Intellectual Property

1 Intellectual Property International patent protection has been debated to be an essential element for the global economy today. However, there are many controversies that surround its design and implementation process. Intellectual property is currently an uprising aspect of global trade in the world. Due to many controversies, disputes regarding patents have been constantly increasing through cross-border disputes and multiple infringement patent suits. Patent protections vary from country to country and their interpretations of the patent laws also differ. For example, technologically advanced countries have strong patent protection to enhance innovation while other countries perceive that strong patent protection reduces access to new goods and welfare too. Moreover, international patent law is very costly.

Most countries in the world today still use national patent laws from the Industrial Revolution; these patent laws are ill-suited in today’s world. Universities in various developed countries such as the US, Japan, Germany and others have pursued and become licensors of patents. Hence, due to these new developments it is necessary for harmonization of patent laws in their enforcement through mitigating differences accrued from national patents of different countries in global trade. Harmonization is expected to benefit global trade through liberalization of technology transfer and high investment by foreign countries in developing countries.

Generally, innovation capacity would be improved in the world through harmonization. In order to achieve harmonization, the World Intellectual Property Organization recommended that Substantive Patent Law treaty (SPLT) be put in place.

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2 In the US patent law, patent is given to the first person to invent a subject matter; a patent is awarded if one proves that he was the first to complete the invention. It differs from almost all other countries which awards to the first person to file a patent application-that is the first-to-file system. The US defines novelty differently from other countries. The US interpretation allows the inventor to publish, sell, or publicly use their invention as long as the inventor does not create an effect on US patent protection-the condition is that the inventor must have filed the patent application within one year of the sales or from disclosure (Radack 1997). Conversely, other countries regard disclosure of information, sale, and publication before filing any patent applications as loss of patent rights.

The US patent law also requires that the inventor should include details of the secrets of the invention in the application. Conversely, the European patent law has no requirement for disclosure of secrets by the inventor. The European patent law requires that there is a novel and an inventive step which is similar to the US patent law which requires an invention be novel and unique. The applicant of the patent should have an invention which is uncommon and substantial for him to get a patent right (Ius Mentis Law and Technology Explained 2005). Lastly, the US follows national exhaustion while the European Union follows the international exhaustion doctrines. Exhaustion of doctrines is an affirmative action that denies the patentees right to control and use products for further sales through the enforcement of the first sale patent. It prevents the inventor from re-selling the same product or being double rewarded. Japan uses the international exhaustion.

The US only published after grant of patent applications but they have since changed to publishing applications 18 months from the date of filing with the exception of withdrawal, or at the request of the non-publication. Consequently, the European Union also publishes 18 months from the date of filing with the exception of withdrawal. The search report is also included if completed.

The European Union tried to implement the Community Patent in its member states. This community design regulates to establish a unified system that should remove obstacles and unfair competition at community level and enhance a uniform protection in the European Union.

Community patent also strives to uphold creativity and innovation. The European Union community patent system had many limitations which include rights conferred do not extend to a number of areas in the proposal for regulation; involves acts done privately and for noncommercial purposes. Also patents do not apply to the prior use of invention; invention can be used for business purpose if without malice before the filing date. Lastly, rights do not extend to acts concerning products covered by patent carried out within member states; patents do not apply after publication (Europa n.d).

Other key issues involve languages, where member states in the EU must have a translation of community patent laws to their own national patent languages in order to be validated. This translation process leads to raised costs and takes a long time. Furthermore, it is difficult to deal with infringement of patent laws due to mistranslations. Financing is also another major issue. The community patent transforms to large costs for businesses since disputes have to be handled on a national level. The disadvantage of the European patent system is that its applicants found it very costly and very slow to get a patent. Comparing with the US, the European community took almost twice as long. Moreover, using a harmonized system led to concentration of risk-through using a single application, it meant loss of variety in patent laws and they became insignificant (Mohanty 2008).

