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Thursday, 18 June 2009

An International Bank of Intellectual Property: a proposal for knowledge liberalisation

Now here's something which is guaranteed to generate debate. This piece has been specially crafted for the blog by Itaru Nitta, Green Intellectual Property Project, Geneva, Switzerland. Itaru writes:

"This summer, a crowd of patent opponents and proponents will be descending on Geneva when international organizations in the city convene a series of meetings to explore future legitimacy for the global regime of patent protection.
Right: green and patent -- but is the solution to the world's innovation problems in the bag?
The participants will address a wide variety of increasing patent disputes, but they seem to amount to one of the most primitive questions -- do we truly need patents? To answer this question, policymakers are strongly encouraged to consider the International Bank of Intellectual Property (IBIP), which has been recently proposed in the course of working with the World Health Organization over public health, innovation and intellectual property.

Patents are widely believed to be indispensable for promoting innovations, or "knowledge production." Once, however, innovation is protected, patents leave up to the market the dissemination of patented technologies, or "knowledge allocation," which is the common culprit of various patent frictions, including the accessibility to essential medicines, the transfer of environmental technologies and the biased incentives of research toward commercial profitability rather than the most necessary public interest, for example, the "neglected diseases."

Patent insurance
To set off this lack of knowledge allocation, IBIP is designed to provide "patent insurance" as a financial assistance. Besides the existing official fee for granting and maintaining patents, IBIP would impose an extra official fee on patent applicants and holders as a form of "insurance premium," which would create a trust fund financing knowledge allocation, such as the compensation of technology transfer costs, particularly royalty assumption, and other subsidies for purchasing patented products in developing counties, as well as a wide range of funding proposed for needed research, including medical grants, prizes, public-private partnerships and others.

This financial assistance, or "payment of the insurance," would convince society of the wisdom of patents, and as a result, calm growing global criticism over patents and uphold societal trust over them. In other words, the extra fee would serve as a premium for defending patents against the risk of compulsory licensing and other safeguard flexibilities. Consequently, the dual benefit of patent insurance -- not only for developing nations in the form of financial aid, but also for developed nations in ensuring patents -- would readily build consensus by developed nation patentees on their burden of paying the patent premium. This dual benefit would attract not only corporations facing predicaments in patent protection, such as pharmaceutical industries, but also any research-oriented sectors in developed countries because they all need ensured patents.

The patent insurance would be payable to both developing and developed countries in response to their requests for financial assistance. Such requests would be deliberated to assess the feasibility of facilitating knowledge allocation during an international quasi-judicial process, modeled after, for instance, the Multilateral Investment Guarantee Agency affiliated with the World Bank and the dispute settlement mechanism in the World Trade Organization. Importantly, in the case of denial, the IBIP must ensure opportunities for the rejected country to consider an alternative action, including the traditional flexibilities in patent such as compulsory licensing, parallel importing, generic production and the Bolar exemption.

The patent insurance premium would be an additional weight for patentees in the traditional balance of public interest (innovation disclosure) and private right (the patent monopoly as a reward for the disclosure) in the legitimacy of patents. In the sense of economics, the patent premium would serve as a combination of "Tobin taxation" and "Pigovian taxation." From Tobin's perspective, the premium is an international taxation imposed at a border when a knowledge asset is crossing. The Pigovian aspect of the patent premium is to facilitate the market incorporating its failure that patent protection generates in society.

Translation Waiver and Reduced Price of Official Fee
To prevent burden of the premium from inflating the price of patented products, for example, increased price of medicine, the proposed patent insurance would also feature two measures: a translation waiver and reduced price of the official fee.

Having paid the premium under the translation waiver, an applicant would no longer need to file an application translation with a local patent office while the application enters a designated country or region, unless the office needs a faithful translation for a trial or litigation. This waiver of translation would compensate or even outweigh the financial load of the patent premium because application translation accounts for a significant proportion in the costs of obtaining a foreign patent (roughly speaking, the total cost for a single foreign application is US$10,000 and its translation costs usually US$3,000 or more). The translation waiver would be supported by considerable improvement in computer translation, allowing a patent office to examine an application without a human-conducted translation or even by utilizing such translation of limited portions (for example, only claims and relevant descriptions in a specification).

Another technical progress in examination of patent applications would offer a discounted price in official fees for those who have already paid the premium. This lowering would be brought about by streamlining examination by means of emerging technologies for identifying and measuring innovations. These tools would include information-communication technologies, highly-evolved patent-mappings and other intelligent methodologies.

