Your Excellency, Ambassador Alberto Dumont, Chair, WIPO General Assembly,
Your Excellencies the Permanent Representatives,
I welcome this opportunity to report on developments since the last meeting of the Assemblies and to share with you my thoughts on the main challenges that we face in the field of intellectual property. I am particularly honored and pleased to do so in the presence of so many Ministers and other high-level representatives of Member States, whose participation in these Assemblies I warmly welcome.
I would like to extend my thanks to the outgoing Chair of the WIPO General Assembly, Ambassador Martin Uhomoibhi, for his invaluable leadership over the past two years and for his support and guidance to me personally throughout the first year of my term of office. I have relied greatly on Ambassador Uhomoibhi and his advice has always been sound and wise. I extend my congratulations to the incoming Chair, Ambassador Alberto Dumont. I look forward very much to working with him in the coming two years.
The best metaphor for the past year is provided by the construction site of the new building of the Organization. We have made considerable progress and a solid structure has been built. But it is still a construction site and much work remains to be done, both internally, to create a fully functional space, and externally, to create an edifice that is open and attractive to all those who may wish to use its services or who may simply pass and perceive its image.
Internally, we have embarked upon a process of organizational renewal under the Strategic Realignment Program. The most fundamental dimension of this process relates to the corporate culture of the Secretariat, where we are striving to develop an orientation of service and effectiveness. There are two questions that I believe we should, as a Secretariat, continually ask ourselves: first, what do we achieve with 1,300 staff and 300 million Swiss francs of expenditure each year; and, secondly, what does a Member State get out of being part of this Organization?
There are a number of projects and initiatives that have been introduced over the past year to stimulate the development of a service-oriented culture: a new performance management and staff development system; financial disclosure for senior management; the adoption of the Code of Ethics promulgated by the Secretary General of the United Nations and the establishment of the position of an Ethics officer; the revision of the contractual framework for staff to make it coherent and representative of the principle of equal pay for equal work; the complete revision of the Staff Rules and Regulations, which date from nearly 40 years ago; the creation of a customer service strategy and structure; a project to make the Organization carbon-neutral; and a project to make the Organization accessible to the disabled.
In all these projects and developments, the staff and the Staff Council have been very closely involved, not only in implementation, but also in development. I should like to take this opportunity to thank the staff for their faith and hope in change, and for their patience in the realization of change, as well as for their hard work and dedication. In this context, I should like also to record my thanks to the members of the Senior Management Team who will be retiring in November, Messrs. Michael Keplinger, Narendra Sabharwal and Ernesto Rubio, as well as to Mr. Philippe Petit, who retired in May of this year, for their diligent service to the Organization. I am equally looking forward to welcoming the new Senior Management Team that will commence in December. I, and the rest of the staff, will be counting on their energy, enthusiasm and leadership on the construction site.
Many elements of the Strategic Realignment Program remain to be completed. Most of the projects that I have already mentioned require further time to reach maturity. In addition, a great deal of work is required on the re-engineering of the somewhat antiquated administrative processes of the Organization. Work is on schedule, in this regard, for the development of information-technology applications for the administrative and financial procedures needed to ensure compliance with the International Public Sector Accounting Standards (IPSAS) by January 2010. The applications will contribute, in time, to the establishment of an Enterprise Resource Planning (ERP) system. Time, however, is needed. The Strategic Realignment Program will take several years to accomplish.
Turning to the external world that we serve, it is apparent that intellectual property continues to be regarded as the major means of creating a secure environment for investment in innovation and creativity and for the diffusion of innovative and creative products and services. In the year 2007, the last year for which complete statistics are available, 1.85 million patent applications, 3.3 million trademark applications and 621,000 industrial design applications were filed around the world.
It is clear from previous recessions that the Global Economic Crisis will have slowed, in the course of the last year, the rate of growth in the demand for intellectual property titles that is reflected in these figures. That slowdown is being felt in the Global IP Systems – the Patent Cooperation Treaty (PCT), the Madrid System for trademarks, the Hague System for industrial designs and the WIPO Arbitration and Mediation Center - which this Organization administers, and which generate 93% of the revenue of the Organization. We will see negative growth in the PCT and the Madrid System this year, broadly (+2%) in the realm of 5% and 10%, respectively. We have managed carefully the consequent decline in revenue through an internal Crisis Management Group and the deployment of a number of measures to reduce or contain costs. As a result, we are very confident of ending the current biennium in December on a positive financial note despite the slowdown.
As you know, we have projected a decline in revenue in the next biennium of 1.6%. We expect demand to be sluggish at the commencement of 2010, but to start to pick up in the second half of 2010 and to be positive in 2011. We are again confident that we can manage the adverse impact of the crisis on the Organization in the next biennium, as well as any variation in the expectations that I have just expressed.
