TRIPS Council Debates IP Improving Lives, Competition Law To Increase Medicines Access

Whether intellectual property rights are improving lives or whether they should be reined in by tools such as competition law to increase access to medicine, education, and innovation, was debated this week at the World Trade Organization committee on intellectual property. Also on the agenda was a suggestion by least-developed countries to create incentives for developed country companies and institutions to transfer technologies for the benefit of the poorest countries.

The WTO Council for Trade-Related Aspects of Intellectual Property Rights (TRIPS) met from 5-6 June.

LDCs Request on Tech Transfer, Developed Countries Hesitant

After the Group of Least-Developed Countries (LDCs) requested a discussion on the implementation of technology transfer rules by developed countries in February (IPW, WTO/TRIPS, 28 February 2018), the conversation resumed this week.

According to a source, last week TRIPS Council Chair Walter Werner of Germany facilitated a meeting between members of the LDC group and developed country members. In their submission [pdf], the LDC group asked for the effective implementation of paragraph 2 of Article 66 of the TRIPS Agreement (Least Developed Country Members), and the reporting mechanism.

The LDC group shared a “room document” presenting a list of what could constitute incentives to developed country enterprises and institutions to provide technology transfer.

According to the document, incentives include the provision of a voucher scheme to enterprises or institutions in the territory of a developed country for acquisition of inputs, if the enterprise or institution project includes technology transfer to LDCS. Other were the issuance of government technology licences developed by government-funded research and development to LDCs; and a tax exemption for enterprises in the territory of developed countries, if technology is transferred to LDCs.

Developed countries argued that the proposal would undermine longstanding and beneficial reporting requirements, and that technology transfer is more efficient if it takes place on voluntary and mutually-agreed terms, according to a source.

The European Union in their statement said its member states “take their commitments and obligations under Article 66.2 TRIPS very seriously, trying to make the annual submissions on technology transfer more transparent and comprehensive.”

The EU statement also said technology transfer requires the acquisition by LDCs of a sound and viable technological base, which is not solely dependent on the provision of technology or equipment. The EU questioned the need for an indicative list of what would constitute incentives for enterprises and institutions, as governments have to remain free to decide how to incentivise their enterprises to transfer technology to LCDs and other developing countries.

According to the source, a number of developing countries supported the LDC group proposal.

IP Improving Lives

Australia, Canada, the European Union, Japan, South Korea, Switzerland, Taiwan, and the United States proposed to discuss “the value of intellectual property in the new economy, and how IP improves lives.”

“The intellectual property system plays a major role in providing incentives to the development of solutions to current challenges and enriches lives thanks to more diverse literature and art,” the Swiss delegate said.

“IP rights are an important tool. They are, however, not a panacea and need to be put into the wider context of the market economy and state policies,” the Swiss delegate said, adding that a free competitive environment is one of the main driving forces of innovation, as well as a reliable legal framework, including a system of adequate and enforceable IP protection.

The Swiss delegate told the story of the invention of instant coffee by Swiss chemist Max Morgenthaler, seeking a solution to Brazil’s coffee beans surplus caused by the 1929 Wall Street crash. The availability of patent protection of this new method of producing instant coffee served as an important incentive, according to the Swiss statement.

IP also contributed to the development of new innovative drugs and treatments, the delegate said, and “plays a key role in providing the necessary funds to cover the expensive undertaking of developing new medicines.”

The delegate also cited Solar Impulse, a Swiss solar-powered plane, which in 2016 completed the first-ever round the world flight without a drop of jet fuel, advertising for clean technologies and renewable forms of energy production. This project too relied on IP protection, the delegate said.

The EU supported the development of various approaches in high performance computing, data analytics and artificial intelligence to help design new healthcare products and better treatments. However, the delegate said, succeeding in these endeavours depends on the availability of new and innovative technologies that ultimately will have to be developed by private healthcare industries, and those need to be able to retrieve a return on their investment.

“Without functioning IP systems, this paradigm shift will not happen or the benefits will only be fully exploitable in those places that properly protect IP,” the EU said it its statement.

