From jbohn@vais.net Mon, 29 May 2000 22:56:38 -0400
Date: Mon, 29 May 2000 22:56:38 -0400
From: John Bohn jbohn@vais.net
Subject: [Patents] WTO challenge to software patents

I have been wondering about the legal and political prospects for a WTO
challenge to individual US software patents, on the grounds of obviousness
or non-patentable subject matter.

The legal argument derives from the original General Agreement on Tariffs
and Trade (GATT 1947) and two of the agreements established with the WTO in
1994, the General Agreement on Trade in Services (GATS) and the Agreement
on Trade-Related Aspects of Intellectual Poperty Rights (TRIPS) (all are on
the WTO website).

Article II:4 of GATT 1947 essentially prohibits the US government from
creating or authorizing monopolies on certain types of products.  Article
XVI:2 of GATS similarly prohibits the US government from creating
monopolies in certain services, including retail and wholesale distribution
and computer services.  (Similar requirements apply to other countries, but
the details vary.)

At least arguably, patents create monopolies, so they could fall afoul of
GATT 1947 or GATT, unless otherwise allowed by the WTO agreements.

Of course, they usually are otherwise allowed.  Article 27 of TRIPS
requires member governments to grant patents on "any inventions, whether
products or processes, in all fields of technology, provided they are new,
involve an inventive step [or are non-obvious], and are capable of
industrial application."  Yet this does not authorize patents on obvious
products or processes, or on things that are not "inventions."  Article 1
of TRIPS authorizes members to "implement in their law more extensive
protection than is required by this Agreement."  This might be read to
permit patents, trademarks or copyrights on anything whatsoever, whether or
not new, obvious or original.  Yet such a reading could have abberrant
consequences, and does not conform to the commonly understood definitions
of patents, copyright, or intellectual property.  The only other section of
any WTO agreement to mention patents, Article XX(d) of GATT 1947,
authorizes members to take measures "necessary to secure compliance with"
patent laws.  Yet it is not "necessary" to issue an invalid patent, nor
does doing so secure compliance with the patent laws (and Article XX(d)
applies only to goods, not services).

It thus seems possible that WTO member governments can ask the WTO to rule
that an obvious patent issued by the US (or possibly other countries)
violates GATT 1947 or GATS.  Also, the term "invention" in TRIPS Art. 27
should arguably be construed as it would have been understood when TRIPS
was adopted in 1994.  At that time, many thought that relatively "pure"
software patents were not "inventions" at all, but algorithms that were
"discovered".  A WTO member might therefore ask the WTO to rule that many
US software or other patents violate Art. II.4 of GATT 1947 or Art. XVI.2
of GATS on this basis as well.

Of course, such an argument would not be iron-clad, and WTO decision-making
is governed more by politics and ideology than by law.  A WTO dispute
settlement panel on this issue would probably consist of diplomats and
patent office officials.  Most WTO members with functioning patent offices
currently consider software patents wonderful.  Thus, any challenge would
probably fail at present.

Yet this could change.  If software patents cause serious problems,
sentiment could turn against them.  Many developing countries have doubts
about patents already.  Korea and India, for example, have long viewed
patent systems as Western nations' method of protecting their head start in
technological innovation.  If developing countries find their nascent
software or e-commerce industries stifled by US patents and the early start
and priority dates enjoyed by US companies, sentiment could turn against
such patents.  Anti-Americanism is rife at the WTO anyway.  Thus, WTO
challenges to particularly eggregious software and business method patents
could eventually help restrain the growth of such patents.

In any case, I'd probably rather have obviousness issues adjudicated by a
WTO dispute settlement panel than a jury, if those were my choices.
Furthermore, Art. 27 of TRIPS very much appears to authorize WTO challenges
to decisions by patent offices or courts to reject or invalidate individual
patents.  If rejections or invalidations become subject to WTO challenge
while issuances and enforcement are not, a sort of ratchet effect with very
disturbing consequences could ensue (as it has in countervailing duty and
antidumping law).

I suggest trying to get an article on this subject published, if the legal
argument holds up after more research.  Perhaps there already is an article
on this subject?  The next step could be organizing a seminar for
developing country trade diplomats in Washington, DC and Geneva.  This
might generate some interest.






