Draft Sign-On Position Paper
To be Submitted To The
Working Group On Intellectual Property Rights
Fourth Trade Ministerial And Americas Business Forum
San Jose, Costa Rica
March 1998
v 1.01a

This document is on the web at
http://www.cptech.org/ip/draftipwg98.html

Introduction

The Free Trade Area for the Americas (FTAA) is a proposed trade agreement for the Western Hemisphere, which is like a super NAFTA. There are currently 34 countries involved in the negotiations. Like NAFTA, the GATT and other international trade agreements, it will largely be focused on non-tariff issues. Some journalists continue to write about these trade accords as though the were turn of the century agreements about tariffs, but this misses the larger and more important issues.

In 1998 there are several important negotiating meetings, including meetings of trade ministers and their staffs, plus the so-called "Business Forum," which will be held in San Jose, Costa Rica on March 16-18, 1998. The process for the FTAA negotiations is anything but open. Many of the key documents and papers have not been released to the public, and hardly anyone is aware that the negotiations are taking place.

The Business Forum is for the public, and in theory is open to anyone. The Business Forum is organized into 13 working groups, including working groups on Intellectual Property Rights, Investment, Services, Competition Policies, Government Procurement, Sanitary and Phytosanitary Standards, and other topics.

I attended last year's Business Form meeting in Belo Horizonte, Brazil, where I distributed a paper to the Working Group on Intellectual Property
( http://www.cptech.org/pharm/belopaper.html). I was permitted to participate in the discussions. The public sessions are called the "Business Forum," and most of the non-profit organizations are trade groups. Of the 2,500 delegates attending the Business Forum, I did not meet another person representing a consumer or environmental group. Most of the attendees represented very large firms. The two leaders of the working group on Intellectual Property Rights worked for pharmaceutical and biotechnology firms. Surprisingly, the firm with the largest number of representatives at the IPR working group was Microsoft, which was pushing an aggressive anti-piracy agenda that included "special forces" for copyright violations, special IP courts, and provisions that would give private corporations the right to obtain warrants to search for unregistered software or other copyright violations. These provisions have strong support among the U.S. trade negotiators.

You can find some information about the FTAA process on the Web. The Organization for American States has some information at: vhttp://www.sice.oas.org/Ftaa/Belo_e.stm (no period), but it is not very complete, and omits many controversial issues which are being discussed. Information about the Costa Rica meetings are also on the Web at: http://www.alca.co.cr/indexi.htm (no period).

The deadline for submission of Working Group position papers was January 31, 1998, but it was just extended to February 15, 1998, after criticism that few persons were informed of the deadlines. February 15, 1998 is also the putative deadline for registration, however, last year, this too was extended.

CPT has drafted a set of positions to present at the IPR Working Group on (I) IP and health care, (II), information technologies, copyright and neighboring rights, and (III) general IP issues. The way the process works, groups typically jointly submit comments, to demonstrate a broader base of support. We are seeking endorsements of these recommendations from other groups. However, since our recommendations cover a wide range of topics, we don't expect blanket endorsements, but rather endorsements of particular points. For example, to endorse the position that "Legislation to protect copyrights or neighboring works should seek solutions which are least invasive of personal privacy," a firm or group would endorse draft position II.2. Those who are not concerned with health care should skip to sections II and III, which are relatively brief.

Individuals cannot submit position papers, but just about any private sector business or organization can, no matter how large or how small.

I would appreciate very much endorsements of any of our draft IP working group positions, and encourage groups to write their own position papers, for any of the working groups. These may be sent (a word processing file in WordPerfect format) as an attachment to electronic mail, to: oduran@cariari.ucr.ac.cr (no period). As noted above, the deadline is February 15, 1998.

James Love
Consumer Project on Technology
love@cptech.org | http://www.cptech.org
202.387.8030; fax 202.234.5176

I. Selected Recommendations for Healthcare and IP

1. Intellectual property regimes for healthcare should achieve public health goals. It is not appropriate to treat healthcare is a matter of commerce only.

2. In the area of healthcare, the focus of trade agreements on intellectual property should be the equitable and reasonable sharing of the costs of research and development, rather than the particular mechanisms for R&D support, such as patents or exclusivity marketing provisions.

3. An important measure of equitable sharing is per capita expenditures on healthcare R&D. Countries with higher per capita incomes should assume higher burdens for R&D expenditures.

4. Countries should have discretion to choose mechanisms that raise per capita R&D expenditures. R&D by commercial firms is important, but so is R&D spending by governments, non-profit entities and other public health entities.

5. Policies should encourage R&D for pharmaceuticals and other new therapies and medical devices, as well as items less likely to attract private investment. There are important market failures in R&D. Research on basic medical science, adverse reactions to pharmaceuticals, dietary practices, appropriate technologies for rural healthcare, epidemiology, therapies for low income patient groups, and more generally, research which is not likely to lead to profitable inventions, is also important. Public health goals reflect research priorities which differ in important respects from investor priorities.

6. Countries should have discretion to limit or eliminate patent protections for areas of public interest, such as healthcare or life forms.

7. Countries should have discretion to use compulsory licenses to achieve public interest goals. This is particularly important in complex fields of technology, where inventions are essential inputs for other inventions.

8. Countries should have discretion to require minimum levels of reinvestment in healthcare R&D. A program of minimum reinvestment in R&D, or a required contribution to a national R&D program (as has been proposed by the U.S. Senate) may achieve fair burden sharing for R&D.

