EU Commission Monitor - 05/12/08

Europe online: new media for a new age
Speech by Margot Wallström - Vice-President of the European Commission at Seminar on Online and Multimedia Communication in Madrid, 2nd December 2008 [Europa]

Trademark success
"One success story in the EU's intellectual property regime, the Office for Harmonization in the Internal Market, based in Alicante, Spain, is highlighted in this special report. The office has just registered its 500,000th trademark and has recently lowered its fees, helped by a healthy financial balance sheet.

But if there is one glaring disappointment in the EU's set-up for intellectual property rights, it is the failure to agree a single Community patent. The Commission's work programme for 2009 says that “the lack of a cost-effective, single patent remains an obvious shortcoming of the single market”. Business groups have long called for a unified patent approvals procedure that would substantially lower costs for inventors and innovators, but still some national governments resist the idea. Nevertheless, the case for a simplified approvals and litigation regime remains compelling." [EuropeanVoice]

A successful EU organisation
"The Office for Harmonisation in the Internal Market has approved more than 500,000 applications for EU-wide trademarks since it was created in 1996.

The Office for Harmonisation in the Internal Market (OHIM) is not the best known of EU organisations but it is arguably one of the most successful. The office, which grants Community-wide trademarks, has just approved its 500,000th application. It finances itself entirely from the fees it charges for trademark registration and is expecting to generate a surplus of €65 million this year. It has already built up reserves of €350m, which have made it possible to cut the registration fee to less than €1,000, down from €1,700 since 2005 and €2,075 from 1996 when the office became operational." [EuropeanVoice]

EU Public Affairs Monitor - 28/11/08

Monopoly of collecting societies' activities: infringement proceedings against the Czech Republic and Hungary
"The European Commission has decided to send reasoned opinions to the Czech Republic and Hungary on the grounds of obstacles to the freedom of establishment and to the freedom to provide services as a result of the monopolies granted to national rights management companies.

Czech and Hungarian laws provide that a single collecting society may be authorised to operate in their respective countries for each type of right and work. This monopoly granted to national companies bans collecting societies set up in other Member States from undertaking any form of activity and denies them the freedom of establishment and the freedom to provide services. The Commission has doubts as to the justification of those national measures in the light of their negative effects on two of the fundamental freedoms enshrined in the EC Treaty." [Europa]

The latest information on infringement proceedings concerning all Member States is available at:
http://ec.europa.eu/community_law/index_en.htm

EMI Music CEO Applauds Govt Action On ISPs
"EMI Music CEO Elio Leoni-Sceti has spoken of his support for the U.K. government's and others' attempts to get ISPs to tackle illegal file-sharing, while admitting the music industry failed to adapt to changes in consumer behavior. Leoni-Sceti appeared at U.K. media/telecoms regulator Ofcom's Next Generation Net Generation conference in London. Vivendi chief executive Jean-Bernard Levy was also among the business leaders at the conference.

The EMI Music CEO appeared on a panel, "Global Content Economy - Challenges for Business," alongside executives including Telefonica Europe CEO Ronan Dunne, Nikesh Arora, president EMEA (Europe, Middle East, Africa) operations, Google, and Roma Khanna, president, global networks & digital initiatives at NBC Universal. Pledging to transform EMI into a "consumer-focused music company," Leoni-Sceti commented: "The new EMI wants to be the most consumer-led, innovative music company in the world - that means listening to our consumers and putting the consumer experience at the heart of our business strategy."A consultation process was recently concluded by the U.K. government, following this summer's brokering of a Memorandum of Understanding between the music industry and ISPs. Part of the agreement includes a pledge by ISPs to write letters to customers who are involved in illegal peer-to-peer activity." [BillBoard] [CMUDaily]

Artists send video message to PM over copyright term
"More from the campaign to persuade Gordon Brown to increase the recorded music copyright term now - and this time the protests have been presented in video form. As much much previously reported, record labels and recording artists have been lobbying the government regarding extending the recording copyright from 50 to 95 years for ages now; the former because the legendary recordings of the rock n roll era are about to come out of copyright; the latter because there is a whole generation of session musicians who will soon start to lose the royalty payments that stem from recordings they worked on in the sixties, which for some are a bulk of their earnings. " [CMUDaily]

EURO LICENSING: THE HARD ROAD AHEAD
"There is no 'us' and 'them' any longer. With nearly 50% of all music consumed by Europeans classified as international repertoire and the rest considered to be essential local music preserving the cultural identities of each European Union (EU) nation, the troubled state of licensing digital publishing rights is not, as some said a few years back, 'a European problem.' After intervention by the European Commission (EC), the current structures for licensing these rights are seen by some to be as volatile as the financial markets. How everyone responds to the situation will inevitably impact the future of recorded music, music publishing, digital and mobile music services and broadcasting -- and everyone else in the creator-to-consumer chain of distribution. Considering the importance of intellectual property as a significant contributor to worldwide economies, figuring out solutions during this economic crisis, in the midst of the physical-to-digital music transition, becomes even more essential.

Music Confidential reached out to senior executives and lawyers throughout Europe to shed some light, and perhaps a bit of insight, on problems and possible solutions following the EC's mandate to restructure rights and operating procedures among the network of collecting societies. Despite an extraordinary amount of angst and concern among the interested parties, there are opportunities and some optimism to report." [MusicConfidential]

Conference calls on WIPO to Boost Support for Collective Management of Copyright and Related Rights
"A conference on the future evolution of collective management of copyright and related rights in Europe has called on WIPO to step up efforts to help stakeholders address the emerging challenges facing collective management. Participants urged WIPO to strengthen the copyright infrastructure so as to support creative industries and promote social, economic and cultural development.

