Transcript WIPO’s Strategies on Intellectual Property and Economic

Promoting access to knowledge through UN
Guidelines for consumer protection and the UN
Code for the control of RBPs,
Tuesday 3 May, 2011
Hassan Qaqaya
Head
Competition law and Consumer policies Branch
UNCTAD
What is meant by access to
knowledge?
– "The principle of access to knowledge argues that we
best serve human rights and economic development
through policies that make knowledge, knowledgecreating tools and knowledge embedded goods as
widely available as possible for decentralized innovation
and use. Open technology standards, a balanced
approach to intellectual property rights, and expansion
of an open telecommunications infrastructure enable
ordinary people to benefit from technological advances
of the information age and allow them to generate a
vibrant, participatory and democratic culture." Jack
Balkin, Director, Information Society Project, Yale University
What is meant by access to
knowledge?
 Access is also broad and pertains
not only to the right to access the
products referred above but also the
right to participate as producers in
their creation, manipulation and
extension.
What is the link between law and
A2K?
– No area of law has a more pervasive impact on access
to knowledge than intellectual property. IP law can
dramatically affect the government ability to provide
public goods-ranging from health care to education
etc...
– IP has also important implications for market
competition; more open approaches may favor small
entrepreneurs offering new products and services.
–
– IP regulation has strong implications for freedom of
expression, democratic and cultural freedom
Why focus on IP and A2K ?
– The aim of intellectual property protection is to
encourage invention and original creation, and through
the intervention of law, to guarantee the rights-holder a
specific period of exclusive rights.
– The Patent Law is intended to encourage, protect, and
utilize inventions and innovations in order to facilitate
the development of commerce.
– Patent Laws provide rights based on the first-to-file rule,
and distinguish between invention patents, new utility
model patents and new design patents;
Why focus on IP and A2K ?
 Copyright Law is intended to protect the
rights of the copyright and adopts the
principle of original authorship,
 Outlines the scope of rights, extension of
copyright terms and their limitation, and
Protect rights through elimination of infringing
activity, and provide for payment of damages
and civil responsibility
How do competition and consumer
protection laws interface with A2K?
– The main objective of competition law is to maintain the
freedom and the competitive functions of the market, allowing
competition to bring about the most appropriate allocation of
economic resources;
– Competition is the basic rule of the game in a market
economy. Nevertheless, if the outcome of competition is to be
accepted by the society at large, the process of competition
itself must not only be free but also conform to a social norm
and be fair. i.e. rests, on inter alia, on equitable opportunities
and transparent and fair application of rules
– Viewed from this perspective, the polemic whether
competition laws should aim only at enhancing economic
efficiency rather than at promoting some social policy goals
such as fairness may appear to be irrelevant
Tensions between IP and
Competition and consumer
protection laws

On the surface, competition law and intellectual property law
would seem to be in conflict; however, the functions of both have
to do with providing extra protection from the standpoint of
maintaining market mechanisms.

Thus, when competition laws and trademark laws, patent laws,
and copyright laws overlap in terms of protection, there is no
question of mutual exclusion, but only one of mutual delineation
of respective regulatory objectives and their scope of applicability
within the system.

