The Research Exemption to Patent Rights - Towards a Minimum Global Standard?

Geraldine Soon is an exchange student at Osgoode Hall and is taking the Patent Law course.

At the Standing Commmittee on the Law of Patents’ (SCLP) 13th session in March 2009, the World Intellectual Property Organization (WIPO)’s secretariat established a preliminary study on the “exceptions from patentable subject matter and limitations to the rights, inter alia research exemption and compulsory licenses”. The 47-page report highlighted and reiterated the importance of imposing exceptions and limitations onto patent rights: in an ideal world, the granting of exclusive patent rights would incentivize innovation and further knowledge; unfortunately, that is not always the case, and State governments have found the need to impose exceptions on these patent rights to further policy objectives and the welfare of society.

However, it is disappointing to note that apart from the comprehensive analysis on matters of interpretation of international agreements regulating the exceptions to patent rights, the report failed to address two main concerns that have cropped up in recent years in patent literature: 1) the limited and less-than-effective usage of exceptions and limitations on patent rights by developing countries; and 2) that the lack of a uniform formulation of the “research exemption” has impeded the very objective of the having a research exemption – to foster innovation.

The primary international agreement on the regulation of exceptions and limitations to patent rights is the Trade Related Aspects of Intellectual Property Rights (TRIPS) agreement. Article 30 of TRIPS provides that members may provide limited exceptions to the exclusive rights conferred by a patent, provided that such exceptions do not unreasonably conflict with a normal exploitation of the patent and do not unreasonably prejudice the legitimate interests of the patent owner, taking account of the legitimate interests of third parties.

It does not take a great measure of imagination to realize the very general nature of this formulation. Its generality becomes more apparent if one were to look at the history of the drafting of the provision on exceptions to patent rights in the TRIPS agreement, where a non-exhaustive list of specific exceptions to patent rights was suggested in the draft dated July 23, 1990 (see page 7 of Carlos Correa, “The International Dimension of the Research Exemption”

It is widely accepted that one of the exceptions to exclusive patent rights is the “research exemption”, and many jurisdictions have enacted laws accommodating this exception. However, the generality of Article 30 of TRIPS has resulted in the many varying formulations of the “research exemption” amongst the different countries.  In the cases of developing countries, some have formulated the exemption as being for the purpose of experimental purposes, some for scientific purposes, and some for technological research. Some require that the experimental purposes be done for non-profit, and some contain the implicit allowance for the research to be done for commercial purposes (in the case of technological research). Some even have research exemptions based not on the nature of the research, but on how it impacts the normal interest of the patent holder.

The variations go on. The question is: Has the multiplicity of formulations on the research exemption, as a result of the generality of Article 30 of TRIPS, hurt the potential for research output in developing countries?

At the national level, most of these developing countries had the patents system thrust upon them. Most have had little guidance as to how to best go about maximizing the benefits of the TRIPS agreement. Countries like India and China arguably have huge scientific and technological research potential, but have not formulated an optimal research exemption for themselves that would allow them to maximize this potential. In fact, this was the motivating factor behind Brazil’s proposal to the SCLP in January 2010 to establish a framework whereby detailed information on exceptions to patent rights in all jurisdictions, as well as information on experiences in implementing such exceptions and the impacts on development, would be compiled and made available to every jurisdiction.

At the international level, the lack of a uniform formulation of the research exemption could have an adverse effect on research – which would, of course, be a complete irony. The international nature of research suggests that barriers could arise as a result of the varying formulations of the research exemption in different countries – they could hinder transnational research activities and innovation.

Perhaps, at its 15th session, the SCLP and member countries of the WIPO should consider setting an international standard for the research exemption to exclusive patent rights.

  1. Geraldine’s question of whether the numerous differing formulations of the research exemption has hurt research potential in developing countries is an interesting one. Certainly, given the global mobility of ideas and technology, there are benefits in harmonization of international IP rights (IPRs). However, in my estimation, the idea that section 30 could or should be reformulated into a strict, mandatory scheme misses the mark.

    The stated objectives of the TRIPS agreement, as stated in article 7, are to promote technological innovation and dissemination of knowledge in a manner conducive to social and economic welfare. In attempting to achieve this objective, the TRIPS agreement mandates certain minimum threshold levels. For example, article 27.1 defines what “shall” constitute an invention, article 28 defines the rights that “shall” be conferred to the patent holder and so on. This ensures a minimum level of IPRs; something that is especially important in developing countries, where a lack of IPRs is frequently cited as a problem in attracting business.

    Besides for these positive rights, the TRIPS agreement also contains provisions that allow for exceptions to patentability, such as those allowed through articles 27.2, 27.3 or 30. However, unlike the threshold standards for patent protection, permissive language is used thus making implementation of these exceptions is optional. This was an important decision by the drafters, as it allows flexibility based on specific national circumstances. This is needed to comply with the policy goal articulated in article 7, namely that protection should be tailored to the social and economic welfare of a particular state.

    Thus, in my estimation, Geraldine’s suggestion for a universal formulation of the research exemption would do more harm than good. What, then, can be done to ensure that the exemption operates in an efficient manner? In this case, I agree with Brazil’s proposal as mentioned in Geraldine’s post. Countries with similar social and economic conditions should collaborate to compare approaches taken in the past and investigate possible approaches for the future. These results could be compiled, in a non-exhaustive manner, to serve as a guide for future domestic lawmakers.

    Of course, there is a lot of complexity involved in trying to determine how a particular patent law has “performed”. It follows that there is inherent complexity in deriving relevant conclusions from the operations of these patent laws. Because of this, it would be no easy task to achieve a consensus on what the optimal bounds for exceptions to patentabilty should be. In fact, this difficulty in deriving relevant conclusions from the operation of patent laws is one of the main reasons for the lack of uniformity between national patent laws in the first place.

  2. As a member of the team of researchers preparing the WIPO study on exceptions and limitations, I must agree with Geraldine Soon that some guidance (not necessarily a mandatory level) is needed now on the research limitation. I expect that providing this guidance is what was mandated in WIPO’s commissioned study.

    Furthermore I believe that a research limitation is a Constitutional requirement imposed on the patent system. The German Constitutional Court said that in the case “Klinik-Versuch”
    (BVerfG, 1 BvR 1864/95, de 10.5.2000), which so states:

    Soweit ersichtlich, wird weder in der Rechtsprechung noch in der Literatur bestritten, dass das Versuchsprivileg des § 11 Nr. 2 PatG eine nach diesen Maßgaben verfassungsgemäße Inhaltsbestimmung des Patentrechts ist.

    I do not believe that this “necessary constitutional content of the Law of Patents” is only impositive within the German system. If you accept as necessary a monopoly-like instrument to impell investment in innovative activities, patent would be a a self-defeating device if it could be used to impede the same research by third parties.

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