Globalising Intellectual Property: The TRIPS Agreement (Routledge Warwick Studies Inglobalisation, 4)

Globalising Intellectual Property Rights

The World Trade Organisation has responsibility for intellectual property rights – including patents, copyrights and trademarks – on a global scale under the auspices of the TRIPs Agreement (Trade-Related Aspects of Intellectual Property Rights). This Agreement has profound implications for the commercial interests of global corporate actors and for access to technology in developing countries. In Globalising Intellectual Property Rights, Matthews looks at various aspects of the TRIPs Agreement – agenda-setting, legal interpretation, implementation, enforcement and revision – from the viewpoint of both global business interests and developing countries. It is argued that the Agreement was largely the result of an initiative by multinational companies who sought to protect their own intellectual property rights through international law and, furthermore, that it is these multinational companies who are now its main guardians. The book concludes that the history of the TRIPs Agreement and the role of business is a clear example of governance by non-state actors on a global scale. This book will be of interest to students and researchers in the fields of international relations, intellectual property law, international economic law and development studies. Duncan Matthews is a lecturer in the School of Law at the University of Warwick. He has written widely on intellectual property rights, environmental policy and the single European market.

Routledge/Warwick Studies in Globalisation Edited by Richard Higgott and published in association with the Centre for the Study of Globalisation and Regionalisation, University of Warwick.

CENTRE STUDY GLOBALISATION REGIONALISATION FOR THE

OF

AND

What is globalisation and does it matter? How can we measure it? What are its policy implications? The Centre for the Study of Globalisation and Regionalisation at the University of Warwick is an international site for the study of key questions such as these in the theory and practice of globalisation and regionalisation. Its agenda is avowedly interdisciplinary. The work of the Centre will be showcased in this new series. This series comprises two strands: Warwick Studies in Globalisation addresses the needs of students and teachers, and the titles will be published in hardback and paperback. Titles include: Globalisation and the Asia–Pacific Contested territories Edited by Kris Olds, Peter Dicken, Phillip F. Kelly, Lily Kong and Henry Wai-chung Yeung Regulating the Global Information Society Edited by Christopher Marsden Banking on Knowledge The genesis of the global development network Edited by Diane Stone Historical Materialism and Globalisation Essays on continuity and change Edited by Hazel Smith and Mark Rupert Civil Society and Global Finance Edited by Jan Aart Scholte with Albrecht Schnabel Towards a Global Polity Edited by Morten Ougaard and Richard Higgott

Routledge/Warwick Studies in Globalisation is a forum for innovative new research intended for a high-level specialist readership, and the titles will be available in hardback only. Titles include: 1 Non-State Actors and Authority in the Global System Edited by Richard Higgott, Geoffrey Underhill and Andreas Bieler 2 Globalisation and Enlargement of the European Union Austrian and Swedish social forces in the struggle over membership Andreas Bieler 3 Rethinking Empowerment Gender and development in a global/local world Edited by Jane L. Parpart, Shirin M. Rai and Kathleen A. Staudt 4 Globalising Intellectual Property Rights The TRIPs Agreement Duncan Matthews

Globalising Intellectual Property Rights The TRIPs Agreement

Duncan Matthews

London and New York

First published 2002 by Routledge 11 New Fetter Lane, London EC4P 4EE Simultaneously published in the USA and Canada by Routledge 29 West 35th Street, New York, NY 10001 Routledge is an imprint of the Taylor & Francis Group This edition published in the Taylor & Francis e-Library, 2003. © 2002 Duncan Matthews All rights reserved. No part of this book may be reprinted or reproduced or utilized in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers. British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloging in Publication Data A catalog record for this book has been requested ISBN 0-203-16568-3 Master e-book ISBN

ISBN 0-203-26025-2 (Adobe eReader Format) ISBN 0–415–22327–X (Print Edition)

Contents

Series editor’s preface Acknowledgements Abbreviations Introduction 1 Origins of the TRIPs Agreement

ix xi xiii 1 7

2 Negotiating the TRIPs Agreement

29

3 Content of the TRIPs Agreement

46

4 Implementing the TRIPs Agreement

78

5 Impact of the TRIPs Agreement on developing countries

108

6 Future of the TRIPs Agreement

123

Appendix: full text of the Agreement on Trade-Related Aspects of Intellectual Property Rights (the TRIPs Agreement)

140

Notes Bibliography Index

175 189 196

Series editor’s preface

The Centre for the Study of Globalisation and Regionalisation (CSGR) (www.csgr.org), founded in October 1997, is funded by the Economic and Social Research Council (ESRC) of the United Kingdom. It has rapidly become an international site for the study of key issues in the theory and practice of globalisation and regionalisation. The Centre’s agenda is avowedly interdisciplinary: research staff are drawn from international relations, political science, economics, law and sociology. Committed to scholarly excellence, the Centre also strives to be problem-solving in methodological orientation. Three broad categories of activity inform and underwrite the research programme of the Centre: (a) What is globalisation? (b) Can we measure its impacts, and if so, how? and (c) What are its policy implications? Understandings of globalisation are seen to be multidimensional – political, economic, cultural and ideological – so CSGR sees globalisation in at least two broad ways. First, as the emergence of a set of sequences and processes that are increasingly unhindered by territorial or jurisdictional barriers, and which enhance the spread of transborder practices in economic, political, cultural and social domains. Second, as a discourse of political and economic knowledge offering one view of how to make the postmodern world manageable. For many, globalisation as ‘knowledge’ (both accepted and contested) constitutes a new reality. Centre research asks what kinds of constraints globalisation poses for independent policy initiative on the part of national policy-makers, and under what conditions these constraints are enhanced or mitigated. Within these broad contexts, empirical work at CSGR focuses on: 1 2

3

particular regional projects in Europe, North America and the Asia– Pacific; the enhancement of international institutions, rules and policy competence on questions of trade competition and international finance and investment; and normative questions about governance, sovereignty, democratisation and policy-making under the constraints of globalisation.

