EU Supports Flexible Compulsory Licenses for Healthcare, But None for Entertainment or Information Technologies; Is This a TRIPS Double Standard?

http://www.ip-watch.org/weblog/index.php?p=907


EU Threatens Taiwan With WTO Case Over Law On Compulsory Licences


31 January 2008


By David Cronin


Intellectual Property WatchBRUSSELS -


The European Union has demanded that Taiwan change its intellectual property law within two months following a probe into how the East Asian island overruled patents on recordable CDs (CD-Rs).


Philips, the Dutch electronics giant which holds patents for the core technologies used in CD-Rs, filed a complaint with the EU in early 2007 over the activities of a Taiwan-based company Gigastorage.


Since the 1990s, Philips had given licences to use technology for which it held patent rights to several companies in Taiwan. These firms went on to supply about 80 percent of the global market in CD-Rs by the early part of this decade.


While Gigastorage was one of the firms with which Philips had a licence agreement, this accord was scrapped in 2001. Gigastorage subsequently asked the Taiwanese national authorities to enable it to continue making the discs by issuing a compulsory licence. Its request was granted in 2004.


After investigating Philips’ complaint, the EU’s executive, the European Commission, warned on 30 January that it could start dispute proceedings against Taiwan in the World Trade Organization unless its patent law is swiftly amended.


http://ec.europa.eu/trade/issues/respectrules/tbr/pr300108_en.htm



The Commission has objected to a provision in the Taiwanese law allowing national authorities to grant a compulsory licence if a rights-holder has refused a voluntary one.


...According to the EU Commission the provision of the [Taiwanese] Patent Act dealing with compulsory licences was inconsistent with Article 28 of the TRIPs Agreement, because it allows the grant of the such licences where there is no more than a refusal to deal on the part of the patent owner. Further, the Commission services concluded that the interpretation of various procedural requirements relating to the grant of compulsory licences in the decisions of the authorities of Chinese Taipei were inconsistent with Article 31 of the TRIPs Agreement. The Commission services also found that Chinese Taipei had failed to respect the obligation to ensure that the compulsory licences were not used to produce for export, and that in fact they had been predominantly used to produce for export."


[THE EUROPEAN COMMISSION'S OBJECTION TO COMPULSORY LICENSES FOR WHAT ESSENTIALLY AMOUNTS TO A 'FAILURE TO WORK'/ REFUSAL TO DEAL' IS QUITE HUMOROUS GIVEN THAT EUROPE HAS TAKEN THIS POSITION WITH RESPECT TO U.S. PHARMACEUTICAL AND SOFTWARE PRODUCTS SOLD IN EUROPE, AND BRAZIL & THAILAND HAVE DONE THE SAME THING AS TAIWAN WITH RESPECT TO U.S. HIV/AIDS DRUG PATENTS].


...“The EU fully supports the use of compulsory licensing in specific circumstances, in particular to facilitate access to medicines,” said Peter Mandelson, the European commissioner for trade.


“However, we cannot accept the abuse of this system. I hope that the Taiwanese authorities will move quickly to bring their law and practice into line with WTO rules. I cannot rule out seeking WTO dispute settlement if they do not.”


The Commission said that it is challenging Taiwan’s patent law as part of its overall efforts to remove barriers to trade encountered by European firms doing business abroad. In a 2006 strategy paper titled Global Europe, the Commission argued that the protection of European patent rights outside the EU’s borders is essential to guarantee the competitiveness of European industry.


A report prepared by EU officials who examined the Philips’ complaint concludes that “circumstantial evidence” has been found to suggest the Taiwanese authorities are willing to use compulsory licensing as an industrial policy instrument, rather than as a limited exception to patent rights.


[THIS PRACTICE IS OTHERWISE REFERRED TO AS 'IP OPPORTUNISM']


It suggests that a compulsory licence was issued in this case to pressurise Philips into lowering the royalty rates it charged to all CD-R manufacturers in Taiwan. None of the other CD-R manufacturers in Taiwan opposed the advantages given to Gigastorage, it noted.


