO Observer Fundacao Getulio Vargas (FGV) intervened.

We are supportive of the position Brazil has taken regarding intellectual property rights and new technologies.

NGO Observer International Federation of Industrial Property Attorneys/ Federation Internationale des conseils en propriete industrielle (FICPI) intervened.

The attorney-client privilege must be protected at all costs.

NGO Observer ITSSD intervened.

We wish to correct the record that NGO Observer KEI has misrepresented in its recent interventions (past and present). Contrary to KEI’s statement that US law, administrative practice and judicial decisions broadly provide for the issuance of compulsory licensing is completely and utterly false and misleading. As the ITSSD’s comments to document SCP/13/3 (available online both on the WIPO and ITSSD websites) clearly explain and illustrate there are very few US compulsory licensing statutes and where they do exist, compulsory licenses are virtually never issued unless there is an imminent public emergency or there is a significant market abuse of the patent right, as in the case of a proven antitrust violation. As concerns the statement and position of the Third World Network regarding development issues, the ITSSD agrees with its observation concerning the capacity needs of developing countries, but the ITSSD disagrees with its conclusion that these issues are the burden and fall within the province of the SCP to address. Rather, they more appropriately belong within the WIPO Committee on Development and Intellectual Property ('CDIP").

Discussion was begun on Agenda Item 5A - SCP document SCP/13/2 – “Standards and Patents”.

The Brazilian delegate commented that standards fall within the domain of public policy as in the case of security, public health and the environment – where there is a strong ‘public interest’ at stake. “Open source standards have a high value”. Standards should be tied in with WTO Technical Barriers to Trade (TBT) activities/efforts.

The Nepalese delegate commented that anti-trust issues must be taken into account with respect to standards.

The Indian delegate commented that standards entail a very complex subject matter and concern issues that have many ramifications for developing countries, especially as concerns anti-competitive practices. We seek more SCP studies and guidance on this important subject matter.

The Swiss delegate on behalf of the EU-27 commented that the EU is willing to discuss the issue of patents and standards, including the need to look at best practices for disclosure of patents for essential areas of technology in connection with standards development.

NGO Observer Latin American Association of Pharmaceutical Industries / Association latino-americaine des industries pharmaceutiques (ALIFAR) intervened.

Developing countries do not have the tools to ensure that patents do not impede standards development.

NGO Observer ITSSD intervened.

The ITSSD invites the SCP chair, committee members, member state delegations and NGO observers to review both its comments on SCP document SCP/13/2 and its supplement to those comments focusing on paragraph 44 – government procurement-driven interoperability frameworks, especially those enacted and/or proposed by EU member states and the European Commission, that express clear preferences and indirect mandates for royalty-free and nonproprietary technologies incorporated within national and/or regional ICT standards, in the same way that advocates of FOSS promote nonproprietary software based on the allegation there is a public policy crisis. The employment of these existing or proposed government intervention mechanisms in the government procurement market also will have a much broader impact on the overall marketplace beyond government procurement than has been considered. They presuppose a public policy crisis in the use and implementation of patents that results in the impairment of standards development at the expense of the public interest. In a word, they are ‘a solution looking for a problem’ since there is little anecdotal evidence to establish there is a widespread problem of patent abuse around the world in the standards development process.

NGO Observer Free Software Federation Europe (FSFE) intervened.

FOSS provides a unique opportunity to develop local businesses. De facto standards developed using patented technologies are equivalent to a monopoly. Royalty-free standards should be mandatory.

The Uruguayan delegated commented that the patent system is in crisis.

NGO Observer Knowledge Ecology International (KEI) intervened.

We refer to the comments contained in the Secretariat’s report of the 14^th SCP session during January 2010, SCP document SCP/14/10 (Oct. 11, 2010), specifically, to emphasize the need for a study of ‘best practices’ concerning patent disclosure for essential areas of technology. We support the EU’s willingness to discuss this issue in further meetings.

NGO Observer European Committee on Interoperable Systems (ECIS) intervened.

We agree that more work needs to focus on the ex ante disclosure of patents and licensing terms. We believe that ‘best practices’ or ‘global norms’ should be adopted. ‘Licenses of Right’ should be mandated.

The Belgian delegate, on behalf of the EU-27, took to the floor.

With regard to SCP document SCP/13/3 – “Exceptions and Limitations to the Right”, strong IP rights and compulsory licenses are compatible in international law, as reflected by the balance set forth in the Paris Convention on Industrial Property and the Plant Breeders Convention. Balanced is needed for the sake of the public’s benefit.

The Brazilian delegate, on behalf of the Development Agenda Group (DAG), took to the floor.

We wish to emphasize again our support for the findings contained in SCP document SCP/15/3 – “Experts' Study on Exclusions from Patentable Subject Matter and Exceptions to the Rights”. In particular we wish to provide our prepared comments to SCP/15/3:

Thank you Mr. Chairman,

DAG welcomes the Expert’s Study on Exclusion and Exceptions/Limitations. The correct understanding of this paramount issue shall surely help WIPO Members to calibrate their national IP systems in order to achieve the fundamental trade-off of the patents, that is, guarantee the monopoly of a given product or process in order to stimulate, not stifle, innovation. The expert’s study recognizes the cost-benefit analysis underpinning the system, that is, that patents should be granted only to the extent necessary to rectify the market failure, for, as WIPO Economist-Chief Carsten Fink would say, in most cases markets will not foster innovation on their own. In the cases which it restricts further inventions, they should not be granted. Therefore, DAG believes that the study brings elements for a discussion which accepts the complexity of the subject, avoiding simplistic assumptions which ignore the systemic implications and the diversities of concrete realities.

As Professor Bently’s introduction correctly states, the TRIPS Agreement has extensively reduced the flexibilities available for countries in general. Therefore, a full understanding of the exclusions and limitations available is vital for a calibration of the national systems, considering the particularities of the countries and their socio-economical environments. Some important rationales are included, such as the relation between human rights and intellectual property found in Dr. Visser’s study, or the necessity of adjusting the legal provisions in order to reach the highest degree of innovation with the lesser possible social cost.

Nevertheless, DAG believes that the main goal of the study should be a comprehensive reflection on the patent system from the exceptions and exclusions, since the subject is intrinsically linked to others in order to provide real utility for governments, such as transfer of technology and correct disclosure of patent information. Any statement on “a common core” or “set of standards” under no condition shall imply harmonization of legal provisions or limitations on the reach of exclusions and limitations, for the particular characteristics of the countries are expressed in the different patent systems.

Additionally, the seeming favoring of exceptions over exclusions is not coherently explained. In some cases, exceptions may raise litigation costs or stimulate sham litigation, while the possibility of ulterior legal liability for patent violation may reduce the incentive for investment of individuals in what they believe to be an exception, thus reducing innovation. Thus, there is not a conflict between exclusions and exceptions: they are complementary tools necessary to assure the systemic equilibrium and the policy space countries demand to achieve their development.

As professor Bently has emphasized, the utility of exceptions depend on the way they are interpreted by courts in countries with different legal traditions and by the dispute settlement system. Just as the DSU has done, in many legal systems exceptions must be interpreted restrictively. If the supposed superiority of exceptions over exclusions depends on they being interpreted broadly a strong case can be made against such rationale.

Furthermore, there is an urgent need of discussing the economic theory underlying the study, since the lack of a theoretical approach of the relation between intellectual property and innovation suggests an automatic and positive relation between them, a relation which is not observed in the realities.

Lastly, Mr. Chairman, DAG considers that these studies represent a positive step in the direction of the proposal made by the Delegation of Brazil.

Document SCP/14/7

The proposal presented by the Delegation of Brazil in document SCP/14/7 intends to provide a wide and sustained debate on exceptions and limitations to patents in three phases.

The first phase shall promote the exchange of detailed information on all exceptions and limitations provisions in national or regional legislations, as well as on the experience of implementation of such provisions, including jurisprudence. The first phase shall also address why and how countries use – or how they understand the possibility of using – the limitations and exceptions provided in their legislations.

To a certain extent, the studies on Exclusions from Patentable Subject Matter and Exceptions and Limitations to the Rights contain some elements of this first phase, which need now to be further developed.

The second phase shall investigate what exceptions or limitations are effective to address development concerns and what are the conditions for their implementation. It is also important to evaluate how national capacities affect the use of exceptions and limitations.

The third phase shall consider the elaboration of an exceptions and limitations manual, in a non-exhaustive manner, to serve as a reference to WIPO Members.

This manual should help each country to adapt the international agreements to its internal IP system, maintaining the adequate policy space for its development needs. to allow dynamic adaptations. For, as rightly stated under the item “Definitions” of the study, an optimal arrangement for the United States is not necessarily so for India or Malawi. Therefore, DAG believes that the Proposal shall be promptly be implemented, for the establishment of such working program would be an important step in the implementation of the Development Agenda.

NGO Observer ITSSD intervened.

End of Plenary session. Member state delegations depart for the remainder of the day to conduct informal Working Group meetings.

ITSSD prepares for its side-bar event to take place in Room B entitled, Can Government Intervention Sustain Economic Incentive, Technological Innovation, and Capital Flows?.

The following ITSSD side-bar panel event documents are accessible online:

Event Flyer:

http://www.itssd.org/ITSSD%20October%2012,%202010%20WIPO%20SCP%20side-bar%20event%20flyer.pdf

Event Handout Materials:

http://www.itssd.org/ITSSD%20WIPO%20SCP%20Side-bar%20Geneva%2010-12-10%20-%20Handout%20Materials.pdf

Event Panelist Bios:

http://www.itssd.org/ITSSD%20WIPO%20SCP%20Side-bar%20Panel%20Event%20Panelist%20Bios.pdf

Event Précis:

http://www.itssd.org/ITSSD%20WIPO%20SCP%20Side-bar%20Geneva%2010-12-10%20Precis%20Final.pdf

Day 3 - Wednesday, October 13, 2010 (Half-day Plenary Session – Informal Work Group meetings):

The Venezuelan delegate comments that there must be a balance between private interests and public interests; intellectual property rights must give way to the human rights to life, health, education, environment…

The Bolivian delegate comments that Bolivia disagrees with prior comments of the French and German delegates that there is a lack of precedent within the SCP to address development agenda issues.

NGO Observer Latin American Association of Pharmaceutical Industries / Association latino-americaine des industries pharmaceutiques (ALIFAR) intervened.

Latin America uses flexibilities to the patent right, but the process prescribed by TRIPS Article 31 – “Other Use Without Authorization of the Right Holder” – is difficult. There is a need to look into how to avoid barriers to flexibilities, and in particular, to revisit the August 2003 Doha Declaration on Public Health Paragraph 6 Waiver which has not yet been adopted by most member states. There is a need for a manual to help developing countries use compulsory licenses.

NGO Observer German Association for Industrial Property and Copyright Law (GRUR) intervened.

GRUR recognizes the contributions of NGOs and the European Patent Office concerning these issues.

NGO Observer Free Software Federation Europe (FSFE) intervened.

FSFE supports the Bently study and its conclusions. We refer again to the Berkeley Patent Survey that finds that patents have only a minor role in innovation. We also wish to emphasize that Exceptions to the Right are a defense to patent infringement.

NGO Observer International Federation of Pharmaceutical Manufacturers Association (IFPMA) / Federation internationale de l’industrie du medicament (FIIM) intervened.

The IFPMA emphasizes that access to medicines have little to do with patents and the costs associated with patent royalties. Rather, access issues mostly are related to lack of healthcare infrastructure, financing, poorly trained and/or non-trained healthcare workers. A legal and economic regime based on compulsory licenses is not sustainable.

NGO Observer International Chamber of Commerce (ICC) intervened.

The Expert Study on Exceptions and Limitations to the Rights, SCP document SCP/15/3, does a good job of providing concrete examples of how WIPO states use compulsory licenses (Annex I, p. 23-32), the use of exclusions and limitations in the field of biotechnology (Annex III) and the use of compulsory licenses in the cases of public health (Annex V).

International Organization European Patent Office intervened.

Article 52 of the European Patent Act is consistent with and reflects the findings contained in the expert study.

NGO Observer Third World Network intervened.

The expert study is based on longstanding EU and US practices.

The Russian delegate commented that algorithms in computer programs may be patented. Yet the decision of algorithms as a ‘solution’ must be recognized as an invention if a business method is to be patented.

The French delegate announced that there would be a Group B informal meeting during the remainder of this afternoon in the Uchtenhagen Room and also bilaterals with other groups.

The Angolan delegate announced that there would be a Development Agenda Group meeting in Room 13.2 and then a Brazil meeting at 3pm.

Day 4 - Thursday, October 14, 2010 – (Half-day Plenary Session - Informal Work Group meetings):

There will be no Plenary afternoon session; only informal sessions in Room B and elsewhere.

There may be an evening plenary session. Written interventions are possible and will be incorporated into the Secretariat’s report.

Discussion was begun on Agenda Item 5C - SCP document SCP/13/4 – “Attorney-Client Privilege” and SCP/14/2.

The Belgian delegate, on behalf of the EU-27, commented that there must be international reciprocity with respect to the attorney-client privilege to enable the best defense of client interests.

The Swiss delegate commented that it appreciated the SCP’s work on the document SCP/13/4, and that the committee and all delegates should look at practices in different countries and the content of those practices. There should be a detailed expert study on the recognition of the attorney-client privilege and confidentiality between countries.

The Slovenian delegate agreed with the EU.

The Nepalese delegate commented that nations’ comparative capacities to uphold attorney-client privilege must be taken into consideration.

The New Zealand delegate commented that there is a lack of cross-border mutuality of attorney-client privilege.

The Australian delegate commented that Australia recognizes and supports the intervention made by the EU, Belgium and Slovenia especially as concerns foreign advisers.

The Russian delegate commented that there is a need to uphold attorney-client privileges to ensure the protection of trade secrets.

The United States delegate took to the floor.

The US is in alignment with the Swiss/Slovenian delegations concerning the summary document prepared by/for the Secretariat on attorney-client privilege. It is valuable to national legislators plus the users of the patent system in various countries. The US is aligned with the EU suggestion for a document on practical next steps for commencing work on a document dealing with state practices concerning attorney-client privilege and confidentiality.

Day 5 - Friday, October 15, 2010 – (Half-day session – Informal Work Group meetings):

Discussion was begun on Agenda Item 5D – SCP document SCP/13/5 - “Dissemination of Patent Information”, and SCP/14/3.

The Brazilian delegate took to the floor.

Mere access to information in a patent application does not ensure technology transfer. In many cases, there is an insufficient explanation of the patented invention. Items 8 & 9 of Brazil’s and Argentina’s Proposal for the Establishment of a Development Agenda for WIPO [WO/GA/31/11] are recalled. [“VIII – A Member-Driven Organization Open to Addressing the Concerns of all Stakeholders, in Particular, Civil Society”; “IX – Conclusion - A vision that promotes the absolute benefits of intellectual property protection without acknowledging public policy concerns undermines the very credibility of the IP system. Integrating the development dimension into the IP system and WIPO’s activities, on the other hand, will strengthen the credibility of the IP system and encourage its wider acceptance as an important tool for the promotion of innovation, creativity and development.”]

The Belgian delegate, on behalf of the EU-27, took to the floor.

Patents and related data must be accessible. The benefits to the user must be the focus of the patent system. Harmonization is needed of the different patent classification systems. Information in national and regional databases must be accessible via cooperation.

The Indian delegate took to the floor.

Dissemination of information, specifically patent data leads to greater patent quality and research & development and more complete search activities. An international database is necessary because of incomplete search activities, non-published patent applications and other non-patented literature. A public international database should be sought because it will help to avoid the trap of private hands who own databases.

NGO Observer Third World Network intervened.

The accessibility and content of such a public international database must be considered.

NGO Observer Latin American Association of Pharmaceutical Industries / Association latino-americaine des industries pharmaceutiques (ALIFAR) intervened.

Such a public international database must include the status of patents in application. Also, many patents have inadequate disclosure. Disclosure is linked closely to standards and patents disclosure.

Discussion was begun on Agenda Item 5E – SCP/14/4 – “Transfer of Technology”.

The Belgian delegate, on behalf of the EU-27, took to the floor.

Some countries have different capacities to receive technology transfer. The definition of property rights in this context is unclear. There is an asymmetry of information between the patent holder and prospective licensees, and the potential for abuses of patent holder rights. Each country should be free to enact legislation most suitable to their needs. Public-private sector cooperation must be facilitated.

The Brazilian delegate took to the floor.

The Secretariat’s study on Transfer of Technology (SCP/14/4) is too narrow. It is focused on the role of the patent system to facilitate technology transfer. The study focuses only where the patent system functions where intended. It does not focus on situations where there are abuses of the patent right. There is a need for clarity of ownership rights in the report, which must address appropriate and effective enforcement as against the exercise of such right. It must also address the asymmetry of information as between the patent holder and prospective licensees. There should be a public mechanism for matchmaking patent licensors with patent licensees. The discussion about financial incentives must reflect a balance between the interests of patent holders and users of patented technologies. LDC government support for R&D is lower than in developed countries. The US Bayh-Dole Act / mechanism is inadequate for LDCs. Many of the advances realized in countries have occurred without patents. WTO TRIPS Articles 66 and 67 concern the technical cooperation and technology transfer obligations of developed countries. Technology transfer must be broader than it has been described in SCP document SCP/14/4. It must be broader to include the flexibilities, the anti-competition enforcement mechanisms and compulsory licenses. The study must examine why the US Bayh-Dole Act does not work in LDCs as it does in the US. There must be developed a forum to explain the actual contract experience in licensing in the context of technology transfer.

The Russian delegate took to the floor.

The patent mechanism is very clear, and its impact on international trade is very clear. In many countries there are no analogue standards in current legislation. The rights transfers being studied regard the area of R&D to create conditions to diversify products that innovative in technology. There is a need for government mechanisms that strike a balance between government policymakers and patent holders that permit the enforcement of the patent right without risking R&D. Provisions must exist to protect IP holders without hampering innovation.

The Indian delegate commented that the committee must study the flexibilities in patent law to facilitate technology transfer.

The Egyptian delegate refers to its prior statement on the Secretariat’s Report on the International Patent System, as contained in paragraph 176 of the SCP’s adopted Report of the 14^th SCP Session.

“The Delegation of Egypt stated that the issue of technology transfer was an issue of a high level of importance. The Delegation expressed its satisfaction with the inclusion of the issue in the agenda of the SCP and delivering a preliminary study on the topic, as the issue had not been discussed at WIPO over the previous years… Referring to paragraph 60 of document SCP/14/4 acknowledging that there was no conclusive evidence or limited conclusive evidence with regard to the impact of the patent system on flows of FDI, the Delegation welcomed such observation, as it reflected the objective academic assessments that had been undertaken in that area. The Delegation, however, pointed out some drawbacks to the preliminary study, and suggested a revised version or an Annex to the document for the consideration of the Committee. As regards the lack of definition of the term “transfer of technology” in the document, the Delegation believed that the revision of the preliminary study could be guided by the draft Code of Conduct on the transfer of technology (1985), which had done considerable work with regard to defining that concept. As regards Section 3 of the document, the Delegation was of the opinion that it failed to take into account the historical background. In its view, the preliminary study had not made legitimate reference to the work undertaken by the United Nations since the publication of the UNCTAD report on technology transfer in 1964. As regards Section 5, the Delegation was of the view that the document did not fully describe the criticism of the patent system with regard to barriers that particular levels of patentability or of protection might represent for technology transfer. While those were contributions that were acknowledged, the Delegation considered that paragraph 56 could be further elaborated with respect to some of the negative impacts on the patent system. Concerning Section 6, the Delegation stressed the importance of the international regulatory framework, and noted that the international regulatory framework should be a key concern. As there had been considerable discussions on the impact of free-trade agreements, economic partnership agreements and plurilateral agreements on appropriate transfer of technology, the Delegation pointed out that these should be reflected in the preliminary study. Further, the Delegation noted that, although the issue of climate change was very important, there was too much focus on that issue. The Delegation hoped that the treatment of technology transfer in WIPO should be more systematic, aiming at broader discussions on what was sometimes referred to as the classical issues of technology transfer, i.e., the classical industries that would have a direct impact on economic development in large parts of the membership. Noting the considerable work done by UNCTAD on international arrangements of technology transfer, the Delegation felt that there should be more collaboration between the two organizations. As regards public-private partnerships in Section 8, the Delegation was of the opinion that the issues of concern in the setting of a multilateral organization were primarily geared to trans-boundary transfer of technology. It noted that, although public-private partnerships could entail a foreign element, the Bayh-Dole Act, for example, essentially geared towards mobilizing national resources in order to promote innovation and transfer of technology, but had less impact on the possibility of developing private-public partnerships in a trans-boundary context. The Delegation further noted that, while it could be interesting to look into the successful models of highly advanced market economies, simulating such a model would be problematic in view of different levels of development. The Delegation recalled that, according to some US officials, implanting the Bayh-Dole Act in a foreign country might cause more problems than benefits…The Delegation recommended more collaboration with other UN Agencies, for example, by organizing a briefing session with leading UN Agencies on the issue of technology transfer. It further suggested that setting up an independent commission to consider the issue of technology transfer would be a good way forward, given that the issue of technology transfer was a cross-sectoral issue in WIPO, such as in the SCP and the CDIP…”

[The Egyptian view that UN agencies should play a more extensive role in technology transfer and the exercise of private intellectual property rights strongly suggests the need to involve the WTO in such policy discussions. Egypt’s recommendation sounds eerily similar to the demands of developing countries during the 1970’s – the New International Economic Order (NIEO).]

