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The Politicization Of The US Patent System

The Washington Post story, How patent reform’s fraught politics have left USPTO still without a boss (July 30), is a vivid account of how patent reform has divided the US economy, preempting a possible replacement for David Kappos who stepped down 18 months ago. The division is even bigger than portrayed. Universities have lined up en masse to oppose reform, while main street businesses that merely use technology argue for reform. Reminiscent of the partisan divide that has paralyzed US politics, this struggle crosses party lines and extends well beyond the usual inter-industry debates. Framed in terms of combating patent trolls through technical legal fixes, there lurks a broader economic concern – to what extent ordinary retailers, bank, restaurants, local banks, motels, realtors, and travel agents should bear the burden of defending against patents as a cost of doing business.


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    Spirit Of Innovation Runs High At South African IP Conference

    Published on 25 November 2013 @ 2:43 pm

    By , Intellectual Property Watch

    DURBAN, SOUTH AFRICA – An industry-government conference here last week captured the high spirit of innovation in South Africa, and discussed ways in which intellectual property rights play a role in the effort.

    The conference entitled, Creating and Leveraging Intellectual Property in Developing Countries was held from 17-20 November in Durban.

    South African Science and Technology Minister Derek Hanekom during the conference stressed the importance of the shift to a knowledge economy and described the government’s efforts to promote intellectual property rights. He highlighted South Africa’s Intellectual Property Rights from Publicly Financed Research and Development Act, which went into effect in 2010.

    The National Intellectual Property Management Office (NIPMO) was set up to implement the Act. It gives policy guidance, and provides support to technology transfer offices at public universities, offering a rebate of up to 50 percent of patenting costs and access to IP tools to help with decision-making.

    Now the government is considering a new national IP policy, and is expected to hold an information session on the draft policy as soon as this week.

    South African Trade Minister Rob Davies told the conference that the country has a lot of activity in the registration of patents but not in the substantive examination of foreign patents. “There are innovations in South Africa, but far too often these end up commercialised somewhere else.”

    There also are cases where he asks people showing their products if they have registered the patent and they say no, because it is too expensive or too much hassle. Davies cited geographical indications as an area of intellectual property that South Africa needs to protect better, as the country is stinging from the registration of South Africa’s native rooibos tea in France.

    The country is looking for an IP system that supports its transition to a knowledge economy, and allows them to reward innovations not just in the developed world but also the developing world, Davies said.

    South Africa has set up a series of innovation parks that take innovators through training, and show them how to do patent searches, among other things. Incubators provide a foundation of basic services for inventors and start-ups, and though it is expensive, can give them mentorship that takes them through the process to the end. The mentor is an experienced person “who has cuts and bruises,” from having gone through the process themselves, one presenter said.

    Another speaker on a panel on innovation said a useful strategy is to build in pro bono deals with law firms that include patent assistance, and also ensure that funds obtained for start-ups include funds for patenting.

    The conference brought in a range of successful users of the patent system, many from the United States and some from Europe, to talk about their successes and promote the patent system. For instance, Prof. Robert Langer, a noted researcher at Massachusetts Institute of Technology (MIT), joined by videoconference and announced, “The patent system made the US what it is today.”

    He added encouragement that “the Boston environment could be reproduced anywhere to some extent,” referring to the success of the region in engendering innovation. He described some of the ways his research centre has gained, such as partnering with the Gates Foundation, a recurring theme throughout the conference.

    Other participants painted a picture of a long road to recreating the environment of the high-tech hubs of developed countries, and asked for information and ideas specific to developing countries and small businesses. It was noted by some that the region’s governments tend to put a very small percent of GDP toward research and development.

    Prof. Stephen Sammut, a senior fellow at Wharton School of Business (Pennsylvania) and Burrill venture partner, said data to be published will show that 60 percent of inventions originate in universities, “a rather stunning statistic.”

    Patents Only One Tool in the Box

    Companies go through their IP portfolio regularly and prune out the less useful or profitable ones, selling or donating them. “Don’t carry that burden” of patent maintenance if it is not worth it, said Morne Barradas, lead IP legal advisor for risk and compliance at Sasol Group Services. She also suggested that companies and policymakers not only look at patents.

    Gordon Myers, chief counsel for technology and private equity at the World Bank Group International Finance Corporation but speaking in his personal capacity, said a message for the conference could be, “don’t overemphasise patents.” There are other IP-related forms that matter too, such as trade secrets, company structuring, competition laws, or funding structure. Matching financing and investment to different stages of innovation is important, he said.

    “There’s a kind of romance with innovation right now” among investors, he said. It is necessary to think about related issues such as privacy, development impact or traditional knowledge. He said IPRs need to be more clear and enforced, and that pressure can be taken off the IP laws by looking at other factors like competition law. “Look at the whole toolbox,” he said. He also had the suggestion to “build your cities,” as “millennials congregate in cities” and they drive innovation.