Despite the temporary, even if severe, decline in IP applications during the current economic crisis, it is very clear that the long-term trend is one of steady intensification in the use of intellectual property. This reflects the development of the knowledge economy, in which knowledge and education are at the center of the economy, development and social change. There are many, many policy questions and challenges that arise in relation to property rights in knowledge in this context. How are we faring in dealing with these questions and in responding to these challenges? Here, I believe, there is room for improvement. Let me highlight just a select few of the challenges that I believe are fundamental.
I shall start with development and poverty reduction. Recognition of the importance of improving the capacity of the developing and least developed countries to participate in, and enjoy the benefits of, the knowledge economy lay behind the establishment of the WIPO Development Agenda. We are all aware, I believe, that we are now at the stage where we must transform that idea into an operational reality. That transformation will occur only if there is a collaborative effort and engagement on the part of the Member States and the Secretariat. The Member States approved earlier this year several projects proposed by the Secretariat in the Committee on Development and Intellectual Property and work is underway to implement those projects. I believe, however, that we need to be more ambitious. We need to agree upon a coordination mechanism that establishes a seamless relationship between approval of projects, budgeting and monitoring. And we need to identify and execute projects that make a difference, and that are not just a continuation of standard technical assistance under another guise. I do not wish to diminish the importance of our regular program of capacity building, but there is little point in having a separate Development Agenda if it is merely a repetition of our standard program.
As far as our regular program of capacity building is concerned, I believe that it is very important to create better linkages between the economic objectives, priorities and resources of countries and the use of intellectual property – to make intellectual property speak the language of the economic circumstances and social context that it serves. An increasing number of countries are seeking to do this by establishing national innovation and IP strategies. We will promote the greater use of these strategies as vehicles for the delivery of capacity-building activities and engage in trying to develop a methodology for assisting those countries that choose to establish their own strategies. In the medium term, I believe that the time has come for a major strategic review of our development program and I shall be proposing this to the Member States in the medium term strategic plan that the Organization will be discussing in the course of the year leading up to the meeting of the WIPO Assemblies in 2010.
The normative agenda of the Organization is not progressing. There are blockages in several areas. Indeed, the rate of progress in norm-making is in inverse proportion to the rate of technological change, which poses several major risks for the Organization. Ultimately, the risk is that the Organization will lose its role in economic rule-making. Multilateralism will suffer and recourse to bilateral and plurilateral solutions may become more frequent. At the same time, which is very inconvenient, technologies are increasingly used globally. There are, for example, 1.6 billion people online worldwide, and the worldwide mobile telephone subscription penetration is 61%. Global use of technologies calls for a global normative architecture to ensure that technologies are indeed available worldwide.
I appeal to the Member States to find a balanced way forward in our normative agenda. If the Organization is to retain its relevance in rule-making, it must be able to deal with all the frequencies of the spectrum of technological development. It must be able to make rules both for the latest advances in technology and for traditional knowledge systems. Too often, the various components of the spectrum are regarded as mutually exclusive. The reality for a global organization, in my view, is that it must be able to deal with all.
I should like to mention, in particular, two specific areas in the normative area where, I believe, greater engagement is needed. The first is traditional knowledge and traditional cultural expressions. The quest here is make the knowledge base that is addressed by the intellectual property system a universal one. The question is before these Assemblies in the form of the renewal of the mandate of the Intergovernmental Committee on Intellectual Property and Traditional Knowledge, Traditional Cultural Expressions and Genetic Resources. I appeal to you all to show the flexibility and understanding that is necessary to renew the mandate of this Committee on terms that will provide grounds for the developing countries, in particular, to believe that tangible solutions at the international level to the unfair misappropriation of traditional knowledge and traditional cultural expressions are close.
A second area of specific concern is the future of copyright in the digital environment. We are witnessing the migration of most, if not all, forms of cultural expression to digital technology and the Internet – music, film, news content, literature and broadcasts of cultural and sporting events. New forms of cultural expression are also emerging. User generated content abounds. YouTube reports, for example, that 10 hours of video are uploaded to YouTube every minute.
None of these transformations is inherently good or bad. They are, however, fundamental and they do signal a challenge for the institution of copyright. The objective of that institution is clear: to provide a market-based mechanism that extracts some value from cultural transactions so as to enable creators to lead a dignified economic existence while, at the same time, ensuring the widest possible availability of affordable creative content. The question is not so much the objective of the system, but the means of achieving that objective amid the convergence of the digital environment. The evidence suggests that the current means are suffering severe stress. In the case of music, for example, according to industry estimations, 40 billion files of music were illegally file-shared on the Internet in 2008, a piracy rate of 95%.
I am not sure that the impact of these tumultuous developments in digital technology can be dealt with by way of negotiation of individual issues in one of our Standing Committees. The developments are too fundamental. They concern a question of major importance to the whole world, which it is not an exaggeration to characterize as the financing of culture in the 21st Century. I should like to suggest to the Member States that they consider, in the coming year, the possibility of some form of global consultation and reflection on this question.
