By Tove Iren S. Gerhardsen
Side-events were held by a nongovernmental organisation (NGO), an intergovernmental organisation and the Canadian competition authority last week alongside the negotiations for a Development Agenda at the World Intellectual Property Organization. They focused on implementation of such an agenda in developing countries, the relationship between intellectual property rights and competition rules, and patents on pharmaceuticals in India versus China.

A 14 June event held by the Geneva-based NGO International Centre for Trade and Sustainable Development (ICTSD) focused on the fact that the 11-15 June meeting of the Provisional Committee on Proposals Related to a WIPO Development Agenda (PCDA) was not “only a diplomatic exercise” but “goes beyond that,” reflecting that it will also be up to member states to implement what will be agreed, said Pedro Roffe of ICTSD, who led the meeting. He said this would be about integrating the development dimension into intellectual property.

The PCDA meeting resulted in agreement on 21 proposals and recommendations for autumn General Assembly (IPW, WIPO, 18 June 2007). The draft report of the meeting will be available on 16 July with a deadline for comments of 31 July, according to officials.

Carolyn Deere, Senior Researcher at the University of Oxford and resident scholar at ICTSD, discussed “Comparing national approaches to promoting coherence between public policy objectives and IP laws,” arguing for greater attention to the process and organisation of IP decision-making at the national and regional level. She highlighted that most developing countries face numerous challenges to coordination within national governments and emphasised the need for greater attention to the lessons from countries which have made advances in this respect.

Deere gave examples of coordination processes in Brazil and India which involve a range of relevant ministries and government agencies in IP decision-making, and in Senegal, which also draws on national experts and civil society. Countries such as Peru and Colombia, on the other hand, suffered from lack of internal coordination in this area which proved problematic when negotiating bilateral deals, she said.

Deere also highlighted the degree to which technical assistance provided by WIPO, bilateral donors, industry and civil society can influence the implementation and administration of IP laws, emphasising that these often have “enormous power” in developing countries. Another concern related to regulatory capture in the area of IP, meaning that the governance of the IP system is too often the domain of an ‘insider community’ comprised of the IP office, IP rights holders and IP attorneys with insufficient input from stakeholders such as consumers, scientists, or the open source community.

Mohi El Din Mabrouk of the African Regional Intellectual Property Organization (ARIPO) discussed the organisation, which is based in Harare, Zimbabwe and has 16 member states. Among its activities is to set up a Master’s programme in collaboration with the University of Zimbabwe and WIPO, he said.

Mabrouk described a triangle in which IP, creation and finance are all needed. He told a story of his family’s financial difficulties after it lost control of the local market in Sudan for a special pudding his grandmother knew how to make because a well-funded British company came in, bringing new technologies. His grandmother lacked the financing in the triangle, he said. Despite her having been an inventor, “the industry of my grandmother collapsed,” he said.

Sisule Musungu, Geneva-based IP researcher, said developed countries would have to focus on implementation of the Development Agenda, referring to technical assistance programmes. He said it might be useful at the regional level in developing countries to set up advisory committees on trade-related IP policies.

Carolina Belmar, head of the intellectual property department at the Chilean Ministry of Foreign Affairs, said they had set up an interagency body in 2005 including members from the agencies responsible for foreign affairs, IP, health, culture, economics, agriculture and education to coordinate Chile’s position. She said this had become necessary after Chile began negotiating bilateral free trade agreements, of which it has signed more than 15 covering 48 countries. She said the importance of IP is “relatively new” in national policy in Chile.

Canada Event on Competition Law

Canada organised a side-event on 13 June at which it presented the preliminary conclusions of five studies it commissioned on topics related to competition law and intellectual property.

An official from the Canadian Competition Bureau told Intellectual Property Watch that the drafts are not available yet, but will form a book to be published by the end of the year. Once the papers have been examined by the bureau, he said, they will become available on its website, www.bc-cb.gc.ca.

The official said it is too early to say whether any of the authors’ conclusions – which he said are their own conclusions and have not been endorsed by the bureau – would lead to changes in Canadian regulation. At the event, he presented the brief preliminary conclusions of each of the five studies.

A study on “authorised generics,” which are brand name products sold as generics, concluded that they did not impact competition in terms of prices, as the average drug prices still dropped by 12 percent when the authorised generics were introduced. There was no direct assessment of whether the threat of these authorised generics might deter entry by independent generics.