    Myers and others talked about the high importance of partnering. “Innovation is starting to look like partnering,” Myers said.

    Several speakers stressed the importance of having an environment that allows entrepreneurs to experiment and possibly fail, the earlier in the process the better. Having a good bankruptcy law is important as it protects the interests of the provider and encourages small businesses, Myers said.

    Speakers also cited a lack of venture capital in South Africa and the region. And Tana Pistorius, a professor of IP and information technology law at UNISA, said not many countries give incentives to employees. “Perhaps what we lack here is not only the law, but the culture,” she said. Looking at China, she said “incremental” innovation is important, localising technology through tech transfer. Then it is a question of uptake, whether the country has the capacity to absorb ideas, whether it has the policies, angel investors, or tax subsidies.

    Neglected Disease R&D from the North

    Ponni Subbiah, a global program leader at PATH, said the project aims at bringing demand-driven health R&D to needy populations through partnering with the Gates Foundation and the pharmaceutical industry. She said PATH holds patents in some of the products it has helped develop, which can help ensure the drug is available and is a model for generating funds to put back into more research.

    Jennifer Dent, president of BIO Ventures for Global Health (BVGH), which is working to develop medicines for neglected diseases, said the global marketplace can be segmented into different populations. That way those who cannot pay can receive needed treatments, but companies can still have opportunities to make money from their products if there are some markets to do so.

    BVGH has developed a funder database for researchers to identify partners for their work. And it is managing, in partnership with the World Intellectual Property Organization, the WIPO Re:Search project, which works like a pool of research to drive solutions for neglected diseases. The project has attracted many participants, including a number of pharmaceutical industry partners. When asked, Dent said she believes generics companies should be involved in WIPO Re:Search too, and that BVGH has looked into it but has not done it yet.

    Ellis Owusu-Dabo, scientific director of the Kumasi Centre for Collaborative Research in Tropical Medicines at Kwame Nkrumah University of Science and Technology in Ghana, said that through partnerships it is able to see through the whole pipeline of drug development. “We have access to data that would have otherwise been very, very difficult to get,” he said.

    Finding an Appropriate System for Africa

    Prof. Yousuf Vawda of the University of Kwa-Zulu Natal School of Law raised doubts about the benefit of the IP system to developing countries’ economic development. Some 90 percent of patent filings in the country are foreign, and whether patenting has “unleashed” innovative activity cannot be proved, he said.

    Vawda also said that Article 66.2 of the World Trade Organization Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) is poorly defined and has not made the impact that developing countries expected when they negotiated the treaty. The article requires that developed countries encourage their companies to engage in technology transfer to developing countries. And TRIPS provisions are further weakened through bilateral and regional free trade agreements, he added.

    “What we need is not more IP shackles,” said Vawda, “but an IP space that will allow us to innovate and grow.”

    Tobias Schonwetter, director of the Intellectual Property Unit at the University of Cape Town Department of Commercial Law, said there are polarised views on whether IP helps access or restricts access, and there is very little research on the global South. But he challenged the suggestion that because there are fewer patents in the South that people there are less innovative, calling that view is “patronising” to a round of applause from the audience. He also raised questions about economic activity in the informal sector, which he said was overlooked.

    In a book due out next month, Schonwetter and others look at projects across Africa. “We find that orthodox forms of IP may not be applicable” in the region, he said. For instance, they may not be able to get a patent. “This has us thinking we’re less innovative, but we’re not.”

    Better Use of IP

    Prof. Joseph Straus, a law professor at the Max Planck Institute for Intellectual Property and Competition Law in Munich who has become involved in South Africa’s IP law, said South Africa is not using IP as much as it should. He also said there must be more cooperation between universities and industry in South Africa, and measures to improve patents for the country.

    South Africa’s patent filing is very low for its size and economy, he said, especially compared with a country like South Korea. And the less than 4,000 patents from public institutions are almost completely unused, he said.

    Straus had numerous recommendations, such as making private business aware of the importance of IP, providing incentives for creativity such as tax benefits, and considering special rules on employee inventions.

    Other suggestions from Straus included: starting to develop the necessary foundation for the patent examination system the country is planning to adopt, including to generate technically skilled patent specialists; providing funds and human resources for monitoring the fate of publicly funded patents; providing statistics on IP court cases (including settlements); exploiting all available possibilities offered by the current law in force before considering changes and amendments; and considering the introduction of a grace period and research exemption of a general type.

    On the subject of evergreening, which was debated during the week (IPW, Developing Country Policy, 21 November 2013), Straus asserted that most evergreening – patenting of variations of an existing patented product – come from Indian generic companies.

    South African Innovators Open Eyes

    As the event was organised by the South African Department of Science & Technology, National Intellectual Property Management Office, and the Companies and Intellectual Property Commission, and sponsored by the private sector, there was a strong emphasis on patenting in big economies and companies, but also promotion of local inventors and entrepreneurship.

