EU Commission 'Openly' Promotes Utopian 'Open' Public Innovation Standards That Disadvantage Small & Medium-sized Enterprises (SMEs)

http://www.ip-watch.org/weblog/index.php?p=894


25 January 2008


Standardisation Policy More Effective Than Legislation On IP?


Posted by William New


By Monika Ermert for Intellectual Property Watch





Efforts by European Union authorities to take advantage of standardisation as a de facto regulatory tool have not been sufficiently systematic in recent years, according to a study published by the European Commission last week. Yet standards especially in information and communications technology (ICT) are becoming more important, said Patrick Van Eecke, attorney at the Brussels office of DLA Piper UK and co-author of the study.



The study http://ec.europa.eu/enterprise/ict/policy/standards/piper/executive_summary.pdf
recommended a dialogue between standardisation organisations and all stakeholders. Also urgently needed is a balance between technical standards and intellectual property rights, according to the study.




Concerns that overly rigid IPR protection might become a problem for invention and innovation recently also resulted in other recommendations and decisions at the EU level. A call for changes in the EU patent system was made in a study commissioned by the European Parliament’s Scientific and Technological Options Assessment (STOA) unit and an inquiry into possible anticompetitive practices by the pharmaceutical industry that was initiated by European Commissioner for Competition Neelie Kroes.




[THE EU COMMISSIONERS' DECISION TO LAUNCH SUCH INQUIRIES IS BASED ON IDEOLOGY - DISREPECT FOR EXCLUSIVE NEGATIVE PRIVATE PROPERTY RIGHTS IN AMERICA , WHICH DO NOT EXIST IN EUROPE]**




A debate on future EU standardisation policy will take place at a conference organised by the European Commission on 12 February in Brussels.



Author Van Eecke, speaking with Intellectual Property Watch, pointed to the growing relevance of technical standards that “are more important than legislation.” Companies and citizens either abide by laws passed by governments or not, but to not follow well-established technical standards would mean to be excluded from the market.




[THIS IDEA OF 'TAKING OVER' GLOBAL INDUSTRY STANDARDS HAS BEEN AN ASPIRATION OF THE EU'S SINCE THE LISBON AGENDA MADE ITS DEBUT DURING 2000. ]**


“If you are a policymaker, you really would like to make sure that companies and citizens abide by the rules, so instead of drafting a law you could put them into a standard,” he said.


Using privacy as an example, he said, “You can draft one hundred laws that should protect it - and hope that people follow the law. But if you are able to have EU data protection implemented in the technical standards, it might be much more effective.” Van Eecke said that legislators who try to rule via standards would end up drawing the conclusion from American cyberlaw luminary Lawrence Lessig’s theory that code is the (new) law and shifts legislators’ attention to standardisation.




[IN OTHER WORDS, COUNSEL IS FISHING FOR NEW CLIENTS THAT FAVOR AN 'OPEN SOURCE' TO KNOWLEDGE (A2K) PARADIGM THAT PAYS LESS THAN EVEN CONCESSION RATE PRICES. TOO BAD HIS CLIENTS WOULD STILL NEED TO PAY HIS BILL EVEN THOUGH THEIR 'OPEN SOURCE' PRODUCTS BRING IN LITTLE PROFIT, IF ANY!!!]


“Yet what you see is that more and more standards are not drafted by organisations that take orders from the EU Commission or governments.” The European Union has tried to build strong EU standardisation bodies by institutionalising the European Committee for Standardisation (CEN), the European Committee for Electrotechnical Standardisation (CENELEC) and the European Telecommunications Standardisation Institute (ETSI). Yet instead, more and more standards have been crafted by private standardisation bodies like the Internet Engineering Task Force, (IETF), World Wide Web Consortium (W3C) or industry consortia like the Organisation for the Advancement of Structured Information Standards (OASIS).










A big step forward, said Van Eecke, would be if the study resulted in a dialogue between organisations and stakeholders in a high-level forum that would decide on what to put into the standards.



Instead of reinventing the wheel and pushing for standards by “official” EU standardisation bodies, EU regulators should join the private standardisation bodies where necessary and try to have the regulators’ policy perspectives reflected in their work, Van Eecke said.



For example, instead of leaving discussions on standards at the IETF to US authorities alone, the European Union should participate and promote its ideas there, too. To have European political standards implemented in technical standards would also mean to possibly give them a global reach. Opening up EU standardisation bodies to more stakeholders also should be considered, Van Eecke said.


[THE EU COMMISSION HAS ALREADY EXPORTED ITS POLITICAL STANDARDS WITHIN OSTENSIBLY PRIVATE INDUSTRY FORESTRY CERTIFICATION & LABELING STANDARDS TO GAIN A COMPETITIVE ADVANTAGE AGAINST FOREIGN WOOD PRODUCT EXPORTS -- SEE: Discerning the Forest From the Trees: How Governments Use Ostensibly Private and Voluntary Standards to Avoid WTO Culpability, at: http://www.itssd.org/GTCJ_03-offprints%20KOGAN%20-%20Discerning%20the%20Forest%20from%20the%20Trees.pdf ] ***



The degree to which it is necessary to have a balance of interests and highly knowledgeable experts representing the public sector in standardisation issues is exemplified by the separate, ongoing fight over US software maker Microsoft’s attempt to get its electronic document format standardised by the International Organisation for Standardisation (ISO).


Other measures recommended by the study point to possible access problems. To get access to official standards is costly and a barrier especially for small and medium-sized enterprises.


Therefore, a new EU standardisation policy should, the study argued, include “a coherent and harmonised (free) availability policy for standards/specifications established by all standards/specification producing organisations within the European standardisation system” and “a thorough study on the relationship between the intellectual property rights and ICT standards to be initiated by the European Commission, the purpose of which should be to launch a global discussion with other global regions.”



The balance between the much wanted law-like standards and IPR is difficult, noted the study, because “the underlying philosophies of standardisation and IPR-protection are seen as opposite. Whereas standardisation intends to put ideas into the public domain, protection of IPR makes them private property.”


[EUREKA!!]


Furthermore, the legal framework of standardisation is blurred, while recognition of private rights over private creations is clear and patent ambushes (patent claims made late in the development of a standardisation process) are prevailing in court cases.



The European Commission so far has tried to alleviate the problem by passing so-called FRAND rules that try to ensure “fair, reasonable and non-discriminatory” licensing when it comes to standards. A new ETSI IPR policy adopted in 2006 addressed the problem of IPR owners not agreeing to licences, yet the problem still is not really resolved, according to the study.



Van Eecke said the one big success story in mandated EU standardisation on ICTs is the mobile wireless standard, GSM. But he said, “A lot of money has been wasted for licences, even if it has worked out in the end.”



Motorola is said to have had the largest share of GSM relevant patents, with 3,831 mobile patents between 1976 and 2004 (of a total of 10,224 mobile telecommunication patents). While Motorola in the end did not fare as well in the GSM arena as its big rivals which traded their own thousands of patents against the US company, smaller companies did not succeed in entering the mobile phone market, according to experts.


EU initiatives on patent system and open access


The difficulty patents and copyright protection can bring for the competition and the public welfare is highlighted by the investigation of the pharmaceutical sector just announced by the EU Competition Directorate, a strong call for reform of the EU patent system by STOA and the recent announcement of the European Research Council for Open Access to results from public research.


[THIS NEGATIVE ASSESSMENT OF THE UTILITY OF PATENTS AND OF THE RELIANCE OF THE PATENT SYSTEM ON THE RECOGNITION OF EXCLUSIVE PRIVATE PROPERTY RIGHTS IS IDEOLOGICALLY BASED]**


The pharmaceutical sector inquiry, according to the Commission, was started because “there are indications of commercial practices by pharmaceutical suppliers including notably patenting or the exercise of patents which may not serve to protect innovation but to block innovative and/or generic competition, litigation, which may be vexatious, and agreements, which may be collusive.”

[DITTO]**


In order to check on possible market distortions, the EU competition authority would “use its powers of investigation in particular with respect to pharmaceutical suppliers of innovative and generic medicines for human consumption, consumer and professional organisations in health care, as well as authorities granting patents and marketing authorisations for drugs,” the Commission said.


[THE EUROPEAN COMMISSION, IN OTHER WORDS, WILL EXERCISE ITS VAST UNCHECKED POWER TO LAUNCH 'WITCH-HUNTS' AGAINST COMPANIES IN ORDER TO LOCATE & IDENTIFY AN EVIL 'MONOPOLY MARKET FAILURE', DEFINED AS INCLUDING INDIGENOUS INNOVATIONS OWNED BY COMPANIES THAT, DUE TO THE FORCES OF (WHAT SCHUMPETER REFERS TO AS) 'CREATIVE DESTRUCTION', FIND THEMSELVES AS THE ONLY ONES IN THEIR MARKETS OFFERING SUCH TECHNOLOGIES AND/OR PRODUCTS]**


Increasing access to patented inventions in every field was requested by the STOA report on the EU patent system. Authors there recommend “to explore and support more flexible, non-exclusive exercises of patent rights, such as licence of right, patent pools and clearinghouses” that would give access to licensing also to small and medium-sized enterprises not involved in the patent race and therefore not able to bargain with patents of their own.


