266. The representative of Brazil said that when Brazil had asked for an item on "Intellectual Property and Innovation" to be included in the agenda of this session of the TRIPS Council, together with the US delegation, its primary intention had been to help set the stage for a debate, without prejudging any outcome. That debate was, in his view, necessary and timely. The interface between innovation and IPRs was being increasingly discussed in the press, in universities, and in parliaments, particularly in developed countries. The issue was also being hotly contested in the courts. The general public were also voicing opinions, and public policy makers were reconsidering the broader question of the scope and depth of disciplines for protection of IPRs, especially, but not only, in the area of enforcement of copyrights in the digital environment.
267. These issues were not being properly discussed at the WTO, or in WIPO. It was time to do so as possibly the only certainty, in the current time of persistent uncertainties about the world economic outlook, was that sustained global economic growth would depend on the quick and effective conversion of innovation into gains in productivity and welfare. In a new book recently published by the Peterson Institute of International Economics entitled "Private Rights and Public Problems: the Global Economics of Intellectual Property in the 21st Century", Professor Keith E. Maskus said "We live in a global knowledge economy and the key to 'winning the future' is to excel at turning what we discover and learn into marketable new products and technologies. Innovation, adaptation, and the use of new technologies are the primary drivers of growth within economies and across international borders."
268. He said that this agenda item had been phrased in broad terms, "Intellectual Property and Innovation", in order to allow any Member to bring its own perspective to the debate. The Brazilian delegation saw the term "intellectual property" as referring to the full body of provisions of the TRIPS Agreement. The concept of innovation seemed less clear. The Agreement itself referred to innovation only once, in its Article 7 (Objectives), in which the noun "innovation" was qualified by the adjective "technological". Thus, the text of the Agreement did not refer to other forms of innovation.
269. The Agreement used invention instead of innovation several times in Section 5, (Patents), especially in Article 27 (Patentable Subject Matter) and Article 29 (Conditions on Patent Applicants). This implied that invention was a more clearly circumscribed and stricter category than innovation, and that inventions alone were eligible for patent protection. Indeed, innovation was a much broader concept as recognized, for example, in the definition contained in the 2012 issue of "The Global Innovation Index", a joint report and ranking published yearly by the INSEAD Business School and the World Intellectual Property Organization (WIPO). That report recognized that the definition of innovation had broadened; it was no longer restricted to R&D laboratories and to published scientific papers. Innovation was more general and horizontal in nature, and included social innovations as well. Currently, innovation capability was seen more as the ability to exploit new technological combinations and embraced the notion of incremental innovation and innovation without research.
270. He said that any in-depth discussion on this topic must be based on the realization that the granting of exclusive IPRs could only be justified to correct a potential failure in the markets for technology and knowledge. That correction of market failure entailed costs for society. By establishing monopolies, however provisional they might be, protection of IP could impair market efficiency in allocating factors of production and other resources. To compensate for the possible costs of misallocation, the IP system demanded, in return for the granting of exclusive rights, full disclosure of the know-how of the protected invention in such a way that society as a whole might benefit from it and build upon it. This essential trade-off in the patent system had another component: that inventions accorded such rights must be, according to Article 27 of the TRIPS Agreement, novel, useful and non-obvious. However, the manner in which these three conditions were transposed into national legislation and regulations remained one of the most intractable and divisive issues in the current international patent system.
271. Against this background, the greatest challenge for public policy makers was arguably the design for a theoretically "optimal" system that would be capable of generating incentives for investment in innovation while at the same time minimizing losses caused by the granting of IPRs. The challenge was compounded by the fact that IP was far from being the single element driving innovation. It was only one in a larger mix of different tools to promote innovation. The Global Innovation Index, for example, referred to the importance of linkages, the right infrastructure for innovation, and collaboration among different innovation players. Along with access to knowledge, these were ever more important ingredients of innovation. It also referred to innovation eco-systems that had become more complex and were now built on more internationalized, collaborative, and open innovation models and knowledge markets. Finally, the report recognized that experiences and lessons in designing policies to promote innovation were still scarce.
272. Innovation was heavily influenced by factors other than IP, such as the industrial capacity of a country, the quality of its education, and access to raw materials. Similarly, the level of protection afforded by the IP system was not the only element stimulating technology transfer to developing countries. The importance of the receiving country's capacity and skills to absorb that technology could not be underestimated. It followed that the mere increase in the degree of IP protection and enforcement rules did not, in and of itself, result in higher levels of innovation output. Thus, IP must be placed within the overall framework of public policies for innovation.
273. He said that exceptions and limitations had a key role to play in calibrating national IP systems in such a way that individual goals of each country could be realistically pursued and eventually met. Other mechanisms to mitigate the potentially adverse impact of IP protection had to do with containing its effects on key areas such as public health and in the interface with competition policy. If it was true that a properly calibrated IP system was likely to play a positive and indeed key role in promoting the technological and social development of a country, then a dysfunctional system might prove an impediment to innovation. The granting of frivolous patents might do enormous harm to R&D activities and disrupt the necessary flows across innovation chains. This was especially true at present, when most meaningful inventions were the combined result of the integration of a series of small innovations increasing efficiency or productivity only incrementally. Patent protection granted to a series of incremental innovations could in fact create uncertainty and thereby prevent breakthrough inventions from being made. An unbalanced IP system was particularly negative in the area of public health and access to medicines, in which the preservation of the flexibilities contained in the TRIPS Agreement, as reaffirmed in the Doha Declaration on the TRIPS Agreement and Public Health, was more important.
274. From the perspective of developing countries, the Development Agenda approved by WIPO in 2007 was a valuable input into the debate on the relationship between IP and innovation. Its recommendations established, for example, that any new norm-setting activity in the field of IP must be preceded by an assessment of its impact on national development policies and strategies.
275. In Brazil, the IP system had been largely aligned, over the past two decades, with the overall set of public policies to promote innovation and increase the competitiveness of the business sector. One of the Government's stated aims was to make it possible for companies, as well as research and technological institutions, in Brazil to take full advantage of IP protection as one of the pillars to support innovation. The importance of patents for scientific and technological advancement had been repeatedly stressed by President Dilma Rousseff. The same perspective was to be found in statements by leaders and relevant players in Brazil's industrial sector, in particular in the agenda of the Business Movement for Innovation ("Mobilização Empressarial pela Inovação - MEI) that was put in place by the National Industry Confederation.
276. He said that government policies targeted at science and technology were to be found in the National Strategy for Science, Technology and Innovation for the period 2012-2015. The restructuring and modernization of the National Institute of Industrial Property (INPI) was part of the strategy. More information on the modernization of the INPI could be found in a recent issue of The Economist, the UK newspaper. Priority sectors within the National Strategy for Science, Technology and Innovation were information and communications technology, pharmaceuticals, oil and gas, aerospace and segments related to the green economy and social development. Around 1.2% of Brazil's GDP was currently invested in R&D. This percentage was to be increased to 1.8% of GDP by 2014. In South America, Brazil had contributed to disseminating a culture of IP and to promoting cooperation among national patent offices. The regional IP co-operation project called PROSUR was one example of such efforts by Brazil.
277. In concluding, he said that at the approach of 20 years from the adoption of the TRIPS Agreement, it was timely to undertake an assessment of its implementation and of its real benefits for all countries. As Professor Maskus had put it in his new book: "Anyone who thought a decade ago that the TRIPS agreement would settle international debates once and for all on the wisdom of increasing global intellectual property rights standards was sorely mistaken". That debate was arguably more live today than ever, especially in developed countries themselves.