The Conference on Collective Management of Copyright and Related Rights in Europe, held in Brussels from November 24 to 25, 2008, was organized by WIPO in association with the European Grouping of Societies of Authors and Composers (GESAC) and in cooperation with the Association of European Performers’ Organisations (AEPO-ARTIS), and the International Confederation of Societies of Authors and Composers (CISAC)." [WIPO]

The European IP market needs a revolution
"The European R&D and patenting world treat intellectual property as a legal right and nothing else. Most companies and investors want that attitude to change. If it does, a number of exciting possibilities can begin to emerge.What Europe needs most is intermediaries from outside the law
A recent EPO survey revealed that 60% of European companies do not care if the inventions and technologies they find and use are patented or not (which surely helps explain the modest levels of patent registrations in many EU countries!). At the same time, however, countless European surveys have revealed that technological innovation is the priority for the EU's institutions, as well as national and regional governments, industrial associations and others; and that European companies are very keen to improve technological innovation (including R&D outsourcing) as key weapon in the global competition race.
These conflicting findings tell us a few key things about the type of IP market Europe should adopt, given that improving its existing one is an official target, as set out by EU leaders in the Lisbon Agreement."

The complete article (and the accompanying charts) in .pdf format is saved on the shared file (in the Monitoring section). A text version can be read on:
http://66.102.9.132/search?q=cache:3BkUjCSMfg8J:www.wipo.int/sme/en/best_practices/pdf/european_ip_market.pdf+WIPO+European+IP+Market+needs+a+revolution&hl=nl&ct=clnk&cd=1&gl=be [WIPO]

EU Council Monitor - 21/11/08

Culture Council
"All the conclusions of the Culture Council can be downloaded on the Council website. The most important documents are already saved on available on the shared folder/EU Presidencies/French Presidency" [Consilium]

Christine Albanel a présidé aujourd'hui à Bruxelles Le Conseil des ministres en charge de la Culture et de l'Audiovisuel de l'Union européenne
"Ce Conseil a permis l’adoption par les ministres de plusieurs textes importants négociés par la présidence française lors de ces derniers mois. En premier lieu, les ministres soutiendront et assureront la pérennité et le développement du projet de Bibliothèque numérique européenne. Ce projet, lancé aujourd’hui à la suite du Conseil, en présence du Président de la Commission européenne, José-Manuel Barroso, rend accessible à tous (sur www.europeana.eu) 2 millions de documents, aussi bien livres, qu’archives écrites et audiovisuelles, et collections des musées européens." [Culture]

Clôture de l’année européenne du dialogue interculturel
"The complete speech made by Albanel at the Centre Georges Pompidou last Wednesday" [Culture]

Forum d’Avignon
"The complete opening and closing speeches of Albanel" [Culture]

Europe's cultural history goes digital
"Europeana, a new digital library intended to bring millions of examples of Europe's cultural heritage into homes across the world, went on-line today.
The multimedia library already contains more than two million digitalised books, maps, recordings, photographs and paintings, and the Commission envisages that by 2010 over 10 million works will be on-line." [EuropeanVoice]

EU ministers reject ban on free downloading
"EU culture ministers yesterday (20 November) rejected French proposals to curb online piracy through compulsory measures against free downloading, instead agreeing to promote legal offers of music or films on the Internet.

The EU Culture Council pushed yesterday (20 November) for "a fair balance between the various fundamental rights" while fighting online piracy, first listing "the right to personal data protection," then "the freedom of information" and only lastly "the protection of intellectual property".

The Council conclusions also stressed the importance of "consumers' expectations in terms of access […] and diversity of the content offered online". No mention was made of a gradual response to serial downloaders of illegal cultural material, as foreseen by the French authorities." [Euractiv]

EU Public Affairs Monitor - 24/10/08

IGC Consultations to Continue on Future Work Program
"The Director General of the World Intellectual Property Organization (WIPO), Mr. Francis Gurry, and the Chairman of the Intergovernmental Committee on Intellectual Property and Genetic Resources, Traditional Knowledge and Folklore (IGC), Ambassador Rigoberto Gauto Vielman of Paraguay, said they would pursue efforts in the coming weeks to bridge differences among member states on the way to move international negotiations forward. The IGC wrapped up its 13th meeting late in the evening of October 17, 2008 after attempts to hammer out compromise texts on the future work program faltered. Despite intense negotiations, delegations were not able to agree on the working procedures required to deliver the concrete outcomes that many have called for from this Committee. The IGC’s mandate calls upon it to accelerate its work, and expectations remain strong that the Committee should produce a significant outcome by the time it is required to report back to the WIPO General Assembly in September 2009." [WIPO]

EC Legal Affairs Committee set to debate term
"No fireworks are expected, but some industry executives are already blocking out early November in their diaries as the next critical date in the copyright term story. The EC’s Legal Affairs Committee (LAC) meets in Brussels on November 4 to discuss the issue, which has so far been exercising a number of working groups.

According to one insider, the LAC is then likely to draw up a draft report, which will be put before the European Parliament.
“The word from the working groups is that Holland and the UK are currently not supporting copyright term extension. But, if the UK is isolated, it will not insist on being difficult,” he says. Poland was also thought to be against the extension of term, but another source suggests its ministers are sitting on the fence.

Once the European Parliament has looked at the work done by the LAC – and made its own amendments and readings - it will be sent down to the European Council for policy making. But the source is worried that, with the EU presidency due to change next year, the timing is tight if the Parliament goes for a second reading. “I think we are talking about the Parliament working on it in January and February, but March is really the last month that Parliament can vote,” he adds." [MusicWeek]

New Comms Minister plans report on Digital Britain
"Our new Minister For Communications, Technology And Broadcasting, former OfCom chief Stephen Carter, has announced he has commissioned a report on 'Digital Britain' which will inform government on what role it should play in the ongoing development of the digital and communications industries.