The structural changes in the distribution and enjoyment of creative works have, as I mentioned, given rise to a level of disregard for intellectual property that is unprecedented. There is a widespread perception that lack of respect for intellectual property is a North-South problem. I do not believe that this is the case. It should be apparent from what I have said about copyright in the digital environment that I consider piracy to be a structural or conceptual problem and a global challenge, not a North-South battle. My recent official visit to Nigeria confirms this. Nigeria has the second largest film industry in the world and a very vibrant and creative musical culture. Both are severely and adversely affected by piracy made possible by digital technology. While the Government is leading a valiant battle against piracy, it faces the same question as every other government in the world: how can we make copyright work in the digital environment, where there is no difference in quality between the original and the copy, and where the means of reproduction and distribution are available to everyone at insignificant cost?
I do not believe that it is any different for physical goods. Counterfeiting is not a North-South problem, but a problem of globalization - of open markets, good transportation systems and the free movement of persons, goods and capital. Let me be clear that, by counterfeiting, I mean the deliberate, large-scale imitation of brands, identity and trade dress. I certainly do not mean generic pharmaceutical products, which have their legitimate place within the competitive and regulated market for pharmaceuticals. Counterfeit means fake and deceptive. It affects high technology, low technology, luxury goods, handicrafts, pharmaceuticals, cosmetics, spare parts and artifacts of traditional cultural systems – in short, the whole of human production – and it affects and originates from all countries. I hope that we can move gradually as an Organization to a dialogue on ways and means of dealing in a practical way with the misuse of intellectual property to sell fake products.
In the networked world, platforms can be as important as, if not more important than, new rules in influencing behaviour. We have, in the course of the last year, established a new strategic objective of coordinating and developing global infrastructure. Some very concrete early results have already been achieved in the form of digitization programs for offices in developing countries, the establishment of technology and innovation service centers and the opening a new database (aRDI) giving access to scientific, medical and technical publications and journals to developing and the least developed countries. I shall not go into the details of this area, but I would like to make specific mention of one project, which I believe to be of great significance, the so-called Road Map for the improvement of the functioning of the Patent Cooperation Treaty (PCT), which will come up for consideration in the PCT Assembly during this meeting. This is not a norm-making exercise. The PCT makes it very clear (Article 27(5)) that nothing in it is to be construed as in any way limiting the freedom of each Contracting State to determine its own substantive conditions of patentability. Neither the PCT nor the Road Map in any way affects TRIPs flexibilities. The Road Map is about improving the functioning of a procedural treaty that links together the patent offices of the world. It is about finding ways to increase work-sharing, to decrease unnecessary inefficiencies, to improve the quality of the output of the international patent system and, thereby, to contribute to the management of the unsustainable backlog of 4.2 million unprocessed patent applications in the world. There are many initiatives occurring already in this regard: the Patent Prosecution Highway and work-sharing initiatives in ASEAN, in South America and between the Vancouver Group of Canada, United Kingdom and Australia. The PCT Road Map aims to bring all these initiatives ultimately under the multilateral umbrella of the PCT.
Let me conclude by referring to WIPO and intellectual property in the broader global agenda. We have, as an Organization, set a new objective of engagement with global policy issues. Following the entry into force of the Convention on the Rights of Disabled Persons, a Stakeholders’ Platform has been established and a treaty proposal has been tabled on access to published works on the part of the visually impaired. We also held a successful conference on intellectual property and public policy issues in July to stimulate greater dialogue. But perhaps the most important public policy issue of all is now arising for discussion, namely, the challenge of climate change.
There is a perception that intellectual property may be a negative influence in the range of policy initiatives that are needed to deal with climate change. I do not believe that this perception corresponds to reality. It is generally recognized that technological innovation will be central to global efforts to deal with the challenges associated with climate change. It is also coming to be recognized that this innovation will be needed across the whole infrastructure of the economy to give that infrastructure ultimately a carbon- free or carbon-neutral character. In this context, it is difficult to imagine how a property right on an individual piece of technology could constitute an obstacle. On the contrary, intellectual property as a systemic stimulus to the creation and diffusion of technology has a very positive contribution to make to our efforts to develop green innovation. It will assist the economy to adjust by favouring investment in green innovation. Some countries have started to use intellectual property in a dynamic way to favour desired outcomes by creating fast-track channels for processing green innovations. Much more is possible.
Given that climate change is global, green innovation will be of relatively little benefit if it is applied in only one country. Transfer of technology is thus fundamental to effective action. The policy challenge of shepherding, through a public process, the transfer of such an extensive range of technology held in private hands is daunting and, frankly, has never been achieved before. Here again, the experience of the intellectual property system and community in the creation, commercialization and diffusion or transfer of technology can make a valuable contribution.
I look forward to engaging with all Member States in addressing the many challenges that lie before us in the coming year.