A Look At The EPO Project On The Future Of Intellectual Property

The European Patent Office (EPO) with its centralised patent grant system was established in 1973. The EPO has 31 member states and comprises a legislative body, the administrative council, and its Munich-based executive office. The EPO has addressed its concerns about the future of the intellectual property system by launching a major study of the “critical issues” ahead. The first part of the study, the result of 64 interviews with key players worldwide, has now been published in a book by the EPO. Intellectual Property Watch spoke recently with Konstantinos Karachalios, a member of the team carrying out the EPO Scenarios for the Future project, about the potential and challenges of the project. One challenge could be that the project finds that solutions may be found outside of the IP system itself. If that is the case, will the EPO and others be willing, and able, to change?

Intellectual Property Watch (IPW): How do you see the future of the IP system and what is the Scenarios for the Future project?

KONSTANTINOS KARACHALIOS (KARACHALIOS): The EPO launched a scenario project about a year ago. We want to see how the intellectual property rights landscape might look 15 years from now; the horizon is 2020. We are looking at the IP system worldwide, not only the European, not only the patents, Of course the question is what are the implications for Europe, and then what could be the implications for us, and then can we do something to influence the outcome so that it can be a win-win situation. Scenarios are not to predict the future, not to plan – they help structuring your mind. They help you better understand the long-term driving forces that are working already now, shaping the system, like continental plates moving, rotating and drifting. They enable you to think of different reactions to the current challenges. If you can figure out that there may be quite different outcomes, some of them possibly detrimental by all criteria, and that ultimately they may depend also on your actions, then you may assume a different kind of responsibility.

A very good example of such an exercise was the United Nations’ AIDS in Africa scenario, where they took into account all possible influences and driving forces but then the way they structured it, the three different outcomes, was based on the political will of their current leaders and also the rest of the world to assume different kinds and levels of responsibility. That means the responsibility is on human shoulders and depends decisively on our current course of acting or being passive.

As the UN scenario, the EPO scenario project is not meant as a prediction. It may ultimately serve as a guide how to take decisions and act now, if you want to avoid something or to reach something else. We are about 40 persons in the EPO dealing jointly with this exercise. We are called the ‘scenario builders.’ The EPO is quite a big organisation, some 6,500 persons, and, as far as I know, it is the third biggest intergovernmental organisation [IGO] worldwide, after the United Nations and the European Commission.

We have already had two workshops, where we agreed that we want to look to 2020. Nobody gave us this horizon, and amazingly all organisations and governments dealing with future scenarios have more or less the same time perspective. It seems that people cannot imagine looking farther than these 15 years. So do for instance the Australian government and the National Intelligence Council (US) — their stories also end at 2020.

“The EPO scenario project is not meant as a prediction. It may ultimately serve as a guide how to take decisions and act now.”We do not see this as an “esoteric” or internal EPO exercise. We have up to now interviewed 70 persons all around the world, taking very different stances towards the IP system and its perspectives, and there is more to come. In addition, in our workshops we systematically invite “external voices” who help us better understand the mood outside not only our organisation but also outside the IP system itself. In four dedicated workshops planned for the next months, the analogy of internals and externals will almost be one to one. Moreover, since we are an IGO, we are going to involve representatives from our 31 contracting states. It is quite a complicated structure, involving many more persons than the mentioned team of 40 scenario builders.

IPW: So you are still in the process of developing the project? But can you already say anything about the main challenges?

KARACHALIOS: We have identified already four basic driving forces on a very consensual broad basis: People from very different nations, different positions within the office, very different backgrounds – we all agreed on these four major driving forces which are more continental shelves moving, drifting, pressing one another.

The first is, broadly speaking, society. The deeper, long term expectations, fears, attitudes, how this underground landscape may influence the IP system. It might sound trivial, but it is not, because there has been a perception that the IP system is something for specific circles, experts and lawyers. However, since IP has entered the political arena, wider societal forces inevitably demand a greater role and influence.

There are political movements, non-governmental organisations [NGOs], wishing to play a role – already playing a role. That is very apparent. As the IP history of the past 100 years shows, a big problem is that IP is one of the rare, highly polarised fields, where it is apparently very difficult to build any kind of consensus, even to gather commonly agreed empirical data to serve as a basis for an objective discussion. It is a huge task for everybody rejecting extremist positions and seeking to create win-win situations.