Brazil presented Brazilian innovations which improved lives. One of them is a smartphone app called “Cataki,” which connects consumers to companies that recycle products, and which received a prize from UNESCO.

According to the Brazilian statement, the country is currently undertaking studies in partnership with international organisations to measure the concrete impact of IP on the Brazilian economy and on access to technology in areas such as agriculture and health.

The Brazilian government also supports innovation through the financing of start-ups for example, the delegate said, adding that IP by itself, although holding an important role, does not generate innovation and development but must be part of a broader innovation and industrial policy strategy.

For South Africa, “any attempt to quantify the impact of IPRs [intellectual property rights] needs to appreciate the variable nature of the legal frameworks that supports IPRs.” The economic literature on the impact of IPRs is rather inconclusive, the South African delegate said in his statement, adding that “it remains ambivalent as to whether the social benefits of IPRs exceed their costs, even in relation to the developed world.”

The delegate argued that if the basic argument in favour of IP rights is their positive role on innovation, their main critique is the increased cost of patented commodities, and in particular in developing countries, net importers of technology.

The South African delegate also underlined the fact that developing countries are not homogenous, and the impact of IP policies on poor people varies according to socio-economic circumstances. “What works in India will not necessarily work in Brazil or Botswana,” he said.

He remarked that over 40,131 patents originating from all over the world were registered in South Africa between January 2005 and July 2015, but only 10 percent of which were South African patents.

“The South African patent landscape is characterized by the easy grant of patents of dubious quality and value, as well as the enforcement of a legal framework that appears to be heavily skewed in favour of patentees,” he said.

The United Nations Conference on Trade and Development (UNCTAD) delivered a statement on the societal value of IP. In his statement, the UNCTAD representative advocated for assistance to developing countries in support of their technology-based industries and job creation in areas such as pharmaceuticals, biotechnology, information and communication technology, and agricultural technologies.

In the context of its IP activities, UNCTAD would like to focus on helping developing countries negotiate licensing contracts, as UNCTAD noticed that “contractual licenses may provide a key avenue for technology transfer in developing countries and may at the same time open new markets for foreign investors.”

The lack of capacity in some developing countries and least-developed countries in understanding and negotiating a contractual licence has not been sufficiently addressed by the providers of technical cooperation, the representative said.

UNCTAD intends on cooperating with the Medicines Patent Pool, which, the representative said, confirmed the need to build capacities in developing countries to better understand patent licences. UNCTAD could complement the work of the MPP, he said.

Competition Law to Address Public Health Challenges

Brazil, China, India, and South Africa had proposed a discussion on how public health can be promoted through competition law and policy.

Brazil in its statement said one way to pursue competition law and to achieve health outcomes is to prevent illicit conduct such as cartels and illegal unilateral conducts, as well as prevent the formation of undue mergers in markets that deal with public health.

The Brazilian delegate provided examples of a cartel in the segment of implantable cardiac pacemakers, and of a company producing chemotherapy medication for cancer abusing exclusive rights. In the field of medical products, the delegate said, it is of particular importance to assure that the exclusive right granted to right holders does not become a hindrance to technological innovation and access to medicines.

South Africa stated that competition policy seeks to ensure that markets function efficiently, and benefit both producers and consumers. The South African competition law “focuses not only on pure competition law matters, but also contains pertinent public interest and social objectives,” the delegate said in his statement.

Competition law and patent law together can be used to implement competition-related TRIPS flexibilities and advance consumer welfare, he said.

The European Union criticised the mention in the submission by India, Brazil, China, and South Africa of the 2016 United Nations Secretary General’s High-Level Panel on Access to Medicines, which the EU said is based on a assumption it does not share that there is policy incoherence between the right of inventors, international human rights law, trade rules, and public health.

Of particular concern for the EU is the mention in the submission of patentability criteria as a TRIPS flexibility. According to the EU statement, a number of jurisdictions are misinterpreting the patentability criteria detailed in TRIPS to “apply practices in the patent grant process which could be interpreted as amounting to additional patentability criteria not mentioned in the TRIPS agreement.” The EU urged those members to “reconsider their practices.”

