Sunday, January 31, 2010

New Rule on the Social Use of Patented Invention

On January 27, 2010, the Korean Patent Act was amended to facilitate social use of patented invention. Two changes were brought by the amendment.

First, the government may use a patented invention in public interest. This means that the government use is no longer limited to national defense or other circumstances of emergency. But the government use must meet a controversial requirement of “non-commercial use.” This is controversial because the government may allow a third party (mainly for-profit businesses) to use the patented invention. This rule on the government use goes into effect on July 28, 2010.

Second, it is made clear that an experimental use exemption encompasses any activities for getting an approval of pharmaceutical products or agricultural chemicals. This change took effect as of January 27, 2010.

English translation of the Amendment:

Article 106bis (Government Use of Patented Invention)
(1) If a patented invention is necessary for national emergency, other extreme urgency or non-commercial use in public interest, the government may use the patented invention or allow a person other than the government to use the patented invention.
(2) When the government or the person other than the government knows or has demonstrable grounds to know the existence of a valid patent right, the patentee, the exclusive licensee or the registered non-exclusive licensee of the patent right shall be informed promptly of the fact that the patented invention is used according to Paragraph 1.
(3) The government or the person other than the government, when a patented invention is used pursuant to Paragraph 1, shall pay a reasonable compensation to the patentee, the exclusive licensee or the registered non-exclusive licensee of the patent.
(4) Matters necessary for the government use and the payment of the reasonable compensation are prescribed by Presidential Decree.

Article 96 (Limitations on a Patent Right)
(1) The effect of a patent right does not extend to any of the following subparagraphs.
(i) Working a patented invention for research or experimental purposes (including research or experiment for the purpose of getting an approval or reporting a pharmaceutical product pursuant to the Pharmaceutical Affairs Act or for registering agricultural chemical pursuant to the Agricultural Chemicals Regulation Act.

Thursday, January 28, 2010

Blogging ACTA Across The Globe: Lessons From Korea

For Korea, ACTA is the Anti-Commons Trade Agreement

In August 2008, our group, IPLeft, demanded that the Korean government disclose relevant information about its stance on the negotiation of ACTA. The disclosure was denied, as was our appeal. The reason for the denial was unconvincing: the disclosure, we were told, would result in "a harmful effect on a diplomatic relationship with foreign countries and severe damage to considerable national interests".

How does the participation in an international cooperation to combat the trade of "counterfeit and pirated goods" harmfully impact foreign relationships? Which national interests are to be damaged by open and transparent discussion? Unlike its attitude to civic society and the general public, it turned out that the Korean government already provided relevant information to, and sought opinions from, particular business groups from the earliest stages of the negotiation, at least from November 2007.

When it comes to ACTA, transparency and openness became principles that apply only to a small number of business interests. This is why the secrecy of ACTA is so bad: it mirrors a particular perspective that views the system of intellectual property as a means for maximizing commercial profit and which pays little attention to the broader social, cultural and economic implications of the IP system.

This imbalanced and biased approach is infused into the draft texts that we have seen. The draft chapters on civil enforcement, criminal enforcement, and border measures lack procedural justice and fairness. They improperly promote the interests of IP holders to the detriment of the other party in civil, criminal and administrative proceedings.

The provisions contained in the proposed Internet Chapter appear to impose undue obligations on ISPs. The extent to which ISPs are to be liable for copyright infringement by users is a matter of domestic cultural policy, not a trade issue. Careful balancing of interests and fine-tuning are necessary, including factors specific to local culture and environment which cannot be concluded in a closed room occupied by trade negotiators.

More significantly, the liability of ISPs is of great importance not merely for the protection of copyright: it is important for the protection and realization of everyone’s right to take part in cultural life as declared in legally binding international human rights instruments. One of our concerns about ACTA is the risk of undercutting the principle of the rule of law and the possible conflict with human rights, in particular with the right to a fair trial, the right to equality before courts and tribunals, the right to equality of arms, and the right to be presumed innocent. ACTA tries to introduce substantial changes in civil and criminal procedures. But the proposed changes give rise to issues of procedural justice and fairness, jeopardizing Korea’s obligations under the international human rights instruments, e.g., the International Covenant on Civil and Political Rights, and potentially weakening the democratic values recognized in our Constitution.

