American Journal of Law & Medicine

"Trust me": patent offices in developing countries.

INTRODUCTION

Patent rules matter to the structure and evolution of pharmaceutical markets. If they did not, pharmaceutical multinationals would not spend resources on their globalization and content. The role of pharmaceutical multinationals in shaping the patent provisions of the Agreement on the Trade-Related Aspects of Intellectual Property Rights (TRIPS) has been well documented. (1) The contributions of developing country coalitions and non-governmental organizations (NGOs) in the World Trade Organization (WTO) on TRIPS and access to medicines have also been studied. (2)

One actor, the patent office, has largely escaped detailed scrutiny in the literature that has grown around intellectual property law and access to medicines. (3) There is an obvious explanation. Patent offices are administrative bodies. They administer patent standards that are decided and defined by others--the courts, legislatures or the executive acting in the context of treaty negotiation. For those interested in the structural reform of pharmaceutical markets, reforming patent office administration has not been a high priority. Instead, the emphasis has been on encouraging the use of TRIPS standards in ways that are consistent with protecting public health, (4) on developing counter-strategies to the use of free trade agreements to impose TRIPS plus standards, (5) as well as putting forward new structural approaches (6) or policy ideas that make more efficient use of existing patent structures. (7)

This set of priorities by those working on the patent dimensions of access to medicines is the right set. However, as this article will show, the routine operations of patent offices matter to the maintenance of pharmaceutical markets. Most patents will not be litigated and most will not be opposed where a country has a pre-grant or post-grant opposition system. (8) It follows that the vast majority of patents begin and end their life in a patent office (either because the term of grant expires or the patent is not renewed). It is the daily patent office routines of a country that determine the build-up of patents in an economy, including pharmaceutical patents. Pharmaceutical patenting has, as in other areas of technology, increased. (9) Important for present purposes is the technical assistance provided by the European Patent Office (EPO) (10), the Japanese Patent Office (JPO), (11) and the United States Patent and Trademark Office (USPTO) (12) to developing countries. This technical assistance enables, as we shall see, technocratic trust to grow between the office providing the assistance and the office receiving it (the trust giver). (13) Technocractic trust, as we shall see, is the trust that individuals within systems place in the technical output of other systems. Technocratic trust influences decision-making processes of trust-giving offices. These decisions help to maintain the structure of patent-regulated pharmaceutical markets, a structure that is based on the fact that patents constitute an opportunity for the owner to pursue economic rents. It follows that profit maximizing patent owners will track markets in which the rents are the greatest. This leads to problems of access to medicines in developing countries. (14) For present purposes, "structure" is being used to refer to those rules that affect the long-term incentives and strategies of interacting players in a given market. Patents rules are structural rules in this sense because they offer companies long-term incentives to invest in the development of technologies under conditions of uncertainty. It has long been recognised that patents may be central to the acquisition of dominance by a firm. (15) This is especially so in the pharmaceutical sector, where there may be cases where there is global demand for a product for which there is little or no substitutability. (16) This article focuses on the role that patent offices play in the maintenance of structure, a role that has received much less attention than the impact of patent rules on the acquisition of market dominance by firms. Drawing attention to this maintenance function of patent offices in developing countries is the main purpose of this article.

A subsidiary purpose is to suggest that developing country policy makers should pay more attention to what happens in their patent offices. As will become clear, developing country patent offices have been integrated into a system of international patent administration, in which the grant of low-quality patents by major patent offices is a daily occurrence. (17) Developing countries for the most part have only had modest success in influencing the evolution of standards at the international level. (18) They have little prospect of influencing the standards of patent examination in the EPO, JPO, and the USPTO, even though those standards impact on the work of their own patent offices. Under these circumstances, developing countries should be thinking about ways to mitigate or prevent the consequences of poor quality patents in the pharmaceutical sector.

The rest of this article is set out in the following way. Section 1 draws attention to the leadership of the EPO, the JPO, and the USPTO in patent administration. Using the example of the EPO, Section 2 shows how technical assistance causes technocratic trust to grow between offices. Section 3 draws attention to the effects of technocratic trust. Section 4 shows why strategies for the regulation of developing country patent offices have to be developed and Section 5 outlines two such strategies.

