WIPO seminar debates intellectual property and development

10 May, 2005

By Meena Raman, Geneva, 3 May 2005

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

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

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

In taking the WIPO Development Agenda forward on public health issues, Musungustressed the need for WIPO to establish principles and guidelines to safeguard theprotection of public health; technical assistance on developing principles andguidelines to ensure public health-sensitive policies and laws; and to haveevidence-based objective analysis through a proposed WIPO Evaluation and ResearchOffice.

Richard Wilder, a US lawyer, spoke on the development of medicines for developingcountry diseases and the role of IP. 'When diseases afflict mainly patients indeveloping countries, the free market may not support the development of a newmedicine, even with patents and data protection,' he said.

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

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

Mohga Smith, Health Advisor of OXFAM UK, said that in the light of serious healthcrises in the developing world, peoples' needs should dictate research anddevelopment &D) for medicines, especially for neglected diseases, and pricingmechanisms to ensure peoples' access to medicines. 'There is a need for anothermodel away from IP protection to ensuring R&D in new medicines,' she said.

In advancing the WIPO Development Agenda, she called for IPRs to be seen as onlyone means to innovation and not an end in itself. She said that there was resistancein WIPO to change but WIPO needs to wake up to the realities. 'There should be nomore high standards for IP rights in developing countries, and there is a need to lookat the implications of the TRIPS agreement before imposing higher standards,' sheadded. 'In the longer term, TRIPS needs to be reformed according to health anddevelopment needs.'

On biodiversity and traditional knowledge, Graham Dutfield from the Queen MaryIP Research Institute in the University of London said that from the 1980s, theknowledge, innovations and practices of indigenous and local communities have beenbarely tapped as a source of technologies. However, said Dutfield, patents, copyrightsand other currently existing IP formulations are inadequate in providing positiveprotection for traditional knowledge and technologies, and in some ways also makedefensive protection more difficult.

Apart from the basic conceptual and practical challenges in applying westernformulations of IP to traditional knowledge, for many traditional societies theincompatibilities go very deep, said Dutfield. 'Consequently, any legal system ofprotection must somehow accommodate the holistic nature of traditional knowledgeand technologies. It must avoid imposing notions of authorship that are alien to thebeneficiary communities.'

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

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

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

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

'This hits developing countries particularly hard where the issue of accessinginformation is a key determinant for their development. Information that traditionallybelonged to everybody is removed from collective ownership with seriousconsequences for education and innovation. Worse still, the retroactive extension ofthe term protection in some jurisdictions is in my opinion a betrayal of the copyrightbargain between rights holders and society.

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

Dr. Sheriff el-Kassas from the Centre for Academic Computing in the AmericanUniversity of Cairo spoke on the merits of the open source model for software whichhe said has established itself as an important and successful alternative to proprietarydevelopment models.

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

In the session on competition policy, Martin Khor of the Third World Network saidthat a discussion on competition policy and IPRs should look at whether IPRs affectthe competitiveness of developing countries and their enterprises, as well as theaccess of their consumers to essential goods and services and the access of smallenterprises to technology and production inputs. Both IP and competition policies atglobal and national levels should assist and not hinder developing countries' quest forindustrial development and access to essentials.

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

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

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

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

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

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

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

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

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

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

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

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

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

Some companies use IPRs to artificially divide markets by prohibition of parallelimports. TNCs argue that differential pricing allows them to fix lower prices inpoorer countries. However, critics point out instead that differential pricing does notalways defend poorest markets as it depends on the bargaining power of the countries. For example, LDCs that have less bargaining power may have to pay higher prices.

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

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

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