"Don't blame TRIPS for poor provisions of national IP law", say MPI and friends

The IPKat has known for a while that his friends at the Max Planck Institute for Innovation and Competition, together with a number of eminent patent scholars from elsewhere on the planet, have been working on a Patent Declaration on the interpretation of TRIPS for the past couple of years [says Merpel, this is why they have been wandering around with solemn countenances which send out an "I'm-up-to-something-really-important" message ...].  The Declaration hasn't quite been launched yet –- that happens tomorrow -- but in the meantime we have a taste of things to come, via former guest Kat Matthias Lamping (currently a Senior Research Fellow at the Max Planck Institute). Matthias has kindly given us sight of the press release that trumpets the publication of the Declaration. This is what it says:

20 Years WTO/TRIPS: Experts Show: Problems of the Patent System are Home-Made

Patent law is omnipresent in the business news of today. One record number of patents issued follows the next. At the same time, the public consciousness is occupied by ‘patent wars’ between Smartphone manufacturers, massive demonstrations against the perceived greed of pharmaceutical companies or the patenting of tomatoes, animals and even parts of the human body. At the time of its introduction, the patent system was not without controversy either. However, is it now at the brink of collapse? What are the problematic issues -– are they to be found in international law? 40 patent law experts from 25 countries deliver answers. In the ‘Declaration on Patent Protection’, published in connection with the 20th anniversary of the WTO, they demonstrate the manner in which the international legal order leaves ample space for differing designs of national patent systems and how this flexibility promotes economic growth and social welfare.

On April 15, 1994, the community of states entered into an historic agreement of international law. With the establishment of the World Trade Organization (WTO) they responded to the globalization which had been rapidly progressing since the 80s. The WTO is based on three pillars, the General Agreement on Tariffs and Trade (GATT), the General Agreement on Trade in Services (GATS) and the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). By incorporating the major international treaties on intellectual property at the time, the TRIPS Agreement became the benchmark for national IP systems practically overnight ['practically overnight' is the way it might look if viewed through the binoculars of 2014, but it was a long, long process while it was actually happening, notes this Kat, who was alive at the time ...]. Today, the WTO has 159 member states, including all industrial nations and upcoming economies such as China and Russia, in addition to a number of developing and emerging countries. 

In the two decades since, the perception of intellectual property’s importance and function has changed substantially. It did not take long for the Internet to reveal the darker sides of copyright law. In contrast, the drawbacks of the patent system have only recently come to light. Nowadays, the patent system makes headlines for the disputes it generates instead of for the innovation it promotes. Smartphone manufacturers like Apple, Microsoft and Samsung engage in litigation wars and try to drive each other out of the market. Pharmaceutical companies are accused of blocking, or at least delaying, the market entry of generics in order to maintain high prices for their blockbuster drugs. So called ‘patent trolls’ have come into the spotlight for buying up entire patent portfolios -- not to manufacture their own products but to extract licensing profits by blackmailing alleged infringers. Not all industries are equally affected by these phenomena, but there is a general perception that patents are increasingly used for strategic purposes rather than to protect innovation [it's regrettable that IP is consistently subjected to analysis in simple binary terms. For example, patents can be used both for strategic purposes and to protect innovation]. 

Disappointment awaits those who expect to find the potential damage of such dysfunctional patent uses reflected in the debates about international law. Most developed countries vehemently advocate strengthening patent protection even more. However, these efforts are now met with considerable resistance [curiously, little reference is made in these disputes to the presence and the efficacy (of lack of it) or otherwise of the antitrust and competition law provisions which may be used to neutralise abuses caused by over-strong IP protection]. Roughly two years ago, the Anti-Counterfeiting Trade Agreement (ACTA) raised the level of public awareness in this regard. This secretly negotiated agreement led to a global outcry and resulted in a wave of public demonstrations across the globe. 

The success of such resistance was remarkable. Several legislators, including the European Parliament, have rejected ACTA. However, this victory was rather limited in scope. The world’s attention has now been turned to the Trans-Pacific Partnership (TPP), which is currently being negotiated –- still secretly, but this time without the participation of the EU –- between the Unites States and a number of other countries. In addition, there are several other, often equally intransparent, bilateral negotiations going on. Patent law is often a subject matter of these negotiations. In exchange for trade concessions in other areas like textiles or agriculture, developing countries are being persuaded to implement high standards of patent protection which are often not in their interest. Such standards may even prove detrimental to the long-term development of national innovation capacities and may therefore ultimately only serve export interests of trading partners. 

Intellectual property is not merely a third-world problem. It is a global challenge. As important as the legal certainty resulting from exclusive rights may be in maintaining investment incentives, the very same rights can cause immense harm if protection becomes excessive and thereby compromises effective competition or other public interests. Thus it is vital to achieve the appropriate scope of legal protection. More protection does not necessarily lead to more innovation. Patent law does not merely function to serve the interests of inventors and right holders. It is a regulatory institution. 

It is often claimed that international law requires a high level of patent protection and leaves little policy space for pursuing national public interest goals. In a ‘Declaration on Patent Protection” a renowned group of patent and international law experts prove this assertion to be inaccurate. In particular, the experts declare that international law permits many measures which are essential to a sustainable patent system. The hostility shown to the TRIPS Agreement by many developing and emerging economies is often owed to a failure to recognize the actual flexibility afforded by the Agreement with regard to the design and application of national law [bravo, cheers this Kat, who has been saying this for years ...]. 

The Declaration on Patent Protection was drafted under the auspices of the Max Planck Institute for Innovation and Competition in Munich. It is the result of two decades of intensive research. In brief and clear manner, the Declaration indicates the interpretive scope of TRIPS norms. Overall, the Declaration remains neutral – it is neither directed at states with a specific level of development nor does it aspire to provide recommendations for legal action. It only points out the regulatory discretion that national legislators enjoy when it comes to implementing their own patent systems. In the end it is up to the individual state to choose the option that best suits its national socio-economic situation.

The Declaration on Patent Protection supplements the existing research work of Max Planck Institute for Innovation and Competition. Six years ago the Institute published a Declaration on a ‘Balanced Interpretation of the Three-Step Test in Copyright Law', which deals with limitations and exceptions to copyright protection and has received worldwide attention. Both Declarations are flanked by ‘Principles for Intellectual Property Provisions in Bilateral and Regional Agreements’, in which the risks of unbalanced free trade agreements (FTAs) are pointed out and recommendations are given with regard to the definition of negotiation mandates, negotiations as such as well as the interpretation and implementation of FTAs.

Roll on tomorrow! Let's see the details. Then we can start to discuss them in earnest ...