18 December 2002

United States Patent and Trademark Office
Office of International Relations
Room 902
2121 Crystal Drive
Arlington, VA 22202,

Attn: Talis Dzenitis

Re: Harmonization

CPTech offers comments on the issue of how global treaties on the harmonization of patent law can be improved, focusing in particular on provisions of the proposed Substantive Patent Law Treaty (SPLT). We focus in particular on how the treaty will affect consumers and small businesses, not as patent owners, but as persons who are affected by the patent monopoly.
The Consumer Project on Technology is a small non-profit organization. We have a full time staff of four persons, and we work with a number of associates and contractors. We host a web page,, plus a large number of Internet mailing lists, such as ecommerce, random-bits and ip-health. We are users of a number of software products, including "free software" products such as GNU/Linux, which is used to host our web page and mailing lists. We are active in a number of public policy debates over patent policy, including patents on medical inventions and inventions of software, business methods and Internet technologies. Our health insurance costs are influenced by the price of medical inventions.

Scope of Patents in the SPLT
We are concerned that the proposed SPLT would create problems, because it would require every member to embrace a very broad scope of patents. We do not think this is appropriate.

Article 12(4) of the current draft of the treaty says:

Article 12

(4) [Industrial
Applicability/Utility] A claimed invention shall be industrially applicable (useful). It shall be considered industrially applicable (useful) if it

[Alternative A]
can be made or used for exploitation in any field of [commercial] activity.

[Alternative B]
can be made or used in any kind of industry. "Industry" shall be understood in its broadest sense, and shall not be limited to industry and commerce proper, but include agricultural and extractive industries.

[Alternative C]
has a specific, substantial and credible utility.

This proposal would require each SLPT member to embrace a very broad scope for patents. Indeed, one can hardly imagine anything broader than "if it can be made or use for exploitation in any field of activity." The most recent draft of the treaty has eliminated the mandatory and discretionary exceptions to patent rights, apparently to be discussed later in the treaty regulations. According to the meeting records, the US government and the US ABA are seeking to extend the scope of patents everywhere into everything, by every country. There is much empirical evidence that this is a mistake.

The National Academies of Sciences ( and the joint US Department of Justice and US Federal Trade Commission ( Hearings on Competition and Intellectual Property Law and Policy have collected extensive evidence that patents are of lower social value in some areas than in others. A one-size-fits- all patent policy is not justified, in our opinion, nations should be free to exclude some areas of activity from the scope of patents. Certainly patents on business methods and software are highly controversial, and according to many experts, the costs far outweigh the meager benefits. There are also enormous controversies over the appropriate scope of patents in the life sciences area.

As you know, in recent years, the US Congress has eliminated enforcement of surgical patents and created a special prior user right for business method patents. Here we also note that on 18 November 2002 Ralph Nader and CPTech wrote to the Office of Management and Budget (OMB), to ask if patents should be eliminated for some fields of technology or commerce on the basis that the costs outweigh the benefits. (

It is inappropriate to require every country to extend patents into so many areas of our economy and even our personal lives. Not only is there growing evidence that patents are poorly suited for many areas of the economy, such as software, but also there are huge differences in the ability to different countries to evaluate patent quality. Efforts to require Jordan and other developing countries to issue patents on software and business methods will lead to even more absurd patents being issued, given the small capacity these countries have to evaluate such patents. The issuance of low quality patents imposes huge costs on small businesses who develop software or who engage in business methods that are deemed infringement by foreign countries.

Standards Issues

The Internet Engineering Task Force (IETF) Working Group on Intellectual Property and other standards bodies are struggling with vexing problems of standard setting in a world where it is difficult or impossible to know if post-
standard there will be claims that the implementation of the standard will infringe a patent. The rules concerning disclosures by members of a trade association are not sufficient, because patent claims may and do arise from non-
members. The SPLT could perform a public service by creating a global system whereby a standards body could provide notice that it was considering a standard, allow patent owners a fixed period of time to assert rights, and
failing to make such an assertion, require that patent owners forgo future claims related to the standard. There is no public interest rationale for having patent owners ambush standard organizations and the public by withholding
such disclosures. This is an extremely important issue in a world increasingly dependent upon information technologies and information technology standards.

We have discussed this proposal with the US Federal Trade Commission, which has investigated a number of anticompetitive issues relating to standards organizations. Recently the IETF working group on intellectual property has had extensive discussions of the problems of disclosure, including the 13 messages in the thread: " History of IPR in IP Storage WG and Questions It Raises."

Compulsory Licensing

It may also be important for the United States to join most countries in the World in adopting more general public interest authority for issuing compulsory licensing of patents. It is simply too expensive and too difficult to use antitrust laws to address cases where compulsory licenses may be appropriate on policy grounds. For example, suppose the recent BT patent on hypertext linking was held to be valid. It would have given BT a virtual monopoly on the Web. This would have been intolerable from a public policy point of view. Likewise, there is growing evidence that many areas of medical research and development are hindered by abusive and restrictive licensing practices by patent owners. We need better tools to address these problems. We note here that Roche recently used a German compulsory licensing provision to obtain a voluntary license from Chiron for an important product involving the screening of blood for the HIV virus.

The WTO TRIPS rules on patents contain two important areas that may present problems for rational policy making. First, the Article 27.1 provisions on discrimination by field of technology may make it difficult for countries to have patent provisions that are tailored to the particular problems in some sectors of the economy. Here we note that the recent Canadian "Bolar" case seemed to provide some room to maneuver on this issue. We note also the European Union has recently adopted a directive in the area of biotechnology that created a mandatory compulsory licensing program for certain agriculture inventions, which illustrates how one can target a sector of the economy that requires a special policy tool. It may be useful to think about special compulsory licensing authorities in the areas of information technologies, software or medical inventions. The TRIPS or the SPLT should not preclude this.

Second, the TRIPS has a restriction on compulsory licensing relating to the export of products, under Article 31.f. If a country such as the United States adopted a public interest compulsory licensing procedure for information technologies or Internet standards, Article 31.f would present a major problem.

Closing Comments

In our opinion, these issues are very important to small businesses and non-profit organizations, as well as the public at large. We do not think the USPTO should only consider the impact of the treaty on US patent owners, but also on persons who are impacted by patents.

In the area of Internet, software and business methods patents, as well as patents in the life sciences area, both US and foreign patents are relevant to US citizens. A foreign patent on an Internet standard is as problematic as a US patent, even though it is quite difficult for a US small business or non-profit organization to challenge the foreign patent on the basis of novelty or utility or relevance. We note again that in recent years the United States has advanced positions in foreign trade negotiations to force developed and developing countries to award patents on software and business methods, including countries that have very little capacity to effectively judge the novelty of such inventions.

Thank you for the opportunity to provide these comments.


James Love
Director, Consumer Project on Technology