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Series editor’s preface

Indeed, Centre research is sensitive to the wider normative nature of these questions, especially when considering the counter-tendencies towards, or sites of resistance to, globalisation at international, regional and local levels that give rise to different understandings of the importance of space and territoriality. Routledge/Warwick Studies in Globalisation provides an avenue for the publication of scholarly research monographs, policy-oriented studies and collections of original themed essays in the area of the research agenda of CSGR. Duncan Matthews’ book, the tenth in the series, looks at one of the major international institutions central to contemporary globalisation studies – the World Trade Organisation. Specifically, it explores the reasons behind intellectual property rights becoming a key issue for international trade, and examines how a consensus in favour of global action was achieved. It explains that, although the signatories to the TRIPs Agreement were WTO Member countries, non-state actors in the form of multinational companies played a crucial role in securing the inclusion of intellectual property rights within the WTO framework. However, Matthews goes on to demonstrate the potential for the TRIPs Agreement to have an adverse impact on developing countries, and the manner in which this is now becoming more widely understood, particularly in relation to access to affordable medicines. This book examines a range of reasons that explain why the TRIPs Agreement consensus is under increasing pressure, including developing country opposition; strains in the relationship between the United States and Europe; a fragmentation of the corporate alliances that encouraged adoption of the TRIPs Agreement in the first place; and the role of new actors whose views were peripheral to the original negotiations, such as nongovernmental organisations and institutions including the World Health Organization. The book concludes that pressure on the TRIPs Agreement consensus is likely to have profound implications for renegotiation of the WTO’s intellectual property provisions during the Doha Development Round of multilateral trade negotiations. This book is timely in the extreme. Richard Higgott Warwick February 2002

Acknowledgements

The appearance of this book within the Routledge series Warwick Studies in Globalisation is no coincidence. The book was conceived and researched under the auspices of the University of Warwick’s ESRC Centre for the Study of Globalisation and Regionalisation and adopts many of the themes that have been prevalent in the early work of the Centre: the role of non-state actors in the process of globalisation; the regional impact of globalisation; the impact of globalisation on economically disadvantaged sections of civil society; and, above all, a multidisciplinary approach to the study of globalisation (in this case encompassing both law and politics). I would like to thank the Economic and Social Research Council for generously funding the research for this project within the ESRC Centre for the Study of Globalisation and Regionalisation at the University of Warwick in 1998. I would also like to thank the School of Law at the University of Warwick for granting leave from my teaching responsibilities to allow the writing of this book in 2001. Many colleagues and scholars have provided encouragement and helpful advice in the preparation of this work. I would particularly like to thank Richard Higgott, Susan Strange, Mike McConville, Andy Clark, Julio Faundez, Abdul Paliwala, Susan Sell, Peter Drahos and Chris May. Special thanks must also go to Nicola Harwood, Law Librarian at the University of Warwick, for skill and enthusiasm in applying her knowledge of electronic databases to locate documents so efficiently. Carol Hughes and Jill Southam provided invaluable secretarial support. Above all thanks go to Louise O’Reilly, who read and commented on the entire manuscript while simultaneously running Artpoint Trust. I would also like to thank the individuals and organisations who assisted with the research for this book by participating in face-to-face interviews, in particular: John Beton of the UNICE and the Trans-Atlantic Business Dialogue; David Bennett of Shell; Clive Bradley of the Publishers’ Association; Claude Burky and Angeline Hanson of the Office of the United States Trade Representative (USTR); Jerôme Chauvin of UNICE; Jacques Gorlin of the Intellectual Property Committee (IPC); Stephan Krawczyk of the International Federation of Phonographic Industries (IFPI); Raimund Raith of Directorate General External Affairs of the European Commission; Koos

xii

Acknowledgements

Rasser of Procter and Gamble Inc.; John Reid of the Intellectual Property Institute (IPI); Peter Richardson of Pfizer Inc.; David Roberts, Brian Russell and David Waters of GlaxoSmithKlein; Eric Smith of the International Intellectual Property Alliance (IIPA); Stephen Smith, Ivor Brown and Roger Pugsley of AstraZeneca; and Phil Thorpe of the Patent Office. I am extremely grateful to each of these individuals and organisations but none should be held responsible for any errors in this book, which remain entirely my responsibility. Considerable thanks must also go to my postgraduate students studying for the LL.M. in International Economic Law at the University of Warwick, who patiently endured my earlier attempts to present the arguments that underpin this book during weekly seminars on the Legal Aspects of International Technology Transfer course and who contributed invaluable views of the TRIPs Agreement by explaining their own experiences in their home countries. Without the enthusiasm and international perspective of these students, developing the main arguments of this book would not have been possible. Finally, I would like to mention two academics whose views I hold in high esteem and whose words provide some justification for the liberties that I have taken in writing this book. First, Peter Drahos, who, on hearing of my intention to write this book, gave his enthusiastic encouragement with the comment that far from unnecessarily duplicating earlier work (not least his own), it is only by telling and retelling the story of the TRIPs Agreement that an accurate picture of its origins and impact will emerge, thus giving me the confidence to write this book in the first place. Second, Paul Heald, who, by observing that the trademark provisions of the TRIPs Agreement lack ‘sex appeal’ (by which he means a relative lack of controversy) when compared with those on patents and copyright (Heald: 1996: 637), gave me the justification to follow through the decision that I had intuitively taken to concentrate on patents and copyright for much of this book at the expense of trademarks. I would like to thank Peter Drahos and Paul Heald for their guidance, unintended or otherwise, and remain indebted to them both. Duncan Matthews Oxford November 2001