The study on “extension of IP rights,” examined “strategies used to try and extend IP rights beyond statutory limits,” he said. The study concluded that the appropriate solution to guard against this depends on the context, and could be related to the enforcement of weak or uncertain IP rights.

A third study on “tying and IP” looked at “the practice of tying in relation to IP rights in order to identify circumstances where tying could be used in a manner to extend IP protection or block entry and innovation.” Tying means tying non-proprietary products to other produces already covered by IP to save costs or for risk sharing reasons, the presentation said. The conclusion here was that there are no “general rules of thumb” that antitrust agencies can use to decide whether a tying situation is anticompetitive.

A fourth study looked at competition and copyright collective societies, of which Canada has more than any other Organisation for Economic Cooperation and Development member, the presentation said. It concluded that these collectives are “more efficient even if technology reduces transaction costs” in terms of disseminating creative works and generating revenues for creators.

Finally, one study looked at compulsory licensing from a domestic perspective, examining the Canadian Patent Act as well as Section 32 of the Competition Act. Canada has a special regulation, called “Section 32,” which could be used if there is an imbalance between IP and competition law, but it has not been used since 1912.

Under Section 32, the federal court “has the power to make remedial orders where it finds that use has been made of the exclusive rights and privileges conferred by certain IP rights, when such use unduly restrains trade or lessens competition,” the presentation said. Among the remedies could be declaring the agreement or licensing void, ordering licensing of the rights, revoking the right or restraining trade, the presentation said.

The Canadian official said, however, that the bureau had to “be very careful” not to undermine the IP system, and said there had been much more friction between IP and competition 25 to 30 years ago.

The study concluded that, “no major changes are required to Canada’s compulsory licensing provisions,” as the commissioner of patents and the Competition Tribunal have requisite expertise and the process is fair and transparent, the presentation said. (For more details on the studies, see IPW Monthly, Vol. 4, No. 4).

South Centre Side-Event on India, China, Patents

At a 12 June side-event held by the intergovernmental South Centre, Xuan Li, lead economist and acting coordinator of the centre’s Innovation and Access to Knowledge Programme, presented a study comparing the impact of the patent regimes in India and China on pharmaceuticals.

The study, “Do higher standards of patent protection generate a positive impact on the pharmaceutical industry in developing countries?” compared the 12 years during which China had both process and product patents for pharmaceuticals, while India had only process patents. A product patent means that other companies are in principle not allowed to copy the product while it is in force, and it is considered a higher standard of patent protection than having only process patents. Product patents were required under the World Trade Organization (WTO) Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) when it came into force in 1995, though developing countries had longer to implement. China introduced product patents for pharmaceuticals in 1993, Li said, and joined the WTO in December 2001.

India, meanwhile, had product patents until the 1970s, when it abolished the system. It had only process patents on pharmaceuticals until 2005, Li said. Among her conclusions was that using TRIPS flexibilities “can offset [the] negative impact of TRIPS.” This was shown in the lower medicine prices and often improved availability in India over China, she said.

Christoph Spennemann, a legal expert in technology transfer and intellectual property at the United Nations Conference on Trade and Development (UNCTAD), said the study showed that one needs a broad public domain at the early stage for follow-up innovation to occur. He emphasised the importance of timing for those depending on reverse engineering and adaptation, saying that India had introduced product patents at the right time, but China had introduced them too early.

Spennemann also referred to a 2006 Swiss study, which showed that stronger patent protection is not always equal to more innovation, as after a certain maximum level of innovation, the curve will fall, after which more protection will only lead to less innovation.

Carsten Fink, senior economist at the World Bank Institute, said he agreed with one of the key conclusions from the study that the abolition of product patents in India in the 1970s did play an important role in developing a pharmaceutical industry as it is known today. But he emphasised that one does not know what would have happened had this change not taken place.

Fink also suggested caution on the exact timing of the introduction of product patent protection as, for example, India had the mailbox system in place, under which one could file a patent before 2005. But a special clause in the 2005 law allows Indian firms to continue production of products for which patents are granted provided they paid royalties. Fink called for more empirical facts before drawing a conclusion on the difference between the India and China scenarios.

Jayashree Watal from WTO echoed this, saying that there were also other mechanisms than the abolition of product patents in India during this time, such as an act making it less favourable for foreign companies to be based there, and a drug policy making it mandatory to manufacture from the basic stage in India, including the active substance of which a medicine is made.

Tove Gerhardsen may be reached at tgerhardsen@ip-watch.ch.