The report comes as one key digital media platform - digital audio broadcasting - faces an uncertain future following the decision by Channel 4 to bail out of its ambitious plans to launch a second national DAB network, and past decisions by some of the major radio firms who were instrumental in setting DAB up in the first place to sell off or close down their digital-only stations. The BBC remains committed to DAB, and with internet capacity issues already a concern as more people start to use rich media services like BBC iPlayer, the wider radio sector is probably advised to continue investing in a digital radio system that doesn't rely on the internet for delivery. Though with ad revenues from digital services still somewhat less than the cost of operating them, and with ad budgets set to be even further slashed in the coming year, it's not surprising commercial radio chiefs have lost their enthusiasm for DAB. Carter will also have to consider what to do about internet piracy. Although the ISPs have this year reluctantly agreed to take a more proactive role in helping record companies distribute warnings to those who access illegal sources of music online, if the warnings campaign doesn't prove to be a success and the labels start to push the ISPs towards taking more extreme action against copyright infringers - maybe even the 'three strikes and then you're cut off' proposal being considered in France - then they may need the government to come good on their promises to legislate in this area, and Carter may have to oversee that." [CMUDaily]

French Culture Minister Launches Cultural Independents Conference
"French minister of culture Christine Albanel has launched the "Arenes europeennes de l'independence" (European Arena Of Independence), a two-day conference session gathering European independent companies from the cultural field - mainly music, cinema and literature. The event will take place in Paris on Oct. 23 and 24.

"Creation is largely supported by independent companies," said Albanel, "which are largely impacted by online piracy." Albanel stressed that independent companies release 80% of new music records in France and generate 44% of the recorded market revenue and 67% of the industry jobs.

Albanel named several measures taken by her ministry during the past 18 months to support the recording industry, namely a €12 million ($15.7 million) tax-credit scheme allowing record companies to offset part of their investments on new records and a dedicated advance fund to help record companies borrow money.
"We need to go further," she added, in terms of financing and distribution. Albanel also reminded her audience about the importance of the EU to preserve fair market conditions and to rule on a more consistent VAT scheme for online cultural business."" [Billboard]

Music News Bulletin - 20/10/08

Bertelsmann today launches its new BMG Rights Management business, promising tailor-made services for songwriters and performers who want support in “the creation, marketing and licensing, collection and accounting, as well as advance financing of their music repertoire”
"The new organisation launches with a selection of European music catalogues that the company retained from the former Sony BMG portfolio. These include works from more than 200 artists and the company is planning to expand on this, initially with further European acts.
Bertelsmann says that its “core competency” will be “advising songwriters and performers in building their repertoire, supporting them with marketing and licensing services, and providing transparent coverage of all their rights management needs”. It will also provide financing during the rights-building process." [MusicWeek] [BillBoard]

The Mechanical-Copyright Protection Society (MCPS) has announced new rates and blanket licensing deals for UK independent production companies using library music
"The Independent Production Company (IPC) licence provides access to over 300,000 pieces of music from 150 music libraries covering all genres and styles.
The efficient ‘one-stop-shop’ system means only one application is required for all music use to be covered." [MusicWeek]

Online music piracy fell by 10% in 2008, according to new findings from Entertainment Media Research
"The company’s latest Digital Music Survey attributes the fall to the changing attitudes of internet service providers to piracy –earlier this year ISPs agreed to send letters to customers it suspects are sharing files under pressure from the BPI. he survey, which polls 1,500 UK consumers, also point to the popularity of music videos on YouTube as a further sign for optimism among the music industry." [MusicWeek]

U.K. Government Aims For ‘Digital Britain’
"The U.K. government is to develop a "Digital Britain" action plan in an effort to ensure the U.K. will be at the forefront of innovation and investment in the digital and communications industries. The report will be led by the first minister for communications, technology and broadcasting, Stephen Carter. The government says the sector is worth £52 billion ($89.9 billion) a year to the economy." [BillBoard]

Bush Signs Controversial Anti-Piracy Law
"U.S. President George W. Bush signed into law on Monday a controversial bill that would stiffen penalties for movie and music piracy at the federal level. The law creates an intellectual property czar who will report directly to the president on how to better protect copyrights both domestically and internationally. The Justice Department had argued that the creation of this position would undermine its authority." [BillBoard]

EU Public Affairs Monitor - 20/10/08

WIPO Director General Calls for Concrete Outcomes to Benefit Indigenous and Local Communities
"The Director General of the World Intellectual Property Organization (WIPO), Mr. Francis Gurry, called upon WIPO’s member states to intensify efforts to develop concrete international outcomes on traditional knowledge, traditional cultural expressions and genetic resources. This call opened the 13th session of the Intergovernmental Committee on Intellectual Property and Genetic Resources, Traditional Knowledge and Folklore (IGC), WIPO’s principal policy forum working on these issues, on October 13, 2008. Newly appointed IGC Chairman, H.E. Ambassador Rigoberto Gauto Vielman of Paraguay, echoed the Director General’s call for the Committee to accelerate and focus its work with a view to delivering conclusive results. Mr. Gurry stressed the need for progress in the IGC’s work, in light of the high priority given to these issues by many diverse countries and by indigenous and local communities. He called on delegations to “reflect on the progress that we have made and where we are going in this process.” The Director General recalled the IGC’s decision at its last meeting in February 2008 to consider intersessional procedures to help accelerate the IGC’s work and to enable it to submit proposals to the WIPO General Assembly in September 2009 in line with the Committee’s current mandate. Mr. Gurry underlined the importance of maintaining a holistic approach to traditional knowledge, traditional cultural expressions and genetic resources, in the light of their cultural significance for many indigenous and local communities. But he equally pointed to the need for practical steps that would lead the Committee to areas of common ground on which solid progress could be made." [WIPO]