Abbreviations

ABPI ANDA ASEAN BDI BSA CBI CI ROAP DSB DSU EC EFPIA EMEA FBI FDA FDI GATT GSP IFAC IFPI IIPA INTA IPC IPO ISACs ITC MITI MPAA NGO NMPA PHARE PhRMA RIAA

Association of British Pharmaceutical Industries Abbreviated New Drug Approval Association of South East Asian Nations Federation of German Industries Business Software Alliance Confederation of British Industries Consumers International Regional Office for Asia and the Pacific Dispute Settlement Body Understanding on Rules and Procedures Governing the Settlement of Disputes European Communities European Federation of Pharmaceutical Industry Associations European Medicines Evaluation Agency Federal Bureau of Investigation Food and Drug Agency Foreign Direct Investment General Agreement on Tariffs and Trade Generalized System of Preferences Industry Functional Advisory Committee International Federation of Phonographic Industries International Intellectual Property Alliance International Trademark Association Intellectual Property Committee Intellectual Property Owners Industry Specific Advisory Committees International Trade Commission Japanese Ministry of International Trade and Industry Motion Picture Association of America Non-governmental organisation National Music Publishers’ Association Poland and Hungary: Aid for Economic Restructuring Pharmaceutical Research and Manufacturers of America Recording Industry Association of America

xiv

Abbreviations

SACIP TABD TACIS

Standing Committee on Industrial Property Transatlantic Business Dialogue Technical Assistance to the Commonwealth of Independent States and Mongolia TRIPs Agreement on Trade-Related Aspects of Intellectual Property Rights TPRG Trade Policy Review Group TPSC Trade Policy Staff Committee UCC Universal Copyright Convention UN United Nations UNCTAD United Nations Conference on Trade and Development UN/ECE United Nations Economic Commission for Europe UNICE Union of Industrial and Employers’ Confederation of Europe US United States USPTO United States Patent and Trademark Office USTR Office of the United States Trade Representative WHO World Health Organization WIPO World Intellectual Property Organisation WTO World Trade Organisation

Introduction

This book concerns the globalisation of intellectual property rights through the World Trade Organisation (WTO) Agreement on Trade-Related Aspects of Intellectual Property Rights (commonly referred to as the TRIPs Agreement). It is an account of the role played by global corporate actors (also known as multinational companies) in securing trade regulation capable of protecting global commercial interests to an extent not previously witnessed in relation to international protection of intellectual property rights. The book explains how a consensus in favour of global action was achieved across a range of industry sectors, how a coherent strategy of industry alliances linked to government action then emerged, most visibly in the United States but also in Europe and Japan, and how a willingness to engage in forum shifting from bilateral to multilateral action, coupled with a negotiating advantage over developing countries in terms of intellectual property expertise, led to a successful outcome to the Uruguay Round of GATT (General Agreement on Tariffs and Trade) negotiations as far as global business interests were concerned. In the light of the Uruguay Round negotiations that secured a TRIPs Agreement, the book argues that global corporate actors have also played an important role in ensuring the effective implementation of the Agreement in each WTO Member country through surveillance carried out by their local branches and agents. But as the adverse effects of the TRIPs Agreement begin to be felt in developing countries, opposition to the Agreement has become more vocal. Again, it is global corporate actors that have sought to counter opposition to intellectual property protection by using a mix of strategies, ranging from assistance and educational programmes to economic coercion and recourse to legal proceedings under both the civil and the criminal provisions of developing countries’ national law. The book argues, however, that at a time when the impact of the TRIPs Agreement is becoming more widely understood in the developing world, the concentration of global business interests that achieved so much in securing the Agreement during the Uruguay Round negotiations is now under pressure that may result in its fragmentation. The reasons for fragmentation of the global consensus among corporate actors are examined in detail. First,