[THE EUROPEAN COMMISSION APPEALS HERE TO POPULIST SENSIBILITIES IN THEIR ZEST TO GARNER SUPPORT FROM THE SMALL & MEDIUM-SIZED COMPANIES - HOWEVER, IN ACTUALITY, IT IS THE VERY SAME 'SMEs', WHICH BEING PREVENTED FROM EXERCISING EXCLUSIVE PRIVATE PROPERTY RIGHTS IN THEIR INVENTIONS & INNOVATIONS, CANNOT EXPLOIT PATENTS IN THE EUROPEAN MARKETPLACE]**


The STOA report also holds that defensive publication should become an alternative practice. Instead of patenting their inventions - an effort too costly, for example, for small companies or university research - they should be able to publish their inventions in “publicly-available” databases.


[THIS WILL ONLY FURTHER DISADVANTAGE EUROPEAN SMEs, AS THEIR INNOVATIONS WILL BE LOOKED UPON OPENLY BY MULTINATIONAL CORPORATE AND DEVELOPING COUNTRY PILFERERS!!]


Access to scientific research funded by the European Research Council should be made accessible over appropriate research repositories and made open access within six months of publication, the ERC suggested. The council that has been working on public access issues for some time now wrote that it considers “essential that primary data - which in the life sciences for example could comprise data such as nucleotide/protein sequences, macromolecular atomic coordinates and “anonymized” epidemiological data - are deposited to the relevant databases as soon as possible, preferably immediately after publication and in any case not later than six months after the date of publication.”

Funny Financial Times Journalist Promotes Utopian 'Door' Prizes Over Patents

http://www.ft.com/cms/s/a4040a4e-c7bd-11dc-a0b4-0000779fd2ac.html


Cash for answers

By Tim Harford

Financial Times

January 25 2008

In 1737, John Harrison, a self-taught clockmaker from Yorkshire, stunned London’s scientific establishment by presenting an idiosyncratic solution to the most important and notorious technological problem of the 18th century. He was hoping to win a then-fabulous prize of £20,000 (about £5m today) for anyone who could devise a way for a ship’s navigator to determine its longitude and therefore its position at sea. Harrison’s approach was to build a clock that would keep Greenwich time faithfully; by comparing local time (measured using the position of the sun) with the time in London, the navigator would know how far east or west the ship had sailed. The theory was sound, but given the rolling of ships and changing temperature and humidity, the leading scientists of the day – including Sir Isaac Newton – reckoned that a sufficiently accurate clock would be impossible to build. Harrison proved otherwise.


The longitude prize, sponsored by the British government, was not unique. Prizes were also offered in France for a functional water turbine, and for a method of preserving food for Napoleon’s armies. The latter prize quickly inspired the tin can, more of a blessing than food snobs might acknowledge.


But such prizes then fell out of fashion. For commercial innovations, we now rely on patents to encourage and protect innovators. Basic research is funded not by prizes but by grants.


And yet two centuries after tinned fish hit the market, the way we look for solutions has come full circle. Governments, private foundations and even corporations are rediscovering the value of offering prizes for good ideas. Rather than paying for scientific and engineering effort as they have done for the past 200 years, idea-hungry patrons are returning to the 18th century, and paying for results.


The most famous innovation prize of this century, the $10m Ansari X Prize, was designed to promote private space flight. The pot went to Mojave Aerospace Ventures in 2004, after the successful flights of SpaceShipOne. And even the Ansari X Prize is dwarfed by a quasi-prize of up to $1.5bn that is about to be offered by five national governments and the Gates Foundation to the developers and suppliers of a more effective vaccine against pneumococcal diseases such as pneumonia, meningitis and bronchitis.

The prize, called an “advanced market commitment’’ or “advanced purchase commitment’’, takes the form of an agreement to subsidise heavily the first big orders of a successful vaccine. Given that the top companies in the UK’s powerful pharmaceutical industry spent little more than £5bn in 2006 on research and development, a $1.5bn prize should be taken seriously on hard-nosed commercial grounds alone.

And if formidable obstacles to setting the prize conditions can be overcome, the pneumococcal diseases contest could be followed by a malaria vaccine prize twice as big and an Aids vaccine prize that would be bigger still.


Prizes need not have such lofty ambitions. They can simply be a way of turning a solution into a commodity. One company, Innocentive, provides an exchange where “seekers’’ can offer cash to “solvers’’. Both sides are anonymous, which is one of the selling points of innovation prizes: they reward neither connections nor seniority, but solutions alone. Innocentive’s problems read a little like the small ads on the world’s least romantic lonely-hearts website. “A technology is desired that produces a pleasant scent upon stretching of an elastomer film’’ ($50,000). “Surface chemistry for optical biosensor with high binding capacity and specificity is required’’ ($60,000).


Netflix, a film rental website which offers recommendations based on what you looked at, bought, rented or reviewed in previous visits, has skipped middlemen like Innocentive. In March 2006, the chief executive of Netflix, Reed Hastings, met some colleagues to discuss how they might improve the recommendation system, Cinematch. Hastings, inspired by the story of John Harrison, suggested offering a prize of $1m to anyone who could do better.


The Netflix prize, announced in October 2006, struck a chord with the Web 2.0 generation. Within days of the prize announcement, some of the best minds in the relevant fields of computer science were on the case. Within a year, the leading entries had reduced Cinematch’s recommendation errors by more than 8 per cent – close to the million-dollar hurdle of 10 per cent. And it has cost Netflix very little to mobilise all this effort. The company has had to pay out a mere $50,000 progress award, to a team of three AT&T data analysts.


Even Netflix is surprised at how well it’s been going. “We just didn’t think the relevant research community was so big,’’ says Steve Swasey, vice-president.

More than 2,500 teams from 161 countries and comprising 27,000 competitors have entered the contest. Teams from California, Budapest and Toronto have been battling away at the top. Clearly, the million-dollar prize has mobilised far more than a million dollars worth of research effort.


The Netflix prize has been helped by the ease of transmitting data around the world and the affordability of the computing power necessary to have a go. The fun of the challenge alone is one of the biggest attractions to participants. So, too, is access to Netflix’s huge database of recommendations – a dream for statisticians and computer scientists. And the competition has also been fanned by the fact that all improvements are incremental and the company is able to publish listings of the current leaders, meaning the race is verging on a spectator sport.

[THIS IS ABSURD - ONLY PEOPLE WITH TOO MUCH TIME ON THERE HANDS CAN BE BOTHERED WITH 'INTELLECTUAL CHALLENGES' & SECURING NAME RECOGNITION]**


The X Prize and Netflix prize have managed to generate a tremendous amount of interest. That means more than free publicity for the organisers; it also means that the prize catalyses far more effort than one might expect on cold financial grounds. “One of the goals of the prize is to transform the way people think,’’ says Bob Weiss, vice-chairman of the X Prize Foundation. “We were trying to create a sea-change.’’


Weiss says that the founders of the X Prize foundation wanted to revive their childhood dreams of a day when ordinary people would be able to travel into space – expectations formed in the heady 1950s and 1960s. They may get their wish. To Weiss’s delight, Virgin Galactic claims it will soon be in a position to offer private space flights. It will be using the technology that won the X Prize.


Future X Prizes, each one funded by corporate sponsors and philanthropic donors, aim to kick-start other new industries. The Archon X Prize for genomics will be awarded to the team that can sequence 100 human genomes within 10 days, at a cost of $10,000 per genome. That is unimaginably quicker and cheaper than the first private genomic sequencing in 2000, which, according to the X Prize foundation, took nine months and cost $100m for a single human genome. (Craig Venter, the director of that effort, is one of the backers of the new prize.) It is the kind of leap forward that would be necessary to usher in an era of personalised medicine, in which doctors could prescribe drugs and give advice in full knowledge of each patient’s genetic susceptibilities.


Another prize will be awarded to the manufacturer of a popular mass-production car that has a fuel efficiency of 100 miles per gallon. The model is the same each time. The X Prize foundation identifies a goal and finds sponsors; it announces a prize and whips up the maximum possible enthusiasm, with the aim of generating far more investment than the prize itself; the prize achieved, it hands out the award with great fanfare and moves on to set other challenges. The prize winner is left with intellectual property intact, and may capitalise on the commercial value of that intellectual property, if any commercial value exists.

