les Nouvelles Article of the Month

IPRs In Least Developed Countries: A Progress Report

Luc Savage

Orange Group, VP Intellectual Property and Licensing and LES France Board, Paris, France

In 2014 we are celebrating 20 years of the TRIPS¹ agreements aimed at harmonizing the treatment of intellectual property rights in global economic trade. The Doha agreements in 2001 gave the least developed countries (LDCs) extra time for adopting the TRIPS agreements. As the agreed deadline for this implementation was extended to 31 December 2015 in November 2013, what is the future for the development of intellectual property rights in the least developed countries?

It was with the aim of contributing to this discussion that economic players with experience in intellectual property management in the least developed countries met in Paris last October. This meeting organized by LES² France and the INPI³ placed the emphasis on positive initiatives which could help to overcome the persistent challenges in order to use intellectual property rights for promoting sustainable development. The originality of the approach consisted in the points of view of players from the world of intellectual property being exchanged with those from the world of sustainable development represented by the AFD⁴ and the C3D.⁵

The subject is certainly not new. Fake medicines and the infringement of molecule patents have long been a concern for the pharmaceutical laboratories which contributed to the signing of the TRIPS agreements in 1994. The decisions regarding compulsory licences which followed one another in 2013, sometimes in different directions, in certain countries such as India, show that the debate is ongoing in the pharmaceutical industry. However, in 2013, certain pharmaceutical companies signed licence agreements with Medicines Patent Pool in order to lower the cost of HIV treatments in around a hundred developing countries. The pharmaceutical industry therefore seems to demonstrate that new original routes are opening up to avoid conflict between respect for the rights of the patentee and sustainable development. These examples might inspire the negotiations aimed at achieving a universal climate agreement which will bring together developing and developed countries in Paris in 2015.

The exchanges throughout that day identified some lessons about the positive initiatives of the past and ideas for discussion on future initiatives which we will share in this article.

A Focus on the Least Developed Countries With Regard to Intellectual Property

The field of sustainable development is wide if we use Brundtland's⁶ definition: "development which meets the needs of the present without compromising the ability of future generations to meet their own needs." Our discussions focussed on developing countries, using examples covering the three pillars⁷ of sustainable development: environmental sustainability, social fairness and economic effectiveness. The developing countries with regard to intellectual property do not correspond to any precise economic definition, but they may, as suggested by Julio Raffo,⁸ group together the countries outside of China, the EPO, Japan, South Korea, and the United States, which represent less than 21 percent of the patents filed in the world.⁹ Africa, which contains the majority of the less developed countries,¹⁰ provides many important examples on the subject. Countries such as Brazil, Russia and India, through their maturity with regard to intellectual property, constitute examples, for the developing countries, of economies which are in the course of integrating intellectual property rights. Our discussions focussed on the countries which have not yet reached that level of development of their intellectual property system, and group together the countries which certainly represent less than 10 percent of the patents filed in the world.