2

Introduction

the book identifies institutions in the United States and Europe as playing a significant role as gatekeepers that must balance the intellectual property concerns of business against wider priorities in international diplomacy. On several occasions, the result is that corporate complaints identifying inadequate intellectual property protection in developing countries have not been taken up by their home governments because of more pressing concerns relating to national security, political stability and economic development. Second, the book suggests that the consensus between the United States and Europe has started to erode as a result of disputes relating to the continued use of bilateral trade sanctions by the United States and as a result of an ongoing disagreement about the most appropriate mechanism to be used for ascertaining the priority date for patent applications (first-to-invent or the first-to-file). Third, there has been a fragmentation of the cross-sector industry consensus that enabled business support for the TRIPs Agreement to appear so unequivocal in the first place. Fourth, new actors whose views were peripheral to the Uruguay Round negotiations have now entered the debate on global intellectual property protection more wholeheartedly in the wake of a wider understanding of the impact of the TRIPs Agreement. These new actors include industry groups, such as generic drug manufacturers, that did not participate in the original negotiations; civil society groups, including non-governmental organisations (NGOs), farmers’ groups and representatives of indigenous peoples that are raising awareness of the potential for adverse effects arising from the Agreement in terms of poverty and biodiversity; global institutions, such as the United Nations Conference on Trade and Development (UNCTAD) and the World Health Organization (WHO), that have to some extent shared the concerns of civil society groups; and developing countries themselves who, through information deficiencies and lack of resources during the Uruguay Round negotiations, did not fully envisage the far-reaching effect of the TRIPs Agreement and are now seeking renegotiation. Finally there are indications that, in interpreting the scope and meaning of the Agreement, WTO Dispute Settlement Panels themselves might be prepared to support a narrower interpretation of the TRIPs Agreement enforcement than global corporate actors envisaged, this narrower interpretation being restricted to flagrant violations as opposed, for example, to more general complaints that the ‘legitimate expectations’ of global corporate actors are not being met by the particular form of national implementing measure introduced to meet the requirements of the TRIPs Agreement. It is against this background that the book sets the scene for any renegotiation of the TRIPs Agreement, particularly during the forthcoming Doha Development Round of trade negotiations between WTO Members, identifying the likely negotiating platforms of key players and the range of issues likely to be at the forefront of future deliberations on international intellectual property protection. The book examines the prospects for issues unresolved at the end of the Uruguay Round by virtue of being included but

Introduction 3 left open for review or omitted from the TRIPs Agreement altogether, assesses the likelihood of new issues being added (particularly in relation to biodiversity, indigenous knowledge and electronic commerce) and suggests that maintenance of the current text, with no substantive revision of the TRIPs Agreement, is the most likely outcome, but with amendments favourable to developing countries also a possibility. At the outset it must be acknowledged that a great deal has already been written about the TRIPs Agreement and much of that excellent work is referenced in the text of this book. Chapters 1 and 2 trace the origins and negotiating history of the TRIPs Agreement. Earlier accounts of these events have tended to focus, on the one hand, on an analysis of official documents released at the end of the GATT Uruguay Round negotiations establishing the WTO and, on the other, on accounts of how and why business interests in the United States came to be mobilised so as to lobby for intellectual property protection on a global scale once the economic implications of widespread international piracy and counterfeiting became apparent from the early 1980s onwards. But in researching this book my initial concern was that these accounts, many of which provide entirely accurate versions of events in so far as they go, did not offer a complete picture of the events leading up to the TRIPs Agreement. By focusing on the undoubtedly significant role played by different US actors (individuals, corporations and business groups) in initiating and negotiating a new international agreement on the protection of intellectual property rights, American scholars have done a great deal to relate their side of the story. What has been underplayed in these accounts is a global perspective to counterbalance the US viewpoint – a recognition that there were also individuals, corporations and business groups outside the United States that played a significant role in laying the foundations for a new, global, regime for intellectual property protection in the twenty-first century. Far from being a victory for the United States (and US business interests in particular) as some authors have tended to argue, Chapters 1 and 2 suggest that once the whole picture of international corporate networking is revealed through an account of the relationships built between key European, US and Japanese actors in initiating and negotiating the TRIPs Agreement, we are presented with a classic example not of US corporate hegemony, but of global business identifying global obstacles to obtaining a secure international trading environment for their goods and services. With entire business sectors collaborating on a global scale and responding to the imperative of intellectual property protection in a coordinated way through lobbying and business group activity, corporate actors paved the way for the inclusion of intellectual property rights in the Uruguay Round trade negotiations and, ultimately, the adoption of new global regulation in the form of the TRIPs Agreement as part of the package of measures now administered by the WTO. What this book implies is that only once the raison d’être of the TRIPs Agreement has been fully acknowledged by recognising the significance of

4

Introduction

the consensus achieved among global corporate actors and business groups, and only once the origins and negotiating history of the Agreement have been understood in this way, can an interpretation of the main provisions of the TRIPs Agreement then be undertaken. This interpretation is undertaken in Chapter 3 with a provision-by-provision analysis of the text of the TRIPs Agreement elucidating its key components and indicating those measures which proved controversial during the Uruguay Round negotiations, often precisely because they ran counter to business practice and commercial expectation among global corporate actors or, conversely, because they amounted to representations of business priorities that were often opposed by developing country delegations to the GATT negotiations. Once the final version of the TRIPs Agreement had been adopted at the end of the Uruguay Round, the significance of global actors and interests in securing the TRIPs Agreement did not stop. Chapter 4 describes how, following adoption of the TRIPs Agreement, scholarly attention has tended to shift to an assessment of whether the Agreement is now being effectively enforced, as a prerequisite for the intended outcomes of international legal obligations being achieved in practice. In this respect, there has been an expectation that the Members of the WTO, namely those countries (not businesses) that are signatories to the Uruguay Round agreements, will bring complaints about implementation of the TRIPs Agreement in the territories of other WTO Members before the WTO body responsible for scrutiny and transparency, the TRIPs Council, or through the formal Dispute Settlement Procedure of the WTO. But, although this shift in scholarly focus is laudable at the level of black letter law, in practice the corporate actors and business groups that provided the original stimulus for the TRIPs Agreement have themselves no right to be heard before the WTO. Because businesses do not have locus standi before the WTO, the continued significance of corporate interests in ensuring appropriate application of international intellectual property protection has tended to be overshadowed by the predominant focus on WTO Member countries and the formal aspects of WTO procedures. Chapter 4 seeks to redress this balance. Following through the theme of highlighting the significant role played by global corporate actors, the book explains that this relates not only to the negotiation of the TRIPs Agreement, but also to the continuing efforts to monitor its application in foreign markets. Chapter 4 suggests that, in many instances, it is the very same companies and business groups that lobbied so hard to initially encourage adoption of the TRIPs Agreement that are now acting as the eyes and ears of developed country WTO Members in terms of global monitoring of national implementing legislation and administrative procedures on the ground. While government administrations in developed countries (particularly the United States and the European Communities)1 rarely possess the resources to seek out instances of inadequate implementation of the TRIPs Agreement in foreign jurisdictions in any concerted way, it is frequently global corporate actors that bring the concerns

