CHAPTER –V

HARMONIZATION OF PATENT LAW

Patent is territorial in nature. As businesses often cross the boundaries, they need

to protect their invention though patent in the countries where they wish to operate. The

patent systems in different countries are not the same, which often create problems for

them. They often shy away from the countries where protection is weak or nil for their

invention. So neither the business nor the country enjoys the benefit of patent. “There are

good reasons behind each country having their own different systems. These include the

history of a nation, its social conditions, economic situation and so forth that go beyond

merely technical issues, sometimes involving political issues as well. But today, however,

when the major part of economic activity has become globalized, different local rules

would become a constraint on economic development. A close look at the details of each

nation's rules will doubtless reveal differences, but at the same time, many similarities

can be found as well. And many of the differences can well be overcome through

cooperation and effort.”

Harmonization is just a journey towards minimization of such differences existing

in the patent systems of different countries.

5.1 Divergences in national laws

Protecting one’s invention is important not only in one country, but often around the

world. Fundamentally, every country has its own laws and its own way of doing things.

For more than 100 years, much effort has been spent in trying to harmonize patentability

standards among different countries, that is, trying to make the standards of patentability

similar.

5.1.1 Filing System

United States of America has the unique system of first to invent system of filing

where as rest of the world follows the first to file system.1 The first to file system has the

1 At the end of 1997, there were two nations that used the first-to invent system: the United States and the

Philippines. Effective from January 1, 1998, under its Republic Act No. 8293, the Philippines adopted a first-to file system, leaving the United States alone in the world in adhering to a first-to invent system. On September 16, 2011 President Obama signed the “America Invents Act,” which changes the first-to invent principles of patent law that have existed for more than two hundred years. http://papers.ssrn. com/so13 /papers. cfm? Abstrac t _id =841404. Accessed on 2-12-2012.

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advantages of legal certainty regarding to the right to obtain the patent. Whoever files

first for the same invention will get the patent, which makes easy for the patent office to

award the patent. However in case of the First to invent system a cumbersome, time

consuming and costly proceeding called “interference proceeding” is required to decide

who invented first.2 In case of first to file system the prior art is considered to be the

disclosure available to the public before the filing date, where as in case of first to invent

system the cut-off date is the date of invention, which is often decided by the interference

proceeding. However the first to invent system has certain benefit. It has built in within it

a grace period of one year from the date of invention to the date of filing of application.

This period allows the inventor to work further on the invention for modification or

improvement and finding the best method before filing the application for patent. Further

during this period the inventor can disclose the invention for technical and financial

negotiations without losing the right to patent. However Section 3 of the Patent Reform

Act of 2007 if comes to effect, will bring the first inventor to file system instead of first

to invent system. Where in incase of any dispute arises regarding the true inventor, the

matter will be resolved through derivation proceeding.

5.1.2 Subject matter of patentability

The TRIPs agreement provides the minimum guidelines for determining whether

an invention qualifies for patent protection. An invention is a patentable subject matter if

it meets the three conditions for patentability set out in Article 27(1) of the TRIPs

agreement, which provides “any invention whether products or processes, in all fields of

technology, provided that they are new, involve an inventive step and are capable of

industrial application”.

TRIPs agreement does not define the standard for novelty, so member countries

adopt their own standard. Japan and EPC adopts the universal novelty standard. Whereas

the US, China and India adopt a blended or relative standard. New Zealand adopts a local

novelty standard. In deciding the novelty what constitutes prior art is important.

2 Stephen Albainy-Jenei, “United States Patent Reform: What Does First-to File Mean to Me?”, February 20, 2008, http://mondaq.com/article.asp?articleid=57298&login=true. Accessed on 4-11-2010.

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Sometimes the claimed invention is not found expresis verbis in a document but

may be derived there from. The patent offices have different approaches for the above

issue. There are also issues regarding selection patent and inherent disclosure.

It is better for the countries having rich traditional knowledge to adopt universal

standard, which may help them to protect their biodiversity and traditional knowledge

from misappropriation. In deciding the novelty the time frame is an interesting issue.

According to PCT regulations Rule 34, the minimum documentation with regard to

national patent documents includes searches in patent documents issued in a number of

countries from 1920 and forward. This time limit is of course a practical measure, but

maybe we should consider the possibility of addressing the time limit in a different way.

For instance when searching for material regarding novelty to be considered in the field

of wind mills the timeframe of 1920 is not sufficient, the same goes for other areas patent

activity where the technology used have roots back in time. A different approach to the

novelty issue in this regard would also allow or even dictate the inclusion of any

traditional knowledge existing in the field of interest.3

Another typical issue which may arise due to first to file system is that when two

or more applications relating to same invention is filed on the same date. As per the

Japanese patent law section 39 (2) only one such applicant agreed upon after mutual

consultation among all the applicants, may obtain a patent for the invention. If no

agreement is reached or no consultation is possible, none of the applicants shall obtain a

patent for the invention.

Further if the claimed subject matter is anticipated by a disclosure made on the

date of filing, the provisions in the patent laws of many countries are silent on it and the

disputer will be left to the court to decide. However, Japan Patent law use the phrase

“prior to filing” which takes care of the situation.4 On this issue the time of disclosure

will be important. As the patent offices are adopting the e-filing system there are greater

probabilities of such occurring.

3http://www.wipo.int/export/sites/www/meetings/en/2006/scp_of_ge_06/presentations/scp_of_ge_06_jorgensen.pdf. Accessed on 10-11-2010. 4 Section 29, Japan Patent Law 1959.

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The purpose of the inventive step criteria is to prevent the continual development

of technology, based on normal skill of the expert or artisan, from being impeded by

monopoly rights.5

TRIPs agreement does not also define the standard for inventive step. The

member countries are free to have their own standards. One of the main issue in deciding

the inventive step is whether the secret prior art (conflict application) should be taken in

to consideration or not. US is the only country which consider secret prior art (conflict

application) as prior art for deciding the unobviousness. In a patent system one patent

should be distinct from the other by inventive step.

Patent protection should only be provided for inventions that are truly innovative

inventions and will enrich the present state of the art beyond the obvious. The legal patent

requirements which we establish in relation to inventive step play a decisive role. If

protection is granted for trivial developments or for inventions where the patent claims

are inappropriately broad, such patents would impede rather than support new

developments. Such an inflation of industrial property rights will lead to increased

research costs and obstruct competition unnecessarily.

A high standard for inventive step is essential to minimize the patent strategies

aimed at blocking real competition and follow on innovation. These strategies can be

especially harmful to new and growing economies. It may be argued that a low inventive

step may be a wise policy as it might allow domestic companies to acquire patents.

However, there is no justification for detracting knowledge from the public domain

whether patents are applied for by domestic or foreign companies. Moreover, while

domestic companies may seldom resort to patent protection due, inter alia, to high

enforcement costs, large foreign companies (e g, in the pharmaceutical sector) are well

prepared not only to patent inventions but eventually to invent patents. Such companies

often apply for a large number of patents merely to discourage or prevent competition.

Here is an excerpt from the interview of Prof. Dr. Goddar to three JPO examiners who

went to EPO for the Examiner Exchange On October 24th, 2006, “Well, I think the

following, based on many experiences. My personal belief is that the level for inventive

5 Ian Muir, Mathias Brandi-Dohrn, Stephan Gruber, European Patent Law, Law and Procedure Under the

EPC and PCT, 2nd ed., (New York: Oxford University, 2003), p.189.

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step required by the JPO and the GPTO is similar and it would be on about this level here

(Prof. Dr. Goddar was pointing, when saying this, to a level of about 80 – 90 of a scale of

0 – 100, with “100” marking the absolutely highest level of inventiveness) – same

requirement for inventiveness by JPO and by GPTO. The European Patent Office (EPO)

is probably here (Prof. Dr. Goddar was pointing, when saying this, to a level of about 60

of the aforementioned scale) – a lower degree of inventiveness is probably necessary

there. Why this is so, is explained below. The USPTO’s requirements for inventiveness

are even lower, however, like here (Prof. Dr. Goddar was pointing, when saying this, to a

level of about 40 of the aforementioned scale). For applicants, wherefore, there is no

problem with fulfilling of the inventive step requirements in the United States: Pretty low

standard, unfortunately, which means that a lot of junk patents flood the market. Very,

very big problem for the industry, particularly for small enterprises, in the United States:

It is so difficult and expensive to fight the validity of patents, big problem! In my

personal experience, I can say of the USPTO – rather low, EPO a lot higher, GPTO,

probably still higher and same level, possibly, the JPO. The above interviews reflect the

view of the user of the system regarding the standard of inventive step adopted by US,

EPO and JAPAN.

Though industrial applicability appears to have a simple interpretation, meaning

of the industries are differently interpreted in different countries. Not long ago "industrial

application" was generally understood to mean something like "an application in the

automated production of material goods". While in the English language the word

"industry" has acquired a very broad sense, including the "software industry", the "sex

industry" and the "patent industry", in other languages such as French it is still restricted

to its traditional meaning, and this has been upheld in court judgments where software

was not deemed to be patentable, because it did not constitute the inventive part of an

industrial production process.

In the draft SPLT Article 12(4) the presence of three alternatives indicates the

dissimilarities in the mindset of different countries regarding the criteria of patentability.

Article 27(2) permits the denial of patents to certain innovation judged to be

morally unacceptable by countries. In other words, the provision allows WTO members

to ‘exclude from patentability inventions, the prevention within their territory of the

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commercial exploitation of which is necessary to protect ordre public or morality,

including to protect human, animal or plant life or health or to avoid serious prejudice to

the environment, provided that such exclusion is not made merely because the

exploitation is prohibited by their law.’6

Article 27(2) helps WTO members decide, in accordance with their culture and

morality, what is patentable in their respective jurisdictions. The provision assumes that

all members are economically equal and capable of prohibiting certain kinds of

inventions from patent protection. The European Patent Convention, like patent laws of

some countries, excludes morally unacceptable inventions from patentability.7 In

contrast, the patent laws of both the United States and Canada have no moral limitations

on what is patentable. In Diamond v. Chakrabarty,8 with the emergence of new

technologies, particularly those that relate to the manipulation and analysis of data, courts

have revisited the issue of what subject matter is patentable.

In June 2010, the US Supreme Court addressed the scope of patentable subject

matter in Bilski v. Kappos.9 Bernard Bilski and his co-inventor sought to patent a general

method of hedging risk in the energy market. The Supreme Court affirmed the U.S. Court

of Appeals for the Federal Circuit’s holding that Bilski’s claims were not patentable. But

the Supreme Court overruled the Federal Circuit’s “machine-or-transformation” test as

the exclusive test for patentability, whereby an invention is a patentable process only if:

“(1) it is tied to a particular machine or apparatus, or (2) it transforms a particular article

into a different state or thing.”

Instead of announcing a test for determining whether a process is eligible for a

patent, the Supreme Court refocused the inquiry on the language of section 101 with

three exceptions based on earlier precedent: Laws of nature, physical phenomena and

abstract ideas are not patentable.10 The patent bar was thus left to determine what this

change in the law would mean in practice. Two recent decisions, Research Corp.

6 Christopher Ohly D, “What’s ‘New’?-Isn’t it Obvious?” Journal of Intellectual Property Rights, Vol. 13, September 2008, p.504. 7 Article 53(a), European Patent Convention. 8 447 US 303 (1980). 9 130 SC 3218 (2010). 10 Diamond v. Diehr, 450 US 175, 182 (1981).

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Technologies Inc. v. Microsoft Corp.,11 and Prometheus Laboratories v. Mayo

Collaborative Services,12 addressed the question of patent- January 31, 2011 enable

subject matter for very different technologies. Together, these decisions provide useful

guidance as to how abstract an invention can be and still be patent eligible.13

5.1.3 Exceptions to Patentability

"Everything under the sun, made by man, is patentable provided it meets the basic

requirements of novelty, inventiveness and utility." US even granted patents on method

of playing a bowling game and method of swinging on a swing.14 According to TRIPs

agreement, Article 27(1) “patents shall be available for any inventions, whether products

or processes, in all fields of technology, provided that they are new, involve an inventive

step and are capable of industrial application.”

According to TRIPs agreement Article 27(3) “ Members may also exclude from

patentability: (a) diagnostic, therapeutic and surgical methods for the treatment of

humans or animals; (b) plants and animals other than micro-organisms, and essentially

biological processes for the production of plants or animals other than non-biological and

microbiological processes. However, Members shall provide for the protection of plant

varieties either by patents or by an effective sui generis system or by any combination

thereof. The provisions of this subparagraph shall be reviewed four years after the date of

entry into force of the WTO agreement. Most of the countries are utilizing the above

flexibilities provided by the TRIPs. These flexibilities are effectively utilized by explicit

or implicit provisions in the Patent laws of almost all countries barring US. As per the

TRIPs provision product patents for pharmaceutical products are available in developing

countries.

The businesses from developed countries wish that the developing countries

should allow the patents for the inventions relating to Business methods, Computer

Software and biotechnology. The developing states are at different stages of

11 2010 WL 4971008 (Fed. Cir. Dec. 8, 2010). 12 2010 WL 5175124 (Fed. Cir. Dec. 17, 2010). 13 The scope of patentable subject matter after ‘Bilski’, www.omm.com/files/upload/Patentable Subject matter After Bilski.pdf. Accessed on 7-10-2010. 14 Johanna Gibson, Patenting Lives, Life Patents, Culture and Development, (London: Ashgte Publishing Ltd., 2009), p.144.

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industrialization. Granting patent to all those leading edge technologies may harm the

interest of the developing countries. Such type of invention should be provided protection

once the country has some development in those technical fields and have a proper

infrastructure for search and examination. Further whether such inventions should be

patentable or not that is debatable issue. Recently The U.S. Court of Appeals for the

Federal Circuit has ordered rehearing en banc in In re Bilski,15 (order granting rehearing

en banc) to determine the extent to which "business methods" are eligible for patent

protection under U.S. law. The Federal Circuit's decision in Bilski could have significant

implications regarding patent-eligible subject matter in the area of business methods.

The controversy over the business method patent is also brewing in the U.S.

Recently U.S has rejected claims directed to a signal that has been encoded in a particular

manner. Since technology is reaching new dimension, the incentive to invent should be

provided to all fields of technology. Patent system provides incentives to the inventor,

there by promotes science and technology .But as it is monopolistic in nature it has also

some negative impacts on the society. So a judicious balance between the private rights

and the public interest should be maintained.

5.1.4 Grace Period

The concept of granting temporary protection to the patentable invention in

respect of goods exhibited at official or officially recognized international exhibitions

held in the territory in any of them found in Article 11 of the Paris Convention. ‘The

concept of non-prejudicial disclosures has been worked out in many varieties, which can

be distinguished in three categories in the case of which national laws grants so-called

“grace period”:

a) The first category is that of a display of the invention at an exhibition by the inventor

or by a third party with the agreement of the inventor (“non-prejudicial disclosure at an

exhibition”). This category got its obligatory enactment by the parties of the Paris

Convention.

b) The second category is that of an unlawful disclosure of the invention by a third party,

based on lawfully or unlawfully acquired information (“unlawful non-prejudicial

15 No. 2007-1130 (Fed. Cir. Feb. 15, 2008).

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disclosure”). This category is frequently called “disclosure in consequence of an abuse.”

Examples are theft of objects containing information on the invention or violation of a

promise to keep the invention secret.

c) The third category is that of a disclosure of the invention by the inventor or lawful

disclosure by a third party of a kind not covered by (a) or (b) (“lawful non-prejudicial

disclosure other than at an exhibition”). Examples are disclosure by publication in the

form of a scientific article or a lecture or by public use (in particular, use made in order to

test the invention). The grace period for this category is often referred to as “the general

grace period”.16

In first to invent system, the grace period is inbuilt. However in first to file system

the need of grace period is felt. Japan vide section 30 of its patent law provide the grace

period for six months. EPO vide EPC article 55 provided the grace period for six months

but limited to first two types only. India provided a grace period of 12 months but limited

to first two types only. The application of a grace period (admitted in the USA and in

many other countries) has raised a significant controversy between the USA and

European countries, where such period is not provided for. It expands the scope for

patenting, as inventions disclosed during that period would be eligible for protection,

notwithstanding that they would have been deemed in the prior art in accordance with the

general rule on novelty. During the harmonization process in the mid 1980’s, the

resistance to recognize a grace period was one of the main reasons for the US withdrawal

of support to the process, and a key trade-off sought by the United States for changing its

‘first to invent’ rule.17

5.1.5 Prior art

Prior art consideration is fundamental to the patent system. The prior art refers to

the knowledge available to the public before the filing date/ priority date in case of first to

file system and refers to the knowledge available to the public preceding the moment

when the invention occurred in the first to invent system. Identifying the relevant prior art

is one the cornerstones of patent examination, since such prior art will be evaluated

16 “Expert Opinion on the Case For and Against the Introduction of a Grace period in European Patent Law”, http://www.european-patent-office.org/news/pressre/pdf/galama.pdf. Accessed on 5-10-2011. 17 Supra note 3.

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during examination to determine the patentability of the invention concerned. It is by

comparing the invention for which protection is sought with the prior art that novelty and

inventive step of the invention are established. Furthermore, prior art will, after the grant

of a patent, be determining in order to evaluate the validity or invalidity of the patent.18

The laws regarding the prior art differs from country to country. When EPO and

Japan follow the absolute standard, which means disclosure anywhere in any form before

the filing date will be considered as prior art, US, China, India and some other countries

follow a blended or relative standard, which means written disclosure anywhere but oral

or other form of disclosure within its territory only will be considered as prior art. It

simply indicates that the US law does not recognize the traditional/indigenous knowledge

as prior art. A herbal composition which might have been in use in India may get a patent

in US. Though India adopts a blended standard it limits the scope of patentability of an

invention, which is anticipated, in so far as claimed in the complete specification, as there

might be knowledge, oral or otherwise, available within any local or indigenous

community in India or elsewhere.19

There is another provision typical to US law. The Section 102(e) which gives rise

to Hilmar doctrine.20 This doctrine does not give benefit of an earlier filing date to the

priority date for the application filed in the first country. According to this doctrine the

application will have the prior art effect on the date of filing in US only. There is also

debate whether the secret prior art or disclosure in pending application will be considered

as prior art for assessing inventive step or not. US consider the secret prior art or conflict

application for inventive step assessment. The prior art effect of certain applications

should not be restricted to novelty, but should apply also to inventive step in order to

prevent the granting of multiple patents for inventions which were not patentable distinct.

While assessing even the novelty some country consider the whole content of the prior

application (US, EPO, Japan) and some just compare the claims of later to the claims of

earlier to check if the claims are coterminous (India). There is discussion regarding

inclusion of the prior secret commercial use or offer for sale without disclosure of the

18 Graeme B Dinwoodie, William O Hennessey, Shira Perlmutter, International and Comparative Patent

Law, 3rd ed., (London: LexisNexis Mathew Bender, 2002), p.352. 19 Sections 25 (1) (k) and 64 (1) (q), Patents Act 1970. 20 http://www.niefeld.com/hilmer.html. Accessed on 5-7-2010.

