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The Current Patent System Favours Corporations

GENEVA, Aug 8 2012 (IPS) - 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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