[Ip-health] KEI and Essential Inventions comments to Special 301 Committee

Jamie Love james.love at keionline.org
Sat Feb 11 06:27:58 PST 2012


*KEI and Essential Inventions comments to Special 301 Committee*

Submitted by James Love on 10. February 2012

KEI and Essential Inventions have both filed requests to testify at the
public hearing on the 2012 Special 301 Report.

The comments are attached here:

KEI 2012 Comments on Special 301, in PDF or ODT

Essential Inventions 2012 Comments on Special 301, in PDF

The KEI submission follows:


Identification of Countries Under Section 182 of the Trade Act of 1974

February 10, 2012

Knowledge Ecology International (KEI) is a not for profit non governmental
organization that was created to continue work undertaken earlier by the
Consumer Project on Technology (CPTech). KEI and CPTech have monitored the
Special 301 list since 1994. Background on KEI is available on the web at

Knowledge Ecology International (KEI) requests the opportunity to testify
at the Special 301 hearing.
KEI also offers these initial comments on the 2012 Special 301 list:

*1. It is time to eliminate the annual 301 Review.*

Even if you support all of the goals and objectives of the Special 301 list
as it is currently implemented, the notion that this should be an annual
review needs to be questioned. The annual review is excessively time
consuming, repetitive, and an unnecessary waste of time for most of us. The
Special 301 list is published around April 1, and by December USTR is
already asking people to nominate countries for the next list. Since the
Obama Administration has proposed abolishing USTR and reorganizing the
trade office, if you can't get rid of the Special 301 process altogether,
perhaps it should consider making the 301 process something that happens
less frequently, such as every three year or so. If this was not such an
ongoing exercise, maybe people would put more thought into the report.

*2. The norms promoted via the Special 301 Review should be subject to
better analysis, independence evidence and scrutiny.*

The norms promoted via the Special 301 Review should be more than an edited
version of the PhRMA, the International Intellectual Property Alliance and
other trade association submissions. USTR is trying to create global norms
for copyright, patents, trademarks and other types of intellectual
property, not to mention drug pricing, and they do it in an environment
that seems to have been largely captured by lobbyists for industry, many of
them who used to work for USTR, the USPTO, the Copyright Office or other
government offices. In many respects, this is something not unique to the
United States government – it is a larger problem of intellectual property
policy making, and was one of the focuses of the UK recent Independent
Review of how the Intellectual Property framework supports growth and
innovation, undertaken by Ian Hargreaves. This was a high level project,
that was announced by Prime Minister David Cameron. Recommendation 2 of the
Hargreaves review was on the topic of evidence:

<-------begin quote-------
Recommendation: Evidence.

Government should ensure that development of the IP System is driven as far
as possible by objective evidence. Policy should balance measurable
economic objectives against social goals and potential benefits for rights
holders against impacts on consumers and other interests. These concerns
will be of particular importance in assessing future claims to extend
rights or in determining desirable limits to rights.
-------end quote-----------/>

The following are excerpts from Chapter 2 of the Hargreaves review

<-------begin quote-------
2.13 There are three main practical obstacles to using evidence on the
economic impacts of IP:
There are areas of IPRs on which data is simply difficult to assemble.
While patents are well documented, and traceable to their owners,
unregistered design rights and copyright use are not.
The most controversial policy questions usually arise in areas (such as
computer programs, digital communication and biosciences) which are new and
inherently uncertain because they involve new technologies or new markets
whose characteristics are not well understood or measured.

Much of the data needed to develop empirical evidence on copyright and
designs is privately held. It enters the public domain chiefly in the form
of “evidence” supporting the arguments of lobbyists (“lobbynomics”) rather
than as independently verified research conclusions.

2.14 Dealing with these obstacles requires an approach to evidence which:
makes the most of the available research where data can be developed;
applies the lessons learned in those areas where we do have data to areas
where we don’t, in ways which make credible use of economic theory; demands
standards of transparency and openness in both methodology and data.

2.15 It also presupposes an institutional environment which encourages the
relevant public authorities to build, present and act upon the evidence.
This cannot be achieved if relevant institutions of Government lack access
to the data upon which corporate lobbying and other positions are
constructed. We return to this point later in the Review.

2.16 The Review has found that IP policy has not always been developed in a
way consistent with the economic evidence. We give two examples below.

The EU Database Directive

An EU Directive to harmonise and increase protection for databases was
adopted in 1996. Its aims were to a) harmonise laws between Member States
to aid the functioning of the single market and b) increase protection for
databases in those Member States where they were “not sufficiently

The hope was that by introducing such protection throughout the EU,
database producers would be incentivised to invest in databases and
information processing systems, and thereby reduce the “very great
imbalance” in the level of investment in the database sector between the EU
and third countries – notably the US, which has no such right. The aim was
to ensure the EU got a foothold in this growing sector at an early stage.
The European Commission carried out an evaluation of the Directive in
2006.13 This found that EU database creation had declined since
introduction of the Directive, whilst it had continued to rise in the US,
undermining the rationale for the right in the first place. The EU Database
Directive remains unchanged.