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invention by the applicant or patentee in the prior art. According to US prior secret

commercial use and offer for sale by the applicant should be included in prior art, in

order to prevent an inventor from extending his exclusive rights by not disclosing his

invention. There is also discussion regarding the inclusion of admissions of prior art by

the applicant contained in the application on its filing date into prior art. There are also

some issues regarding consideration of the disclosure of the information on digital media

such as internet. Japan has incorporated in its law section 29(1) (iii) 86 to deal with the

disclosure over electric telecommunication lines. EPO deals with such type of disclosure

in a way similar to oral disclosure. The disclosure of information on digital media is

typical due to its volatile or transient nature. The content can be changed easily and it is

very difficult to ascertain the date of publication or the date of modification of such

information. JPO has a well detailed examiner’s guidelines to handle with disclosure of

such nature. The definition of prior art is the foundation of our patent system and without

common ground and definition on this matter we will not be able to reach a sufficient

level of harmonization in other areas.21

5.1.6 Enabling disclosure

As the patent is a right granted to the inventor or the assignee of the inventor in

lieu of the disclosure of the invention, the disclosure should be set forth in a manner

sufficiently clear and complete for the invention to be carried out by a person skilled in

the art. The Japanese Patent Law stipulation about full disclosure of specification is “in a

manner sufficiently clear and complete for the invention to be carried out by a person

having ordinary skill in the art to which the invention pertains”. It is totally the same as

Art 26 subsection 3 of Chinese Patent Law. American Patent Law also has the same

stipulation (The 35 U.S.C.112). However the US law require, the disclosure of the best

mode of operation. Section 10 (4) (of the Indian Patent law requires applicants to declare

the source and origin of biological material in the specification, when used in an

invention, in international patent applications.………………………..

Article 10 of the draft SPLT stipulates that:

21 Supra note 3.

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(1) [General Principle] The application shall disclose the claimed invention in a manner

sufficiently clear and complete for that invention to be carried out by a person skilled in

the art. The disclosure of the claimed invention shall be considered sufficiently clear and

complete if it provides information which is sufficient to allow that invention to be made

and used by a person skilled in the art on the filing date, without undue experimentation

[as prescribed in the Regulations].

(2) [Parts of Application to be Taken Into Account for Assessing Disclosure] For the

purposes of assessing sufficiency of disclosure under paragraph (1), the disclosure

contained in the description, claims and drawings, as amended and corrected, shall be

taken into account.

5.1.7 Interpretation of Claims

According to some this particular aspect is related to infringement only. In some

opinion the wording of the claims should provide the primary basis for the interpretation,

while the description and the drawings should form a secondary basis for the clarification

of ambiguities; the terms in the claims should be interpreted in accordance with their

normal meaning, unless they are specifically defined. There is also debate whether for the

purpose of determining the scope of protection conferred by the patent, due account shall

be taken of elements which are equivalent to the elements expressed in the claims. There

should be procedures for claim interpretation for special types of claims, such as means-

plus-function claims, product-by-process claims, and claims associated with use, should

be provided. Since the different interpretation of claims will lead to the difference in

protection scope, so how to interpret claims in practice is always a disputable problem for

each country to clarify rights and judge infringement. Especially, whether to interpret

claims characterized by functions to get a wider protection scope or a smaller one is

always swinging in American examination and law practice. The similar situation also

exists in various countries.

5.1.8 Exemption from Patent

Exemption can be categorized as (i) Research exemption, (ii) Bolar exemption.

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(i) Research exemption

Certain actions which fall within the claims of a granted patent are not patent

infringement if they are done for the purposes of research. This provision is called the

research exemption. TRIPs article 30 stipulates `Members may provide limited

exceptions to the exclusive rights conferred by a patent, provided that such exceptions do

not unreasonably conflict with a normal exploitation of the patent and do not

unreasonably prejudice the legitimate interests of the patent owner, taking account of the

legitimate interests of third parties‘.

Japan patent law section 69 (1): says that the effects of the patent right shall not

extend to the working of the patent right for the purposes of experiment or research.

Indian Patent Act section 47(3) stipulates that any machine, apparatus or other

article in respect of which the patent is granted or any article made by the use of the

process in respect of which the patent is granted, may be made or used, and any process

in respect of which the patent is granted may be used, by any person, for the purpose

merely of experiment or research including the imparting of instructions to pupils.

A research exemption should ensure that a product or process covered by a patent

may be freely made or used:

To evaluate the validity of the patent by testing:

a. whether the patent description is sufficient.

b. whether the invention performs as stated in the patent.

To carry out research for the purpose of:

a. improving the invention.

b. making an advance over the invention.

c. finding an alternative to the invention.

(ii) Bolar exemption

Clinical trials and other experimental work done to obtain regulatory approval of

a generic drug do not infringe the patent for the drug. This provision is called the Bolar

exemption.

USA: art 35 USC 271 (e): it shall not be an act of infringement to make, use, offer

to sell, or sell within the US or import into the US a patented invention (…) solely for

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uses reasonably related to the development and submission of information under a

Federal law which regulates the manufacture, use, or sale of drugs or veterinary

biological products.

Section 107A (b) of Indian Patent law stipulates,” any act of making,

constructing, using, selling or importing a patented invention solely for uses reasonably

related to development and submission of information required under any law for the

time being in force, in India, or in a country other than India, that regulates the

manufacture, construction, use, sale or import of any product”.

5.1.9 Exhaustion of patent

The doctrine of patent exhaustion (also known as the first sale doctrine) is an

affirmative defense, under which the unrestricted sale of a patented product, by or with

the patentee’s authority, exhausts the patentee’s right to control further sale and use of

that product by enforcing the patent under which it was first sold. The doctrine is

grounded on the idea that the patent right is exhausted when the patentee is rewarded for

disclosing the invention in the market by selling the patented product. The patentee

should not be allowed to profit twice (double reward) by re-selling the same product.

There are three type of Exhaustion: National exhaustion, Regional exhaustion,

International exhaustion.

The US follows the National exhaustion doctrine. (Jazz Photo Corp v.

International Trade Commission.22

) European Union follows the regional exhaustion and

Japan follows the International exhaustion.

Section 107A (b) of the Indian Patent act stipulates “Importation of patented

products by any person from a person who is duly authorized under the law to produce

and sell or distribute the product, shall not be considered as an infringement of patent

rights. “ Parallel imports occur when patented medicines produced or sold abroad with

the consent of the patent owner are subsequently imported into the domestic market at

cheaper prices without the consent of the owner.

22 264F.3d 1094 (Fed. Cir. 2001)

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5.1.10 Grant of patent

The grant and enforcement of patents are governed by national laws, and also by

international treaties, where those treaties have been given effect in national laws.

Commonly, a nation forms a patent office with responsibility for operating that nation’s

patent system, within the relevant patent laws. The patent office generally has

responsibility for the grant of patents, with in fragment being the remit of national courts.

There is a trend towards global harmonization of patent laws, with the World Trade

Organization (WTO) being particularly active in this area.

The TRIPs agreement has been largely successful in providing a forum for nations

to agree on an aligned set of patent laws. Conformity with the TRIPs agreement is a

requirement of admission to the WTO and so compliance is seen by many nations as

important. This has also led to many developing nations, which may historically have

developed different laws to aid their development, enforcing patents laws in line with

global practice.

The Paris Convention sets out a range of basic rules relating to patents, and

although the convention does not have direct legal effect in all national jurisdictions, the

principles of the convention are incorporated into all notable current patent systems. The

most significant aspect of the convention is the provision of the right to claim priority:

filing an application in any one member state of the Paris Convention preserves the right

for one year to file in any other member state, and receive the benefit of the original filing

date. Because the right to a patent is intensely date-driven, this right is fundamental to

modern patent usage.

In addition, there are international treaty procedures, such as the procedures under

the European Patent Convention (EPC) [administer by the European Patent Organization

Cooperation Treaty] (PCT) (administered by WIPO and covering 140 countries), that

centralize some portion of the filing and examination procedure.

Similar arrangements exist among the member states of ARIPO and OAPI, the

analogous treaties among African countries, and the CIS member states that have formed

the Eurasian Patent Organization.

The Patents Act 1970, which is currently the law relating to paten in India, was

promulgated to encourage scientific research new technology, and industrial progress.

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This enactment is based on the U.K Patents Act 1949 in main respects, but also differs

from it in relation to drugs, medicines, produce patents and licensing of patents.23

5.1.11 Term of a Patent

The time period during which the patent shall have effect is known as the term of

the patent. The protection offered to a patent under the Patents Act may come to an end

when the term of the patent has expired.24

Under Indian law the term of patent was not the same for all kinds of inventions

as in most other developed countries. In respect of process patents relating to drugs and

food, the term is five years from the date of sealing the patents or seven years from the

date of the patent i.e. the date of filing the complete specifications whichever is shorter.

In respect of all other patents the term is fourteen years from the date of the patent. A

patent can be kept alive only by paying the renewal fee from time to time.

The uniform term of protection of 20 years was introduced into the Indian Patents

Act in compliance with article 33 of the TRIPs agreement.25 The amendment adopted in

2002 has removed most of the elements that gave the Patents Act 1970, its specificity.

Important change included in Act was to increase the term of protection to uniform 20

years, thereby increasing significantly the average duration of protection and removing

the discrimination put in place in the case of process patents in the field of health and

nutrition where the term was only 7 years from the date of application.26

5.2 Necessity for Harmonization of Patent System

The necessity of harmonization of substantive patent law does not recognize any

border, but the patent protection is limited to territory of the state in which it is granted.

With the intense globalization of trade due to advancement in transport and

communication technology, there is a need to protect the invention in multiple countries.

There is as such no global patent granting system. The application has to be processed in

all the countries, where protection is required. A basic frame work for patent protection is

23 Laws that govern and grant (Enforcement of Patents), www.shareyouressays.com. Accessed on 7-7-2011. 24 Section 53 (1), Patents Act, 1970. 25 TRIPs agreement, Article 33 states: the term of protection available shall not end before the expiration of a period of twenty years counted from the filing date. 26 P. Narayanan, Intellectual Property Law, 3rd ed., (New Delhi: Eastern Law House, 2001), p.23.

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in place due to the Paris convention, PCT and TRIPs agreement. However there are

dissimilarities in the formal requirements, substantive requirements and the procedural

requirements of the patent laws of different countries.

5.2.1 Demand of the user of the patent system

The user of the applicants demands the patent at low cost, quality of examination

and timeliness of patent grant.

Due to the dissimilarities in the patent systems, there are many procedures which

are duplicated many times by the applicant. Each procedure costs money. Even the forms

and formats of different patent offices are different. Several hundred million dollars can

be saved annually if a single format is adopted.27 Thus there is a necessity for

harmonization on forms and formats at least.

Due to dissimilarities in the law, procedures and interpretation of laws there is a

greater dependency on the attorneys of the country where the application to be processed.

Leveraging on that situation the attorneys are also charging fees quite high in comparison

to the official processing fee of the application. By harmonizing the requirements this

cost can also be minimized and the attorneys can be better utilized for creation of quality

IP rights.

The quality of examination can be improved if sufficient time can be given for the

study of the application. It also depends very much on the search data base, the search

engine used and the capability of the examiner.

However due to workload as mentioned earlier there will be always pressure to

dispose off the application at the earliest. So quality of examination is affected by the

work load on the patent office. As we have seen from the statistics that the developing

countries/least developed countries received more non-resident applications. These

applications are duplicated in many countries. The work load due to such duplicated

applications can be reduced by mutual exploitation of the search and examination results

of other countries. But this duplication of work mainly search and examination can be

avoided only after harmonization of substantive patent law.

27 http://www.jipa.or.jp/content/english/topics/append/PRESENTATION.pdf. Accessed on 20-11-2010.

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The developed countries have no dearth of scientific personnel to handle the

inventions relating to frontier technologies such as Information technology,

biotechnology and nano technology. They can recruit those personnel as examiners and

get the examination of patent application done. However in developing or least developed

countries there may be scarcity of such personnel. The case may be like this in a country

there may not be much progress in biotechnology but that country may be receiving a

number of applications relating to biotechnology. Even if very resource personnel’s are

available, they should be utilized for creation of intellectual property rather than

protecting them. So to have good quality examination too it is essential that there should

be harmonization, where the search and examination result of one country can be

exploited by other countries. A good patent is one which can be enforceable with

certainty. Due to unharmonized patent system a patent may be granted for an invention

and may be enforceable, but another patent granted on the same invention in another

country may not enforceable.

Timely grant of the patent is one of the major demands of the user of the system.

Due to delay in grant of patent the applicant remains in uncertainty. So, major decisions

regarding commercialization of the invention and follow on researches are also delayed.

Third party also remains in uncertainty whether to use that invention or not for

commercialization or for further research and development. With current backlogs, the

patent offices are nearly in an impossible situation to grant the patent timely without

augmenting their infrastructures.

So two options are available:

i. Harmonization

ii. Work sharing.

Even work sharing requires harmonization of substantive laws to certain extent.

As pointed out by Shinjiro Ono If substantive harmonization achieved in determination of

range of prior art, claim system and claim interpretation at least the search and

examination result of one office can be better used by other office.28

28 Shinjiro Ono, Deputy Commissioner of JPO: Substantive Patent Harmonization and Japan’s Stance” www.law.washington.edu/CASRIP/Symposium. Accessed on 3-11-2010.

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5.2.2 Demand of the enterprise

In addition to the above mentioned demands the enterprise has continuously

demanding patent protection for newer technologies.

Broadening the patentable subject matter:

The enterprises’ which creates innovation always demand that protection should

be available for invention in all fields of technologies and the protection should be the

strong and enforceable one.

As technology is advancing there should be protection available for those new

technologies. Particularly inventions relating to information technology and

biotechnology are not protected through patents in many countries. In absence of

protection the businesses which posses the technology will shy away from the market

where the protection is weak or nil.

“Businesses will move out of markets which they consider to be to their

disadvantage, and only those markets that are considerate towards business activities will

be able to survive. The patent system must be able to support such business activities. As

new commercial products and services are developed, the patent system must also

broaden its scope to provide appropriate protection to such new products and services.

The patent system has an increasingly important role to play as an economic

infrastructure to support business activities, which are changing in response to the

changing times.”29

In one of the example, one Brazillian professor Flavio Alterthum and two

American academics invented a genetically altered microbe which digests the bio-waste

of the sugar harvest to efficiently produce ethanol. They were granted an US patent

where as they were not granted a patent in Brazil, as such inventions were not patentable

in Brazil at that time. Commercial development of the invention is progressing in the

United States and elsewhere, but not in Brazil, where this new technology could bring

substantial benefits. The Brazilian co-inventor returned to Brazil and attempted to interest

29 Takeshi Isayama, Commissioner of JPO, Toward Desirable IP Systems? Taking the Patent System as an Example, Chaiman’s Note for the Informal Meeting of the Heads of Patent Offices in Developed Nations, May 19-20, 1999 www.eps.nagoya-u.ac.jp/examin/991d/991dej.html. Accessed on 15-11-2010.

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local sugar companies in development of the process, but in the absence of local patent

protection at the time he got no response.30

So it is necessary for the countries to broaden their patentable subject matter to

have access to new technology, transfer of technology or investment in new technology.

The flexibilities provision provided in the draft article 12(5) of SPLT indicates

that some countries are not willing to give up the flexibilities enjoyed by them.

Demand of the patent offices:

There are two main factors from patent office point of view which necessitates the

harmonization of patent laws.

1. Rapid growth of patent applications:

As can be seen from the statistics of patent applications in developed as well

as developing countries, there is a tremendous growth in the number of

applications. The growth of PCT international applications will also add to the

work load of the patent offices in future. As of year 2006, 242000 patent

applications are duplicated in trilateral offices alone. The increased workload and

the pressure to deliver quality output compelled the patent offices to increase their

annual expenditures.31

But to tackle with the growing number of applications, augmenting the

infrastructure of patent office is not enough. The patent offices have to mutually

recognize the effort (search and examination) of other offices. Mutual exploitation of

such results can only be possible after certain degree of harmonization of the substantive

patent law.

Further in some developing countries, the number of technical personnel required

for the search and examination of patent applications are very less. Those technical

resources should be utilized for country’s technical development rather than providing

the administrative job of a patent office. The patent system which utilizes a number of

30 Robert M Sherwood, “Human Creativity for Economic Development: Patents Propel Technology” www.uakron.edu/law/lawreview/docs/sherwoodgood333.pdf. Accessed on 15-11-2010. 31 Supra note 3.

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scientists and engineers thus creates a system for internal brain drain.32 It is important to

mention that there are some countries which receive more than 90% non-resident

applications and worldwide the percentage of Non resident application is 38%. So these

percentages of applications are presumed to be duplicated. By reducing the duplication

work the technical resources of developing countries can be better utilized.

Development of advanced technologies

Many applications are filed for the inventions relating to frontier technologies

such as information technology, biotechnology and nano technology. To examine these

applications, therefore, highly specialized knowledge is needed. Patentability for

inventions involving high-technologies can't be appropriately decided under the existing

guidelines in many cases, for example, patentability of DNA fragments. Therefore,

central IP Offices are now required to respectively issue patentability criteria at an

appropriate time and have them harmonized internationally.33 For uniform practice in

dealing with the cases related to advanced technology harmonization is required.

5.3 The Effect of Globalization on Patent System

Patent laws are inherently diverse for three reasons. The first reason is due to the

centuries-old principle of territoriality. The seventeenth century Dutch scholar Ulrich

Huber identified three precepts of modern territoriality doctrine: (1) a state’s laws have

force within the state’s boundaries; (2) anyone found within the state’s boundaries is

subject to the state’s authority; (3) comity will discipline one sovereign’s exercise of

authority to respect the territorial competence of other sovereigns. As synthesized by

Professor Harold Maier, these precepts “state that acts of foreign sovereigns should, when

appropriate, give effect within another state’s territory and that courts of all nations

should indulge a presumption against the extraterritorial impact of law.” Thus, according

to the territoriality principle, intellectual property rights are protected only within and in

accordance with the legal rules of the jurisdiction where they have been granted. This

territoriality of patent law is well evidenced in the United States. For example, the latest

32 Lois E Bolan, “International Patent Reform efforts: A United States Perspective”, http://www.law.washington.edu/CASRIP/Symposium/NUMBER7/4-bOLAND.PDF. Accessed on 4-12-2010. 33 Supra note 3.

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Patent Act adopted in 1952 contains language suggesting that its scope is limited to the

U.S. territory. It provides that the grant of a patent confers a “right to exclude others from

making, using, offering for sale, or selling the invention throughout the United States.”