3 Harmonization simplifies the process of obtaining a patent through harmonizing differences in patent requirements in the different countries. A refusal of patent in one country will mean other member states will reject as well based on the same grounds; hence helps to save time and costs. Secondly, it leads to reduced workload due to reliance on experiences from other countries. Through harmonization, member states share information and experiences on the various suits; hence it saves time and reduces research in patent suits. Thirdly, patentable subject matters are broadened through harmonized patents; “invention” may be patented. Fourthly, harmonization facilitates prediction of patent; same invention in countries will be easily noted enhancing legal certainty and value for patent. Fifthly, harmonization leads to reduced patent costs through simplification by sharing information and experiences. Lastly, harmonization benefits other countries’ domestic policy through aping developed countries; hence they benefit economically (Mohanty 2008).

Developing countries have consistently raised concerns that harmonization would affect the local competition and innovations in a negative way. Regulation of intellectual properties may help to control abuses but may also adversely abuse control in developing countries. The harmonization requires members to adhere to certain stringent conditions which pose a difficulty for developing countries to comply. These requirements involve establishment of special bodies or judicial courts to deal with intellectual property infringement. Considering that it is very expensive to establish certain bodies, developing countries opt not to join due to the enormous expenses that will be incurred.

Secondly, lack of clear definition in terms such as ‘technology transfer’ and ‘developed country’ has created doubts in most developing countries thus preventing them from joining the harmonized system of patents. Furthermore, developing countries are not aware of the implications of infringement of the intellectual property rules and TRIPS standards. Therefore, they do not want to risk involving in a harmonized patent. Developing countries also prefer being independent and enjoy formulating patent rules, they have less to fear in the current setting of patent law because developed countries are no longer using their "go it alone power" through collaboration with other underdeveloped countries. Thirdly, developing countries would like to introduce some substantive reforms but TRIPS and TRIMS have failed to do so -The US had offered to exchange substantive laws for procedural in GATT rules, which developing countries strongly rejected. Subsequently, conforming to TRIPS is a major concern in developing countries due conditions of the pharmaceutical products and processes. These challenges occur from the requirement for legislative reform which might lead to change in public health policies and access to drugs. These countries prefer transfer of technology needed for development.

Developing countries have openly opposed the harmonization of patents. There are arguments by most developing countries which points out that a strong intellectual property may lead to monopolization by multinationals in developing countries, hence providing an avenue for increasing prices of their products and selling abroad and can lower their investment.

Furthermore, strengthened international patent rights leads to reduced trade so as to benefit licensing. Political issues instigated by many developing countries have hindered the implementation of the harmonized patent laws due to the notion that the intellectual property is a way of developed countries such as the US to suppress and manipulate developing or poor countries. Moreover, because of harmonization and introduction of the international patent system, some countries especially developing countries have experienced an effect on their trading system. Developing countries have realized that exports have been negatively affected by patent rights, especially in the pharmaceuticals trade which has only benefited developed

4 countries more. With reference to TRIPS, there was no substantial gain by developing countries especially least developed countries patent rights have significantly affected exports negatively.

Developing countries are also concerned that strong international patent rights might lead to technology diffusion and absorption of innovation by developed countries (Hassan, Yaqub & Diepeeven 2010). Considering the stringent requirements of the adherence to rules such as novelty and inventive step, developing countries might easily take advantage of the situation and absorb certain ideologies. Moreover, developing countries are concerned with the effectiveness of policies that protect diversity of knowledge. It is evident that harmonization of patents depends on market conditions and capabilities for a market power (it does not ensure diversity of access and benefit-sharing). These subsequently lead to increased costs of international technology transfer. Finally, a weak international patent rights system may also lead to technology transfers through non-market channels including imitation and reverse engineering (Hassan, Yaqub & Diepeeven 2010).