[ISN'T THIS LAST PART OF THE STATEMENT WHAT IT IS ALL ABOUT ANYWAY?? BASIC DISCOVERIES BY THEMSELVES ARE OF LIMITED USE AND VALUE - MOST OF THE VALUE ATTRIBUTABLE TO A DISCOVERY RELATES TO ITS MARKET-RELEVANT USES]**

The X Prize foundation claims that the Ansari X Prize directly stimulated $100m of spending on research and development, 10 times the value of the prize itself. That is clever, and for a handful of sexy challenges it is likely to be a trick that can be repeated.


But the X Prize and the Netflix prize may give too flattering a picture of what might be possible if prizes catch on. Rather, prizes could become humdrum. For the problems listed on Innocentive’s website – “The challenge is to produce a specific citric acid ester in a faster cycle under current specifications’’ ($40,000) – the day of the humdrum has already arrived.


In other cases, for example the advanced market commitment for a pneumococcal virus, the sums of money being invested in the research are so huge already that it is hard to imagine the mere glamour of the $1.5bn “prize’’ weighing heavily on the minds of scientists and inventors.


For both the uninspiring innovation and the billion-dollar research programme, it is the prize money itself that has to do the talking. If that is not the case, the prizes will not multiply research efforts, as the Ansari X Prize and the Netflix prize have done, but will increasingly need to compete with alternative methods of funding innovation – that is, grants and patents – on a level playing field. To become a significant alternative to grants and patents, prizes will have to become very large indeed – large enough to cover, on average, all of the likely research expenditures of all those hoping to win. Is that desirable?


Champions of prizes see them as a component of a wider system to promote innovation, rather than as an outright replacement either for grants or patents. Instead, the hope is that prizes will help to compensate for the specific weaknesses of those alternatives.


The downside of a patent is fundamental to its design: in order to reward an innovator, the patent confers a monopoly. Economists view this as, at best, a necessary evil since monopolies distort prices. In the hope of raising profits from some customers, they will price others out of a market. The most obvious victims are consumers in poor countries.

[PATENTS ARE DISFAVORED ONLY IN 'SOFT' SOCIALIST COUNTRIES WHERE KEYNESIAN 'MIXED ECONOMIES' BOLSTERED BY STATE-CENTRALIZED WELFARE POLICIES ARE FAVORED OVER MERIT-BASED INITIATIVES]**

In an ideal world, prizes could replace patents. Instead of offering a patent for an innovation, the government could offer a prize. The inventor would pocket the prize but would not be allowed to exploit any monopoly power, so the innovation would be freely available to use in products for poor consumers – cheap drugs for Africa, for instance – and, importantly, in further innovations. But to explain that idea is to see its limitations. How could the government know enough about the costs and benefits – and even the very possibility – of an innovation to put a price tag on it and write the terms of reference for a prize competition? For this reason it is hard to see prizes replacing patents in most cases. But it is not impossible.

[AMONG LIBERAL EUROPEAN & AMERICAN POLITICIANS, THE ANTICIPATED POTENTIAL UNASCERTAINABLE ECONOMIC BENEFITS ARE ALWAYS MORE ATTRACTIVE THAN THE UNKNOWABLE FUTURE ECONOMIC COSTS, AS A MATTER OF RHETORIC]**

The modern heir to 18th-century prizes for canning, water turbines and finding longitude at sea is the advanced market commitment for vaccines for the poor: the goal is clear, the costs and benefits can be guessed at, and the quasi-prize nudges the patent system to one side with a prize contract that respects the patent but, in exchange for a large subsidy, radically constricts the holder’s right to exploit it.

[SO MUCH FOR THE EXERCISE OF EXCLUSIVE PRIVATE PROPERTY RIGHTS IN INNOVATIVE WORKS IF THE PRIZE PREFERENCE IS PREFERRED]

Prizes can also, in principle, supplement grants for basic research, paying scientists for results as well as for effort. There is, for example, an “Mprize’’ for creating long-lived mice. The eventual aim is to lengthen human life spans. And the Clay Mathematics Institute, a non-profit body set up 10 years ago by a Boston businessman, is offering million-dollar prizes for the solution of seven “Millennium’’ problems in mathematics.


These prizes are exceptions; but prizes were once the standard way of encouraging basic research. According to Robin Hanson, an economist at George Mason University, more than twice as many 18th-century scientific societies paid for results using prizes or medals than paid for effort with grants. As that changed, scientific societies sometimes ignored the wishes of donors, or even had the wills of deceased donors voided, in order to hand out grants rather than the prizes specified.


The standard historian’s explanation of this trend is that once science became a profession rather than the province of rich amateurs, prizes were no longer a suitable way of funding innovation. Hanson is not convinced. “Most academics who study the issue of prizes have focused on what a prize does to the behaviour of researchers, versus a grant,’’ he says. “But there’s another aspect: what does the person giving the prize or the grant get out of it?’’


He argues that grants are more appealing than prizes to bureaucracies for many reasons, not all admirable: “With grants, there’s all sorts of possible patronage and corruption.’’ Even leaving aside outright graft, there is plenty of opportunity for cosiness and cliques. Then there is the mundane fact that grants are easier to account for in an annual budget than a multi-million prize that could be paid tomorrow, in a year, or never. For Hanson, it was for these reasons, rather than any intrinsic merits, that grants elbowed aside prizes in the 19th century.


Prizes may be making a comeback because of all the money now available from private foundations – which demand results. Not only the X Prizes and the Millennium problems prize, but even the pneumococcal vaccine prize is part-funded by private money. Yet governments are getting in on the act. The US space and defence research agencies Nasa and Darpa both use innovation prizes, and other government agencies look likely to follow with, for example, an “H prize’’ for advances in hydrogen fuel technology.


If Hanson is right, this new trend is a welcome swing of the pendulum towards a modest use of prizes. But not everyone is convinced that prizes will live up to the hype.


“The literature has pushed them as a silver bullet; more recently there’s been a bit more sobriety in the debate,’’ warns Andrew Farlow, an expert in the economics of vaccines at Oxford University. “How much genuine risk-taking can it pull along?’’


The problem is not the principle, he argues, but the details. A vaccine for HIV is a distant and costly prospect, and might require a $10bn or $20bn prize. Inevitably, companies and their shareholders will question whether the prize would be honoured in full. The triggers for releasing some of the prize money are difficult to define: early vaccines would probably be expensive, fallible and risky, but better than nothing. Donors would not want all the money to go to those efforts and leave none to encourage superior successors. Try framing “good enough’’ in legalese, when billions are at stake.


Donors might pay a lot more than they needed to for a substandard product, or the prize might be too restrictive and too small to generate any interest at all. That would drain attention, enthusiasm and political will. “It all sounds like good economics, but whether you could ever set a prize big enough or correct enough to work in those cases is doubtful,’’ Farlow concludes.


But the proponents of advanced market commitments (AMCs) believe the problems can be overcome. “There’s no question that there’s going to be a way to deal with these challenges in a sensible, analytically based way,’’ argues Ruth Levine, vice-president of the Center for Global Development, a think-tank based in Washington, DC, which has been a leading force in evaluating and advocating AMCs. “By that I mean that a proposal or contract will be written that makes sense and is based on good empirical work.’’


The pilot is the pneumococcal vaccine pledge, made in principle back in February 2007, and now being hammered out. It is a big deal – a lot of money is on the table, with the potential to save many millions of lives at a low cost. Yet compared with other possible AMCs, the pneumococcal problem is relatively simple: two credible vaccines are in the late stages of development. Levine acknowledges that this example is as close to a procurement contract as to a pure innovation prize, but believes there is much to be learned from the exercise about whether donors can make a commitment together and handle the legal and accounting challenges. “What this won’t be is a pure test of whether putting a market-like offer out a long distance into the future will give firms an incentive to do early-stage R&D,’’ she says.


That is the dream of AMC proponents, but the true test – a malaria or HIV prize – is some way off yet. Only then will we see whether private companies will take the bait, and the public purse will get value for money. We can be sure that big Pharma will be checking the small print: John Harrison, master clockmaker, was eventually rewarded for his brilliant, accurate maritime clock only by appealing direct to King George III. Neither he nor anyone else was ever judged to have satisfied the conditions necessary to receive the longitude prize.