Thus, “whoever without authority, makes, uses or sells any patented invention, within the

United States during the term of the patent therefore, infringes the patent.” Even before

the adoption of this language, courts consistently held that patent law is territorial in

scope. In Dowagiac Manufacturing Co. v. Minnesota Moline Plow Co. case, the Court

said that “the right conferred by a patent under our law is confined to the United States

and its territories. . . and infringement of this right cannot be predicated of acts wholly

done in a foreign country.” In short, as the legal rights and protection of patents are

limited within their jurisdiction by territoriality, countries naturally develop and maintain

their patent laws differently from one another.34

Second, patent law’s inherent diversity is also attributed to governments’ use of

patent law as a policy tool for economic growth. Assuming there is a stable set of

preferences within each jurisdiction, it is generally agreed that the diverse laws tailored to

each jurisdiction better accommodate those individual preferences than a uniform set of

laws imposed across all jurisdictions. Thus, in making patent laws, every country decides

for itself what intellectual assets to protect within its borders, and adopt patent policies in

connection with the preferences of its society. In other words, the standard for patents

should be intimately tied to a nation’s economic goals, and especially to its industries’

technological potentials and the types of innovation it hopes to foster. In this sense, patent

law is established on the foundation of its national policy. Thus, to have a valid patent, an

applicant must incorporate administrative formalities which must be satisfied to create or

perfect a patent. Also, government officials determine whether the application is fit for a

patent according to national standards. One can see the difference between patent rights

and copyrights in the sense that copyrights do not require formalities to obtain legal rights

and a court do not have to second-guess the administrative decisions of a foreign

34 Dongwook Chun, “Patent Law Harmonization in the Age of Globalization: The Necessity and Strategy for a Pragmatic Outcome”, journal of Patent Trademark Office Society, Vol.93, No.2, 2011 www.scholarship.law.corness.edu.pdf. Accessed on 4-11-2010.

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government. Thus, the patent law is an important policy tool that is closely related with

the economic goal and strategic priority of the government.35

Third, a nation’s a cultural factor makes each patent system unique. According to

Luigi, Paola, (2006), culture has a direct impact on expectations and preferences, which

in turn have an impact on economic outcome. Although economists have been reluctant

to rely on culture as a possible determinant of economic phenomena, there are

countervailing historical arguments. Adam Smith viewed a theory of Moral Sentiments as

an integral part to the wealth of nations, and John Stuart Mill regarded cultural

constraints as sometimes more important than even the pursuits of personal interest. A

powerful example of cultural impact on the patent system is the different approaches to

the notion of “property.”

Historically Western societies have emphasized property rights as one of natural

rights. John Locke believed that every man has an inherent property interest in his own

person and asserted that “life, liberty, and property” are the inalienable rights of a just

society. Consistent with this notion, the law has long held intellectual property under the

general heading of “property.” Intellectual property is even analogized to that of tangible

property. Professor Richard Epstein (2004) furthers this argument by contending that

patents deserve much the same protection as real estate. The analogy between tangible

property and intellectual property remains arguable, but it is apparent that this historical

and cultural backdrop can have the effect of strengthening the patent regime. On the other

hand, certain cultures emphasize commonality. The Chinese believed for centuries that

inventions and creative works belonged to the community or the government and should

be freely shared.36 Therefore, the entire concept of intellectual property protection is quite

new to the Chinese society because the traditional Chinese culture does not consider it as

private. Many Chinese business entities, in reality, were not aware of their intellectual

property rights and the need to seek protection; likewise many infringers were unaware

that their activities infringe other’s private rights. Many countries in Asia have similar

traditions, so it is understandable for them to be reluctant to have stronger patent regimes.

35 Ibid. 36 Lei Fang, “Chinese Patent System and its Enforcement”, 12 (2005), http://www.sutherland.com /files/Publication/chinese%20Patent.doc. Accessed on 14-11-2010.

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This cultural issue is believed to have substantial effects on the development of patent

systems.

For the reasons discussed above, the patent system should be country-specific. It

is easily understandable that each country has unique national policy and cultural

backgrounds. However, in fact, country-specific patent laws did not cause serious

problems until the 18th century when business and innovation activities were restricted to

the domestic market and international trade was not a common practice. Industries and

inventors who sought protection beyond the domestic boundaries could file for a patent in

the corresponding jurisdiction but even this was a rare practice. However, as the world

became more and more globalized, there was an increasing movement of economic

resources beyond one’s national border. International trade exploded, and movements of

capital and labor became more liberal.37 Moreover, beginning in the 19th century,

countries and businesses increasingly recognized the value of the intellectual property

system as a tool for technological developments.38 Consequently, securing patent

protection in foreign countries became one of the many concerns for business and

governments, and it caused several problems that never existed before.

Limited Patent Protection

First and foremost, patent protection was not guaranteed in foreign countries

because of different rules governing subject matter and novelty. For example, in the U.S.,

Congress intended patentable subject matter to "include anything under the sun that is

made by man."39 However, for the rest of the world, the scope of patentable subject

matter was quite narrow. According to Joseph Straus (1996), in 1988, pharmaceutical

products were not patentable in 49 countries, animal species in 45, methods for the

treatment of the human or animal body in 44, plant varieties in 44, biological processes

for the production of plant varieties or animal species in 42, food products in 35,

computer programs in 32, chemical products in 22, pharmaceutical processes in 10,

processes for the manufacture of food in 9, and microorganisms in 9 of a total 92 states in

37 World Trade Organization (WTO), International Trade Statistics (2008), http://www.wto.org/english/ res_ e / statis_e/its2008_e/its08_charts_e.htm. Accessed on 14-11-2010. 38 Philippe Baechtold and Tomoko Miyamoto, “International Patent Law Harmonization – A Search for the Right Balance”, Journal of Intellectual Property Rights, 2005, pp.177,178. 39 Diamond v. Chakrabarthy 447 US 303 (1980).

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Paris Convention.40 The companies that invented the above-mentioned products not only

failed to obtain patent protection in countries that declared the subject matter not

patentable, but also had to suffer from the importation of copied products which were

manufactured in those countries where the product is not protected by patents. Moreover,

countries may also have different criteria for novelty, thus filing a patent in one country

often bars the applicant from obtaining a patent in others. This happens in some countries

where they have a rule of absolute novelty to obtain a patent: any public disclosure of the

invention, even by the inventor, is generally a bar to obtaining a patent protection.41

Unlike the U.S. or Canada, other countries rejected the argument for a grace period, and

the inventor could not secure his or her patent protection in these countries. In short,

different domestic patent laws may prevent inventors from exploiting their patents to

achieve commercial gain in international markets.

Application Costs

Also, obtaining multiple patents in this fragmented patent system can inevitably

demand substantial costs for multi-national corporations that are running business

throughout the world. Today, with the growing trend of globalization, the activities of

multinational corporations are increasing in volume and importance. The Top 500 multi-

national corporations account for nearly 70 percent of the worldwide trade, and this

percentage has steadily increased over the past twenty years.42 For them, having and

maintaining patents in every jurisdiction is a crucial but costly investment. A survey by

the Korea Intellectual Property Office (KIPO) revealed that Korean businesses identify

the most serious hurdles in applying for foreign patents as the high price (63%).43 This

notion is strongly evidenced by the empirical data of WIPO. WIPO estimated roughly

that patenting in 2 major countries (US and Japan) costs approximately $16,000 to

40 Joseph Straus, “Implications of the TRIPS Agreement in the field of Patent Law”, Friedrich-Karl Beier and Gerhard Schricker, (Eds), From GATT to TRIPS: The Agreement on Trade-Related Aspects of

Intellectual Property Rights, 160, 1996, P.170-175. 41 Christopher B Kilner, US “Novelty” v. International “Absolute Novelty”, http://ram. Timberlake publishing .com /files/ usnoveltyvsinternationalabsolutenovelty.pdf. Accessed on 3-12-2011. 42 World Trade Organization (WTO), Trade liberalization statistics: Poverty, http://www. gatt.org /trastat_e.html. Accessed on 12-5-2011. 43 Korea Intellectual Property Office (KIPO), The Survey On Intellectual Property – Related Activities In Korea 84-85, 2009.

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$19,000.44 If a company wants to obtain and maintain patents in 7 major countries,45 they

must pay approximately $60,000. If the company wants to have broader protection by

obtaining patents in 15 countries,46 it should be ready to pay around $120,000.

Considering that this is the estimated cost just for a single patent, one can imagine the

enormous expenditures for multi-national companies in order to obtain and maintain

hundreds or thousands of patent pools. Similarly, one research data shows how one of the

world’s major research-based pharmaceutical companies is estimated to spend between

$750,000 and $1,000,000 to obtain comprehensive world-wide patent protection for an

important chemical compound, and how the figure is growing at a rate of 10% each

year.47

Examination Delay

Moreover, business globalization has triggered striking internationalization in the

world of patent protection,48 and the increasing number of patent applications beyond

borders triggered an increase in workload and backlogs in patent offices. In 1985, there

were 1.2 million patent applications filed worldwide. The number of patent applications

had more than doubled in only a decade, so that it reached to 2.79 million in 1995. The

expansion of non-residential filing was the main reason for this increase. Domestic patent

applicants stayed relatively stable at about 0.72 million over the course of the decade. By

contrast, applications by foreign inventors rose fourfold during the same period, from 0.5

million in 1985 to 2.07 million in 1995. The real problem from this trend is that many of

these increased applications are actually duplicated application. Nearly 242,000

applications were duplicated among the trilateral offices (U.S, EU, and Japan) in 2006.

These duplicated applications are also subjected to all the required steps of obtaining a

44 World Intellectual Property Organization (WIPO), World Patent Report: A Statistical Review 5158,

(2008),http://www.wipo.int/export/sites/www/ipstats/en/statistics/patents/pdf/wipo_pub_931.pdf. Accessed on 12-5-2011. 45 Id, (China, European Patent Office (validation in France, Germany and United Kingdom), Japan, United States of America, Republic of Korea). 46 Id. (Australia, Brazil, Canada, China, European Patent Office (validation in France, Germany, and United Kingdom), Israel, India, Japan, Mixico, United States of America, Republic of Korea, Russian Federation, Singapore). 47 Raymond J Keating, Patent Reform: Protecting IP, Enabling Innovation & Bolstering Entrepreneurship 18, http://www.sbecouncil.org/uploads/ SBEC%20polseries%20IPPatents 02081.pdf.Accessed on 8-5-2011. 48 Hisamitsu Arai, WIPO Intellectual Property Handbook: Policy Law and Use 13, http://www.wipo.int/about-ip/en/studies/publications/wipo_pub_489. Accessed on 8-5-2011.

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patent including search and examination,49 which substantially contributes to patent

backlog and depreciation of patent quality.50 In fact, the total number of pending patent

applications, i.e. patent backlogs across the world is estimated at around 4.2 million in

2007.51 The United States Patent and Trademark Office (USPTO) had the largest backlog

(28.4% of the world total) in 2007, and the backlog at the patent office of the US has

increased at a faster rate than that of any other similarly sized patent office. According to

a study by London Economics released on behalf of the United Kingdom Intellectual

Property Office (UKIPO), the cost to the global economy by the delay in processing

patent applications may be as much as £7.65 ($11.4) billion each year. While admitting

the seriousness of the matter, the US Department of Commerce commented that “delay,

uncertainty, and poor quality at the front end ultimately make private investments in

innovation less likely and undermine the potential for economic growth and job

creation.”52

Uncertainty and Unpredictability

The fragmented patent system that causes the uncertainty on delays and

unpredictability of enforcement can be a grave concern for business society. Delays

causing uncertainty may be particularly problematic for startups with high growth

potential because such delays and uncertainty can cause difficulty in securing patents and

venture funding in a timely fashion. Moreover, the uncertainty associated with patent

delay imposes significant costs not only to patent applicants but also to potential

competitors. These competitors cannot know where to focus their research and

development investments until they know precisely what a patent applicant has been able

to claim as its inventive territory. Accordingly, companies in this situation may make

fewer investments in innovation that are potentially misdirected and wasteful.53

49 Ibid. 50 Arti Rai, Stuart Graham, Mark Doms, “Patent Reform: Unleashing Innovation, Promoting Economic Growth & Producing High-Paying Jobs” 5, http://20012009.commerce.gov/s/ groups/public /@doc /@ os/ @opa/documents/content/peos01_009147.pdf. Accessed on 2-5-2011. 51 World Intellectual Property Organization, World Intellectual Property Indicators 14 (2009), http://www.wipo.int/freepublications/en/intproperty/941/wipo_pub_941.pdf. Accessed on 2-5-2011. 52 Supra note 50. 53 Ibid.

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Another great concern for multi-national corporations is the unpredictability in

patent enforcement or validity. In fact, costly infringement suits on parallel patents have

become common.54 If a patent office grants a patent that is subsequently invalidated or

subject to invalidation proceedings, not only does the office waste its own time, the time

and money of the applicant, and that of the applicant’s competitors, but such a later-

invalidated patent also distorts the market.55 Often, this type of problem occurs as a result

of the examination’s failure to possess the most relevant prior art at the time the patent is

granted. And, patent litigation in a fragmented system with large institutional and cost

differences can lead to a proliferation of litigation tactics and strategies that cause hold-

up problems and wasteful duplication. Although different results are technically possible

in that national patents are independent of one another, inconsistent outcomes in that

different parties win in different locations can complicate global marketing efforts.

Furthermore, legal uncertainty also generates the following indirect transaction costs such

as (1) costs of collecting information, (2) costs of legal disputes, (3) costs of setting

incentives for pushing through legal claims, and (4) other transaction costs.56

In the age of globalization, proposals to further harmonize domestic patent laws at

the international level have understandably attracted considerable attention. Originally,

the term “harmonization” was widely used in the conflicts-of-laws context, as a synonym

for “unification.” Projects for the unification or harmonization of laws in general have

been pursued since the middle of the 19th century, when the Italian Minister of Justice

Pasquale Stanislao Mancini sought to convene a conference for the harmonization of

private international law. In this sense, “international patent harmonization” originally

means the creation of uniform patent laws throughout the world. Sherwood (1993) argues

that “a uniform intellectual property system makes sense for the world.” This idea is

further supported by Radack (1997) as he stated that “the phrase patent harmonization

refers to efforts to make individual national patent laws around the world more

54 Jerome H Reichman and Rochelle Cooper Dreyfuss, “Harmonization without Consensus: Critical Reflections on Drafting a Substantive Patent Law Treaty”, http://www.wipo.int/meetings /en/2006 /scp_of_ge_06/scp_of_ge_06_infl.html. Accessed on 8-2-2012. 55 ICC Commission on Intellectual Property, Cooperation between Patent Offices: Prior Art Searching of Patent Applications 2 (June 2010), http://www.iccwbo.org/uploadedFiles/ ICC/policy/ intellectual _property/pages.pdf. Accessed on 8-2-2012. 56 Helmut Wagner, “Legal Uncertainty – Is Harmonization of Law the Right Answer? A Short Overview”, http://www.fernuni-hagen.de/FBWIWI/forschung/beitraege/pdf. Accessed on 8-2-2012.

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uniform.”57 This idea of a uniform patent system is more clearly supported by the term

“true harmonization” (the label introduced in 1993 by Assistant Secretary of Commerce

Bruce Lehman) under which patent applicants would complete one prosecution for global

protection. Under the concept of “true harmonization,” a patent, after completing one

prosecution in one patent office, would be granted full effect in all treaty states. Former

Japanese Patent Office commissioner, Hisamitsu Arai also agreed with this idea by

arguing that “Might it not be possible . . . for a patent granted by the Japanese Patent

Office in response to an application filed in Japan to be recognized internationally as

well?”58 The advocates of true harmonization believe that it will create a uniform patent

law system that simplifies the law, making it easier to receive and enforce patents in

many jurisdictions while reducing administrative costs. The United States’ uniform

patent system, successfully maintained since 1790, is a testament to this effect. The

majority of the international patent community is and has been supportive of the idea of

uniformity, recognizing the value of creating a uniform patent law on a global scale.

Participating countries in the World Intellectual Property Organization (WIPO) and the

World Trade Organization (WTO) have a number of treaties and agreements in place that

articulate the concept of international harmonization of patent laws–the Paris Convention

for the Protection of Industrial Property (Paris Convention), the Patent Cooperation

Treaty (PCT), the Patent Law Treaty (PLT), the Trade-Related Aspects of Intellectual

Property Rights (TRIPs), and WIPO Treaties. However, while admitting that the

harmonization of fragmented patent laws can solve many problems in the age of

globalization, progress toward harmonization is slow, costly and noisy. As discussed

before, diversity of country-specific patent laws is natural and valuable in itself. Thus, a

consolidation of existing patent systems into a single monolith would impoverish the

field: it would be a mass extinction of legal species.59

57 David V. Radack, “Patent Harmonization: Creating Uniform Patent Laws”, 49, Journal of the Minerals,

Metals and Materials Society, 1997, http://www.tms.org/pubs/journals/JOM/matters-9705.html. Accessed on 10-2-2012. 58 Supra note 50. 59 Takashi Kinoshita, Strategy for Harmonization of the US Patent System with the International Norm, (2001), http://www.commercialdiplomacy.org/pdf/ma_projects/kinoshita_takashi.pdf. Accessed on 10-2-2012.

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5.4 Harmonization of Patent Laws at International Level

In many countries, patent laws had been introduced by colonial administrations as

a simple reflection of European laws. These patent laws varied widely, depending upon

domestic interests, the domestic legal context and legal tradition. For example, patent

laws varied in subject matter, with some countries excluding patentability for natural

products (Spain), luxuries or chemical products (Germany), medicine ( all counties

except the United State, Britain, Chile and Brazil), medical products but not methods of

manufacture (Sweden), food (Germany, Austria, while Sweden allowed patents only for

process-related food patents) and beverages (Austria). Patent laws varied in terms of the

applicable foreign art, using all worldwide prior art, or only printed or published foreign

art or excluding foreign prior art altogether. They varied in the length of the patent grant,

and whether the system was a registration or examination system. They varied in terms of

whether a patentee had an obligation to work a patented invention in the country and

whether importation of a patented object was permitted. There was great diversity in the

formalities needed to obtain a patent, a resident agent needed to be appointed by non-

resident applicants, and a failure to closely follow formalities resulted in the loss of the

patent.60

There was little international patent cooperation, and it was difficult for an

inventor to obtain useful patent rights for an invention in many countries. Many patent

laws invalidated applications filed after an equivalent application was filed in a foreign

country. Under the absolute novelty standard in place in most countries, any revelation of

the subject matter of an invention – even if required by law – immediately barred the

filing for a patent on that invention. Many patent laws required foreign patentees to

manufacture the invention within the country as a condition of the continued validity of

the patent. Some countries also had different terms for patents granted to non-residents

and residents.61

Patents were seen as a strategic tool for domestic industrial policy; for example, in

Britain patents were available to persons who introduced inventions into Britain

regardless of whether they were an inventor, which, combined with working

60 Alexander Stack, International Patent Law, Cooperation, Harmonization and an Institutional Analysis of

WIPO and the WTO, (London: Edward Elgar, 2011), p. 65. 61 Id, p. 66.

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requirements, was designed to encourage technology transfer into Britain and the growth

of new industries.

Commercial interests in a number of countries had an interest in obtaining

protection for their industrial property (a subset of intellectual property including patents

and trademarks but excluding copyright) in foreign markets and motivated national

governments to negotiate bilateral treaties covering industrial property. This was part of a

more general trend towards reducing uncertainty in international business through

international cooperation. In form, these treaties ensured that domestic industrial property

systems facilitated the granting of rights only to applicants from those countries that

extended equivalent privileges in return. Thus, the initial international intellectual

property norm was one of reciprocity; a form of harmonization.