“Since IP has entered the political arena, wider societal forces inevitably demand a greater role and influence.”The second continental plate is technology, emerging new fields and its pace, its acceleration, what is called “technology avalanche.” To give you one example: The whole 20th century is equivalent to only 16 years of technological progress measured by the year 2000, i.e., technologically seen, the whole century could be compressed within only 16 years, with developments concentrated more and more towards its end. Taking into account this accelerating effect, could you imagine how many such time units we and our children will experience and must cope with during the 21st century? There will apparently be more than 100, but can you imagine how many? Well, if you simply extrapolate the current trend, assuming no large-scale and long-term disasters, it may be that we will have to accommodate a technological progress equivalent to 25,000 years, based on year 2000 technology, within two generations. Even if you take “only” 1,000 years, we will be faced with challenges similar to the ones that are still facing most populations in Africa, which were catapulted from the Iron or Stone Age into modernity within two to three generations.

IPW: And all of these new innovations will influence the patent system?

KARACHALIOS: These developments influence society, morality, they pose very crucial dilemmas, going to the very heart of the conditio humana. And they will put a lot of stress on the patent system, if they do not do it already.

“The rise of China doesn’t mean only that China will be bigger and will increase its ability to impose rules internationally. The question is: What kind of rules?”The third challenge is linked to the general economic environment, including the innovation process. Whose interests is this system serving and where is the right balance? There is an ongoing general discussion about knowledge as public good and knowledge as an exclusive private property right. This is a never-ending question, one will never find the perfect equilibrium, it will remain a matter of political negotiation. Another aspect is the rapidly changing economic and production conditions within the globalization mega-trend.

Then we identified a fourth driving force, geopolitics, the working group of which I am coordinating. The question is how does geopolitics play into the agendas. How a change within a major geopolitical player, let’s say the United States, may influence the rest of the world. That means that you have to capture what is going on now in the micro-scale within the societies and policymaking levels not only of the current, but also the future major players, and also try to imagine the qualitative transformation of their IP agendas as they change in the years to come. This cannot be done by linearly extrapolating current agendas and weighing them with probable geopolitical future weight, you need to get the “turn”, the possible metamorphosis from caterpillar to butterfly.

So these are the four driving forces which of course are not separated, they play strongly into each other. Having this in mind, we have set up four groups to look more systematically into each one of the mentioned main challenges, intending to make a synthesis at the next phase of the project. For each topic we will hold small workshops including also external people.

Regarding the geopolitics group, we are interested in what are the current hot international agendas, who are the actors and what are the main underlying, long-term antagonisms and issues. We think that knowledge as public good versus knowledge as exclusive private property and the gap between haves and have nots, both at national and international level, may be such structural, long-term issues.

The hot issues could then be perceived as topical expressions/agendas of such basic antagonisms, as seen by the strong players under the current conditions. Examples are the harmonisation debate [and] the development agenda [both at the World Intellectual Property Organization or WIPO], the negotiations under the [current World Trade Organization trade talks called] the Doha round, the public health preoccupations, the battles around tradition knowledge, biodiversity and genetic resources.

Further, we try to understand the dynamics of the places where these fights or debates take place, such as WIPO, WTO, other UN bodies such as WHO [World Health Organization], UNCTAD [UN Conference on Trade and Development], as well as national and regional negotiation frameworks with the European Union, the United States, developed and developing countries [interact] with each other.

“The positive aspects of the system are still not used by the ones that need them most urgently. What is urgently needed is a coordination of donors also regarding IP, a coordination already achieved in other fields.”The current situation is already complicated enough, but what makes our exercise really difficult is to think how these actors and places may transform themselves in the future and how this may change attitudes and stakes. For instance, the rise of China doesn’t mean only that China will be bigger and will increase its ability to impose rules internationally. The question is: What kind of rules? The rules they have now or others they will get in their way going up? So it is a very complex figure, and right now we are trying to understand the current situation because in it there are already the [seeds] of the change. And this is the time where we have to start acting.

IPW: Is there a possibility that your study will find that the solution to the IP system challenges indeed lay outside of the system so that only reforming the system would not be enough?

KARACHALIOS: Our scenario is open-ended, so theoretically such an outcome could become possible. More concretely, as indicated above, we are discussing also the impact of extending the top-down, exclusive property rights paradigm to several fields of innovation such as business, plant varieties or so-called “sub-patentable” or incremental innovation both to the concerned fields and to the patent system itself, as epitomised in for example the publications and research work of Jerome Reichman [a professor at Duke University Law School]. Of course, no one can predict the outcome of these discussions.

IPW: What do you think of the developing country notion that current IP treaties should be made more flexible instead of trying to have more and more countries fit into the existing system?