The EU also cautioned against the use of competition policy as a TRIPS flexibility. The EU delegate said compulsory licences on pharmaceutical patents as a remedy to excessive pricing “would have a negative impact on innovation incentives and appear to be superfluous, because a competition authority, once it has established unlawful market behaviour, has the normal toolbox of competition policy remedies.”

According to a source, Switzerland concurred with the EU on the High-Level Panel, and said voluntary licensing mechanisms such as the Medicines Patent Pool are the way forward. IP and competition law are complementary, the Swiss delegate said, and “any strong measures such as compulsory licensing should be considered as a policy tool of last resort.”

According to a source, the United States said that IP and competition are distinct disciplines, which are implemented and overseen by different administrative authorities, and the TRIPS Council is not a conducive venue to have a detailed discussion of competition law and policy concepts.

“The misapplication of competition law is particularly concerning in IP disciplines because it runs the risk of forestalling future innovation and as such antitrust enforcers should strive to eliminate as much as possible the unnecessary uncertainties for innovators and creators, and their ability to exploit their IP rights, as those uncertainties can also reduce incentives for innovations,” the US said according to the source.

Non-Violation Complaints, Requests for Concrete Cases

Non-violation complaints allow a country to take another country to the WTO Dispute Settlement Body even if no WTO agreement has been violated, on allegations of deprivation of an expected benefit because of that country’s action. A moratorium is shielding non-violation complaints from IP-related complaints. Most of the WTO membership is in favour of making the moratorium indefinite, while the US and Switzerland would like the moratorium to be lifted.

South Africa, in its statement, noted that the moratorium has been renewed eight times. The delegate remarked on the rarity of non-violation complaints at the WTO, and on the fact that the evolution of the multilateral trading system, and the expansion in the provision of WTO agreements regulating non-tariff measures, may have had the effect of making non-violation complaints redundant as a remedy.

However, the South African delegate did not close the discussion and suggested that proponents of the application of non-violation complaints under TRIPS provide concrete examples of the kinds of scenarios “under which an otherwise TRIPS-consistent measure would impair or nullify benefits beyond those arising from the obligations set out in the Agreement.”

Brazil also remarked that the proponents have not provided information about the scope and modalities of non-violation complaints under TRIPS, encouraging them to do so, according to its statement. The Brazilian delegate said Brazil remains unconvinced about the necessity of providing non-violation complaints under TRIPS, and asked for concrete case of this necessity by the proponents.

Switzerland said in its statement that the moratorium should be lifted. Switzerland argued that TRIPS Article 64.2 and 64.3 do not instruct the TRIPS Council to examine whether or not non-violation complaints should apply under the TRIPS, but to examine scope and modalities for such complaints.

The Swiss delegate agreed with South Africa on the rarity of non-violation complaints and said they exist to provide predictability and security to all members under the TRIPS. Non-violation complaints, the delegate said “preserve Members’ ability to implement legitimate social, economic, development, health, environmental and cultural policies.”

Non-violation complaints, the Swiss delegate added, cannot be used as a tool to increase the level of IP protection established under the TRIPS, and would not impede the use of TRIPS flexibilities.

E-Commerce: Not Yet

According to several sources, Bangladesh proposed that the WTO work programme on e-commerce become a standing agenda item at the TRIPS Council. This request was opposed by the United States and the European Union, according to sources.

In its statement, Bangladesh said the ministerial conference of last December gave WTO members the mandate to continue work under the 1998 Work Programme on Electronic Commerce by the relevant bodies.

“We understand that TRIPS Council is one of the four bodies, which has been entrusted to examine specific issues,” the delegate said.

Bangladesh believes that e-commerce has been evolving rapidly and new issues such as data and innovation in the digital economy have risen, he said, underlining the importance of access to technology so that e-commerce benefits all.

Benin, Brazil, and Venezuela supported Bangladesh, an LDC source told Intellectual Property Watch.

 

Image Credits: Catherine Saez