NGO Observer Third World Network intervened.

The study [SCP/14/4] does not analyze the threat of patents to the public interest, nor does it discuss the use of WTO TRIPS flexibilities. A good model upon which an international legal framework for technology transfer can be established was previously set forth in a report prepared by the UN Commission on Trade and Development (UNCTAD) in 1975. Article I of the agreement between WIPO and the United Nations should also be consulted.

[The TWN delegate is most likely referring to UNCTAD (1975) The Role of the Patents System in the Transfer of Technology to Developing Countries, United Nations Conference on Trade and Development, Geneva Switzerland. However, there are two additional UNCTAD reports of the same era which should be of concern to IP rights holders given the demands of the NIEO during that era: UNCTAD (1975) The International Patent System as an Instrument of Policy for National Development, United Nations Conference on Trade and Development, Geneva Switzerland; and UNCTAD (1978) Draft International Code on the Transfer of Technology, United Nations Conference on Trade and Development, Geneva Switzerland.]

Discussion was begun on Agenda Item 5F – SCP/14/5 - “Patent Opposition Systems”

The Indian delegate commented that there must be focus on the pre-grant system.

The Belgian delegate, speaking on behalf of the EU-27, commented that more training is needed on patent search procedures which could be undertaken by the PCT working group.

The Brazilian delegate commented that the Development Agenda Group (DAG) would deliver a prepared statement to the Secretariat.

The Swiss delegate commented that the report should discuss how an effective patent opposition system can contribute to patent quality.

International Organization European Patent Office commented that it supports the Belgian/EU and Swiss statements/observations.

NGO Observer Latin American Association of Pharmaceutical Industries / Association latino-americaine des industries pharmaceutiques (ALIFAR) commented that a more detailed study is needed of the procedures within each country for patent pre-grant opposition.

Friday, October 15, 2010 – (Resumption of Plenary at 6:00pm CET):

Final differences between and among WIPO member state delegations were ironed out in order for the Secretariat to arrive at a final Summary of the 15^th Session, accessible online as SCP document SCP/15/5 (Oct. 15, 2010) at: http://193.5.93.81/edocs/mdocs/scp/en/scp_15/scp_15_5.pdf .

Attali Report Recommendation to "Strictly Circumscribe Precautionary Principle Apparently Doesn't Apply to IP-Free & Royalty-Free ICT Mandates

noreply@blogger.com (ITSSD Charitable Mission) — Sun, 24 Oct 2010 21:44:00 +0000

[In a recent ITSSD Journal post (See: Attali Commission: "France Must Strictly Circumscribe Precautionary Principle to Promote Entrepreneurial Risk-Taking, Innovation & Economic Growth", ITSSD JOURNAL ON ECONOMIC FREEDOM (Oct. 24, 2010) at: http://itssdeconomicfreedom.blogspot.com/2010/10/attali-commission-france-must-strictly.html ), the ITSSD provided extensive translated excerpts from the recently released (October 2010) French Attali Commission Report, An Ambition for Ten Years - Report of the Committee for the Liberation of Growth.

The Attali Commission report, among other things, strongly recommended the strict circumscription of the Precautionary Principle, the zero-risk threshold of which was found to encourage risk aversion, reliance upon social welfare state provisions and, consequently, calls by local industries for greater international trade regulation, and hence, protectionism. The Attali Commission concluded that the Precautionary Principle, as it has been applied in France, continues to serve as a disincentive for businesses and individuals to engage in the kinds of entrepreneurial risk-taking and scientific and technological innovation activities that are necessary and which, in fact, will lead to economic growth in France.

Apparently, however, the Attali Commission report fails to directly address the application of the Precautionary Principle to the ICT sector, which failure can be seen in calls by the French government (and by the EU Commission by extension) to increase the use of Open Source software, especially in public IT projects, by expressing government procurement preferences for IP-free and royalty-free ICT technologies to be incorporated within national and/or regional standards, that are to be adopted and used by the French government (and by extension the European governments) as part of its (their) transition to e-government (computerization of public services) platforms.

While there are legitimate public policy reasons for the French government (and by extension other European governments) to seek to reduce government budgetary costs and taxpayer burdens, and to increase job opportunities for the younger generation through the use of e-government platforms, however, this budget conscious ethos does not justify in a legal sense the French government's (and by extension other European governments') decision to expressly promote procurement guidelines that prefer/favor patent/trade secret-free and otherwise royalty-free software and information communication e-Government platforms.

There is at least one 2008 article which verifies that these actions were recommended by the Attali Commission ,and it voices the concerns of "the French association of software publishers, Afdel...[which was quoted as saying]...that the commission Attali turned its back on innovation by recommending Open Source. Afdel fears commercial software companies will be excluded from public IT projects. 'The commission Attali surprisingly favours a strategy to cut costs, instead of favouring the growth of an industry that employs 60,000 people'" Indeed, this same article reflects that the Attali Commission had previously mandated a quota for government acquisitions of Open Source (royalty and/or proprietary-free) software platforms for public IT projects - "The Attali report lists three recommendations. First, competition between the two types of software should be increased in bidding for new IT projects, including public projects. As a result in 2012 at least 20 percent of all applications developed for or installed by the public sector should be Open Source." See FR:Government Economic Commission Recommends Open Source, European Communities (May 28, 2008) at OSOR.eu at:

http://www.osor.eu/news/fr-government-economic-commission-recommends-open .

Apparently, the academic literature which promotes the application of the Precautionary Principle to the information society supports this same objective. Similarly, NGOs such as the Free Software Federation Europe (FSFE) and the European Committee for Interoperable Systems (ECIS) have couched their policy arguments in favor of such initiatives in stark populist 'public interest' terms that have per se appeal to the unemployed within Europe; however, there is no doubt that such arguments also mask the hidden agendas of certain companies which endeavor to effectuate broad government and market migration ('change') to a different business model - from one based on products to one based on services, where they believe they have an ostensible market advantage. Yet, contrary to their assertions that such preferences will liberate the market, it is more likely the case, rather, that they will further impair the entrepreneurial, risk-taking and scientific and technological innovation activities which the French Attali Commission deems indispensable to France's, and by extension, Europe's economic growth and vitality in the 21st global knowledge economy. In addition, such government interventions will also preclude France (and by extension, Europe), from stemming its economic decline.

Lastly, a 2005 study prepared on behalf of the European Parliament strongly suggests that the application of the Precautionary Principle to the ICT sector has as its philosophical justification/basis, in part, the very trade protectionism that the Attali Commission is now recommending against.

Below is some information on this perspective on the Precautionary Principle for readers to seriously consider:

"The Precautionary Principle in the information society can be articulated as follows: In order to enable society now and in the future to make relevant choices in the use of Information and Communication Technologies, as well to minimize harm for human health and the environment caused by ICT, ICT-related decisions under uncertainty should favor [ ] lower complexity over higher complexity[,] open standards over proprietary standards[,] and adapting the technology to humans over adapting humans to the technology" (emphasis added). 1

...“Pervasive Computing refers to visionary new ways of applying Information and Communication Technologies (ICT) to our daily lives. It involves the miniaturization and embedding of microelectronics in non-ICT objects and wireless networking, making computers ubiquitous in the world around us. Unlike most of today’s ICT products, Pervasive Computing components will be equipped with sensors enabling them to collect data from their surroundings without the user’s active intervention. If our daily life is to be pervaded in such ways by microelectronic components, running all the time with most of them wirelessly networked, one must ask whether these technologies might not have undesirable side-effects. The expected benefits need to be weighed against the potential risks involved in implementing such technological visions. When comparing opportunities with risks, we will have to answer the basic question of the ethics of technology: ‘Which technologies do we want in our lives, and what kind of a world would that be?’” (emphasis added) 2

“...The free space theory says that the PP is intended to preserve free space for the activities of future generations. This applies for example to future activities that pollute the environment in that the permitted environmental pollution (according to the risk limit) is not exhausted. However, the free space may also be applied to a modified assessment and evaluation, since values, laws and risk acceptance change in society and new scientific knowledge is acquired (‘risk of change’). Things that are regarded as unobjectionable today may be seen as unacceptable damage tomorrow…According to Van den Daele (2001), the PP is used to bring technological development more firmly into the sphere of influence of politics and society. This appears necessary because technical progress not only brings natural risks into the ambit of human decisions, but at the same time creates new risks. New technologies can have unacceptable side-effects for society. The PP is intended to guarantee that society is able to make a conscious decision for or against entering into such risks, even where there is uncertainty over the existence and extent of a risk. The PP is not only an important principle in national and international environmental policy, but it is now also being extended to consumer protection policy. According toVan den Daele, the areas of damage associated with the notion of risk (originally health and the environment) have now been further extended to include social problems or changes in moral principles (Daele, 1991, quoted in Wiedemann/Brüggemann, 2001). With the extended scope of the PP, even the possibility of a change in applicable values would have to be treated as a risk and minimised. The question therefore arises whether, on the basis of current values, a possible change in those values can be regarded as an opportunity or a risk. Certainly such processes should be given over to a social discourse more than others (Habermas 2001), since it is obvious that society is redefining its value coordinate system and takes decisions on new technologies not just within the framework of such a system. It is not acceptable for technology to establish ‘faits accomplis’ and thereby stipulate moral standards without any reflection on the subject. It should merely be pointed out that Pervasive Computing has the potential to change moral standards in society, for example the standards representing the boundaries between the private and the public spheres” (boldfaced emphasis added) 3

“[T]he decisive step on the way [of ICT]to causing (possible) damage is the propagation of a technology together with the nature of its use…The use of a technology that has been propagated interacts both with the behaviour of users and with the use of other technologies. The propagation of a widely used technology is reversible in theory, but irreversible in practice. Once a technology has been propagated, the costs to the national economy of adjusting the course of the trend would be very high, if the legal requirements for such an adjustment are satisfied at all. In such cases, we talk about socioeconomic irreversibility. For this reason, precaution must be exercised in the case of technologies such as ICT which are very widely used in respect of the development and diffusion of technologies” (emphasis in original; boldfaced emphasis added). 4

“...In summary, it must be stated that there are three reasons why in the context of the information society the PP can be construed not only in terms of the ‘Emission-Transmission-Exposure’ arrangement:

1. The diffusion of very widely used technologies (mass market products) such as ICT currently in use is socio-economically irreversible.

2. A high number of emission sources can lead to unwanted exposure even where missions are limited at source. In addition, those affected have little opportunity to react to such ubiquitous risks.

3. Precaution against social effects of a technology is not covered by the concept of ‘avoiding harmful impacts’.

These reasons also apply to some other widely used technologies and are therefore not only relevant in the context of the information society. However, they are particularly pertinent in the case of PvC because the widespread use of this technology, its ubiquity and its penetration of all areas of life are an express part of the vision. This observation raises a dilemma regarding the precautionary measures that may become policy as a result of a technology assessment:

• If the problem is tackled in a broader sense ‘at source’ and the development and diffusion of technologies are regulated, there is a risk of inefficiency and of conflicts, since the measures may, for example, infringe international agreements (WTO) as technical barriers to trade. [WTO Trade Barrier concerns if Government policies are too heavy-handed]

• If, on the other hand, measures at the front of the causal chain are not taken, no precautionary action is possible in the case of mass technologies, but only aftercare of more or less irreversible conditions.

Ropohl (1996) therefore puts forward the idea of ‘innovative technology assessment’, which is used where a technology is linked to a utilisation idea. ‘This would have the advantage that they can become effective even in the early stages of technical development and, in addition, at the place where there is the most extensive technological knowledge’ (Mehl, 2001, p. 112f). According to Ropohl (1996), however, this also has a disadvantage in that a forecast is difficult at this early stage. He therefore suggests that technology assessment goes hand-in-hand with technological development in an ongoing learning process. ‘Whilst innovative technology assessment also needs scientific and political institutions, it is also and equally dependent on the constructive participation of industrial corporations and on the expert competence of the individuals working in those corporations’ (Ropohl, 1996, p. 269f). The advantage of this kind of approach is undoubtedly that developers of a technology can be involved in the social discourse and take responsibility at an early stage. However, it must also be borne in mind that the independence of the technology assessment is called into question” (boldfaced emphasis added). 5

“…The connection between the precautionary principle and the sustainability principle Because of the long-term orientation of the PP and the ‘free space theory’ there is a direct connection with the sustainability principle’s aim of intergenerational fairness. The PP can therefore be regarded as one of several instruments that implement the sustainability principle. Rausch (1985) and Rehbinder (1991) also recognise the sustainability and precautionary principles as having the same intention: not just to delay the overexploitation of nature, but to prevent it permanently. Norton (1992) sees the precautionary principle as a way of protecting the sustainability principle from the feared ineffectiveness. The final declaration from the ‘United Nations Economic Conference for Europe’ back in 1990 stressed the role of the PP as a necessary prerequisite for sustainable development: ‘In order to achieve sustainable development, policies must be based on the precautionary principle [...] Where there are threats of serious or irreversible damage, lack of full scientific certainty should not be used as a reason for postponing measures to prevent environmental degradation.’ (Bergen Declaration, 1990)” (boldfaced emphasis added). 6

“…In conclusion, it should be noted that if the sustainability principle is interpreted in the context of the information society, a ‘maxim of dematerialisation’ can be inferred: Information and communication technologies should be used in such a way that their potential for dematerialisation (reduction of material and energy conversion for the same utility) is realised. At present this maxim is still largely ignored or ineffective. The dematerialization potential of ICT is not being realised; the path taken by the industrialised countries into the information society is still a path of rising materials and energy sales per head of population…In addition to the question that was discussed above concerning the way in which the sustainability principle is to be interpreted in the context of the information society, there are a number of problem areas in the information society, which have been discussed for some time. These include, in particular, the traditional ethical principles that are touched on by certain applications of ICTs: respect for human dignity, welfare, social justice…In 1976 the International Federation for Information Processing (IFIP), the global umbrella association for information technology organisations, formed a Technical Committee to deal with ‘The Relationship between Computers and Society’ (IFIP TC 9), which gave the many national organisations the impetus to discuss the social responsibility of ICT professions and to draw up ethical guidelines for their members" (boldfaced emphasis added). 7

"…There are five subjects that repeatedly crop up in these discussions because of their ethical implications and the disagreements to which they give rise:

1. Privacy: Where does individual freedom to collect data end, in conflict with the right to information self-determination (which stems from the principle of autonomy)?

2. Security: What level of security for an information system needs to be guaranteed for it to be responsible to use the system? Who is responsible for security flaws? Is it a criminal act or a service to society to identify and publicise security flaws?

3. Unmastered complexity: In the case of complex, and particularly distributed, information systems, it is generally not possible to give a formal guarantee of certain properties of such systems. Does the increasing dependence on such systems result in a loss of decision-making responsibility (‘the problem of incontinence’)?

4. Free speech: What are the limits of the right to free speech with respect to the use of electronic media, when it comes into conflict with other fundamental rights? May or should there be censorship of Internet content?

5. Intellectual property: Where is the boundary between information as public property, which must be available to everyone for reasons of social justice, and intellectual property, over which the owner has autonomous control?

6. Digital divide: The jeopardisation of social justice through the division of society into those who have access to the information society and those who are excluded, e.g. low-income households, the elderly, those with disabilities (also known as the ‘global digital divide’: the gap between north and south).

7. Education: Changes to the education process through the use of ICT and the implications for social justice…

…Although a specific change in the situation regarding ‘intellectual property’ and ‘cultural diversity’ can be expected as a result of PvC, those subjects will not be examined any further, since this would extend far beyond the bounds of this study.” (emphasis added)." 8

“…A feature of PvC is the networking of a large number of components. Among the networks, the Internet will continue to play an important role in the ‘PvC era’, since it has developed into a global information and communication infrastructure. In future it can be expected that the Internet will encompass more and more applications and will be ‘extended’ right inside everyday objects. In principle, the whole spectrum of communications infrastructure can be part of the ubiquitous networking, from satellite-based networks and fixed and mobile phone networks to short-range wireless networks. A central role will be played by wireless technologies, in particular where nonstationary objects are networked” (boldfaced emphasis added). 9

"The development of the networking potential of devices and objects also depends on further standardisation of network protocols. Many PvC devices will presumably support the Internet protocol (Ipv6). For applications in which interconnected devices or objects form a network, however, network protocols for distributed architectures are needed. In this respect there are a number of sophisticated systems and systems in development such as HAVI25, UpnP26 and, more broadly speaking, CORBA27. Hitherto, however, these systems have been proprietary and not interoperable. Generally accepted, cross-manufacturer standards have not yet been developed, which has prevented the relevant systems from breaking through (Huhn, 2002). One example is the field of home networking (smart homes), where many different network access points exist. As soon as generally accepted standards exist, network-ready components will be a possibility for a mass market" (boldfaced emphasis added). 10

“…Social effects of PvC are, in the broadest sense, also relevant to health and are therefore dealt with extensively. However, we would point out that the statements made in this part of the study display greater uncertainty than the comments on health effects in the narrower sense and on environmental effects…The division of society into those who use ICT and those who cannot or do not want to use ICT is termed the ‘digital divide’ in society. In that regard, access to the Internet is now the central criterion. On account of the abovementioned opportunities provided by new forms of human machine interaction it is possible that the threshold for the use of ICT will fall considerably…At the same time there is a risk that consumers’ freedom of choice will be restricted…ICT is based decisively on technical standards and this is true in particular where the level of networking is high. As long as proprietary de facto standards continue to play an essential role, there is a possibility that competition will disappear…In th[is] case the consumer no longer has the choice of which ICT products or ICT services they use because the ICT market tends to adopt a ‘winner-takes-all’ structure. This is the case at present with software but it could spread to hardware on account of the close link between hardware and software in PvC, that is to say the providers will attempt to sell software licences in a ‘bundle’ with hardware products” (boldfaced emphasis added). 11

“…In the procurement of ICT products (both material goods and services), regard should be had for energy efficiency, useful life, waste disposal characteristics and ergonomics. In the Pervasive Computing age, it will be a major challenge to develop a long-term procurement policy despite short innovation cycles…The focus should not be the characteristics of the individual hardware product, but the systems to which the components procured are connected. The life cycle of the overall system should be assessed on the basis of ecological, social and economic criteria. For this purpose, we recommend that a check list be drawn up and that purchasing staff be given appropriate training…In economic terms, regard must be had above all to the increasing dependence on foreign manufacturers and licensers. Public procurement policy, with its sizeable volumes of demand, should not encourage the market dominance of individual, mainly foreign suppliers. Otherwise, in the long term, the ‘electronic nerve system’ of the state will be at the mercy of the success of individual lines of technology, proprietary standards and pricing policy of a few dominant suppliers. These risks can be minimised by giving preference to open, product-independent standards, because only these allow fair competition in the ICT sector in the long term, and the use of open source software” (boldfaced emphasis added). 12

Perhaps lacking a fuller understanding and/or appreciation for the relevance of the deeper philosophical and ethical (sustainable development-related) underpinnings of Europe's application of the Precautionary Principle to the ICT sector, industry has focused mostly on the technical standards and intellectual property issues, which form only a part of those underpinnings.

At least as far back as 2003, concerted efforts have been made to encourage the broader use of non-proprietary ‘open’ standards in lieu of proprietary standards employed in the ICT sector, which is consistent with applying the Precautionary Principle to the ICT sector. Indeed, in a paper published by the National Information Standards Organization (NISO), a non-profit association accredited by the American National Standards Institute (ANSI), the author claims the following:

“The OpenURL situation has made it clear that NISO needs to develop a patent policy explicitly governing tolerance for encumbered technologies and procedures for disclosure. Because of the extended work of the W3C Patent Policy Working Group, much of the recent discussion about standards organizations and patents has focused on the relative merits of RAND versus royalty-free licensing. The debate has shown a clear and strong preference for royalty-free terms, and may in time cause a re-evaluation of the RAND-based patent policies of other standards organizations. However, because NISO is an ANSI-accredited standards developer, NISO’s policy will have to be consistent with ANSI’s own policy which currently allows patented technologies on both royalty-free and RAND terms. There are other lessons that can be learned from the recent experience of the W3C, beyond the opposition to RAND. It is striking that the W3C debate did not focus on the appropriateness of including patented technologies in standards. Even in organizations with a ‘Tao of unencumbrance’, the idea that the best technology for a standard may at times be a patented technology appears to be widely accepted.