KEI Anti-Patent Activist Praises Thailand For Planning to Issue 4 Cancer Drug Compulsory Licenses

http://www.bangkokpost.com/News/25Jan2008_news15.php


[Thai] Government approves four cancer drugs: Compulsory licensing a must, says Mongkol


January 25, 2008


Bangkok Post


APIRADEE TREERUTKUARKUL


The outgoing military-appointed government will go ahead with the implementation of compulsory licensing (CL) for four cancer drugs, Public Health Minister Mongkol Na Songkhla said yesterday. The minister did not disclose the names of the drugs listed for compulsory licensing, simply saying the decision had been made on Jan 4 following a proposal submitted by the sub-panel chaired by Government Pharmaceutical Organisation (GPO) board chairman Vichai Chokewiwat.


The Vichai [VICHY] panel has advised the public health minister to issue compulsory licences for the breast cancer drug Letrozole and the leukaemia drug Imatinib, both produced by Novartis, the breast and lung cancer drug Docetaxel, produced by Sanofi-Aventis, and lung cancer drug Erlotinib, made by Roche.


The objective is to seek cheaper generic forms of the drugs for treating patients under the universal healthcare scheme, thereby saving the government huge sums of money.


Dr Mongkol said he had thoroughly considered the pros and cons of applying CL to such cancer drugs.


''We would not do it if it's not necessary. But we don't have time for more negotiation. We did the best we can,'' he said, adding that health officials had met patent owners for at least 13 rounds of negotiations over prices without making any significant progress.


The minister said he was certain that generic versions of cancer drugs would be of high quality and that patients under the universal healthcare scheme would receive the best benefits from the state policy on CL.


Letters stating the necessity to bypass patents of cancer drugs would be sent to all sectors involved _ the GPO, the Department of Intellectual Property and pharmaceutical companies owning the patents to the drugs by next week as he would soon finish his term, he said.


''I have faced pressure from several sides by making such a decision, but I am happy that poor patients will not go bankrupt due to the cost of cancer treatment,'' he said.


Cancer ranks as the number one cause of death in Thailand. The male population suffers mostly from lung cancer, whereas breast cancer is the major cause of death among women.


Meanwhile, pharmaceutical giant Sanofi-Aventis has threatened legal action against an India-based generic drug maker chosen to supply Thailand with a generic version of the heart drug Plavix.


Withit Artavatkun, managing director of the GPO board, said the threat was the latest in a series of attempts by the patent owner of Plavix to interrupt the country's CL policy.


Plavix, a blood thinner, is used to treat coronary artery, peripheral vascular and cerebrovascular diseases.


''Sanofi-Aventis' threat will not affect the procurement agreement as the first batch of two million heart drug tablets will be arriving by next week,'' said Dr Withit.


The India-based Zydus Cadila firm was chosen ahead of the other potential supplier Emcure Pharmaceuticals, also based in India, because Emcure had not yet provided bioequivalent documents essential for a registration grant from the Food and Drug Administration.


However, Dr Withit believed a threat from the patent owner was one of the main reasons that delayed Emcure's decision to supply a copycat version of the heart drug to Thailand.


The company last year also sent a letter to Emcure, claiming that selling generic versions of the medicine to Thailand was illegal as the country had not made public its decision to override the patent.


However, the GPO managing director said the ministry had officially declared its policy on the compulsory licensing of Plavix for over a year.

German Pharmaceutical Company Chooses NOT to Register Drug in Brazil Due to Risk of Patent Expropriation

Boehringer Refuses to Register Tipranavir in Brazil Because of Patent Law


By Michel Lotrowska


Sem Fronteiras Campanha Acesso a Medicamentos Essenciais / Access Campaign for Essential Medicines


January 21, 2008


Company refrain from launching and anti-aids drug because it disagrees with the patent law of the country ESTADO DE S PAULO -19TH FEBRUARY FABIANA LEITE


Although [l]egal, the decision not to register a drug is harmful for patients that need it to go on with their treatment.


The pharmaceutical laboratory Boehringer Ingelheim decided not to launch a medicine against aids in Brazil. The medicine called tipranavir is used in patients that are resistant to most other drugs against the disease. By not registering the medicine in the country, the company makes it difficult for patients who need it to have access as a last treatment alternative no medicine can be sold, offered by the Public Health System - SUS, without registration.


Recently, the Public Prosecutor of the State of SE Sao Paulo went to court to get this medicine as well as another one, recommended for a patient that has the immune system extremely weak and that already doesn’t respond to other medicines. The man has no money to import the drug. The court was favourable to the request, but the order has not arrived yet to the State Authorities of SE Sao Paulo, that will be obliged to import the medicine. The patient is only using some antibiotics says the public prosecutor Felipe Pereira.


The laboratory BI renounced to register the drug and the decision was unilateral. It conditioned the registration to the guarantee that the patent would be honored. As the government has a process for this, the president of the laboratory decided not to register, although the local office was trying to. The laboratory really decided not to register because of lack of guarantee of the patent. It was an extremely wrong decision, affirms the infectologist Adauto Castelo Filho, [who] was involved in the group of specialists that was analyzing studies with the medicine in Brazil.


According to Castelo, the decision was taken already in the middle of 2006, before the compulsory license of other medicine against aids, efavirenz, that took place in May last year. Nevertheless, this decision was never turned public. Partners of the company, nevertheless, affirmed to the newspaper that the compulsory licensing buried the possibility of the medicine be made available in Brazil. But also the fact that the Brazilian market for the medicine is not a priority for the company weighted in the decision of denying access to Brazilian patients of the drug being sold in Europe and the US.


BI pointed out they respect the Brazilian legislation and promised to bring the product in the country. The substance tipranavir, being an important medicine to control the infection (...) is in the relation of launching of the company that is programmed for the next years, in Brazil, informed the company (one of the 20 big one in the world) in a release. Nevertheless, every launching of BI is part of a chronogram guided by global strategies of the company, and, therefore, that can possibly be altered. According to the company, 92 patients that were part of a study with the drug in Brazil keep receiving the drug, paid by the lab.


The decision not to register a drug is a right of the patent holder. Nevertheless, currently, even without the guarantee of the exclusivity of production of a medicine in the country, other pharmaceutical companies don’t stop offering their products. The launching is usually done before the end of the analysis done through a long process implemented but the Patent Office (INPI) and the Local Drug Regulatory Authority (ANVISA) through the prior consent.


The decision of the company is not new in the pharmaceutical world. Others already denied to launch medicines in countries where the patent legislation is considered bad for its business, like Thailand, that already issued compulsory licenses.


NEGOTIATION IS LACKING


Castelo Filho calculates that between 2 and 3 thousand patients could benefit from tipranavir. For him, there was a lack of negotiation between the Brazilian Government and the Ministry, that would not have worked hard enough to bring the drug, that is very expensive. The Aids program is bringing very soon another drug for cases of resistance, Darunavir.

China Allows Academics to Own Patents

04 January 2008


RSC Chemistry World


http://www.rsc.org/chemistryworld/News/2008/January/04010802.asp


China has revised its 'science and technology constitution' to allow scientists, institutes and universities to own patents arising from publicly-funded research in an effort to boost innovation.


China's legislature - the standing committee of the National People's Congress (NPC) - passed the revised Science and Technology Progress Law on 29 December, changing the fundamental laws guiding research and innovation in the country.


Higher eduction institutions and academics will now for the first time be able to own intellectual property derived from publicly-funded research - providing a new incentive for them to spin-out or license their inventions. The new amendments also say scientists who have not completed scientifically risky projects should not be penalised - as long as their experimental records demonstrate that their chances of success were low.


In addition, the revised law stipulates that industry should play a major role in innovation. It paves the way for the introduction of new funds to support innovation in small and medium-sized businesses and allows companies to carry out publicly-funded R&D.


Zhu Xiaomin, a researcher at the Institute of Policy and Management, the Chinese Academy of Sciences (CAS), says that highlighting the role of the private sector could help small firms play a more active role in science and technology. 'The law has also introduced many practicises that are known to spur innovation - such as the endowment of patent ownership.'


The changes to patent ownership rules could be a boon for chemistry researchers. 'In our research, new testing and analysis technologies often emerge as byproducts,' said one scientist at the CAS Institute of Chemistry, who asked not to be named.


But much of China's patent law is still based on the principle that research funders should own patents originating from work they have paid for, he added. Revisions to other laws might now be needed.


Duan Weiwen of the Chinese Academy of Social Sciences said that the revised law needs to be followed by details of implementation. For example, the new amendment on research failure will need supporting regulations to distinguish between a 'reasonable' failure and any excuses offered by those who have misused funds.


Duan said China should next change the way it evaluates the quality of publicly-funded research.


Instead of looking at the number of papers researchers have published in high impact journals, he believes there should be a system of peer review to allow scientists to judge whether work is really ground-breaking.


Hepeng Jia

China Amends S&T Law to Boost Research

Jia Hepeng


January 3, 2008


Source: SciDev.Net


http://www.scidev.net/News/index.cfm?fuseaction=readNews&itemid=4166&language=1


[BEIJING] China has revised its science and technology constitution to give greater incentives to researchers, in an effort to boost innovation.


