Council for Trade-Related Aspects of Intellectual Property Rights – Communication from India

Council for Trade-Related Aspects of Intellectual Property Right (00-4108)
Original: English

The following communication, dated 22 September 2000 has been received from the Permanent Mission of India with the request that it be circulated to Members.

• The scenes of Seattle, both inside and outside the negotiating rooms, brought out many lessons for the WTO membership. One of these is that the long-term health of the multilateral trading system would depend, inter alia, on the extent of flexibility retained by Members in meeting their WTO obligations. Second is the expression of frustration in some quarters on the lack of empathy of the multilateral trading system with, inter alia, the protection of public health and nutrition, and the promotion of public interest in sectors of vital importance to socio-economic and technological development of the Member countries.
• In the WTO, these are times of introspection. Introspection to determine the extent of sovereign flexibility necessary to retain a balance between the right of peoples in Member countries to achieve their needs and aspirations, and the obligations of Member Governments to provide a predictable multilateral trading system. Introspection also to distinguish between what is the consensus of the membership on interpretation of what they have negotiated during the Uruguay Round and the “clarificatory” interpretation evolving through the strengthened dispute settlement mechanism. The TRIPS Agreement is perhaps the most intrusive of the WTO Agreements and therefore needs deeper introspection.
• Article XVI:4 of the WTO Agreement obliges each Member to ensure the conformity of its laws, regulations and administrative procedures with its obligations as provided in the TRIPS Agreement. To determine whether such conformity is being ensured, recourse is available either through discussions in the TRIPS Council or through the Dispute Settlement Understanding (DSU).
• The objectives of the TRIPS Agreement are contained in Article 7. These objectives have two pillars; first, to promote inventions; and second, the transfer and dissemination of technology embodied in such inventions. The principles of the Agreement are contained in Article 8.
• The objectives and principles of the Agreement, and the fact that it is lodged in the WTO, demonstrate two things. Firstly, the TRIPS Agreement is a trade agreement with the overarching objective of promoting trade through international transfer of technology. That, in fact, is the only reason it could become a part of the WTO acquis. Although export of pharmaceuticals or active ingredients, of sound recordings, films, software packages, etc. may have been the primary objective of the demandeurs of the Agreement, they sold it to the membership as a trade agreement and thus transfer of technology is necessarily an integral part of its objectives. Second, the Agreement balances the private rights of inventors with the rights of the users of inventions. In any debate on the TRIPS Agreement, therefore, these objectives and principles need to be preserved. This being the intention of the negotiators, the TRIPS Council as well as the Dispute Settlement Body (DSB) of the WTO need to reflect these objectives and principles in their discussions and decisions.
• The preambular objective of the WTO Agreement is to raise standards of living, ensure full employment and a large and steadily growing volume of real income and effective demand, and expanding the production of and trade in goods and services. On a conventional economic analysis, raising intellectual property protection may actually reduce total domestic and even global economic welfare. It is important therefore that all discussions and decisions on interpretation of the TRIPS Agreement take account of the objectives of the WTO and circumscribe intellectual property rights protection with competing public values embodied in Articles 7 and 8. Whether this has happened or not can be assessed from the discussions in the TRIPS Council and decisions of the DSB.
• Discussions in the TRIPS Council have focused on two aspects so far. First, practices of Members in implementing their obligations have been reviewed. Second, some mandated negotiations and reviews have been initiated. A survey of the numerous questions raised by Members, particularly developed country Members themselves, on the legislation reviewed in the last four years leads to an interesting conclusion. This is that the questions have all been based on obligations relating to minimum standards of protection provided for under the Agreement; no questions are asked on the extent to which the objectives and principles of the Agreement are translated into the legislation. Rather, exercise of legislative or administrative flexibility by Members to accommodate competing public values, such as the use of compulsory licences or Government use, have been the subject of some repeated follow-up questions, meant primarily to question the use of such flexibility. Clearly, the transfer and dissemination of technology and the consequential increase in trade have been of little concern to the questioning Members. It could thus be argued that the TRIPS Agreement, instead of being a trade agreement that it is, has been sought to be converted into a means of enforcing private rights irrespective of their trade effects.
• During the discussions on the mandated negotiations and reviews in the TRIPS Council, while the developing countries have been emphasizing the flexibilities available under the Agreement to pursue public interest, some developed countries have been proposing further strengthening of the rights of inventors irrespective of public interest.
• The developments in the dispute settlement body are no different. In an important dispute involving two public policy provisions in a Member’s Patent Act, the dispute settlement mechanism appears to have relegated the objectives and principles to secondary importance as compared to the minimum standards of protection. So much so, in order to focus on standards of intellectual property right protection per se, and not on the larger context of the TRIPS Agreement as a trade agreement, the particular Panel took pains to clarify in the beginning of its findings that in interpreting the TRIPS Agreement they have taken into account the extended context, beyond the negotiating history, encompassing incorporated international instruments. These, of course, are intellectual property right-related instruments and not trade-related instruments. In interpreting “limited” in Article 30 of the Agreement, again, the Panel considered the expression solely from the perspective of the right holders, disregarding the policy goals or social purposes of the measure. It did not take guidance from the Appellate Body, which had earlier held that an exception provision