In cases of conflict between competition and patents laws, Courts
often frame the legal analysis in terms of whether it is within the
“scope of the patent” and contributes to the “reward which the
patentee by the grant of the patent is entitled to secure” or is
outside the scope of the grant and by its “very nature illegal.”
Complementarities and gaps in
competition and consumer laws:
 Competition law and enforcement does not necessarily and
in all cases lead to a benefit to consumers or consumer
welfare. It may be that competition enforcement will have to
address more directly (and possibly become more
conditional upon) harm to consumers:
 A more consumer-focused competition law may need to
consider more explicitly harm to consumers, as compared
to harm to competition.
 The effect on consumer is an important factor in
assessments of the anticompetitive effects of a practice:
high benefits to consumer may justify otherwise
anticompetitive conduct
 and therefore the absence of harm to consumers may be a
necessary factor to the absence of competition law
enforcement. Equally, however, the absence of harm to
consumers will not excuse anticompetitive conduct.
Complementarities and gaps in
competition and consumer laws:
 While the role of the consumer is central to the definition of the
relevant market and the determination of dominance, the effect
of conduct on consumers is not traditionally directly considered
in competition enforcement.
 Harm to consumers is not necessary to a finding of anticompetitive conduct; the absence of harm to consumers in itself
will not exempt anticompetitive conduct, in the absence of a
clear benefit. In most cases, harm to consumers is presumed
from harm to the competitive process.
 Moreover, it is possible that the strengthening of the consumer
will lead to substantive changes within competition laws: for
example consumer detriment in itself may trigger findings of
competition violation, whereby harm to competition and/or
efficiencies to competition will be presumed from harm to/
benefits to consumers correspondingly.
The UN guidelines for consumer
protection
–
The idea for elaborating the UN Guidelines originated in the late 1970s when
ECOSOC recognized the strong linkages between consumer protection and
economic and social development
–
They were adopted by consensus by the UN General Assembly on 9 April, 1985
and revised at the request of the UN Economic and Social Council (ECOSOC) in
1995 in order to include aspects of sustainable consumption patterns and
environmental concerns.
–
The Guidelines were further revised by the "Inter-Regional Expert Group Meeting
on the extension of the UN Guidelines on Consumer Protection", held on 28-30
January 1998, endorsed by the Economic and Social Council in July 1999 and
adopted by the General Assembly in its decision 54/449 in the same year.
–
The previous extensions of the Guidelines to include sustainable consumption
prove that the Guidelines are a dynamic process, adapting to changing
conditions. Future extensions to cover access to knowledge will reinforce the
role of the UN Guidelines.
Some background information on the UN Code
for the control of RBPs “the UN Set”
 Adopted on 5 December 1980 by the General
Assembly of the UN on the basis of the work of the
United Nations Conference on Restrictive Business
Practices;
 Provides a set of equitable rules for the control of
anti-competitive practices addressed to companies
and states;
 Recognizes the development dimension of
competition law and policy; and
 Provides a framework for international cooperation
and exchange of best practices.
Development perspective of the Set
 Contribution to economic development among the Set‘s objectives;
 Emphasis on the negative impact of restrictive business practices on
developing countries;
 Preferential or differential treatment among the multilaterally agreed
equitable principles in Section C of the Set;
 Objective 3 of the Set “To protect and promote social welfare in general
and, in particular, the interests of consumers in both developed and
developing countries;”
 Sharing of experience and technical assistance encouraged by the Set:
„States with greater expertise in the operation of systems for the control of
restrictive business practices should, on request, share their experience
with, or otherwise provide technical assistance to other States wishing to
develop or improve such systems. (Section E 8. of the Set)
Cooperation under the Set
International measures under
Section F
– Work aimed at common
approaches in the field of
competition law and policy
– Reporting to SG of UNCTAD
– Annual publication of report by
UNCTAD
– Case specific consultations
foreseen (to date consultation
mechanism has not been
applied)
Institutional arrangements under
Section G
– Intergovernmental Group of
Experts on Competition Law
and Policy (IGE)
– IGE functions as forum for
information exchange and
mutual learning
– IGE to undertake and
disseminate studies in the field
of competition law and policy
How can the UN guidelines and the
UN Set address the treats to A2K by
IP abuse ?
 Revise the UN Guidelines on consumer protection;
 Promote the application of commitments made in the UN
Set on regional and international cooperation in case
specific enforcement of competition and consumer
protection rules;
 Integrate IPR in national competition and development
policies and programs;
 Promote a A2K culture including in issues relating a
balanced protection and use of IPR;
 Engage the judiciary in a dialogue on A2K.
How can the UN guidelines and the
UN Set address the treats to A2K by
IP abuse ?
 Competition law can be used to limit intellectual property rights,
including prohibiting refusals to license others. Thus, the key
question is when competition law should limit intellectual
property rights.
 Professor Louis Kaplow, for example argues that the use
competition law to regulate a particular practice should be by
reference to the net benefit or harm to society that the restrictive
practice is causing.
 The costs of a restrictive practice may be limited access to the
existing technology, as well as other dynamic costs from limiting
the diffusion of information and erecting barriers to follow-on
innovation.
How can the threats to A2K by IP
abuse be handled?
 The leading treatise on intellectual
property law and competition in the
United States describes the question
as calling for “balancing the social
benefit of providing economic
incentives for creation and the costs
of limiting diffusion of knowledge.”
Why resort to competition agencies
and Courts?
 Resort to competition tribunals shifts the discourse back to
the monopoly frame, where consumers hold an advantage;
 Monopolies are synonymous with exploitation and abuse.
Monopolies are entities to be regulated, not freed from state
intervention;
 The decisions of competition courts and commissions may
have a lasting precedential effect, altering the legal
background in the industry ;
 Another advantage of using competition law is that it is
punitive. Using competition laws shifts the question from
whether the government should use its discretion to limit
patent rents to whether the company deserves punishment
for its abusive actions.
Why resort to competition agencies
and Courts?
 In a several cases dealing with the ownership of unique
infrastructure resources that are necessary for competition,
courts have formulated the “essential facilities doctrine.”
 This doctrine orders companies to share “access to their
unique facilities, even to competitors, on a
nondiscriminatory basis where sharing is feasible and the
competitors cannot obtain or create the facility on their
own.”
 U.S. and European courts have begun applying this
doctrine to refusals of intellectual property owners to
license their rights in special cases.
Why resort to competition agencies
and Courts?

