DITE ’ s IP program

1. The Development Dimensions of Intellectual Property21 September 2007Short Courses on Key Economic IssuesGeneva, Switzerland Kiyoshi Adachi, Legal Officer and Team Leader, IPDivision on Investment, Technology and Enterprise Development

2. DITE’s IP program Objectives: • build capacities (Geneva & capitals) to help DCs participate more effectively in international discussions on IPRs, in line with their development objectives • help DCs to better integrate into and benefit from the world economy Activities: • research and analysis • training and capacity-building • consensus-building • cooperation with interested governments

3. The Raison d’ Être for Intellectual Property Rights (IPRs) IPRs are designed to encourage innovation by balancing private rights for reward with public needs for the unconstrained availability of important knowledge and information.

4. IP Trade is Growing Whether we like it or not, IP has ended up being discussed as an economic trade/investment issue

5. Tracking trends- R&D expenditure by TNCs overseas

6. IPRs and Striking a balance • IPRs (and patents in particular) provide exclusivity as an incentive for inventors to engage in R&D • But, technological development also needs competition and follow-on innovation • Balance between IP protection and essential information is needed in various areas of public policy • Health (access to affordable medicines) • Biotechnology (use of genetic research tools) • Food & agriculture (food security & preservation of biodiversity)

7. Maximal innovation level Optimal protection level P Striking a balance: Patents as a Policy MeasureProtection (P) vs.Innovation (I) Source: Swiss Federal Institute of Intellectual Property, October 2006 I Minimal protection level

8. Striking a balance • Where is the optimal protection level to reach maximum of innovation? • Historical evidence: no «one-size-fits-all» model • Early stages of technological development require broad public domain for indigenous learning • Advanced stages of development require higher level of protection of technological assets • Even technologically advanced economies depend on competition and follow-on innovation

9. How is IP manifestedas a trade/investment issue? • The Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement) is a condition of WTO membership; it establishes minimum standards that must be adhered to by members • Practically all bilateral investment treaties (BITs) have a broad definition of “investment” that encompasses IP rights • Increasingly there are provisions in many free trade agreements (FTAs) and economic partnership agreements (EPAs) that deal with IP rights, sometimes going beyond the minimum standards established under TRIPS (TRIPS-plus)

10. TRIPS - Objectives • IPRs should contribute to • the promotion of technological innovation; • the transfer & dissemination of technology; • the mutual advantage of producers and users of technological knowledge • IP protection is not an end in itself, but one means to promote public policy objectives

11. TRIPS - Minimum standards of IP protection • TRIPS provides for mandatory minimum standards of protection in most IP categories • Members in domestic laws may generally not provide less protection than under TRIPS • Members may provide higher protection than under TRIPS

12. TRIPS Flexibilities • TRIPS obligations are drafted in general terms • Example: patents available for inventions that are new, inventive & industrially applicable(4 undefined terms) • In order to become operational on national level, most TRIPS provisions need further elaboration by domestic law makers • This leeway in implementation is referred to as« TRIPS flexibility »

13. TRIPS-plus developments • Limitation of available TRIPS flexibilities • Through bilateral & regional free trade agreements (FTAs): «TRIPS-Plus» obligations (= higher levels of IP protection, reduction of public domain) • Examples: • Exclusion of low-priced parallel imports • Limitation of grounds for authorization of compulsory licenses • Exclusivity of pharmaceutical test data • Mandatory pharmaceutical patent extension for delays on the grant of the patent or regulatory approvals

14. TRIPS-plus developments • Freedom of WTO Members to give up flexibilities • Limitation of available flexibilities reduces scope for development-oriented balancing of IP protection vs. public access • Governments may be ready to compromise on IP flexibilities for other policy considerations • Market access (agriculture, etc.) • Bilateral pressure

15. Intellectual Property in Preferential Trade and Investment Agreements (PTIAs) • Based on model agreements • IP issues in PTIAs often similar among the set of treaties to which a major economic country is a party • Usually containing TRIPS-plus provisions • US FTAs typically include IP provisions relating to protection of pharmaceutical products; EU agreements typically require adherence to multilateral conventions such as the International Convention for the Protection of New Varieties of Plants (UPOV)

16. Intellectual Property in PTIAs Specific provisions on IP Over 50% of the agreements contain TRIPS-plus provisions <Forms of IPR provisions in PTIAs> 9% 51% 40% Source: UNCTAD survey of 158 PTIAs, 2007

17. Intellectual Property in PTIAs But, there is often leverage to negotiate even when negotiations are based on a model agreement: Japan – Malaysia EPA (2005): Contracting parties must ensure that rights relating to new plant varieties are adequately protected, and having due regard to the concerns of the other Country, endeavour to protect as many plant genera or species in a manner stated in paragraph 1 of the Article within the shortest period of time. Japan – Philippines EPA (2006): Each party shall within its capabilities, endeavour to increase the number of plant genera and species that can be protected under its laws and regulations and that in this regard, each Party shall consider the concerns of the other Party.

18. Conclusions • IPRs may provide important incentives for innovation but may also prevent access to essential information and prevent competition • TRIPS provides important tools to strike a balance between protection and access • TRIPS flexibilities to promote local production & access to pharmaceutical substances (latter session) • TRIPS flexibilities are being limited through <<TRIPS-Plus>> provisions in PTIAs; there is room to negotiate, however, and developing country negotiators need to be aware of implications of IP provisions

19. Forthcoming Events – Fall ‘07 27 October 2007 A Commonwealth Secretariat - UNCTAD National Training Workshop on Regulatory Frameworks for Better Access to Medicines (Mombassa, Kenya) 15 November 2007 An UNCTAD – BMZ – InWEnt Multistakeholder Dialogue: Mobilizing Resources and Harnessing Knowledge for Development: Investment and the Local Production of Essential Medicines 21 November 2007 A Joint UNCTAD – South Centre - Stockholm Network Debate - Negotiating Pharmaceutical IPRs – International Governance In Need of Coordination? 26-30 November 2007 UNCTAD-Action Medeor Workshop on TRIPS Flexibilities on Public Health for EAC Countries (Moshi, Tanzania)

20. Contact Kiyoshi Adachi Legal Officer and Team Leader, Intellectual Property Policy Implementation Section Policies and Capacity Building Branch Division on Investment, Technology and Enterprise Development (DITE), UNCTAD E-mail: Kiyoshi.Adachi@unctad.org Tel: ++41 (0) 22 917 14 13 Fax: ++41 (0) 22 917 01 97