Ladas lists 69 bilateral industrial property treaties in force in 1883, all signed

between 1859 and 1883. These dealt with trademarks, sometimes with industrial designs

and less often trade names, but only two dealt with patents – and of these, one was

between Austria-Hungary and Liechtenstein, while the other, between Germany and

Austria-Hungary, was signed after the drafting but before final agreement of the Paris

Convention. These agreements became more sophisticated over time, moving from mere

declarations on reciprocity to more detailed standards dealing with registration,

formalities, and even validity and forfeiture.

Patent law was subject to pressure for early international agreement due to

national industrial interests seeking foreign intellectual property protection. This is

consistent with the idea that although patent law has a public purpose, it is implemented

through private interests. However, the influence of national industrial interests on

international cooperation was not enough to result in bilateral patent treaties for the

recognition of foreign inventors.62

5.4.1 The Paris Convention

During the second half of the 19th century, more and more countries recognized

the value of the Intellectual property system as tool for the technological and economic

development. Consequently, many of them introduced a system for the protection of

62 Id, p. 67.

169

inventions at the national level. The industrial revolution stimulated a more

internationally oriented exchange of technology and an increase in the international trade

flows, which led to the increased need to obtain intellectual property protection in foreign

countries. Since no global international convention in the field of intellectual property

existed at that time, it was rather difficult to obtain protection for industrial property

rights in various countries of the world due to the differences in national laws. In

particular, there was no guarantee that foreign applicants could enjoy the same protection

on the same condition on national applicants. Moreover patent applications had to be

roughly filed at the same time in all countries in order to avoid that a publication in one

country destroyed the novelty of the invention in other countries.63

The lack of adequate protection for foreign inventions become particularly

apparent when the Austria-Hungary government invited a number of other countries to

participate in an international exhibition on inventions held in 1873 in Vienna.

Participation was hampered by the fact that many foreign visitors were not willing to

exhibit their inventions at that exhibition in view of the inadequate legal protection

offered to the exhibited inventions.

This led to two developments: first, a special Austrian law secured temporary

protection to all foreigners participating in the exhibition for their inventions, trade-marks

and industrial designs. Secondly, Congress of Vienna for patent reform was convened.

One outcome of the congress was a resolution which, inter alia, stated that: "In

consideration of the great inequality of the existing patent legislation, and in

consideration of the altered means of international communication of the present time,

there is great want of reform, and it is very desirable that the Governments will initiate an

international understanding on the patent protection."64

Following that Congress, the French Government convened an international

conference with the view to determining the basis of uniform legislation in the field

industrial property, which led to the adoption of Paris Convention for the protection of

63 Supra note 37, p.178. 64 Robert Pitkethly, “The European Patent System: Implementing Patent Law Harmonization”, http://www.oiprc.ox.ac.UK.EJWP1099.pdf. Accessed on 8-2-2012.

170

Industrial Property (Paris Convention) in March 20, 1883.65 The Paris Convention on the

Protection of Industrial Property provided a rather flexible framework for the protection

of industrial property, including patents.66

Paris Convention contains inter-alia the provisions of national treatment, right of

priority, independence of patent, mention of the inventor in the patent , Compulsory

Licenses and the concept of an “Open Union”, with the possibility of revision and the

extension of membership.

The Paris Convention, the first global intellectual property treaty which

guarantees national treatment, allowing the inventors from any signatory nation to claim

priority in other nations based on the filing date of its first application, as embodied in

Article 4. Article 4(A) (2) of the Paris Convention ties its requirement of patent priority

to an “application for a patent … in one of the countries of the Union.” Article 4(A) (2)

provides that “any filing that is equivalent to a regular national filing under the domestic

legislation of any country of the Union or under bilateral or multilateral treaties

concluded between countries of the Union shall be recognized as giving rise to the right

of priority.” Another feature consisted in providing common rules in the field of

substantive law establishing rights and obligations or permitting the member countries to

enact legislations implementing those rules. In other words, some of those provisions had

the effect of harmonizing national legislations of the member countries, and some other

provisions expressly provided the freedom of member countries to regulate certain issues

under their national legislation. For example, Article 11 provides common rules

concerning temporary protection in respect of goods exhibited at international

exhibitions, leaving it to Member States to choose the means for implementing such

protection in the domestic legislation.

However, the Paris Convention’s lack of minimum standards of patent protection

led the countries to discuss the TRIPs agreement, accomplishing a major step toward

legal-substantive patent law harmonization.

65 WIPO Intellectual Property Handbook (WIPO Publication no. 489), The text of Paris Convention, http://www.wipo.int/treaties/en/index.html. Accessed on 9-3-2012. 66 Carlos M. Correa, “An Agenda for Patent Reform and Harmonization for Developing Countries”, http://www.wipo.int/meetings/en/2006/scp_of_ge_06/presentations/scp_of_ge_06_correa.pdf. Accessed on 9-3-2012.

171

The Paris Convention, concluded in 1883, was revised at Brussels in 1900, at

Washington in 1911, at The Hague in 1925, at London in 1934, at Lisbon in 1958 and at

Stockholm in 1967, and it was amended in 1979 and in 1993.67

The first signatories of the Paris Convention were the major advanced countries

including Brazil and Tunisia from the developing countries. However, after the Second

World War, a number of developing countries that enacted patent laws or inherited from

their colonial masters joined the Convention (Juma, 1989). The number of developing

countries joining the Convention has increased particularly in the 1990s and the reason is

attributable to the TRIPs agreement. Maskus (2000) explains the increase in number, the

type of countries that join the Convention and the reason behind such a step as follows:

“All new members since 1985 have been developing countries and countries in

transition...while several key developing economies, including Venezuela,

Singapore, India and Chile, chose to join in 1990s, most of the newer members

are small and poor or new republics in transition. No doubt much of the increase

in membership stems from the need of WTO parties to implement TRIPS, which

incorporates by reference the substantive legal provisions of the Paris Convention

while not requiring membership per se”68

The year 1897 is notable for the founding of the International Association for the

Protection of Industrial Property (AIPPI), an organization of manufacturers, businessmen,

engineers and lawyers. AIPPI was established to conduct research and lobby for the

protection of industrial property, including the introduction of uniform patent laws in all

countries. The AIPPI commission yearly reports from various countries seeking a basis

for further harmonization on a chosen topic.

In summary, the interests of industrial patent holders in obtaining protection for

their inventions internationally led to the creation of the Paris Convention. Initially, the

primary idea was one of unification of patent laws, similar to that underlying

international public union for purely administrative services. However, this proved to be

impossible due to differences in domestic welfare preferences and the larger legal

environment between countries. Although the primary institutional structure chosen was

67 Source-summary of the Paris Convention for the Protection of Industrial Property (1883) http://www.wipo.int/treaties/en/ip/paris/summary_paris.html. Accessed on 9-3-2012. 68 The Impact of the International Patent System on Developing Countries: A study by Getachew Mengistie, Assemblies of the member states of WIPO, Thirty ninth series of meetings, Geneva, 2003, www.wipo.int/edocs/mdcos/govbody/en/ala-39-13-add/doc. Accessed on 9-3-2012.

172

that of an international union, the actual Paris Convention largely holds to the idea of

diversity, with some minimum standards necessary to effectuate the primary interests of

the industry. The long-term goal of the Union, however, was still to promote

harmonization and to the strengthening of patent rights worldwide. This is still said to be

the goal of the World Intellectual Property Organization (WIPO), the modern descendant

of the Bureau established under the Paris Convention.

5.4.2 World Intellectual Property Organization.

The Paris Convention has been amended several times over the years, with

continuing battles along the themes of harmonization or reciprocity versus diversity or

national treatment. However, the important features of the Paris Convention by 1897 –

national treatment, the right of priority, removing the ban on importing patented products,

and the independence of national patents – continue to be the central features today. It is

important to note the writings of Ladas:

Amendments of the Convention embodying harmonization on new points

of law or procedure have been successfully carried out when two factors

were present: (a) a real practical interest of removing serious or

unreasonable obstacles to international trade: (b) a sufficiently close

similarity of law in the various countries so that this could be stabilized

for the future and ensure certainty.69

However, the institutional features of the associated organization have changed

over the years. In 1893, the Bureaux established by the Paris Convention and the Berne

Convention (which dealt with copyright and related laws) to administer the treaties

merged to create the Bureaux Internationaux reunis pour la protection de la propriete

intellectuelle (BIRPI).70 The United International Bureaux for the Protection of

Intellectual Property or BIRPI was set up in Berne, and administered by the Swiss

government. Its original function was primarily the collection and dissemination of

information and statics about the industrial property laws of various states.

69 http://www.wipo.int/treaties/en/index.html. Accessed on 7-3-2012. 70 Sisule F. Musungu and Graham Dutfield, “Multilateral Agreements and a TRIPS-Plus World: The World Intellectual Property Organization”, www.geneva.quno.info/pdf/wipo(A4)final10304.pdf. Accessed on 7-3-2012.

173

The idea of transforming BIRPI into an international intellectual property

organisation, however, only arose at the 1962 meeting of the Permanent Bureau of the

Paris Union and the Berne Union. At that meeting, the Permanent Bureau recommended

the setting up of a Committee of Governmental Experts to consider administrative and

structural reforms to the Paris and Berne Union systems and prepare for a diplomatic

conference. The proposal to establish such an organisation in place of the BIRPI structure

was advocated, partly, to head off any attempt by outsiders, such as the United Nations

Economic and Social Council (ECOSOC) to deal with the subject of intellectual property.

Another motivation for changing the BIRPI structure seems to have been to transform it

from a developed country club into an organisation with a multilateral character that

could attract developing countries including the newly independent ones. The second

meeting of the Governmental Experts Committee took place in 1966 and was attended by

representatives from 39 member states of which nine were developing countries, the rest

being developed or European communist countries. The draft Convention, prepared by

BIRPI on the basis of the views expressed by the Committee, was presented to the 1967

Stockholm Conference and approved.71

Meanwhile, changes were taking place in the membership of the Union. A greater

variety of countries was now represented, with a greater divergence of domestic interests.

In particular, many developing countries joined whose views different considerably from

those of the industrialized nations Developing countries viewed patent law through the

lens of a need for development and technology transfer, often tied to a fear of exploitation

by developed-country industry. They resisted moves to broaden obligations under the

Paris Convention, including the strengthening of pharmaceutical patents and the

narrowing of compulsory licensing provisions. Instead, in many cases they advocated the

weakening of the minimum standards contained in the Paris Convention, to allow greater

flexibility in designing regimes for technology transfer.

Concern over the influence of private interests, and also the increasing

involvement of developing countries, along with outside events such as the interest of UN

organization in intellectual property and the general focus on development in the 1960s,

led to BIRPI being transformed into the World Intellectual Property Organization. In

71 Ibid.

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1970, the Unions for the Protection of Industrial Property and the Berne Union became

the World Intellectual Property Organization or WIPO, which in 1974 became an agency

of the United Nations. The new structure comprises a permanent secretariat reporting to

the WIPO Assembly, an organization of government representatives. WIPO coordinates

the Paris, Berne and several other conventions.

Importantly, the scope and membership of the organization changed as well:

WIPO purports to be responsible for intellectual property protection worldwide, and all

members of the United Nations are now eligible to join WIPO without adherence to

either the Paris or Berne conventions. United Nations agencies are also eligible to join

WIPO.

Regardless of these changes, much of WIPO as a institution continues the

thinking and approaches under the old unions. In Principle, as a United Nations agency,

the mandate of WIPO should incorporate concerns for the development of less-developed

member states. However, the preamble of the WIPO Convention states that WIPO shall

promote the protection of intellectual property throughout the world, and that one of

WIPO’s functions is “to harmonize national legislation in this field.” This is a direct

continuation of the institutional ideas that were present in the Paris Convention.

In the late 1960s through the early 1990s great progress was made on the

international administrative arrangements for patent law prosecution. After the recovery

from World War II, companies increasingly sought patent protection in more and more

countries. This began to burden the national intellectual property offices, who were

having trouble maintaining their standards for quality and speed, and simultaneously

costs rose for patent applicants. BIRPI, with input from the USPTO and EPO, created the

Patent Cooperation Treaty (PCT) system in 1970.

WIPO greatly expanded its educational and outreach efforts in the late 1980s and

1990s. WIPO personnel travel the world and talk to stakeholders perhaps more than any

other UN agency, creating perhaps the quintessential transnational network. In

developing countries, WIPO tends to focus on providing technical assistance, while in

developed countries WIPO tends to engage in activities advertising its patent, trademark

and industrial design services. WIPO continues to be able to facilitate agreements in the

area of patent prosecution. The Patent Law Treaty (PLT) was concluded in 2000 and

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deals exclusively with streamlining formal procedures for national and regional patent

applications and patents.72

The Patent Agenda was announced in August 2001 by the Director General of

WIPO as a new initiative which he envisaged as a process of worldwide discussions with

the aim of preparing a strategic blueprint that would underlie the future development of

the international patent system. The initiative was presented to the WIPO Assemblies in

September 2001. The Patent Agenda has placed the issue of further development and

harmonization of patent law as a top priority in WIPO’s activities for several years to

come. The Patent Agenda activities are taking place under three main pillars:

(i) Activities related to the ratification of the PLT which was adopted in 2000;

(ii) Efforts to reform the PCT; and,

(iii) The ongoing negotiations on the draft Substantive Patent Law Treaty

(SPLT).

In general, these processes are ultimately oriented to create an international legal

framework for something akin to a universal patent.73

In 2000, WIPO began discussions on a Substantive Patent Law Treaty; however,

as of this date the negotiations appear to have broken down over the scope of the treaty.

The lack of progress in this area is now commonly thought to result from the mandate of

WIPO being limited to intellectual property. Within the context of intellectual property,

there was little that the industrialized countries could offer the developing countries to

entice them to cooperate.

There was increasing frustration for the United States and Europe as they tried to

move developed countries such as Japan as well as transitional economies such as India

and Brazil towards stronger patent laws. This frustration on the part of industrial interests

who wished to see a greater harmonization of patent laws led to a move to a different

institutional structure, the WTO.

In summary, the institutional features of WIPO might be described as follows:

i. Widespread membership

72 Supra note 59, p.81. 73 Supra note 37, p.11.

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ii. Increasing and important role as an administrator of the PCT system, greatly

increasing the size and in-house expertise of WIPO.

iii. Negotiations by technical experts, largely from the national patent offices, rather than

by diplomats and politicians.

iv. Weak enforcement and dispute resolution mechanisms.

v. Negotiations encompassing only intellectual property.

vi. An institutional bias towards the “promotion” of intellectual property rights

worldwide.

vii. Dependence upon the fees of intellectual property applicants to fund WIPO activities

and independence from state funding.

WIPO is now primarily concerned with four main activities; the three “Global

Protections Services” for patents (the PCT), trademarks (the Madrid system) and

industrial designs (the Hague system); the legal-technical assistance program and other

global outreach programs; ongoing development of international intellectual property

law, through discussions aimed at new treaties as well as “soft law”; and a domain name

dispute resolution service. WIPO also fosters dispute resolution between private parties

(not between states) through the WIPO Arbitration and Mediation Centre.

WIPO continues to be heavily influenced by non-governmental organizations

(NGOs): WIPO admits many NGOs to its meetings as observers, and also “seeks to

involve NGOs, IGOs industry groups and all other stakeholders as widely as possible in

consultation processes and debates about current issues”.74

5.4.3 Patent Cooperation Treaty (PCT)

Although the Paris Convention had established fundamental principles and some

substantive rules, national procedural and substantive rules continued to be significantly

different, while international movement of goods and services had expanded considerably

since the adoption of the Paris Convention. The Patent Cooperation Treaty (PCT), an

agreement for international cooperation, with regard to the filing, searching and

preliminary examination of patent applications and dissemination of technical

information contained in patent applications, was adopted in 1970 with a view to

74 Supra note 59, p.82.

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streamlining the patent granting procedures at the global level.75 The PCT became

operational in January 24, 1978 with 18 Contracting States. Being responsive to

applicants’ needs, it is one of the most successful treaties in the field of intellectual

property with 185 Contracting States. The PCT, like the Paris Convention, is

administered by the WIPO, headquartered in Geneva, Switzerland.

The objectives of the PCT can be extracted from the preamble of the treaty, which

states that the Contracting States desire to ‘make a contribution to the progress of science

and technology’, ‘perfect the legal protection of invention’, ‘simplify and render more

economical and obtaining of protection for inventions where protection is sought in

several countries’, facilitate and accelerate access to the technical information’ and

‘foster and accelerate the economic development of developing countries through the

adoption of measures designed to increase the efficiency of their legal systems’.

PCT is a facilitating treaty and one of most significant advancement in

international cooperation in the field of patents. The principle objective of the PCT is to

provide a more effective and more economical means for applying for patent protection

in several countries. As per conventional system, an inventor has to file separate

applications in each country where he desires to seek protection for his invention.76 The

PCT system, which consists of two phases: the international phase and the national phase.

The procedures in the international phase include:

i. Filing – instead of filing a national patent application in each country in which

protection is sought, a single international application, filed with a single patent

office (‘receiving office’) in one language has effect in each of the States party to

the PCT;

ii. Formality examination – the receiving office conducts the formality examination

to check whether the formality requirements under the PCT are complied with;

iii. International search – an ‘International Searching Authority’ (ISA) (one of the

patent offices that comply with the requirements under the PCT and appointed as

75 Toshiko Takanaka, (edr), Patent Law and Theory, (UK: University of Washington School of Law, 2008), p.161. 76 Rajiv Ranjan, “PCT System and its Impact on the Developing Counties”, Journal of Intellectual Property

Rights, Vol. 8, January 2003, p.50.

178

ISA by the PCT Assembly) prepares an international search report citing the

relevant prior art and establishes an opinion on potential patentability;

iv. International publication – the centralized international publication of applications

with the related search report is made as soon as possible after the expiration of

18 months from the priority date;

v. International Preliminary Examination – upon request by the applicant, an

‘International Preliminary Examining Authority (IPEA)’ (one of the patent offices

that comply with the requirements under the PCT and appointed as IPEA by the

PCT Assembly) carries out an additional patentability analysis, usually based on

the claims amended by the applicant taking into account the search report and the

opinion of the ISA.77

Once the procedures under the international phase have been completed, the applicant

decides whether, and in respect of which States, the applicant wishes to continue the

procedure after reviewing the results of the search and the preliminary examination, if

any. Only in that event shall the applicant fulfill the requirements for entry in the national

phase. These requirements include the paying of national fees and, in some cases, filing

translations of the application or appointing a local patent attorney, in each country in

which the applicant seeks patent protection. These steps must be taken, in principle,

before the end of the 30th month from the priority date.

In the national phase, each patent office is responsible for granting a patent or

refusing the international application, in accordance with its national or regional

substantive patent law. This procedure and time limits are described in following figure.

