Healthy Skepticism Library item: 16534

Warning: This library includes all items relevant to health product marketing that we are aware of regardless of quality. Often we do not agree with all or part of the contents.

Publication type: Media Release

Syam N
PCT Reforms & Implications for Developing Countries
South Centre 2009 Sep 22
http://www.southcentre.org/index.php?option=com_content&task=view&id=1075&Itemid=279

Notes:

[The Patent Cooperation Treaty (PCT) is likely to flood developing
countries with patent applications, incl. pharmaceuticals. This might
increase prices of single-source medicines, and thus affect access. PCT
was a voluntary scheme, and is considered TRIPS-plus. However, recent
“free trade agreements” like the Economic Partnership Agreement between
the European Union and Caribbean countries will oblige all CARICOM
member states and the Dominican Republic to sign up to PCT. Below a good
article from the South Centre on this topic. Sorry about the legal
issues, but E-druggers should know what consequences these treaties have
on their field!]

Full text:

What is being proposed at the Patent Cooperation Treaty is the
continuation of an approach towards a binding International Search and
Examination for the granting of patents, with potentially serious
effects on developing countries

The recent discussions in the World Intellectual Property Organization
(WIPO) on reforming the Patent Cooperation Treaty (PCT) system based on
a roadmap prepared by the WIPO Secretariat is an attempt to further a
long term agenda of developed countries to completely overhaul the PCT
system so that it can be used to facilitate the grant of patents without
subjecting it to national search and examination procedures.

The proposed PCT reforms are designed to eliminate national search and
examination in the name of reducing unnecessary duplication. This would
essentially convert national patent offices to become rubberstamp
authorities of the international search and examination work done by a
few patent offices in developed countries.

Even if not all developing countries are PCT members, there are moves to
induce more to join up. In many Economic Partnership Agreements (EPAs)
that the European Union is seeking to enter into with developing
countries, the latter are being required to join the PCT and the Patent
Law Treaty (PLT). This article discusses the original intent of the PCT,
how this has been gradually changed during the phase of PCT reforms from
2000 to 2007, and how the agenda is to facilitate further changes in
accordance with the ultimate objective of PCT reforms.

The PCT of 1970

The PCT is a WIPO-administered treaty concluded in 1970, which now has
141 countries as parties. This Treaty provides patent applicants with
the opportunity of filing an international patent application. Instead
of filing separate applications in different countries, the applicant
can file a PCT application with the International Bureau at the WIPO
Secretariat or any national or regional patent office. The date of this
international filing is deemed as the date of filing in all national
offices.

Based on this application, national or regional offices that are
designated by WIPO as International Search Authorities (ISA) conducts an
international search for prior art and issues an International Search
Report (ISR), and the application is made public 18 months from the date
of filing. This was a mandatory process under the PCT system as
originally devised.

Following the publication of the application and the issuance of the
ISR, after the expiry of 20 months from the date of filing, the
applicant had to transmit a copy of the application to a national office
if he wishes to obtain a patent in that country, unless he exercises his
option to further delay national entry for another 10 months by electing
for an international preliminary examination on patentability by a
WIPO-designated international examination authority. This option could
be exercised only in respect of those countries which did not make
reservations to chapter II of the PCT which provides for this additional
international phase procedure. The international preliminary examination
report (IPER) states whether the claims in the application meets the
requirements of patentability i.e., novelty, inventive step and
industrial application, as defined in the PCT Article 33.

Thus, the PCT did not seek to harmonize the international patent system
leading to the grant of a global patent based on PCT applications.
Rather, it sought to provide an easy, single-window international
facility for filing applications instead of requiring applicants to go
through the arduous process of filing multiple applications in several
countries. Moreover, the ISR and IPER was designed to serve as an
information tool to enable applicants to sense whether their
applications are likely to be granted patents if they enter the national
phase. The ISR and IPER were non-binding reports and do not prevent
national offices from conducting their own search and examination
processes to determine the patentability of the application based on
their substantive criteria in their national laws. Thus, it respected
the territorial differences in substantive standards of patent laws in
different countries. This is made clear under Article 27.5 of the PCT.
National offices could base their decisions on the ISR or IPER if they
found them reliable, but were not bound to do so.