Introduction 5 of their local agents, branches and subsidiaries to the attention of the appropriate government agencies via the Office of the United States Trade Representative (USTR) and/or the European Commission. Corporate pressure is then exerted on the appropriate public sector officials with a view to resolving TRIPs implementation problems in foreign markets through bilateral trade dialogue, through the TRIPs Council or, ultimately, through the Dispute Settlement Procedure of the WTO. It is global business that lies at the heart of these activities and continues to play a pivotal role in ensuring the practical application of the TRIPs Agreement but, crucially, it is governmental institutions such as the USTR and the European Commission that act as ‘gatekeepers’ in deciding which complaints to take forward. Chapter 4 also examines the significance of corporate involvement in a number of the earliest complaints relating to the TRIPs Agreement that have been brought by WTO Members before the Dispute Settlement Procedure in particular. There is evidence, in this respect, of at least two emerging trends that challenge the interests of global corporate actors: first, a narrowing in the interpretation of what global corporate actors may legitimately expect under the terms of the TRIPs Agreement is apparent in the Appellate Report of the US–India Mailbox Panel; second, it is clear from the EC–Canada Bolar/Stockpiling Panel and associated activity in Israel and Cyprus that generic drug manufacturers are encouraging WTO Members to operate at the boundaries of permissible acts under the provisions of the TRIPs Agreement in order to achieve competitive advantage for their national industries. For developing countries, where in many instances adherence to international standards of intellectual property protection had not been present before the Agreement, the implications of WTO surveillance and enforcement mechanisms relating to the TRIPs Agreement are likely to be far-reaching. Opposition to the TRIPs Agreement is growing among civil society groups and NGOs concerned with biodiversity, farmers’ rights to reuse and plant seeds from their crops, and the rights of indigenous peoples to prevent global corporate actors appropriating traditional knowledge. The growth of opposition to the TRIPs Agreement among these groups raises the prospect of fragmentation of the delicate balance of interests that made the Agreement achievable at all during the Uruguay Round. Given the likely impact of the TRIPs Agreement on developing countries and the possible implications for future renegotiation of the Agreement, global corporate actors have stressed the role of intellectual property protection in facilitating economic development through technology transfer and inward investment. Chapter 5 acknowledges that the potential benefits of the TRIPs Agreement that have been predicted by global corporate actors in terms of attracting higher levels of foreign direct investment and encouraging local entrepreneurship as a result of improved standards of domestic intellectual property law must be balanced against the likelihood of higher costs (particularly for proprietary pharmaceutical products and educational

6

Introduction

materials) that higher standards of patent protection and copyright imply. This raises the possibility that the adverse effects of the TRIPs Agreement will outweigh the benefits for developing countries, a view shared by a significant number of commentators, and the grounds for their pessimistic predictions will receive further attention, not least because they are a likely focus for opposition to the Agreement in any forthcoming renegotiation of its provisions. Chapter 6 concludes the book by assessing the future prospects for the TRIPs Agreement in more detail. It suggests that it is only against the background of understanding global corporate actors that full consideration can be given to any future renegotiation of the TRIPs Agreement. Global corporate actors will continue to play a pivotal role. Their interests are likely to be at the forefront of developed country perspectives on future requirements of international intellectual property protection. Multinational companies and developed country governments are well advanced in their proposals for further tightening of the text of the Agreement. But, the book concludes, the concentration of interests that led to the inclusion of intellectual property protection in the package of deals achieved at the end of the Uruguay Round negotiations now shows signs of fragmentation. The fragmentation of interests is attributed to a range of factors internal and external to global corporate actors. Internal factors contributing to the fragmentation of the global corporate consensus include the prospect that wider diplomatic issues will take priority over the imperative of rigorous international intellectual property protection among developed country governments; differences of opinion between developed country governments on the role of bilateral trade sanctions in the post-Uruguay Round era and the debate over first-to-invent and first-to-file procedures for patent applications that have gone some way towards undermining transatlantic relations between the United States and Europe; and the differences in priorities between industry sectors which are now more prominent than during the Uruguay Round. External pressures contributing to the fragmentation of the global corporate consensus in favour of the TRIPs Agreement include responsive behaviour from industry groups that did not participate in the formulation of the TRIPs Agreement, including the generic drug companies; civil society groups including NGOs, farmers and indigenous peoples; developing country governments; and global institutions such as UNCTAD and the WHO. Dispute Settlement Panels of the WTO are also identified as a factor likely to limit the scope for interpretation of obligations under the TRIPs Agreement. The book concludes that these internal and external pressures on the global corporate consensus are likely to hinder the tightening up of the standards of worldwide intellectual property protection embodied in the TRIPs Agreement, with the possibility of a weakening of those standards also apparent.