77 Supra note 65, p. 162.

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The Procedure and Time Limits of PCT78

For applicants, the PCT system makes it possible to postpone the decision on the

desirability of seeking protection in foreign countries and the payment of major costs

associated with international patent protection, such as preparing the translation, payment

of national fees and appointment of local representative. The applicant can prepare a

patent application complying with one set of harmonized formality requirements, which

must be accepted by all Contracting States. Further, the PCT system provides the

possibility of ‘perfecting’ the application based on the result of search and preliminary

examination before entering the national phase, thus putting it in order before processing

by the various patent offices. For the patent offices, the work relating to formality checks,

publication of applications, search and examination can be considerably reduced. In

particular, search and examination reports prepared during the international phase may

provide valuable patentability information for deciding the grant of patents.

The PCT harmonized the form and contents of patent applications and established

an international framework under which a unique, common procedure is established for

certain parts of the patent granting procedures. Article 27 (1) of the PCT states that ‘no

78 Supra note 68.

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national law shall require compliance with requirements relating to the form or content of

the international application different from or additional to those which are provided for

in this Treaty and the Regulations’.79 The PCT, however, explicitly ensures the freedom

of the Contracting States to prescribe substantive conditions of patentability (PCT Article

27(5)), and thus is incapable of tackling the issues relating to substantive patent law, such

as definition of prior art, novelty and inventive step. Consequently, the results of the

international search and preliminary examination do not have a binding effect on the

determination of the patentability at the national phase in each Contracting State. The

terms ‘form or contents of patent application’ and ‘substantive conditions of

patentability’ are not defined in the Treaty, thus, at least theoretically, leaving an

ambiguity with respect to the rights and obligations of the Contracting States.80

The PCT is considered the most successful mechanism in international patent

cooperation, reflected in its growing number of patent applications. According to WIPO

Global IP Indicators Report 2012, PCT filings (international) also set a new record with

182,354 in 2011(an 11 percent growth rate, the faster since 2005).Together, China, Japan

and the US accounted for 82 percent of that international growth. There is not much

opposition to procedural harmonization,81 even though the modification of patent laws is

required of participating nations. Thus, it is widely accepted that a uniform patent

application process can benefit inventors throughout the world. However, it is also true

that procedural harmonization’s economic benefits are not significant because the

examination results conducted within these frameworks are typically a set of individual

national patents that remain separately enforceable under local laws.82 Thus, as long as

national Patent Offices decide whether to grant a patent and PCT merely provides another

convenient route for multiple applications, the problems from a fragmented patent

system—limited patent protection and unpredictability—cannot be solved by mere

procedural harmonization. Many provisions in PCT clarifies this point: Article 27(5)

expressly states that “nothing in this Treaty and the Regulations is intended to be

79 PCT Article 27(4), however, provides that the national law may provide for requirements regarding the form or contents of applications which, from the viewpoint of applicants, are more favourable than the requirements under the PCT. 80 Supra note 65, p.163. 81 Supra note 50. 82 WIPO, Open Forum on the Draft Substantive Patent Law Treaty (SPLT), Geneva, Switz, Mar. 1-3, 2006, http://www.wipo.int/meetings/en/2006/scp_of_ge_06/scp_of_ge_06_infl.html. Accessed on 6-6-2012.

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construed as prescribing anything that would limit the freedom of each Contracting State

to prescribe such substantive conditions of patentability as it desires.” The “Notes on the

PCT” further explain that “’conditions of patentability’ include novelty, inventive step

(non-obviousness), industrial applicability, certain subject matter (for example, foods and

beverages, chemical products, pharmaceutical products, and plant or animal varieties, are

not patentable in some countries).”

Moreover, contrary to our intuitive expectation, an application through PCT is

ineffective even in reducing costs and expediting the process. For example, WIPO shows

that the costs using PCT is higher than direct application, especially when only a few

countries are involved (Table 1).83 The contributing factors behind the high costs include

high default fees of international preliminary examinations compared to national

examination fees, Offices’ failure to provide sufficient opportunity for discussion

between the agent and examiner before a final report is established, and the fact that

many elected Offices do not give significant attention to the international reports.84

Furthermore, KIPO argues that PCT is relatively slow and the patent may have a reduced

enforceable life span because the life of a patent is calculated from the date of its first

filing. According to WIPO, in 2009, 26% of international applications were published

without an attached International Search Report (ISR) because of delayed search. Also, in

the same year, over 6% of ISRs were delivered more than 30 months after the priority

date. International Authorities are mainly responsible for the delays because they often

are unable to timely begin the international search or international preliminary

examination as a result of delays in receiving information, documents or fees from the

applicant or receiving Office. Part of the delay is also due to the time expended in

application processing within the Office, including any Office correspondence with the

applicant. Receiving Offices and International Authorities in different regions send

documents in paper form and via surface mail, which also contributes to the delay.85

83 World Intellectual Property Organization (WIPO), Standing Commission On the law of Patents, Report at 1-2, WIPO Doc. SCP/10/11 (June 1, 2005). 84 Supra note 67. 85 Ibid.

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Table 1: The Comparison of Costs between Direct and PCT Applications86

2 Countries 7 Countries 15 Countries

Application Direct PCT Direct PCT Direct PCT

Costs $16,971 $19,406 $59,397 $60,481 $119,381

$118,339

5.4.4 Draft Patent Harmonization Treaty

Despite the fact that the PCT greatly simplified the filing of patent applications at

the international level, substantive patentability requirements varied significantly in

different jurisdictions. Further, considerable numbers of applications were filed abroad

not using the PCT system.87 In the mid-1980s, this used to the negotiation of a new global

treaty that addressed a number of substantive issues, the harmonization of which was

considered indispensable for a better international patent system. The discussion started

from the global harmonization of grace periods, recognizing that, without harmonization,

an applicant must absolutely refrain from disclosing his or her invention to the public

before the filing date, as long as one of the countries in which patent protection is sought

does not provide the grace period. A number of other issues were subsequently included

in the negotiation package, and a draft ‘Treaty Supplementing the Paris Convention as

Far as Patents are Concerned’ (draft 1991 Patent Harmonization Treaty) was discussed at

the first part of the Diplomatic Conference, held in The Hague in 1991. The substantive

provisions of the draft Treaty covered a wide range of issues under patent law, provisions

related to patent applications and examination procedures, standards for obtaining a

patent, rights and remedies granted by patent and post-grant procedures.88

The first part of the Diplomatic Conference could not resolve two major issues,

that is, the worldwide introduction of a grace period and the ‘first-to-file’ principle. A

number of European countries89 considered that the acceptance of the grace period

provision, combined with a mandatory article on prior user’s rights, was conditional on

86 http://www.wipo.int/export/sites/www/ipstats/en/statistics/patents/pdf/wipo_pub_931.pdf. Accessed on 7-6-2012. 87 WIPO Industrial Property Statistics, 2005, http://www.wipo.int/ipstats/en/statistics/patents.Accessed on 7-6-2012. 88 Supra note 65. 89 Belgium, Denmark, Finland, France, Norway and Sweden.

183

the mandatory first-to-file principle. The United States of America could not concede on

this point due to strong opposition by, in particular, national independent inventors.

Although the dates for the second part of the Diplomatic Conference had been fixed, the

draft Patent Harmonization Treaty faced deadlock in 1993 when the United States of

America declared that they were not prepared to change their domestic system to first-to-

file.90

In parallel to the negotiation of a broad harmonization treaty in WIPO, another

negotiation was taking place under the framework of the General Agreement on Tariffs

and Trade (GATT). The negotiation on the TRIPs Agreement was officially launched in

conjunction with the GATT Uruguay Round in 1986. In the early years of the TRIPs

negotiations, developing countries argued that only WIPO had the competence to discuss

substantive norms and standards relating to intellectual property rights, blocking

substantive discussions on IPRs apart from counterfeit goods. However, the positions of

developing countries gradually weakened, and the draft Final Act prepared in December

1991 (Dunkel Draft) was almost the same as the final text of the TRIPs agreement.91

Subsequent to such development at the GATT, when deciding on the dates of the second

part of the Diplomatic Conference in 1992, the Assembly of the Paris Union also decided

to delete from the draft Patent Harmonization Treaty a number of articles,92 the contents

of which had been included in the draft TRIPs agreement. With the prospect of a

successful conclusion of the TRIPs agreement at GATT, major demanders’ of the draft

1991 Patent Harmonization Treaty were probably not able to see any benefit in making

concessions at WIPO, and the momentum for the continuation of the discussion was lost.

5.4.5 Patent Law Treaty

Discussions resumed two years later in WIPO, after the adoption of the TRIPs

agreement, taking another approach to promoting harmonization, namely, limiting the

scope of the negotiation to formalities of national and regional patent applications. The

90 Supra note 65. 91 Daniel Gervais, The TRIPS Agreement: Drafting History and Analysis, 2nd ed., (London: Sweet & Maxwell, 2003), p.31. 92 Article 10 (Fields of Technology), Article 19 (Rights Conferred by the Patent), Article 22(1) (Term of Patents), Article 24 (Reversal of Burden of Proof), Article 25 (Obligations of the Right Holder), and Article 26 (Remedial Measures under National Legislation) were removed from the Basic Proposal.

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discussions on the draft Patent Law Treaty (PLT) started in 1995 and concluded in June

2000.93 In expressly excluding substantive requirements, the PLT confined itself to a

simplification of formality requirements set by national and regional offices and the

streamlining of the procedures for obtaining and maintaining a national and regional

patent. Prior to the initiation of the discussion on the PLT, in the field of trademarks, the

adoption of the Trademark Law Treaty (TLT) in 1994 advanced the harmonization of

formality requirements under national/regional trademark systems. Undoubtedly, this

success inspired the idea of concluding a similar international instrument in the area of

patents.

The 1991 Draft Harmonization Treaty also included formality issues such as

requirements for obtaining the filing date and belated claim of priority. The PLT includes

those issues and other matters such as representation, signatures, change in names and

addresses, change in ownership, and conditions for the extension of time limits and

restoration of rights. Compared with substantive requirements, formality requirements are

often considered less important requirements. However, since non-compliance with such

requirement results in the refusal of a patent application, the importance of formality

requirements cannot be underestimated. The PLT is expected to result in cost reductions

and in the avoidance of loss of rights, since it provides predictable, uniform and simple

procedures for applicants and encourages efficient operations within patent offices.

Another feature of the PLT is that, as far as form and content of applications are

concerned, the PLT incorporates to a large extent the provisions of the PCT and its

regulations so as to ensure uniform formality requirements for international applications

(PCT) and national and regional applications (PLT).94

5.4.6 Agreement on the Trade-Related Aspects of Intellectual Property Rights (TRIPs)

The General Agreement on Tariff and Trade (GATT) was an international

platform established in 1947 to evolve a framework for enhancement of global trade in

“goods”. The first seven rounds of the discussions till 1979, addressed issues related to

the goods sector and aimed at establishing non-tariff barriers across the nations.

93 Record of the Diplomatic Conference for the adoption of the Patent Law Treaty http://www.wipo.int/treaties/en/index.html. Accessed on 7-6-2012. 94 Supra note 37, p.179.

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However, the well-known Uruguay round of multilateral trade negotiations

initiated in September, 1986, made a major deviation from the traditional goods sector to

include three new areas, namely investments, services and IPR. In addition, the

traditional goods sector also broadened its scope to bring in issues related to textiles and

agriculture.

This entire package generated varied views from the different nations as the

GATT umbrella would strongly influence the domestic socio-economic policies to meet

the requirements of GATT. This created a virtual split among the member states,

resulting in what may broadly be termed as a “North-South Debate”.

In December 1991, the GATT Director-General Mr. Arthur Dunkel proposed

some “compromise solutions” which were tabled as the “Dunkel Draft”. This document

aimed at establishing the WTO with a commitment from its “member states” to

implement the agreed-upon “interrelated features” of GATT, such as the Trade Related

Investment Measures (TRIMS), the General Agreement on Trade Services (GATS), the

agreement on TRIPs and agreement on establishing the WTO.95

The World Trade Organization (WTO Agreement) established in April 15, 1994

in Marrakech. The TRIPs agreement was contained in the Annex to the WTO Agreement,

which entered into force on January 1, 1995. Built upon the foundations laid by the Paris

Convention and the Berne Convention, the TRIPs agreement is an unprecedented

international agreement in terms of its coverage, scope, specificities and enforceability.96

The TRIPs agreement, formally recognizes the need to promote “effective and

appropriate means for the1 enforcement” of intellectual property rights, and provides for

“expeditious procedures for the multilateral prevention and settlement of disputes”

relating to private intellectual property rights. The practical effect on patents has been the

harmonization of the world’s patent law. To this end, TRIPs requires that all signatories

enact domestic legislation to implement the minimum levels of patent protection

provided by the Agreement. Thus, developed and non-developed signatories alike must

95 Prabuddha Ganguli, Gearing up for Patents: The Indian Scenario, (Hyderabad: University Press (India) Ltd.,1998), p.122-123. 96 Jayashree Watal, Intellectual Property Rights in the Wto and Developing Countries, (New York: Oxford University Press, 2001), p.90.

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adhere to an international baseline for patent protection and ensure effective, expeditious,

and impartial application of patent rights.

As regards geographic coverage, the TRIPs agreement is binding on all WTO

members. Compliance with its provisions is a precondition of joining the WTO, which

deals with the rules of trade between members at a global level. Although intellectual

property rights (IPRs) and their effects on trade have been advocated for a long time, the

TRIPs agreement is the first international instrument to focus on trade-related aspects of

IPRs. In view of the different levels of ‘preparedness’ among members to implement the

TRIPs agreement under national laws, the TRIPs agreement sets out certain periods of

time after the entry into force of the WTO Agreement before members are obliged to

implement the TRIPs agreement (Articles 65 and 66). Different periods were prescribed

for developed countries (January 1, 1996), developing countries (five years from the date

on which the TRIPs agreement becomes mandatory for developed countries) and least-

developed countries (ten years from the date on which the TRIPs agreement becomes

mandatory for developed countries).97 The leniency expressed in these articles allows a

developing country an opportunity to slowly adapt and further expand its economy prior

to compliance.

The TRIPs agreement also sets forth the criteria for patentable subject matter.

Article 27 provides that, “a patent shall be available for any invention… in all fields of

technology, provided that they are new, involve an inventive step, and are capable of

industrial application.” Thus, TRIPs requires a patent be made available for any

invention, product or process, regardless of its field of technology. In addition, Article 27

sets forth clear guidelines for subject matter that may not be patentable. These exceptions

include inventions necessary to “protect ordre public or morality,” “diagnostic,

therapeutic and surgical methods for the treatment of humans or animals,” and naturally

existing plants, animals, and “essentially biological processes for the production of plants

or animals.”

Furthermore, TRIPs provides that the rights set forth apply to all Members,

thereby disposing of the past use of reciprocity. Under the National Treatment clauses,

each signatory is compelled to accord to the nationals of other Member States “treatment

97 Supra note 65, p.171.

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no less favourable than it accords to its own nationals” with regard to the protection of

patents. Moreover, TRIPs applies the most favoured nation principle in affording patent

protection. Thus, with few exceptions, “any advantage, favour, privilege or immunity

granted by a Member to the nationals of any other country shall be accorded immediately

and unconditionally to the nationals of all other Members.”98

TRIPs also set forth the basic rights that must be accorded to each Member’s

nationals. Article 28 provides that a patent grants an inventor the right to prohibit third

parties from making, using, selling, offering to sell, or importing the subject matter of a

patent. In addition, the term of a patent under TRIPs was extended to twenty years.

Enforcement provisions were considered essential to realizing TRIP’s intent.

Article 41 provides that each Member “shall ensure that enforcement procedures…are

available under domestic law so as to permit effective” and expeditious remedies against

any act of patent infringement. Thus, all Members are required to ensure that

enforcement procedures are available under their laws. Furthermore, many procedural

safeguards are present in the Agreement. Under TRIPs, all patent infringement actions

must be: (1) decided on the merits; (2) in writing; and (3) reasoned only upon evidence

after each party thereto is afforded an opportunity to be heard. In addition, a party is

entitled to judicial review of administrative decisions. In providing remedies for a

contesting state, judicial authorities are permitted to award judgment in the form of an

injunction, damages, and even an order that the infringing goods be destroyed without

compensation.

Moreover, the TRIPs agreement formally recognizes the need for procedures for

multilateral prevention and settlement of disputes. For example, TRIPs provides a

suitable binding dispute resolution procedure that former international intellectual

property conventions lacked. Under Article 64, the dispute settlement procedures set

forth in GATT are made applicable to patent dispute resolution and are to be monitored

by the Council for TRIPs. Furthermore, all signatories are required to abide by the

decisions of the Dispute Settlement Body of the WTO. The dispute Settlement Body,

consisting of a panel of three Members to make initial decisions and another three

98 Adam Isaac Hasson, “Domestic Implementation of International Obligations: The Quest for World Patent Law Harmonization”, http://www.bc.edu/bc-org/avp/law//wsch/journals/bciclr/09-TXT.htm. Accessed on 7-9-2012.

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Member appellate panel, possesses the authority to make findings or recommendations,

and may authorize a country to take reprisals against an erring WTO Member.

Thus, the TRIPs agreement laid the foundation for the international protection of

patents. Not only were all signatories required to join the WTO, but they also were

compelled to adapt their domestic patent laws, pursuant to TRIPs, in exchange for mutual

protection of intellectual property.99

After the conclusion of the PLT in 2000, a considerable number of WIPO member

states expressed their wish to consider the issues related to the harmonization of

substantive requirements of patent law. This did not mean that the member states would

simply come back and re-discuss the draft 1991 Patent Harmonization Treaty. The

international landscape has significantly changed. Firstly, the conclusion of the TRIPs

agreement, which expressly recognized the interaction between intellectual property

protection and trade in a global environment, changed the perspective of the international

intellectual property regime. It appears that the frictions surrounding the TRIPs

agreement explain the two major challenges of today. The first is an increase focus on the

interaction between intellectual property protection and other social, economic and

cultural issues. Particularly in the field of patents, public policy issues, such as public

health, protection of the environment, food security and access to basic research, have

been brought onto the agendas of international debates.100

The second challenge is increasing regionalization and globalization in all areas

of our activities. The globalization of commerce, in particular, challenges the design and

operation of the international patent system. The increasing international dimension of

trade flows requires protection of intellectual property assets beyond the borders of the

inventor’s home country. This applies not only to multinational and large-scale business

in developed countries, but also to smaller entities, since regional trade and economy also

call for the protection of intellectual property beyond national boundaries. Under the

current international patent regime, this implies a higher cost of obtaining, maintaining

and enforcing patents in each country in which patent protection is required. The higher

cost of obtaining patent protection abroad stems, at least in part, from differences among

99 Ibid. 100 Supra note 67, p.173.

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national laws. In addition to differences of a more formal nature, such as the language of

an application, differences as to substantive requirements, acceptable claim formats and

the interpretation of claims oblige an applicant to ‘customize’ the application in

accordance with the national/regional law. Such customization requires considerable

effort and time with a thorough understanding of the relevant national/regional laws.

Nevertheless, the number of patent applications filed worldwide is growing,101 and patent

offices have to cope with the increasing workload within their limited financial and

human resources.

Another type of challenge which is inherent in the operation of the patent system

concerns the quality of granted patents. Although the question as to how to design a

mechanism that only protects truly patentable inventions is nothing new, the question is

more significant today in a situation where all WTO members, be they developing

countries or least-developed countries, should put in place a patent system in compliance

with the TRIPs agreement.