China's legislature — the standing committee of the National People's Congress (NPC) — passed the revision of the 1993 Science and Technology (S&T) Progress Law last month (29 December).
The law states that the nation's overall research and development (R&D) budget, from both the government and private sectors, should continue to increase steadily each year.


R&D investment in China grew by 22 per cent in 2006, totalling 300 billion yuan (US$41.1 billion) and accounting for 1.4 per cent of the country's gross domestic product (GDP). Existing plans state that R&D spending will account for 2.5 per cent of China's GDP by 2020.


Under the amended law, industry will be more involved in innovative research activities and the government will set up funds to support innovation in small and medium enterprises. Research activities and required equipment will enjoy favourable tax rates.


Amendments to the S&T law will also allow scientists, or their institutions, carrying out public-funded research projects to own the resulting patents.


Additionally, the government will not retract patents unless their holders do not use them in "a reasonable period". Previously, there was no universal regulation on intellectual property rights.
[THIS A FORM OF THE EUROPEAN 'FAILURE TO WORK' DOCTRINE]**


Li Yuan, director of the NPC's administrative law office, explained at a news conference for the new S&T law that the looser stipulation on the patent period is intended as an incentive for researchers.


Scientists who do not complete scientifically high-risk projects will not be punished under the new law, provided their research records can prove the risk was too great. But researchers committing malpractice will be punished with measures including public exposure and the deprivation of the rights to apply for public funding.


Duan Weiwen of the Chinese Academy of Social Sciences and a research ethics consultant to the Ministry of Science and Technology, welcomes the amendments, saying they have summarised many ongoing S&T policies in a legal way. But he warns that the coordination of different departments is essential to implement the amendments.


In related news, China's cabinet, the State Council, approved 'The Key New Drug Creation and Manufacturing Programme' last month (28 December), which will support the development of more than a dozen innovative drugs over the next five years.

Incentive-less Innovation is Not a Viable Economic Development Model for LDCs

Incentive-less Innovation is Not a Viable Economic Development Model for LDCs


The following article was authored by John Kilama, PhD, President, Global Bioscience Development Institute, Inc. http://www.gbdi.org/


The article was prepared to support the manuscript entitled, Rediscovering the Value of Intellectual Property Rights: How Brazil's Recognition and Protection of Foreign IPRs Can Stimulate Innovation and Generate Economic Growth, International Journal of Economic Development, Vol. 8, Nos. 1-2 (Sept. 2006), at pp. 11-14, at:


http://www.spaef.com/IJED_PUB/v8n1-2.html


http://www.itssd.org/White%20Papers/ijed-8-1-2-kilama.pdf


Once in a long while, a person comes along who knows the inside scoop or holds a penetrating insight about a particular issue or situation that others simply overlook, ignore or take for granted. Lawrence Kogan is one such person who, in my opinion, correctly sees a major paradigm shift slowly taking shape in the international law of intellectual property rights.


As Mr. Kogan explains, in painstaking detail, this shift is occurring notwithstanding the fact that successful private property rights regimes have resulted in remarkable scientific and technological advances and generated exceptional economic wealth throughout the world.


This very comprehensive article represents a clear understanding of why we should all take pause and reevaluate the bases underlying the unprecedented rate and degree of human progress that has taken place during the past century. In doing so, we will likely come to realize that we must prevent the new political alliance and experimental economic system now being formulated by Brazil and other misinformed governments and civil society activists from ever emerging.


Without the incentive of private property ownership, individual-based invention and creation, not to mention commercial innovation, would have been largely non-existent. As a result, we human beings would have likely remained a subsistence-based feudal society beholden to the political elite. If we erroneously decide, for reasons of political expediency, to severely restrict or eliminate private intellectual property rights in the life sciences and information technology fields, we once again run the very real risk of technological and economic stagnation, and perhaps, regression.


Private property rights are integral to and an indispensable part of human destiny, and thus, the human condition. They also represent basic human values by rewarding those of us capable and willing to assume the economic risk of invention, creation and innovation.
Indeed, investors are unlikely to finance new discoveries and inventions that can advance our societies and improve the quality of our lives unless they are entitled to receive exclusive rewards/returns for the risks they have assumed.


Real world history supports such logic. Soviet-style communism largely collapsed in Eastern Europe because of the absence of individual incentive-based private property rights regimes. Furthermore, the nations of the African continent have suffered repeatedly as the result of misconceived World Bank structural adjustment and participatory development programs. These programs were unsuccessful in promoting African economic development, in part, because they did not emphasize the importance of private property rights. More importantly, however, they failed also because they did not recognize how the African culture itself epitomized the largely unproductive ‘open sharing’ ethic that it had inherited from its former European colonizers. Africa needs to move away from this paradigm to one where women actually have the right of property ownership. Therefore, the worst thing that could happen now is for African countries to experience, yet again, a new economic experiment.


In light of all this, it is very surprising and quite disturbing that Brazil would take the lead in advocating a new global anti-intellectual property right paradigm favoring open source and universal access to knowledge. During the past twenty-five years, Brazil has been very successful in building its academic standards such that excellent research and development now regularly takes place in Brazil.


Arguably, the next step Brazil must take to propel itself into the ranks of the major economic powers is to develop national laws and policies that encourage its private sector to commercialize basic inventions produced as the result of the government’s successful R & D programs. Unfortunately, the Government of Brazil is currently engaged in a self-destructive proposition that threatens to compromise private intellectual property rights. Thus, it would be unwise for least developed countries, especially those in Africa, to use Brazil as a model for their economic development.


These nations must recognize that Brazil will actually undermine its future and that of its citizens by weakening its recognition and protection of such rights. For example, as the result of globalization, Brazilian individuals (inventors) and companies now have access to Brazil’s growing corpus of public know ledge, and they are likely to create new inventions from it that have great market potential. However, lacking the ability to retain an exclusive private property interest in their know-how-based inventions, Brazil’s companies and inventors are unlikely to attract the level of investments needed to commercialize them for domestic and global markets. This will render Brazilian industry vulnerable to increasing international competition from better capitalized and more market-savvy companies located in countries such as China and India, which seem to be establishing stronger national property rights recognition and enforcement systems than Brazil.


As a chemist and biotechnologist, I truly appreciate the value of exclusive intellectual property rights in motivating individuals to go beyond the ordinary and create a new entity. IPRs not only entitle us to professional recognition, but also provide us with feelings of personal accomplishment and satisfaction. Some scientists may seek only recognition of their discoveries and inventions through publication in the public domain, and this is certainly their right. Yet, the thrill of making a discovery that serves human needs may take other scientists, including myself, only so far. What we truly desire, is some additional monetary incentive that inspires us to convert the knowledge reflected in our discoveries and inventions into product or process innovations that are also commercially relevant and useful. The marketplace is the true proving ground of vibrant economies, and it is there where the genuine value of an invention is measured.


For these reasons, I strongly recommend that scientists and policymakers, especially those from developing countries, carefully read Mr. Kogan’s well researched manuscript. His analysis accurately describes the close relationship between exclusive private property rights, scientific and technological innovation, and economic development.


International Journal of Economic Development Volume Eight, Numbers 1-2, pp. 11-14 2006

The Key to Economic Development is the Presence of the Institutions of a Free Society: Property Rights, Rule of Law, Free Markets & Limited Government

In the words of one Ugandan-born American bioscientist, John Kilama, PhD,


“The key to economic development is the presence of the institutions of a free society: property rights, the rule of law, free markets and limited government… Strong intellectual property rights, administered and enforced in an impartial manner, have been an important part of this framework. As a result…countries… which have [put this]… institutional framework [] in place have experienced the growth of ‘knowledge-based’ industries — to the benefit of all” (emphasis added).


According to this same expert,


“Explosive rates of innovation have taken place in countries, such as South Korea, Mexico, Jordan and Singapore, which have understood that growth and prosperity can only occur once the institutional framework is in place. If intellectual property rights are responsible for restricted access to medicines in poor countries, then drugs should be plentiful in countries where the patents are expired or were never present. On the contrary, many of the most critical drugs that Africa still lacks have been off-patent for 30 or 40 years. These include most anti-diarrhoea drugs, antibiotics, derivatives of penicillin and cephalosporin, many antihypertensive drugs and almost all antipyretic drugs. The human genome project hardly serves as a basis for completely altering the current model of intellectual property rights. While it has provided information with potential use, the benefits of its initial research must not be overstated.