Ireland to work with EU lawyers on Lisbon opt-outs
"Irish Taoisach Brian Cowen said his government is consulting with EU council legal services on drafting possible "opt-outs" to the Lisbon treaty, speaking after an EU summit in Brussels on Thursday. "We are prepared to go into that process in good faith," he said, the Irish Times reports, with the structure of the European Commission, EU military integration, taxation and civil rights the likely areas of concern.The Irish leader also underlined his personal support for the Lisbon document and used Iceland's financial meltdown to show the benefits of EU and eurozone membership."There is a huge body of opinion - not shared by the Irish people as things stand - that sees the need for stronger institutions, for better decision-making processes, for more effective decision-making to make sure we can deal with challenges that transcend national boundaries," Mr Cowen said." [EUObserver]

Ashton hearing brought forward
"Deal with European Parliament could limit the disruption caused by the handover of the trade portfolio to the UK's new commissioner. The European Parliament has agreed to fast-track its hearing of the UK's new European commissioner, Catherine Ashton, a move prompted by concerns that she might otherwise be obliged to miss a number of important international meetings." [EuropeanVoice]

EU Events: October 2008 Monitoring

The Internet Summit Austria 2008
02 October 2008, Vienna, Austria
"e-Inclusion" is the leading theme of the conference, which will be a meeting of minds of the leading thinkers and major architects of the internet and the digital society today. Their range of experience will cover all aspects of e-Inclusion like e-Accessibility, Ageing, e-Competences, Socio-Cultural e-Inclusion, Spatial e-Inclusion, Inclusive e-government and broadband for all.
This event takes place in preparation for the European e-Inclusion Ministerial Conference 2008 in Vienna and is supported by the Federal Chancellery of Austria. The audience will consist of the top 300 CEOs, academics, administration and politicians of Austria and some European countries.
ISPA (Internet Service Providers Austria) is a non-profit organisation dedicated to advance the usage of the Internet in Austria. [Europa]

Internet of Things - Internet of the Future
6 - 7 October 2008, Nice Acropolis (France)

eGovernment for Regions at Open Days 2008
to be held 7th October 2008, Brussels, Belgium
This workshop, organized during the Open Days 2008 European Week of Regions and Cities, will look at current EU initiatives and activities in the eGovernment area and how they can benefit regions and municipalities. [Europa]

The conference will concentrate on the following 2 areas:
1. aspects related to the development of the mobile Internet
2. the industrial and technological perspectives necessary for the development of the 'Internet of Things'

The aim is to identify and discuss the technological state-of-the-art, future trends, as well as opportunities and challenges, and draw a comprehensive picture of how the Internet of Things will change our interactions with objects. [Internet2008]

Ministerial Conference on the Internet of the Future
8th October 2008 [Europa]

Towards Future Media Internet
13 - 15 October 2008, Saint-Malo, France
This event aims to be a major conference and exhibition devoted to the field of Networked and Electronic Media (NEM) and ICT at large. It will provide an opportunity to network and share information and viewpoints on R&D status and perspectives in this area. It is organised by the NEM platform, one of the European Industrial Initiatives, also known as Technology Platforms. The NEM Platform is established by key European stakeholders, addressing the convergence of media, communications, consumer electronics, and IT as a wide opportunity for future growth, by taking advantage of generalised broadband access, increased mobility, availability of rich media formats and contents, as well as new home networks and communications platforms. [Europa]

An industrial property rights strategy for Europe, Strasbourg, 16-17.10.2008
A strong industrial property rights system is a driving force for innovation, stimulating R&D investment and facilitating the transfer of knowledge from the laboratory to the marketplace. On 16 July 2008, the Commission adopted a Communication on an industrial property rights strategy for Europe which outlines actions to ensure Europe has a high quality industrial property rights system in the years to come. The Communication provides a horizontal strategy across the spectrum of different industrial property rights and includes initiatives on enforcement, innovation support for small and medium-sized enterprises, and the quality of industrial property rights. It complements the 2007 Communication on the patent system, which set out a way forward towards the adoption of a Community patent and an integrated EU-wide jurisdiction for patents. [Europa]

Second European Summit on Interoperability in the iGovernment
20 - 22 October 2008, Rome, Italy
This event will offer a forum to develop new strategies, to network and build synergies between participants. These will include representatives from the European Commission, national and regional governments, researchers, academics and ICT experts. The Summit aims to : analyze the European Interoperability Framework produced by IDABC ; verify the state of the art in Interoperability in Europe ; involve International and national stakeholders on interoperability, in order to define new priorities and to develop more innovative and efficient electronic services. [Europa]

World Standards Day 2008 conference: "Standardisation and SMEs: a challenge for Europe; what are the keys to success?" Paris, 21 October 2008
On the occasion of World Standards Day 2008, the French Presidency of the Council of the European Union, in cooperation with the European Commission, will organise a one-day conference about standardisation.
...

Entrepreneurs, organisations representing SMEs, the national standards bodies, administrations and other interested parties will meet on 21st October 2008 in Paris in order to share their experiences and throw new light on the strategic importance of standardisation for SMEs, the challenges ahead and the solutions which work. [Europa]

2nd Europe INNOVA Conference - Accelerating Innovation
The Europe INNOVA Conference 2008 will focus on accelerating innovation in Europe and how to optimise knowledge transfer, strengthening industry's innovation capacity through strategic partnerships and supporting innovative entrepreneurs. 22nd – 24th October 2008 [Europa]

In the Loop: 30/09/08

Germans gives peeking Google one in the eye: Schleswig-Holstein's answer is NEIN!
30th September 2008
"The town of Molfsee near Kiel in the north-western German state of Schleswig-Holstein doesn't want to be filmed by Google for its Street View program, a service that provides 360-degrees street level images via Google Maps.

