US Raises Economic Concerns About Proposals At WIPO On Patents And Genetic Resources

Normally known for sanguine views of rules to strengthen intellectual property rights globally, the United States government this week submitted a paper at the World Intellectual Property Organization putting forward private sector economic concerns about proposals to strengthen international rules for patenting of genetic resources aimed largely at helping developing countries.

The 36^th session of the WIPO Intergovernmental Committee on Intellectual Property and Genetic Resources, Traditional Knowledge and Folklore (IGC) is taking place from 25-29 June. All documents are available here.

The US paper entitled, “The Economic Impact of Patent Delays and Uncertainty: U.S. Concerns about Proposals for New Patent Disclosure,” WIPO/GRTKF/IC/36/10, is available here. The paper reacts to a committee text consolidating various proposals, WIPO/GRTKF/IC/36/4.

The paper cites studies that showed that for each year’s delay in the patent application process, employment growth declined by 2.4 percent in the first year after a patent grant, and by 12.7 percent and 19.3 percent over three and five years, respectively. Similarly, the effect on sales growth was pejorative, leading to negative impacts of 3.6 percent, 12.8 percent, and 28.4 percent over the one, three and five years following the patent first-action decision, the study said.

At issue are proposals by developing countries – which tend to have significant genetic resources – trying after decades to finally rein in what they see as ongoing biopiracy – the misappropriation of their genetic materials – by northern companies and others who use the materials in patented products without disclosing the origin of the genetic materials. An example of a biopiracy case surfaced this month involving genetic material of the açai berry from Brazil being used in research in California.

The aim of the proposals is generally to ensure prior informed consent of the communities and countries where the genetic materials occur, in part so that they may be sure to have access to, and get some benefits from, any product – such as a pharmaceutical or biotech innovation – that is ultimately put on the market.

The main concern of the US paper is the “uncertainty” new measures might inject into the system, deterring or chilling private sector innovation.

“Proposed sanctions for patent applicants and owners failing to meet these requirements include the rejection of a non-compliant patent application or the revocation of a non-compliant patent,” the paper states. “…[T]hese requirements could have a devastating impact on research and development in the field of biotechnology and pharmaceuticals due to uncertainties they would introduce into patent protection.”

Observers typically hold the view that protecting local communities is in the public interest. Companies might argue that ensuring the private sector can continue to access the resources necessary to develop the next scientific or technological innovations is also in the public interest. And if their costs go up, they tend to pass these on to the consumers. The differences fall on who gets benefits for innovations derived from genetic resources, and how to ensure there would be no abuse of any new system that is set up.

One US concern is that biotech and pharma inventions generally increase in value over time, after they gain regulatory approval and their value is recognised by people in the field. Competitors tend to challenge such inventions after that, they said.

But also, the uncertainties around requiring mandatory disclosure of origin “could cause significant delays in the patent examination process by reducing the patent’s valuation and making investments into research and development imprudent,” the US said. The 7-page paper goes into some detail on the economic impact of delay and uncertainty, citing certain studies.

International organisations and policymakers are sometimes seen as being out of touch with private sector interests, and the private sector is often encouraged to participate in the policymaking process and provide their views.

But a developing country official attending the WIPO negotiations today told Intellectual Property Watch the paper appears to be based on “hypotheticals” and that it suggests countries should continue to allow misappropriation in the name of protecting company patents.

“When somebody is misappropriating your knowledge or genetic resources, and you are saying because your patent will be delayed that means the country should continue to allow their misappropriation, that doesn’t make sense,” the official said.

US and other developed country companies have taken the view that they prefer to leave policies to the national level and to make arrangements with local communities via contracts, when relevant. But developing countries have said the communities are often at a disadvantage in such contractual negotiations, and that many genetic resources are taken and used without acknowledgement or contract.

The US paper does not appear to include any proposal for alternatives or acknowledgement of the problem of theft asserted by developing countries. A US delegate presenting the paper this morning noted that US law has measures for this purpose. He also highlighted a “Joint Recommendation” (WIPO/GRTKF/IC/36/7) in this WIPO committee of the US along with Canada, Japan, Norway and South Korea that would allow third parties to dispute validity of a patent, and shared access to databases to try to prevent misappropriation. These members reintroduced their proposal this week and took the floor this morning to ask that their proposal be used as the basis for agreement in the committee going forward.

The US delegate and others also raised a new study by the International Federation of Pharmaceutical Manufacturers and Associations (IFPMA) launched and presented yesterday at a side event at WIPO that similarly looked at the economic impact of disclosure requirements in patent applications for genetic resources-based innovation.

The US paper concludes: “These requirements will cause uncertainty in the patent system that, at best, will raise costs for innovators, IP offices, and the public, and at worst, will chill and deter innovation and public disclosures of inventions, to the detriment of scientific, technological and economic development around the world.”

Debate in Plenary

In the plenary, indigenous groups took the floor to say that even though the disclosure requirement would add some work for patent examiners, it would be effective in reducing erroneous patents and ensure patent filers have legal title, increasing legal certainty.

The suggestion of economic impact must include all affected parties, not just patent filers, indigenous groups said. Indigenous groups will counter with a study showing the economic, social and cultural damage to indigenous peoples of erroneous patents filed over the years.

In fact, as one indigenous representative said, the problem of access and benefit-sharing and biopiracy of genetic resources was supposed to have been addressed in the 1992 Convention on Biological Diversity and its later Nagoya Protocol. The US paper shows that the problem is continuing and the work of the WIPO committee to address it becomes all the more relevant, they argued.

Switzerland has a disclosure of origin law which can lead to penalties, and a representative of the American IP Law Association (AIPLA) presented results of a study on the experience of a number of companies with the Swiss law. One thing it found was that companies with biotech-related patents could avoid Switzerland’s jurisdiction by filing at the European Patent Office. The US delegate pointed to this finding as evidence that a disclosure requirement can be a deterrent to patenting.

The African Group took the floor to ask that committee negotiations continue to be based on the consolidated text, WIPO/GRTKF/IC/36/4.

Japan, backed by the US and some others, backed a proposal, WIPO/GRTKF/IC/36/8, that focuses on the use of databases for defensive protection of genetic resources and traditional knowledge related to genetic resources.

Canada took the floor to discuss another document, WIPO/GRTKF/IC/36/9, a “Proposal for the Terms of Reference for the Study by the WIPO Secretariat on Measures related to the Avoidance of the Erroneous Grant of Patents and Compliance with Existing Access and Benefit-Sharing Systems.” Canada said the proposal would go beyond existing studies and provide new and better information, which could be helpful in addressing concerns such as those raised by indigenous groups.

Indigenous groups have raised concern that heavy patent-filing nations are continuing to try to delay the progress of this committee toward a legally binding instrument on the protection of genetic resources. The US argued that suggestions are aimed at improving the work of the committee and “are not intended to slow the work” of the committee.

Brazil took the floor to say all members’ concerns are legitimate, but they would be given more comfort if their concerns would also be given equal treatment, that the US paper inaccurately refers to a no-longer active Brazilian law, that the committee has two decades of studies already and that the proposed study’s questions have been fully addressed previously.

[Editor’s note: this article was updated progressively during the plenary discussions this morning.]