Intellectual Property, a Reality in the Economic Development of LDCs

Intellectual property is an important issue in the financing of projects in developing countries, as shown by the Agence Française du Développement. This specialist financial institution contributes to the financing of innovative projects in developing countries, with the aim of creating jobs in the beneficiary countries. Jean-Yves Grosclaude¹¹ summarizes the issue of intellectual property as follows: can it help to create employment in developing countries? This is the question posed by its Proparco subsidiary, which specializes in the financing of operations in the private sector, for the majority of the new financing projects which are submitted to it. One of the companies supported by the AFD shows the importance of intellectual property tools in a company centered on developing countries. Nutriset is a company which was created over 25 years ago and has more than 100 staff members. In 1996, it developed a ready-to-use therapeutic food, Plumpy'Nut®, which considerably improved the treatment of malnutrition. It protected its innovations through trade marks and patents. It was therefore able to protect its research efforts from other players in developed countries, and was able to create a network of producers to which it transferred its know-how in developing countries, contributing to sustainable economic development. This company is not alone. The IRD,¹² which brings together more than 800 researchers, is increasing the development contracts and agreements for its work with developing countries. FBIOLAK is a Moroccan start-up created in 2013 which produces bio-pesticides based on fungal spores and develops local agro-industrial by products. It belongs to a group of partners which use a technology developed in joint ownership with the IRD. The licences at the start-up's disposal for this valuable intellectual property have helped to make it stand out to potential investors. It therefore received one of the 5 prizes awarded in 2012 by the Maghreb Start-up Initiative out of 325 start-up candidates. Other examples promote intellectual property which is produced completely locally and has its value increased in developed countries. This is the case with Light Years IP, an English company which has been working with the Ethiopian government since 2004 in order to set up a trade mark licence and protection programme for Ethiopian coffee, which is known for its quality and unique taste. The intellectual property rights acquired around the trade marks Yirgacheff, Harar and Sidamo have allowed Ethiopian coffees to escape the situation of a commodity market under the pressure of the purchasers. This programme transferred the choice from the client for the trade mark to the sale negotiations centre. It has allowed the value of coffee exports from Ethiopia to grow by U.S.$ 200 million in 8 years, increasing jobs in the local coffee industry. These success stories demonstrate some collaboration principles which call into question preconceived ideas.

Fairness, the Key to Sustainable Development, is Encouraged in Intellectual Property Licences

The traditional approach of supporting purely philanthropic development does not seem to be sustainable in a context of economic and budgetary crisis, particularly in Europe. In this regard, the patent funds offering free exploitation do not seem to represent a sustainable business model. Emmanuel Faber, head of a large company with a long-term commitment to social innovation, and put in charge of the "Innovation and Development" project by the Deputy Minister for Development in France, promotes fairness, rather than charity, as the main theme of development policies. The link with intellectual property appears obvious. He quotes the works of Hernando de Soto Polar¹³ which conclude that developing countries cannot increase their wealth due to the lack of an effective system of respect for property rights. He suggests finding ways of developing intellectual property based on fairness. The "copy left" model of sharing ownership in Open Source software is a route to be considered if it is compatible with sustainable financing. The FRAND (Fair Reasonable and Non Discriminatory) patent licences required by certain standardization bodies for accepting the contributions of their members seem to make sense for promoting fair use of intellectual property in developing countries. However, Emmanuel Faber warns that the principle of fairness is not easy to implement: it requires the mobilization of innovators, particularly those in the world of agriculture and energy which constitute pillars of the economies of developing countries. How is it possible to collectively mobilize economic players in favour of this approach?

IPXI¹⁴ in the USA responded by creating a market of intellectual property rights based on an exchangeable title: the ULR (Unit License Right). It uses the rules of free exchange to establish this fair and reasonable price for the intellectual property needed for the exploitation of a technology in a product. The price has to be quite low in order to deter infringers from exposing themselves to the risks of litigation, anywhere in the world. This mechanism, which makes it possible to resell unused ULRs and establish a price reflecting the interest of the market in this technology, would facilitate access to technologies and development of innovations throughout the world, including in developing countries in the long term. It was on this model that Philips chose, in 2013, to make available its OLED technology for displays. In the same spirit, Philips is offering, via an open licensing program, its technologies related to LED based luminaires and retrofit bulbs, in order to foster growth of the LED market and a faster adoption of this technology which has a great potential to reduce the global energy consumption.

The IRD in France is adopting a different approach. In finding that the development of technologies in LDCs required particular skills, it created, in the scope of the Investissements d'Avenir [investments for the future] supported by the French government, a Consortium de Valorisation Thématique Sud [LDC development consortium]. It is making its network of partners from developing countries available to all the Sociétés d'Accélération de Transfert de Technologies [technology transfer acceleration companies] which develop public research in France. It is promoting a development of socio-responsible research. This is achieved through respect for the joint ownership of the patents with the partners in developing countries, but also respect for "bio-fairness" as defined in the Nagoya protocol. The aim is to achieve a rate of transfer of 20 percent of its portfolio of 800 patents.

