United States Patent and Trademark Office
Attn: Talis Dzenitis
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.
Scope of Patents in the SPLT
Article 12(4) of the current draft of the treaty says:
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 (http://ip.nationalacademies.org/) and the joint US Department of Justice and US Federal Trade Commission (http://www.ftc.gov/opp/intellect/index.htm) 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. (http://www.cptech.org/letters/omb-18nov2002.html)
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.
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-
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."
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.
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.