Second-Tier IPR are distinct mechanisms to drive innovation without STRETCHING the current IPsystem

(Dr. Uma Suthersanen, Chair in International Intellectual Property Law, Centre for Commercial Law Studies, Queen Mary, University of London, United Kingdom“Utility models: Do they really serve national innovation strategies?,” pg online @ https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3139963 //pa-ef)

States, the United Kingdom, Singapore, Sweden and Canada have not embraced any utility model regime.2 2.1 CHARACTERISTICS OF THE ‘UTILITY MODEL’ 3 A quick summation of the law should start by noting that the term ‘utility model’ has morphed, over the years, into a generic term referring to a second-tier patent system which offers cheaper protection to subject-matter that hinges between patent and sui generis design laws. It is ostensibly a registered intellectual property right which confers exclusive protection for a technical invention. It resembles a patent in that the invention must be new and should display a measure of inventive achievement. Unlike patents however, utility models are often granted without prior examination to establish novelty and/or inventive step. Whilst protection can be obtained more rapidly and cheaply, it will also be commensurately less secure. There is no universal nomenclature to this type of hybrid right. Australian law, for example, has alternatively referred to them as ‘petty patents’, and then as ‘innovation patents’.4 They are called ‘utility innovations’ in Malaysia, ‘utility certificates’ in France, ‘short-term patent’ in Belgium, although the prevailing term remains ‘utility models’ as used in Germany and China. International instruments refer to them synonymously as utility certificates, utility models, and utility certificates of addition.5 Some systems define utility models as incorporeal subject matter including technical concepts or inventions or devices; while others anchor their definitions to three-dimensional forms and exclude plants, methods, biological and pharmaceutical products. A few countries offer second tier protection which adopt normal patent thresholds but without prior examination and for a shorter durations. From a global perspective, identifiable common traits within national utility model regimes include the following:6 (1) The laws confer registered, exclusive rights on the proprietor of the right (as opposed to an anti-copying or automatic unregistered right). (2) Novelty is a criterion in all systems, although the standard of novelty varies from universal novelty to local novelty.7 (3) Although registration is a requirement, there is usually no substantive examination of applications. The major points of divergence are: (1) Subject-matter under protection – Some utility model laws protect only the threedimensional form while others extend the umbrella of protection to cover all technologies and processes but exclude controversial subject matter such as pharmaceutical or biological substances, or plant varieties.8 A majority of utility model laws simply adopt the domestic patent law definition of protectable subject matter. The current German Utility Model Act, for example, is the archetypical second-tier regime within a developed nation, where protection can extend to all inventions with important exceptions, including methods, processes or biotechnological inventions.9 (2) Granting procedure – Many systems adopt a simple registration procedure with cursory examination, while a few implement a detailed examination process. In practice, some examining offices offer an optional detailed search facility with the payment of supplementary fees. Other jurisdictions expressly call for a detailed search on validity to be carried out on the commencement of civil proceedings.10 (3) Substantive criteria – Herein lies the greatest disparity between the utility model systems. While all major utility model systems adopt the criterion of novelty, the level of novelty required ranges from universal novelty, to relative novelty, to domestic novelty. A second criterion is usually, though not always, imposed in the form of inventiveness or usefulness. Again, the standard employed for the level of inventiveness varies greatly. There is also a significant propensity within current utility model laws to link the definition of the utility model with an element of industrial application. (4) Scope of protection – A final element of divergence is the duration which can vary from 6 years (for example in France) to 10 years (for example, in Germany, South Korea and Spain), to 15 years (Brazil), with varying restrictions on the specifications and claims of the utility model right. 2.2 INTERNATIONAL RULES The absence of a transnational pattern is reflected in the lack of international norms regarding the nature and extent of a second-tier patent regime. For example, Article 1(2) Paris Convention merely states: ‘The protection of industrial property has as its object patents, utility models, industrial designs, trade marks, service marks, trade names, indications of source or appellations of origin, and the repression of unfair competition.’ Countries are free to formulate or reject utility model protection as they see fit; should a country introduce a utility model regime, it can tailor such a regime to exclusively adapt to local socio-economic conditions and infrastructure. Nonetheless, it should also be noted that Paris Union countries which have a utility model regime cannot discriminate against a foreign rights holders in terms of recognition and enforcement of such utility models pursuant to the generally applicable national treatment obligation.11 Reciprocal national treatment will also apply for select international principles including the right of priority, 12 the importation and forfeiture clauses, 13 and the compulsory licensing arrangements.14 However, the Paris Convention is silent on the definition, nature and scope of the right and protection. The TRIPS Agreement, by incorporating the main provisions of the Paris Convention, extends the WTO dispute settlement system to utility models; but the Agreement fails to establish any other international benchmark for this form of protection.15 A consideration of other international arenas reveals that despite the recalcitrance of international instruments to engage with utility models, these rights are being increasingly recognised within the intellectual property chapters of free trade agreements (FTAs)16 or as investment under some international investment agreements (IIA).17 3. JUSTIFYING UTILITY MODELS The traditional premise within market economies is that patents are necessary tools as they confer a protective buffer on inventors against other competitors. The consequent societal welfare is assured: labour is rewarded, the invention is divulged to the public, further technological innovation is stimulated, and a public knowledge base is incrementally strengthened, upon which a society’s future technological progress will be built.18 Nevertheless, this utopian vision only materialises within certain political, economic and social environments, where intellectual property rights are allowed to act as competitive boosts to innovation and growth. IPRs are often seen as being ‘a drain on learning and source of market power that is inimical to development’.19 Policy and economic rationales underpin the limits placed on national patent law ensuring that not all inventive activities are embraced as being worthwhile of protection. Inventions must fulfil certain criteria under a rigorous examination procedure, whilst other types of subject-matter are excluded ab initio from the patent regime so as to support complementary, and sometimes, conflicting policies in maintaining public domain, competition, health and education. It is now accepted that the monopoly privileges and exclusivity arising from patents invariably effect other public spheres, and the rigorous eligibility standards are essential to prevent excessive patenting.20 So how do we justify the introduction of a sui generis law that potentially undermines the strict demarcations of traditional intellectual property rights? Sui generis rights (such as utility model, design, semiconductor chip, geographical indications or database laws) emanate from the inability of legislators and jurists to stretch the existing three bulwarks of the intellectual property regime to accommodate new things to protect.21 The subject matter, criteria and scope of protection of sui generis regimes inevitably reflect copyright, patent or trade mark characteristics, or a mixture of all three types of intellectual property rights. For instance, the novelty criterion betrays the patent origin of plant variety and utility model laws. Geographical indication laws, with their roots in trade protectionism and product identity, adopt a trade mark approach, protecting signs of distinctive qualities and geographical origins. Nevertheless, a constant battle is fought as to the rationale and scope of such rights. In our case, the questions are varied: Should utility model laws protect all innovations which show a modest level of inventiveness and novelty? Should utility model laws be confined to minor innovations in the field of engineering and construction, and exclude more ‘advanced’ technologies such as computer programs, biotechnology and pharmaceuticals? The following discussion explores such issues by focusing on three main rationales for a sui generis utility model right: (i) ameliorating the defects of the national patent system; (ii) preventing free riding copying, and encouraging innovation, especially in relation to SMEs; and (iii) improving the legal environment in developing countries.