Removing property rights and making companies conduct open-source research and development could to lead to disaster. Without the chance of recovering investments, why would research-based pharmaceutical companies invest large sums in drug development? Open-source models might work in some businesses that are not so capital-intensive, but it is a pipe-dream to rely on the philanthropy of chemists, physicians, researchers and financiers to contribute voluntarily to such schemes.”


See John Kilama, “Protecting Patents Protects Patients”, Bangladeshweb.com (7/22/05), at: http://bangladesh-web.com/view.php?hidDate=2005-08-03&hidType=FEA&hidRecord=0000000000000000053492 ; John Kilama, “Drug Patents Are Part Of The Cure”, Business Day (7/28/05), at: http://www.businessday.co.za/articles/topstories.aspx?ID=BD4A73957 .

Exclusive Private Property is Indispensable to Brazil’s Economic Development

Exclusive Private Property is Indispensable to Brazil’s Economic Development


The following article was authored by O. Lee Reed, Esq., Professor of Legal Studies and Meigs ProfessorUniversity of Georgia http://www.terry.uga.edu/spotlight/faculty/lee_reed.html


The article was prepared to support the manuscript entitled, Rediscovering the Value of Intellectual Property Rights: How Brazil's Recognition and Protection of Foreign IPRs Can Stimulate Innovation and Generate Economic Growth, International Journal of Economic Development, Vol. 8, Nos. 1-2 (Sept. 2006), at pp. 5-10,


at: http://www.spaef.com/IJED_PUB/v8n1-2.html


at: http://www.itssd.org/White%20Papers/ijed-8-1-2-reed.pdf


According to Nobel economist Douglass North, all the world was poor five-hundred years ago. Famines regularly swept through Europe, and when Europeans arrived in the New World, the Native Americans had a standard of living equal to or superior to the average Europeans. Yet today, throughout much of Europe, North America, and the Pacific Rim, people enjoy per capita income in many multiples of incomes in the rest of the world.


Peruvian economist Hernando De Soto used to ask the financial ministers and treasury officials of wealthy nations why their countries were so rich while his was so poor. Invariably, he was met with silence. De Soto now worries that wealthy nations may have forgotten what they did in generating conditions necessary for prosperous, modern economies.


Neither technology, education, infrastructure, natural resources, and temperate climate nor securities exchanges, banks, and the private market account most fundamentally for the dramatic economic development of certain nations in recent centuries. Instead, growing numbers of analysts point to the legal institution of private property as the primary catalyst of economic development.


Only when an adequately enforced legal system secures private resources can education, natural resources, technology, infrastructure, and financial institutions unleash through the private market sustained per capita income growth. In an infelicitous yet apt metaphor, private property is the goose that lays the golden wealth of nations.


As used here, “property” refers not to something owned but to ownership itself. Most clearly, it is the legal right to keep others from interfering with an object or resource. Property implies lawful boundaries that protect the object, good against all others. Importantly, the object protected within property boundaries can have both tangible and intangible aspects to it. Within protected boundaries can be included not only physical objects like land and intangible objects like market exclusivity but uses of these resources as well. The uses of the resources are themselves resources and are part of the protected object.


By this definition, property is absolute. Inasmuch and only inasmuch as a person can keep others from interfering with a resource, does the person have property. If a person cannot keep others— including the state— from interfering with a resource, to that precise extent the person lacks property. However, absolute resource boundaries do not mean infinite resource boundaries and an owner’s property, especially in the use of a physical object, is always limited by the property of others. An adequate legal system of property law includes formal ways of determining the extent of property boundaries and of providing enforcement against and compensation for their harmful crossing. Criminal law, tort law, and government regulations provide that function, just as contract law and commercial codes specify the rules by which owners exchange objects in a private property-based legal system.


Private property provides the certainty and incentive necessary to free people from having to protect their possessions and to make them willing to invest resources in fixed locations for production. That the institution of private property generates the maximum human effort and ingenuity in the production of what society needs and wants comes from a deeply ingrained human characteristic which brings people to work harder for themselves and their families than for needy humanity in general, what economists refer to as “self interest.” Consequently, nations should enforce private property in whatever tangible or intangible resources they wish people to produce in greater quantities. It is entirely proper to teach and encourage the compassionate sharing of resources, but the development of national wealth in the last several centuries is almost entirely associated with the development of strong private property systems. No nations with such systems are poor, and no nations lacking them have diversified, prosperous economies.


First in the Netherlands, then in England, private property in land and the productive use of resources we today call “business” took hold. Also during this period, the American colonies were beginning a period of ferment over private resources that led eventually to a new nation. Historians of the colonial era are virtually unanimous in concluding that the American Revolution was fought over private property and the English refusal to apply to their own colonists the great constitutional principle of England: legitimate taxation of privately owned resources can derive only from the people’s elected representatives. Said John Wilkes, Lord Mayor of London, during this time, “If we can tax the Americans without their consent, they have no property, nothing they can call their own.”


The Constitution of the United States itself arose to protect the concept of what was frequently called in the 18th century “sacred property.” Without any opposition whatsoever, no fewer than five members of the Constitutional Convention observed that the purpose for which the political state comes into being is the protection of property. James Madison, who recorded these statements in his minutes of the Convention, himself held this belief, and in 1792 wrote a famous essay in which he extended the established constitutional cachet of private property to such objects as speech and the practice of religion. Madison said that even as people have a “right to property” so also do they have a “property in their rights,” thus representing individual liberty as nothing less than self-ownership. Thomas Jefferson’s “pursuit of happiness” phrase from the Declaration of Independence is likewise property based, deriving from John Locke’s belief that one’s privately directed acquisition of the means of life is the highest political happiness.


The path dependence or societal inertia of this kind of constitutional, legal, and social tradition brings us to the carefully analyzed, yet impassioned, article Rediscovering the Value of Intellectual Property Rights. Like Hernando De Soto, Lawrence Kogan recognizes the importance of private property to nations, but he extends this recognition
to the increasing globalization of trade in the vital area of IP rights. He fully embraces Article 1, Section 8, of the U.S. Constitution, which acknowledges that the purpose of patent and copyright protection is “to promote [give incentive to] the Progress of Science and useful Arts [business],” all done to serve the nation’s general welfare or common good. He vigorously promotes this justification for private IP in global trade as well.


Rediscovering the Value of Intellectual Property Rights focuses principal concern on Brazil’s continuing abridgment of IP rights and that nation’s efforts in international fora — assisted by certain European views— to justify the abridgment of trade secrets and patents and of the limited, exclusive markets that are the objects of IP boundaries. Although the opportunistic appropriation of valuable resources others have worked to create may have temporary, situation-specific economic and human advantages to Brazil, it fosters only long-term poverty in the development of new pharmaceuticals, quick growing, disease-resistant crops, energy efficient invention, and other information technology-based goods and services. From the perspective of private companies that spend billions to create the “Progress of Science and useful Arts,” actions to deprive them of the fruits of their research differ little from the predations of the Barbary Coast pirates, who plundered trade routes until the early 19th century. To eliminate or substantially reduce private property in new ways of generating w hat the world’s people need and want can only stifle incentive to create these resources in the first instance and lead companies to avoid dealing with nations who take IP resources without permission.


With a meticulously documented case, Lawrence Kogan shows that Brazil itself will benefit in the long-run from curbing its efforts to impair private property in what is currently protected by trade secret and patent law. From increasing foreign direct investment and providing incentive to its own private investors, Brazil will ultimately benefit more under— rather than out of— the private property regime. Lawrence Kogan provides an important service in reminding us why some nations are rich and others are poor.


International Journal of Economic Development Volume Eight, Numbers 1-2, pp. 5-10 2006

Brazil’s ‘Open and Universal Access’ Agenda Undermines its Own Technological Future

Brazil’s ‘Open and Universal Access’ Agenda Undermines its Own Technological Future


The following article was authored by Pat Choate, PhD, Director, Manufacturing Policy Project.


The article was prepared to support the manuscript entitled,


Rediscovering the Value of Intellectual Property Rights: How Brazil's Recognition and Protection of Foreign IPRs Can Stimulate Innovation and Generate Economic Growth, International Journal of Economic Development, Vol. 8, Nos. 1-2 (Sept. 2006), at pp. 1-4, at:


http://www.spaef.com/IJED_PUB/v8n1-2.html


http://www.itssd.org/White%20Papers/ijed-8-1-2-choate.pdf


Brazil’s ‘Open and Universal Access’ Agenda Undermines its Own Technological Future


The great riddle of 19th and early 20th Century economics was the role that technology exerted in economic progress versus the contributions of labor and capital. By the beginning of the 21st Century, most economists agreed that technological innovation was the motor of development and that its continuity and accumulated creations, what the Institutional Economists called “tools,” furthered a progress that persistently reduced squalor and improved the life of nations.