U.S. and European courts have begun applying this doctrine to refusals
of intellectual property owners to license their rights in special cases ;

For example, European courts ordered compulsory licensing of a
copyrighted data tool that had become an industry standard and that
prevented any other firm from competing in the same market;
In EC, legal limits on the refusal to license in intellectual property
matters are relatively well established. In Magill CASE, three television
broadcasters held copyrights on their respective listings for broadcasts
in Ireland and refused to give permission for any firm to produce a
comprehensive weekly guide combining the listings.
European courts struck down the refusal to license, holding that the
exclusion justified compulsory licensing because it prevented “the
appearance of a new product . . . which the appellants did not offer and
for which there was a potential consumer demand.”


Why resort to competition agencies
and Courts?
 A number of US courts have also concluded that a
refusal to license intellectual property may violate
antitrust law where the refusal does not sufficiently
serve the purposes of intellectual property law in
promoting new creation or innovation.
 Yet an important appellate court for patent law has
held that such theories may not be pursued and that
courts instead are restricted to regulating practices
that lie outside of the core right to exclude granted by
the patent

Why Public interest criteria ?

The costs of a restrictive practice may be limited access to the
existing technology, as well as other dynamic costs from limiting the
diffusion of information and erecting barriers to follow-on
innovation.

Recent experiences in developing countries show this: The more unequal
the distribution of income is in a country, the more people will be excluded
from the market (“deadweight loss”) when a monopoly prevail in a market
for an essential good.