For instance, pursuant to the US-Japan joint proposal, any provisional measures such as a preliminary injunction may be rendered by judicial authorities without a prior hearing of the alleged infringer. Here, neither "irreparable harm to the right holder" nor "a demonstrable risk of evidence being destroyed" is explicitly required. Even the Customs office may take an ex-officio action to suspend the release of suspected copyright or trademark infringing goods. Moreover, right holders may be awarded a predetermined amount of damages without having a burden to show the amount of damage or even when the amount is greater than actual damage. An even more severe breach of principles of procedural justice is found in a so-called "camcorder provision" under which anyone who attempts to use an audiovisual recording device to make a copy of any part of an audiovisual work in a theater may be criminally punished. This out-of-proportion rule not only produces a direct conflict with the right to be presumed innocent but also undermines the principle of fair use or fair dealing.

National autonomy is vital in order to decide the proper level of local IP protection and enforcement. Korean IP law has undergone substantial revision due to the threat of trade sanctions from both the US and the EU since the early 1980s. This economic coercion has continued for about thirty years, and has led to an emergence of consistent domestic pressure for stronger IP protection.

Interestingly, the strongest advocates for these reforms in Korea are not the IP industries: they are the executive branches in government which claim competance over the administration of patent, trademark, and copyright. To them, stronger IP protection and enforcement is a chance to enhance their position. The unending economic pressure and the heavy reliance of our domestic economy upon exports have produced this environment. The problem is that these state actors are much more influential than other, emerging local businesses, because they possess institutional capacities and resources to promote a maximalist IP regulatory culture.

With this power, these government agencies have introduced new laws in Korea which may well be used to support controversial provisions currently being discussed in Guadalajara, Mexico. Examples include a filtering obligation imposed on certain online service providers, and a "graduated response" rule under which the Minister of Culture can suspend or terminate the Internet account of a repeat infringer or even shut down a website that the repeat infringer is using. Advocates claim that the shutting-down provision is incorporated in the US-Korea Free Trade Agreement (and Side Letters) (currently awaiting ratification), and may possibly be pushed by the US in modified form during the ACTA negotiations. If ACTA is concluded with an inspiration of such provisions and applied to Korea under the name of international harmony, our effort to reform the copyright system would be undermined, and opportunities for democratic policy discussion at local level would be lost.

Contrary to the beliefs of ACTA negotiators, stronger, criminal enforcement rules can create unintended consequences among the general public. In Korea, following the introduction of these new laws, reports of criminal copyright infringement skyrocketed from 14,838 to 90,979 between 2005 and 2008. Among these, juveniles victims occupied 24% in 2008, an increase from 1.9% in 2005.

This reported increase, however, does not represent a rapid rise of the unauthorized use of copyrighted material by juveniles. Rather, it shows how criminal sanctions can be misused. Under the Korean Copyright Act, any unauthorized acts of reproduction or distribution of copyrighted works can invoke a criminal liability. This wide coverage of criminal sanction paves the way to abuse or misuse of criminal enforcement. ACTA is no different in this sense. In order to be "willful copyright piracy" under ACTA, an infringing activity needs to be "on a commercial scale". But commercial scale is defined so broadly that it covers activities with "no direct or indirect motivation of financial gain". With this broad definition, the infringement on a commercial scale may include almost every unauthorized use of copyrighted work. So, for instance, those who download a single piece of music may risk criminal penalties. In other words, ACTA opens the door to the global misuse of criminal enforcement rules, beyond even what we've seen in Korea.

Here, criminal sanctions have become a sort of new business model for lawyers acting for copyright holders (mainly music and film industries). They monitor Internet users and send warning letters to suspected individuals threatening a criminal action. In exchange for not taking the criminal action, they ask for a cash settlement. Criminal enforcement procedures provide copyright holders with leverage; using the threat of criminal action as leverage for the settlement negotiation as the initiation of criminal procedure is triggered by a complaint by the right holder. Among the 90,979 complaints in 2008, 56% were settled out of court.

ACTA risks exporting Korea's criminal enforcement regime, while importing the worst of other countries' IP laws. But that's not the only reason to oppose it. A trade agreement that breaches procedural justice, fairness, transparency, and proportionality is not Anti-Counterfeiting: it's Anti-Commons.