According to the Commission, the case sets a “terribly dangerous precedent of an industrial policy built on violation of the TRIPS agreement.”


A Taiwanese diplomat familiar with the case said that producers on the island had encountered a “dramatic change” because the international price of CD-Rs has fallen considerably in recent years. Although the Taiwanese authorities had asked Philips to reassess the royalty rates it was charging to reflect this situation, the Dutch firm declined to do so, the diplomat said.


[THIS SOUNDS AWFULLY SIMILAR TO THE BRAZILIAN GOVERNMENT'S ARGUMENT THAT BRAZIL HAS ENCOUNTERED A 'DRAMATIC CHANGE' BECAUSE THE INTERNATIONAL PRICE OF ITS NATIONAL 'UNIVERSAL ACCESS TO HEALTHCARE' PROGRAM HAVE INCREASED CONSIDERABLY IN RECENT YEARS.]


“It might seem odd that the Commission wants us to change the law within two months,” the diplomat continued. “Maybe it just wants to send out a signal not just to Taiwan but to others that it will vigorously safeguard Europe’s intellectual property concerns.”


Despite the Commission’s warning, a preliminary settlement was reached between Philips and Gigastorage in October 2007. The settlement followed a ruling in Philips’ favour, delivered by the US International Trade Commission earlier in the year. The Commission said its aim is a change to Taiwanese law.


http://www.usitc.gov/secretary/fed_reg_notices/337/337-TA-474.Notice.1170697224.pdf


The amount of compensation being paid as a result of the settlement has not been disclosed.


[THE PRIOR SITUATION DESCRIBING THE EUROPEAN UNION'S GROWING DISPUTE WITH TAIWAN OVER THE LATTER'S ISSUANCE OF A COMPULSORY LICENSE AGAINST EUROPEAN COMPANY (PHILIPS) INFORMATION / ENTERTAINMENT TECHNOLOGIES FOR THE PURPOSE OF SECURING A BETTER PRICE MUST BE READ IN LIGHT OF TAIWAN'S PREVIOUS ISSUANCE IN 2005 OF A COMPULSORY LICENSE FOR EUROPEAN COMPANY (ROCHE) MEDICINES:


'Taiwan’s Adventures With Tamiflu’


“In November 2005, Taiwan's government issued a license to allow local companies to manufacture generic versions of Tamiflu -- the only drug in the world considered effective in combatting the effects of bird flu. To date, Taiwan has recorded no cases of bird flu, but according to health authorities, it lies squarely in the path of migrating birds from China...At the time, Taiwan's health authorities stated very clearly that the purpose of the compulsory license was only to stockpile enough Tamiflu to protect against an outbreak of bird flu. But...Taiwan[] [subsequently]...amend[ed] [its] patent laws to allow the export of its generics to other nations.¨


...‘The new provision will relax regulations on drug exportation, so that upon the request of poorer countries, local drug companies may manufacture and export drugs to those countries without the consent of the patent holders...As such, these medicines would be available at a much cheaper price than their authorized versions...


This amendment seems custom-designed to allow companies which are making generic Tamiflu for Taiwan's DOH under compulsory license conditions to make extra money from their participation in the project. And it seems to contradict the DOH's earlier statement made when it was enacting compulsory licensing conditions in November 2005, when it said that any Taiwan-made generic Tamiflu was strictly for local use only and would not be exported to any other country’... [W]hatever gains Taiwan generates with developing nations, it will lose with the developed world...” (Andrew Leonard - Salon 2006)


¨The following compulsory licensing conditions were agreed upon between Taiwan’s DOH and the patent-holder, during negotiations:

§“Taiwan must use Tamiflu supplied by Roche before resorting to using any supply produced under the compulsory license”;

§“The compulsory license could be cancelled if TDOH obtained a voluntary license from Roche during the compulsory period”;

§“The products produced under the compulsory license would be limited to domestic prevention”;

§“Taiwan’s Dept. of Health would provide adequate remuneration to Roche” (Finnegan, Henderson, Farabow, Garrett & Dunner, LLP)

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.”

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.