…NISO Patent Update

On September 25, 2003, the NISO Board of Directors unanimously approved a NISO Patent Policy. NISO’s policy statement beings: ‘To promote the widest adoption and use of NISO standards, NISO seeks to develop and promote standards that avoid embedded patents whenever possible’. The Policy acknowledges that this may not always be possible. If a patent claim is essential for implementation of a NISO standard then NISO would seek to assure that a free license would be offered, or that the patent holder would not enforce the patent, or that a license would be made available under reasonable and nondiscriminatory terms. NISO policy is consistent with ANSI requirements” (emphasis added). 13

These ongoing efforts were subsequently acknowledged and the arguments seemingly embraced by a consultant to the SMEs Division of the World Intellectual Property Organization (WIPO):

“During the development of technical standards, participants may be required to draw the attention of the committee to the fact that there may be one or more ‘essential patent(s)’ that are needed for meeting the standard, i.e. it would be impossible for someone to comply with the standard without employing the technology protected by the patent(s). So the permission of the patent-holder would be needed and that could mean signing a license agreement and paying royalties to the patent holder. Obviously, it would not be very productive to adopt a standard if an IPR holder can block the implementation of that standard by either refusing to grant a license or requiring such high royalties as to make it impossible for its dissemination and adoption as a standard…Many SDOs discourage the use of proprietary or patented technology in standards; they support it only in exceptional cases where justified by technical reasons. In such cases, the patent holder of a technology considered to be crucial for meeting the requirements of a standard may be contacted by the technical committee of an SDO and asked whether the patent holder would agree to negotiate licenses with users of such standards on fair, reasonable and non-discriminatory terms and conditions (generally referred to as RAND terms and conditions). However, IPR policies of SDOs generally do not really explain as to what may be considered to be RAND terms and conditions. Some SDOs go beyond the RAND terms and conditions, requiring technologies to be licensed on a royalty-free basis (generally referred to as RF basis); for example, this is true of certain consortia dealing with Internet standards” (emphasis added). 14

At least one commentator has highlighted how the first European Interoperability Framework (v.1.0) specifically concerning the ICT sector endeavored to define the term ‘open standards’ in the context of European e-Government services in a manner that was consistent with the application of the Precautionary Principle but at odds with industry norms with respect to open standards.

“The IDA [European Interchange of Data between Administrations] and like definitions of open standards threaten well-established and highly effective norms and mechanisms that have succeeded for many years in fostering the development and widespread adoption of the best technical standards in the world. If any of these definitions were adopted, standards bodies that often are cited as examples of well-recognized “open standards” developers (such as CEN, ETSI, ISO, IEC, IETF, ITU, OMA, ECMA, OASIS, and those accredited by ANSI) would not qualify as open standards organizations, and hundreds of international standards that have been developed and widely deployed by these and other such leading standards organizations would not qualify as open standards. In addition, because the mandatory royalty-free, unfettered sublicensing, and ‘no other re-use constraints’ conditions of these definitions fail to adequately accommodate the rights and interests of patent holders, they would discourage key technology contributions to the standards development process and thereby impede innovation and interoperability. Finally, these proposed definitions would limit the universe of ‘open’ standards available to European and other governments in their procurement decisions and thereby further derail technological innovation and interoperability going forward” (emphasis added). 15

Similar assessments of the impact of the effective application of the Precautionary Principle to the ICT sector were made by other commentators. For example, according to one commentator, a former legal adviser to the Business Software Alliance,

“The requirement that a standard be ‘irrevocably available on a royalty-free basis’ [and] . …that standards licenses be ‘irrevocable’ and impose no constraints on ‘re-use’ of the standard is inconsistent with the licensing policies of every major standards organization, including those that require royalty-free licensing…BSA also has concerns with statements in the EIF regarding open-source software” (emphasis added). 16

------------------------
Endnotes

1. See Claudia Som, et al., The Precautionary Principle in the Information Society – Impacts of Pervasive Computing on Health and the Environment, 10 Human & Ecological Risk Assessment, 787–99 (2004). “We advocate precautionary measures directed towards pervasive applications of ICT (Pervasive Computing) because of their inestimable potential impacts on society.” Id. at 787, 796.

2. See Lorenz Hilty, Siegfried Behrendt, Mathias Binswanger, Arend Brunink, Lorenz Erdmann, Jürg Fröhlich, Andreas Köhler, Niels Kuster, Claudia Som, Felix Würtenbergerat, The Precautionary Principle in the Information Society - Effects of Pervasive Computing on Health and Environment, European Parliament Directorate-General for Internal Policies of the Union, Working Paper STOA 125 EN 08-2004 (Second Revised Edition 2005) p. 17, at: http://www.empa.ch/plugin/template/empa/*/34042 .

3. Id., at p. 32.

4. Id., at p. 36.

5. Id., at p. 37.

6. Id., at p. 40.

7. Id., at p. 42.

8. Id., at pp. 43-44.

9. Id., at p. 49.

10. Id., at pp. 50-51.

11. Id., at pp. 252-253.

12. Id., at pp. 269-270.

13. See Priscilla Caplan, Patents and Open Standards, 14 Information Standards Quarterly No. 4 (Oct. 2003); National Information Standards Organization (NISO) (2003), at pp. 7, 9 at: http://www.niso.org/publications/white_papers/Patents_Caplan.pdf .

14. See Esteban Burrone, WIPO, Standards, Intellectual Property Rights (IPRs) and Standards-Setting Process, http://www.wipo.org/sme/en/documents/ip_standards.htm .

15. See Nicos L. Tsilas, The Threat to Innovation, Interoperability, and Government Procurement Options From Recently Proposed Definitions of ‘Open Standards’, 10 International Journal of Communications Law & Policy 8, 2, 12 (2005), at: http://www.ijclp.org/10_2005/pdf/ijclp_08_10_2005.pdf .

16. See Benoît Müller, The European Interoperability Framework: An Industry Perspective, Business Software Alliance (Dec. 2005) at pp. 6-8, http://www.politech-institute.org/review/articles/MULLER_Benoit_volume_3.pdf .

--------------------------------------------------------------------------------------------------------------

http://www.osor.eu/news/fr-government-economic-commission-recommends-open

FR: Government economic commission recommends Open Source

France should increase the use of Open Source software. That is one many recommendations offered by an economic commission Attali headed by French economist and policy adviser Jacques Attali.

"Increase competition between commercial and Open Source software", is the 58th recommendation of Attali's commission. The policy advisers estimate that Open Source software equals some 131.000 man-year of work, half of which is donated by European developers and represents billions of Euro in investment. "Using Open Source software helps companies to cut costs for research and development, by an average of 36 per cent. Open Source has a market of only 2 percent, though it is growing by 40 percent annually, estimates the commission.

The Attali report lists three recommendations. First, competition between the two types of software should be increased in bidding for new IT projects, including public projects. As a result in 2012 at least 20 percent of all applications developed for or installed by the public sector should be Open Source.

As in the United States, the French government should secondly consider tax benefits to stimulate Open Source development. The third recommendation is that France helps to establish international rules on interoperability between Open and closed source software.

The recommendations were criticised by the French association of software publishers, Afdel. According to a new report by Le Monde Informatique, the association said that the commission Attali turned its back on innovation by recommending Open Source. Afdel fears commercial software companies will be excluded from public IT projects. "The commission Attali surprisingly favours a strategy to cut costs, instead of favouring the growth of an industry that employs 60,000 people", Le Monde Informatique quotes the chairman of Afdel, Patrick Bertrand, chief executive of the management software development company Cegid.

Attali's commission was set up this summer up by France's president Nicolas Sarkozy. The commission published its report titled '300 Decisions for Changing France' on January 23.

Pro-FOSS & Industry-backed 'Open' Standards NGOs Favoring IP-Free & Royalty-Free EU Interoperability Mandates Challenge ITSSD at WIPO Geneva Side-bar

noreply@blogger.com (ITSSD Charitable Mission) — Sat, 23 Oct 2010 16:35:00 +0000

http://www.ip-watch.org/weblog/2010/10/14/wipo-members-search-for-a-negotiating-agenda-on-patent-law/
WIPO Members Search For A Negotiating Agenda On Patent Law

By Kaitlin Mar

Intellectual Property Watch

14 October 2010

Patents aren’t what they used to be at the World Intellectual Property Organization. Discussions to come up with a work plan at the Standing Committee on the Law of Patents (SCP) this week and in recent meetings point to the possibility of a sea change in thinking over what matters about intellectual property policy and law.The SCP is meeting this week from 11-15 October, and delegates are working toward a future work plan for the committee after failing to come to an agreement at its last meeting in January (IPW, WIPO, 1 February 2010).

The committee has been meeting in informal discussions for most of the week, which exclude nongovernmental groups. The SCP is in a slow-restart process from a past stalemate primarily over harmonisation of national patent laws on the agenda.

The pressure is on the committee to come up with a plan of work as there is no other multilateral forum for discussing patent policy. Developed country members who were frustrated in efforts to advance multilateral enforcement interests just completed substantive negotiations on an Anti-Counterfeiting Trade Agreement (ACTA) but in the final stages of the talks, patents were excluded from key areas of the text (IPW, Enforcement, 12 October 2010).

The informal meetings between members with SCP Chair Maximiliano Santa Cruz, the head of the Chilean patent office, and between regional groups, were expected to last through tonight. Sources said a draft chair’s summary is expected to emerge, but likely not until tomorrow. It could reflect various proposals and positions put forward during the week on the way forward for the committee.

Meanwhile, a side event this week on patents and technical standards sparked a 'heated' exchange between panellists and audience members over the issue of patents on standards.

Proposals

In the SCP, the Group B of developed countries, now being coordinated by France, has proposed a future work plan that focusses on patent quality, including the exchange of information on laws and practices relating to patent quality and the “elaboration of recommendations” on good legislative and practical measures for patents worldwide. It is available here [pdf].

The Development Agenda Group (DAG), a collection of countries supporting the WIPO Development Agenda and now chaired by Brazil, emphasised in its opening statement that exclusions, exceptions and limitations to patent law, the transfer of technology, patents and standards, and anti-competitive practices are particularly important to developing countries. “Discussions at the SCP should never lose sight of the fundamental trade-off at the root of the patent system” between protecting innovators in return for dissemination of their knowledge, theDAG statement [pdf] said.

The DAG is supporting a proposal on future work made by Brazil [pdf] at the last SCP that focusses on exceptions and limitations to patent law.

The African Group has proposed a study on patents and public health. The African Group also proposed two new topics to be added to a “non-exhaustive list” of potential topics for the SCP to discuss. These are the impact of the patent system on least developing countries and developing countries, and patents and food security.

And Slovenia on behalf of the Group of Central European and Baltic States proposed the addition to the non-exhaustive list of strategic use of IP in business, particularly for small and medium-sized enterprises.

Technical transfer, client attorney privilege, and dissemination of patent information are remaining issues from the last meeting.

Also up for discussion this week is how the SCP will report on its development-related activities to the decision-making annual General Assemblies. At the latest Assemblies in September, a coordination mechanism [pdf] for the Committee on Development and Intellectual Property was adopted that required “the relevant WIPO bodies to include in their annual report to the Assemblies, a description of their contribution to the implementation of the respective Development Agenda Recommendations.” The SCP is the first WIPO committee to meet since the General Assemblies.

On this issue, the DAG has proposed in its opening statement this week a discussion on how to do that. As the Assemblies directive applies to all WIPO committees, this is likely to be a recurring issue.

And a new secretariat-prepared study on exclusions from patentable subject matter and exceptions and limitations to patent rights, available here [pdf] was also cause of much discussion in informal meetings, according to participants. A statement on the issue from the DAG is available here [doc], and a statement from the nongovernmental Third World Network is available here [pdf].

Broadly speaking, there has been a massive cultural change at WIPO, said one participant. WIPO “was basically an industry-based organisation” when it began, and discussions were one-sided: mainly aimed at protection of IP rights, he added. Even nongovernmental observers largely represented industry groups. But in recent years, the fundamentals of the patent system have been questioned. This puts the organisation at a critical juncture, but it is hard to see if any agenda is advancing, he said.

Patents and Standards

A spirited discussion was had between at a side event to the SCP [pdf] organised by the Institute for Trade, Standards and Sustainable Development (ITSSD) on 12 October.

Interoperability frameworks or government procurement preferences for nonproprietary technologies create legal and economic uncertainties that are “basically unfair and unnecessary,” argued the event’s organiser, Lawrence Kogan, president and director of the ITSSD. The ITSSD is a nonprofit organisation that promotes a “positive paradigm of sustainable development” which it says includes strong intellectual property rights and free markets. A testimonial posted on their website called the group “deeply supportive of traditional American imperial ideology.”

“Freedom of contract and exclusive IP rights” are needed for legal and economic certainty, which will cause increased knowledge dissemination and technology transfer, whereas compulsory licences and “royalty-free mandates” would dampen the movement of technology, Kogan said. Government procurement standards preferencing open standards constituted a potential trade barrier, he added.

This did not sit well with several audience members. No government has required procurement of IP-free standards, said Thomas Vinje, an audience member and an attorney who advises clients on software patents. The European interoperability framework “does not by any honest – and I repeat honest – measure mandate anything on patents.” What it does say is that when governments procure software, they procure software that is open, defined as having less IP or limits to royalties that can be requested to licence the IP. “That is not IP-free. Anyone who says that is not being honest.” [MR. VINJE IS THE LEGAL COUNSEL OF THE EUROPEAN COMMITTEE FOR INTEROPERABLE SYSTEMS (ECIS), WHICH IS AN AD HOC OBSERVER TO THE WIPO STANDING COMMITTEE ON THE LAW OF PATENTS. THE AUTHOR OF THIS ARTICLE CONVENIENTLY OMITTED THIS MATERIAL INFORMATION.]

“Seeing as royalty-free standards can be implemented by anyone, where exactly do you see a barrier to trade in that?” added Karsten Gerloff, president of the Free Software Foundation Europe. The FSFE position on patents and standards is here.

“Expressed preference is a nuanced way of saying ‘if you wish a government contract, you must satisfy our demands’ [which is] de facto mandatory,” said Kogan, who added that trade barriers were a “possible but not necessarily probable” outcome of such preferences.

Many innovations that later become standards are created by small businesses, said Jonathan Zuck, president of the Association of Competitive Technology. Small business innovators are particular in that the up-front money is often supplied externally, from venture capital investors who require intellectual property protection as a condition of investment. Small businesses are also particularly vulnerable if “subject to decommercialisation” of their technology because its inclusion in a standard means it must licence for free or low prices. Small businesses often have only one technology, he said, and if it fails, the business disappears.

Innovation is not a top-down process and by and large what is needed is to create an environment in which some return on investment is likely, said Zuck. This requires the ability to protect them. The role of government in this environment “is predominantly to stay out of the way.”

Standardisation is a private undertaking in which commercial companies get together “to cooperate in an area where they usually compete,” said Benoît Müller, a Geneva-based attorney who previously worked for the Business Software Alliance, speaking on his own behalf. Governments became interested mainly out of concern for the anti-competitive effects of such cooperation. He said governments should stay away from “mandating no-IP standards. Because then you won’t be able to buy anything for your government,” as most standards have some IP in them.

A recently published Berkeley Patent Survey at the University of California (Berkeley) interviewed 700 software entrepreneurs, said Vinje, and found that patents were the least important incentive mechanism among seven options. Zuck said a study conducted by the European Commission Enterprise & Industry Directorate General, available here, talked about the importance of IP to businesses, including small and medium-sized enterprises in the information and communication technology sector.

The “field of standardisation does not strike me as one in which patent issues arise any differently from any other field,” Müller said. “Companies need to obtain patents, but should not abuse rights.”

Martin Hinoul of the Leuven High Technology Region, Brussels, also spoke at the event.

William New contributed to this story.

Comments
Rebentisch says: 16 October 2010 at 3:06 pm
“Government procurement standards preferencing open standards constituted a potential trade barrier, he added.”

A free competitive market allocation as a “trade barrier”? It raises concerns that persons like Kogan pretend to advocate for free trade and do so by advancing anti-free trade policies. When you speak about trade barriers you should at least have a clue about the foundations of trade economics. Silly!

Karsten Gerloff says: 16 October 2010 at 5:39 pm
@Rebentisch:
I was in the room when Mr Kogan made those claims. Interestingly, the same “barriers to trade” meme popped up in a letter sent to the European Commission by the Business Software Alliance (BSA) and obtained by FSFE.In both cases, this claim is nonsense. Open Standards can be implemented by anyone, so even mandating Open Standards for the public sector could not possibly be viewed as a barrier to trade. What we’re seeing today are *recommendations* for Open Standards in a limited number of countries – a recommendation, of course, being much weaker than a mandate.

The IIPA submitted similar claims to the USTR in February 2010 for the Special 301 process, which is designed to reflect the concerns of US corporations when it comes to international trade. Tellingly enough, the USTR’s subsequent report didn’t even mention the topic.

For some more discussion, see our review of the BSA’s claim athttp://www.fsfe.org/projects/os/bsa-letter-analysis.html

Lawrence Kogan says: 18 October 2010 at 6:10 pm
Gentlemen,
You have piqued my interest with your mostly emotion-filled comments.

Mr. Rebentisch, please reveal who you really are as well as your affiliation so that we may exchange views on equally informed terms. When you employ strong emotion-filled words like ‘pretend’, should I assume you speak from knowledge or hyperbole? I seek your instruction on this point.

Mr. Gerloff, there will be ample time to once again correct the record that FSFE and Mr. Thomas Vinje from ECIS have colored with nuanced falsities. I am particularly gratified by Mr. Vinje’s insistence that the Berkeley study supports the statement that patents are not important to software developers which, I assure you, shall be corrected, as the conclusions of the Berkeley study are quite enlightening and liberating.

Also, Mr. Gerloff, while I appreciate your verve and passion, I found less than candid your quite mis-representative ‘Tweet’ of October 12. At 11:36am, you ‘tweeted’ that Room B was “almost empty”. Of course that was the case, as the event did not begin until 1:30 at which time it was attended by more than thirty (30) persons. And, by the way, I do hope that you had fun.

Lastly, as concerns your question regarding why the ITSSD and the panelists were once again emphasizing points previously made and accepted by the SCP during 2007, namely, the issue of the significance/ ‘value’ of patents, I can provide you with only one answer: developing countries and NGOs such as FSFE and ECIS, which advocate on behalf of non-proprietary and non-patent royalty-based technologies, and seek to prevail upon governments to indirectly mandate the use of other than patent-based royalty business models in connection with government procurement requirements, apparently still ‘don’t get it’, even despite the wise words spoken by Dr. Martin Hinoul of K.A. Leuven, Jonathan Zuck of the Association of Competitive Technology and Attorney-at-Law Benoit Muller…

[THE ITSSD WIPO EVENT FLYER IS AVAILABLE ON THE ITSSD WEBSITE at: http://www.itssd.org/ITSSD%20October%2012,%202010%20WIPO%20SCP%20side-bar%20event%20flyer.pdf ; SEE ALSO Handout Materials and Panelist Bios for this event. THE PRECIS IS FORTHCOMING.]

Russian 'Business' Press Takes Curious Propagandized Interest in ITSSD WIPO Geneva October 2010 Side-bar Event

noreply@blogger.com (ITSSD Charitable Mission) — Sat, 23 Oct 2010 13:54:00 +0000

http://www.cnews.ru/news/top/index.shtml?2010/10/21/413000

http://soft.cnews.ru/news/softbox/10555/

http://www.rosinvest.com/news/743292/

http://open.cnews.ru/news/top/index.shtml?2010/10/21/413000

American lobbyists against open standards, faced with opposition from the Free Software Foundation

21.10.1910, Thu, 09:46, Moscow time, the text: Egor Grebnev /
Fighting that erupted around the soon-to-adoption of a European code of regulations for compatibility (European Interoperability Framework, EIF, reached the highest intensity in connection with the forthcoming any day approval EIF. From the ability of the European Commission to uphold the requirement for compliance with open standards in the development of state systems will largely depend on the fate of free software in Europe.

October 7 Association of Business Software Alliance (BSA), which includes well-known software vendors such as Adobe, Apple, Dell, IBM, Intel, Kaspersky Lab, McAfee, Microsoft, SAP and others, addressed a European Commission official letter with a demand to amend the Section 5.2.1 of the draft European code of regulations for compatibility and to exclude therefrom the regulation requiring the use of technology, free from the burdens associated with intellectual property (ie, from patents and royalties).

According to the writer Robert Holliman (Robert W. Holleyman), the proposed wording "may be read as if part of the most innovative European and foreign companies in the standardization process will not be welcome, if they own the patents for the technologies and seek compensation for their inventions, If these patents are part of the standard. " Alternatively, the author of the letter suggests the European Commission to adopt the criterion of a fair, reasonable and non-discriminatory (fair, reasonable and non-discriminatory, FRAND) conditions, which imply the possibility of inclusion in the list of permissible standards, including, and technologies that are encumbered by patents, or the requirements of expulsion of the royalties. As examples, specifications, burdened by patents, but applies to "reasonable and non-discriminatory" terms, BSA causes such well-known technologies such as WiFi, GSM, and MPEG.

It should be remembered that, as in Russia, the software patents in Europe have no legal significance, and a relatively recent attempt to lobby the directive on software patents through the European Parliament ended in failure. However, the debate on the admissibility or inadmissibility of patent encumbrances in the standards for software for the European public sector, no matter how detached from reality it may seem, can directly affect the distribution of free software. We should not forget that the development of free software is a framework of international projects, and American developers will not show a significant interest in the project, whose results can not be used in the U.S. due to legal restrictions. A lack of access to U.S. users - an irreparable loss for the majority of free software projects.

In this regard, attention is drawn to the fact that the majority of the BSA - it was American, not European, companies.

BSA - not the only organization that speaks out against open standards. A similar opinion was expressed by Lawrence Kogan (Lawrence Kogan) prezdineta Institute for Trade, Standards and Sustainable Development (Institute for Trade, Standards and Sustainable Development, ITSSD) during a meeting of the Standing Committee on the Law of Patents, acting through the World Intellectual Property Organization on 12 October. According to Lawrence Kogan, codes for compatibility requirements for state systems or the provision of contradictions Open Source creates a legal and economic uncertainty, which is simply unfair and unnecessary. "Interestingly, in one of the positive reviews posted on the site ITSSD, the organization is characterized as "extremely positive for the traditional American imperial ideology."

