Intellectual property and innovation
As part of a series of items on IP and innovation regularly added to the Council’s agenda since 2012, the co-sponsors (Australia, the European Union, Japan, Switzerland, Chinese Taipei and the United States) summarized the discussion of the topic “inclusive innovation and MSMEs growth” that the Council had considered at its meetings in 2017, and introduced “the societal value of IP in the new economy”, a theme on which the co-sponsors want to focus this year.
On the first issue, proponents introduced recent data showing that businesses using IP rights, and in particular micro, small and medium-sized enterprises (MSMEs), perform better on average. Likewise, businesses owning IP rights often have higher revenue per employee than businesses that do not and, in many cases, they also expand their workforce faster and pay higher salaries.
The co-sponsors stressed that IP is important for smart and sustainable growth and that MSME-driven inclusive innovation has a significant social as well as economic impact in both developed and developing economies, given that approximately 95% of businesses around the world are SMEs. However, the challenge was to integrate MSMEs into global trade and enhance economic outcomes. To support this goal, there was still ample room for MSMEs to better utilize IP both domestically and internationally, they noted.
On the second issue, the co-sponsors proposed the discussion on IP and innovation to take a new angle in 2018 to examine how IP creates conditions that encourage investments in innovation. As part of a three-theme discussion – IP-Intensive Industries and their Economic Impact on Society, IP Improving lives and IP and New Business – they invited other members to take up the first topic and share their experiences on how IP-intensive industries impact the development of their economies and their national evidence-based data on the economic relevance of these industries.
The European Union Intellectual Property Office (EUIPO) presented a report which indicates that IP-intensive industries generated 27.8% of all jobs and more than 42% of total economic activity (GDP) in the EU, worth €5.7 trillion, during the period 2011-2013. The report highlights that IP-intensive industries pay significantly higher wages than other industries, with a wage premium of 46% over other industries.
Along the same lines, the United States cited a report by the Commerce Department entitled “Intellectual Property and the U.S. Economy: 2016 Update” which found that IP-intensive industries support at least 45 million US jobs and contribute more than US$ 6 trillion dollars to the economy, or 38.2 % of US gross domestic product (GDP). Other members, including Japan, Switzerland, Canada, Colombia, El Salvador and Australia, also showcased national experiences of the economic impact of IP-intensive industries.
One member noted that intellectual property rights (IPRs) may provide an incentive to innovate, but they are neither a necessary nor a sufficient condition, and will only be effective in certain contexts. IPRs cannot foster innovation if the required conditions, like skills, information, capital market prospects, do not exist. Therefore, this member said, the extent of IP rules should be calibrated to the levels of development in a country as IP protection may actually be more costly than beneficial in countries where the conditions to benefit from strong IP protection do not exist.
Another member noted that patents can stifle innovation. The evidence for a positive relationship between IP and innovation was inconclusive.
IP and the public interest
Bolivia, Brazil, Chile and South Africa, with the support of China, put forward a paper highlighting the importance of WTO members making full use of the flexibilities contained in the TRIPS Agreement to promote access to health technologies when necessary.
With a view to broadening the understanding of the complex interplay between intellectual property and the public interest, the sponsors invited delegations to share their national experience regarding the implementation and use of the regulatory review exception (also referred to as “Bolar exception”), under which generic companies can use patented inventions for the purposes of obtaining regulatory authorization for the prompt marketing of their generic versions after the expiry of the patent.
Several members intervened to explain how the use of this exception has allowed them to find an adequate balance between right holders and users, between the protection of innovators and the public interest. At a time when the global burden of disease is expanding and countries increasingly face the need of providing life-saving medicines at a reasonable cost, sponsors supported an integrated approach that ensures the continuous production of new, innovative medicines without endangering access to off-patent medicines.
Under this framework, the Bolar exception is of particular importance and provides a valuable tool for stimulating competition in the market and ensuring the protection of public health, these members noted. A number of interventions acknowledged that the panel report in DS114 (Canada – Patent Protection of Pharmaceuticals) had laid the ground for many members to implement this exception into their respective patent laws.
One member stressed in this regard that IP and patents should not be viewed as intrinsic barriers to access. To properly address this issue, several factors outside the IP system must be observed, including pricing and procurement policies, taxes, tariffs, other national policies or the lack of those policies that also may result in higher costs for consumers and health systems. Another member expressed its caution in supporting a too broad interpretation of the regulatory review exception that could amount to weakening fundamental IP rights for other purposes.