A further challenge concerning the quality of patents relates to new technological

development. In the past, a patent system has been flexible and general enough to bring

in new technologies under a common set of rules called ‘patent law’. Is it also true for

information technology and biotechnology? In addition to the technological development,

generally, the so-called ‘service’ sector has occupied an increasing part of our economy.

Is a patent system feasible to promote innovative ideas in such sectors? Further, the

business models surrounding innovative activities have also developed. In today’s

knowledge-based economy, the creation and management of innovation has become

more institutionalized and systematic, which results in a growing number of patents and a

growing amount of litigation. Is a patent system capable of standing still with such a

labyrinth of rights?102

101 The number of patent applications filed worldwide remained around 900,000 per year between 1985 and 1994. In 1995, the number exceeded one million applications per year and in 2004, 1,599,000 applications were filed worldwide. In 2011, the total number of patent applications filed exceeded 2 million for the first time ever (1.36 million resident and 0.78 million nonresident), reflecting a 7.8 percent growth rate. China led the way patent applications with 526,412, followed by the U.S. with 503,582 and Japan with 342,616. WIPO Global IP Indicators Report 2012, http://newslink.federallabs.org/2013/01/09/wipo-global-ip-indicators-report-2012/ Accessed on 8-9-2013. 102 Supra note 65, p.174.

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Certainly, these are the questions which do not have definite answers today. In the

midst of the wide range of views expressed, international debates on patent

harmonization, however, are under-way. In this relation, PCT Reform, a draft Substantive

Patent Law Treaty (SPLT), review and amendment of TRIPs agreement and the Doha

Declaration is to be considered.

5.4.7 Patent Cooperation Treaty Reform

By the 1990s, a number of efforts had been made to further develop the PCT

system into a more efficient and useful international framework.103 However, few

changes have been made in terms of the basic architecture of the PCT system. One of the

reasons is that member states have strong reservations about extending the PCT system to

the area of substantive patent law. Another difficulty is that a large-part of the PCT

system is regulated in articles of the Treaty, the amendment of which needs to be adopted

by a Revision Conference. Even if such an adoption were successful, until the adopted

changes entered into force in all member states, there would be a period where different

versions of the Treaty applied to different States. This might cause practical difficulties in

administering the system and, albeit temporarily, could further complicate the system

rather than simplifying it. The PCT Reform project, started in 2001, thus took a two-step

approach: as a first step, improvement of the system through the PCT Regulations, and as

a second step, consideration of further reform that affects the provisions under the

Treaty.104

The objectives of PCT Reform are, among other things, to simplify and streamline

the PCT system, to reduce costs, to enable offices and authorities to meet their workload,

to avoid duplication of work among offices and to meet the needs of large, medium and

small offices. The last point is pertinent, since 185 States are members of the PCT as of

2011. During the last six years, a number of changes were made in the PCT system in

view of the above objectives. The major changes are:

103 The International Bureau of WIPO explored the possibility of a ‘PCT Certificate of Patentability’, which could be obtained, if an applicant so wished, from the International Bureau on the basis of the results of an international preliminary examination by extending the international operation on the PCT system further into the national phase. The Certificate would have the same effect as national or regional patents of the countries which participate in the new system. 104 Working documents and reports of the meetings relating to PCT Reform, http:// www .wipo .int/pct /reform/en. Accessed on 4-8-2012.

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i. The time limit in Article 22(1) was modified from 20 months to 30 months from the

priority date, so that, in general, international applications enter a national phase at

the expiry of 30 months from the priority date under both Chapter I procedure

(without the international preliminary examination (IPE) and Chapter II procedure

(with the IPE);

ii. The international search system was expanded so that the International Search

Authority (ISA) prepares a written opinion (WO) in addition to the international

search report (ISR);

iii. filing an international application now has the effect of designating all PCT

Contracting States, thus the applicant’s choice of designating countries can be

deferred to the national phase;

iv. Various changes were made in order to conform with the PLT, for example, extension

of the time limit for the national phase entry, restoration of the right of priority and

inclusion of missing elements and parts of the international application which are

contained in the earlier application, the priority of which is claimed, without affecting

the international filing date;

v. Patent documents of the Republic of Korea were included in the PCT minimum

documentation used by the ISAs in carrying out international searches;

vi. Arabic, Korean and Portuguese were added as publication languages of international

applications filed in Arabic, Korean and Portuguese, respectively;

vii. The minimum requirements for ISAs/IPEAs were modified so that those Authorities

must have a quality management system and internal review arrangements in place.

With the above achievements, the work of the PCT Reform was completed in

2007.105

5.4.8 Draft Substantive Patent Law Treaty

In November 2000, the Standing Committee on the Law of Patent (SCP), which

consists of WIPO member States and intergovernmental and non-governmental

organizations, took the decision to undertake discussions on the harmonization of certain

substantive patent law requirements. The objective of such undertaking was to find

105 Supra note 65, p.175.

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solutions, in particular, to the problem of the significant cost of obtaining international

patent protection and to facilitate cooperation among patent offices through better

utilization of search and examination reports issued in other countries in order to reduce

the workload they face.106 The items to be covered by the draft Substantive Patent Law

Treaty (SPLT) should include, according to the SCP at that time, issues of direct

relevance for the grant of patents, including provisions relating to the definition of prior

art, novelty, inventive step (non-obviousness), and industrial applicability (utility), the

sufficiency of disclosure of the invention in the application, and the structure and

interpretation of claims. The SCP further agreed that a number of additional issues, such

as first-to-file versus first-to invent, mandatory publication of applications at 18 months

from the filing (priority) date and a post-grant opposition system, should be considered at

a large stage. On the issue of the first-to-file versus first-to-invent, however, even if it is

not expressly addressed, the draft SPLT provides a filing date as a critical date for the

determination of prior art, novelty and inventive step.

During subsequent meetings, the draft SPLT underwent developments in different

respects, following proposals by a number of delegations. The draft SPLT as discussed at

the tenth session of the SCP also includes, in addition to the issues above, provisions

concerning exceptions to the applicability of the Treaty, a right to patent, unity of

invention, contents, manner and order of description, amendments of applications and of

granted patents, patentable subject matter and grounds for the refusal of applications and

the invalidation of granted patents.107

The progressive broadening of the contents of the draft SPLT has given rise to

significant difficulties in advancing the negotiation in many areas.

The first set of difficulties includes matters concerning claim interpretation,

patentable subject matter and exceptions to patentability. Although those issues appear in

most patent laws all over the world, the way in which they are implemented reflects the

approach towards the patent system that different social and legal cultures have adopted.

They are also closely linked to a question that goes to the very heart of the patent system:

106 Standing committee on the Law of Patents, http://www.wipo.int/patent/law/en/scp.htm. Accessed on 9-5-2011. 107 Draft Substantive Patent Law Treaty, http://www.wipo.int/patent-law/en/harmonization.htm. Accessed on 3-7-2012.

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the achievement of the right balance between the patentee’s exclusive rights and the

interests of the public at large. There are number of fundamental issues to be solved

among developed countries. For instance, Article 11(1) of the draft SPLT states that ‘the

claims shall define the subject matter for which protection is sought in terms of the

[technical] feature of the invention’. The United States of America suggests the deletion

of the ‘[technical]’ so that the claimed invention may encompass ‘non-technical’

inventions, which is not acceptable to other countries.108

The second issue concerns disclosure of origin of genetic resources and associated

traditional knowledge in patent applications where the claimed invention is derived from,

or based on, such genetic resources or traditional knowledge.109 Some countries wish to

establish a binding international instrument that obliges countries to provide a mandatory

requirement for such disclosure, so that developed countries, from which a great majority

of patent applications are generated, are obliged to implement such requirements in their

respective national laws. The primary objective of such a requirement is to provide

supportive measures to implement the provisions of the Convention on Biological

Diversity (CBD)110 which provide that, inter alia, (i) the national governments have

authority to determine access to genetic resources; (ii) access to genetic resources shall be

subject to prior informed consent on mutually agreed terms of the Contracting Party

providing such resources; (iii) each Contracting Party shall take legislative,

administrative or policy measures with the aim of sharing the R&D results and benefits

arising from the commercial and other utilization of genetic resources, with the

Contracting Party providing such resources; (iv) each Contracting Party shall encourage

the equitable sharing of benefits arising from the utilization of indigenous knowledge

subject to its national legislation. The idea is that, if a patent applicant is obliged to

indicate the origin or source of genetic resources utilized in the invention, it would

facilitate finding illegal access to genetic resources, since this application will be

published for public scrutiny. It would also motivate the patent applicant to request the

prior informed consent of the country providing the genetic resources. On the other hand,

108 Supra note 65, p.177. 109 WIPO Technical Study on Patent Disclosure Requirements Related to Genetic Resources and Traditional Knowledge, http://www.wipo.int/tk. Accessed on 3-7-2012. 110 http://www.cbd.int/convention/. Accessed on 8-9-2012.

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some other countries are of the opinion that the CBD-related issue should be dealt with

entirely outside the scope of patent law. Some other countries do not oppose a patent law

incorporating provisions that primarily address the issues under the CBD. Certain

countries wish to include new disclosure requirement in the context of the draft SPLT,

while others consider that the question has been properly dealt with in the

Intergovernmental Knowledge and Folklore (IGC), another forum at WIPO, and the same

question should not be addressed to the SCP in parallel.

A third set of issues relates to concerns about the available flexibility in respect to

national policies, for example, for measures to protect public health and nutrition, and to

promote the public interest in sectors of importance in socio-economic and technological

development. Against any limitation on the existing flexibility recognized under current

international treaties, such as Article 8 of the TRIPs agreement, a number of countries

supported the inclusion of a provision in the draft SPLT that expressly stipulates that

nothing in the draft SPLT would prejudge the above-mentioned flexibility in respect of

certain national policy choices. By the same token, draft provisions concerning the

grounds for refusal of a claimed invention (draft Article 13) and the grounds for

invalidation or revocation of a claim or a patent (draft Article 14) were viewed as

problematic by some countries because those provisions provided a maximum list of

grounds on the basis of which the Contracting Parties could refuse an application or

revoke a patent. Therefore they proposed the inclusion of a new provision that would

allow a Contracting Party to also require compliance with the applicable law on various

policy matters.111

On a number of issues which were highly disputed during the negotiation of the

draft 1991 Patent Harmonization Treaty, the same divergent arguments were presented at

the SCP. So it is not fair to blame the scope of the draft Treaty as the only source of the

problem. For instance, the provision regarding a prior art effect of another application

filed earlier, but published after, the filing (priority) date of the application under

examination (draft Article 8(2) and draft Rule 9) raised the same four points debated in

1991: (i) whether or not to prohibit the ‘Hilmer Doctrine’ of the United States of

America; (ii) whether such prior art should be taken into account for the novelty

111 Supra note 65, p.178.

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determination only or for the determination of both novelty and inventive step; (iii)

whether PCT international applications which have not entered into the national phase in

the respective country should be part of the prior art or not; (iv) if the applicant, or the

inventor, of the earlier application is the same person as the applicant, or the inventor, of

the application under examination, whether such earlier application should be part of the

prior art or not.

In a similar manner, the provision regarding the grace period (draft Article 9)

contains a number of unsolved issues, such as (i) whether the duration of the grace period

should be six months or one year; (ii) whether the grace period should cover all prior

publication of another application filed by the inventor or his successor in title, published

within the grace period, or should be limited to such publication which should not have

occurred; (iii) whether the inventor or his successor in title should submit a declaration

invoking the effect of the grace period within a certain time limit; (iv) whether or not to

accord a prior user’s right to a person who in good faith used the claimed invention

between the public disclosure triggering the grace period and the filing (priority) date.112

In view of differences which made the discussions in the SCP difficult to advance,

in May 2004, the United States of America, Japan and the European Patent Office

submitted a joint proposal, designed to focus on an initial package of priority items, that

is, the definition of prior art, grace period, novelty and inventive step. According to the

proposal, once international agreement was reached on those prior art-related issues, the

SCP could then on other issues which may include topics such as disclosure requirement,

claim drafting, unity of invention and others. The choice of those four items was based on

the following reasoning: (i) the degree of which the discussion had matured and the

extent of agreement among the delegations; (ii) the technical nature of those provisions

and the absence of political implications; (iii) the link between those provisions and the

prospect of creating conditions for mutually exploiting search and examination results

between offices; and (iv) the advantages of harmonization on those points for all

countries.

On the other hand, the Group of Friends of Development, which consists of

Argentina, Bolivia, Cuba, the Dominican Republic, Ecuador, Egypt, the Islamic Republic

112 Id, p.179.

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of Iran, Kenya, Peru, Sierra Leone, South Africa, the United Republic of Tanzania and

Venezuela, proposed that the following issues be included in the working program of the

SCP: development and policy space for flexibility, exclusions from patentability,

exceptions to patent rights, anticompetitive practices, disclosure of origin, prior informed

consent and benefit sharing, effective mechanisms to challenge the validity of patents,

sufficiency of disclosure, transfer of technology and alternative models to promote

innovation. While developed countries gave priority on technical issues, the

harmonization of which directly facilitates the mutual was exploitation of search and

examination results between offices, the Group of Friends of Development’s priority was

to discuss in the SCP policy issues going beyond the processing of patent applications

before patent offices.

5.4.9 Review and Amendment of the TRIPS Agreement and the Doha

Declaration

In 2005, the deadlock at the SCP resulted in the formation of a group called

‘Group B+’, which consists of developed countries, more specifically, Australia, Canada,

Japan, New Zealand, Norway, the United States of America, member states of the

European Union and/or the European Patent Convention, as well as the European

Commission and the European Patent Office. Seeking an agreement among those parties

with respect to patent harmonization on the definition of prior art, grace period, novelty

and inventive step, Group B+ has been holding meetings to negotiate texts in a treaty

language based on the relevant articles and rules of the draft SPLT.113

Through Article71.1, the TRIPs agreement establishes a mechanism for the

Council for TRIPs to review the implementation of the Agreement and to undertake

reviews in the light of any relevant new development which might warrant modification

or amendment of the agreement. Further, in the area of patents, TRIPs Article 27.3(b)

provides that the provision shall be reviewed four years after the date of entry into force

of the WTO agreement.

In the context of the review of Article 27.3(b), in addition to the patentability of

plants and animals and an ‘effective sui generis system’ for plant variety protection,

113 Id, p.180.

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topics such as the relationship between the TRIPs agreement and the CBD, access to

genetic resources and benefits sharing and protection of traditional knowledge and

folklore quickly started to dominate the debate in the Council for TRIPs. Consequently,

the Doha Ministerial Declaration in 2001 mandated the Council for TRIPs, during the

review of Articles 27.3(b) and 71.1 as well as negotiations on outstanding

implementation issues, to examine the relationship between the TRIPs agreement and the

CBD, and protection of traditional knowledge and folklore and other relevant new

developments raised by members pursuant to Article 71.1. In undertaking this work, the

Council for TRIPs shall be guided by the objectives and principles set out in Articles 7

and 8 of the TRIPs agreement and shall take fully into account the development

dimension.114

With respect to the disclosure of origin of genetic resources and associated

traditional knowledge in a patent application, Brazil, China, Colombia, Cuba, India,

Pakistan, Peru, Thailand and Tanzania submitted a proposal to include new Article 29bis.

New Article 29bis provides that, in essence, (1) members shall have regard to the

objectives and principles of the TRIPs agreement and the objectives of the CBD; (2)

where the invention derived from or developed with biological resources and/or

associated traditional knowledge, members shall require applicants to disclose the

country providing the resources and/or associated traditional knowledge, from whom

they were obtained, and as known after reasonable inquiry, the country of origin.

Members shall also require information including evidence of prior informed consent to

access and fair and equitable benefit sharing; (3) applicants and patent owners shall

submit any new information concerning of which they become aware; (4) members shall

publish the above information disclosed; and (5) members shall put in place effective

enforcement procedures. In particular, when the applicant has knowingly failed to

comply with the disclosure obligation or provided false or fraudulent information,

authorities have the power to prevent further processing of the application or the grant of

a patent and to revoke or render a patent unenforceable. While some members supported

the inclusion of new Article 29 bis, others are not in favour of amending the TRIPs

114 Official document for the Geneva Ministerial, WTO document WT/MIN (1) DEC/1, paragraph 19, 2009.

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agreement, arguing that discussions on the disclosure of origin of genetic resources and

associated traditional knowledge are adequately dealt with in the IGC/WIPO.

The issue of the relationship between the TRIPs agreement and access to

medicines, in particular, in developing and least-developed countries, was put on the

agenda of the Council for TRIPs agreement, many developing countries and least-

developed countries did not protect pharmaceutical products under patents.

Consequently, some of those countries which had manufacturing capacity for

pharmaceutical products were in a position to legally produce and sell cheaper generics to

other developing and least-developed countries that had no patents on the pharmaceutical

product concerned. The TRIPs agreement challenged such a supply chain by obliging all

members to provide patent protection for the pharmaceutical products, subject to a

transitional period.

How can medicines under patents be made available in the necessary quantity at

an affordable price at international level? What would be the consequences for the

international procurement of medicines by, in particular, least-developed countries?

Faced with such questions, the Doha Ministerial Declaration recognized that, under WTO

rules, no country should be prevented from taking measures for the protection of health at

the levels it considers appropriate, provided that such measures are not applied in an

unjustifiably discriminatory manner between countries where the same conditions

prevail, or as a disguised restriction on international trade, and are otherwise in

accordance with the provisions of the WTO agreements A separate declaration, the Doha

Declaration on the TRIPs agreement and Public Health, was also adopted. The latter

affirmed that the TRIPs agreement should be implemented in a manner supportive of

public health. It also reaffirmed the right of members to use, to the full, the provisions in

the TRIPs agreement that provide flexibility, which include: (i) the provisions of the

TRIPs agreement shall be read in the light of the objective and principles of the

Agreement as expressed, in particular, in articles 7 and 8; (ii) the right to grant

compulsory licenses and freedom to determine the grounds upon which such licenses are

granted; (iii) the right to determine what constitutes a national emergency or other

circumstances of extreme urgency for issuing a compulsory license; (iv) each member is

free to establish its exhaustion regime. It also states that least-developed country

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members will not be obliged to implement Section 5 (patents) and 7 (protection of

undisclosed information) of Part II or to enforce rights provided for under these sections

in respect of pharmaceutical products until January 1, 2016. As regards the extension of

the transitional period, a separate decision by the General Council was made so that the

obligations of least-developed countries under Article 70.9 (exclusive marketing rights)

with respect to pharmaceutical products will not take effect until January 1, 2016.115

Paragraph 6 of the Doha Declaration on the TRIPs agreement and Public Health

raised an important issued. According to Article 31 (f) of the TRIPs agreement, where a

member allows for use of the subject matter of a patent under the so-called compulsory

license or public non-commercial use without the authorization of the right holder, such

use shall be authorized predominantly for the supply of the domestic market of the

member authorizing such use. This means that, with respect to pharmaceutical patents,

where the member does not have sufficient manufacturing capacities, it could face

difficulties in making effective use of compulsory licensing. The Doha Ministerial

therefore instructed the Council for TRIPs to find an expeditious solution. A number of

legal options were discussed, and the General Council adopted the Decision of the

Implementation of Paragraph 6 of the Doha Declaration in August 2003, which allows

WTO members to issue a compulsory license with a view to exporting patented

pharmaceutical products to countries with insufficient manufacturing capacity under

certain conditions.116 Subsequently, the agreed solution was codified with the adoption of

the Protocol amending the TRIPs agreement by the General Council in December

2005.117 New Article 31 bis states that a member may grant a compulsory license for the

purpose of production of a pharmaceutical product and its export to an eligible importing

member. Where such a compulsory license is granted and patents have been granted in

both the exporting member and the eligible importing member, adequate remuneration

shall be paid in the exporting member taking account of the value to the importing

member of the use that has been authorized in the exporting member. No further

remuneration in the importing member is required.

