[The Report] states that “Inconclusive empirical evidence on the role of the patent system to encourage research and development (R&D) and technology transfer makes it difficult to draw any clear-cut conclusions about the effectiveness of the patent system for economic development.” While this is an accurate statement as far as it goes, making such a statement is highly dependent on assumptions that are made and the context in which the statement is made. In order to avoid misinterpretation we would suggest adding a sentence noting that “However, particularly with respect to technology transfer via foreign direct investment (“FDI”) and bilateral trade, the available empirical evidence suggests that strong IP systems can have a significantly positive impact on trade flows and FDI benefitting developing countries.”
This appears to be a quite cautious statement but I have to confess that I don't know of the cited empirical evidence especially relevant for technology transfer via foreign direct investment (“FDI”) and bilateral trade.
In general, the discussion of standards and intellectual property issues related to standards in the paper is thorough and balanced. We particularly welcome the recognition that intellectual property plays an important role in incentivizing the development of technologies that are ultimately incorporated in standards, and that a blanket requirement by a standards organization that technologies always be contributed royalty-free could potentially disincentivize future technological development in areas subject to standardization. Rather, as the paper notes, standards bodies can choose from a variety of potential licensing regimes, depending upon the technologies at issue, the objects of standardization, and the preferences of participants. We support this concept of choice – within reasonable competition law limits, participants in standards bodies should be free to agree on the IPR rules that are best suited for their endeavor.
Of course it does not come as a surprise that Microsoft does not like any pressure towards FRAND or RF licencing in conjunction with standards.
Paragraphs 111 and 112 [of the Report] suggest that standards “create” or “ensure” interoperability. Standards often play an important role in the development of interoperable technologies. However, standards are no guarantee of interoperability. A standard may be ambiguous in places, or have gaps, leading to different choices by implementers. The standard may offer implementers multiple choices about how to implement some elements. There could be bugs in some implementations. Implementers might take different technological approaches to implementing a particular element, causing subtle (or not so subtle) conflicts between the different implementations. Or they may choose to implement different parts of a standard based on different views as to what is going to be appropriate in the marketplace, leading to interoperability gaps between implementing products. After all, there is often asynchronous evolution of standards and the products that implement them. The point here is not that standards are not useful in achieving interoperability – they are. But they should not be seen as a panacea. And other means of achieving interoperability, such as plugfests and vendors working together, should not be discounted.
Did Microsoft intend to characterise their own practice in conjunction with regard to standardisation procedures?
[...] in paragraph 252, the Report vaguely cites “the special characteristics of software innovation.” To our knowledge, no persuasive argument has been developed that either defines what these “special” characteristics are or demonstrates that they apply particularly or exclusively to software innovation. (At a minimum, many of the “special” characteristics that critics of software patentability typically rely on would apply with greater or equal force to digital engineering advances relating to computer and consumer electronics hardware.) In sum, we feel that it is inappropriate to cite such “special characteristics” in a manner that leads the reader to assume that such characteristics have been proven.
Again, not coming as a surprise, the WIPO finds itself within an antagonistic bipolar field of forces where, on the one end, creating software is merely something like engineering as usual, and, on the other end, creating software can be compared with nothing else on earth.
The subsequent references to “network effects” and interoperability – which appears intended to relate to the competitive-impact argument – is relevant to only a subset of software and, we would argue, almost completely irrelevant to the issue of patentability. “Network effects” is merely one of a number of theoretical descriptions of situations in which a marginal increase in deployment may either decrease marginal cost or produce a positive externality. These situations are, in effect, what used to be described in the field of antitrust economics as “natural monopolies,” where economies of scale or positive externalities may lead to a very small number of competitors (or even a single monopolist) in a particular market. Thus, the arguments relating to “network effects” and the potential for “lock-in” most commonly appear as an argument for increased antitrust scrutiny or, in the patent field, as an argument that patent protection is unnecessary to provide incentives to innovate in particular areas. Even if such arguments are accepted, however, it is unclear that they have any clear bearing on the competitive effects of patenting, unless one also assumes that only dominant firms are able to obtain patents in the relevant field of technology (which is emphatically not the case in the area of software). While it is true that patents held by the dominant firm may enhance its market power, other patents held by would-be competitors will constrain the options available to a dominant firm, tending to its diminish market power. Thus, the competitive effect of patentability in the field may either increase or decrease the contestability of the market.