The leader of the Christian Democratic Union on the town council told the Lübecker Nachrichten that "we are not going to let this happen". The 5,000 inhabitants find the project "extremely alarming" as criminals can plan break-ins more easily. Germany's Federal Commissioner for Data Protection also has major misgivings about Google's plans, according to Der Spiegel." [TheRegister]

Sky told to hand over footy and film rights: Rivals to get access at fair price
Posted in Government, 30th September 2008
"The UK's media regulator Ofcom has told Sky it should offer to sell rights to football games and Hollywood films to other broadcasters at a fair price.

The investigation into pay TV was begun after complaints were made by BT, Virgin, Setanta and Top Up TV. Ofcom reckons that consumers make their choices of which service to go with based on content not the features of different platforms. Big films and live Premiership games are a big draw for viewers and Sky has "market power" in these areas." [TheRegister]

Tories would decentralise NHS IT: Want patient confidence and reined-in data 30/09/08
"An incoming Conservative government would decentralise health service computing and extend competition between suppliers, according to a plan released at its party conference.

The party's NHS Improvement Plan, released on 29 September 2008 by shadow health secretary Andrew Lansley, says the party will replace "Labour's centrally determined and unresponsive national IT system."" [TheRegister]

Secret Service camera bought on eBay: Nikon camera, good nick, includes secret files 30th September 2008
"Today's government data loss shenanigan is a repeat performance of that old favourite - flogging off old kit containing secret information to a random punter through online tat bazaar eBay.

An unnamed 28-year-old delivery man from Hemel Hempstead bought a Nikon Coolpix camera for £17 on eBay. But when he returned from his holiday and downloaded the contents of the camera he found pictures of rocket launchers, log-in details for the Secret Service's encrypted remote computer network marked Top Secret and a hand-drawn diagram linking different, named al-Qaeda cells including individual names and occupations." [TheRegister]

US Congress rubberstamps IP enforcement bill: DoJ suits out, White House czar in 29/09/08
The US House of Representatives on Sunday passed a bill heavily backed by the recording industry that would create an intellectual property enforcement czar position in the White House as well as significantly increase penalties for IP infringement.

The bill passed unanimously through the Senate on Friday after being stripped of a controversial provision that would allow the US Department of Justice to file civil suits against suspected copyright violators on behalf of copyright holders. [TheRegister]

Click here to read more information on Mr Grimsdale, King Heron and Mobius

Are Intellectual Property Rules the “New Protectionism” or are they the Necessary Policies to Promote Innovation in the Knowledge Based Economy?

Protectionism, the fostering or developing domestic industries by protecting them from foreign competition through duties or quotas imposed on importations has existed in many different forms, ranging from mercantilist practices in the sixteenth century to dirigiste and isolationist economics of the twentieth century. Today the level of protectionism has declined as a result of organisations such at the WTO and the EU fostering common approaches to trade and policy developments. However, despite this countries will still attempt to use new and existing levers of influence to strengthen their international positions and their domestic companies. One emerging form of modern protectionism is the strengthening of intellectual property, the ownership of ideas and control over the tangible or virtual representation of those ideas. Encouraged by developed economies such as the United States and the EU, intellectual property rules benefit their policies, as the new rules extend the length of exclusivity that companies or individuals have over new ideas. Despite claims that the structure encourages new research and innovation the rules favour larger companies and liberal economies compared to smaller companies and less developed economies.

In many developed countries following the Second World War the overriding principle was to have an industrial policy, usually heavily reliant on the public sector in order to encourage the development of ‘national champions’, companies with enough expertise and scale to be able to compete well on the international markets. These values had been reflected in the protectionist measures which some countries had employed, such as France giving generous loans and subsidies to key industries. However, the growing web of trade agreements, such as the Treaty of Rome in 1957, which put restrictions on subsidies left France “saddled with huge coal, steel, shipbuilding and automobile companies that were absorbing public funds but which had substantial overcapacity and could not produce as cheaply overseas.”[1] This resulted in France increasing its pressure on its European neighbours in the 1990s to increase its level of standards in many areas in order to reduce their competitive advantage as a result of lower producing standards and a firmer policy on agricultural imports to the EU to protect its agricultural base.

The WTO’s Agreement on Trade-related Aspects of Intellectual Property Rights (TRIPS), a binding international agreement that sets new universal standards on how countries grant and protect intellectual property (IP) helped to change the global climate of patents and the right to access information.

The Previous System

Prior to the strengthening of the patent system, “society looked to high technology for a model of how to innovate, not the only or necessarily the best model of how to innovate, not the only or necessarily the best model, but a model that certainly worked. The model was based firmly on the notion that innovation was dependent on the free flow of information.”[2]

This was part of the belief that information should be disseminated as much as possible, as even though the free rider takes the benefit of information without having to pay for it society gains, as the producer of information does not lose the information. This emphasis places the innovator above the inventor, as the benefit to society of a new breakthrough being used widely is greater from society’s point of view than if an inventor solely made use of it. For example, Drahos, and Mayne considered that the more producers who know how to produce a therapeutic drug the better, as the producers would have to compete on price in order to sell it. [3]

There have been varying uses of free riding throughout economic history, with countries ranging from Switzerland and the United States not having patent law until the 19^th century to some countries which still maintain some degrees of free riding. [4] This is because free riding enables countries to ‘imitate’ in order to catch-up with other countries economically. For Trebilcock and Howse there is “nothing suspect or unreasonable with the preference of many developing countries for a relatively lax system of intellectual property rights.” [5] One example of the was Japan, which practised an imitation policy highly successfully after the Second World War.