In response to claims of U.S. organizations, Free Software Foundation Europe (Free Software Foundation Europe) are also sent to the Commission's letter, and published a detailed paper document, which offered objections to each of the arguments made in a letter to BSA. According to representatives of the Fund's open standards do not prevent, but instead promote competition. Waiver of royalties would not shorten, but rather expand market access for government contracts for the widest range of suppliers. [???] The Foundation also believes that these BSA examples of technologies are not adequate, since they are all related to the hardware market, not the software.

Finally, the Free Software Foundation Europe is a direct indication that the conditions FRAND directly contradict the most popular free license. Thus, by agreeing to allow the encumbered patent-pending technology, the European Commission at the same time exclude the possibility of developing a state system based on free software.

Before the publication of the final version of the EIF have to wait, apparently, a very short time. Hardly the arguments of American lobbyists to materially alter the position of the European Commission, which for years has been one of the most consistent supporters of the idea of open standards, but the actual activity of lobbyists, shows how seriously the proprietary software vendors perceive the threat of technology-neutral with respect to the supplier.

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[APPARENTLY, THERE IS MORE HERE THAN MEETS THE EYE. AT LEAST ONE STUDY HAS SHOWN THAT THE SO-CALLED RUSSIAN 'BUSINESS MEDIA' HAS INCREASINGLY BEEN ACQUIRED BY PRO-KREMLIN OLIGARCHS, WHICH MAY INDICATE THEIR USE AS RUSSIAN GOVERNMENT PROPAGANDA COMMUNICATION TOOLS.

IN FACT, TWO STUDIES CONCERNING THE RUSSIAN MEDIA REVEAL THAT THE OWNER OF CNews.ru IS A RUSSIAN COMPANY, ("CNews.ru -- Website owned by RosBiznesKonsalting that features high tech and computer news; URL: www.cnews.ru") WHICH IS OWNED BY A PRO-KREMLIN RUSSIAN OLIGARCH ("Oligarch Mikhail Prokhorov, who is known to cooperate with the Kremlin, owns RosBiznesKonsalting (RBC), which has been quietly gobbling up Russian Internet (Runet) domains, holding 21% of the Runet's sites, according to its last annual report in 2007, including Loveplanet.ru, the second-most popular online dating service in the Runet").

PERHAPS READERS SHOULD KEEP THIS IN MIND WHEN CONSIDERING THE CONTENT OF AND VIEWPOINT EXPRESSED WITHIN THE ARTICLES SET FORTH ABOVE.

FOR MORE INFORMATION ON HOW PRO-KREMLIN OLIGARCHS ARE GOBBLING UP THE RUSSIAN INTERNET WITH THE BLESSING OF THE KREMLIN See: Russian Internet Websites Are Rapidly Being Consumed by Pro-Kremlin Oligarchs - Does the Kremlin Have a Renewed Appetite for Censorship?, ITSSD JOURNAL ON EVOLVING RUSSIA, at: http://itssdjournalevolvingrussia.blogspot.com/2010/10/russian-internet-websites-are-rapidly.html ].

Can Government Intervention Sustain Economic Incentive, Technological Innovation, and Capital Flows?

noreply@blogger.com (ITSSD Charitable Mission) — Thu, 07 Oct 2010 12:41:00 +0000

Please be advised that the Institute for Trade, Standards and Sustainable Development (ITSSD), an ad hoc observer to the WIPO Standing Committee on the Law of Patents, is hosting a side-bar panel event during the fifteenth session meetings of the WIPO SCP, the purpose and subject of which is described briefly below and in more detail on the ITSSD website homepage, at: http://itssd.org/ITSSD%20October%2012,%202010%20WIPO%20SCP%20side-bar%20event%20flyer.pdf.
The ITSSD side-bar will take place on Tuesday, October 12, 2010, in Room B of the World Intellectual Property Organization (WIPO) building, located at 34, chemin des Colombettes, CH-1211 Geneva 20, Switzerland, at 1:00-2:45pm CET.

The venue for this event will have limited space for those who might wish to attend.

In any event, it is expected that a summary or a précis of these proceedings may be available online on the ITSSD website (www.itssd.org) subsequent to the event for your perusal.

How SMART are Standards that Sacrifice Intellectual Property Rights?

noreply@blogger.com (ITSSD Charitable Mission) — Mon, 19 Apr 2010 02:31:00 +0000

How SMART are Standards

that Sacrifice Intellectual Property Rights?(c)

(Abridged Outline)

By: Lawrence A. Kogan, Esq.

President, The Institute for Trade, Standards and Sustainable Development, Inc.

Presented at

American National Standards Institute (ANSI) Intellectual Property Rights Policy Committee (IPRPC)

April 15, 2010

I. Introduction and Welcome

II. Overview of ITSSD ad hoc observer Work at the World Intellectual Property Organization (WIPO) Standing Committee on the Law of Patents (SCP) Concerning Patents and Standards

A. ITSSD Comments Concerning Document SCP/13/2 Standards and Patents (March 2009) http://www.wipo.int/scp/en/meetings/session_14/studies/itssd_1.pdf

B. Supplement to ITSSD Comments Concerning the WIPO Report on Standards and Patents (SCP/13/2) (January 2010) http://www.wipo.int/scp/en/meetings/session_14/studies/itssd_supplement.pdf

C. General Tenor of WIPO Report SCP 13/2 and ITSSD Findings Relating Thereto

1. Perceived Problem:

a. “Inherent tensions” exist between patents and standards that result in the impairment of technology standards development in the ICT, medical/health and clean/alternative energy technology sectors, at taxpayer and society’s expense. Member-based voluntary SDOs are incapable of resolving, and RAND/FRAND terms alone are inadequate to resolve, these tensions.

2. Recommended Solution:

a. Government-imposed solutions where voluntary initiatives deemed inadequate

b. Government creates a new ICT legislative/regulatory framework to address the perceived conflict between standards and patents

i. Defines ICT ‘Interoperability’ as a ‘Public Interest’

ii. Redefines ‘Open Standards’ consistent with Free & Open Source Software - as economically open – e.g., ‘Royalty-Free’

iii. Determines that ICT patents deemed ‘Essential’ to the functioning of ICT standards which are not ‘Royalty-Free’ limit/encumber ICT technology ‘Interoperability’, and thus, threaten the ‘Public Interest’

iv. Treats as legally unenforceable, ‘Essential Patents’ which limit/encumber technology ‘Interoperability’, impair standards development, and threaten the ‘Public Interest’

v. Encourages national and regional government procurement agencies sourcing eGovernment services to express a direct or indirect ‘Preference’ for ‘Open’, ‘Essential’ ‘Royalty-Free’ Patent-Embedded ICT Standards

vi. Incentivizes compliant companies generous government grants and public approbation

vii. ‘Takes’ private property (patents) for ‘public use’ without ‘full, adequate or fair compensation’.

c. Europe’s e-Health Action Plan promotes development of common interoperability approaches and standards for patient identifiers, medical data messaging, [and] electronic health records”, based on adoption of Open Source reference implementations for care services…taking inspiration from models such as the World Wide Web Consortium.

III. Does the Evidence Reflect that Stakeholder Groups are Calling for the Obama Administration Approach to ICT/Medical/Clean Energy Technology Sector Standardization for Government Procurement Purposes to Track the European Framework?

A. OMB Circular A-119 and the National Technology Transfer and Advancement Act of 1996 “require [US] Federal [government] agencies to use [already existing ‘open’ private commercial] voluntary consensus standards in their regulatory activities wherever possible and to avoid using ‘government-unique’ standards.

B. However: 2008 – IBM-sponsored Yale Information Society Project’s Standards on Standards Recommends Changes to OMB Circular A-119 (on Federal Participation in the Development and Use of Voluntary Consensus Standards and in Conformity Assessment Activities) Consistent With EU Approach

a. Views EU Commission as way ahead of U.S. in assessing standard policy, touts the EU Interoperable Delivery of European eGovernment Services (IDABC), recommends reformation of standard body IP policies revisions to OMB Circular A-119 concerning definition of ‘open’ standard and ‘essential’ patents.

C. However: 2008 – Legal Representatives to Standards Consortia and their Members Recommend Changes to OMB Circular A-119 and Other Government Changes to Reform US Standards Strategy Based on the EU Approach, Which Emphasizes the User & Consumer Rather than the Innovator Viewpoint

1. Employ 2002 eGovernment Act to promote administration’s ‘Open Government’ goals, ‘virtual Civil ICT Rights’, and incentivize change in electronic health and other standards.

2. Harness government procurement purchasing power to influence the standards that industry adopts.

3. Adopt a government-wide interoperability framework that ensures open (Civil IT) standards for document format and platform neutrality.

4. “[L]aunch[] a ‘Standards for Standards’ organization…to evaluate standards, or the SSOs that create them, for purposes of government procurement.

5. Revise OMB Circular A-119 to expressly give equal status to consortium-developed standards, and to require implementation of Civil ICT Standards certified by the Standards for Standards body.

6. Regulatory agencies should advise concerning the ex ante disclosure of patent licensing terms and employ enforcement measures to prevent patent ‘hold-ups’ that can derail the standards development process.

7. As part of patent reform, reduce the number of poor quality patents which, if widely adopted in a standard, can cause harmful vendor lock-in.

8. The EU’s consumer-centric Interoperable Delivery of European eGovernment Services to public Administration, Business and Citizens (IDABC) relies upon the use of ‘open’ standards, the IP of which is made irrevocably available on a royalty free basis, and/or allows all interested parties to implement the standards and to compete on quality and price.

9. Procurement officers must actively embrace and utilize the best software available in every case, especially that (increasingly FOSS) which fully implements open standards and better protects the procuring agency from vendor lock-in.”

D. However: 2009 – Computer and Communications Industry Association (CCIA) Recommends Changes to OMB Circular A-119 Consistent With EU Approach

1. Like the EU Commission, which has acknowledged the growing scope of user interests as well as the reality of consortia operating outside of the formal system, the Obama Administration’s Open Government Initiative must take a flexible and open approach to high-level standards that produces a more proactive and collaborative process than that contemplated by National Technology Transfer and Advancement Act of 1995 and OMB Circular A-119.

E. However: 2006 - The Standards Consortia OASIS Recommends Abandoning the RAND/FRAND Approach for Setting Patent Royalties in the Case of Public Standards

1. RAND licensing terms, especially if made operative in a standards setting, pose a potential threat to the health of an open, accessible Internet…RAND may be acceptable if the royalty fee is guaranteed to be zero, for eternity, and the patent holder agrees to a permanent, unconditional, irrevocable grant of freedom under the license.

F. However: 2009 – 50 Companies, Academic Institutions and Community Groups Formed the Nonprofit Organization Open Source America (OSA), the Mission of Which is to Promote ‘Open Source’ in the U.S. Federal Government Sector

1. [G]roups such as Google, RedHat, Novell, Linux, Mozilla, Sun Microsystems and the Electronic Frontiers Foundation are lobbying the US Federal government to consider using open-source software over proprietary code.

G. However: 2009 – Google Public Policy Blog Emphasizes that ‘Open Standards’ Are Those Unencumbered by Patents

1. ‘Open’ standards are unencumbered by patents.

H. However: 2009 – The Independent System Operator (ISO)/ Regional Transmission Organization (RTO) Council Recommends that NIST Adopt Royalty-Free ‘Open’ Standards

1. NIST should give preference to open standards that are royalty free and prohibit the use of vendor owned intellectual property within a Smart Grid standard, unless that property is provided on reasonable and non-discriminatory terms to the community.

I. However: 2009 – The National Energy Marketers Association and Intelligent Energy Recommend that FERC Develop and Adopt Only ‘Open’, Non-Discriminatory (Non-Proprietary) Standards to Facilitate the Smart Grid

1. The Federal Energy Regulatory Commission (FERC) should develop and implement truly ‘open’ (open standards) non discriminatory (non-proprietary) access to the new data pipelines (IT infrastructures).

J. However: 2008-2009 – Open Source Journalists Argue that the Obama Administration Should Not Waste Taxpayer Monies on Proprietary Technologies Susceptible to Vendor Lock-in

1. The government must avoid wasting billions of dollars and recreating the problems we now have in broadband by mandating that all new contracts have “open systems, open standards, full interoperability without royalty-bearing bottlenecks.”

2. The government’s money should not go to cement the current health technology in place.

3. The government should ensure that the providers of proprietary health IT systems do not have too much influence.

4. NIST stewardship of the government’s significant investment in the domestic smart grid market has been indispensable to keeping the market alive.

5. Although long term-minded utilities want open standards to prevent vendor lock-in, short-term profit-seeking vendors are endeavoring “to wedge their proprietary technology into the standards-making process.”

IV. Does the Evidence Reflect that the Obama Administration Approach to ICT/Medical/Clean Energy Technology Sector Standardization for Government Procurement Purposes Actually Tracks the European Framework?

A. The Obama Administration Approach to ICT/Medical/Clean Energy Technology Sector Standardization is Facilitated, in Part, by the American Recovery and Reinvestment Act (ARRA)

1. $4.3B ARRA stimulus (taxpayer) funding is provided for SMART Grid technologies through the US Department of Energy (DOE).

2. $20B ARRA Health Information Technology for Economic and Clinical Health Act (HITECH) Act stimulus (taxpayer) funding is provided for Healthcare IT, including electronic health records and comparative effectiveness research, through the US Department of Human Health and Services (HHS) and its Centers for Medicare and Medicaid Services (CMS).

3. $7.2B ARRA stimulus (taxpayer) funding for development of a national broadband plan by the US Federal Communications Commission (FCC), flowing through the Commerce Department’s National Telecommunications and Information Administration (NTIA) and the US Agriculture Department’s Rural Utilities Service (RUS) to ensure universal access to broadband and to improve broadband connections to increase health IT adoption.

a. NTIA and the FCC should increase coordination of Smart Grid use in appropriate federal bands, and require that any new broadband network built in the identified spectrum meet standards of interoperability…DOE and FCC should conduct a thorough study of the communications requirements (including Smart Grid) of electric utilities, and should collect data about utilities’ current and projected communications requirements, as well as the types of networks and communications services they use.”

4. 2007 Energy Independence and Security Act (EISA) funding, including for demonstration projects, and standards

B. The Obama Administration’s Approach to ICT/Medical/Clean Energy Technology Sector Standardization is Based on the US Prior Successful Broadband and Internet Experience

1. The National Broadband Plan can advance consumer welfare, civic participation, public safety and homeland security, community development, health care delivery, energy independence and efficiency, education, worker training, private sector investment, entrepreneurial activity, job creation and economic growth, by enabling the free and efficient exchange of information.

2. “The smart grid is an electricity Internet.”

3. NIST views Internet standards as a model for how the smart grid process should operate. A governing panel created last year specifically to focus on interoperability (the Smart Grid Interoperability Panel) will resemble the Internet architecture board. Rather than develop standards, it will develop the overall architecture and select which standards should be used’.

4. The US government must secure “an interoperable, ‘plug-and-play’ smart grid that avoids vendor lock-in.”

5. The FCC National Broadband Plan suggests amending the Copyright Act to ensure the adoption of a new voluntary permissive copyright license, administered by the government, to permit educational digital use.

6. Like the Internet, the Smart Grid is a system of systems that embraces diversity of technology, operators, and connection. The Smart Grid must enable new technologies and support new business models, just as the Internet generated new technologies and business models a decade ago.

C. ARRA and EISA Instruct Government to Play a Central Role in the Setting of ‘Open’ Standards that Will Enable the Build-out of an Interoperable Smart Grid

1. EISA directs the US Department of Energy (DOE) to monitor deployment of Smart Grid technologies, establish a Smart Grid Advisory Committee and a Smart Grid Task Force to assist with its implementation, measure implementation costs and benefits, conduct Smart Grid R&D, create a qualifying Smart Grid investment reimbursement and utility rate recovery program.

2. EISA directs NIST to establish protocols and standards to increase the flexibility of use for Smart Grid equipment and systems.

3. EISA directs the FERC to initiate rulemakings to adopt standards and protocols necessary to facilitate the functionality and interoperability of Smart Grid technology in the interstate transmission of electricity and in regional and wholesale electricity markets.

4. EISA specifies that the interoperability framework should be ‘flexible, uniform, and technology neutral.’, and that sound interoperability standards are needed to ensure that sizable public and private sector technology investments are not stranded.

5. NIST defines voluntary consensus standards, consistent with OMB Circular A-119, as requiring that the relevant IP owners have agreed to make IP “available on a nondiscriminatory, royalty-free, or reasonable royalty basis to all interested parties.”

6. NIST generally believes that Smart Grid interoperability standards should be open; i.e., developed and maintained through a collaborative, consensus-driven process that is open to participation by all relevant and materially affected parties.

7. FERC, under EISA, is authorized to incentivize utilities’ investment in smart grid technologies through base rate recovery. To secure rate recovery, a utility must show that it has minimized the possibility of stranded investment in smart grid equipment – i.e., that its “Smart Grid devices and equipment, including those used in a Smart Grid pilot program or demonstration project”, are “‘used and useful’ in providing service.” Furthermore, it must show how it has relied to the greatest extent practical on existing, widely adopted and ‘open’ interoperability standards – standards comprising an architecture that is other than vendor-specific and proprietary, and which does not block other vendors from adoption.

D. ARRA Instructs Government to Play a Central Role in the Setting of ‘Open’ Standards that Will Enable the Build-out of Interoperable Health IT Systems

1. Federal agencies shall utilize, where available, health information technology systems and products that meet…interoperability standards…recognized by the Secretary of Health and Human Services (the ‘Secretary’), in accordance with guidance developed by the Secretary.

2. The HITECH Act should improve both the capture of interoperable clinical data and consumer access to such data, which in turn, should allow better real-time health surveillance and improved response time to update care recommendations, allocate health resources and contain population-wide health threats. Currently, digital health data generally are held in proprietary ‘siloed’ systems that do not communicate with one another and therefore cannot be easily exchanged, aggregated or analyzed. The ‘meaningful use’ incentives for electronic health records will greatly increase the capture of interoperable clinical health information.

3. ARRA authorizes the Centers for Medicare & Medicaid Services (CMS) to provide reimbursement incentives for eligible professionals (EPs) and hospitals who are successful in becoming ‘meaningful users’ of certified electronic health record (EHR) technology.

a. On December 30, 2009, the CMS issued a proposed rule that would specify the initial criteria an EP and eligible hospital must meet in order to qualify for the incentive payment. Certified EHR technology must be part of or fall within a ‘service oriented architecture’ developed from open standards that provides the basis for interoperability between and among different systems and programming languages whether or not they may reside on different platforms.

b. Also, on December 30, 2009, the ONC/HHS issued an interim rule setting forth an initial approach to adopting standards, implementation specifications, and certification criteria to enhance the interoperability, functionality, utility, and security of health information technology and to support its meaningful use. The certification criteria adopted in this initial set establish the capabilities and related standards that certified electronic health record (EHR) technology will need to include in order to, at a minimum, support the achievement of the proposed ‘meaningful use’ Stage 1 (beginning in 2011) by eligible professionals and eligible hospitals under the Medicare and Medicaid EHR Incentive Programs. ONC anticipates increasing the level of specificity it provides related to standards, implementation specifications, and certification criteria. And, it anticipates that the requirements for meaningful use will become more demanding over time, and consequently that Certified EHR Technology will need to include greater capabilities as well as the ability to exchange electronic health information in a variety of circumstances with many different types of health information technology. ONC will adopt standards, implementation specifications, and certification criteria if, among other things, they promote interoperability and are specific enough about content exchange and vocabulary standards to enhance semantic interoperability. It will also seek input from the HIT Policy Committee and HIT Standards Committee, and utilize the NHIN [Nationwide Health Information Network].

i. Cost minimization is among the HIT Standards Committee’s key guiding principles for standards recommendations. To be adopted, a standard’s implementation cost must be as low as possible - any royalties or other expenses associated with the use of standards must be eliminated.

ii. The goal is to establish a more competitive marketplace and to allow those who adopt HIT to choose from a variety of offerings ranging from subscription services, to vendor-based products, to open source products.

E. Does the Evidence Reflect the Obama Administration’s Preference for Free and Open Source Software (FOSS) for Government Procurement Purposes Considering the Software Platforms Federal Agencies Have Thus Far Adopted Pursuant to OMB’s Open Government Directive?

1. “President Obama announced the government will use open source software to create a national electronic health records system for the military. By pursuing two open source options – the Department of Veterans Affairs’ VistA medical records system and Connect from Sun Microsystems -- proponents hope the Obama administration is sending a signal that open source software could become a vital part of national reform.”

2. The DOE’s Open Government Plan highlights flagship initiatives spearheaded by DOE including the launch of Open Energy Information (OpenEI.org), a new open-source web platform that opens DOE resources and data to the public, which will make a range of DOE resources and open energy data widely available to the public.

3. During April 2009, the Office of the National Coordinator at HHS released for download and public use the “federally developed, free and open-source Connect software…created under the auspices of the Federal Health Architecture initiative”. It uses “an open technology platform using Sun's open source software… Sun’s GlassFish, the Java Composite Application Platform Suite (CAPS) SOA Platform, and the Sun Java Identity Management suite…to connect federal government agencies and health information exchanges.”

V. Conclusions?

A. “Many voices call for ‘open’ standards for the Smart Grid. They should be careful to distinguish between the necessary characteristic of universally availability and the much less important goal that all included technologies be royalty free.”