PCT Reforms

The process of PCT reforms was initiated since 2000-01 as an integral
part of WIPO’s Patent Agenda initiative which sought to promote a
globally harmonized patent system based on three pillars – a Substantive
Patent Law Treaty (SPLT) harmonizing substantive patent law standards
including criteria for novelty, inventive step and industrial
application; conclusion of a Patent Law Treaty harmonizing formal
procedures for patent applications at the national level, and reforming
the PCT to make it suitable to a harmonized international patent system
such that international patents can be granted based on PCT applications
and PCT search and examination processes.

The original proposal for PCT reform was submitted by the United States
which envisaged PCT reforms in two phases: a short-term phase involving
amendments to PCT regulations rather than a revision of the Treaty; and
the second phase involving substantive revision of the Treaty to
facilitate the grant of a global patent based on PCT processes. Thus,
its approach for realizing PCT reforms was based on the following
milestones – adoption of the PLT in 2000, starting the process of
PLT-based PCT reforms in 2000 and its implementation by 2005, followed
by a complete overhaul of the PCT system.

To facilitate discussions on the first phase of the PCT reforms, the
Assembly of the PCT Union established a Committee on Reform of the PCT
in 2000 and on the recommendation of this Committee, a Working Group on
Reform of the PCT was established in 2001. The Working Group held 9
sessions between 2001 and 2007 and carried out changes in PCT
Regulations with significant implications.

The original PCT system today stands changed in the following manner:
instead of conducting a simple international search, an ISA also
provides a written opinion (WOISA) on the patentability based on the
application along with the ISR. Based on this ISR/WOISA, the WIPO issues
an International Preliminary Report on Patentability (IPRP Chapter I) if
the applicant does not opt for an international examination under
chapter II of the PCT. However, the IPRP remains confidential till the
expiry of 30 months from the filing date because national entry is now
deferred to 30 months instead of 20 months.

Thus, early national entry in 20 months that was possible under the
original PCT is not possible now unless a country has made a reservation
to that effect (many developing countries have made such reservations).
If the applicant opts for international examination under Chapter II, an
IPRP II is issued based on the ISR/WOISA (making international
examination faster) followed by national entry in 30 months.

The PCT Regulations have also been amended in accordance with PLT
provisions. For example, if international application is filed at a date
after the priority period has expired but within 2 months of that date
and the failure to file on time occurred in spite of due care or was
unintentional, then the priority is restored. Originally, if a PCT
application is filed 14 months after a national application on the same
claims, the priority period of 12 months under the Paris Convention
would be lost. The PLT provides for grounds for restoration of priority
for late filing, and the PCT Regulation has been amended accordingly.

The Working Group also discussed proposals by the WIPO Secretariat for
revision of the PCT and making greater use of international search and
examination reports. In 2002, the Secretariat proposed that instead of
revising the PCT through a standard treaty revision mechanism provided
under Article 60 of PCT, the PCT may be revised by terminating the
existing treaty and simultaneously concluding a new treaty or by
concluding a new treaty and phasing out the existing treaty
(PCT/R/WG/3/3).

It was considered by the Working Group that though relevant, the
proposal was premature and can be considered at a later stage. It must
be noted that this was at a time when the adoption of the Substantive
Patent Law Treaty was a distinct possibility. In keeping with the
buoyant spirit from the possibility of the adoption of the SPLT, the
WIPO Secretariat proposed in 2003 the adoption of protocols to the PCT
under which national offices will rely on PCT search and examination
reports for grant of patents in most cases (PCT/R/WG/5/9). However, as
the SPLT faced stringent opposition from developing countries in WIPO
and discussions on the SPLT became dormant, these proposals also
received less attention and the mandate of the Working Group expired
without any progress on these issues.

Revival of discussions on PCT Reforms: The New Working Group

In 2007, the Assembly of the PCT Union constituted a Working Group to
discuss matters that need to be submitted to the Assembly. Most commonly
this involves matters of amendment of the PCT Regulations. So far the
Working Group has held 2 sessions.