Medicines Patent Pool (MPP) finally created in Switzerland a structure for negotiating licences for medicine patents. This "alliance" was created at the request of the international community in 2010, with the support of the World Health Organization and UNITAID funds, an innovative financing mechanism. It aims to facilitate access to the best HIV treatments at affordable prices which at the same time make it possible to continue financing of research for new treatments. Totalling more than 6 agreements signed with laboratories supplying quality treatments, MPP demonstrated the effectiveness of the approach and defined a new standard for "voluntary licences" for medicines. It presents itself as a unique point of contact between the multiple proprietors of patents for medicines and the producers of generic medicines. The resulting fluidity encourages all parties to agree on fair terms with complete transparency. All of the licences are made public on MPP's website. Fairness goes together with simplicity here.

For the economist Hernando de Soto, the simplicity of the forms of ownership is a condition of development: investment is stimulated by the promotion of private ownership through simplification of the procedures for transferring this ownership and the reduction of the associated costs. This appears just as necessary with regard to intellectual property, and not just at the development stage.

Practices in Search of Simplification and Effectiveness

HYSTRA¹⁵ underlines that the complexity of understanding the subject is one of the main causes which lead social entrepreneurs to regard intellectual property as a problem… and only sometimes as an opportunity. Basil Kransdorff is the founder of "e-Pap," a solution for combating the effects of malnutrition in people with HIV. He refuses to protect his invention with patents, thinking that he will not have the means to defend himself. However, if he could develop the intellectual property of his inventions, he might find funds to launch new social initiatives. Intellectual property professionals sometimes offer their services to developing countries to help their entrepreneurs understand this complexity. Pedro Garcia in Peru, Diana Pombo in Colombia and Harry Jonas in South Africa are examples of these experts who train the local population in intellectual property law in order to make it more accessible if not more simple.

Simplify the procedures: this is also one of the key objectives of the OMPIC¹⁶ in its strategic vision for 2015. To this end, the Office has undertaken to reform the Moroccan law in order to allow the proprietors of a patent application at the EPO¹⁷ to extend that application to Morocco when designating the countries outside the European procedure. The Moroccan examiners can therefore concentrate their resources on national patent applications and the development of the services for the clients. That takes place through training in companies and the computerization of the processing of the applications thanks to e-OMPIC. Will these initiatives inspire the countries of the African continent which has multiple national intellectual property systems and even two regional systems (OAPI, ARIPO)?

In the same spirit of simplification of grants, the "Patents for Humanity" programme of the USPTO reserved accelerated processing in 2013 for patents selected according to criteria of contribution to sustainable development. The symbol is powerful: this gain in time must allow more rapid transfer of these technologies from research through to marketing. By presenting the winners with a "rapid grant" certificate, the USPTO intends to help entrepreneurs find financing for their "green technologies." However, the acceleration of the grant periods is not only important for patents connected to sustainable development. Furthermore, there is uncertainty as to whether the "exception" of processing in favour of patents for humanity in the USA will be maintained. The editor of "waybetterpatents.com" underlines this: the future of the programme is unknown as its effectiveness regarding the acceleration of the transfer of technology is not unanimously agreed on. However, the entire world agrees on the importance of the development of absorption capacities in developing countries.

Spreading Innovation Depends on "Local Absorption Capacity"

Analysis of patent filing practices shows the positive impact of innovative scientific work being carried out in developing countries. In fact, although the number of filings is certainly much lower in the least developed countries, it is in reality proportional to the investments in R&D. In 2009,¹⁸ the high income countries (excluding China) represented 77 percent of the global expenditure in R&D, and in 2011¹⁹ the six main patent offices (including China) represented 79 percent of the global patent applications. These figures confirm the finding of several contributors: when the research work is carried out in developing countries, the patents are also filed in those countries. Yann Ménière²⁰ confirms the trend for Low Carbon Technologies: patents promote the circulation of information if the "local absorption capacity" and the local demand are sufficiently high. In other words, the companies which benefit most from technologies patented by others are companies which carry out R&D themselves and see a local market for the technologies developed.