B. NIST finds itself in a quandary – it recognize[s] the need for innovative IPR policies in standards organizations and the use of open standards to build the Smart Grid, but it cannot accept the systematic giveaway of IP rights.

C. “[T]here is nothing “Smart” about implementing multiple, proprietary, non-compatible... standards across the country that raise the cost of doing business in different markets.”

D. Because of the White House’s smart-grid plans, US Commerce Secretary Gary Locke noted that, “‘Companies whose business model depends on customized proprietary interfaces to lock in customers will now have to find a new business model based on open standards.’”

1. This sounds eerily similar to the argument used in the March 2008 Dutch Government’s government procurement guidelines, which sought to justify the Dutch Government’s September 2007 government action plan expressing an explicit ‘preference for open-source software in the case of equal suitability’. The Dutch Government, in effect, sought to distinguish between discrimination among individual vendors, which is anticompetitive, and a preference within a particular tender towards a specific business model that meets specific procurement needs, which it claimed is generally accepted and widespread in several areas - such as when a preference is expressed for leasing or buying capital equipment in a call for tender.

a. Interestingly, the Dutch Government’s government action plan still incorporates the EU IDABC’s EIF v1.0, pursuant to which ‘open’ standards are defined as those where “the patents possibly present [in the standard or part of it are] made irrevocably available on a royalty free basis”.

A full version of this presentation is accessible online via the www.itssd.org website at:

http://itssd.org/How%20SMART%20are%20Standards%20that%20Sacrifice%20Intellectual%20Property%20Rights%20-%20Full%20Outline.doc

US Reversal of Fortune in Brazilian WTO Cross-Retaliation

noreply@blogger.com (ITSSD Charitable Mission) — Mon, 22 Mar 2010 02:45:00 +0000

http://www.ip-watch.org/2010/03/18/the-us-cotton-case-the-truth-behind-brazil’s-cross-retaliation-against-us-intellectual-property/

The US-Cotton Case: The Truth Behind Brazil's Cross-Retaliation Against US Intellectual Property

By Pedro Paranaguá

Intellectual Property Watch

March 18, 2010

The United States awards subsidies to its cotton industry, including export subsidies. According to Brazil, such subsidies distort competition and violate World Trade Organization (WTO) rules that have been agreed to by all WTO member countries, including the US. Brazil filed a complaint with the WTO dispute settlement system challenging the cotton subsidies.

In 2005, WTO’s Appellate Body ruled that the US policies in fact violate WTO rules.

The Appellate Body ruled that the US should remove the adverse effects of certain benefits or withdraw such subsidies within six months, and that the US should comply with WTO rules.

The US did not comply with the WTO decision within the six month period, and continued to award subsidies to its cotton industry (in violation of the WTO decision). In response, in 2005, Brazil requested authorisation from the WTO to adopt countermeasures as foreseen by the WTO to induce the US to comply. A panel of WTO arbitrators granted Brazil’s request.

Accordingly, such measures taken by Brazil not only have a punishing character for the breaching of mutually agreed WTO rules, but especially they are compensatory for the illegal damages caused by the US in violation of WTO rules. Above all, the main goal of the measures is to make the US comply with the agreed rules, and therefore withdraw subsidies contrary to WTO rules.

In November 2009, the WTO arbitrators authorised Brazil to adopt countermeasures not only in goods, but also on services and intellectual property, a decision permitted by the WTO system.

To implement the WTO authorisation, on February 11, 2010 Brazil’s President issued Provisional Measure (MP) No. 482 (in Portuguese), providing for the suspension of measures or other obligations concerning intellectual property rights and other rights when WTO members fail to comply with their multilateral obligations.

Following the WTO’s authorisation and MP No. 482, on March 08, 2010 Brazil’s Chamber of Commerce (Camex) published a list of goods [pdf] (in Portuguese) (not including intellectual property) that will have their import tax rates increased to U.S. goods.

The list of goods amounts [doc] to retaliation of $591 million. The remaining compensation amount that Brazil is entitled to – $238 million (of a total of $829 million authorised by the WTO) – will be implemented on intellectual property rights and services.

This is the so-called cross-retaliation. That is, the case involves subsidies to cotton goods in the US – in violation of WTO rules – but Brazil has the right and was authorised to set compensation not only in goods, but also in regard to intellectual property rights.

It is important to clarify that at the time of the negotiations that led to the creation of the WTO in the late 1980s and early 1990s, industrialised countries – notably the US, but also the European Union and Japan – supported the cross-retaliation in one direction only: if there were violations to commitments on intellectual property rights, the violating country would be subject to retaliation in other sectors, such as trade in goods, just as occurred in the unilateral (and illegal) measures undertaken by the US before the WTO, including against Brazil.

The head of the delegation of Brazil in Geneva at the time of the negotiations, Ambassador Celso Amorim, played a key role to achieve a balanced outcome of the negotiations. Cross-retaliation in the opposite direction was thus agreed upon and allowed.

Accordingly, on March 15, 2010 Brazil issued Camex Resolution 16/2010 [pdf] (in Portuguese) for open public consultation (in Portuguese) on the measures that Brazil may take on intellectual property rights, calling on interested parties to express their views within 20 days. The Brazilian government is being cautious and transparent, and is promoting a democratic participation in the process.

The cross-retaliation may (and should) be put forward where it is determined that the suspension of concessions in the same sector will have no effect or will not be efficient, or when it is more harmful to the country authorised to establish such measures. In practical terms, should the raising of import tax on some goods from the US be harmful to Brazil, the latter is entitled to, for example, refrain from paying royalties for patented and copyrighted goods – a form of suspension of concessions and obligations on intellectual property rights.

In other words, the WTO rules provide that if the US does not comply with the rules of the organisation, as decided by the WTO Dispute Settlement Body, Brazil has the right to suspend its obligations to the US, and this can be done in another field, such as intellectual property rights.

Potential Benefits to Society, Multilateral System

If used wisely, cross-retaliation may be very beneficial to society, the industrial sector and the Brazilian consumers, who will pay less or even will not have to pay anything to buy or use, for instance, a patented product (from a US company). Society will be able to save millions with software licences, expensive books published by US publishers such as medical books, which can be made available for free on the internet, or seeds protected by plant breeders’ rights may be freely used for food production, and so on.

Cross-retaliation is a measure that benefits (i) consumers and Brazilian society, (ii) the local industry (e.g. the generics industry will be allowed to introduce patent-protected medicines), (iii) the domestic private sector harmed by the illegal measures, which will compensate the losses suffered by the illegal US subsidies, (iv) the Brazilian government, which will make sure the international rules are observed by everyone, including and especially the most powerful countries (the main advantage of multilateralism), and (v) the international community, which will benefit from the fact that one of the most powerful countries will be obliged to comply with the rules agreed by all WTO members.

Accordingly, what is more interesting in the cross-retaliation scheme is that the measure serves as an incentive for the US to comply with the WTO rules, as decided by the Appellate Body, in particular by withdrawing its illegal cotton subsidies and ending the harm to Brazilian producers (or to other WTO members).

Yet, it is important to recall that retaliation measures are not (and should not be) permanent, but rather limited in time. It only lasts as long as the US does not comply with the WTO decision and its rules.

Effective Means for Compliance

How does this incentive for compliance work? The US entertainment, biotechnology, information technology, chemical and pharmaceutical industries, among others, will protest such countermeasures by Brazil – even though Brazil is duly following in full the WTO rules. These US industries will not receive royalties (until the US complies with the WTO decision) from copyrighted music, film, books, software and patents for drugs or technologies such as spare automobile parts protected by industrial design or cotton harvester machines or machines used in the textile industry, not to mention the patents on genetically modified cotton seed varieties or patents on pesticides used in cotton farming. In this sense, Brazil can take measures that will directly benefit the producers of cotton in Brazil.

And precisely because these US industries are so economically and politically powerful (and depend on IP royalties to maximise their profits), they will pressure the US government to withdraw the cotton subsidies contrary to the WTO rules. Accordingly, Brazil is taking the best possible measures consistent with the WTO system to incentivize the US to comply with world trade rules in line with the WTO rulings against the US.

It should be reiterated that the idea of retaliation comes from the US. The US used and abused this system unilaterally and illegally over the years (against the rules of the WTO). Now, years later, the US government and its private sector are afraid to taste its own formula.

Of course Brazil may be subject to occasional malicious or incomplete interpretations, implying that Brazil does not respect US intellectual property rights. To be sure, however, Brazil is following exactly the WTO rules, as decided in the US cotton subsidies case.

Indeed, if there is someone who is not complying with the rules, it is certainly the US, and not Brazil.

ITSSD Makes Revealing Submission to the WIPO SCP Concerning Evolving Government Procurement Rules; Brazil's IP Opportunism Shows Thru Again!!

noreply@blogger.com (ITSSD Charitable Mission) — Sat, 06 Feb 2010 17:05:00 +0000

http://www.wipo.int/export/sites/www/scp/en/meetings/session_14/studies/itssd_supplement.pdf

On January 25, 2010, during the 14th Session of the WIPO Standing Committee on the Law of Patents, the ITSSD submitted a quite revealing document entitled, Supplement to ITSSD Comments Concerning the WIPO Report on Standards and Patents (SCP/13/2) Paragraph 44.

This document exposes the growing governmental effort in a number of countries around the world to reform the international law of government procurement, in tandem with desired international patent law reform proposals, such that patent-rich health-tech, information-tech and clean & alternative energy clean-tech technologies embedded in an industry or national standard, will be required to be ROYALTY-FREE or NON-PROPRIETARY, consistent with the 'PUBLIC INTEREST', in order for such a technology to be widely adopted.

In other words, a growing number of national and regional foreign governments have unilaterally decided that 'PUBLIC INTERESTS' trump PRIVATE INTERESTS because, in their view, patents are either utilitarian regulatory instruments enacted by the state to individual inventors to promote a PUBLIC INTEREST, or they are NOT PRIVATE PROPERTY AT ALL!

A recent article appearing in the Intellectual Property Watch blog makes this clear for all inventors and patent holders, the world over, to see. In addition, to trying to express direct or indirect preferences for ROYALTY-FREE or NON-PROPRIETARY technologies in government procurement regulations, foreign national and regional governments are endeavoring to expand the exceptions and limitations to and conditions on the grant of a patent, with the Brazilian government and Group of 77 African nations leading the charge! [SEE BELOW!!]

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http://www.ip-watch.org/weblog/2010/01/27/wipo-patent-committee-prepares-to-discuss-future-work-programme/

WIPO Patent Committee Prepares To Discuss Future Work Programme

By Kaitlin Mara

January 27, 2010

Discussions at the World Intellectual Property Organization patent committee this week are focussed on a series of new studies, though one of the more difficult issues on the table - exceptions and limitations to patent law - will not be substantively dealt with until the next meeting in October.

Discussions on future work for the committee, with a proposal on the table from Brazil for a new work programme on exceptions and limitations, are soon to begin and are likely to be the most difficult topic of the week. The WIPO Standing Committee on the Law of Patents (SCP) is meeting from 25-29 January.

Brazil’s proposal, available here [pdf], calls for a three-part programme for the SCP, including an information-gathering phase, in which countries share national and regional experiences; an investigative stage, to find the particular exceptions needed and conditions needed to implement them; and a final stage in which the creation of a manual on exceptions and limitations will be considered.

This work on exceptions and limitations is necessary, the Brazil proposal said, as countries are now “facing a moral deadlock” where “developed countries seem to be the only ones capable of reaping any advantage from the [IP] system,” and it is unclear what benefit membership in WIPO is bringing other states.

“The naïve assumption that providing IP title holders with stronger rights will, by itself, foster innovation or attract investments is no longer acceptable… creativity and creative economy do not rely solely on an increasingly stronger” IP regime, the proposal adds. The claims of rights holders “are undoubtedly legitimate, but certainly incomplete from the perspective of the public policy.”

The proposal received strong support from developing countries, though some developed countries said the time was not yet right to discuss it, as the proposal was only circulated Monday afternoon of the weeklong meeting.

The official study on exceptions and limitations - which the committee decided to undertake at its last meeting in March (IPW, WIPO, 30 March, 2009) - is not yet finished, but WIPO sources said it would be by the next meeting in October. The report is still currently with an external group of experts who were commissioned to write it.

Brazil’s proposal further says that there is precedent for this kind of work in Article 30 of the Trade-Related Aspects of Intellectual Property Rights agreement at the World Trade Organization. This article lays out a sort of “three-step test” to establish acceptable limits and exceptions.

Also this week, several small developing countries are trying to ensure that their particular needs are being addressed.

A representative of one of these countries said “WIPO should move from the one-size-fits-all approach,” and asked that their particular situations be reflected in the exceptions and limitations studies and in Brazil’s proposed work programme. This includes help with understanding what rights are available to them, how they may be used, and what political pressure they may receive to avoid using them as well as an analysis of what particular rights are most relevant to small countries in their individual contexts.

New Studies

The rest of the discussions this week have focussed on four new studies: one on client-patent advisor privilege, one on technical solutions to improve access to and dissemination of patent information, one on transfer of technology, and one on opposition systems.

Technical solutions for patent information access primarily revolve around the possibility of digitising such information. Digitally formatted patent information “is still limited globally,” the WIPO report [pdf] notes, especially in “searchable full-text format.” What information is available is often hard to interpret for users not specialising in IP law. And when information is available, it is often not free, which can be burdensome for small patent offices and small companies alike, the report says.

Transfer of technology is considered a critical issue in several international fora, and is often cited as one of the key ways to assist in economic development of poor countries, and to aid in the global fight against climate change. The way in which IP may either incentivise or prevent such transfer has been a subject of much debate.

The WIPO study, available here [pdf], explores this debate. It says “no conclusive evidence can be found with respect to the relationship between patent protection and the transfer of technology,” but does present findings from economic studies on the issue as well as a look into different ways and systems through which technology transfer might be achieved.

Three-Step Test For Patents?

This week the Free Software Foundation of Europe is proposing the committee consider using a three-step test on whether a particular type of knowledge should become patentable subject matter or not.

These three steps take the form of questions: “1, is there a demonstrated failure of the market to provide innovation in this area?; 2, are there demonstrated positive effects of disclosure from patenting in this area?; 3, in this area, does the patent system work effectively to disseminate knowledge?”

"Patents are a form of regulation, and constitute state intervention in the market," said Karsten Gerloff, president of the FSFE. And, he added, “as with any regulation and intervention, the first consideration must be to do no harm.” These questions should help ensure that patents aid the cause of innovation, he added.

William New contributed to this story.

Climate Change: Technology Transfer or Compulsory License?

noreply@blogger.com (ITSSD Charitable Mission) — Sat, 16 Jan 2010 17:19:00 +0000

Climate Change: Technology Transfer or Compulsory License?

By: Lawrence A. Kogan, Esq.

President, Institute for Trade, Standards, and Sustainable Development (ITSSD)

Presented at

American National Standards Institute (ANSI) Monthly Caucus Luncheon

January 15, 2010

I. Introduction and Welcome

II. Overview of the Copenhagen Conference

A. Legal Objective:

B. Political Problems:

· Lack of Trust in GHG Emissions Reduction Verification

· Clean/Green Technology Patent/Trade Secret Protections at Risk

o Officials from China, India and Brazil have proposed that new green technologies be made subject to “compulsory licensing”, which is tantamount to waiving IPRs.

§ UNFCCC Arts. 4.3 and 4.5
§ WIPO General Assembly Cluster C “Technology Transfer, Information and Communication Technologies and Access to Knowledge”

C. Non-Legal Result/Outcome: A limited and nonbinding instrument known as the “Copenhagen Accord”.

· Flaws in the UN process, which demands consensus among the members of the international community, were exposed at Copenhagen and caused chaos.

o E-10 group of countries – largest GHG emitters would include: the United States, the European Union, China, Russia, India, Japan, Canada, South Africa, Australia, and Brazil.

III. Top-Down Proposed International Solutions to the Broader Problem that Threaten to Adversely Reform International Regulation of IPRs:

A. Creation and execution of a Doha Declaration on Climate Change:

B. Creation of Multilateral and/or Intergovernmental Funds:

· Fund grants would be subject to “Global Access Principles”, which would set forth rules for the international management of IPRs.

· Funds would create an additional UNFCCC bureaucracy and outside ‘expert’ committees.

C. Proposals Made Within the WIPO Standing Committee on the Law of Patents:

· SCP/14/4 pars. 86-87; 122-123.

· SCP/13/3 at par. 142.

· SCP/13/3 at pars. 13, 46, 91-93 and 141-142; SCP/13/2 at pars. 141-142.
o http://www.wipo.int/export/sites/www/scp/en/meetings/session_14/studies/itssd_2.pdf

· Mandatory ‘open’ ‘royalty-free’ patent-rich standards coupled with Patent Pools and/or Licenses of Right are favored solutions.

§ http://www.wipo.int/export/sites/www/scp/en/meetings/session_14/studies/itssd_1_summary.pdf
§ http://www.wipo.int/scp/en/meetings/session_14/studies/itssd_1.pdf

D. Top-Down Patent and Standardization Proposals Made by the Chinese Government at the National Level with International Consequences:

· China 2005 proposal to WTO Technical Barriers to Trade (TBT) Committee G/TBT/W/251, G/TBT/W/251 Add.1. (2005)).

· The Standardization Administration of China (“SAC”)’s recently drafted Proposed Regulations for the Administration of the Formulation and Revision of Patent-Involving National Standards, mandate free-of-charge or FRAND at a price significantly lower than normally royalties patent licensing. Articles 8, 9, 12 and 13.

§ This will have a severe impact on US clean/green technologies.

§ “Only one of the top ten solar photovoltaic (PV) producers in the world is American; only one of the top ten wind turbine producers is American; and only two of the top ten advanced battery producers are from the U.S.

IV. Is There Still a Sufficient Incentive to Innovate in Clean/Green Technologies After Copenhagen and With China in Mind?

· IPRs patents and trade secrets subject to reverse-engineering.

· Costs of compliance will increase to reach GHG reduction targets and reduce job creation.

V. US Domestic Considerations

A. Top-Down Proposed US National Solutions:

· Condition federally funded government patent grants to universities and private parties on the licensee’s exhaustion of the patent on compliance with ‘humanitarian licensing clauses’. (e.g., US NIH)

· Reform Bayh-Dole legislation

B. Bottom-Up University Alternative Licensing Solutions:

· Some US universities have begun to change their licensing practices to incorporate ‘humanitarian’ or ‘open licensing’ policies.

o Humanitarian

o Open Licensing

§ Equitable Access Licensing Clauses

§ Reach-Through Licensing Clauses

VI. Which do you prefer: Tech Transfer or Compulsory License?

A full version of this presentation is accessible online via the www.itssd.org website at:

http://itssd.org/LKogan%20-%20Climate%20Change%20-%20Technology%20Transfer%20or%20Compulsory%20License%20-%20ANSI%20Luncheon%201-15-10.doc

Experienced Judicial Hand Expresses Intent to Create 'Do No Harm' Think Tank to Protect US Patent System From Congressional Overreach

noreply@blogger.com (ITSSD Charitable Mission) — Wed, 02 Dec 2009 16:11:00 +0000

http://online.wsj.com/article_email/SB20001424052748704107104574569791106477288-lMyQjAyMDA5MDAwMjEwNDIyWj.html

Retiring Patent Judge May Start Think Tank

Michel Plans to Press Congress Not to Meddle With Current US System for Deciding Disputes Among Businesses

By Kristina Peterson

Wall Street Journal

December 2, 2009

The retiring chief judge for the federal patent appeals court may start his own intellectual- property think tank, where he will press for limited congressional meddling in U.S. patent law.

"Once I'm a retired judge, I can make a public nuisance out of myself," U.S. Federal Circuit Court of Appeals Chief Judge Paul Michel said in an interview this week in his chambers. "I think that's needed."

The Federal Circuit, based in Washington, handles all appeals of patent cases decided by a federal trial court. The appeals court also hears cases involving trademark law, government contracting, international trade and other matters.

Congress is in its third attempt since 2005 to overhaul U.S. patent laws. Judge Michel said when he retires in May 2010 he will be "unmuzzled" in the debate, particularly on the issue of how damages are apportioned in patent disputes.

The 68-year-old judge conceded that Congress has a role in shaping the patent office's growing authority and responsibilities. But when it comes to managing patent litigation, the courts should hold sway, he said.

A sweeping bill dictating broad rules for where cases are heard, how damages are determined and nailing down patent concepts like "willfulness" would be too rigid, he said.

Judge Michel may yet get a chance to speak directly to the congressional patent effort. After clearing the Senate Judiciary Committee earlier this year, patent-law changes have bogged down as lawmakers attempt to settle disagreement between big and small companies over the impact of changes in the bill.

"If they get it a little wrong, it will do a lot of harm," Judge Michel said of Congress.

His court hears between 20 and 30 patent cases every month.

"We can continue to adjust, modify and clean up unintended consequences," he said, referring to the federal courts.

Politicians and their staff would also benefit from hearing a wider array of opinions before changing the patent system, Judge Michel said.

No judges have testified before Congress on the topic, he noted.

"No judge was ever called as a witness, which seems to me a bit odd," he said. "It's mostly corporate people from a limited number of companies."

As chief judge since Dec. 25, 2004, Judge Michel has authored opinions for a steady stream of significant patent cases.