KARACHALIOS: As several analysts state, the probability of changing the treaties in the current situation – and also in the horizon of our scenario exercise – is rather weak. So, the dispute will be around how to interpret, implement and enforce, including all enabling features of the patent system, the current treaties. In other words, the discussion will be not so much around the substantive patent laws, but about how to best use the patent system in a given context.

IPW: You talked about technical assistance, which you said was not being sufficiently provided to or used by developing countries. What is the reason for this?

“There is a widespread perception that the system is coming under stress.”KARACHALIOS: I think that the positive aspects of the system are still not used by the ones that need them most urgently. One of the reasons is that the demanding side — the developing countries — do not yet have the right tools and capacities to make full use of the system. This is what technical assistance should focus on and this is what we have been trying to do for several years. What is urgently needed is a coordination of donors also regarding IP, a coordination already achieved in other fields, for example the Organisation for Economic Co-operation and Development’s [OECD] integrated frameworks for free trade related technical assistance.

IPW: Do you think the European and the global IP system in general would be ready to change – is it possible for the people in the system to think out of the box?

KARACHALIOS: Not every fish likes jumping out of the water. On the other hand, it was the amphibians that opened new spaces for life in earth’s early days. There is an interesting theory that they had to do so because they were losing the battle in the water, so they had to search for alternatives. So, sometimes it is the losers, not the winners that kick off major change and evolution.

In our case, I think that we will all have to work hard to face the widespread perceptions in society, and partly in politics, and we may also need to question in depth some basic assumptions and leading paradigms.

IPW: I talked to a US patent attorney who is working a lot in China. He said that actually they are developing a very good patent system because they can avoid the mistakes of the West and jump straight into a new system although they have problems with copyright enforcement.

KARACHALIOS: You may know that Europe has a long cooperation history with China in the IP field. First the German Patent Office and then the EPO, with significant funding from the European Communities, have carried out major projects in China, contributing decisively to the current infrastructure, tools and working methods of the Chinese IP system. In particular, the Chinese patent system is very close to ours, and this is not only an important tool for boosting innovation in China, but probably also a big asset for European industry and investors.

IPW: Maybe related to the China issue: Why is it particular that the EPO is doing this exercise? Do you feel particularly threatened or are there some specific challenges to the European patent system?

“The EPO was conceived to become in the long term an organisation with some 2,500 persons, dealing with a maximum of 40,000 applications a year. Not even 30 years after, we are 6,500 persons and receive 200,000 applications a year, trends upwards.”KARACHALIOS: There is a widespread perception that the system is coming under stress. In the US it is very apparent, there is a lot of very vivid debate there, and this [spills] also over to Europe. There are two main symptoms: One is the increasing backlog, the patent offices face increased difficulties to cope with the numbers of applications. Apparently the system has been very attractive and successful, so an increasing number of people wish to use it. But this poses questions. Is the experienced geometrical growth sustainable and if yes, how can we cope with it? To give you an example: based on the situation and the predictions at its creation period, the EPO was conceived to become in the long term an organisation with some 2,500 persons, dealing with a maximum of 40,000 applications a year. Not even 30 years after, we are 6,500 persons and receive 200,000 applications a year, trends upwards. You see here that predictions and extrapolations based on solid experience and common sense do not always deliver realistic results.

IPW: Is this what people call “patent inflation”?

KARACHALIOS: Yes and no. First of all, within Europe, a new market was created, which did not exist before. This was not taken fully into account when introducing a new, regional system. On the other hand, internationally seen, there are new technological fields to which the patent system is extended [such as] bio-, nano-, cogno-technology, and other innovative fields like business methods, semantic web-related inventions [and] plant varieties which were thought not to belong to the patent regime. Also the fields of “small grained” technical improvements, which could be seen to belong to the category of “sub-patentable innovation” exert considerable pressure onto the patent system, mainly because there seem not to exist satisfactory systems to reward creators in all these fields. So, the patents paradigm, precisely because it has been historically so successful, is extended to cover all these fields.

So numbers are growing for different reasons and we have to understand them and design a strategy for Europe. We wish to contribute to this, since we are a genuine European organisation, although not a body of the European Union or Commission. As we look for our position within Europe and the role of Europe within the world, we need to look strategically into the future.

IPW: So this project could just as well have been carried out by the United States, for example?

KARACHALIOS: Taken from their point of view, yes. In particular, I imagine that the patent offices of both the US and Japan will become increasingly interested in what we are doing and that we will somehow introduce this matter into our trilateral framework.

IPW: Thank you.