Tuesday, January 26, 2010

Glivec price cut by Government was revoked by Court

The court applied a rule (Ministerial Decree) which was revised on December 29, 2006. According to the rule, adjustment of the ceiling price can be rendered by the Minister of Health when the ceiling price is "highly unreasonable."

SEOUL, Jan 22, 2010 (AsiaPulse via COMTEX) --

A Seoul court on Friday said the price of Gleevec, an anti-leukemia drug developed by Swiss pharmaceutical firm Novartis, is not "unreasonable," ruling in favor of the drugmaker in a years-long battle with the local government over the cost of the medicine.

Last September, the Ministry for Health, Welfare and Family Affairs notified Novartis of its decision to reduce the price of Gleevec to 19,818 won (US$17.3) per capsule from 23,045 won, the initial price agreed to by the government and Novartis under a deal reached in January 2003. The move came one year after a group of civic activists and patients appealed to the ministry, complaining that leukemia patients were forced to pay up to 2 million won per month for the medicine.

Following the ministry's notification, the Swiss pharmaceutical giant filed a suit with the Seoul Administrative Court, seeking to nullify the government's move to lower the price.

"As Gleevec's upper-ceiling price was set as the average price of the drug in the seven most advanced countries, including the United States, it is hard to conclude the price was considerably unreasonable," the court said in its ruling.

Gleevec is used to treat patients with chronic myelogenous leukemia (CML), a form of blood cancer in which the body produces too many abnormal white blood cells. The deadly disease afflicts about 500 people in Korea each year, according to the ministry.

Major foreign pharmaceutical firms and the Korean government have battled over the pricing of several other essential drugs. Civic groups say that charging the same price in Korea as in the world's richest countries is unfair considering that per capita GDP is a lot higher in those countries.

The health ministry said it will review the ruling and decide whether to appeal the case or not in two weeks.

"This ruling is a regrettable decision as it could set a bad precedent in nullifying the ministry's administrative order," a health official said.

Novartis said it respects the court's decision, declining to elaborate further.

Wednesday, January 13, 2010

EC investigation on patent deal by originator and generic drug companies

Brussels, 12 th January 2010

Antitrust: Commission launches monitoring of patent settlements concluded between pharmaceutical companies

The European Commission can confirm that on 12 January 2010, on the basis of EU antitrust rules, it addressed requests for information to certain pharmaceutical companies asking them to submit copies of their patent settlement agreements. The requests cover patent settlement agreements concluded between originator and generic pharmaceutical companies in the period from 1 July 2008 to 31 December 2009 and relating to the EU/EEA. The Commission is in particular looking at patent settlements where an originator company pays off a generic competitor in return for delayed market entry of a generic drug. This monitoring exercise has been launched in the light of the findings of the competition inquiry into the pharmaceutical sector Inquiry (published in July 2009, see IP/09/1098 and MEMO/09/321 ). The sector inquiry highlighted the risk that certain types of patent settlements may have negative effects on European consumers by depriving them of a broader choice of medicines at lower prices and indicated that the Commission could monitor such patent settlements.

Commissioner Kroes commented: "The Commission's pharmaceutical sector inquiry points to significant shortcomings in the pharmaceutical sector. Patent settlements are an area of concern, not least if there are situations where an originator company pays off a generic competitor in return for delayed market entry. We need to monitor this type of agreement in order to better understand why, by whom and under which conditions they are concluded. The monitoring will also provide us with the possibility to act should this become necessary. Since completing the sector inquiry, the Commission has launched a number of new antitrust investigations and we will continue to do so should this be necessary."

A selected number of originator and generic companies received an information request in which they are asked to submit to the Commission a copy of all patent settlement agreements relevant for the EU/EEA markets and concluded in the period from 1 July 2008 to 31 December 2009, as well as copies of all annexes, related agreements and amendments. In order to limit the administrative burden on companies, they were asked for copies of the agreements without additional background information. Following receipt of the responses, the Commission will analyse the agreements and publish a short report providing a statistical overview. In case a specific settlement raises additional questions, a more targeted request for information could follow. Depending on the outcome of the exercise, this round of information requests may be repeated annually for as long as the Commission considers that there is a potential problem.