1

Origins of the TRIPs Agreement

Ministers of GATT met in Marrakesh on 12–15 April 1994 to conclude the Uruguay Round of Multilateral Trade Negotiations that had begun in Punta del Este nearly eight years earlier. At Marrakesh, 114 countries, together with the European Communities,1 became signatories to the Final Act embodying the results of the Uruguay Round and parties to the Agreement establishing the WTO, which came into effect on 1 January 1995. Signatories (the WTO Members) also became parties to the Agreement on Trade-Related Aspects of Intellectual Property Rights (the TRIPs Agreement), annexed to the WTO Agreement, as well as to thirteen Multilateral Agreements on Trade in Goods, a General Agreement on Trade in Services and a number of other measures, including an Understanding on the Settlement of Disputes. This chapter describes the events that led to the inclusion of intellectual property protection as an agenda item during the Uruguay Round negotiations. It explores the reasons why intellectual property protection became a key issue for international trade, reviews earlier multilateral attempts to link intellectual property to trade through multilateral and bilateral initiatives and, most crucially, examines how a consensus in favour of global action was achieved across a range of industry sectors. Moves towards achievement of that consensus, led by key individuals in the business community, were motivated first by a strategy of encouraging use of bilateral trade law in the United States as a means of encouraging other countries to protect the intellectual property rights of multinational companies based in the United States. Once that strategy had proved successful, global corporate actors shifted the forum for their efforts from domestic law to global trade law. In the United States, Europe and Japan, businesses exerted pressure on their governments to ensure that intellectual property became a global commercial issue and the focus of attention during the Uruguay Round of GATT negotiations. These developments, discussed here, constitute the origins of the TRIPs Agreement. Progress made towards intellectual property protection subsequently during the GATT negotiations is then discussed in Chapter 2, with later chapters dealing with the content of the TRIPs Agreement, its implementation, impact and future priorities. This chapter begins by explaining the scope of intellectual property rights and the reasons

8

Origins of the TRIPs Agreement

why piracy and counterfeiting 2 became such an important issue in international trade.

Perceptions of intellectual property rights The term ‘intellectual property’ refers to a range of legal rights over new ideas relating to patents, copyright and related rights, trademarks, geographical indications, industrial designs, layout designs of integrated circuits and the protection of undisclosed information.3 As international trade has developed and the significance of technology as a commodity of that trade has increased (Doane 1994: 465), so an awareness of the importance of intellectual property protection has also grown (see also Sell 1995: 163; May 2000: 81). Today, intellectual property constitutes a valuable economic asset that accounts for an ever greater ‘value added’ in high technology areas such as the pharmaceutical4 and information technology industries, and in audiovisual entertainment areas such as the music and cinema industries. In the pharmaceutical sector, for example, US and European companies invest about 20 per cent of their sales income in research and development with the aim of producing the next generation of medicinal products, this being by far the highest level of investment of any industrial sector (according to Yeutter, foreword to Gorlin 1999: ii). Unfortunately, high technology sectors, such as proprietary medicines, also produce commodities that have proved particularly susceptible to misappropriation through piracy (Welch 1992: 41). From a developed country perspective, for as long as there has been legal protection of intellectual property rights there has also been a history of misappropriation of those rights through piracy (see also Halbert 1997: 55) and counterfeiting. The argument against allowing piracy and counterfeiting is that it amounts to theft, since rights are owned and right holders should be allowed to recoup the investment they have made in terms of research and development endeavours and/or intellectual creativity. Yet, from a developing country perspective, allowing the (mis)appropriation of rights is based on perceptions of intellectual property rights as the common heritage of society, namely the view that humankind should have equal access to lifesaving medicines, for example. Developing countries have also argued that recouping investment will in any case be achieved primarily from markets in developed countries, where consumers are more readily able to afford the higher cost of products protected by intellectual property rights. Many developing countries have tended to consider that the purpose of intellectual property rights was simply to reinforce the economic power of developed nations and transfer wealth from poorer countries to richer ones (Worthy 1996: 195).

The anti-counterfeiting code The origins of the TRIPs Agreement as a manifestation of international intellectual property rights can be traced back to the late 1970s, when the

Origins of the TRIPs Agreement 9 growth of trade in counterfeit goods led to the mobilisation of corporate actors on a global scale with the formation of the Anti-counterfeiting Coalition, an alliance of 100 multinational corporations with the common aim of encouraging national governments to strengthen protection against counterfeit trademarked goods (see also Blakeney 1995: 77; Stewart 1993: 2259). The Coalition provided an important industry input into the drafting of a code on anti-counterfeiting. During the Tokyo Round of the GATT between 1973 and 1979, trade in counterfeit goods had begun to emerge as a serious issue (see also Blakeney 1996a: 544; Bradley 1987: 64; Doane 1994: 471; Emmert 1990: 1339) and was no longer simply considered an ‘acceptable obstacle’ to free trade (Gervais 1998: 8). Although attempts to agree common rules to stop trade in counterfeit goods failed to receive widespread support from other national delegations at the end of the Tokyo Round, the Coalition encouraged the United States and the European Communities (see also Evans 1994: 158; Stewart 1993: 2260) to continue their efforts and, in 1979, reached agreement on a draft ‘Agreement on Measures to Discourage the Importation of Counterfeit Goods’.5 Under the draft code, contracting parties were to implement measures to detain and seize counterfeit trademarked goods once the owner of the trademark demonstrated a right to protection by past importation or the likelihood of future importation (Stewart 1993: 2260). This proposal came too late to receive widespread support from other delegations to the Tokyo Round of GATT, particularly since there was a lack of evidence that international copyright infringement posed a real problem to business interests in developed countries and to the US economy (see also Blakeney 1996b: 1). Yet it was the absence of an international consensus to support the draft Agreement that paradoxically provided the stimulus for US business to overcome the perceived lack of evidence of infringements and galvanised corporate interests to support the common aim of getting intellectual property protection on the agenda for the subsequent Uruguay Round of GATT negotiations. Between 1980 and 1982 informal meetings were conducted between representatives of key business interests and government officials in the United States, the European Communities, Canada, Japan and Switzerland (Blakeney 1996b: 1; Stewart 1993: 2260), culminating in the submission of a revised version of the draft GATT anticounterfeiting code.6