As matters of intellectual property originally tended to relate only to domestic innovations the institutions tended to reflect national preferences. For example, Canada was able to develop a highly successful generic drugs industry in order to guarantee value for money healthcare for its citizens as a result of promoting competition in the pharmaceutical industry.

Also, as R&D often was publicly funded it permitted for greater cooperation between countries on major scientific projects, as the benefits of findings were likely to benefit all.

Calls for Greater IP Protection
Since the 1980s traditional industrial policy, whereby governments subsidized various industrial sectors to promote national economic development, had been severely criticized. Its practice became “increasingly less viable both for reasons of budgetary restraints and for fear of trade counterveil measures by other countries.” [6] This combined with the growing popularity of libertarianism and the belief in the free market over public investment created louder concerns for reform of intellectual property rules, particularly from the business community. However, Doern feels that the decline of traditional industrial policy and the emergence of trade related policies are traceable with hindsight but they do not yield a simple casual path for intellectual property for IP institutions.[7]

This relationship between society and businesses has altered since the 1980s, with the intellectual property balance being tilted in favour of businesses in order to allow growth. A major argument from the business community was that there was a new need to protect inventors. It is argued that today’s inventors are different from yesterdays, as the time and cost necessary to make new discoveries was greater than in the past and that, consequentially they required a greater return to justify and further encourage research. As a consequence patents, a form of subsidy to inventors from society in exchange for new knowledge was extended.

Supporters of this felt that the monopoly of longer patents is less of a problem than it would have been in the past because “as alternative strategies proliferate, there are fewer and fewer products with inelastic demand curve that allow companies to raise their prices arbitrarily to earn monopoly returns.” [8] Thus, as there is increased choice there is less opportunity for patent holders to abuse their position. However, this pure version of perfect competition fails to stand up to the light in many situations. As a result, the US Government has cut its support for research and development. What used to be a fifty - fifty split in investment has now become one third - two thirds split in research expenditures. [9]

Increasing Intellectual Property Internationally

America and later Europe have been the major standard bearers in extending IP and creating global standards globally. This was a response to create a framework to encourage international trade, through creating a stable framework for trade in goods, services and knowledge for companies. However, the framework’s unitary style and free-market language create significant disadvantages for the developing worlds and their businesses.

Until the 1980s America was content to share its innovation with the world, partly to counteract the threat of the Soviet Union but also because “Americans believed that the rest of the world would not be able to catch up with American ingenuity,” as while foreigners were copying the last generation of technology Americans would be inventing the next. [10] However, the economic growth of East Asian companies and their increasing abilities to compete both in terms of manufacturing and research has put pressure on American competitiveness.

Following bilateral agreements with Hungary, South Korea, Singapore and Taiwan the US Government learned that “while exhortation alone was ineffective, linking trade and intellectual property protection could get desired results.” [11] As a country with a $12,455,825 million GDP[12] the United States has been able to exert its influence on others using its market size to get concessions for protecting its IP. This has been used to cement its strength as the largest pharmaceutical manufacturer and computer software manufacturer in the world.

During the Uruguay Round the United States pushed for increased levels of IP, with a flat twenty year time period for all patents. This agreement occured without any African country present at the earlier rounds of negotiation, despite the importance of such a decision. It resulted in the linkage between trade and IP being tightened through amending the Trade and Tariff Act in 184 and 1988. As a result, America “is able to retaliate swiftly with trade sanctions in the event that targeted countries fail to adequately protect its intellectual property.” [13]

Effects on Businesses
The economic consequences affect all types of businesses, as agreements such as TRIPS raise the barriers to entry for all companies, making it difficult for new or smaller companies to establish themselves. However, this is especially the case for developing countries, as they tend to have less powerful businesses, especially in high knowledge industries.

In the past, companies were willing to share their technology because it did not seem to be the source of their success and could not be sold for much anyway. [14] However, as a result of lengthening the time period of IP to twenty years there is a considerable benefit to enforcing and claiming rights of patents. For example, Texas Instruments, once liberal in its cross-licensing arrangements with competitors, has become particularly litigious. Its most profitable product line is now patent royalties. For example, the company’s licence income from $30 million in 1990 to nearly $1 billion in 2000 (Rivette and Kline, 2000). [15]

Previously, businesses who developed a product would first attempt to move quickly in producing it in order to get the ‘first mover advantage’ and gain economies of scale so significant that other companies would be put off entering the market. However, as a result of the new system large companies are becoming less willing to share their inventions with others, as they have such a large period of monopoly they have a greater incentive to use their internal resources. As a result there is less dissemination of knowledge, as there is no incentive for companies because they can sit on the patent. Today, 73% of private patents were still based on knowledge generated by public sources such as universities and non-profit or government laboratories. Thurlow felt that this was enough to suggest that secretly held knowledge does not generate the next generation of technology. [16]

The flat twenty year intellectual property time period was introduced by negotiators as an expedient, as the time it would take to introduce separate industry agreements would be time consuming and perhaps preferential to certain industries. However, as a result the flat time period it has greatly distorted many markets. Simple economic logic suggests that these periods of protection “ought to vary greatly by field or sector, depending on varying cost structures, investments, and payback periods.” [17]

As a result, some industries have a greater incentive to produce patents, as the benefit of a patent exceeds the length of the monopoly period given. The table below highlights the fact that even though many patents are being issued it does not mean that the technology being developed would not have come about if the IP protection period was shorter.