Technology transfer to LDCs
The LDCs Group put forward a paper asking developed countries to fully implement their technology transfer requirements under WTO rules. The initiative dates back to 1999, when LDC members first expressed their concern with the lack of effective implementation of paragraph 2 of Article 66 of the TRIPS Agreement, which states that “developed country Members shall provide incentives to enterprises and institutions in their territories for the purpose of promoting and encouraging technology transfer to least-developed country Members in order to enable them to create a sound and viable technological base”.
In their document, LDCs stress that in spite of the mechanisms and processes introduced in the TRIPS Council, a continued lack of clarity has been observed in notifications by developed countries on the nature of incentives. Also, many notifications continue to demonstrate that incentive programmes identify recipients that are not LDCs and in cases where LDCs are identified, incentives do not result in transfer of technology, proponents said.
In this context, the LDCs Group requested the Council to demand developed countries only specify incentives provided to LDCs for technology transfer and deliberate on the meaning of “incentives to enterprises and institutions in their territories”. They also requested the Council to agree on possible ways developed country members can provide incentives to their enterprises and institutions in order to meaningfully fulfil their commitments and obligations.
The LDCs Group underlined that the notifications by developed countries make reference to technical assistance projects and programmes but do not detail the incentives provided nor specify that the purpose of the incentive is to encourage the transfer of technology to LDCs.
One member stressed that its annual submissions presented regularly to the Council on this matter clearly identify programmes benefiting LDC members and opposed limiting the scope of future reports to LDCs alone because it would undermine a long-standing and beneficial impact of the current reporting practice. In relation to the proposal that the Council makes recommendations on the nature of incentives and examines particular terms of contractual arrangements, this member stressed that technology transfer can proceed most effectively on voluntary and mutually agreed terms by the involved parties, and not on terms recommended by the Council.
Another member said that governments are limited by two factors: first, they do not own the vast majority of technologies subject to transfer; second, they cannot force the private sector to transfer technologies. Therefore, incentives can only take the form of encouragement, promotion and facilitation of projects which are part of a global and comprehensive approach to development.
Members repeated well-known positions regarding the “triplets” issues – the review of Article 27.3(b) with respect to patenting of life forms, the relationship between the TRIPS Agreement and the Convention on Biological Diversity (CBD) and the protection of traditional knowledge.
The lead proponents of including a mandatory disclosure requirement in a new Article 29 bis of the TRIPS Agreement reiterated this proposal while the promoters of removing any such requirement to patent life forms continued to argue for this position.
There was no consensus on the two pending procedural proposals: whether the Secretariat of the CBD should be invited to debrief the Council on the Nagoya Protocol, and whether the WTO Secretariat should update the three factual notes.
Non-violation and situation complaints
On the issue of “non-violation and situations complaints” – whether a member can bring cases against another member if it considers that the other member’s action or a specific situation has deprived it of an expected benefit, even if no obligation has been violated – exchanges at the TRIPS Council repeated well-known positions by members. However, in a shift of tone, new delegations indicated readiness to constructively engage in discussions about possible modalities in case such complaints were to become applicable.
In the first TRIPS Council after the 11th Ministerial Conference had decided to extend the moratorium on “non-violation and situation” complaints for an additional two years, and to request the Council to continue the examination of scope and modalities and to make recommendations to the next Ministerial Conference in 2019, the chair called on members to bring forward suggestions to break the impasse.
e-TRIPS online platform
The WTO Secretariat updated members on the e-TRIPS online platform for filing and consulting notifications and submissions of materials relating to the work of the Council. The Secretariat welcomed the extremely helpful feedback by delegations in fine-tuning the eTRIPS Notification Submission System (NSS), which is very close to being put online.
The priority now is providing a gateway that makes it easier to access and use the information uploaded through the eTRIPS Information Management System (IMS), a user-friendly online resource to search, consult and track all TRIPS documentation and information, both the legal instruments and all other material submitted, as well as the minutes of the Council itself.
Ms Irene Young chaired the TRIPS Council for the last time. The Council will now have to wait until the General Council agrees on the slate of chairpersons for WTO bodies on 7-8 March to know her successor. The TRIPS Council Chair-designate will then be able to take up his/her role, including holding any consultations in preparation of the next Council’s meeting on 5-6 June.
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98IGO , 151WTO