1982 GATT Ministerial Meeting At the Ministerial Meeting of 1982, designed to address outstanding issues that had not been resolved at the end of the Tokyo Round, the United States delegation advocated further negotiations, based on the revised version of the draft code, with the aim of belatedly achieving the adoption of a multilateral anti-counterfeiting code (Evans 1994: 159; Stewart 1993: 2261). However, the proposal still failed to attract wide support. Developing countries, led by India and Brazil, questioned the need for an agreement on intellectual property rights within the GATT at all and argued that the World

10

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Intellectual Property Organisation (WIPO) already offered an appropriate multilateral forum for raising intellectual property standards and that the GATT, with its remit for trade in goods, had no jurisdiction over trademark counterfeiting (for a detailed account of developing country opposition to including intellectual property rights within the Uruguay Round agenda, see Blakeney 1995: 78; 1996b: 2; Bradley 1987: 67; Stewart 1993: 2261). Despite the continued misgivings of some developing countries, the Ministerial Declaration of 29 November 1982 requested the Director General of GATT to hold consultations with his counterpart at WIPO on legal and institutional aspects involved in trade in counterfeit goods7 (see Bradley 1987: 67; Gervais 1998: 8). In 1984, at the fortieth Session of the GATT Council, it was agreed that work concerning counterfeit goods would continue, the GATT Council appointing an Expert Group, which was to include a representative from WIPO and report its findings to the GATT Council (Stewart 1993: 2261– 2). The Expert Group met on six occasions in 1985 (Gervais 1998: 8), culminating in a report on ‘Trade in Counterfeit Goods’,8 which set out the adequacy of national laws to attack the counterfeit problem; the authority of the GATT to act in this area; the methods available to the GATT; and the impact of anti-counterfeiting on international trade (Stewart 1993: 2262). The Expert Group concluded that joint action was probably needed, but was not able to agree on whether the GATT was an appropriate forum for such action (Gervais 1998: 9). It recommended that it should be for the GATT Council to determine whether multilateral negotiations through the GATT framework would be appropriate. However, the report was criticised by developing countries within the GATT Council itself on the grounds that the impact of trademark counterfeiting could not actually be quantified (Blakeney 1996b: 2). Other developing countries, led by India and Brazil, were of the view that WIPO rather than GATT was the appropriate forum for addressing counterfeiting issues (Gervais 1998: 9). For developing countries, WIPO had the practical advantage of offering a forum where, owing to the system of voting, they could use their numerical advantage to better protect their interests (Evans 1994: 159).

Attempts to revise the WIPO conventions WIPO had been established in 1967 as a United Nations (UN) agency to administer the Paris and Berne conventions and to seek the harmonisation of national intellectual property laws.9 The Paris Convention for the Protection of Industrial Property of 188310 and the Berne Convention for the Protection of Literary and Artistic Works of 188611 were the result of attempts to coordinate the international dimensions of intellectual property rights. Under the Paris Convention, signatories12 agreed to provide national treatment for foreign works under domestic laws for patents, trademarks, industrial designs, trade names, appellations of origin and utility models. The Berne Convention sets out similar provisions and minimum terms for copyrights.13 However,

Origins of the TRIPs Agreement 11 these conventions lacked strong enforcement provisions, a problem exacerbated by the reluctance of developing countries to carry through their obligations as signatories. This reluctance on the part of developing nations had its origins in concerns that strong intellectual property rights would make the acquisition of technology from the developed world prohibitively expensive (de Koning 1997: 64). The TRIPs Agreement was therefore not an entirely new development in international economic law. In many respects, it was the successor to earlier WIPO-administered conventions (see also de Koning 1997: 71). Indeed, the TRIPs Agreement itself actually requires compliance with the Paris and Berne conventions (with the exception of Article 6bis of the Berne Convention relating to moral rights). But, as they stood, two main flaws were perceived in the Paris and Berne conventions: first, the absence of detailed rules on enforcement rights before national judicial administrative authorities, and, second, the absence of a binding and effective mechanism to settle disputes between states (see also Gervais 1998: 9–10). The Paris and Berne conventions also suffered from the reluctance of some countries to become signatories when they did not consider this to be in their national interest. For developed countries, intellectual property was a private right that should be protected as any tangible property, whereas for developing countries it was a public good that should be used to promote economic development (see also Stewart 1993: 2255). These tensions underpinned the debate that took place from the late 1970s onwards about the future of the international intellectual property regime. From the 1970s onwards, with increasingly vocal complaints from industry about the growth in piracy of copyrighted works (Blakeney 1995: 76), developed countries attempted to revise and strengthen the WIPO intellectual property conventions (see Stewart 1993: 2249) in order to introduce effective enforcement mechanisms capable of combating international piracy and counterfeiting of intellectual property. Attempts to revise the Paris Convention, however, became polarised. From the viewpoint of developed countries, effective enforcement was needed to combat loss of revenue due to piracy and counterfeiting, whereas developing nations wanted to see revisions in the light of a report by the UN Conference on Trade and Development (UNCTAD). UNCTAD had conducted a study of transfer of technology to developing nations14 and had concluded that 84 per cent of patents issued in developing countries were owned by nationals of five countries (the United States, Germany, France, Switzerland and the UK), whereas only 1 per cent of patents were owned by nationals of developing countries within their own states (UNCTAD 1974). The UNCTAD report provided the stimulus to encourage developing countries to seek revisions to the Paris Convention that would allow them to retain the use of compulsory licences (a requirement that patents be worked locally, with the sanction of a compulsory order granting manufacturing rights to another party if the patent holder fails to meet this obligation).

