The Current Patent System Favours Corporations

8/20/2012
By Carlos M. Correa *
http://www.other-news.info/2012/08/the-current-patent-system-favours-corporations/

GENEVA, Aug (IPS/South Centre)--A proposal has been made to
initiate a debate on patent quality at the World
Intellectual Property Organisation (WIPO). The expression
'patent quality' ambiguously alludes to a growing problem,
faced in both developed and developing countries alike:
the overwhelming majority of patents are applied for and
granted over incremental developments on existing
technologies.

Although the intrinsic value of the technology protected
under such patents is low, they are often strategically
used to generate or keep monopolistic positions that
affect competitors and consumers. Thus, the proliferation
of patents that do not make a genuine technical
contribution limits legitimate competition and undermines
innovation.

An investigation conducted by the European Commission on
the pharmaceutical industry, for instance, concluded that
"filing numerous patent applications for the same medicine
(forming so called "patent clusters" or "patent thickets")
is a common practice to delay or block the market entry of
generic medicines. Patent litigation cases increased by a
factor of four between 2000 and 2007; generic companies
prevailed in 62 percent of 149 litigated cases that lasted
from six months to more than six years. European
governments and consumers paid around three billion euros
in excess between 2000 and 2007 (in relation to 219 drugs)
due to abuses in the exercise of patent rights.

A WIPO study identified around 800 patents on ritonavir,
an important component in the treatment against HIV/AIDS.
In order to preserve a monopolistic position after the
expiry of basic patents, pharmaceutical companies
routinely apply (and often obtain) patents on derivatives,
dosage forms and new uses of existing medicines, thereby
evergreening the original patents.

Information and communication technologies have also
become a patent battlefield. Thousands of patents granted
on computer programmes and other technologies are used to
block competitors or to keep them out of the market
through the threat of costly litigation. Companies that do
not have large patent portfolios can hardly survive.
Google paid 12.5 billion dollars to take over Motorola
Mobility and get hold of its nearly 17,000 patents that
could be used to harass mobile device-makers using
Google's Android mobile operating system.

A number of factors explain the proliferation of patents
with low or no inventive contribution. On the one hand,
large companies devote significant resources to pursue
patent strategies that deliberately aim at limiting the
competitor's room to operate. They include "blanketing"
(creating a jungle or a minefield of patents), "flooding"
(taking out multiple patents, major as well as minor, in a
field), "fencing" (acquiring a series of patents that
block certain lines or directions of research and
development) and "surrounding" (when an important central
patent is fenced by other less important patents).

Patent offices in developing countries have followed
similar patterns regarding the patentability criteria.
Technical assistance programmes, intense advocacy and
business lobbying have been effective in creating
practices that transform the patent system into a
convenient mechanism of market control and exclusion. In
most cases, patent activity by foreign companies does not
encompass any investment in production (since markets are
mainly supplied through imports) nor a real transfer of
technology to the countries where protection is sought.

Canada and the United Kingdom submitted to the WIPOs
Standing Committee on Patents a proposal to deal with the
issue of patent quality. It recommends undertaking work on
three aspects: technical infrastructure development,
information exchange on quality of patents and process
improvement. The proposal recognises the existence of a
problem with the patent system. However, it fails to
address critical issues, such as the way in which the
patentability requirements and other concepts of the
patent system are applied.

Important changes in the way the system is designed and
operates are necessary to make it work as a tool to reward
genuine contributions to the existing pool of knowledge,
consistently with national development objectives. They
include:

Integrating patent policies into national development
policies, including in relation to access to medicines and
to environmentally sound technologies;

Increasing the capacity available in patent offices and
courts to properly examine patent applications, and
introducing substantive examination where it does not
exist;

Providing patent examiners incentives to objectively
examine patent applications and thereby avoiding a bias
towards approval;

Ensuring that the inventive step analysis takes into
account prior expert knowledge available in written
documents as well as that derived from practical
experience. Patents should only be granted when a real
contribution to the state of the art has been made;

Preventing the proliferation of patents resulting from
offensive and defensive practices (e.g. patent thickets)
that may block legitimate competition and the development
of a local innovative capacity;

Reviewing practices based on questionable assumptions or
legal fictions, such as the number of documents that may
be combined to establish inventive steps and the
evaluation of novelty in the case of selection patents;

Clearly distinguishing inventions from discoveries; if
genetic materials are deemed patentable, limiting the
protection to the function/s disclosed in the patent
claims;

Differentiating as necessary between sectors in applying
the patentability standards. For instance, more rigorous
standards may be applied to examine pharmaceutical patents
(given their impact on access to drugs) than those in
other sectors;

Strengthening and facilitating the use of pre and
post-grant opposition systems;

Improving the transparency of the system by requiring
information on the International Nonproprietary Name (INN)
of drugs and the origin of claimed genetic resources;
Empowering the competition authorities to take effective
action in cases of undue acquisiton or abuses of patent
rights. (END/COPYRIGHT IPS)

*Carlos Correa is the South Centre's special adviser on
trade and intellectual property issues. For further
analysis see South Bulletin 28 May 2012
(http://www.southcentre.org ).

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