Trade Related Aspects of Intellectual Property Rights (TRIPS) agreement was established in 1994 to facilitate harmonization. The agreement introduced the intellectual property law towards the international trading system which required uniformity in signatory countries. The agreement brought about many differences and some countries were struggling to comply with the agreement. For instance, article 1.1 of the TRIPS agreement states that it “leaves member states ‘free to determine the appropriate method of implementing the provisions of this Agreement within their own legal system and practice’” (Bera 2007, p. 457). In 2005, least developed countries were allowed to delay implementation of the TRIPS agreement objectives until 2013 by the TRIPS council (art. 27(3)(a) and art. 27(2); inventions that are required to protect ordre public, morality, human health). This allows countries to reject patent diagnostics, surgical and therapeutic methods.

Provisions contained TRIPS allow changes to be done in the patent system of countries according to their development, needs and their potential. Art. 27(1) requires an ‘inventive step’ for patentable matters; an inventor should provide a unique and a new idea for them to get a patent right. Consequently, art. 28 defines scope as nature of the rights conferred, however, it does not explain the breadth of technology a patent is to cover. Therefore, member states can have their own definition of ‘inventive step’ and scope of patent protection. TRIPS further permits countries to issue compulsory licenses to countries that are unable to produce locally needed medicines so that they can meet the health needs of the nation. This agreement is disadvantageous to developing countries since it undermines their technological improvement abilities especially in the pharmaceutical production in countries that lack manufacturing ability.

Other attempts of harmonization apart from TRIPS include: the Patent Cooperation Treaty, the Convention on the Grant of European Patents and the African Intellectual Property Organization (regional agreements). These harmonizing efforts of various procedural matters do not affect the functioning of the patent systems of nations. Currently, the European Patent Litigation Agreement is being considered.

Japan, the US and Europe (Trilateral Offices) entered into a Trilateral Cooperation in 1983 which processed most of the patent laws. The Trilateral Cooperation’s main objective was “through harmonization and development of industrial property administration and protection of industrial property rights, the Trilateral Offices strive to contribute to an increasingly efficient worldwide patent system in the 21st century” (Bera 2007, p. 457). Regularly, the Trilateral meet to compare and examine practices in their domestic laws and determine where new standard practices can be applied. Through the Trilateral cooperation initiatives, many successes and

5 experiences were gained in the patent harmonization practices. This led to the development of the Patent Prosecution Highway agreements in which a set of bilateral initiatives aped the ideology of harmonization. In this agreement, patent offices in countries share their experiences and information during patent prosecutions in a bid to reduce workload and improving the quality of awarded patents (Bera 2007). These bilateral agreements mainly started in 2008, for example, between Australia, Canada, Europe, and South Korea patent offices and USPTO. Also there is the bilateral agreement between Japan and UK patent offices and between Germany and Denmark.

Harmonization through the TRIPS has experienced many obstacles. Nations have differed mainly on the definitions such as ‘novelty’, ‘non-obviousness’ (or ‘inventive step’), ‘useful invention’, ‘doctrine of equivalents’, ‘infringement’ and many others. Moreover, countries have to agree on the level of revealing invention by patent application, assignment of priority of invention towards the inventors, accordance of grace periods that permits disclosure of invention, guidelines for research exemption and standards of analysis of infringements and awarding relief. A long time is also needed to interpret and amend the harmonized law before implementation. Though, a harmonized law will lower costs through reduced examination procedures and sharing of experiences.

Harmonization also requires that member states should internationalize intellectual property standard agreements rapidly without legally discriminating the local needs of its country and against other countries. “These objectives have to be achieved irrespective of the countries location, population, economy, history, culture human or natural resources, R&D infrastructure, ability to provide education, public health, environmental safety, or its ability to compete in the marketplace” (Bera 2007, p. 458). Because of these stringent objectives, many countries will be denied opportunities for development and locks in member’s competitive advantage to few developed countries.