Inventions that would not have been developed in the absence of patent protection (%)[18]

Pharmaceuticals 60

Chemicals 38

Petroleum 25

Machinery 17

Fabricated Metal Products 12

Electrical Equipment 11

Primary Metals 1

Office Equipment 0

Motor Vehicles 0

Rubber 0

Textiles 0

The lack of mini-patents, which would provide shorter, less expensive and less rigorous forms of protection has disadvantaged smaller companies. This results in smaller and medium sized companies being unable to compete on a level footing with larger companies.

Small companies are in a lose-lose situation in regards to IP as even if they have a patent it may not guarantee them any security. In situations where rival companies start using a technology or process smaller companies may be unable to afford or have the human resources to mount a legal challenge against the offending company.

Patents do not confer any wealth. The amount spent on securing and enforcing patents does not add any value to an idea. With cases lasting four years or more, costs can go from between $2 million and $10 million per case, resulting in companies spending as much time in the courts as they are in the laboratories. [19]

Jorde and Teece argue that ‘legal scholarship and judicial action (in the US) have been slow to recognise the primary importance of innovation to the competitive process. [20] For example, corporate patent attorneys have started scrutinizing their companies’ patent portfolios and have become more reluctant to give R&D managers the go-ahead on a new idea or business for fear of duplicating a patented product. [21]

The law community suggests that anti-trust cases will help clarify any misunderstandings through test cases. However, any judges decision will merely reflect previous judgements and will be unable to take account of any economic or political realities of agreements regarding IP.

Effects on Developing Countries
As a result of longer periods of agreements and tougher enforcement of IP protection there has been an increase of foreign technology transfer as a consequence of companies being less concerned about their technology being copied. However, it is difficult to envisage whether this would have happened regardless. The main concern is that the developing world has had a system imposed on it that forces it to pay the developed world for technology that it morally should be discounting the effects of patents.

As mentioned previously, most countries have gone through stages at which they ‘free ride’, borrowing technology from abroad and using it to develop the economic infrastructure until there is domestic pressure to protect domestic innovators. Agreements such as TRIPS have removed this path which had previously allowed countries such as Japan and America to become prosperous, widening the gap for many countries to economically reform.

For example, the United States has 3676 scientists and engineers in R&D per million compared to Rwanda’s 35 scientists and engineers in R&D per million. [22] It is unlikely that a company would seriously consider relocating to Rwanda just because it was offering a fifty year period of IP protection. Consequentially, it seems unfair to burden a country with regulations and demands that it will struggle to comply with and affect it greatly.

This is especially so given the fact that the patent infrastructure is based more on the developed worlds needs for consumerism, with emphasis on cheap entertainment goods rather than poorer countries needs to cheap medicine for malaria.

No case is this more apparent than the pharmaceutical industry which has now become purely business orientated and seemingly unable to make moral or investment decisions. Take for example the pharmaceutical industries shock at South Africa’s attempts to introduce cheap drugs to deal with the AIDS crisis merely because it would be seen as the thin edge of a wedge of reduced prices or generic goods for other countries.

The pharmaceutical industry has every right to attempt to be profitable. However, the infrastructure put in place appears to knowingly put in place a system whereby the industry maximises its costly investment in developing and testing drugs on both the developed and developing countries of the world. In the case of poor countries inability to develop new drugs for themselves or generic drugs legally this would be a case of abuse of control and overly protectionist policies of developed nations.

Similarly, its market decision making results in greater resources being devoted to solving the crisis of hair loss over the crisis of HIV because developed countries will provide a more profitable marketplace.

Conclusion

The benefits of agreements such as TRIPS seem to be highly one way, reinforcing the dominant position of countries such as the United States and economies such at the EU. Measures to encourage research are helping to create a situation where inventors are given too great a control over the innovation process. This seems to benefit predominantly Western and East Asian companies without offering poorer companies the benefits beyond the chance of increased foreign investment if they toe the line. The lack of power is highlighted by industries such as pharmaceuticals being able to set the level of investment and price on goods without any form of accountability. However, intellectual property is not the ‘new protectionism’, as new battle lines such as over how we reduce the growth of carbon emissions are creating more current forms of government competition. Despite this, the new rules are a major disadvantage that works against the least well off in the developing world.

By Jonathan McHugh

First written in May 2007

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[1] Peter Hall, Jack Hayward and Howard Machin Developments in French Politics (The Machmillan Press Ltd) 1994. p175

[2] S. MacDonald Exploring the hidden costs of patents p.26

[3] P Drahos and R. Mayne Global Intellectual Property Rights: Knowledge, Access and Development (London: Palgrave, 2002) p4

[4] P Drahos and R. Mayne Global Intellectual Property Rights: Knowledge, Access and Development (London: Palgrave, 2002) p4

[5] B. Doern Global Change and Intellectual Property Agencies (Pinter) 1999 p. 7

[6] The Canadian Intellectual Property Office p61

[7] B. Doern Global Change and Intellectual Property Agencies (Pinter) 1999 p. 35

[9] L. Thurow Needed A New System of Intellectual Property Rights Harvard Business Review

[10] L. Thurow Needed A New System of Intellectual Property Rights Harvard Business Review

[11] S. Sell Power and Ideas North South Politics of International Property and Antitrust (State University of New York Press) 1998 p. 183

[12] International Monetary Fund, (World Economic Outlook Database) September 2006;

[13] S. Sell Power and Ideas North South Politics of International Property and Antitrust (State University of New York Press) 1998 p. 183

[14] L. Thurow Needed A New System of Intellectual Property Rights Harvard Business Review

[15] S. MacDonald Exploring the hidden costs of patents p.29

[16] L. Thurow Needed A New System of Intellectual Property Rights Harvard Business Review