At the same time, because sales in such a country are likely to be so few
(making sales only to the very top income earners), the monopoly does
not enjoy very high levels of overall profits. In other words, in countries
with high income inequality, unrestrained monopoly pricing of essential
goods is very likely to cause large social harms and comparatively small
incentives to invest in innovative activities
Enforcement Challenges
 Almost all Competition laws in developing countries
explicitly incorporate developmental objectives and
decisions to consider equity objectives in the
interpretation and enforcement of competition law may
be heightened in countries that have adopted social
and economic rights in their constitutions.
 Effective enforcement calls for the introduction of Public
interest criteria in evaluating potential abuse of IP under
competition law
Enforcement Challenges
 Prior to the adoption of TRIPS Agreement imposing minimum
standards on intellectual property laws and terms, countries could
respond to a situation where the costs of intellectual property
restrictions far exceeded their benefits by shortening the term of
years or by doing away with intellectual property in the particular
field of technology. Those options are no longer available to WTO
members, who must grant intellectual property
 Although there are more than 110 competition laws worldwide,
there is no uniformity. Unlike in intellectual property law, where
binding minimum standards are established by the TRIPS
Agreement, in competition law, countries remain largely free from
any international obligation to draft, interpret, and enforce
standards in any particular manner.
Enforcement Challenges
 Claims that a right holder has engaged in anticompetitive
conduct is often complex and require significant judicial
and legal expertise in their interpretation.
 Competition authorities in developing countries must
develop capabilities to distinguish various forms of
behaviors and potential impacts on static and dynamic
competition.
Enforcement Challenges
 Under competition law, conduct is evaluated under the
per se rule or the ‘rule of reason’, depending on the
Conduct. Competition agencies have found conduct per
se unlawful (presumed anti-competitive) where licensing
of intellectual property was really a pretext for a market
allocation scheme, or when an intellectual property
holder tied the sale of one product to a product protected
by an intellectual property right. But, the vast majority of
competition cases in which intellectual property is
involved have been analyzed under the ‘rule of reason’.
Enforcement Challenges
 When evaluating a conduct involving an IPR
under the ‘rule of reason’, the challenge is how
define the relevant market in which the IP
competes ? then assess whether it possesses
monopoly or market power.
 Furthermore when intellectual property is
involved, markets also can be characterized as
‘technology’ or ‘innovation’ markets.
Enforcement Challenges
 I. Pricing in developing countries is a major issue;
 II. Exclusionary effects of licensing agreements;
 II. Attempts to acquire power beyond firms own
protected technology or products by purchasing
exclusive rights to technology or products
Enforcement Challenges
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Exclusive licensing;
Refusals to license;
Tying;
Patent pooling;
Exclusive dealing;
Grant back ;
Standard setting;
The role of Government
 Equally important in some developing countries where
entry is made difficult by protected monopolies,
exclusive distribution laws, restriction on trade and
investment, anti-competitive exploitation of IPR could
be particularly problematic. The remedy is not a
blanket check for IPR but to strengthen competition
institutions and strike a balance between IPR
protection and the control of anticompetitive
practices.
UNCTAD recent work on consumer related
issues in developing countries
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Angola
Bolivia
Botswana
Bhutan
Combodia
Costa Rica
Dominican Rep
Ecuador
El Salvador
Colombia
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Kenya
Laos
Mozambique
Peru
Rwanda
Sierra leone
South Africa
Costa Rica: enforcement
 Art. 19 of the Patent and copyright Law provides for prior
assessment by the competition agency of a possible
compulsory license when anti-competitive practices is
suspected in the exercise of certain IP rights.
 UNCTAD COMPAL PROJECT provided technical
assistance in the drafting of the regulations of art. 19.and
the preparation of an operational guideline on how to
assess competition concern in cases involving IP;
(patent).
 The Competition Authority makes recommendations and
the final decision is taken by the Patent Office.
Ecuador: Competition and IPR issues
in the pharmaceutical sector:
 UNCTAD project addressed the challenges facing policy
makers in Ecuador in formulating policies that provide
protection for IPRs and promote innovation while
ensuring competition in this sector.
 Experiences of UNCTAD COMPAL Project in Salvador
and Nicaragua and comparison with the experience of
EU, Brazil and Mexico were highly instructive Ecuador.
 The regulatory framework of the pharmaceutical sector
seems to facilitat certain abusive conduct by holders of
IPRs, including costly patent litigation.
El Salvador: Two sectoral in-depth studies
 1st study on medicines (aggregated): showed that
companies that develop and sell new medicines use a
variety of methods with the objective of delaying or
blocking the market entry of generic companies thus
harming competition, raising prices for consumer and the
cost of public health to government;
 2nd study on specific medicines for certain illnesses
(disaggregated: Generic vs. branded products. Parallel
imports and competition confirmed these findings;
Colombia and Peru
 In both countries, Competition and IPR issues are
handled by the same ”umbrella” competition agency (SIC
& INDECOPI)
 UNCTAD COMPAL project assisted both agencies in the
compilation of norms, jurisprudence and doctrine on
competition, IPRs and consumer issues; the work led to
recent competition and IPRs law reforms in both
countries:
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Peru (2008) : change of legal analysis to approach
anticompetitive practices in IPR cases (shift from Per se to Rule
of reason approach)
Colombia (2009): More competence to the Umbrella Agency in
dealing with IPR issues.
Other ongoing Technical
assistance in this area
 Review of the application of competition and
IP laws in Kenya;
 Analytical tools for case handlers in
Indonesia, Tanzania, Botswana, and Namibia;
 Review of Competition draft law and IPR in
Mozambique.
Competition policy and IPR
 Lessons learned:
– First, including a rigorous assessment of
competition and consumer issues on the
analysis of IPR filings may generate more
costs to business but would be balanced by
social and total welfare objectives.
– Second, allowing for post-grant reviews and
opposition by third parties and government
bodies can diminish the cases which an IPR
enables anticompetitive practices.
Concluding remarks

Striking a balance between the protection of Intellectual property and
controlling anticompetitive use of IPR is a critical to securing open
and fair access to knowledge.

Recent experiences of competition and IP authorities show that a more
frequent use and effective enforcement of the patent and trademark
systems reduce the probability of anticompetitive practices.

These results confirm the proposition that in addition to focusing on IP
law reforms a more effective enforcement of consumer and
competition laws will enable the a2k social movement to serve human
rights, democracy and economic development.
Thank you for your kind attention
 Hassan Qaqaya
 Head
 Competition law and Consumer policies Branch,UNCTAD
 [email protected]
 www.unctad.org/competition
 Tel 0041229175494