does not ipso facto become “stricter” or “narrower”. Instead, it did not even take a clue of the negotiating intent of the membership when the majority of third parties found both the impugned policy provisions as acceptable limited exceptions under Article 30. Another, perhaps more damaging, evolutionary interpretation of the dispute settlement mechanism in a particular case is its finding that the non-discrimination provisions in Article 27.1 of the Agreement apply to any exception granted under Article 30. Such an interpretation renders ineffective the otherwise legitimate and prescribed objectives and principles of the Agreement including legitimate social and economic objectives, health concerns and creation of a balance between private interests and public interests. After all, Article 30 is not subject to Article 27 by any reading or interpretation of the plain words of the Agreement. This reduces the legal security of both right holders and those social interests seeking to limit intellectual property protection. Therefore, in its evolutionary interpretation, the WTO dispute settlement mechanism has interpreted Article 30 in a very limited way. The importance of Articles 7 and 8 was limited, firstly, by counting them as two among many provisions which indicate the object and purpose of the Agreement and, secondly, by referring mainly to the limitations of these Articles. Thus, Article 30 has to virtually stand on its own feet, and will not be read as sub-serving the objectives and principles of the Agreement.
• Many developing country Members have sought the operationalization of Articles 7 and 8 of the TRIPS Agreement in their proposals submitted during the preparations for the Seattle Ministerial Conference. Documents WT/GC/W/147, WT/GC/W/302, WT/GC/W/209 and Corr.1, WT/GC/W/225, WT/GC/W/233 and Job(99)/3169 and Add.1 refer in this regard. While lip service has been given to the objectives and principles in the discussions on these proposals, there has been little accommodation in terms of accepting these principles and objectives in actual legislative or administrative practice. The developed country Members have shown little accommodation of the essence of these proposals in the preparations for the Seattle Ministerial Conference, or in considering related implementation issues during the Conference.
• It is unfortunate that the WTO membership has handed over its primary responsibility of clarifying both the trade implications of intellectual property rights and the basic objectives and principles behind the TRIPS Agreement to the dispute settlement mechanism. The kind of rumblings heard in Seattle and reflected in a number of implementation issues proposed at and after Seattle will not die down if the membership refuses to take its responsibility and interpret the Agreement for itself rather than leaving it to the judgement of a few. There is more reason for such action in the TRIPS Council than elsewhere because the TRIPS Agreement is uncharted territory for the WTO and would need revisiting to clarify the negotiating intent, wherever necessary. After all, the membership took firm steps in the Uruguay Round to revisit some of the other Codes of the earlier rounds and evolved more appropriate guidance for dispute panels and the Appellate Body.
• India is itself the repository of immense intellectual property and there is no doubt in our minds that intellectual property needs to be protected. It is also true that protection of intellectual property coupled with liberal trade and investment policies are important for development, and India is autonomously pursuing this approach. However, the abjectly mercantilist use of intellectual property rights involving possible loss to health or achievement of other socio-economic objectives was neither intended by the negotiators nor should it be encouraged. Another worrying trend is the increased resort to the issuance of “bad patents”. Although numerous examples of such bad patents could be given, it may suffice to mention the latest one here. On 11 May 2000, the Opposition Division of the European Patent Office at Munich adjudged that no inventive step was involved in a patent granted on “hydrophobic extracted neem oil – a novel fungicide”. Commenting on this action, Mr. Hiltrud Breyer, a Member of the European Parliament stated “This action illustrates how the patent system is being abused by multinational companies (MNCs). Genetic resources that are freely available in the South are being expropriated without reward or recognition for their traditional custodians. This is bio-piracy at its crudest”.
• In this scenario it becomes even more important to check this trend through the objectives and principles of the TRIPS Agreement. The question of how to operationalize Articles 7 and 8 is a larger question and it would be more appropriate to answer it in the Council itself. The following are some suggestions in this regard:
• A clarification could be made of the language in Articles 7 and 8 for the benefit of national governments pursuing public interest and for the dispute settlement mechanism. For example, it could be clarified that Article 7 contains the objectives of the Agreement and is not circumscribed by any other provisions of the Agreement.
• The phrase “provided that such measures are consistent with the provisions of this Agreement” in Article 8.1 could be clarified to emphasize that principles of the Agreement contained in this Article cannot be completely negated by this proviso.
• A number of “implementation” proposals in paragraphs 21 and 22 of the Draft Ministerial Text (DMT) of the Seattle Ministerial Conference relate to objectives and principles contained in Articles 7 and 8. It would be a confidence-building measure to agree to these proposals and would also help in operationalizing these Articles.
• Through this paper, India urges the TRIPS Council to examine the above issues in order to build the confidence of the weaker trading partners who may not otherwise be able to express their negotiating intent either through the existing agenda of the Council or through recourse to disputes. India also invites suggestions from other like-minded delegations for operationalization of Articles 7 and 8 of the Agreement in such a way that our trade moorings are not uprooted and we are not subjected to protectionist objectives of commercially stronger companies and countries. This would be necessary also to preserve the democratic way of functioning of the GATT/WTO. It would also be guidance for the dispute settlement mechanism grappling with the balance between the principles and objectives of the TRIPS Agreement on the one hand and minimum levels of protection required under the Agreement on the other hand. Most important, it would be a confidence-building measure for those from whom greater accommodation is expected on some of the other proposals in the WTO aimed at further trade liberalization.