John S. Gardner, a Senior Director of the White House Writers Group in Washington, D.C., and former General Counsel of USAID, is representing the Federalist Society this week at the Forty-third Assemblies of the Member States of the World Intellectual Property Organization, which is meeting from September 24 to October 3 in Geneva. The meetings are expected to be dominated by the proposed adoption of the "Development Agenda" of WIPO , a proposal from the US and Japan to reduce fees paid by WIPO customers under the Patent Cooperation Treaty, and continuing controversy over the tenure of WIPO Director General Idris (for a summary of this, please see Claudia Rosett's article on National Review Online from September 23). For further background on WIPO's development agenda, please click here. Please note that any quotations here are based on notes from the simultaneous translations provided by WIPO and do not represent a particular nation's official text except where indicated.

Forty-third Assemblies of the Member States of WIPO
September 24 - October 3, 2007

The morning began with informal consultations among Member States led by the Chair of the PCT Assembly, Ásta Valdimarsdóttir of Iceland, on the competing proposals for PCT fee reductions submitted by the US and Japan and by Brazil. Brazil modified its proposal to reflect a 90% reduction in fees for developing countries and later again to address the question of eight countries that would otherwise have to pay full fee rates, stating that the idea behind their resolution was to be inclusive. (The countries are Antigua and Barbuda, Bahrain, Barbados, Libya, Oman, Singapore, Trinidad and Tobago, and the United Arab Emirates. Three are small Caribbean developing countries; three are members of the Gulf Cooperation Council; Singapore is of course in many respects a developed country.)

Portugal, representing the EU, opened the consultations trying for a balanced statement, stating that it was concerned about the possible financial consequences of fee reductions, but also needed more information about the impact of the Brazilian proposals. Deputy Director General Francis Gerry noted that he did not think the study on the impact of fee reductions would be resolved today or even this week.

The US responded strongly, noting that it had requested a budget from the Secretariat in early 2007 showing the impact of a 15% fee reduction but had not received it. Further, the work of the Program and Budget Committee showed that the Secretariat's current assumptions on spending were flawed. The Controller, Carlotta Graffigna, responded that she could only report based on the proposed budget to be considered by the Assemblies. DDG Gurry gave the impact on income from a 15% fee reduction as a reduction of 70 million SFr to 429 million SFr (this is based on a static budget not reflecting the reductions already agreed by the Program and Budget Committee). The US responded that the current budget nevertheless represented a large increase in WIPO funding; it was not accurate to say that the US/Japan proposal would cut WIPO funding but instead would only cut the rate of increase in funding. Its assumptions in developing its proposal were conservative; they could have gone to 19% with no impact on WIPO's budget. The Controller then noted that on the budget as she analyzed it, the US/Japan proposal would lead to a reduction in reserves below both the target level and the 25% level recommended by the auditors.

Canada, clearly taking up the Chair's suggestion to work in a spirit of compromise, stated that a solution should be reached during these Assemblies rather than having the issue studied for two years. It further stated that the Brazilian proposal did not necessarily prejudice the US/Japan proposal (although the level of reduction proposed might not be right) but rather that across-the-board fee reductions would lead to more users of the PCT system and thus more revenues. Both proposals had room to serve all users of the system. (It was nice to hear a statement of supply-side economics.) Australia endorsed Canada's comments.

Algeria, representing the African Group, continued to oppose the US/Japan proposal. DDG Gurry intervened to provide figures on the impact of the Brazilian proposal: a reduction in fee income of 1.2 million SFr, rising to 2 million SFr if the target reduction were raised to 90%, and an additional 157,000 SFr if eight countries that would de facto be excluded under the Brazilian proposal were included.

Brazil was sensitive to the concerns of these eight countries and had proposed that one solution would be for them to join the Group of 77. Canada objected forcefully to this, noting that it would substitute a political criterion for an economic one in determining eligibility for fee reductions. Instead, Canada would support a percentage reduction for all members under the PCT, which "should be expected to support an increase in applications from all developed countries." In response, Brazil (clearly a bit chagrined) offered that there could be a technological criteria for eligibility as well as an economic one, perhaps based on the number of patent applications on a per capita basis. Brazil stated that a reduction that applies to all countries equally was not acceptable to his delegation but would insist firmly on a reduction for developing countries. Canada said that it would be pleased to support a model (for developing countries) similar to that suggested by Brazil.

