WIPO paper on limitations and exceptions to the exclusive rights of patents

The International Bureau has released a 47-paged paper in preparation for the 13th Session of the WIPO Standing Committee on the Law of Patents (23 March-27 March, 2009) entitled Exclusions from patentable subject matter and exceptions and limitations to the rights (SCP/13/3).

In its introduction to the treatment of patent exceptions and public policy, the paper asserts:

Although many countries share general public policy objectives, the concrete means as to how to reach those objectives often vary from one country to the other. Public policy consideration may be influenced by the socio-economic conditions and the country’s priorities, and vice versa. Historical, cultural and religious conditions may be important factors for shaping ethical and moral considerations. Therefore, public policy considerations are hardly ever static: they change over time, reflecting the needs and realities of the various countries.

Excluding certain categories of subject matter from patentability can neither stop
inventors from inventing in the area of such subject matter, nor can it prohibit the commercial exploitation of such inventions. Indeed, where no patent exists, nobody is required to obtain the consent from the inventor to use the invention. It is sometimes argued that the control of commercial activities based on, for example, ethical, health and environmental grounds should rather be regulated by other laws than the patent law. On the other hand, some argue that the patent system does not exist in a vacuum, and that the State should not grant exclusive rights to inventions that obviously harm public interests and consequently do not deserve to generate any economic return thanks to patent protection.

In describing the architecture of exceptions and limitations in the realm of patents, the paper states,

Generally speaking, there are two types of exceptions and limitations that allow States to fine-tune the different interests among stakeholders. First, there are provisions that exclude, or allow for the exclusion of, certain uses of a patented invention from being addressed in infringement proceedings in national laws as well as under international treaties. The second type of exceptions and limitations is characterized by the fact that a patentee cannot stop third parties from using his patented invention, but is entitled to remuneration against such use. In other words, although the injunctive relief is significantly limited, a right to remuneration against the use of the invention is maintained. So-called compulsory licenses (or non-voluntary licenses) are often used to put this type of limitation in place.

On the role of exceptions and limitations, the paper notes,

In an analogous manner to the exclusions from patentable subject matter, at first sight, the consequence of limiting the scope of the enforceable rights may lead to reducing the incentives for inventors to invest in innovative activities. It is a public policy choice whether, under certain circumstances, it is considered more adequate to allow anybody to use the patented technology, or to allow the patentee to exercise the exclusive rights with a view to better promote innovation and increase social welfare. However, the legal assurance of non-infringement through uses by others than the patentee does not necessarily mean that these others can immediately exploit the patented invention. While the patent system requires the disclosure of patented inventions in a manner clear and complete so that a person skilled in the art can carry out the claimed invention, often, a significant amount of know-how is involved in order to achieve an optimal exploitation of the invention.

On the matter of international civil aviation, the paper cites Article 27 of the Convention on International Civil Aviation (190 State parties) which states:

Article 27 of the Chicago Convention extends the exceptions to the patent rights with respect to international air navigation so that the authorized entry of an aircraft in the territory shall not entail any seizure of the aircraft on the grounds of a patent infringement. The provision provides that, while engaged in international air navigation, any authorized entry of an aircraft of a contracting State into the territory of another contracting State or authorized transit across the territory of such State with or without landings shall not entail any seizure or detention of the aircraft or any claim against the owner or operator thereof or any other interference therewith by or on behalf of such State or any person therein, on the ground that the construction, mechanism, parts, accessories or operation of the aircraft is an infringement of any patent, design, or model duly granted or registered in the State whose territory is entered by the aircraft. Further, a similar exception to the patent rights applies to the storage of spare parts and spare equipment for the aircraft and the right to use and install the same in the repair of an aircraft of a contracting State in the territory of any other contracting State, provided that any patented part or equipment so stored shall not be sold or distributed internally in or exported commercially from the contracting State entered by the aircraft

In its treatment of Article 30 of the TRIPS Agreement which deal with the exceptions to the rights conferred by patents, the International Bureau discusses the Canada-Patent Protection of Pharmaceutical Product case (DS114) in great detail by noting that the WTO Dispute Settlement Panel provided guidance on the conditions set out by Article 30 of the TRIPS Agreement.

First, the Panel found that the three conditions apply cumulatively, and “the exact scope of Article 30’s authority will depend on the specific meaning given to its limiting conditions”. When examining the words of those conditions, “both the goals and the limitations stated in Articles 7 and 8.1 must obviously be borne in mind, as well as other provisions of the TRIPS Agreement which indicate its objective and purposes”.

Second, the Panel held that the “limited” character of an exception should be “measured by the extent to which the exclusive rights of the patent owner have been curtailed”.

With respect to the expression “normal exploitation of the patent”, the Panel considered that it referred to the “commercial activity by which patent owners employ their exclusive patent rights to extract economic value from their patent”. The term “normal” was interpreted by the Panel as the combination of “an empirical conclusion about what is common within a relevant community” and “a normative standard of entitlement”. Further, the Panel’s decision stated that, while the specific forms of patent exploitation by the patent owner are not static, “protection of all normal exploitation practices is a key element reflected in all patent laws”. In the specific circumstances of the case, the Panel concluded that the “additional period of de facto market exclusivity created by using patent rights to preclude submissions for regulatory authorization should not be considered “normal”. It was not a “natural or normal consequences of enforcing patents rights”, but rather an “unintended consequences of the conjunction of the patent laws with product regulatory laws” that resulted in such additional period of de facto market exclusivity.

As regards the third criteria, the Panel concluded that the term “legitimate interest” must be “defined in the way that it is often used in legal discourse – as a normative claim calling for protection of interests that are ‘justifiable’ in the sense that they are supported by relevant public policies or other social norms”. In the specific circumstances of the case, the Panel considered that the “interest claimed on behalf of patent owners whose effective period of market exclusivity had been reduced by delays in marketing approval was neither so compelling nor so widely recognized that it could be regarded as a ‘legitimate interest’ within the meaning of Article 30.

The latter part of the WIPO paper provides examples of regional and country legislation on experimental use and scientific research (page 27) as well examples of compulsory licensing and government use provisions (page 36).

The 13th session of the WIPO Standing Committee on the Law of Patents (March 23-March 27) affords Member States and Observers a golden opportunity to pay closer heed to the role of exceptions and limitations to the exclusive rights of patents; this chance should not be lost in vain. The fact that the WIPO’s technical patent committee with norm-setting functions is providing a detailed treatment of limitations and exceptions augurs well for a positive agenda at WIPO in the context of witnessing tangible fruits of the WIPO Development Agenda. One hopes the outcomes of this WIPO patent committee, particularly with respect to the agenda item on limitations and exceptions to the exclusive rights of patents, will engender rich discussions at the WIPO Conference on Intellectual Property and Global Challenges (July 13-14, 2009). This WIPO Conference will address “issues relating to the interface of intellectual property with other areas of public policy, notably health, the environment, climate change, food security and disability, and serve as a global forum to discuss issues and solutions to some of the major challenges in relation to intellectual property the world faces today”.