Copyright Term Extension

Economic evidence is clear that the likely deadweight loss to the economy
exceeds any additional incentivising effect which might result from the
extension of copyright term beyond its present levels.14 This is doubly
clear for retrospective extension to copyright term, given the
impossibility of incentivising the creation of already existing works, or
work from artists already dead. Despite this, there are frequent proposals
to increase term, such as the current proposal to extend protection for
sound recordings in Europe from 50 to 70 or even 95 years. The UK
Government assessment found it to be economically detrimental.15 An
international study found term extension to have no impact on output


1. Evidence. Government should ensure that development of the IP System is
driven as far as possible by objective evidence. Policy should balance
measurable economic objectives against social goals and potential benefits
for rights holders against impacts on consumers and other interests. These
concerns will be of particular importance in assessing future claims to
extend rights or in determining desirable limits to rights.

2. International priorities. The UK should resolutely pursue its
international interests in IP, particularly with respect to emerging
economies such as China and India, based upon positions grounded in
economic evidence. . . .
-------end quote------/>

The concerns expressed by Ian Hargreaves are shared by many persons. We are
reaching a point where policy makers need to admit that intellectual
property policy is more complicated than simply pushing for more and more
rights and ever harsher penalties for infringements. We also need to
acknowledge that we barely know how the world works. Here are just a few
areas where evidence is lacking.

1.  Given the huge emphasis on test data protection in the Special 301
reports, does the Special 301 Committee know how much money drug companies
spend on clinical trials?

2.  Does the Special 301 Committee have knowledge of the minimum economies
of scale to efficiently manufacture active pharmaceutical ingredients?

3.  Given the huge emphasis on forcing countries to grant patents on new
uses of old medicines and for relatively obvious tweaks in drug delivery
mechanisms, and to link drug registration to patent status, does the
Special 301 Committee know if developing countries have the capacity to
evaluate low quality patents on pharmaceutical drugs, or how much it costs
to litigate patents in different countries?

4.  What will be the impact of higher IPR norms on PEPFAR budgets?

5.  Does the Special 301 Committee know how much of the publishing industry
is owned by foreign owned companies?

6.  How much of publisher revenues go to authors or performers?

7.  How do the wages and growth rates in employment compare between old
content industries and new Internet and information technology firms?

8.  Are the promotion of open royalty free standards for information
technologies likely to be a positive or a negative in terms of economic
growth in the United States?

9.  Do low quality patents in the United States and China benefit the US?

10.  Do developing country patents on heat stable formulations of drugs
induce much investment into such technologies? To what extent
do such patents create ethical dilemmas and public health risks as poor
patients use heat damaged drugs and develop more drug resistance?

11.  Does the United States gain more from global norms that create liberal
access to knowledge than we do from norms that restrict access to
knowledge? Is access to knowledge in the United States important for our
economic growth? Do we benefit or suffer from higher levels of education in
developing countries?

12.  Would the United States benefit or suffer if there was more liberal
parallel trade with other high income countries. (Note to Special 301
committee – President Obama campaigned in favor of such parallel trade for
pharmaceutical drugs.)

Some Intellectual Property organizations are beginning to create the
capacity to evaluate intellectual property policy in the same way they
evaluate other government policies, such as the regulation of environmental
pollution – another activity that imposes both benefits and costs. Both
WIPO and the USPTO have created offices for economists to contribute to
policy discussions. USTR might want to do the same.

The Special 301 Committee could also begin to organize its work in ways
that allow various stakeholders and experts to engage each other in
transparent debates over the evidence that supports various policy norms
promoted in the Special 301 reports. For example, if the Special 301
Committee could get out from underneath its annual review work load, it
might have time to open an inquiry into the best policy for dealing with
test data protection, given the complex ethical and economic issue at
stake, and attempt to explain what objectives we are trying to achieve, and
debate how best those objectives can be achieved.

*3. Least Developed Countries Should Not be Required to Grant or Enforce
Patents on Medicines.*

For a number of years, the Special 301 Report has indicated it expects
Least Developed Countries to comply with TRIPS obligations, including the
granting of patents on pharmaceutical drugs. This year the Special 301
Report should express a new policy, that supports indefinite extensions of
that deadline.

*4. The Protection of Consumers*

KEI, like many other public health groups, objects to efforts in the
Special 301 list to bully countries to adopt patent extensions, gut price
controls, implement TRIPS plus standards for patentable subject matter,
grant exclusive rights in test data, link drug registration to patent
status and otherwise push for measures the drive up drug prices. While this
is a general concern, we continue to be particularly concerned about the
impact of such policies on developing countries.
KEI, like many other consumer and digital rights groups, objects to efforts
in the Special 301 list to promote long copyright terms and larger damages
for copyright and patent infringements. The extended copyright terms in the
United States are an embarrassing episode of special interest lobbying and
we should not impose this mistake on the rest of the world, undermining our
own opportunities to reform our own laws.

Special 301 norms should not undermine efforts to liberalize access to
orphaned copyrighted works.

Foonote [1] KEI searches for better outcomes, including new solutions, to
the management of knowledge resources. KEI is focused on social justice,
particularly for the most vulnerable populations, including low-income
persons and marginalized groups. There are probably 5 billion people who
live in the margins of the global economy, and an entire planet that
depends upon knowledge for economic and personal development, education and
health, political power and freedom, culture and fun. We are just now
learning about the opportunities to manage knowledge resources in ways that
are more efficient, more fair, and responsive to human needs.


James Love.  Knowledge Ecology International
http://www.keionline.org, +1.202.332.2670, US Mobile: +1.202.361.3040,
Geneva Mobile: +41.76.413.6584, efax: +1.888.245.3140.

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