US Firm On WIPO Budget Demands: Lisbon Must Find Funds, WIPO Financial System Must Change

World Intellectual Property Organization members this week are trying to find a compromise in order to adopt the budget for the years 2018/2019. The United States has posed conditions on approval, particularly that they would like to keep discussing a potential change in WIPO’s budget allocation to prevent the treaty they pay most into from having to fund other less financially viable treaties. They also asked that the WIPO treaty protecting geographical indications eliminate its deficit, and that no high-level negotiating meeting be provisioned for without the whole WIPO membership agreeing to it.

The 57th series of WIPO Assemblies is taking place from 2-11 October.

Delegates this week are trying to agree on the proposed budget [pdf] for the 2018/2019 biennium, and on the proposed capital master plan [pdf] 2018/2027. They started discussing the matter on 3 October.

No agreement could be found in either at the last two sessions of the WIPO Program and Budget Committee (PBC) (IPW, WIPO, 18 September 2017)

WIPO Director General Francis Gurry presented the programme and budget, with an estimated income for the first time over CHF 800 million for the 2018/2019 biennium (IPW, WIPO, 11 September 2017).

He explained that the Capital Master Plan was used to keep the organisation’s premises and systems fit for purpose. The proposed provision for the next two years is CHF 25 million.

US Poses Three Conditions for Adoption

The US said they are not prepared yet to approve the budget, and conditioned their approval on three items. The first is that the Lisbon System for the International Registration of Appellations of Origin “assumes its financial commitment to the organisation” by addressing its projected deficit (around CHF1.5 million in 2016/2017 biennium).

The second condition is that work continues on the allocation methodology of the budget by union, and the third condition refers to the need for a consensus of the whole WIPO membership before provisions can be made for high-level negotiating meetings (diplomatic conferences). The US has expressed concern since the 2015 adoption of the Geneva Act of the Lisbon Agreement on Appellations of Origin and Geographical Indications, benefiting a subset of the WIPO membership. It argues that the Lisbon system has a chronic deficit, and that the Patent Cooperation Union is financing over 75 percent of WIPO’s budget, and should not be called to pay the Lisbon system deficit without the PCT members agreeing on it.

The US asked that the item be held open until after decisions on the Lisbon System, and the report of the Intergovernmental Committee on Intellectual Property and Genetic Resources, Traditional Knowledge and Folklore (IGC) – another difficult issue at this General Assembly – have been taken.

US Explanation of Rationale

The US explained that some WIPO unions existed before WIPO was established and “those fee-financed unions have a different commitment to the organisation than the contribution-financed unions.”

A 2016 PBC document prepared by the secretariat entitled, “Review of allocation methodology for the income and budget by union,” lists all WIPO unions, six of which are contribution-financed unions: the Paris Convention for the Protection of Industrial Property, Berne Convention for the Protection of Literary and Artistic Works, the International Patent Classification, the Nice Agreement Concerning the International Classification of Goods and Services for the Purposes of the Registration of Marks, Locarno Agreement Establishing an International Classification for Industrial Designs, and Vienna Agreement Establishing an International Classification of the Figurative Elements of Marks.

WIPO also administers four fee-financed unions: the PCT, Madrid Agreement Concerning the International Registration of Marks (Madrid system), the Hague Agreement Concerning the International Registration of Industrial Designs (Hague system), and the Lisbon system.

The PBC document says that “the evolution of the Organization from a mostly contribution-financed Organization to a mostly fee-financed Organization has taken place over the past three decades. In the 2016/17 biennium, WIPO’s revenues from fees are expected to represent 94.5 per cent of the Organization’s overall revenue.”

According to the US, the unitary contribution system causes contribution-financed unions to have a single budget between them, while each registration system has a separate budget. In 2013, the US delegate said, WIPO members decided against a unitary budget so as to allow the fee-financed unions to retain independent decision-making authority, independent of WIPO’s. This could not be confirmed at press time.

In 2015, the WIPO legal counsel provided an explanation on the unitary contribution system (IPW, WIPO, 8 October 2015).

Fee-financed systems need a budget and have income that is sufficient to cover expenses, she said, adding that the unitary contribution does not fund the registration union, only the contribution-financed unions.

The rationale for the unitary contribution system was originally administrative convenience and facilitation of accession to the contribution-financed unions by developing countries, the delegate added.

Unitary System Defended by Many Countries

A number of countries taking the floor said they are ready to adopt the budget as it was presented by the WIPO secretariat, with the modifications requested during the last two sessions of the PBC in July and September. Countries that voiced approval for the budget as proposed include Chile, Brazil, Switzerland, France, Senegal for the African Group, Italy, Indonesia for the Asia and Pacific Group and in its national capacity, Germany, Portugal, Russia, Ecuador, South Africa, Spain, Malaysia, and Angola.

Some countries also underlined their attachment to the WIPO unitary system and the solidarity between WIPO’s unions. This included Switzerland, France, Italy, Indonesia, Germany, Spain, Iran, and Malaysia.

The African Group said the convening of diplomatic conferences should not depend on any pre-condition and should be subjected by a decision by the General Assembly on the basis of a “well-established mechanism.” This concern was also echoed by Iran.

Switzerland remarked that WIPO is engaged in a number of activities, including capacity building and technical assistance, IP awareness-raising, for example through WIPO Academy, and the ongoing normative work in different committees. These activities do not make a profit, most of them could be considered in deficit, the Swiss delegate said. Only the unitary rationale guarantees the financing of those activities, whether they generate profit or not, she added.

US, Japan, China PCT Heavyweights

As shown in a briefing [pdf] made in April 2017 by Gurry to ambassadors on WIPO 2013 results, the fees generated by the PCT system cover 75 percent of the WIPO budget.

In 2016, some 233,000 international applications were registered in the PCT, a 7.3 percent increase over 2015. The 10 top filers were the US, Japan, China, Germany, South Korea, France, the United Kingdom, the Netherlands, Switzerland, and Sweden. The trend over the last 10 years shows a sharp rise from Asian filers.

Image Credits: William New, WIPO