"He's written a prodigious number of opinions and very influential ones," said Philip Johnson, chief intellectual-property counsel of Johnson & Johnson.

Recently, the U.S. Supreme Court decided to revisit several of his court's decisions. Judge Michel acknowledged he was surprised that the high court chose to hear Bilski v. Kappos. In the opinion written largely by Judge Michel, the federal court ruled that methods of doing business generally cannot be patented, and the U.S. solicitor general urged the court not to take the case.

Judge Michel shrugged off the Supreme Court decisions in patent cases KSR v. Teleflex and eBay v. Merc Exchange, each of which overturned part of the lower court's decision.

"That's the way the system is supposed to work," he said. "They made significant adjustments, but they haven't bashed down the work of the federal circuit."

Among the changes Judge Michel brought to the court since taking over as chief is a pilot program requiring parties to go through mediation before starting litigation. Every year, between 30 and 40 major patent cases reach agreement before even entering the courtroom, he said.

"We can't make them settle, but we can make them show up," he said. Before his appointment to the court, Judge Michel worked for Sen. Arlen Specter (D., Pa.) when he was the Philadelphia district attorney and later on Mr. Specter's Senate staff.

As an assistant Watergate prosecutor, he investigated former President Richard Nixon's slush fund and the president's secretary, Rosemary Woods. When he was president, Ronald Reagan appointed Judge Michel to the federal appellate court in 1988.

US Ag Continues to Hold US Drug Patents and ICT Copyrights Hostage to Brazilian Trade Cross-Retaliation - It's Time for Obama's USTR to Wake Up!

noreply@blogger.com (ITSSD Charitable Mission) — Mon, 23 Nov 2009 13:41:00 +0000

[The following articles reflect what ITSSD research had predicted would likely occur back during 2005, as the result of the WTO finding US Ag subsidies illegal vis-a-vis competing Brazilian farm exports. See Slavi Pachovski and Lawrence Kogan, The Wolf and the Stork: How Brazil's Breaking of Drug Patents Threatens Global Trade and Public Health, ITSSD (June 14, 2005), at: http://www.itssd.org/White%20Papers/TheWolf_and_theStork-Brazil_snon-patentabilitylaw.pdf ].

http://www.ip-watch.org/weblog/2009/11/17/brazil-issues-retaliation-list-of-us-products-ip-protected-items-in-next-round/

17 November 2009

Brazil Issues Retaliation List Of US Products; IP-Protected Items In Next Round

By Claudia Jurberg

for Intellectual Property Watch @ 12:45 pm

Brazil has announced the list of 222 American products that could suffer retaliation with tariff rates of more than 100 percent of the value when imported to Brazil. The list could be followed by another including potentially hundreds of millions of dollars in non-tariff items related to intellectual property rights such as lower-priced patented pharmaceuticals.

The retaliation list [pdf http://www.mdic.gov.br/arquivos/dwnl_1257771150.pdf ] was announced on 9 November and is open for public consultation until 30 November, said Lytha Spíndola, executive secretary of the Board of Foreign Trade (in Portuguese, Câmara do Comércio Exterior - Camex). The Brazilian government hopes to receive contributions from entrepreneurs who belong to associations or federations of the same branches of trade as those that would be affected by the tariffs.

The first retaliations will be applied to US products in January 2010, said Spíndola. The World Trade Organization (WTO) authorised Brazil to retaliate against products from the United States in the amount of US$ 900 million in exchange for past illegal US agricultural subsidies. Arbitrators used the year 2006 as a baseline for the ruling. Of the total amount ($900 million), half is expected to be in products facing tariffs. The other 50 percent, $450 million, could be applied to services and intellectual property, in a situation called “cross-retaliation.”

Cross-retaliation (retaliation in a trade area other than the one in violation) is permissible under WTO rules and could be used to lower prices on patented pharmaceuticals. According to the Camex executive secretary, the second stage sanctions involving exceptions to patents on drugs and more tariffs in services only will occur after the implementation of the first product tariffs. And a public consultation also will be held. Exceptions to patents such as compulsory licences already are permitted under WTO rules, but could be made easier through WTO sanctions.

The National Institute of Industrial Property [corrected], under the Ministry of Development, Industry and Commerce, is awaiting instructions to participate in a discussion on creation of a list of patent exceptions. The technical staff from the institute do not yet have details on retaliation in the area of intellectual property.

On 10 December, there will be a meeting of seven ministries involved with this subject and Camex. During this meeting, they will analyse the public suggestions to list. Of the content of these 222 products, the list includes food, medicine, medical equipment, cotton, appliances, cosmetics, and accessories for vehicles. According the Commerce Ministry, the total value of the list is $2.7 billion, and some products may be excluded.

At the end of August 2009, the Brazilian government was authorised by the WTO, after a seven-year battle, to retaliate against US products because subsidies to US farmers and cotton industry were judged inconsistent with WTO rules and harmful to Brazilian cotton exports (IPW, WTO/TRIPS, 7 September 2009 - BELOW). That action damaged the cotton markets of developing countries such as Brazil.

The Ministry of Foreign Relations (in Portuguese, Ministério das Relações Exteriores - MRE) said that during the process of arbitration the country formally requested countermeasures of U$ 2.5 billion and asked for freedom to choose other areas of retaliation, such as intellectual property rights, and not only use tariffs on imported products.

Employing the WTO rule on cross-retaliation, according to the Ministry of Foreign Relations, besides being a legal instrument, was justified in the face of the severity of the violation. Although the value stipulated by WTO was not equal to what Brazil asked, the ministry issued a statement that said: “it is a significant value, the second highest authorised in the history of WTO.”

If Camex really applies the retaliation in 2010, it will be the first time that Brazil has used this kind of response. The country received six opportunities in the past, but so far never used this authorisation.

Claudia Jurberg may be reached at i nfo@ip-watch.ch.

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http://www.ip-watch.org/weblog/2009/09/07/wto-ruling-on-brazil-cotton-opens-door-to-cross-retaliation-against-ip-rights/

WTO Ruling On Brazil-US Cotton Opens Door To Cross-Retaliation Against IP Rights

By Catherine Saez@ 5:40 pm

Intellectual Property Watch

7 September 2009

The World Trade Organization has issued an arbitration report in a dispute between the United States and Brazil over US cotton subsidies, giving Brazil the right to use trade countermeasures against the US, and in certain circumstances to suspend intellectual property obligations.

[Note: Brendan McGivern of White & Case in Geneva has issued an analysis of the WTO decision, available here.]

Brazil claims that the volume of US subsidised transactions is already higher this year than the reference year used by the arbitrators, which means a threshold provided in the report would be exceeded and make it possible for Brazil to suspend IP obligations. The US reaction to the arbitration report was relief about the amount of countermeasures granted to Brazil although domestic US producers denounced the WTO ruling.

In 2002, Brazil filed for WTO consultations with the United States over subsidies to cotton producers. In 2003, a panel was formed, which in 2005 found the US in violation of its WTO commitments on subsidies. In 2005, the US took measures to comply with the ruling, but in 2006, Brazil requested a panel on US compliance, which issued a report in December 2007 finding the US had not complied correctly.

In February 2008, both the US and Brazil appealed. In June 2008, the appellate body report was adopted upholding the ruling of the compliance panel that the US is inconsistent with WTO agreements and maintaining the recommendations and rulings adopted by the Dispute Settlement Body in 2005.

In August 2008, Brazil requested resumption of arbitration relating to its request for retaliation. The arbitrators decided in their report that Brazil could retaliate in proportion to the amount of US subsidised transactions on cotton, found in violation of WTO rules.

According to the WTO, the US has no further possibility of appeal in this case and Brazil can apply the awarded countermeasures after the WTO Dispute Settlement Body gives its green light, probably later this month.

The suspension of IP rights obligations under the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) or the General Agreement on Trade in Services (GATS) was awarded twice before by the WTO in a procedure described as cross-retaliation. Cross retaliation was awarded to Antigua and Barbuda in a dispute with the United States over internet gambling and to Ecuador in a dispute with the European Union over the EU banana import regime.

Cross-retaliation was awarded after a WTO member was found in violation of trade rules, and it was determined that retaliating in the same sector as the violation could prove more harmful than not for the winning country.

Mixed Outcome

In the case of Brazil, the arbitrators agreed that the country could suspend certain obligations under the TRIPS and/or the GATS as retaliation for US subsidies but conditioned it on a yearly threshold calculated according to a formula based on Brazilian imports of US consumer goods, according to the WTO arbitrators’ report.

Brazil had claimed the value of retaliation should be a total of approximately $2.68 billion, according to sources. Its claims were based on several elements. The first was a claim on the US “Step 2” programme, found in violation of trade rules by the WTO in 2005. The others were an export incentive programme for agricultural products called GSM 102, a claim on US marketing loan and countercyclical payments, and a claim to suspend IP rights obligations under TRIPS and GATS.

The suspension of obligations under TRIPS and GATS by the arbitrators would be over and above countermeasures permitted to be taken by Brazil and would be applicable only if the threshold is reached.

The Step 2 programme issued marketing certificates to US domestic mills to help reduce the gap between the price of US and foreign cotton, according to the National Cotton Council. This programme was declared by a WTO panel to be in violation of trade rules and the US asked to dismiss this programme by a deadline of July 2005. However, the US complied a year later. Brazil sought compensation for the period of non-compliance. This request was dismissed by the WTO arbitrators.

The GSM 102 payments, also called export credit guaranties, are incentives to exports of agricultural products overseas.

The WTO arbitrators found this programme not compliant with trade rules and awarded Brazil a possibility of countermeasures in the amount of US$ 147 million based on 2006 figures. This amount is subject to reassessment every year and depends on the volume of GSM 102 payments.

For marketing loan and countercyclical payments, which are direct domestic subsidies to compensate lower market prices for cotton, the WTO arbitrators decided on an annual level of countermeasures also in the amount of US$147 million.

Brazil Rejoices, Foresees Higher Countermeasures in 2010

Brazil said in a release that “the value [of the award] is significant, being the second-largest amount ever authorised in the history of the WTO.”

The countermeasures on the GSM 102 programme have to be recalculated every year, and Brazil estimated the possible countermeasures in 2009 could be in the realm of US$800 million. If this estimation proved right, Brazil would be able to use cross retaliation on some US intellectual property or services.

Following the arbitrators’ decision, the suspension of IP rights obligations will only be possible after the amount of permissible countermeasures goes above a threshold determined by the set calculation. In the fiscal year 2007, the threshold would have been US$409 million, a Brazilian official told Intellectual Property Watch. In 2009, it might reach US$460 million, he said, above which Brazil would be able to cross-retaliate.

Brazil said “the present award contributes to strengthen the WTO dispute settlement mechanism, demonstrating that the system is capable of recognising the evident asymmetries between developed and developing countries.”

USTR Philosophical, US Cotton Producers Irked

The Office of the US Trade Representative in a release expressed disappointment with the WTO ruling but said it was “pleased that the arbitrators awarded Brazil far below the amount of countermeasures it asked for” and “grateful that the arbitrators denied Brazil’s request for unlimited ability to suspend concessions on intellectual property or services.”

USTR spokeswoman Carol Guthrie stated that, “At this time, we do not know when or if Brazil will move to obtain final authorisation to suspend concessions or when or if Brazil would act on any such authorisation.”

The National Cotton Council along with the North American Export Grain Association, CoBank, the Farm Credit Council, US Rice Producers Association and the National Council of Farmer Cooperatives released a statement on 2 September on the WTO ruling.

They voiced their disappointment and argued that the WTO panel had based its decision on the GSM program that was in use in 2005 without taking into account the “significant changes” that had been made since.

They urged the US government to request a new compliance panel to update the ruling so that it reflects the changes in the GSM program by the US Congress and the US Department of Agriculture.

William New contributed to this report
Catherine Saez may be reached at c saez@ip-watch.ch.

US Congress Should NOT Enact Costly Patent Review Procedures That Expose Small Inventors To Big US & Foreign Company IP Poachers

noreply@blogger.com (ITSSD Charitable Mission) — Sun, 08 Nov 2009 20:03:00 +0000

http://online.wsj.com/article/SB125728918217026407.html

Proposed Change in Patent Policy Pits Big Firms vs. Small

By KRISTINA PETERSON

Wall Street Journal

Nov. 4, 2009

WASHINGTON -- Congress is considering an overhaul of U.S. patent policy that would bring the first major changes in more than half a century. But a disagreement between big and small companies over one aspect of the bill could derail its passage.

The effort marks the third time in five years that lawmakers have tried to change the nation's patent laws, as they have struggled to balance the competing interests of big technology companies, small start-ups and individual inventors.

The bill would seek to bring the U.S. patent system in line with international standards and streamline the operations of the U.S. Patent and Trademark Office, which is facing a backlog of applications.

The Senate Judiciary Committee approved one version of the bill in April, shortly after the introduction of a similar measure in the House. Democratic and Republican staff members from the House and Senate committees are negotiating changes, and hope a widely acceptable version will hit the Senate floor this fall.

The most contentious aspect of the bill concerns what happens after the patent office approves an application. The Senate measure proposes expanding the avenues for challengers to ask the patent office to examine already-granted patents.

The office currently has two systems for reviewing approved patents. One method permits challengers to remain more involved in the review, while the requester has only limited participation in the other. In the last fiscal year, there were 2,120 pending re-examinations, including both types.

The new re-examination process would bring complaints on a broader range of challenges in front of patent judges rather than patent examiners to create the atmosphere of a court inside the patent office, but without the expense of litigation. Rulings would occur on a tight timeline: within a year from the filing date. The new bill would also change the way subsequent challenges to the same patent can be made. Critics say it would become easier to launch serial attacks.

The proposed new review process is pitting larger, established companies against smaller or start-up firms.

Many big technology companies argue that the proposed process would strengthen the patents that make it through. The review would be "essential to maintaining high-quality patents because it allows the validity of questionable patents to be tested," said Horacio Gutierrez, deputy general counsel of Microsoft Corp. International Business Machines Corp. in a statement called the process "a low-cost alternative to litigation."

Many small companies and research universities fear that deep-pocketed businesses could attempt through the review to keep innovative products from hitting the market. The National Venture Capital Association and other critics said it could be harder for start-ups to secure funding if their patents were targeted by repeated attacks.

"This may be catastrophic for a start-up or small inventor," said Dean Kamen, inventor of the Segway, a personal electric scooter. "You get this young guy who quit his job to make this gizmo and he shows up at the bank or to his father-in-law. The first thing the bank or that venture capitalist will say is, 'Do you have a patent?'"

A dozen Republican senators voiced support for the smaller firms in an Oct. 15 letter to leaders of both parties. Congressional aides said that unless both sides could reach agreement, lawmakers were unlikely to introduce the bill for a floor vote in the Senate, which is tackling health care and other issues.

David Kappos, director of the U.S. patent office, said he had urged lawmakers to set a high threshold for reviews. He also wants safeguards against serial attacks on patents.

A coalition of major technology companies, the Coalition for Patent Fairness, voiced disagreement in a letter to Mr. Kappos in September. "We would very strongly oppose changes to the Senate and House bills that would dilute in any way the efficacy of post-grant challenges," the letter said.

If this Congress doesn't pass patent legislation, it won't likely come up again soon. In the two previous congressional sessions, attempts at passing patent legislation collapsed.

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http://online.wsj.com/article/BT-CO-20091015-718144.html

Senators, Inventors Criticize Patent Bill Favored By Tech Cos

By Kristina Peterson

Of DOW JONES NEWSWIRES

Wall Street Journal

Oct. 15, 2009

WASHINGTON (Dow Jones)--Twelve Republican U.S. senators on Thursday sent a letter to Senate leaders criticizing pending patent legislation, saying the bill "threatens to diminish the value and enforceability of U.S. patent rights."

The Oct. 15 letter backs criticism against the legislation being levied by independent inventors and academics who argue the bills favor major technology companies. If approved the legislation would be the most sweeping rewrite of federal patent law in 50 years.

Critics say two similar bills now in Congress would broadly make it harder for individuals, universities and start-ups to defend their inventions against companies with deeper pockets. Opponents are also upset that Obama administration officials with past ties to International Business Machines Corp. (IBM) and Microsoft Corp. (MSFT) are supporting the bill.

At issue is a provision giving outside challengers expanded ability to initiate review of newly approved patents. "These so-called post-grant review provisions, as currently crafted, are quite problematic," the Republican senators said in the letter written by Sen. Sam Brownback, R-Kan., and signed by 11 other Republicans.

Microsoft and IBM are two of the most active companies involved in filing patents; IBM, for example, earns over $1 billion each year in intellectual property-related income. Both companies have ties to top government officials with authority over patent policy, including U.S. Patent and Trademark Office Director David Kappos.

In testimony before Congress last March, Kappos - who was, back then, the head of intellectual property at IBM - praised the post-grant review. Kappos, who spent 26 years at IBM, said in an interview Thursday that he recuses himself from IBM-specific matters and has taken pains since his appointment to listen to the concerns of independent inventors.

"If I wanted to do the right thing for a specific company, I could have stayed there," he said. IBM declined to comment.

Kappos also said he told lawmakers in private meetings they should establish a high threshold for reviews and include safeguards against serial challenges.

But even one post-grant review can cause an inventor to lose market advantage and venture capital funding.

"Patent certainty is critical to the ability of a venture capitalist to be able to invest," said Kelly Slone, director of the National Venture Capital Association's medical industry group. More than a dozen research universities have also sent letters opposing the post-grant review provision.

Microsoft, too, has connections in the Commerce Department. Marc Berejka, a senior official handling intellectual property matters, worked for Microsoft for the 12 years leading up to his July 2009 hiring, including eight years as a lobbyist for the company.

Commerce Secretary Gary Locke, who endorsed most of the bill in an Oct. 5 letter, received campaign donations from Microsoft employees as Washington state governor. Locke accepted $96,900 in cash donations from company employees while running for re-election in 2000, according to state public records. In total, Locke raised $3.8 million in that election cycle. He also owned between $100,000 and $250,000 of Microsoft stock until divesting it on June 22 as a condition of his appointment.

A Commerce spokesman said the agency is deferring to Congress on how to alter patent laws.

Pat Choate, an economist and board member of American Innovators for Patent Reform, said he was troubled by the process. "Patent policy is suddenly being run by advocates for Microsoft and IBM," Choate said.

But some representatives of small companies say they think the government is trying to work in good faith.

"It is certainly the case that big companies have a lot of very well-qualified people who work with them and then go and do other things," said Brian Pomper, executive director of Innovation Alliance.

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http://www.i-newswire.com/opposition-grows-to-post-grant/8089

Opposition Grows to Post-Grant Review Provisions in Proposed Patent Reform Act of 2009

(I-Newswire) October 20, 2009 - New York, N.Y. – October 20, 2009 – “Patent policy is suddenly being run by advocates for Microsoft and IBM,” says Pat Choate, noted economist and writer, and a board member at American Innovators for Patent Reform (AIPR), a nonprofit organization dedicated to promoting and defending American innovation.

Dr. Choate was quoted in an article, “Senators, Inventors Criticize Patent Bill Favored by Tech Cos,” that appeared in the Friday, October 16, Wall Street Journal and was distributed by the Dow Jones Newswire Service. Dr. Choate’s comment was in response to criticism that U.S. Patent and Trademark Office Director David Kappos spent 26 years at IBM, and Commerce Secretary Gary Locke received campaign contributions from Microsoft employees.

At issue is proposed post-grant review provisions in the pending Patent Reform Act of 2009 that would give third parties – such as IBM, Microsoft and other giant high tech corporations – expanded ability to challenge newly issued patents. The Wall Street Journal article also addressed another challenge to the Patent Reform Act of 2009 that came from 12 Senators who co-signed a letter from Sen. Sam Brownback, a Republican from Kentucky. In the letter, the senators wrote that the proposed legislation “threatens to diminish the value and enforceability of U.S. patent rights.” The letter also stated that the Senators found the proposed bill’s post-grant provisions to be “quite problematic.”

About American Innovators for Patent Reform

Headquartered in New York City, American Innovators for Patent Reform (AIPR) represents a broad constituency of American innovators and innovation stakeholders, including inventors, engineers, researchers, entrepreneurs, patent owners, investors, small businesses, and intellectual property professionals such as patent attorneys, patent agents, tech transfer managers and licensing executives. AIPR opposes the Patent Reform Act of 2009 (H.R. 1260 and S. 515) and its proposed apportionment of damages, post grant opposition and a change to the first-to-file regime. AIPR advocates strengthening the U.S. intellectual property regime and increasing the funding of the U.S. Patent and Trademark Office. AIPR advocates patent reform that creates a multi-tier patent system, synchronizes patent and copyright laws, and clearly strengthens U.S. patents.

For more information about AIPR, please visit www.aminn.org .### About American Innovators for Patent Reform: Trade association representing inventors, patent owners and patent professionals that promotes strengthening the US Patent system.Company Contact Information American Innovators for Patent Reform 244 Fifth Avenue, Suite A253 New York, New York 10001-7604 Phone : 212-726-1114

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http://www.patentfairness.org/pdf/whitepapers/What_Needs_To_Change_FINAL.pdf

What Needs To Change

White Paper By: Coalition for Patent Fairness

The Coalition for Patent Fairness supports a modern and efficient patent law that will promote innovation and spurs job creation and economic growth by encouraging commercialization of new and better products and services.