Germany reminded the group that it had suggested a 5% across-the-board reduction and that its proposal and the Brazilian one were not necessarily exclusive. The US reiterated its complaint that it had not received a pro forma budget from the Secretariat as it had requested and stated that it would likely find it very difficult to find a way to move forward on the issue.

The Chair then suggested that Member States consider the following suggestion based on her reading of the room: a 5% across-the-board reduction, the Brazilian proposal as modified, and something to solve the problem of the eight countries mentioned above.

Barbados intervened strongly to complain that it should not be excluded from any benefits from fee reduction under the Brazilian proposal and that it could not be considered in the same category as advanced countries such as the US, Germany, or Switzerland. Oman stated that it could not respond at this time because of the Thursday/Friday weekend in the Gulf countries.

Brazil then stated that it would be prepared to consider a 2.5% across-the-board reduction but could not go beyond that.

The Chair decided that the meeting could not make further progress at this point and in any event had to adjourn for the resumption of the plenary Assembly, and the meeting adjourned with informal consultations to resume later.

Plenary began with some routine business. The appointment of International Searching and Preliminary Examining Authorities under the PCT was extended for 10 years, and both Brazil's National Institute for Industrial Property and the Indian Patent Office were appointed as an additional International Searching and Preliminary Examination Authorities. As many Latin American countries are not currently members of the PCT, there was general agreement that Brazil's appointment was a positive step to encourage Latin American participation.

After lunch, the PCT Assembly considered the addition of a Supplementary International Search System (PCT/A/36/7) on a proposal from France. Consensus on this has not been reached during the Working Group on Reform of the Patent Cooperation Treaty. Under the proposal, applicants could request that there be additional international searches during the international phase of the PCT application beyond that of the principal International Searching Authority designated for each application. France supported the proposal on the grounds that international searches must allow the fullest prior art to be disclosed and that the system would be optional at users' request.

Japan and Spain remained opposed to introducing this feature into the PCT system as potentially undermining the authority of the principal ISA during the PCT application process, possibly leading to contradictory results, and increasing expenses. However, they offered a compromise under which if the SIS system were adopted, there would be an understanding consisting of the following elements: a) all International Searching Authorities shall make efforts to improve the quality of the international search and their efforts will be reviewed at the PCT Assembly; b) the International Bureau shall report on the costs of SIS to the Assembly; c) the International Bureau shall review the system three years after entry into force of ISS system. The proposal was adopted with this understanding.

It will be interesting to see how the SIS system will work. Will it be used to subtly criticize the work of specific ISAs? How would contradictory results between searching authorities be resolved? Will this raise the costs of the PCT process to the detriment of users, or provide greater comfort to users through a more intensive search for prior art? In any event, as the Assembly noted, while the proposal goes into effect in 2009, in practice the SIS authority will not be available until and unless one or more national ISAs offer to provide this service to the PCT process.

Korean and Portuguese were unanimously approved as languages of publication in the PCT process. Portuguese was affirmed on the basis of the large number of Lusophones in the world. Korea is already fifth in the world in PCT applications and is expected to rank fourth by the end of 2007. From Korea's perspective, adding Korean in this context will make the system more attractive to Korean users and lead to a substantial increase in PCT applications from Korea, which will in turn lead to a substantial increase in PCT revenue. The International Bureau will, at the request of several delegations, prepare a study on the criteria to be used for any future languages to be added as languages of publication under the PCT process.

After one minor item on Quality Management Systems for International Authorities under the PCT, the only item remaining in the PCT Assembly is the proposal on fee reductions. Discussion on this point was suspended until further notice, so the Chair could once again try to seek consensus.

Um dia bom para Brasil hoje, a good day for Brazil today (at least, that's how's free translator rendered it). Despite the inability to reach consensus so far on fee reductions, it seems likely that any compromise will include virtually all of Brazil's resolution. Portuguese was approved as a regular official language of publication for what I believe is the first time in the international system. (Brazil's soccer team even eliminated the U.S. from the Women's World Cup.) Most important, the appointment of Brazil and India as searching and preliminary authorities - of which there are now a total of 15 - is a positive step showing that IP brings real benefits to developing countries, many of which have made great strides in developing their own patent and intellectual property protection systems.