[17] The Canadian Intellectual Property Office p. 121

[18] The Canadian Intellectual Property Office p62

[19] S. MacDonald Exploring the hidden costs of patents p.29

[20] Cited from The Canadian Intellectual Property Office p. 63

[21] S. MacDonald Exploring the hidden costs of patents p.32

[22] P Drahos and R. Mayne Global Intellectual Property Rights: Knowledge, Access and Development (London: Palgrave, 2002) p2

Does WTO Centred Free Trade Policy Essentially Make National Industrial Policies Obsolete? Notes

North American Trade Organisation

• The increasing scale and rate of movements of finance, goods, services and people have placed increasing strains on North American policymakers to coordinate and make concessions in exchange for policy reform abroad.
• Like the WTO, NAFTA administers the implementation of a set of agreements in the goods sector, services and property rights but restricted to Canada, Mexico and the United States of America. Each of their motivations are different and all parties have had to make difficult decisions in order to make general agreements.
• Transformationalists such as Rosenau argue that the growth of ‘intermestic’ affairs define a ‘new frontier’, the expanding political, economic and social space in which the fate f societies and communities is decoded.
• Keohare considers sovereignty best understood ‘less as a territorially defined barrier than a bargaining resource for a politics characterized by complex transnational networks.”[1]
• “Contemporary regional trading arrangements have been developed to liberalise trade not build protectionist fortresses, recognising the potential benefits from freer trade but also the relative ease of reaching agreement at the regional, as opposed to the global level. While open regionalism does not appear to be leading to mercantilist trading blocs, for smaller and developing economies it is partly driven out of fear of being left out of preferential trading arrangements (Perroni, Whalley 1994). Paradoxically, negotiation of regional trade agreements is partly insurance against the possibility of regional trade blocs. The threat of regionalism has thus proved more potent than its reality”[2]

United States of America

• The rational for American policymakers for NAFTA was that as a result of its significant economy size (Mexico’s GDP was $250bn; Canada’s GDP was $569bn and the USA GDP was $6,952bn)[3] it was in a position to negotiate significant compromises out of Canadian and Mexican negotiators in order for the countries to access its market.
• The free market emphasis on both the WTO and NAFTA was seen to particularly benefit American businesses as the political, economic and businesses were culturally calibrated to take advantage of an increasingly competitive laissez-faire position. NAFTA helped to consolidate a strongly market orientated regime, weakening pre-existing national political instruments that had been developed to offset the negative aspects of markets without developing international instruments. In contrast to the EU, for instance, where a great deal of effort had been devoted to developing an institutional solution to exchange rate problems, such problems in North America are dealt with by individual government initiatives on an ad hoc basis, as was especially apparent in the Mexican pesos bailout.
• There was a need for expanding the opportunities and the scope of operation of the investors abroad. The relocation of American factories to Mexico’s free trade area was seen as a significant benefit to manufacturers as they were able to benefit from Mexico’s cheap labour pool and export to America and Canada without tariff. For American politicians this was seen as a method of reducing the flow to Mexican immigrants across the border, as the increased demand for labour in Mexico would reduce the incentive for Mexicans to cross the border.
• The widening of intellectually property rights gave “new technologies excessive profits as a result of the monopoly they are seen as interfering with the flow of knowledge to places where it is needed.”[4]
• This was to especially have an adverse effect on Canada, as its thriving generic drug industry had developed as a result compulsory licensing provisions. However, NAFTA overturned this policy, despite many Canadian’s objecting on social and economic grounds.
• These areas of dispute resolution for investment, intellectual property rights and financial service provision were the most developed in the agreement, creating an legal framework for legal resolution.
• Most other matters were, by contrast left to power politics, even compared to the mechanism in place at the WTO. Porter notes that the labour and environmental agreements are especially weak, despite reforms by Bill Clinton later. However, even he sees limits to citizens’ willingness to citizens to increase their exposure to international markets without new ways to safeguard themselves from negative effects.

Canada

• Before NAFTA Canada was unhappy with its dispute resolution procedures with American companies. Porter suggested that larger countries are able to use political power to disregard or interpret agreements as it pleases.
• For Canada and Mexico “it was important, if their increased access to the US market was to be meaningful that there be a way to address the long tradition of US firms using US anti dumping and countervailing duty measures to gain protection from foreign competition. The FTA had put in place a dispute resolution mechanism that, in its first five years, had led to two thirds of Canadian appeals of US decisions being successful, twice the success rate of appeals by other countries using the non-FTA procedures provided by the US.”[5]
• Canada was keen to gain access to US public sector contracts. Consequentially purchases above the threshold of $50,000 for federal government entities and purchases over $250,000 for federal government enterprises became open for competition. However, America was still able to retain small and minority business set asides.
• Despite opening up a large level of its influence over foreign companies Canada retained its FTA right to review major foreign takeovers above $250m and in the oil, gas and uranium sectors.

Mexico

• Hirst suggested that globalisation more often than not reflects a politically convenient rationale for implementing unpopular orthodox neoliberal economic strategies.
• At the start of the 1990s the Mexican government was faced with three choices, to remain closed, open unilaterally or develop a strategy of negotiated liberalisation. They chose negotiated liberalisation to increase domestic reform as a result of NAFTA agreements.
• However, Mexico was able to exert concessions that reflect its own priorities/ Its negotiators managed to maintain domestic ownership of the petroleum sector, in order to guarantee future energy independence.

These notes were made by Jonathan McHugh in February 2007

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[1] D Held; A McGrew et al Global Transformations

[2] D Held, A McGrew et al Global Transformations

[3] M Cameron; B Tomlin The Making of NAFTA: How The Deal Was Done

[4] Porter, T The North American Free Trade Area

[5] Porter, T The North American Free Trade Area