WIPO To Tackle Lisbon Financing, External Offices, Development Expenditures

The World Intellectual Property Organization Program and Budget Committee meets next week to address several substantive issues. Among the issues to be discussed is the financing of the system of protection of geographical indications, which has been called into question by non-members of the system. Other topics are external WIPO offices, and if the WIPO coordination office in New York should be closed, what constitutes development expenditures in the budget, and how to implement a recommendation by the United Nations Joint Inspection Unit.

The 24th session of the Program and Budget Committee (PBC) is meeting from 14-18 September.

The PBC is called on to approve the WIPO budget for the next biennium. The Proposed Program and Budget for 2016/2017 [pdf] was submitted to the PBC session in July (IPW, WIPO, 22 July 2015).

The Conundrum of Lisbon System Financing

After the controversial adoption of the Geneva Act of the Lisbon Agreement on Appellations of Origin and Geographical Indications, in May, a number of countries have called into question the financing of the system (IPW, WIPO, 20 May 2015), underlining a chronic deficit. At present, only a small number of WIPO members benefit from the Lisbon system and there are differences between countries worldwide on use of geographical indications and trademarks.

The WIPO secretariat has provided Options for the financial sustainability of the Lisbon Union [pdf] for next week’s meeting of the PBC. According to the document, in 2016/2017, the expenses related to the Lisbon Union are expected to amount to CHF 1,125,000 (US$ 1,150,000) per annum.

Over the last five years, the document says, “the Lisbon System has received 80 (2014), 12 (2013), 9 (2012), 3 (2011), and 6 (2010) applications, respectively. The average number of applications received over the last twenty years was 14 applications per year.”

If single fees were to fund the operations of the Lisbon Union, the international registration fee required would be CHF 80,357 (US$82,187), according to the document. The forecasted 20 international applications and 20 modifications per year in 2016/2017 would bring that amount to CHF 54,750 (US$55,998). “At this fee rate, in both scenarios, the System would be at risk of receiving no future applications,” it said.

A new fee structure is being considered but, according to the document, this proposed fee structure would lead to a projected annual deficit in 2016/2017 of some CHF 700,000 (US$715,000).

The document states that member states “will have to consider whether to pursue increased fees, annual contributions, a working capital fund, advances from the Host State, and/or other sources of financing, or a combination thereof to provide for its long-term financial sustainability.”

Some countries, in particular the United States, have asked that in the budget the Lisbon system stand on its own and not be coupled with the Madrid System for the International Registration of Marks.

US Proposal

In July, differences over the Lisbon issue appeared to be threatening to hold up approval of the WIPO biennial budget (IPW, WIPO, 30 July 2015).

Last week, the United States tabled a proposal [pdf] to be submitted to the WIPO General Assembly in October. The proposal calls for the WIPO Standing Committee on the Law of Trademarks, Industrial Designs, and Geographical Indications (SCT) to review the newly adopted Geneva Act of the Lisbon Agreement. The proposal asks that the SCT consider “the systems of protection for indications of source such as certification trademarks, collective trademarks and geographical indications, while protecting the principle of territoriality and the use of common names.”

The US also tabled a proposal [pdf] for the Patent Cooperation Treaty Union Assembly so that would “direct that PCT Union fee income and reserves shall not be used to fund the Lisbon Union direct or indirect expenses, absent specific authorization by the PCT Union to do so.”

“We understand that the Lisbon Union deficit is being financed by the Patent Cooperation Treaty (PCT) and Madrid System for the International Registration of Marks (Madrid System) international registration systems,” the US said. “We have grave concerns that this deficit financing scheme is in contravention of the treaty obligations of the PCT.”

External Offices, TAG, Development Expenditures

Among the programmes still to be discussed after the July session of the PBC, is the establishment of a new international quality assurance standard for collective management organisations, referred to as TAG (Programme 3). Some member states requested that the TAG should involve a full consultation process with WIPO’s member states when defining quality assurance standards.

Programme 20 on new WIPO external offices is also expected to be revisited next week and in particular whether the proposal by the secretariat to close the WIPO Coordination Office to the UN in New York after the next biennium will be carried out.

The definition of development expenditures is also expected to be debated. For several years, the issue of what constitutes development expenditures in the WIPO budget has been under discussion. Some developed countries are of the opinion that fee reductions to the PCT constitute development expenditures while developing countries say that development expenditures should concern development-oriented activities.

Also remaining to be discussed is Programme 6 (Madrid and Lisbon Systems) and a proposal to split the programme into two separate programmes.

Governance

The issue of governance is linked to the 2014 UN Joint Inspection Unit (JIU) Report, in particular Recommendation 1 which suggests that the WIPO General Assembly should review the WIPO governance framework as well as current practices “with a view to strengthen the capacity of the governing bodies to guide and monitor the work of the organisation.”

A Progress Report [pdf] on the Implementation of the JIU Recommendations for the Review of WIPO Legislative Bodies has been tabled by WIPO for next week’s meeting.

Other Items

On the draft agenda [pdf], a number of items are listed for the consideration of member states. This includes an update [pdf] on a proposal of the PCT working group concerning hedging strategy for the PCT income, which relates to exposure to movements in currency exchange rates.

Also on the agenda is a Proposed Revision [pdf] of the Terms of Reference of the WIPO Independent Advisory Oversight Committee (IAOC), and a WIPO Independent Advisory Oversight Committee Membership Rotation [pdf].

Member states are invited to consider the Report [pdf] by the External Auditor, and the Annual Report [pdf] by the Director of the Internal Oversight Division (IOD), as well as the Annual Financial Report [pdf] and Financial Statement 2014, and the Revised Policy [pdf] on Investments.