115 The Doha Round texts-contents, WTO document WT/L/478, 8th July 2002. 116 Implementation of paragraph 6 of Doha Declaration on the TRIPS Agreement and Public health, WTO document WT/L/540, 1st September 2003. 117 Amendment of the TRIPS Agreement, WTO document WT/L/641, 8th December 2005.

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5.4.10 European Patent Convention (EPC)

This is essentially a regional arrangement. The current European patent system is

governed by the 1973 Munich Convention.118 This system established a common patent

procedure that covers up to thirty one European countries. The potential contracting

countries are limited to those of Europe by Article 166 of the Convention, although not

solely to those of the European Economic Community.119

The European Patent Convention is more advanced than the PCT in that both

searching and examination are centralised in the newly founded European Patent Office

in Munich, Germany. It is similar to the PCT in that the applicant again has to designate

the particular European countries in which he is interested to protect his invention. A so-

called Euro-PCT application is also possible.120

The EPC is the first of two pillars of the European patent system. The second

pillar, the Community Patent Convention (the CPC)121, is also concerned with the

enforcement of European patents by means of infringement proceedings in national

courts.

The main objects of the EPC, as set out in its preamble, are “to strengthen co-

operation between the States of Europe in respect of the protection of inventions”, and

“that such protection may be obtained in those states by a single procedure for the grant

of patents and by the establishment of certain standard rules governing patents so

granted.”

The European patent system is currently in motion. A Revision Conference was

held in Munich at the end of 2000. The most important elements of the revision are, inter

alia, the bringing into line of some key provisions with the TRIPs agreement, the

possibility of filing a patent application in any language and the possibility of a petition

for review of the Boards’ of Appeal decisions by the Enlarged Board of Appeal.

118 Convention on the Grant of European Patents (EPC), done at Munich on 5 October 1973 http://www.ipr-heopdesk.org. Accessed on 9-8-2011. 119 Austria, Belgium, Bulgaria, Switzerland, Cyprus, Czech Republic, Germany, Denmark, Estonia, Spain, Finland, France, United Kingdom, Hellenic Republic, Hungary, Ireland, Iceland, Italy, Liechtenstein, Lithuania, Luxembourg, Latvia, Monaco, Netherlands, Poland, Portugal, Romania, Sweden, Slovenia, Slovakia, Turkey are current member states of European Patent Office as on 3rd October, 2006. 120 Brian C. Reid, A Practicle Guide to Patent Law, 2nd ed., (London: Sweet & Maxwell, 1993), p.161. 121 Convention for the European Patent for the Common Market-signed Lucembourg, 1975, amended in 1985 and 1989.

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The European Patent Convention provides for a centralized filing and granting

procedure at the European Patent Office in respect of a number of Contracting States

designated by the applicant. The European Patent Office processes the application,

examines whether the subject matter is patentable in terms of uniform patentability

requirements set out by the European Patent Convention itself and grants a ‘European

patent’ that amounts to a group of national patents in the designated states. The European

Patent Convention also provides for third parties to bring opposition proceedings at the

European Patent Office to revoke the European patent as a whole within nine months

after it was granted. However, once these nine months have elapsed, the ‘European

patent’ is no more than a bundle of legally independent patent rights in different

Contracting States. In other words, the European Patent Convention provides for a

unitary procedure for patent application, patent granting and post –grant patent opposition

and, to a large extent, refers to the national law of the Contracting States for patent

infringement matters.122

Nationals of both member and non-member countries are entitled to take

advantage of the EPC. It is thus possible for a United States applicant to make a

European patent designating the United Kingdom, France, Germany and Luxembourg as

the countries in which protection is desired.

The Contracting States to the EPC are not bound to bring their national patent

laws into conformity with the EPC, but since the harmonization of patent law within

Europe is the main purpose of the EPC, the majority of such States have changed their

national patent laws so that they do so conform. Therefore, many provisions of the EPC,

concerning both procedural law and substantive law, have counterparts in individual

national patent laws.

In individual cases, the EPO on the one hand and national courts on the other

hand may be called upon to decide the same or similar questions of interpretation of the

same or similar provisions. Neither the Boards of Appeal nor national courts are legally

bound to follow previous decisions or judgments of each other; but having regard to the

common background of a desire for harmonization within Europe, previous decisions of

122 Marta Pertegas Sender, Cross-Border Enforcement of Patent Rights, (New York: Oxford Private International Law Series, 2002), p.6.

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the EPO concerning such points of law which are common to the EPC and national laws

are strongly persuasive upon national courts, and vice versa.

The desire of harmonization of patent law within Europe can therefore be

considered as an additional factor which may influence the interpretation of the EPC.

Since the EPC directly creates and defines the rights and duties of individuals and legal

entities, when interpreting such a treaty it necessarily pays attention to the question of

harmonization of national and international rules of law.123

5.5 Effects of Harmonization

There has been a dramatic change in the Patent Law system across the world since

its origin and embodiment. Not only the form of patent has become more refined but also

that the entire process of registration of patents has witnessed a commendable change. As

a result of the recent move towards globalization, the procedure for obtaining patents has

also shifted towards centralized systems which aim at saving time and related costs. At

the same time, with the emerging areas of new technology and inventions, the

requirements for registration of patents have become more onerous and stringent. There

are both advantages and disadvantages of harmonization which are as follows:

5.5.1 Advantages of harmonization

The advantages of the harmonization depend upon the degree of harmonization. If

we see the harmonization of substantive requirements of patentability the following

advantages will accrue.

Simplification of the process of obtaining the patent

(i) Simplification of the process of obtaining the patent

Due to dissimilarities in the patentability requirements the applicant follows

different processes according to the patentability requirements of the countries. There

may be case where the ground of refusal from different countries for the same invention

may be different. Then the applicant has to respond to each country differently. This may

results in refusal of patent on different ground. Otherwise if accepted for grant of patent

123 Gerald Paterson, European PatentsSystem: The Law and Practice of the European Patent Convention, (London: Sweet & Maxwell, 1992), p.7.

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with different claims. There may be case when the patent is granted in some countries

where not in some other countries. This makes the process of getting patent in multiple

countries complex. With the harmonization of substantive patent law the ground of

refusal from one country will be presumed as the ground of refusal from other countries.

This will simplify the process of obtaining patent.124

(ii) Reduction of work load of the patent office

As we have seen from the statistics (chart 1) the average annual rate of increase of

nonresidential filing is 7.6% from 1995 to 2005.Where as the average annual rate of

increase for the residential application is 6.6%.the increase in nonresidential filings are

due to same applications duplicated in other countries. Nearly 242000 applications are

duplicated among the trilateral offices (2006 year).These duplicated applications are also

subjected to all the steps of granting patent which include search and examination too.

This duplication of application cannot be avoided. But the duplication of work can be

avoided provided the laws of the countries are harmonized. If the law of the countries

will be harmonized, then the search and examination report of one country can be relied

by other countries. This will result in substantial work load reduction in the developed as

well as developing countries. If substantive harmonization achieved in determination of

range of prior art, claim system and claim interpretation at least the search and

examination result of one office can be better used by other office.125

124 “The Advantages/Disadvantages of Harmonization”, http://www.jpo.go.jp/torikumi-e.pdf. Accessed on 9-4-2011. 125 Ibid.

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The chart-1 below shows the number of patent applications filed by residents and non-

residents worldwide by year of filing.126

(iii) Broadening of patentable subject matter

Due to the harmonization of patent system there is every chance that the subject

matter of patentability will be broadened. At least patent protection will be available to

inventions related to new generation technologies such as information technology,

biotechnology and nanotechnology. The TRIPs Article 27.1 has limited the “invention”

to all the field of technology, however with the harmonization the “invention” belonging

to any field may be patented. The requirement of technical effect as in Europe may not be

there.

(iv) Increase the predictability of the patent

With the harmonization in place if an invention is granted a patent in one country,

the probability of getting the patent in other country for the same invention will be high.

This will increase the legal certainty and value of the patent.

126 http://www.jpo.go.jp/torikumi-e.pdf. Accessed on 9-4-2011.

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(v) Reduction in cost of Patenting

Due to simplification of the procedure and unification of the forms and formats

the cost of patenting an invention will be reduced. By mutual exploitation of search and

examination results of other office, the patent office can also cut expenditures (Japan

outsource the patent application for search) and pass on the benefits to the applicant.

(vi) Cuts down on “forum shopping”

In multi country litigation process the chance of forum shopping will be less as

the provisions of law and implementing guidelines will be harmonized.

(vii) Expansion of policy space for the developed countries

Through harmonization there is a greater chance that the developed countries’

domestic policy will be imposed on other countries and their economic benefits will be

safe guarded.127

5.5.2 Disadvantages of Harmonization

The harmonization of substantive patent laws can have the following

disadvantages.

(i). Reduce the policy space of the government

Harmonization will reduce the flexibility of the government to use the patent as a

tool to devise economic and industrial policies. Developing countries are used to design

their patent system according to their level of industrial development. “So might it be the

case that by depriving developing countries of the freedom to design patent systems

according to their level of industrial and technological development, we are, to use the

title of a recent book by Cambridge University economist Ha-Joon Chang, "kicking away

the ladder" after we in the developed world have scaled it ourselves? Or, to be even more

skeptical about harmonization, would "the setting up of a world patent system ... mean

the end of patent policy as a tool for national development strategies," as Genetic

resources Action International claims?”128

127 Feng Xiaobing, The Harmonization of the Patent System, A Global Patent System is Possible or Impossible?, http://www.apic.jiii.or.jp/en/modules/tinyd5/index. Accessed on 9-3-2010. 128 http://www.enterpreneur.com/tradejournals/article/120184959.html. Accessed on 3-5-2010.

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(ii) Disadvantages due to strong IPR

Harmonization often regarded as adoption of higher IPR standard. It is often

thought that strong IPR brings FDI, technology transfer and promote research and

development “while critics counter that it will lead an unjust transfer of wealth from the

poorest countries to the wealthiest ones. The World Bank estimates that TRIPs represent

an annual $20 billion plus transfer of wealth from the technology importing countries to

the technology exporting countries. (US has got $36 billion as royalties in 1998 from

patents and licenses globally).129

There is no empirical evidence available to show that strong IPR spurs FDI,

technology transfer or domestic innovation.” Evidence from Turkey found that the

banning of pharmaceutical patents appeared to have no significant effects on levels of

FDI, technology transfers, or domestic innovation. Similarly, a study on Brazil,

examining the manufacturing industry as a whole, found no evidence that FDI levels

were greatly affected by patent protection.”130

In the past the developed countries have taken the benefit of lax IPR rules.” The

US provided no copyright protection for foreign authors for most of the 19th century on

the ground that it needed the freedom to copy in order to educate the new nation.

Switzerland had no patent system for most of the 19th century. Japan brought its IP laws

up to Western standards in 1985 while South Korea did so in 1996.”131

“There are three interesting anecdotes. It took Japan’s Patent Office 29 years to

grant Texas Instrument the patent on integrated circuit (it filed in 1960); Japanese

companies were free to read the patent specification 18 months after TI’s filing. They

acquired the technology and improved it substantially. Royal Philips Electronics was set

up to take advantage of Thomas Edison’s inventions because from 1869 to 1912 Holland

had no patent law. Ericsson, founded in 1876 (the same year Bell invented the telephone),

produced phones using the same technology. Bell forgot to file a patent in Sweden.”132

The logic which was applicable for a lax IPR then may be applicable for the developing

countries or the LDCs of now.

129 http://www.asiabusinesscouncil.org/docs/IntellectualPropertyRights.pdf. Accessed on 3-5-2010. 130 Supra note 94. 131 Supra note 127. 132 Id.

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“Strong IPR protection can hinder, rather than nurture, economic development

while economies with weak IPR protection can actually gain advantages. The late Linsu

Kim, a management professor at Korea University, argued that “strong IP rights

protection will hinder rather than facilitate technology transfer and indigenous learning

activities in the early stage of industrialization when learning takes place through reverse

engineering and duplicative imitation of mature foreign products.” Only after countries

have accumulated sufficient indigenous capabilities with extensive science and

technology infrastructure to undertake creative imitation in the later stage does IP rights

protection become an important element in technology transfer.”133

“In East Asia (Japan, South Korea and Taiwan), a combination of relatively weak

IPR protection and the availability of second-tier IPRs like utility models and design

patents encouraged technological learning. The weak IPRs helped by allowing for local

absorption of foreign innovations. The second-tier systems encouraged minor adaptations

and inventions by local firms. Later on, the IPR systems became stronger partly because

local technological capacity was sufficiently advanced to generate a significant amount of

innovation, and also as a result of international pressure.”134

Due to adoption of strong IPR the businesses may like to manufacture the

products in the countries offering suitable conditions for them such as low labor cost,

capacity to adapt technology, suitable industrial policy and favorable tax regime and

export it to the countries having strong IPR. So the Government will lose the tax revenue

and may lose opportunity to create employment for the people.

(iii) Export of mistakes from one system to other

In harmonized patent system if a mistake occur in one system then there is rare

chance that the mistake will be detected and corrected in another system. For example if

the search examiner skipped one particular prior art, there is very rare chance the

examiner in other office will find that prior art.

133 Supra note 95. 134 Nagesh Kumar, Commission on Intellectual Property Rights, Technology, Development and Intellectual Property Rights, http://www.iprcommission.org/papers/word/workshops1.doc. Accessed on 2-6-2010.

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(iv) Absence of best practice

Due to harmonization as the provisions of the laws of all the countries will be the

same, there is no question of finding any best provision to tackle a particular situation.

(v) Lack of diversities

Due to harmonization there will be no diversities in the law so a single cause will

affect all the countries equally.

However all the above disadvantages can be sidelined, eliminated or bear with if

the advantages accrued due to harmonization is quite more.

To make the harmonization effort truly meaningful, countries concerned should

select best practices from among various patent systems without adhering to the systems

of their own.135

“Developing countries will be made a great disservice if they were induced,

through the WIPO patent harmonization process, technical assistance or other means, to

import features of a patent regime that is growingly seen as malfunctioning in developed

countries, and often stifling rather than promoting innovation.” The decline in the

patentability standards is one of the factors behind the ‘intense pathology of the current

[patent] system’ in the United States. The United States patent system has become sand

rather than lubricant in the wheels of American progress.136

People need a robust system for handling intellectual property, and world

harmonization of IP is extremely desirable. Removing diversity is good for the majority

of those seeking patents, by simplifying the process and avoiding duplication in the work

of patent offices, so IP professionals will rightly press the case to do so. But it may not be

so good for the rest of us, the ultimate users of the results, and may not be good for all

patent holders equally. Precisely because the world is diverse, we are not yet in a position

to agree easily on the details of the ideal system. Solutions need to be effective overall,

not just for the few. We need to seek balances between sometimes conflicting pressures

135 Supra note 127. 136 Supra note 65.

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between developed and less developed countries, discovery and exploitation in science,

private and public, free release and monopoly.137

5.6 Recent Developments towards Harmonization

Few of the very recent developments relating to patents in the international

scenario are as follows:

5.6.1 Free Trade Agreements

In fact the United States had already embarked on a series of agreements with

individual countries that contained substantial provisions relating to patent law. The first

significant step was the North American Free Trade Agreement, but this has been

followed by agreements with Chile, Singapore, Australia, Morocco, Bahrain, Dominican

Republic, Costa Rica, El Salvador, Oman, Guatemala, Honduras, Nicaragua and Peru. All

of the agreements contain a number of patent provisions:

(i) Most of the agreements, those with Chile and Morocco being exceptions, contain

TRIPS-type provisions relating to what constitutes patentable subject matter.

Some of the agreements require the use of patent rather than TRIPS’ other option

of plant variety protection for plants.

(ii) Provided, that patents may only be revoked on the same grounds as the

applications for them could have been refused or for inequitable conduct.

(iii) A requirement in all agreements, except that with Chile and Peru, to provide for

patent term extension to compensate for delays in marketing of pharmaceuticals

as a result of the need to secure regulatory approval.

(iv) All agreements permit limited exceptions from the exclusivity provided by a

patent “provided that such exceptions do not unreasonably conflict with a normal

exploitation of the patent and do not unreasonably prejudice the legitimate

interests of the patent owner, taking account of legitimate interests of third

parties.”

137 John Sulston, “International Patent Law Harmonization, Development and Policy Space for Flexibility”, http://www.wipo.int/edocs/mdocs/scp/en/scp_of/_ge_06/scp_of_ge_06_inf2.doc. Accessed on 2-6-2010.

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(v) Where activities within the scope of a patent claim are permitted to allow a third

party intending to market a pharmaceutical product after a patent has expired to

produce data to enable it to obtain marketing approval for such post-expiration

marketing, any product produced shall be used solely for this purpose and shall

not be exported for any purposes other than for obtaining such approval.

(vi) All contain a requirement to provide for patent term extension to compensate for

unreasonable delays in the grant of a patent.

(vii) All agreements, except that with Singapore, provide for a one-year grace period

for determining novelty when the publication in question derives from the

applicant.

(viii) All agreements, except those with Singapore and Chile, require that patents

include a written description that enables the invention to be carried out without

undue experimentation and is sufficient to show the inventor had possession of

the claimed invention at the filing date. The agreements with Australia, Morocco,

Oman and the Central American countries also require that the "credible specific,

substantial" utility test of US law be used as the test for whether an invention has

industrial applicability.138

In addition to the inclusion of provisions relating to substantive patent law

included in free trade agreements, the United States, the European Patent Office and the

Japanese Patent Office have been cooperating on several projects for many years. These

have been aimed largely at procedural improvements. Cooperation with the European

Patent Office includes a program for electronic exchange of priority documents to reduce

the workload in each office. There are continuing efforts by all three offices.

5.6.2 Trilateral Co-Operation

A meeting, which was held in Tokyo from November 3 to 7, 2003, the European

Patent Office, the Japan Patent Office and the United States Patent and Trademark Office

reached the understandings on cooperation between the Offices which includes, inter alia,

a project on the harmonization of patent law. The Offices identified two categories of

items for consideration in the framework of patent law harmonization in the SCP. The

138 Patent Law Harmonization, http://www.ladas.com/Patents/ Harmonization/Patent_ Law_ Harmonization 02.html. Accessed on 2-6-2010.