Post Grant Review

Improving the existing process for challenging questionable patents will lead to better patent quality and will benefit everyone: patent holders, patent users and consumers. Allowing third parties to institute a reexamination early in the process will clarify the breadth and applicability of these patents, thereby leading to fewer later challenges. Patent reform legislation should establish a new administrative procedure for review of patent decisions so that wrongfully-issued patents can be effectively reviewed and redressed within the PTO, rather than in the courts.

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http://www.patentfairness.org/pdf/whitepapers/MythvsFact_Patent_FINAL.pdf

Myths and Facts of Patent Reform

White Paper By: Coalition for Patent Fairness

(p.3)...

MYTH: Patent Reform Act of 2009 would hurt American competitiveness by empowering Chinese and Indian citizens to both evade their intellectual property obligations and undermine the interests of American inventors.

FACT: This is a fanciful charge without any basis in the provisions of the 2009 bill. Improving patent quality – ensuring that only meritorious inventions receive a patent – is a high priority of the bill. Every witness at the more than 20 hearings held over the past three Congresses testified that poor patent quality creates severe and immediate problems. [THIS IS TRUE]

The Patent and Trademark Office (PTO) proposed establishing a post-grant opposition system to challenge patents. As introduced, HR 1908 (the Patent Reform Act of 2007) adopted the PTO’s proposal. It would have created a post-grant opposition mechanism enabling challenges of patents within 12 months of their being issued, or at any time during the life of the patent – the so-called "second window" – if the challenger could meet certain very rigorous criteria.

The bill as introduced came under considerable criticism, primarily by US drug makers. Their objection was limited to the "second window." They argued that the ability to challenge a patent at any time would empower the very kind of challenges those quoted in the India Times greet with such glee.

The Judiciary Committee took these concerns to heart. The 2009 bill no longer has a "second window" for post-grant opposition. The bill permits challenges only in the first 12 months after a patent is granted. For most drugs, because its takes about 7 years after the patent is granted to begin selling the drug, these challenges will simply not be available when a drug is actually marketed. [PERHAPS. BUT THE PROPOSED POST-GRANT REVIEW PROCEDURES STILL RENDER SMALL INVENTORS AND START-UPS VULNERABLE TO LARGE OPPORTUNISTIC U.S. AND FOREIGN IP POACHERS].

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http://www.onestopinventionshop.com/AboutUs/ArticlesByEricDebelak/patentreformact2009.html

The Patent Reform Act of 2009

The Patent Reform Act of 2009 is a bill that has been causing lots of controversy ever since Senators Orrin Hatch and Patrick Leahy introduced a Senate bill on March 3, 2009 and Representative John Conyers introduced the House version of the bill on the very same day. This bill is very similar to the Patent Reform Acts of 2005 and 2007 and, although some of the controversial parts have been taken out, if this bill is passed, it will be disastrous for small and independent inventors. The good news is you can take part in the effort to stop this bill. We talked to retired patent examiner and registered patent agent, Albert W Davis Jr, Reg. No. 38773, to talk about why the patent office needs change, but how this bill is the wrong kind of change for inventors and what he suggests to do to stop it.

First, we will give you a very brief rundown of a few of the major aspects of the bill.

If the Act was passed, one of the major results would be a big change in the way patent infringement litigation works and the amount of damages an inventor can receive if his or her patent is infringed upon. The Act would do this in the following ways: only allowing the plaintiff to bring a suit in the states where the defendant has a physical place of business, broadening the use of appeals, creating stricter criteria for "willful infringement" and "reasonable royalty" and allows defendants to win with a "good faith" defense, in effect saying they didn't know they were infringing or they thought your patent was unenforceable or invalid. All of these changes greatly favor big businesses that infringe on inventors' patents and greatly limits inventors chance to be reimbursed when a company steals their idea.

Other important aspects of the bill are that it would allow any party to challenge a patent within 12 months of being issued and the system would switch from a first-to-invent system, to a first-to-file system. Both of these changes heavily favor large corporations, with lots of money to spend, and makes it harder for often under-financed small inventors.

One of the difficulties of this bill is that almost everyone is calling for reform of the Patent Office.

As Davis says:

Right now the cost of attaining a patent has risen substantially. That is because the Agent or Attorney for the Applicant (Inventor) has to answer more rejections from the Patent Office. Each rejection costs more money to the Applicant in fees paid to argue the rejection. This situation has been brought about because, for the last 6 years at least, the Patent Office has not been functioning correctly. Examiners are afraid to issue or "allow" patents because of a review by the Quality Group of the Patent Office on applications that are issued into patents. Even the smallest mistake in the allowed or issued patent is treated as a critical error. Then, Quality Review goes back through the last 10 applications that the Examiner has issued or allowed. Again, it is easy to find a minor error in any application. These minor errors are then used to prevent advancement, demote or possibly fire the Examiner.

So, what the Examiners are doing is to reject most applications whether the rejections are good or not. Then, the Applicant can only re-file the application or appeal to the Board of Appeals. All of this costs the Individual Inventor a lot of money. Eventually, the Inventor may run out of money or just give up because the system does not make sense.

But, as Davis adds,

"This bill does nothing to cure the current problems of the Patent Office and adds more expenses to getting a patent by subjecting the patent to more attacks by big companies." So instead of reforming the patent system, the Patent Reform Act is really just an attempt by big businesses to run over small inventors. So why don't more people speak out? "The issues are complex so it is not always obvious that they are bad for the Individual Inventor. But, the bill is bad. Call your congress persons local office and tell them to vote against the bill and save the Individual inventor," says Davis.

So who is supporting the bill? One of the big supporters of the bill is the Coalition for Patent Fairness. Over the period of 1996-2006, seven of the corporations who lead this coalition are responsible for paying out half of all awards given in patent infringement lawsuits! Simply said, this bill is supported by patent infringers who want to continue to steal patents, but not pay for them.

So what can we do to stop this bill? "Call your Congress person every day until they agree to help stop the current bill of Sen. Leahy, really misnamed the Patent Reform Act. It should be named the Patent Deform Act," says Davis. You can find your congress people at this website: http://www.congress.org/.

So does the Patent Office have hope for the right kind of change? "I believe that the Patent Office will become functional in a little while," says Davis, "maybe this year but probably next year."

Davis continues:

While I worked there, the Patent Office changed several times. Currently, there is a money pressure on the Office because they are receiving a lot fewer Maintenance Fees and Allowance fees. Also, there is a big back-up at the Board of Appeals because Applicants have appealed all of the suspect rejections. The Board will not be able to keep up in a timely fashion with this new workload. Congress made the Patent Office guarantee that the average time to abandonment or allowance would not exceed 18 months. The Office is way over 18 months pendency now and has a 1,000,000 applications waiting for a first action. These pressures will eventually cause a change in the Office to a more rational approach to rejecting and a more rational approach to Quality.

Inventors should try to hang in until the change occurs. Inventors can re-file their applications for very little money and add a new set of claims to prevent a first action Final Rejection.

There hasn't been an overhaul of the patent system since 1952, but let's make sure we get the right change. Contact your Congress persons today.

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http://www.reuters.com/article/pressRelease/idUS96463+13-Apr-2009+BW20090413

General Patent Corporation Calls New Patent Reform Bill Harmful to Inventors and Entrepreneurs

Reuters

April 13, 2009

SUFFERN, N.Y.--(Business Wire)--General Patent Corporation chairman and CEO Alexander Poltorak, writing in the popular syndicated "Washington Watch" column circulated throughout the country, strongly criticized the proposed Patent Reform Act of 2009, and said that"recycling a piece of failed legislation is not the best way to protect American inventors and spur innovation."

Calling the proposed new bill "a warmed-over version of a proposed policy package that didn`t pass the first time it was introduced in 2007," Dr. Poltorak said "the apportionment of damages and other changes would weaken patents and make it easier for offshore copycats to bring pirated goods into the U.S. This,"he continued, "could have serious consequences for American jobs and thecountry`s competitiveness in the global economy."

The proposed changes would transform the U.S. system for granting patents from a"first-to-invent" basis to the European-style "first-to-file" system, which would lead to a "race to the Patent Office" that favors large corporations over small inventors. "Many critics," Dr. Poltorak said, believe the proposed changes as currently written "will diminish many of the protections offered by the current law and discourage innovation and venture investment, and make it even more difficult to enforce a patent."

Dr. Poltorak`s company, General Patent Corporation, has for the past 22 years assisted inventors and entrepreneurs with licensing and enforcement of their patents, and helped them protect their intellectual rights and property under the law. Dr. Poltorak, a national expert on the U.S. patent system and co-author of two books on the subject, says that the new bill "will devalue patents, and stifle innovation and entrepreneurship."

He is also founder and president of thenon-profit organization American Innovators for Patent Reform (AIPR), andsuggests that readers write to their respective Senators and Congressional Representatives to express their views about the Patent Reform Act of 2009. For further information, contact General Patent Corporation at http://www.generalpatent.com/ , write to info@generalpatent.com or telephone 845-368-4000 x116.

About General Patent Corporation General Patent Corporation (GPC), headquartered in Suffern, New York, is the premier intellectual property (IP) boutique focusing on patent licensing andpatent enforcement, as well as IP strategy and IP valuation. GPC represents clients in assertive licensing, patent infringement claims and patentinfringement litigation on a contingency basis. For more information, visit www.generalpatent.com .

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http://www.americaneconomicalert.org/view_art.asp?Prod_ID=3199

Opposition Mounts to Patent Reform Act of 2009

By Kevin L. Kearns

American Economic Alert

March 18, 2009

Dear Senators Reid and McConnell, Speaker Pelosi and Congressman Boehner:

We are writing to ask you to strongly oppose the passage of The Patent Reform Act of 2009, S. 515 and HR. 1260, legislation sponsored by Senator Leahy and Rep. Conyers, respectively. These bills, under the mantle of "reform," will actually severely damage U.S. international competitiveness and threaten most American businesses - along with the jobs they create - by undermining America's historically strong intellectual property rights. This legislation will threaten America's smaller inventors, large and small domestic manufacturers, venture capitalists, agricultural entities, biotech and pharmaceutical firms, non-profit research consortia, and research universities, among others. Downgrading patent rights – which are fundamentally property rights – will seriously constrict innovation and the ability of domestic manufacturers to turn good ideas into products consumer want, and thus good jobs for working Americans.

A series of U.S. Supreme Court and Federal Circuit decisions have already shifted the legal balance of power to favor patent users, tightening standards of patentability and narrowing patent rights and remedies. These judicial reforms eliminate any need for sweeping legislative changes to the patent system. Foreign interests, who for years have been trying to slow America's innovation engine through measures to weaken and devalue patent rights, are very happy with the proposed changes. In fact, commentary by patent experts in the Chinese and Indian press indicates they believe that intellectual property theft will be much easier under the proposed bill. Unfortunately, these foreign experts are correct in their assessment.

Yongshun Chen, former Senior Judge and Deputy Director of the Intellectual Property Division of Beijing High People's Court China, said this about the patent bill: "This bill will give companies from developing countries more freedom and flexibility to challenge the relative U.S. patent for doing business in the U.S. and make it less costly to infringe.... The bill will weaken the rights of patentees greatly, increase their burden, and reduce the remedies for infringement" (Intellectual Property News, November 2007).

This bill will lead to many additional American factories and jobs, even entire industries, being lost to overseas competitors. During this economic recession, more market uncertainty is the last thing that our economy needs.

To put the matter plainly, this bill is written to devalue patents – to the detriment of almost every industrial, service, and financial sector of the economy. Certain high-tech companies who are pushing this bill want to make it cheaper and easier to infringe others' patents. But Congress should safeguard innovation as the backbone of our economy and reject this legislation.

The patent system is rooted in the Constitution. Congress is charged with "securing for limited times to authors and inventors the exclusive right to their respective discoveries." The Founders understood that protection of intellectual property was vital to innovation and progress. James Madison wrote in the FederalistPapers,"The utility of this power will scarcely be questioned." Yet, today it is being threatened in the Congress.

Small enterprises often drive innovation. About one-third of all patent applications are made by independent inventors, small companies, universities, and nonprofit research groups. Small businesses produce more patents per employee than larger businesses, and small-firm patents are more "innovative" and technologically important than large firm patents. Because small firms must work with others to commercialize and manufacture their innovations, they need strong patents to realize a return on investment.

American manufacturers do about 65 percent of the R&D in this country and hold 60 percent of the patents. Over the last 40 years, we have witnessed a startling transformation of our economy. Whereas previously about two-thirds of a company's wealth was in physical assets, such as land, buildings, and machinery, now the opposite is true. The vast majority of a company's worth is in its intellectual property, not its physical assets. We cannot afford to jeopardize what is in effect America's balance sheet with an ill-advised, special-interest bill, particularly in the midst of a severe economic crisis.

The legislation creates a new, expensive quasi-judicial system within the USPTO to challenge the validity of a patent throughout its entire life. The proposed system would expose patent holders to a perpetual threat of abusive, serial attacks, and, as a result, undermine the benefits of patent ownership for patent-holders and their financial backers. In addition, it would create even greater operational challenges within the USPTO. Incentives to seek patents would be weakened, and venture capitalists, who supply the life blood of the patent system with their investment monies, would face far higher risks when backing new ideas.

The Leahy bill raises multiple barriers to independent innovation. The pending legislation would also make it harder for patent-holders to enforce their rights or win just compensation from those who steal their ideas. Under the bill, it would be harder to prove "willful" infringement, which serves as an important deterrent to deliberate theft. Perhaps, most significantly, the bill strikes at the very core of the patent system by changing the way infringement and resulting damages are treated. Instead of restoring the pre-infringement parity between the patent holder and the potential licensee, the bill calculates damages in an after-the-fact manner that lessens the value assigned to patents in most products. It throws out the window the venerable Georgia Pacific case and with its time-tested factors in determining a patent's value. In effect, the bill invites an infringe-now-and-(maybe)-pay-later business strategy, which destroys the "exclusive use" given to the patentee by the Constitution and the risk/reward ratio that has so successfully driven American innovation for over two centuries.

According to a recent study, the proposed damages amendment would reduce the value of U.S. patents by as much as $85.3 billion; reduce R&D expenditures by up to $66 billion per year; and potentially cost the U.S. economy 298,000 manufacturing jobs. This bill is bad for American businesses; it is bad for American workers; it is bad for American inventors; it is bad for American research universities; thus it is bad for America. We ask that you oppose this legislation, protect the property rights enshrined in the Constitution, and preserve a patent system that for over 200 years has provided great technological advances, material progress, and a high standard of living for all Americans. Thank you for your serious consideration of our views.

Sincerely,

Kevin Kearns US Business and Industry Council David KeaneAmerican Conservative Union Rev. Lou Sheldon Traditional Values CoalitionJim Backlin Christian Coalition of AmericaSusan Carleson American Civil Rights Union Jim Martin60 Plus Association C. Preston Noell III Tradition, Family. Property, Inc.Harry Valentine Capitol Hill Prayer AlertBarrett Duke Ethics and Religious Liberty Commission of the Southern Baptist ConventionGary AldrichCNP Action, Inc John Kwapisz VA Coalition for common sense on Climate Change and EnergyPhyllis Schlafly Eagle Forum Morton Blackwell Conservative Leadership PAC Frank Gaffney Center for Security Policy Colin A. HannaLet Freedom Ring Ron Pearson Council for America Jeffrey Gayner Americans for Sovereignty Alex St. JamesAARLC Organization Connie Marshner American Family Business InstituteJim Backlin Christian Coalition of AmericaCarmen Mercer Minuteman Civil Defense Corps.Mark de Bernardo Council for Employment Law and Equality Laszlo Pasztor National Federation of American Hungarians

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http://www.patentbaristas.com/archives/2009/03/03/and-theyre-off-patent-reform-act-of-2009-unleashed/

And They’re Off: Patent Reform Act of 2009 Unleashed

by Stephen Albainy-Jenei

Patent Baristas

March 3, 2009

Following hot on the heels of the Patent Reform Acts of 2005, 2006, 2007 and 2008, Senate Judiciary Committee Chairman Patrick Leahy (D-Vt.) and former chair Orrin Hatch (R-Utah), along with House Judiciary Committee Chairman John Conyers (D-Mich.) and ranking minority member Lamar Smith (R-Texas), introduced, you guessed it, the “Patent Reform Act of 2009.”

The legislation (S.515 and H.R.1260) is set to pick up where patent-reform efforts left off last year. Controversial provisions remain so get ready to see continued efforts at lobbying for changes. Sens. Leahy and Hatch conceded during a press conference that more work needed to be done on the legislation but said reforms were needed urgently to improve patent quality and create more certainty in patent litigation.

In a nutshell, the Patent Reform Act of 2009 Senate Bill provides for the following:

...Sec. 4. Right of the inventor to obtain damages

Damages. Requires the court to conduct an analysis to ensure that, when a “reasonable royalty” is the award, it reflects the economic value of the patent’s “specific contribution over the prior art”, i.e. the contribution the invention makes to promoting science and the useful arts per the requirement of Article I, Section 8 of the Constitution. The court also is required to identify the factors that will be considered in determining a reasonable royalty, ensuring that the record is clear on what considerations the judge or jury assessed in awarding damages.

Willful infringement. This section changes the doctrine of willful infringement in both procedural and substantive respects. Courts will now require a plaintiff to demonstrate with clear and convincing evidence that the infringer acted in a manner that was objectively reckless, which is also subject to a good faith defense.

Prior User Rights. If the same invention is later patented by another party, the prior user may not be liable for infringement to the new patent holder, although all others will be. This section permits the defense to be used by entities controlling or controlled by the prior user.

Sec. 5. Post-grant procedures and other quality enhancements

The section expands the evidence that a party may cite to the USPTO under § 301 to include written statements of the patent owner regarding the scope of the patent claims and evidence that the claimed invention was in public use or on sale in the United States more than one year prior to the application. Requests for reexamination under § 302 can be based on either prior art or prior public use or sale, as can requests for inter partes reexamination under chapter 31. Inter partes reexamination will now be heard by an administrative patent judge in accordance with procedures established by the Director. Inter partes reexamination is further improved by permitting a third-party requester to file written comments.

A third-party requester is estopped from asserting the invalidity of any claim determined to be valid in inter partes reexamination on any ground that was raised in reexamination. Further, the estoppel bar to instituting an inter partes reexamination proceeding after a judicial determination of patent validity is lowered from a “final decision” to a judgment of the district court.

This section also creates a new post-grant review procedure that can be instituted either within 12 months after the issuance of a patent or a reissue patent, or if the patent owner consents. The post-grant review begins with a cancellation petition and moves forward only if the Director determines that there is a substantial new question of patentability. The presumption of validity does not apply in this proceeding, but the burden of proof is on the party advancing a proposition. The Director will prescribe rules governing the proceeding, including rules to sanction abuse. This section prohibits successive filings or filings after a final decision in a civil action.

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http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=111_cong_bills&docid=f:s515rs.txt.pdf

Calendar No. 46
111TH CONGRESS
1ST SESSION S. 515

To amend title 35, United States Code, to provide for patent reform.

IN THE SENATE OF THE UNITED STATES
MARCH 3, 2009
Mr. LEAHY (for himself, Mr. HATCH, Mr. SCHUMER, Mr. CRAPO, Mr. WHITEHOUSE, Mr. RISCH, Mrs. GILLIBRAND, Ms. KLOBUCHAR, Mr. SPECTER, Mr. CORNYN, and Mrs. FEINSTEIN)

introduced the following bill; which was read twice and referred to the Committee on the Judiciary

APRIL 2, 2009
Reported by Mr. LEAHY, with amendments

SECTION 1. SHORT TITLE; TABLE OF CONTENTS

(a) SHORT TITLE.—This Act may be cited as the ‘‘Patent Reform Act of 2009’’

‘‘CHAPTER 32—POST-GRANT REVIEW PROCEDURES

‘‘Sec.

‘‘321. Petition for post-grant review.
‘‘322. Timing and bases of petition.
‘‘323. Requirements of petition.
‘‘324. Prohibited filings.
‘‘325. Submission of additional information; showing of sufficient grounds.
‘‘326. Conduct of post-grant review proceedings.
‘‘327. Patent owner response.
‘‘328. Proof and evidentiary standards.
‘‘329. Amendment of the patent.
‘‘330. Decision of the Board.
‘‘331. Effect of decision.
‘‘332. Settlement.
‘‘333. Relationship to other pending proceedings.
‘‘334. Effect of decisions rendered in civil action on post-grant review proceedings.
‘‘335. Effect of final decision on future proceedings.
‘‘336. Appeal.

‘‘§ 321. Petition for post-grant review

‘‘Subject to sections 322, 324, 332, and 333, a person who is not the patent owner may file with the Office a petition for cancellation seeking to institute a post-grant review proceeding to cancel as unpatentable any claim of a patent on any ground that could be raised under section 282 (relating to invalidity of the patent or any claim). The Director shall establish, by regulation, fees to be paid by the person requesting the proceeding, in such amounts as the Director determines to be reasonable.

‘‘§ 322. Timing and bases of petition

‘‘A post-grant proceeding may be instituted by the Director under this chapter pursuant to a cancellation petition filed under section 321. Such proceeding may be instituted only if—

‘‘(1) the petition is filed not later than 12 months after the issuance of the patent or a reissue patent, as the case may be; or
‘‘(2) the patent owner consents in writing to the proceeding.