Perhaps this paragraph comprises the weakest assumption of the paper of Microsoft. I would dare to say that “network effects” and interoperability are, in the age of the Internet, at the core of all ICT, and patents can, if no applicable standards are in place, severely interfere with interoperability.
As known since years, the various branches of the industry increasingly develop different attitudes towards the patent system. Optimum patent policies e.g. for the pharmaceutical industry might well be different from those for ICT industries. however, even within the ICT block severe differences emerge.
CCIA is a nonprofit membership organization for a wide range of companies in the computer, Internet, information technology, and telecommunications industries, represented by their senior executives. Created over three decades ago, according to their own mission statement, CCIA promotes open markets, open systems, open networks, and full, fair, and open competition. Member firms are, inter alia, Google and eBay, and - Microsoft. They have also submitted a paper with their own comments on the WIPO Report which appears not always to be in-line with the above-mentioned statement of Microsoft:
The high volume of patents in complex-product technologies such as IT creates fertile ground for a major problem: non-practicing entities, commonly referred to as “trolls.”
The question is as to whether or not the so-called "Patent Trolls" or Non-Practising Entities (NPEs) really are an unfair plague or if they are merely just the downside of some kind of habitual ignorance of Intellectual Property matters on Executive level.
[...] portfolio-driven demand, especially when combined with low inventive-step standards and inadequate patent office review, results in large numbers of trivial or questionable patents. This diminishes the value of patent information in IT and ultimately make product clearances prohibitively expensive. As a consequence, patents are ignored unless the patent owner asserts them. Thus, independent invention is commonplace, and inadvertent infringement is the inevitable result. (Recent empirical research shows that copying is rare in patent litigation, and especially rare in IT.) This is especially problematic for software, where the high search, information, and transactions associated with clearance simply overwhelm the relatively low cost of authoring software.
Surely a true description of the view from inside some of the major ICT players on the patent system as it stands now.
Finally, the discussion of subject matter gives short shrift to the patentability of computer programs, which continues to provoke legal, economic, and political controversy. Much of the controversy can explained as extreme version of the
problem set faced by IT generally, but in some ways software is unique: Copyright is available for software, which may further diminish the value of patents, and copyright appears to fit better with the high degree of simultaneous innovation that takes place in software. Only software is suited to open source models of development and distribution. For this reason, standards
organizations focused on information and software standards (W3C, OASIS) prefer royalty-free licensing since it does not discriminate against open source models.
I would be inclined to think that such kind of stuff is not very much liked by Microsoift, despite their membership with CCIA.
The brief quotations presented above might be useful to illustrate the difficulties which the WIPO faces: Not only are the WIPO Member States deeply divided over the role of IP but also the various branches of the industry appear to follow diverging lines.
Anyway, the interaction of standards, in particular in the field of ICT, with the patent system will be a hot topic on the SCP session. Document SCP/13/2 is dedicated to this matter. One of the problems present in this context is described in the Document as follows:
Patents and standards serve certain common objectives insofar as they both encourage or support innovation as well as the diffusion of technology. So long as the patent system motivates companies to contribute their technologies to standardization, and consequently, the best solution is adopted as a standard for a wide use in the market at reasonable cost, the
patent system and the standardization process share the objective of promoting innovation and diffusion of technology. However, if patent rights are enforced in a way that may hamper the widest use of standards, some antagonism between the two systems may arise.
In the Document mentioned above, in particular the patent policies of ITU, ISO and IEC; ETSI; ANSI; IEEE-SA; and W3C are described.
The 
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