9. Countries should avoid overbroad patents and other approaches which discourage innovation and lead to anitcompetitive practices.

10. Protection of trademarks should not be interpreted a limitation on a government's ability to regulate marketing of products or services. In the area of healthcare, governments clearly have the power to require plain paper packaging of cigarettes, bar billboard ads for cigarettes or alcoholic beverages, require standardized packaging of infant formula, promote generic drug use, and other matters which protect the public's health.

11. "Sweat of the brow" protections for health care research should not be excessive, or create inappropriate anticompetitive barriers to entry. Protections based upon investment, rather than genius, should be limited to avoid anticompetitve effects, and subject to compulsory licenses, where licensing fees are related to the costs (and risks) of the unpatented research. Firms seeking sui generis marketing exclusivity for unpatented investments in research should be required to make financial disclosures about investments which receive exclusivity marketing privileges. Such disclosures are needed to evaluate the reasonableness of the exclusivity privileges.

12. A blanket five year period of exclusivity for reliance upon health registration data is excessive.

13. Health registration data should be disclosed to the public, following the principles presented by the International Working Group on transparency and accountability in drug regulation.

14. Patent, copyright and trademark provisions of the FTAA should not create barriers to parallel imports. Parallel imports of pharmaceuticals are particularly important for smaller economies which suffer from inadequate competition. (See CPT's October 16, 1997 comments to the Portfolio Committee on Health, Parliament, Cape Town, South Africa, on the Medicines and Related Substances Control Amendment Bill and South African Reform of Pharmaceutical Policies, on the web at: http://www.cptech.org/pharm/sa/sa-10-97.html).

15. Patent or other IP rights should not be used to prevent persons from engaging in health care research. When necessary, governments should provide for policies on material transfers or compulsory licenses which expand opportunities for medical researchers.

16. Patents should not be issued for surgical procedures or doses of medications.

II Information technologies, copyright and neighboring rights

1. The Internet and other digital information technologies pose new issues for copyright and neighboring rights.

2. Legislation to protect copyrights or neighboring works should seek solutions which are least invasive of personal privacy.

3. Legislation to protect copyrights or neighboring works should avoid barriers to the development of new information technologies.

4. Legislation to protect copyrights or neighboring works should protect non-commercial and commercial fair use. Countries should be given wide latitude to define fair use rights for educational and research purposes, including non-commercial distance education programs.

5. Efforts to protect "sweat of the brow" investments in databases should not create ownership of facts, create excessive terms or scopes of marketing exclusivity, authorize anticompetitive licensing practices, or exclude fair uses of data.

6. Efficient development of information technologies are enhanced by policies which promote interoperability of computer and telecommunications software and hardware.

7. Competition authorities should discourage anticompetitive software licensing practices and other monopolistic practices.

8. Mass market "shrink-wrap" or "click-on" licenses should not be permitted to include anticompetitive provisions. For example, mass market licenses should not be permitted to contain restrictions on reverse engineering, nondisclosure clauses, or restrictions on the use of the product that stop the customer from creating a competing product. (This recommendation adopted Cem Kaner, "Restricting Competition in the Software Industry: Impact of the Pending Revisions to the Uniform Commercial Code," Presented to the Appraising Microsoft conference, Washington, D.C., November, 1997, on the web at: http://www.badsoftware.com/nader.htm).

9. Avoid problems associated with overbroad patent or copyright protection, and anticompetitive barriers to the development of interoperable works. Here it is useful to quote from the May 1996 U.S. Federal Trade Commission staff report, Competition Policy in the New High-Tech, Global Marketplace:

   Some participants expressed concern that overbroad copyright scope might either create disincentives for, or erect roadblocks against, follow-on innovation. One computer industry representative found overbroad copyright scope "harmful to progress because software, more than anything, is a series of inventions piled on top of each other."[77] Another emphasized that broad copyright scope can create a risk of "overcompensation" in the sense that "[a]n author or inventor with too broad a monopoly over a work can seek compensation from authors of inventors of [interoperable] works, driving up the cost of such works, [and ultimately] resulting in fewer works being produced."[78] Others suggested that broad scope could thwart efforts to enhance interoperability, which would in turn impact the growth of computer networks, the anticipated source of substantial innovation in the near term.[79] Some suggested that the owner of a software copyright should be prevented from enforcing its copyright as to the interface, especially once that interface has become a standard,[80] or they advocated compulsory licensing of interface standards that dominate the market.[81] [Footnotes are reported in original, and in CPT's 1997 position paper]. See: Anticipating the 21st Century: Competition Policy in the New High-Tech, Global Marketplace, a Report by the Federal Trade Commission Staff, Vol. 1. May 1996. The entire report is on the Web at: http://www.ftc.gov/opp/global.htm (no period).

III General IP issues

1. Trademark, copyright or other IP rights should not be used to discourage criticism, parody, or free speech.

2. Patents should not be used to protect business practices from competition. Examples of business practices which have received patent protection in the United States are bonds which base interest payments on particular forms of inflation (U.S. Patent No. 4,839,804, "Method and apparatus for the funding of a future liability of uncertain cost"), or the use of federal tax loopholes to minimize the costs of the loans from pension fund assets (Patent No.5,206,803, for a "System for enhanced management of pension-backed credits"). Business practices patents are inappropriate and anticompetitive.