Numerous examples of initiatives, particularly in Africa, for encouraging the spread of innovation were shared, including:

• AMAPIC , the centre for training in intellectual and commercial property of the OMPIC
• Africa Techno, the forum for the exploitation of research results, with the OAPI
• INNODEV, the business incubator for food technologies in Senegal
• PACEIM, which supports the creation of businesses by scientific diaspora in the Mediterranean region
• African Social Entrepreneur Prize in the telecommunications sector.

For the leaders of these initiatives, the great success that they encounter underlines the interest and the need for continuing investment in education and research in these countries. Sustainable development does not just amount to the granting of patent licences under fair conditions. It must be accompanied by the transfer of know-how to a trained local population in order to create new innovations in a sustainable manner.

Conclusion: Go Beyond Preconceived Ideas and Focus Efforts on Promising Initiatives

This day of discussions developed the understanding of the path that remains to be taken in order for intellectual property to come of age in developing countries. Intellectual property rights are often wrongly cited as an obstacle to sustainable development. Evidence has shown that solutions exist for intellectual property rights to be used to promote sustainable development, when the parties agree on the basis of their collaboration. The work of Mines Paris Tech therefore shows that intellectual property rights for low carbon technologies (LCT) do not constitute a barrier to their adoption by developing countries. These technologies are not patented more than others on average, and there is not an abundance of patents as in the field of information technologies, which would tend to create monopolies. The prospect of making a sustainable contribution to the economies of developing countries, as shown, encourages accompanying the intellectual property system of emerging countries as it comes of age, by following in particular three paths towards change cited during the discussions:

1. Recognizing the value of local intellectual property by encouraging its development through investment in research and education centres in developing countries.
2. Simplifying access to intellectual property protection procedures in developing countries and promoting the quality of the titles granted.
3. Supporting the intellectual property development structures under fair licensing conditions between developed and developing countries.

These avenues will be studied and explained in detail in an official report which will be produced in the next few months by the "Intellectual Property and Sustainable Development" Working Group of LES France and the INPI with the help of the AFD and the C3D.

1. Trade Related Aspects of Intellectual Property Rights is a multilateral agreement signed in 1994 with the aim of integrating intellectual property rights in the system of the World Trade Organization, anticipating in particular the authorization of compulsory licences in the case of public health emergencies.
2. Licensing Executive Society, an association of professionals operating in the field of intellectual property and its development in the form of licensing or transfer of technology.
3. Institut National de la Propriété Industrielle [National Industrial Property Institute].
4. Agence Française de Développement [French Development Agency].
5. Collège des Directeurs du Développement Durable [College of Sustainable Development Directors].
6. Mrs. Gro Harlem Brundtland, Norwegian Prime Minister in 1987.
7. The Rio Earth Summit in 1992 under the aegis of the United Nations made official the notion of sustainable development and that of the three environmental, social and economic pillars.
8. Julio Raffo, Senior Economic Officer, Economics and Statistics Division—World Intellectual Property Organization (WIPO).
9. WIPO source 2011.
10. The Least Developed Countries are a category of countries defined by the UNO, grouping together 49 countries since 2011, with a GDP per capita usually below US$ 900.
11. Former Operations Director - Agence Française de Développement (AFD).
12. Institut de Recherche pour le Développement [Institute of Research for Development] has conducted scientific programmes for 60 years to contribute to the sustainable development of developing countries.
13. Hernando de Soto is a Peruvian economist who published "The Mystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere Else" in 2000.
14. IPXI, created in Chicago in 2012, is the first financial exchange for licensing and trading intellectual property rights.
15. HYSTRA is a sustainable development strategy consultancy firm.
16. OMPIC: Office Marocain de la Propriété Industrielle et Commerciale [Moroccan Industrial and Commercial Property Office].
17. EPO: European Patent Office.
18. WIPO estimates of September 2011.
19. WIPO statistical database.
20. Lecturer at Mines Paris Tech.