‘‘§ 323. Requirements of petition

‘‘A cancellation petition filed under section 321 may be considered only if—

‘‘(1) the petition is accompanied by payment of the fee established by the Director under section
321;
‘‘(2) the petition identifies the cancellation petitioner;
‘‘(3) for each claim sought to be canceled, the petition sets forth in writing the basis for cancellation and provides the evidence in support thereof, including copies of patents and printed publications, or written testimony of a witness attested to under oath or declaration by the witness, or any other information that the Director may require by regulation; and
‘‘(4) the petitioner provides copies of the petition, including any evidence submitted with the petition and any other information submitted under 2 paragraph (3), to the patent owner or, if applicable, the designated representative of the patent owner.

‘‘§ 324. Prohibited filings

‘‘A post-grant review proceeding may not be instituted under section 322 if the petition for cancellation requesting the proceeding—

‘‘(1) identifies the same cancellation petitioner and the same patent as a previous petition for cancellation filed under such section; or
‘‘(2) is based on the best mode requirement contained in section 112.

‘‘§ 325. Submission of additional information; showing of sufficient grounds

‘‘(a) IN GENERAL.—The cancellation petitioner shall file such additional information with respect to the petition as the Director may require. For each petition submitted under section 321, the Director shall determine if the written statement, and any evidence submitted with the request, establish that a substantial question of patentability exists for at least one claim in the patent. The Director may institute a post-grant review proceeding if the Director determines that the information presented provides sufficient grounds to believe that there is a substantial question of patentability concerning one or more claims of the patent at issue.

‘‘(b) NOTIFICATION; DETERMINATIONS NOT REVIEWABLE.—The Director shall notify the patent owner and each petitioner in writing of the Director’s determination under subsection (a), including a determination to deny the petition. The Director shall make that determination in writing not later than 60 days after receiving the petition. Any determination made by the Director under subsection (a), including whether or not to institute a post-grant review proceeding or to deny the petition, shall not be reviewable.

‘‘§ 326. Conduct of post-grant review proceedings

‘‘(a) IN GENERAL.—The Director shall prescribe regulations, in accordance with section 2(b)(2)—

‘‘(1) establishing and governing post-grant review proceedings under this chapter and their relationship to other proceedings under this title;
‘‘(2) establishing procedures for the submission of supplemental information after the petition for cancellation is filed; and
‘‘(3) setting forth procedures for discovery of relevant evidence, including that such discovery shall be limited to evidence directly related to factual assertions advanced by either party in the proceeding, and the procedures for obtaining such evidence shall be consistent with the purpose and nature of the proceeding.

In carrying out paragraph (3), the Director shall bear in mind that discovery must be in the interests of justice.

‘‘(b) POST-GRANT REGULATIONS.—Regulations under subsection (a)(1)—

‘‘(1) shall require that the final determination in a post-grant proceeding issue not later than one 10 year after the date on which the post-grant review proceeding is instituted under this chapter, except that, for good cause shown, the Director may extend the 1-year period by not more than six months;
‘‘(2) shall provide for discovery upon order of the Director;
‘‘(3) shall provide for publication of notice in the Federal Register of the filing of a petition for post-grant review under this chapter, for publication of the petition, and documents, orders, and decisions relating to the petition, on the website of the Patent and Trademark Office, and for filings under seal exempt from publication requirements;
‘‘(4) shall prescribe sanctions for abuse of discovery, abuse of process, or any other improper use of the proceeding, such as to harass or to cause unnecessary delay or unnecessary increase in the cost of the proceeding;
‘‘(5) may provide for protective orders governing the exchange and submission of confidential information; and
‘‘(6) shall ensure that any information submitted by the patent owner in support of any amendment entered under section 329 is made available to the public as part of the prosecution history of the patent.

‘‘(c) CONSIDERATIONS.—In prescribing regulations under this section, the Director shall consider the effect on the economy, the integrity of the patent system, and the efficient administration of the Office.

‘‘(d) CONDUCT OF PROCEEDING.—The Patent Trial and Appeal Board shall, in accordance with section 6(b), conduct each post-grant review proceeding instituted by the Director.

‘‘§ 327. Patent owner response

‘‘After a post-grant proceeding under this chapter has been instituted with respect to a patent, the patent owner shall have the right to file, within a time period set by the Director, a response to the cancellation petition.The patent owner shall file with the response, through affidavits or declarations, any additional factual evidence and expert opinions on which the patent owner relies in support of the response.

‘‘§ 328. Proof and evidentiary standards

‘‘(a) IN GENERAL.—The presumption of validity set forth in section 282 shall not apply in a challenge to any patent claim under this chapter.

‘‘(b) BURDEN OF PROOF.—The party advancing a proposition under this chapter shall have the burden of proving that proposition by a preponderance of the evidence.

‘‘§ 329. Amendment of the patent

‘‘(a) IN GENERAL.—In response to a challenge in a petition for cancellation, the patent owner may file one motion to amend the patent in one or more of the following ways:

‘‘(1) Cancel any challenged patent claim.
‘‘(2) For each challenged claim, propose a substitute claim.
‘‘(3) Amend the patent drawings or otherwise amend the patent other than the claims.

‘‘(b) ADDITIONAL MOTIONS.—Additional motions to amend may be permitted only for good cause shown.

‘‘(c) SCOPE OF CLAIMS.—An amendment under this section may not enlarge the scope of the claims of the patent or introduce new matter.

‘‘§ 330. Decision of the Board

‘‘If the post-grant review proceeding is instituted and not dismissed under this chapter, the Patent Trial and Appeal Board shall issue a final written decision addressing the patentability of any patent claim challenged and any new claim added under section 329.

‘‘§ 331. Effect of decision

‘‘(a) IN GENERAL.—If the Patent Trial and Appeal Board issues a final decision under section 330 and the time for appeal has expired or any appeal proceeding has terminated, the Director shall issue and publish a certificate canceling any claim of the patent finally determined to be unpatentable and incorporating in the patent by operation of the certificate any new claim determined to be patentable.

‘‘(b) NEW CLAIMS.—Any new claim held to be patentable and incorporated into a patent in a post-grant review proceeding shall have the same effect as that specified in section 252 for reissued patents on the right of any person who made, purchased, offered to sell, or used within the United States, or imported into the United States, anything patented by such new claim, or who made substantial preparations therefor, before a certificate under subsection (a) of this section is issued.

‘‘§ 332. Settlement

‘‘(a) IN GENERAL.—A post-grant review proceeding shall be terminated with respect to any petitioner upon the joint request of the petitioner and the patent owner, unless the Patent Trial and Appeal Board has issued a written decision before the request for termination is filed. If the post-grant review proceeding is terminated with respect to a petitioner under this paragraph, no estoppel shall apply to that petitioner. If no petitioner remains in the proceeding, the panel of administrative patent judges assigned to the proceeding shall terminate the proceeding.

‘‘(b) AGREEMENT IN WRITING.—Any agreement or understanding between the patent owner and a petitioner, including any collateral agreements referred to in the agreement or understanding, that is made in connection with or in contemplation of the termination of a post-grant review proceeding, must be in writing. A post-grant review proceeding as between the parties to the agreement or understanding may not be terminated until a copy of the agreement or understanding, including any such collateral agreements, has been filed in the Office. If any party filing such an agreement or understanding requests, the agreement or understanding shall be kept separate from the file of the post-grant review proceeding, and shall be made available only to Government agencies on written request, or to any person on a showing of good cause.

‘‘§ 333. Relationship to other proceedings

‘‘(a) IN GENERAL.—Notwithstanding subsection 135(a), sections 251 and 252, and chapter 30, the Director may determine the manner in which any reexamination proceeding, reissue proceeding, interference proceeding (commenced with respect to an application for patent filed before the effective date provided in section 5(k) of the Patent Reform Act of 2009), derivation proceeding, or post-grant review proceeding, that is pending during a post-grant review proceeding, may proceed, including providing for stay, transfer, consolidation, or termination of any such proceeding.

‘‘(b) STAYS.—The Director may stay a post-grant review proceeding if a pending civil action for infringement of a patent addresses the same or substantially the same questions of patentability raised against the patent in a petition for the post-grant review proceeding.

‘‘(c) EFFECT OF COMMENCEMENT OF PROCEEDING.—The commencement of a post-grant review proceeding—

‘‘(1) shall not limit in any way the right of the patent owner to commence an action for infringement of the patent; and
‘‘(2) shall not be cited as evidence relating to the validity of any claim of the patent in any proceeding before a court or the International Trade Commission concerning the patent.

‘‘§ 334. Effect of decisions rendered in civil action on post-grant review proceedings

‘‘If a final decision is entered against a party in a civil action arising in whole or in part under section 1338 of title 28 establishing that the party has not sustained its burden of proving the invalidity of any patent claim—

‘‘(1) that party to the civil action and the privies of that party may not thereafter request a post-grant review proceeding on that patent claim on the basis of any grounds, under the provisions of section 321, which that party or the privies of that party raised or could have raised; and
‘‘(2) the Director may not thereafter maintain a post-grant review proceeding that was requested, before the final decision was so entered, by that party or the privies of that party on the basis of such grounds.

‘‘§ 335. Effect of final decision on future proceedings

‘‘If a final decision under section 330 is favorable to the patentability of any original or new claim of the patent challenged by the cancellation petitioner, the cancellation petitioner may not thereafter, based on any ground that the cancellation petitioner raised during the post-grant review proceeding—

‘‘(1) request or pursue a reexamination of such claim under chapter 31;
‘‘(2) request or pursue a derivation proceeding with respect to such claim;
‘‘(3) request or pursue a post-grant review proceeding under this chapter with respect to such claim;
‘‘(4) assert the invalidity of any such claim in any civil action arising in whole or in part under section 1338 of title 28; or
‘‘(5) assert the invalidity of any such claim in defense to an action brought under section 337 of the Tariff Act of 1930 (19 U.S.C. 1337).

‘‘§ 336. Appeal

‘‘A party dissatisfied with the final determination of the Patent Trial and Appeal Board in a post-grant proceeding under this chapter may appeal the determination under sections 141 through 144. Any party to the post-grant proceeding shall have the right to be a party to the appeal.’’.

(g) CONFORMING AMENDMENT.—The table of chapters for part III of title 35, United States Code, is amended by adding at the end the following:

‘‘32. Post-Grant Review Proceedings ......................................... 321’’.

(h) REPEAL.—Section 4607 of the Intellectual Property and Communications Omnibus Reform Act of 1999, as enacted by section 1000(a)(9) of Public Law 106–113, is repealed.

(i) EFFECTIVE DATES.—

(1) IN GENERAL.—The amendments and repeal made by this section shall take effect at the end of the 1-year period beginning on the date of the enactment of this Act.

(2) APPLICABILITY TO EX PARTE AND INTERPARTES PROCEEDINGS.—Notwithstanding any other provision of law, sections 301 and 311 through 318 of title 35, United States Code, as amended by this section, shall apply to any patent that issues before, on, or after the effective date under paragraph (1) from an original application filed on any date.

(3) APPLICABILITY TO POST-GRANT PROCEEDINGS.—The amendments made by subsections (f) and (g) shall apply to patents issued on or after the effective date under paragraph (1).

(j) REGULATIONS.—The Under Secretary of Commerce for Intellectual Property and Director of the United States Patent and Trademark Office (in this subsection referred to as the ‘‘Director’’) shall, not later than the date that is 1 year after the date of the enactment of this Act, issue regulations to carry out chapter 32 of title 35, United States Code, as added by subsection (f).

Obama Asked to Prevent Compulsory Licensing ('Give Away') of US Cleantech Patented Technologies at Upcoming Copenhagen Climate Change Negotiations

noreply@blogger.com (ITSSD Charitable Mission) — Sun, 08 Nov 2009 15:19:00 +0000

http://www.bloomberg.com/apps/news?pid=20601072&sid=aug9aycq0lJw

Clean-Energy Cause Shouldn’t Void Patents, Senators Tell Obama

By Jim Efstathiou Jr.

Bloomberg News

Nov. 4, 2009

Nov. 4 (Bloomberg) -- The U.S. must “stand fast” on patent protection and resist calls from developing nations to share energy-efficient technologies to combat climate change, 42 senators told President Barack Obama.

The administration shouldn’t waver in its “support of American intellectual property, American workers, and American innovators” during climate-change talks next month in Copenhagen, the lawmakers said in the letter to Obama yesterday that was circulated by Senator Evan Bayh, an Indiana Democrat.

Developing nations have cited a World Trade Organization ruling as grounds to break patent protections on drugs in health emergencies. Some seek a similar approach to wind- and solar- energy innovations in the name of curbing global warming. U.S. companies such as General Electric Co., which makes wind turbines, would be forced to give free or low-cost access to patents under such proposals.

“They want companies in the U.S. to give away their technology,” said Lawrence Kogan, head of the Institute for Trade, Standards and Sustainable Development, a Princeton, N.J.- based group that advocates for intellectual property rights. It’s part of an effort to “treat intellectual property as a utilitarian tool to promote development.”

Delegates from about 190 nations will meet in Copenhagen next month in the effort to complete a global-warming treaty. How to help fast-growing developing countries pay for clean- energy technology is one of the unresolved issues.

U.S. officials such as Todd Stern, special envoy for climate change, and Ron Kirk, U.S. trade representative, have said the administration won’t weaken intellectual-property protections.

India, Brazil, China

India, Brazil and China, the world’s largest greenhouse-gas emitter, want easier access to licenses to make and export systems that produce electricity with fewer emissions, said James Love, an economist with Knowledge Ecology International, a Washington-based group that follows intellectual-property negotiations.

“If what you’re trying to do is mobilize the world to do something about climate change, you could actually be in favor of a lot of compulsory licensing,” Love said in an interview. “If you want to deal with climate change, you want buy-in from developing countries.”

World Trade Organization agreements should be interpreted to “allow compulsory licensing of patents for the production of climate-friendly equipment and goods that embed climate-friendly technology,” the United Nations’ Geneva-based Conference on Trade and Development said in a report released on Sept. 7.

The sharing of some clean-energy patents has support from Senator Jay Rockefeller, a Democrat from West Virginia, a coal- producing state. He said he backs development of “national technologies” to reduce carbon dioxide from burning coal that “nobody can put a patent on.”

‘Just Give It’

“If we get a good technology and Wall Street and industry and everybody else buys into it, then I want to give it free of charge to the Chinese and the Indians and to others, anybody who needs it,” Rockefeller told reporters Oct. 30. “Just give it. This is a worldwide problem.”

Senate Democrats began committee debate this week on legislation to limit greenhouse gas-emissions. The House passed a climate-change bill in June.

To contact the reporter on this story: Jim Efstathiou Jr. in New York at jefstathiou@bloomberg.net. Last Updated: November 4, 2009 09:30 EST

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http://bayh.senate.gov/news/press/release/?id=55133F9E-2A80-438C-BB20-D78244E69D70

Senators Bayh, Voinovich Ask President Obama to Protect American Intellectual Property

Office of U.S. Senator Evan Bayh

Nov. 4, 2009

Washington– U.S. Senators Evan Bayh (D-IN) and George V. Voinovich (R-OH) led a bipartisan letter [http://bayh.senate.gov/imo/media/doc/Bayh%20Letter%20to%20POTUS.pdf ] signed by 42 senators to President Obama calling on the president to protect American intellectual property (IP), jobs and innovation in the United Nations (U.N.) Framework Convention on climate change negotiation.

“Unless we take aggressive action to protect the intellectual property of our entrepreneurs and manufacturers, we will continue to watch profits and jobs migrate overseas,” Sen. Bayh said. “Protecting our innovations in international climate negotiations will encourage the development of more American technology and help us maintain the economic strength we will need to advance our efforts to reduce carbon emissions.”

“We must fight to protect American innovators, entrepreneurs and manufacturers involved in creating our cutting-edge clean energy technologies,” Sen. Voinovich said. “It is universally held that the answer to climate change lies in technology. Now is not the time to take away a major incentive, undermine innovation and weaken our economy. We must protect American IP - thus protecting American jobs, creativity and innovation.”

Bill Keith, President of SunRise Solar in St. John, Indiana praised the letter, saying, “Senator Bayh is bringing attention to the protection of American patents and breakthrough innovations at a critical time. Some countries are using the climate change negotiations as a means to obtain our technological designs. If they succeed, it will cost Indiana jobs and harm our global competitiveness. Our Hoosier-made products contribute to the fight against global warming and stimulate job growth, and environmentally responsible companies like ours must be protected as the climate change debate moves forward.”

The letter sent to the president highlights the importance of safeguarding IP rights for clean technology as the United States takes part in the U.N. climate change negotiations this December in Copenhagen. It recognizes the president’s commitment and asks for his support for IP rights in the United Nations Framework Convention on Climate Change (UNFCCC) and urges further support from American negotiators as the process continues. There are international efforts to weaken IP protections, which the senators strongly oppose.

The senators also recognize the importance of a strong IP system in attracting the research and development dollars needed for investment in new technologies that will bring jobs and solutions to global problems. IP rights allow innovators to attract the investment needed to develop and market their ideas, promoting economic growth and prosperity and creating high-value American jobs.

Sens.Bayh and Voinovich have worked hard to protect American innovation for years. The senators introduced legislation in the 110th Congress designed to address intellectual property rights enforcement issues and to protect American innovation and advancement. The legislation was introduced July 2008 by Senate Judiciary Committee Chairman Patrick Leahy (D-Vt.), Ranking Member Arlen Specter (R-Pa.) and Sens. Bayh and Voinovich. The bill was signed into law October 2008.

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http://hatch.senate.gov/public/index.cfm?FuseAction=PressReleases.Detail&PressRelease_id=f5528716-1b78-be3e-e07c-10870587b1fe&Month=6&Year=2009

HATCH URGES OBAMA TO PROTECT INTELLECTUAL PROPERTY RIGHTS Senators On Both Sides Of The Aisle Sign On To Letter

Office of U.S. Senator Orrin Hatch

June 18, 2009

Washington – U.S. Sen. Orrin Hatch (R-Utah) today sent a letter to President Obama urging him to protect intellectual property (IP) rights. In addition to his own, Hatch secured the following signatures for the letter: Sen. Evan Byah (D- Ind.) Sen. Robert F. Bennett (R- Utah) Sen. Debbie Stabenow (D- Mich.) Sen. Charles E. Grassley (R- Iowa) Sen. Arlen Specter (D- Penn.) Sen. George V. Voinovich (R- Ohio) Sen. John Thune (R- S.Dak.) Sen. Judd Gregg (R- Nh.) Sen. David Vitter (R- La.)

“The United States government cannot afford to sit idle while others seek to weaken IP protections,” the senators explain. “America must continue to set the standard for IP protection, and be willing to confront those countries and organizations that attempt to weaken IP rights.

The senators explain that industries based on IP employ 18 million Americans and account for more than $5 trillion of the nation’s GDP and more than half of all our exports. “IP rights have not caused any of the world’s problems, and compulsory licensing is not the key to solving them. Maintaining strong IP rights is essential to economic growth and continued innovation, and protecting IP rights will not only improve the world’s development but America’s as well”, they conclude.

The full letter is attached and below:

June 18, 2009

The President

The White House

Washington, DC 20500

Dear Mr. President:

Protecting intellectual property (IP) rights has been a fundamental concept in the United States since the Founders provided Congress with the power “To promote the Progress of Science and useful Arts” in the Constitution.

Today, America’s commitment to strong IP protection has yielded astounding results. Not only do industries based on IP employ 18 million Americans, but they also account for more than $5 trillion of the nation’s GDP, and more than half of all our exports. The United States’ commitment to strong IP has been a major impetus in propelling it to the forefront of manufacturing.

Today we stand on the cutting edge of the bio-tech, entertainment, energy and consumer electronics industries, to name a few. Further investment in these areas will lead to an improved economy and millions of jobs. To ensure the United States maintains its leadership we must continue to reward the creativity of scientists and inventors and provide incentive for businesses and workers to invest time and resources in improving technology and accelerating innovation.

Despite the overwhelming evidence that strong IP rights lead to scientific progress, there are many governments, NGOs and even UN agencies that seek to weaken IP protections. Many governments mischaracterize IP rights as an obstacle to progress and a barrier to helping others.

Urgently addressing health and environmental crises is a priority that all nations should take seriously. These challenges are handled best when governments and private industry work together. Unfortunately, some governments require compulsory licenses of IP, while others require forced technology transfers. These short-sighted approaches to IP rights will curtail growth and development, and stagnate the very industries that these countries depend on.

For example, China and India claim they cannot meet future global emission requirements without free or significantly discounted access to climate change mitigation technologies.

While addressing global pollution and environmental harm is an important endeavor, sacrificing IP protections to achieve it is not the solution. Weakening IP protections will create a disincentive for inventors and large companies to invest in technologies that reduce global emissions and improve the environment. This disincentive will lead to fewer and less efficient technologies, and will significantly impede our ability to improve the environment.

President Barack Obama Page Two June 18, 2009

The United States government cannot afford to sit idle while others seek to weaken IP protections. America must continue to set the standard for IP protection, and be willing to confront those countries and organizations that attempt to weaken IP rights. The world faces many challenges today. IP rights have not caused any of the world’s problems, and compulsory licensing is not the key to solving them. Maintaining strong IP rights is essential to economic growth and continued innovation, and protecting IP rights will not only improve the world’s development but America’s as well.

Sincerely,

Evan Bayh

Orrin G. Hatch

Robert F. Bennett

Debbie Stabenow

Charles E. Grassley

Arlen Specter

George V. Voinovich

John Thune

Judd Gregg

David Vitter