In its first session, the Secretariat submitted a proposal for enhancing
the value of PCT search and examination to ensure that national offices
rely on those reports in their work and in most cases grant patents
based on those reports, thus reducing unnecessary duplication of work
(PCT/WG/1/3). This was a reintroduction of the 2003 proposal mentioned
above (PCT/R/WG/5/9) with an important distinction that it did not
propose any new protocol but suggested amending the regulations to this
effect.

This document called for work sharing between national offices and the
international search and examination authorities and drew attention to
such work sharing arrangements as the Patent Prosecution Highway (PPH)
that have bilaterally been established between US and Japanese patent
offices (many other national offices are now a part of PPH).

The PPH is a system outside the PCT. Under this system an application
filed in one PPH office (say USPTO) is automatically deemed as filed in
other PPH offices (JPO, EPO, etc). The search and examination by the
USPTO then is relied upon by the other PPH offices for grant of patent.
In the second session of the Working Group in 2009, the WIPO Secretariat
presented a roadmap for PCT Reforms with the objective of reducing
unnecessary duplication, eliminating reservations to the PCT and
establishing a high presumption of validity for international search and
examination reports.

This was accompanied by a US proposal for comprehensive PCT reforms by
developing a system under which an international search and examination
report produced through work sharing between major patent offices
becomes automatically binding on all national offices unless they are
specifically rejected within a stipulated time (say 6 months).
Developing countries vehemently opposed these proposals and hence these
proposals were not recommended for adoption by the Assembly of the PCT
Union. However, this issue is most likely to confront developing
countries again in the PCT Working Group in future.

Consequences of PCT Reforms

Following their entry to the PCT, patent offices in developing countries
have been flooded with a massive number of PCT applications which are
predominantly filed by foreigners. The extended deferral of national
phase entry under the PCT system, which is 30 months unless a country
has a specific reservation, means that till the expiry of 30 months the
local innovators are not sure whether to go ahead with their innovations
because if the PCT applicant decides to enter national phase after 30
months and a patent is granted, the local innovator may be held liable
for patent infringement.

If the PCT applicant does not pursue a national patent after 30 months,
then the local innovation is delayed substantially. Many countries made
reservations to chapter II of PCT to ensure early national entry in 20
months as originally stated in Chapter I (Article 22). Some countries
have therefore, made reservations to the change which delays national
entry under chapter I to 30 months. The proposals in the Roadmap seek to
eliminate these reservations by making States committing to do so within
stipulated time frames.

Secondly, PCT reforms seek to make international search and examination
de facto binding on national offices. It seeks to commit national
offices to rely on international search and examination reports and not
to conduct search and examination in the national phase on the ground
that they are unnecessary and duplicative.

It needs to be noted here that national search and examination processes
not only ensure more effective scrutiny of patent applications (because
standards of patentability differ in countries and PCT search and
examination, and PCT search and examination is based on prior art which
is publicly disclosed in a written form and hence does not take into
account traditional knowledge which may not be disclosed in written
form) but also national procedures provide for pre-grant opposition
mechanisms which is an important tool for safeguarding against the grant
of bad patents.

Moreover, increased reliance on PCT search and examination for grant of
national patents will also increase the burden of post grant opposition
and litigation, which may not be very feasible for generic companies and
SMEs particularly in developing countries and LDCs.

During the discussions during the last session of PCT Working Group, the
WIPO Secretariat tried to assure the developing countries that the
reforms as envisaged in the roadmap were not designed to undermine the
right of national offices to apply their own substantive criteria of
patentability and conduct national search and examination procedures in
that regard. Rather, the proposals in the roadmap sought to streamline
the system to make it more effective by amending the PCT Regulations and
not the Treaty.

However, it needs to be remembered that what has been proposed in the
PCT Working Group reflects previously suggested reforms for overhauling
the PCT system such as those in the original US proposal of 2000.
Indeed, what has been proposed in the roadmap is a revival of earlier
proposals by the WIPO Secretariat to the previous Working Group on
Reform of the PCT.

Therefore, the proposals in the roadmap for PCT reform must be viewed in
context and developing countries should consider the long term
development and innovation policy implications of this strategy of
incremental reforms aimed ultimately to a global harmonized system that
is not in their interests.