    South Africa was shown to have a number of busy inventors. There are so many that a government programme for identifying and supporting promising inventions has to rigorously screen them.

    To demonstrate a few of the better ideas, competition was held among a number of inventors to explain and demonstrate their inventions to a panel of judges in front of meeting attendees, with an award ceremony at the end. The inventors also demonstrated their projects in booths in a small exhibition hall during the week.

    First place, with an award of R50,000 South African rand (about US$5000) went to a product called “Lightie,” which is a bright, hand-sized, solar-charging light stick that can screw into any empty plastic litre-sized soda bottle in the world to make a lamp. According to the inventor, eight hours of sunlight will give up to 40 hours of light. It costs about US$2-3 dollars to produce, and could change the lives of the many millions of people around the world who live in the dark, or use expensive, highly dangerous lighting sources.

    Other prizes were awarded for teaching software, a power generation system, and a simple teaching system. The prizes were sponsored by Janssen Pharmaceuticals, a division of Johnson & Johnson.

    The three-day event ended with a lively presentation by flashy South African designer Brian Steinhobel, CEO, of Steinhobel Design. He made a pitch for design as a very high-value, but overlooked, option. While South Korean and US companies like Samsung and Apple under Steve Jobs became among the most successful companies in the world by putting their resources into design, South Africa does not have a policy on designs, and does not understand it, he said.

    “The right policies could make us the Hong Kong or Korea of the world,” Steinhobel said.

    He also had parting words for the IP conference, telling them that the patent system is too expensive and that open source is the next trend.

    “The world is just about to become open source,” said Steinhobel. “There is so much plagiarism you can’t keep up. IP is good for negotiating … but you can’t go around suing on [a high number of] patents.”

    “We pay too much money to you guys for patent services,” he told the conference. “We’re giving you a licence to kill. You guys must cool it. It impedes a lot of growth.”

    As to their ideas being copied, he said, “You’ve got to get over it, find a new way,” as it is a moving target. For instance, he used to design tea kettles, and sold 35 million of them, but “now people just go to China get one off the shelf and put their label on it,” so he has moved on to new products.

     

    William New may be reached at wnew@ip-watch.ch.

     

    Comments

    1. Conference On IP, Innovation And Public Interest Underway | Intellectual Property Watch says:

      […] Spirit Of Innovation Runs High At South African IP Conference […]

    2. IP, Innovation, Public Interest Converge At Conference | UCT IP Unit says:

      […] noted that in November at an industry-led IP conference in Durban, South Africa (IPW, Developing Country Policy, 25 November 2013), private sector did not respond to his remarks that IP needs to better consider social costs. He […]

    3. Convergence Of Who’s Who In IP, Innovation, Public Interest In Africa » infojustice says:

      […] noted that in November at an industry-led IP conference in Durban, South Africa (IPW, Developing Country Policy, 25 November 2013), private sector did not respond to his remarks that IP needs to better consider social costs. He […]


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    We welcome your participation in article and blog comment threads, and other discussion forums, where we encourage you to analyse and react to the content available on the Intellectual Property Watch website. By participating in discussions or reader forums, or by submitting opinion pieces or comments to articles, blogs, reviews or multimedia features, you are consenting to these rules.

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    By participating in discussions or reader forums, or by submitting opinion pieces or comments to articles, blogs, reviews or multimedia features, you are consenting to these rules.

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    2. You understand and agree that Intellectual Property Watch is not responsible for any content posted by you or third parties. You further understand that IP Watch does not monitor the content posted. Nevertheless, IP Watch may monitor the any user-generated content as it chooses and reserves the right to remove, edit or otherwise alter content that it deems inappropriate for any reason whatever without consent nor notice. We further reserve the right, in our sole discretion, to remove a user's privilege to post content on our site. IP Watch is not in any manner endorsing the content of the discussion forums and cannot and will not vouch for its reliability or otherwise accept liability for it.

    3. By submitting any contribution to IP Watch, you warrant that your contribution is your own original work and that you have the right to make it available to IP Watch for all purposes and you agree to indemnify IP Watch, its directors, employees and agents against all damages, legal fees and others expenses that may be incurred by IP Watch as a result of your breach of warranty or of these terms.

    4. You further agree not to publish any personal information about yourself or anyone else (for example telephone number or home address). If you add a comment to a blog, be aware that your email address will be apparent.

    5. IP Watch will not be liable for any loss including but not limited to the following (whether such losses are foreseen, known or otherwise): loss of data, loss of revenue or anticipated profit, loss of business, loss of opportunity, loss of goodwill or injury to reputation, losses suffered by third parties, any indirect, consequential or exemplary damages.

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    8. For any content that you post, you hereby grant to IP Watch the royalty-free, irrevocable, perpetual, exclusive and fully sub-licensable license to use, reproduce, modify, adapt, publish, translate, create derivative works from, distribute, perform and display such content in whole or in part, world-wide and to incorporate it in other works, in any form, media or technology now known or later developed.

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