Furthermore, in a harmonized patent system, there is a high probability of mistakes not being detected and corrected in other systems if a mistake is evident in one system; a skip in one prior art will likely lead to other examiners skipping the same Prior art. Harmonization leads to absence of best practice in the patent laws. Member countries that are in the harmonized system will be using similar laws; hence it hinders new developments for the best provisions to deal with a particular situation. Moreover, countries will lack diversity in a harmonized patent system.

Every country will be required to comply with a set of standardized patent laws.

National interests have been argued to be hampered by harmonization of patents. The US agrees that it requires reforms in patent laws. Currently in the US, there are efforts for the establishment of a new patent act that are yet to bear fruit. Since the 1980s, many patents were passed that have put the market economies in jeopardy and the courts full of suites. In order for SPLT to succeed, fundamental principles which will be the basis of patent law should be laid down for all member states. These principles should provide the definitions and standards of the patent law. “TRIPS currently lack a solid legislative basis for amending intellectual property law to changing needs” (Bera 2007, p. 458).

The variation between procedural and substantive is that procedural harmonization is having an influence in policies that affects an individual’s life or having a direct influence on international patent rights while substantive harmonization is where implementation of national patents reflect preferences, resources, and technologies. However, if policies for natives differ, then local policies should be made to be effective to achieve harmonization (Bhagwati 1996).

6 Substantive harmonization is based on two kinds: legal and administrative. It drafts, files and examines patent applications as well as evaluates the requirements of patentability while procedural harmonization is concerned with requirements for the method and form of application; “Procedural harmonization provides a filing tool for filing foreign patents and suggesting a patent office” (Chun 2011, p 18).

TRIP was formulated mainly to make national and regional patent laws similar -the differences still remain. TRIPS have strong minimum substantive standards for patents.

Substantive harmonization has been a considerable interest mostly in countries such as Japan.

TRIPS also require member states to adhere to a range of procedural harmonization. This adherence objective is to ensure that the applicants have clear platforms of enforcing intellectual rights. Procedural standardization creates hurdles for systems that do not meet the standards required by TRIP due to unprecedented intrusion. Furthermore, substantive legislation involves uniformity in the international level while procedural takes place in local courts depending on national procedural regimes.

The patent prosecution highway was developed to enhance acquisition of patents at an early stage for applicants and improve the use of search and examination results in the major Intellectual Property offices to reduce workloads. The other aim of patent prosecution highway is to uphold the quality of examination. Patent prosecution highway actually reduces procedural burden for accelerated examination but substantive examination is done in accordance to the law and similar to normal substantive examination.

7 List of References Bera, R. K., 2007. Harmonization of patent laws. Current Science, 96(4), 457-458.

Bhagwati J. N., 1996. Fair trade and harmonization: Economic analysis. Massachusetts: Massachusetts Institute of Technology.

Chun, D., 2011. Patent law harmonization in the age of globalization: the necessity and strategy for a pragmatic outcome .Cornell Law School Inter-University Graduate Student Conference Papers. Paper 45. [online] Available at http://scholarship.law.cornell.edu/lps_clacp/45 [Accessed on 29 November 2011].

Europa, n.d. Summaries of EU legislation: limitation of the community patent. [online] Available at: http://europa.eu/legislation_summaries/about/index_en.htm [Accessed 29 November, 2011].

Hassan E., Yaqub O. & Diepeveen S., 2010. Intellectual property and developing countries: A review of the literature. UK: RAND Corporation Ius mentis law and technology explained, 2005. Differences between US and European patents. [online] Available at <http://www.iusmentis.com/patents/uspto-epodiff/> [Accessed on 29 November 2011].

Mohanty, N. K., 2008. The advantage/disadvantage of the harmonization of the patent system.

Mumbai: Georgetown University.

Radack, D. V., 1997. Patent harmonization: creating uniform patent laws. The Journal JOM, [online] Available at http://www.tms.org/pubs/journals/JOM/matters/matters-9705.html [Accessed 29 November 2011]