I. THE AGE OF THE TRILATERALS

At the beginning of the 21st century, three patent offices receive the bulk of patent applications and issue most patents: the USPTO, the EPO and the JPO. Collectively they are referred to as the Trilateral Offices. (19) Of the 5.5 million patents in force at the end of 2004, 83% were in force in the US, Japan, and the member countries of the European Patent Convention. (20)

The story of the Trilaterals is one of informal co-operation that becomes grounded in bilateral memoranda of understanding between the USPTO and the EPO in June 1982, and the USPTO and the JPO in 1983. From 1983 onwards, the Trilaterals have continued to sign annual memoranda of understanding (MOUs), deepening and broadening the co-operation amongst them. (21) The Trilateral MOUs turn the three offices into the global hub of cooperation and convergence in patent administration. The bulk of the activity by the Trilaterals, in terms of international co-operation with other offices, is like the bulk of an iceberg submerged, with only brief descriptions available from annual reports of the individual offices and their websites and conference summaries. The Trilateral website lists the most significant examples of Trilateral co-operation: paperless search capability, common system architecture, electronic filing, harmonization of patent practices, common patent information dissemination policies, and exchange of priority documents. (22)

Trilateral Office co-operation with other offices can take a multilateral or bilateral form. So, by way of example, the EPO, in 2005, under the Trilateral Memorandum of Understanding (on training in western Africa) between the EPO, the African Intellectual Property Organization, and the French Patent Office, launched a regional training centre in Cameroon. (23) The EPO also has bilateral links with offices, including other large offices such as the Chinese patent office. (24) The same pattern of multilateral and bilateral co-operation is true of the USPTO and JPO.

The model of global integration and convergence of patent office administration might be said to follow a 'hub and spoke' model. Over time, the Trilateral hub has brought its technical systems for exchanging data and for search and examination of applications into greater and greater alignment. At the same time, as the hub has become progressively more integrated, other offices have become linked to those systems via 'spokes' of bilateral OF multilateral co-operation. It is the Trilateral hub that bears the financial cost of this integration. (25) Figure 1 below depicts the process.

[FIGURE 1 OMITTED]

The Trilateral story has become one of dense co-operation that has moved well beyond technical matters such as electronic document exchange. So, by way of example, there is the Trilateral Working Group (26) that is involved in the negotiation of the proposed Substantive Patent Law Treaty that is taking place at the World Intellectual Property Organization (WIPO). (27) The most likely reason for evolution of this co-operation is the workload problem facing each of these offices. The EPO's annual report for 1989 suggests that the Trilateral Offices were at first reluctant to exchange detailed information about their backlogs. (28) Following "lengthy and difficult negotiations" at the 7th Trilateral conference in 1989, a project on "long-term methods of coping with the increasing number of patent applications" was established. (29) Essentially, the Trilaterals have concluded that they are in the same lifeboat when it comes to storms in the patent ocean.

The MOUs of 1982-3, which mark the beginning of the period of cooperation amongst the EPO, JPO, and the USPTO, can be said to represent the start of an evolution of a global system of patent administration. This international system of administrative governance that is emerging for patent offices is separate from the treaty-based processes that aim to harmonize substantive patent law. Patent offices do not need treaties to create a global system of administrative governance. At the most they simply need MOUs. The politics of the post-TRIPS era has undoubtedly complicated the goal of patent law harmonization. (30) WIPO has been working on a treaty for patent law harmonization since 1983. (31) Progress has been slow. Business actors are increasingly focused on the pragmatics of speeding up the work of patent offices and reducing the costs of the application process. In 2003, an Industry Trilateral Group was formed. (32) This Industry Trilateral has made it clear that the Trilateral Offices should concentrate on unifying the administrative practices of patent offices: (33)

 
   As a first step toward harmonization and enhanced efficiency, 
   patent offices should adopt a common patent application format for 
   a global patent application so that conforming applications (i) can 
   be filed, preferably electronically, in any patent office without 
   the need for any change in the submitted application to accommodate 
   national/regional rules, and (ii) aid in facilitating machine 
   translation of the applications. 

In short, the Trilateral Offices have moved well beyond simple technical co-operation into a much deeper convergence of administrative systems. (34) Using the EPO as an example, the next section shows how developing countries are being integrated into the Trilateral system of governance for patent administration.

II. TECHNICAL ASSISTANCE AND TECHNOCRATIC TRUST--THE CASE OF THE EPO

The EPO's principal sources of fee income are from filing and search, examination, opposition, appeal and renewal fees. (35) Its principal source of expenditure is staff costs. (36) The strength of its financial position has been commented upon by observers. (37) Technical assistance forms a much smaller part of its expenditure. For example, in 1989 technical assistance, which is part of a category that includes travel, meetings and representation, has a figure of DEM (German Mark) 5.9 million next to it. (38) In that year, the EPO's technical assistance activities consisted of training 66 nationals from developing countries at the EPO and sending 28 experts on technical assistance missions covering various aspects of how to build and administer a patent system. …

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