Marco M. ALEMAN Acting Director, Patents Law Division, WIPO

1. Regional Seminar on the multilateral legal framework and practice of patent protection in the pharmaceutical field Patent Policy and its Relation with other Policies IssykKul, May 27 and 28, 2014 Marco M. ALEMAN Acting Director, Patents Law Division, WIPO

2. Outline • The international patent system • Objectives of the patent system • Trends on patents filing • Patent policies and its relation to other policies

3. The international patent system # 3

4. Characteristics of Intellectual Property • Non-rivalrousness: • simultaneous use by multiple entities • no bottlenecks or capacity constraints • Non-excludability: • use without authorization cannot be prevented • For static efficiency: optimal to permit free society-wide use as marginal cost low • For dynamic efficiency: need to prevent above, as incentives required to invest in creations, where social value exceeds development costs

5. …Characteristics of Intellectual Property • Therefore, societies faced with fundamental trade-off between two market distortions • Excessively weak IPRs, satisfy the static goal but inadequate incentives to create, leading to slower growth, limited culture, lower product quality • Excessively strong IPRs, consistent with dynamic goal but generate insufficient access, inadequate dissemination • Balance is imperative

6. Role of the State • To accelerate economic development need to: • arrest tendency to under invest in R&D • create incentives for additional investments • Intervention imperative for IP protection: • provides potential competitive advantage for innovator • creates market distortions, but society benefits (in most cases, for a limited period of time, during the early period of the product life-cycle) • However, need to balance static efficiency for a specific innovation and the dynamic efficiency for a stream of inventions

7. Main features of patent rights Property rights in inventions may be sold or licensed Right to stop others from making or selling the invention without a patent owner’s consent NOT a right to make or sell the invention Only available for new inventions in a field of technology Need to fulfill conditions of patentability Geographically limited under nationalpatent laws but there are regional and international treaties Limited duration, 20 years from filing date Annual renewal or maintenance fees (increasing with time) Some limitations to the rights

8. The Patent System • Inventions Products or processes 2. New not included in the state of the art 3. Inventive stepno obvious for the expert in the field 4. Industrial applicability

9. Objectives of the patent system

10. Objectives of the patent system • The system, based on private rights, should effectively serve the public interest (both right holders and society) by contributing to innovation and diffusion of knowledge • Features of the system to achieve these objectives - Granting exclusives rights to the inventor to promote innovation • Granting valid patents after the invention has pass the test of objective standards (patentability criteria) • Disclosure of the invention to allow diffusion of knowledge

11. Patents and Technology Diffusion • The patent system is generally understood to facilitate technology diffusion; for some, it is even a prerequisite for technology transfer • It does that mainly via • patent information and • by using patents as an instrument to assist technology transfer • Several countries have in the past relied on the patent system as a tool in developing the national economy and this assisted it in promoting FDI and transfer of technology (e.g. Japan, Republic of Korea) • Other countries also show a correlation: • India: FDI growth followed the patent reform in 1990s • Brazil: FDI growth followed the introduction of a new industrial property law in 1996 (US$ 4.4 billion in 1995 to US$ 32.8 billion in 2000)

12. Innovation and commercialization New invention Further innovation by third parties Further innovation by third parties Patent application Recovery of investment through - exclusive use- licensing- sale Patentgranted Publication ofapplications & patents Exploitation of patent

13. Trends on Patents filing

14. Filings • The number of patent applications filed worldwide totaled 2.35 million in 2012 (approximately 1.51 million resident applications and 0.83 million non-resident applications) • This represented growth of 9.2% on 2011 figures – the highest over the past 18 years (SIPO accounted for 72.6% of this total increase, USPTO for the 14.6% and KIPO accounted for and 5.2% each of this total increase).

19. Patentpolicies and its relation to other policies

20. There are several IP policies that addressed the challenge of striking a balance with other policies (Examples) • University and Public Research policies • Competition policies and • Health policies on innovation and access to medicines

21. Innovation with public funds • Dinamarca. Act of June 2 of 1999; and • USA. Act of 1980 “Bay Dole Act”.

22. Stanford:“something that all of us at OTL share is the feeling of satisfaction that comes from knowing that we have helped to bring a new technology to the market”. En 35 años han logrado 2500 Acuerdos de Licencias o de opciones. Ejemplos: i) Microarrays; ii) Genscan;iii) Insulate gate bipolar transistor; iv) FM sound and physical modeling and v) Improved Hypertext Searching (Google). IP and transfer of technology 22

23. M.I.T. “General Policy Statement”: “The prompt and open dissemination of the results of M.I.T. research and the free exchange of information among scholars are essential to the fulfillment of the M.I.T´s obligations as an institution committed to excellence in education and research. Matters of ownership, distribution, and commercial developments, nonetheless, arise in the context of technology transfer, which is an important aspect of M.I.T´s commitment to public service. Technology transfer is however subordinate to education and research; and the dissemination of information must, therefore, not be delayed beyond the minimal period necessary to define and protect the rights of the parties” IP and transfer of technology (2) 23

24. Goals of Competition policy • Broad Goal. To promote and maintain inter-firm rivalry. This is achieved in two ways: First, the adoption of competition laws to addressed anti-competitive market structure and enterprises' practices that impede competition and second, remove government measures that create obstacles to trade and competition. • More specific goals: i) economic efficiency (allocate efficiency, productive efficiency and dynamic efficiency) ii) consumer welfare (price charge and choice available to consumers).

25. IP and Competition Interface OECD (1998): “At the highest level of analysis IPR and competition policies are complementarybecause they share a concern to promote technical progress to the ultimate benefit of consumers. Firms are more likely to innovate if they are at least somewhat protected against free-riding. They are also more likely to innovate if they face strong competition.” “Despite sharing important goals intellectual property rights (IPR) and competition policies are not purely complementary policies and managing the interface between them can be difficult.”

26. Multilateral legal framework Art. 8.2 of TRIPS. Appropriate measures may be needed. Art. 40.1 of TRIPS. Some licensing practices or conditions may restrain competition. Art. 40. 2 of TRIPS. Members to take measure to prevent anticompetitive abuses of IP Rights. Illustrative list: grant back; No-Challenge; and Patent Tying clauses.

27. IP MATERS RELATED TO COMPETITION REFUSAL TO DEAL. The US Patent Law of 1988. The EU approached (more liberal essential facility doctrine) Acquisition (standards of patentability, scope of the claims, patents to technical standards) Enforcement of IP Rights (injunctions, abuse of patents rights and patent trolls); (European Commission Pharmaceutical Inquiry) Compulsory licenses to remedy anti-competitive practice Patent pools Research collaboration agreements Anticompetitive clauses: (no-challenge, grant back and patent tying clauses)

28. Patents and related health policies • Patent and access to medicines • Patent law provisions that help to improve policy coherence are those dealing with: • Patentability subject matter • Limitations and exception to patent rights ( research exc., regulatory review exc., CLs and exhaustion) • Term of protection (public domain/Generics • Doha Declaration on IP and Public Health (transition periods for LDCs and paragraph 6) 28

29. Many thanksmarco.aleman@wipo.int