Lawrence A. Kogan’s article is in that tradition. His thesis is Brazil is undermining its national innovation efforts by policies and practices whose ultimate effect is to discourage the creativity of the Brazilian people and divert meaningful levels of direct foreign investment.


Kogan buttresses his argument with a detailed description of how the Government of Brazil has sent forth its diplomats to diffuse the concept of intellectual property rights in various international forums. First at the World Trade Organization (WTO), then the World Health Organization (WHO, and then at the World Intellectual Property Organization (WIPO), among others, he describes and analyses how Brazil has advanced an agenda of “open and universal access” which translates into a “taking” by the state of the creations of others and then making them publicly available without proper compensation, or often even acknowledgement. As a strategy, Brazil, he notes, is forum shopping, changing one provision here, and another there, all the while creating ever more holes in an already cheesy-like regime of global protections.


Unfortunately, Brazil and other developing countries are succeeding. As a condition for entering the Doha Round of WTO talks, Brazil led efforts to change the intellectual property protections for pharmaceuticals, allowing developing nations to force compulsory licensing and then produce patented medicines under terms largely decided by the government. Appropriately, Kogan points out that all except four or five of the more than 400 medicines now on the WHO critical medical list are generic, freely available for production by anyone in the world.


The principal problem is not that a handful of pharmaceutical companies are keeping medicines from peoples in Africa or other developing places, but that those governments do not enforce the integrity of pharmaceutical production inside their countries, nor do they ensure the integrity of the pharmaceutical distribution systems. So, the generic medicines available to billions of people cannot be assumed to be safe.


Brazil’s agenda is an ideological one, backed by a stubborn and confused post-communist politics of state “takings.” Brazil’s leadership in the open and universal access movement is not new. For almost a half century, it led efforts that sought to transfer intellectual properties developed by innovators from the developed nations to the societies of the underdeveloped countries. While justifying its actions on moral grounds, those efforts were and remain tainted by a corrupt political system where well-connected corporations have used the power of the state to advance a privatized and highly rewarding commercial piracy.


Kogan persuasively argues that Brazil would prosper under a strong regime of intellectual property protections. He points out that it has one of the world’s greatest collections of plant and life forms, which could under gird the creation of a world-class pharmaceutical industry, plus the development of biotech, biotechnology, environmental biotech, agro biotech, and chemical sectors, among many others.


But, to seize these opportunities, Brazil needs to acquire and develop technologies on a massive scale.


Fortunately, Brazil has the resources and people required for development on such magnitudes.


China is an example of a nation that has well managed this acquisition/development process. Chinese leaders have exchanged market access and incentives with the corporations from the developing nations for technologies and know how. The bargain is simple: foreign companies get the benefits if they bring their best technologies to China and share patent ownership for any technological improvement made in China. With that exchange China is modernizing its economy rapidly and simultaneously it is making the necessary investments in its human capital to become a world-class research and development center from which future innovations will flow. Even as China blatantly violates its WTO commitments to protect foreign intellectual properties, it is creating a domestic structure of intellectual property protections that is increasingly being used by the Chinese to protect their new creations.


In contrast, to China’s pragmatism, Brazil seems more interested in advancing the ideology of open and universal access. Yet, as Kogan notes, Brazil has treaty obligations with the other WTO members to honor and protect the intellectual properties of foreign owners. In this exchange, the United States has given Brazilian exports largely unimpeded access to the American market. Brazil seems to want the benefits of that deal even as it tries to wiggle out of its corresponding obligations.


It is a risky political approach. Specifically, the companies whose technologies Brazil is trying to take are unlikely to invest heavily there, an opportunity cost of great consequence to that nation. Equally important, Brazil risks reopening the piracy and counterfeiting wars of the 1970s and 1980s with the United States.


But most of all, Kogan argues that Brazil is diminishing its own future by not creating a legal, political, and developmental environment in which Brazilians and foreigners are inspired and rewarded for innovating.


This piece is lucid and written strikingly well. A full set of endnotes with sources, elaborations, and aside comments that merit attention backs the analysis. The audience should be Brazilian intellectuals, politicians, media and business people. The Brazilian government’s ideological pursuit of an open and universal system is undermining its national technological future.


International Journal of Economic Development Volume Eight, Numbers 1-2, pp. 1-4 2006

European Commission Hands 110th Congressional Majority & Presidential Contenders a New Political Issue - Bashing Private Intellectual Property Rights

The following article demonstrates indirectly how the ‘failure to work’ doctrine in international intellectual property (patent) law has been squeezed down from 4 years under the Paris Convention for the Protection of Industrial Property (Patents) to practically zero years, and then used as a justification by governments to declare a compulsory license if there is found to be a ‘lack of adequate competition’.

Pursuant to Article 5 of the Paris Convention, the ‘failure to work’ doctrine essentially affords each member country “the right to take legislative measures providing for the grant of compulsory licenses to prevent the abuses which might result from the exercise of the exclusive rights conferred by the patent”.

However, within the European Union, it appears that a company’s indigenously (internally) developed know-how (as opposed to know-how and technologies acquired by means of merger & acquisition), especially in the healthcare or information technology sectors, is deemed to be a ‘public’ good – or in the international context, a ‘global public good’ (GPG).

Consequently, if the medical or healthcare-related knowledge or technology is unique in the marketplace without peer, and the holders of the patents to such know-how or technologies impose conditions for licensing or refuse to license the patent altogether, the EU Commission’s Antitrust Directorate is empowered to deem (i.e., to invoke a legal presumption of 'monopoly' against) the holders of the patents to such know-how or technology as operating an illegal ‘monopoly’. This makes it easier for governments to recommend the use of antitrust remedies to ‘break’ the monopoly via the issuance of compulsory licenses even though there is NO predatory behavior by the company and NO unreasonable contractual or market behavior by U.S. legal standards.

Emerging country governments, such as the Government of Brazil, are now basing their policies of ‘universal access to healthcare’ and ‘universal access to knowledge’ (A2K) on this approach to patents law. Such approach has also been embraced by many Majority members of the 110th United States Congress.



EU Probes Pharmaceutical Industry
On Dwindling New Patents, Drugs
http://online.wsj.com/article/SB120048256196094295.html?mod=hpp_us_whats_news

The Wall Street Journal Europe

By CHARLES FORELLE
January 16, 2008 9:17 a.m.

BRUSSELS -- European Union investigators raided drug companies in several countries as the bloc's antitrust watchdog launched a wide investigation of potentially anticompetitive practices in the industry.

Neelie Kroes, the EU antitrust chief, said the industry-wide inquiry would examine whether large companies are abusing their market power to prevent competitors from bringing new drugs to market, or whether companies were colluding to restrain competition. [THIS AMOUNTS TO A 'WITCH HUNT' – CORPORATE CITIZENS IN CONTINENTAL EUROPE ARE DEEMED ‘GUILTY’ UNTIL PROVEN ‘INNOCENT’ – PRECISELY THE OPPOSITE SITUATION IN AMERICA DUE TO THE U.S. CONSTITUTION]


AstraZeneca PLC, GlaxoSmithKline PLC, Sanofi-Aventis SA, and Pfizer Inc. said they were among the companies contacted, although the commission did not name the companies searched Tuesday and early Wednesday, nor where they were located.

The EU's so-called sector inquiries are broad-brush examinations; they don't necessarily lead regulators to bring antitrust cases, but can result in substantial fines. Recent sector inquiries have focused on energy markets and payment-card systems. Both eventually resulted in antitrust action -- most recently in the EU's declaring unlawful a type of interbank fee set by MasterCard.

Mrs. Kroes cited figures indicating that the number of new drugs launched annually has declined from an average of 40 in the late 1990s to 28 between 2000 and 2004. "The pharmaceutical markets are not working as well as they might," she said. [THIS IS ANOTHER ‘MARKET FAILURE’ WHICH THE EU REGULATORS WISH TO ‘CORRECT’ THROUGH GOVERNMENT INTERVENTION/REGULATION ANATHEMA TO EXCLUSIVE PRIVATE PROPERTY RIGHTS]

The pharmaceutical sector inquiry seems likely to reanimate a debate about the intersection of competition policy and patent law. EU officials say one concern is that companies are "misusing" patent laws to block new drugs made by rivals. Such misuse might entail overbroad patent filings or specious lawsuits. The officials say that if the companies in question are "dominant," then any abusive behavior falls under their jurisdiction as a violation of EU monopoly rules.[THERE DOES NOT NEED TO BE REALLY AN ‘ILLICIT’ ACTIVITY – JUST THE MERE PRESENCE OF INNOVATION LEADERSHIP AND NO DESIRE TO LICENSE THE TECHNOLOGY...]