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first category, which appeared to the Offices to be likely to produce agreement in a near

future, would comprise prior art (including Hilmer doctrine, anti-self-collision, prior art

effect of international applications under the Patent Cooperation Treaty (PCT) and prior

art effect of earlier applications for inventive step), grace period, novelty, inventive

step/non-obviousness, sufficiency of disclosure, claim drafting, unity of invention and

amendments/corrections. The second category of items, which would be discussed at a

later stage, would cover first-to-file/first-to-invent, patentable subject matter/technical

character and utility/industrial applicability. The Offices will continue their discussions

in a working group, which would give priority to the items relating to prior art, grace

period, novelty and inventive step.139

Some of the projects undertaken under the auspice of Trilateral Co-operations are:

Focus

"Focus" is an EPO proposed approach in which the Trilateral Offices select and

identify technical areas where there is a high degree of cross filings between the Offices

and concentrate their activities in the selected areas to build synergy between the

different Trilateral projects. This approach will enable the Trilateral Offices to evaluate

the benefits of the Trilateral Cooperation and its impact on the backlog. In the second

stage, the Trilateral projects will be deployed across all technical fields.

Strategic Handling of Applications for Rapid Examination - SHARE

Strategic Handling of Applications for Rapid Examination (SHARE) is a USPTO

proposed concept in which each office will give priority to examining applications for

which it is the office of first filing.

This arrangement will maximize work sharing by eliminating timing imbalances

that currently affect the availability of search and examination results from other offices,

in turn reducing redundancy. The Office of Second filing will use the search and

examination results from the Office of First Filing "to the maximum extent practicable", a

concept endorsed by the Trilateral Offices.140

139 Ibid. 140 http://www.trilateral.net/projects/use_of_work_results. Accessed on 2-6-2010.

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Patent Prosecution Highway (PPH)

During 2006, a new form of cooperation appeared in the form of a patent

prosecution highway between the United States Patent and Trademark Office and the

Japanese Patent Office. The patent prosecution highway enables applicants who have

secured allowance of applications in one of these patent offices to obtain expedited

prosecution of an application containing equivalent claims in the other. The purpose of

the patent prosecution highway is to facilitate an applicant's acquisition of a patent at an

early stage worldwide and to enhance the utilization of search and examination results

between the world's major IP Offices so as to reduce the burden of examination and to

enhance the quality of examination worldwide. The patent prosecution highway enables

an application whose claims are determined to be patentable in the Office of First Filing

(OFF) to undergo an accelerated examination in the Office of Second Filing (OSF) with a

simple procedure according to a request from an applicant.

During 2007, additional patent prosecution highways were created between the

United States and the United Kingdom and also between Japan and both the United

Kingdom and Korea. Additional highways opened by the United States include those

with Australia, Canada, Denmark, Singapore, Germany and the European Patent Office.

Japan has such highways with the United States but also, Korea, the United Kingdom,

Germany, Denmark, Finland and Russia and has announced its intention to open one with

Austria on July 1 2009 Korea has a highway with Denmark in addition to those with the

United States and Japan. Use of the highways has so far proved a little disappointing to

the patent offices involved. Possibly this is because of the need to commence prosecution

at the country at the receiving end of the highway with claims that may already have been

limited during prosecution in the country of first filing and perceived differences in the

approach to patentability in different countries leading to fears that claims granted by use

of the highway may be narrower than might be secured by ordinary examination. If the

highways do in fact speed up prosecution, however, these fears may be overcome, at least

in cases where no limitation of the original claims was required in the country of

origin.141

141 Supra note 125.

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5.6.3 Triway

The Triway proposal was proposed by USPTO in 2006. The proposal including

the following steps:

STEP 1: A corresponding application has to be filed in each of the Trilateral Offices and

each application must be ready for examination (alternative proposal: for search).

STEP 2: One of the 3 Offices is selected as the first Office to carry out the search and

examination. It is suggested that applicants choose their national Offices when they are

resident in one of the 3 countries.

STEP 3: The application in the first office is placed in the special status queue for action.

STEP 4: The first Office sends the search results and the resulting office action to the

other two offices in the Trilateral Dossier Access System (TDA) within an agreed time

limit.

STEP 5: The second and third Offices complete their respective searches within an

agreed time limit and send their search results in the TDA to be available to all Trilateral

Offices.

IF the Office of the first examination considers the claimed invention to be

patentable, it waits to take its final decision until the other two Offices have sent their

search results.

As an alternative, a Triway implementation could provide for Search results from

the 3 Trilateral Offices to be sent simultaneously to promote competition between them,

to the benefit of the applicant, who could then take advantage of a "shared" search,

regardless of the status of prosecution in any particular office.

The advantages of Triway proposal lies in:

(i) Would permit each Office to take advantage of the two other's search expertise.

(ii) Would allow, if the other two offices rely on the search from the first Office, to

focus their search efforts on their primary search resources (USPTO would focus

the search on US patent documents).

(iii) The quality of patents would be enhanced since the best art found by the Trilateral

Offices would be available within a short time to all three Offices via TDA.

(iv) The three Offices carrying out the search would find respectively the best patent

documents in their own country. (USPTO would find the best U.S. patent

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documents, the EPO would find the best European patent documents and JPO the

best Japanese patent documents).

(v) The Trilateral Offices would gain the efficiency of an initial search, followed by

supplemental searches and the benefits of work sharing at the earliest possible

time.142

5.6.4 New Route Proposal

In another pilot program, the USPTO and the Japanese Patent Office are

cooperating on what is called the “New Route” for patent prosecution under which is

similar to PCT except that WIPO is not involved. The New Route for Applications

Abroad is proposed by JPO at the Trilateral Conference held in Munich in 2005. The

proposal can be called the third route, subsequent to the Paris Convention Route, which is

the direct application route (also called the national application route), and the Patent

Cooperation Treaty Route, which is the international application route.

An application filed with the Office of First Filing (OFF) through the New Route

is deemed to have been filed with the Office of Second Filing (OSF) on the filing date or

priority date.

The OFF publishes the application 18 months after the filing or priority date.

Then the OFF issues a search or examination report 4-26 months after the filing or

priority date. Finally, the OFF publishes the search report at 26-28 months.

Based on the first office action received 24-26 months from the filing / priority

date, an applicant decides whether to continue the procedure with the OSF. The time limit

for an applicant to submit a translation at the OSF is 30 months from the filing / priority

date.

The New Route is to be established by an agreement among a few countries. The

International Bureau will not be a part of the New Route.

The Hilmer rule, and other national laws which distinguish the application in

terms of the effect to defeat the later-filed application, are abolished in the New Route.

The Advantages of New Route lies in:

142 http://www.training-jpo.go.jp/en/uploads/text_vtr/wr_pdf/feng.pdf. Accessed on 3-8-2011.

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i. The burden of translation is less, and the time limit for the translation to be

provided to the OSF is longer (30 months);

ii. Filing date of the OSF is secured by filing at the OFF in the official language of

the OFF;

iii. Total costs would be lower for IP Offices assuming an enhanced mutual

exploitation of search and examination results

iv. The New Route does not have a double-layered structure consisting of an

international stage and a national stage, the OFF can both make the search and

examination as domestic procedure.

v. The search is carried out later than as specified by the PCT, thus a more complete

search can be accomplished.

An application filed under the New Route procedure in one country is deemed to

be an effective application in both and the patent office of the country in which an

application is first filed undertakes the initial examination and publication of the

application, with the applicant being given up to thirty months to effect entry into the

other patent office and bring the results of that examination to the patent office of the

other country as if it were an international search report or international preliminary

report on patentability issued under PCT.

The New Route reduces the examination workload and increases the examination

quality by providing for the mutual utilization of search/examination results on a full

scale for Paris-Route applications, while giving an applicant more time to make a

decision about whether to file overseas and the payment of accompanying costs.143

5.6.5 Global Impact of the America Invents Act, 2011

After the House of Representatives of America failed to pass patent reform

legislation in 2007, the Senate has finally passed the America Invents Act. This new bill

will effectively revamp current patent law and move toward harmonizing U.S. patent law

with the patent laws of other countries. Most notably, the Act will shift the focus of

Section 102 from the date of invention to the filing date, thereby transforming the U.S.

first-to-invent system to the widely adopted first-to-file system, used by nearly every

143 http://www.jpo.go.jp/torikumi_e/t_torikumi_e/japan_usa_newroute_e.htm. Accessed on 2-6-2013.

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other country in the world. Therefore, a patent will no longer be issued if “the claimed

invention was patented, described in a printed publication, or in public use, on sale, or

otherwise available to the public before the effective filing date of the claimed

invention.”

This amendment is huge for U.S. patent law. By amending Section 102, Congress

is effectively harmonizing U.S. patent law with that of other nations. The implications of

a first-to-file system will be beneficial in limiting the contentious determinations of

competing inventors’ invention dates and will simplify this determination by awarding

the patent to the first inventor to file.144

The America Invents Act creates an innovation-friendly, collaboration-friendly

and inventor-friendly patent system that will reduce costs, level the playing field for

businesses small and large, and spur economic growth. The new law enables a better-

resourced USPTO to grant patent rights with greater speed, predictability, clarity, and

quality. It also represents the optimal harmonized patent system that international

negotiations have aimed for over the last 25 years.

Over the decades, patent law harmonization negotiations have contemplated a

system with two major elements: (1) first-to-file and (2) a 12-month grace period (e.g.,

the draft Patent Law Treaty of 1991). On March 16, 2013, the U.S. will transition to a

first-to-file (FTF) system to provide the transparency that the banks, venture capitalists,

and other investors need to invest in new businesses while establishing the stability that

companies need to bring new products to globalized markets. Congress recognized the

significance of a transition to first-to-file and stated in section 3(p) of the America

Invents Act:

“It is the sense of the Congress that converting the United States patent system

from ‘first to invent’ to a system of ‘first inventor to file’ will improve the United

States patent system and promote harmonization of the United States patent

system with the patent systems commonly used in nearly all other countries

throughout the world with whom the United States conducts trade and thereby

promote greater international uniformity and certainty in the procedures used for

securing the exclusive rights of inventors to their discoveries.”

144 Aaron Gleaton, “The America Invents Act Makes US One Step Closer to First-to File System”, The

Hindu, March 15, 2011.

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Along with a transition to a first-to-file system, the America Invents Act also

provides for an improved grace period, which will help secure investment. Under the

current system, an inventor who discloses an invention to a potential buyer or investor

without entering into a confidentiality agreement risks losing patent rights. The new

provisions allow the inventor to engage in critical negotiations with potential buyers or

investors without fear of losing their right to a patent.

Provisional U.S. applications will continue to be available. Since 1995, inventors

who wish to preserve their rights in their invention while evaluating its potential can do

so by submitting a provisional application and paying a nominal fee (currently US$250 or

US$125 for small entities), thereby establishing an internationally recognized priority

date. The inventor may, within a 12-month period, convert that provisional application

into a full U.S. application if the invention is worth pursuing.

The America Invents Act further harmonizes U.S. law by broadening the

definition of prior art, eliminating the Hilmer doctrine and virtually eliminating the best

mode requirement. The reform provides that prior art under U.S. law includes non-

printed disclosures, including oral disclosures, made available to the public anywhere in

the world. New provisions also provide an incentive for early disclosure (i.e., one year or

less before the effective filing date) by insulating inventors who disclose their inventions

against third party disclosures, if the inventor’s disclosure precedes that of a third party.

The elimination of the Hilmer doctrine ensures that patents and published applications

filed in the U.S. are prior art as of the earliest effective filing date to which they are

entitled to claim a right of priority. Additionally, the earliest effective filing date is no

longer limited to only U.S. filings; it can now also originate from a foreign filing. The

new U.S. law also eliminates the best mode requirement as a defense in infringement

actions in court and USPTO post-grant review. As is true with all U.S. laws, these

provisions will be subject to judicial interpretation.145

145 The Global Impact of the American Invents Act, Dec. 2011, WIPO Magazine, http:/ /www. wipo.int /wipo. magazine/en/2011/06/article_0002.html. Accessed on 6-5-2013.

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5.7 Main Achievements of harmonization

With the development of patent system, especially the development during the

past more than one hundred years, the harmonization of patent system has achieved great

success in the following aspects.

5.7.1 Established Several Important and Fundamental Principles

Prior to the Paris Convention, most countries established patent system mainly to

protect the benefits of domestic inventors, patent rights were also granted mainly to

domestic nationals and patent laws were made totally according to the need of domestic

economic development or the intention of the government. However, the Paris

Convention not only changed many countries’ view about patent system, but also

changed the patent system itself. It is safe to say that patent system can never be so

essential to economic development as it is today if there are no principles of national

treatment, priority, compulsory license and etc.

The Principle of National Treatment

In the Article 2 of the Paris Convention, it demands that countries that are

members of the Union apply the same treatment to national of other member countries as

they give to their own nations. National treatment means that, as regards the protection of

industrial property, each country party to the Paris Convention must grant the same

protection to nationals of the other member countries as it grants to its own nationals. Just

a few comments and observations on the national treatment rules are offered here.

The term “national” includes both national persons and legal entities. With respect

to legal entities, state-owned enterprises of a member country or other entities created

under the public law of the country are nationals of the country concerned. So also are

legal entities created under the private law of that country. In terms of Article 2 (1) of the

Paris Convention, the national treatment rule applies to all advantages that the various

national laws grant to their nationals. Implicit in the national treatment rule is that any

requirement of reciprocity in the grant and scope of patent protection is excluded.146

146 Edmund W. Kitch, “The nature and function of International Patent System”, http//www.belipo.bz/e library/articles/naturefunctioninpatents.pdf, accessed on 3-9-1013.

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The Principle of Priority Right

In the Article 4 of the Paris Convention entitles any inventor who has duly filed

an application for a patent in a Convention country to have a priority of twelve months

within which to file similar application in other Convention country.

These latter applications will then be regarded as if they had been filed on the

same day as the earliest application. As such, these later applications enjoy a priority

status with respect to all applications relating to the same invention filed after the date of

the first application. They also enjoy a priority status with respect to all acts

accomplished after that date which would normally be apt to destroy the rights of the

applicant or the patentability of his invention.

In practice, the right of priority confers an advantage to an applicant entitled to

benefit from the national treatment rule since he will have twelve months after filing on

initial application for the protection of his invention to approach the other countries of the

Paris Convention and seek protection in those countries based on his initial application.

A later application claiming priority must be treated in any Paris Convention

country as if it had been filed on the date of filing of the initial application, and all acts

accomplished between the time of filing the initial application and filing the later

application (the so-called “priority period”) cannot destroy the rights of the later

application claiming priority. As such, any publication of the invention during the priority

period, or any filing of the same invention by a third party during the priority period, will

not destroy the novelty or inventive character of the application claiming priority.147

The Principle of Independence of Patent

The principle of “independence of patents for inventions” means that a patent for

an invention cannot be refused, invalidated or otherwise terminated in any member

country on the ground that a patent for the same invention has been refused or

invalidated, or is no longer maintained or is terminated in any other member country of

the Paris Convention. Put differently, the fate of a patent in Country A has no influence at

all on the fate of the same patent in Country B, because the patents are subject to different

national laws, administrative practices and jurisprudence.

147 Ibid.

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The Principle of Compulsory Licenses

The rationale for Article 5 is that patentees should work their patents in the

country of grant. This will promote industrialization in the country and help to introduce

the use of new technology in the country. Otherwise patentees, on the basis of their

patents, would merely block the working of the invention in the country or monopolies

the importation of the patented invention.148

The Principle of Minimum Standard

TRIPs set a minimum standard of protection. TRIPs stipulated that members may

include more extensive protection than is required by TRIPs in their law as long as such

protection does not contravene its provisions. As a rule, TRIPs only requires that the

standards of protection it provides for will be accorded to nationals of other members.

Theoretically a WTO member state could comply with TRIPs by granting the standard of

protection TRIPs requires only to nationals from other members while denying it to its

own nationals.149

5.8 Conclusion

An efficient and well functioning international patent system needs to promote

innovations and the disclosure and dissemination of patent information as well as to serve

the public interest. In order to maintain an ongoing cycle of innovation, the patent system

should remain an instrument which attracts investments in to the creation of innovations.

The system needs to be sufficiently flexible as to support emerging new technologies and

to be capable of ensuring an adequate return on investment. On the other hand, society

needs to be protected from a flood of exclusive rights that might prevent the use of

technology or its application for research purposes, and to have access both to the patent

system and, at least in certain situations, to the use of patented technologies. A well

functioning patent system must prevent the misappropriation of matter already in the

public domain, improve the quality of patents, use resources in a rational way, and be

flexible enough to accommodate different national policy measures required to achieve a

148 Ibid. 149 “TRIPS-The basic principles”, http://www.ipr-helpdesk.org/documentos/docsPublication. Accessed on 2-2-2013.

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balance between the exclusive rights conferred by a patent and the interests of the public

at large.

In addition to the interests of right holders and society, one of the major

components of a balanced patent system are the interests of research, the fruits of which

need to be translate into concrete advantages for society. The expected results from

international harmonization would, obviously, benefit the research, in that (i) the

international patent system would become more accessible, transparent and cost effective,

(ii) a common prior art basis would create more certainty on existing and conflicting

rights and (iii) the strict application of patentability standards, such as novelty and

inventive step, would contribute to the increasing quality of granted patents, thus

removing some unjustified impediments to research. At the same time the system would

leave enough flexibility to countries to decide whether granted patents are exploited in a

manner conductive to those objectives.

Achieving common ground in terms of bringing closer some operational

principles of patent law and practice at the international level is not an easy task, since

some of the interests involved appear to be contradictory. Nevertheless, some of the

suggestions may be considered for future work in this area, as they may both improve the

international patent system and safeguard the interests of the various players.

As a first step, a distinction should be made between aspects which lead to or

have an impact on the grant of patents on the one hand and the phase relating to the post-

grant exploitation of patents on the other. It appears that many countries wish to

safeguard certain freedoms allowing them to implement their policy choices relating to

the use of granted patents. Therefore, measures concerning the exploitation of patents in

the post-grant phase including measure ensuring that patents do not unreasonably hamper

access to, and exchange of information, in particular, for research purposes, might be left

outside the scope of patent law harmonization.

Second, those aspects of the patent system whose greater convergence would

clearly contribute to making the system more clear, more simple and easier to accept

especially for applicants with limited resources, could be identified and examined as to

their potential for improvement.

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Third, those principles which could contribute to the grant of higher quality

patents, and thus reduce the number of potentially invalid patents, and which would avoid

the appropriation of matters already in the public domain, could be considered for further

alignment. This would bring the patent system closer to its original goals, namely, to

protect only truly new and inventive developments.

In addition, discussions on certain concerns relating to the economic and social

impact of the patent system and the directions it is taking, may be taken up for identifying

these issues that may be addressed through the patent system and those that are

extraneous to that system.

To sum up, it seems that a multilateral, modestly ambitious approach directed

towards achieving a balanced international system would better serve the interests of the

international community than opening the door to unilateral and bilateral measures which

might bear the risk of reducing the ability of less powerful players to defend their

legitimate interests. History reveals that international patent law harmonization has been

achieved step by step. Although each step may be small in itself, added together, they

will overtime contribute to achieving a patent system that serves society in general while

continuing in particular to support the cycle of innovation.