In addition to the original functionalities of the patent insurance, these financial advantages of the translation waiver and discounted official fee would further encourage patentees to agree with the insurance premium.

Since patent insurance would be embedded in the existing patent system, the insurance would possess a substantive and sustainable financial scale (with a possible annual revenue of up to several tens of billions of US dollars) due to enormous amounts of both filing numbers and subject matters in patent worldwide even during a time of challenging economic conditions.

Knowledge liberalisation
An expected function of patent protection is to enhance the total welfare in society through "knowledge liberalisation." It might surprise readers to know that an unexploited but genuine essence of patents is not the protection but liberalization of knowledge, which is a macroeconomic model containing knowledge production and allocation as constituents to describe the dynamics of patent. Such liberalisation would be embodied in IBIP if patent incorporated the financial mechanism to drive knowledge allocation.

The concept of knowledge liberalisation would no longer regard patents as a mere innovation protector, but rather as more like a proactive financial driver of funding for the largest overall benefit in society.

More information appears on the website of the Green Intellectual Property Project, Geneva, Switzerland".
The IPKat would love to hear what his readers think. Adds Merpel, so long as he agrees with them ...


Anonymous said...

This financial assistance, or "payment of the insurance," would convince society of the wisdom of patents, and as a result, calm growing global criticism over patents and uphold societal trust over them. In other words, the extra fee would serve as a premium for defending patents against the risk of compulsory licensing and other safeguard flexibilities.

So, if I understand this correctly, this would provide "insurance" in the same way that a certain "honourable society" of "upstanding citizens" provides "insurance" to neighbourhood entrepreneurs?

Well, as one such "upstanding citizen" once put it, that's an offer you can't refuse...

Don't patent offices worldwide already require payment of quite substantial official fees? Isn't that already enough "Tobin taxation" and "Pigovian taxation"? Shouldn't the proponents of this idea rather be questioning the use to which those official fees are put, especially in developing countries?

As for the idea of issuing a translation waiver in exchange of this "insurance", I really don't believe that criticism of the patent system would quiet down if there was the idea that somebody in, say, India, could be sued for infringement of a patent in German (or that somebody in Germany could be sued for infringement of a patent in Chinese). And no amount of blather concerning the potential of machine translation and other information technologies is going to assuage my concern about that.

Patent system reform seems to be attracting more than its fair share of hare-brained schemes these days, but this one is more hare-brained than most (although possibly quite lucrative for a few people).

Sean said...

"subsidies for purchasing patented products in developing counties"

like Norfolk?

Anonymous said...


"Defending patents agains the risk of compulsory licensing".

"Opportunities for the rejected country to consider an alternative action such as...compulsory licensing"

There seem to be some glaring inconsistencies in what is basically a reworked version of the IP tax, which has been a long suggested "IP for economic development" measure. I think it was last dealt with by the WIPO PCDA in the legendary list of 110 proposals, though as I don't have that to hand I can't be sure.

This has been rejected in the past as not only being unfair (since the costs of the IP system already act as a tax on innovation) but also unworkable. The confused nature of this proposal serves to reinforce the latter objection.

I for one can't wait to see the day when ICT streamlines the patent application system to the extent suggested here. Bring on PatBot!

twr57 said...

"It might surprise readers to know that an unexploited but genuine essence of patent is not the protection but liberalization of knowledge, which is a macroeconomic model containing knowledge production and allocation as constituents to describe the dynamics of patent."

This sentence doesn't strengthen the case for machine-translation. Can anyone explain what was meant?

Anonymous said...

If you put it into Google translate and translate it from English to German and then back from German to English you get the following:

"It may surprise readers to know that an unused, but real essence of patent law is not protection, but the liberalization of knowledge, this is a macroeconomic model with the knowledge and the allocation as components to describe the dynamics of the patent."

If anything, I reckon the double translation's made it clearer. Maybe it is an advert for machine translation after all...!!!

Anonymous said...

If the aim is to foster access to technologies in the developing countries, it would make sense to have those special taxes - e.g higher fees in these countries. Applicants can than decide if they want to have a patent in e.g. Uganda, or do they allow anybody to read their patent specs as published by the UK patent office.... and copy it in e.g. Uganda.

If a special tax should be paid when filing for patent in first country (e.g. UK) which would benefit other countries (e.g. developing countries) as a compensation for technology/knowledge supremacy, it would also make sense to HAVE SPECIAL TAXES IN DEVELOPING COUNTRIES, rich in traditional knowledge. Thus any Chinese or Indian buying in China or India local herbs and spices should pay a special tax which should be without delay forwarded to UK, (a country less developed aspects of traditional knowledge).


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