Another potential violation is more straightforward -- collusion between companies, for instance, agreeing not to enter each other's markets, or taking payment not to launch a competing drug. [THIS IS A LEGITIMATE ‘CONCERN’ IN THOSE INSTANCES WHERE IT CAN BE DEMONSTRATED BY CLEAR & CONVINCING EVIDENCE]

The EU has taken on alleged patent abuses before. In 2005, the Commission fined AstraZeneca €60 million ($89 million) for trying to block generic-drug makers from coming out with versions of its blockbuster ulcer drug Losec. The Commission said AstraZeneca gave "misleading" information to national patent offices that led them to wrongly extend the company's patents on Losec. AstraZeneca has appealed the case.

Under EU regulations, commission officials can raid the premises of businesses operating in Europe, whether or not they are European companies.

The EU began the sector inquiry with unannounced inspections -- triggering the first ones within hours of the commission's decision Wednesday to authorize the inquiry. In earlier sector inquiries, EU officials had begun more politely, with requests for information.

--Dow Jones Newswires contributed to this article.

Former ITSSD Intern Reveals How American & European Activists and Politicians Attack U.S. Intellectual Property Rights

The New War on Drugs:
Activists and Politicians Attack Intellectual Property Rights

Capital Research Center - Organizational Trends

January 2008

http://www.capitalresearch.org/pubs/pdf/v1199294989.pdf

America’s pharmaceutical industry is the envy of the world and the savior of millions of sick people. But activist groups, many of them founded by Ralph Nader and funded by liberal foundations, are campaigning to limit the industry’s incentives to produce new life-saving drugs. Their strategy focuses on undermining the intellectual property rights that protect pharmaceutical innovation.

By Karl Crow


Karl Crow is a 3rd Year student at Temple University's Beasley School of Law. In 2007 he was an intern at the Institute for Trade, Standards, and Sustainable Development (ITSSD) in
Princeton, New Jersey.

Recording Industry Deems Consumers Criminals for Copying Purchased Music Tracks to their PCs or Home Entertainment Systems for Personal Use

Recording Industry Tells Court (Again) That MP3s Are a Crime

By Ryan Singel December 11, 2007

Wired Blog Network

http://blog.wired.com/27bstroke6/2007/12/recording-indus.html


Does the Recording Industry Association of America think that you have the legal right to rip MP3s off CDs that you own? The evidence says the RIAA thinks you are a criminal if you make MP3s out of your late 80's hair metal CD collection, but probably won't sue you unless you send that MP3 to a friend or share it on the internet.

In a court filing (.pdf) that's being much discussed on the internet today, the RIAA appears to say no when asked that question by a judge in an Arizona suit against Jeffrey Howell for sharing songs on the Kazaa file sharing network.

The RIAA doesn't quite say MP3s ripped from one's own music collection are illegal, but instead refers to them as "unauthorized copies."

But the judge's question was plain:

Does the record in this case show that Defendant Howell possessed an "unlawful copy" of the Plaintiff's copyrighted material, and that he actually disseminated that copy to the public?

The answer was convoluted. The RIAA said the copies were unauthorized and that by putting the unauthorized copies in the Kazaa share folder, Howell was guilty of distributing copyrighted works.

The RIAA's website clarifies what it means when it says unauthorized copies.

If you make unauthorized copies of copyrighted music recordings, you’re stealing. You’re breaking the law, and you could be held legally liable for thousands of dollars in damages.

What does the site say specifically about ripping your CD or making a backup copy?

There's no legal "right" to copy the copyrighted music on a CD onto a CD-R. However, burning a copy of CD onto a CD-R, or transferring a copy onto your computer hard drive or your portable music player, won’t usually raise concerns so long as:

- The copy is made from an authorized original CD that you legitimately own;
- The copy is just for your personal use. It's not a personal use – in fact, it's illegal – to give away the copy or lend it to others for copying.

That's reassuring. The millions of Americans who ripped their music collections to listen to on their home media centers and portable digital audio players are considered thieves by the Record Industry, but you can rely on the goodness of their hearts not to sue you.

Also remember that in the case against Jammie Thomas, the record industry was much clearer on how much they hate their customers.

Sony's BMG's anti-piracy officer Jennifer Pariser was asked by record industry attorney Richard Gabriel if ripping songs from a CD was legal. She said no -- that's "a nice way of saying, 'steals just one copy.'"
[See "Sony BMG Exec Tells Jury that Ripping a Single Song is Theft", By David Kravets, Wired Blog Network (10/2/07) at: http://blog.wired.com/27bstroke6/2007/10/sony-bmg-exec-t.html ].

I originally thought after reading the filing, that Ray Beckerman at Recording Industry vs The People and Boing Boing were overplaying this (as Mike Masnick at TechDirt thinks), but on a closer read, Beckerman was absolutely right when he broke this story.

I tried to call the RIAA for clarification, but their phone system, like the record label's business model, is stuck in the early 80s. There's no voicemail -- not even an answering machine -- for their press contacts. The phone just rings out.

Music Industry Lawyer Claims All Music Reproduction Technologies (MP3, IPOD, etc.) Illegal, Notwithstanding 'Fair Use' by Consumers

Lawyer: Ripping MP3s Illegal, Grounds for Lawsuit

Monday , December 31, 2007

FoxNews

http://www.foxnews.com/story/0,2933,319276,00.html

You, too, could be sued for thousands of dollars by the major record companies — even if you've never once illegally downloaded music.

That's because at least one lawyer for the Recording Industry Association of America, the Big Four record companies' lobbying arm and primary legal weapon, considers the copying of songs from your own CDs to your own computer, for your own personal use, to be just as illegal as posting them online for all to share, according to a federal lawsuit filed in Arizona.

Jeffrey Howell of Scottsdale stands accused of placing 54 music files in a specific "shared" directory on his personal computer that all users of KaZaA and other "peer-to-peer" software could access — pretty standard grounds for an RIAA lawsuit.

However, on page 15 of a supplemental brief responding to the judge's technical questions about the case, the RIAA's Phoenix lawyer, Ira M. Schwartz, states that the defendant is also liable simply for the act of creating "unauthorized copies" — by ripping songs from CDs.

Schwartz is a partner in DeConcini McDonald Yetwin & Lacy, the family firm of former Sen. Dennis DeConcini, R-Ariz.

It is undisputed that Defendant possessed unauthorized copies of Plaintiffs’ copyrighted sound recordings on his computer. [Exhibit B to Plaintiffs’ Complaint is a series of screen shots showing the sound recording and other files found in the KaZaA shared folder on Defendant’s computer on January 30, 2006. (SOF, Doc. No. 31, at ¶¶ 4-6); Exhibit 12 to SOF at ¶¶ 13, 17-18.)] Virtually all of the sound recordings on Exhibit B are in the ".mp3" format. [(Exhibit 10 to SOF, showing virtually all audio files with the ".mp3" extension.)] Defendant admitted that he converted these sound recordings from their original format to the .mp3 format for his and his wife’s use. [(Howell Dep. 107:24 to 110:2; 114:1 to 116:16). The .mp3 format is a "compressed format [that] allows for rapid transmission of digital audio files from one computer to another by electronic mail or any other file transfer protocol." Napster, 239 F.3d at 1011.] Once Defendant converted Plaintiffs’ recording into the compressed .mp3 format and they are in his shared folder, they are no longer the authorized copies distributed by Plaintiffs.

"I couldn't believe it when I read that," New York lawyer Ray Beckerman told the Washington Post. "The basic principle in the law is that you have to distribute actual physical copies to be guilty of violating copyright. But recently, the industry has been going around saying that even a personal copy on your computer is a violation."

In other words, according to Schwartz's logic, every single person who's ever "ripped" a CD for portable listening on an iPod or other MP3 player could be liable for astronomical damages.

Apple itself estimated earlier this year that only 4 percent of music on iPods worldwide had been purchased through iTunes, implying that most of the rest had been ripped from CDs.

In October, Jammie Thomas, a Minnesota single mother, was ordered to pay the record companies $220,000, or $9,250 for each of 24 songs a jury found she'd shared online.

The RIAA's own Web site is more conciliatory, but implies that the organization reserves the right to go after music "rippers" should it change its mind.

"If you make unauthorized copies of copyrighted music recordings ... you could be held legally liable for thousands of dollars in damages," it plainly states before adding that "transferring a copy onto your computer hard drive or your portable music player won't usually raise concerns so long as the copy is made from an authorized original CD that you legitimately own [or] the copy is just for your personal use."

However, Schwartz isn't the only RIAA bigwig who's recently implied that those concerns may be raised more often.

Copying a song you've paid for in CD form is "a nice way of saying 'steals just one copy,'" Sony BMG top lawyer Jennifer Pariser testified during cross-examination in the Jammie Thomas case in early October.