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With the positions of developed and developing countries polarised along these lines, signatories to the Paris Convention held inconclusive revision conferences in Geneva (1980), Nairobi (1981) and Geneva (1982) in an unsuccessful attempt to overcome their differences.

The 1984 watershed Parties to the Paris Convention met again in Geneva in 1984 in an attempt to agree to revisions. But negotiations broke down, with the entrenched views of developed and developing countries blocking any revision. Instead, the Paris Convention remains in its last revised form following the Stockholm amendments of 1967 (for a detailed account of why negotiations to revise the Paris Convention broke down in Geneva, see Sell 1998). From the perspective of developed countries, 1984 marked a realisation that they had failed in their attempts to strengthen the enforcement mechanisms of the Paris and Berne conventions. Moreover, attempts to introduce common dispute settlement provisions to cover all WIPO treaties had failed because signatories did not formally ratify the measures envisaged. By the mid-1980s it became clear that the differences between developed and developing country viewpoints of how national interests could best be represented through international intellectual property systems were polarised. From the viewpoint of developed countries, it was becoming increasingly clear that there was a need to protect national industries from piracy and counterfeiting in foreign markets. US companies found themselves having to compete with mass-produced unauthorised copies of their own patented, trademarked and copyrighted goods in both domestic and foreign markets (see Sell 1998: 132), whereas developing countries sought access to the tools for achieving technological advancement and economic development through a relaxation of intellectual property rules (Stewart 1993: 2255). By the mid-1980s developed countries had begun to turn away from consensusled WIPO initiatives to ensure international protection for intellectual property rights (see also Sell 1998). Instead, the focus turned to bilateral measures designed to ensure protection of technology-based export markets, particularly through the strategy of achieving a linkage between trade and intellectual property (bilateral measures have been highlighted as being of particular significance in identifying the origins of the TRIPs Agreement by Merges 1990: 241 and Sell 1998: 132).

The emergence of a business strategy for global intellectual property protection In the light of the failure to revise the WIPO-administered conventions and the scepticism voiced within the GATT Council as to the validity of assessments of the costs of trademark infringement on international trade, business interests in developed countries became disillusioned with WIPO

Origins of the TRIPs Agreement 13 ‘impotence’ (Blakeney 1995: 76) and more sophisticated in their relations with the national governments of developed countries. Efforts to strengthen existing intellectual property conventions were seen by business and government as having ended in failure. The WIPO-administered conventions were perceived as ‘toothless’ (Blakeney 1995: 76; 1996b: v; 1996b: 544; de Koning 1997: 59), with the failure to achieve significant amendment of the Paris Convention attributed to too much influence on the part of developing countries (Merges 1990: 239). Meanwhile, the growth of pirated and counterfeited goods appeared to be continuing unabated. By the end of the 1970s, business interests had already begun to put the case for stronger intellectual property protection abroad through mechanisms other than the WIPO conventions. As early as 1978 the Publishers’ Association (PA), representing the copyright interests of book publishers in the United Kingdom, had brought, and subsequently won, a civil action in the Singapore courts against a publisher (Ng Sui Nam) found to have infringed textbook copyright. The case (unreported) was settled after a preliminary ruling against the defendant, based on the applicability of the UK Copyright Act of 1911 to Singapore following independence.15 Subsequently, the PA broadened its agenda of seeking redress for copyright infringements on an international scale by sending a delegation to the United States to press Harvey Bale, then Deputy US Trade Representative, for the United States to take action against infringement worldwide. Although the PA met with some resistance from US policy-makers, who did not immediately appreciate the significance of a delegation acting on behalf of UK publishing interests travelling to the United States to influence public policy, the PA had used a strategy that many high profile US companies would later replicate by calling for international action in order to produce a coordinated response to copyright infringement. The PA had demonstrated that, at least from a UK perspective, the potential was already there for a global dimension to a coordinated business strategy designed to protect intellectual property rights abroad. As the 1980s progressed, such coordinated corporate activity became more commonplace. The agricultural chemicals producers, the Anti-counterfeiting Coalition and the newly established Copyright Alliance all began to coordinate lobbying activities to press for changes in US trade policy (Sell 1998: 132). Soon afterwards, US business stepped up its strategy of raising awareness of intellectual property infringement abroad by submitting reports to Congressional hearings (Blakeney 1996b: 2; Stewart 1993: 2253), highlighting losses caused by infringement of intellectual property rights. In 1983 the Sub-committee on Trade of the United States House of Representatives had heard that the annual losses to the video industry resulting from copyright infringement were approximately $6 billion,16 while in 1984 the House Sub-committee on Oversight and Investigations was told by the Automotive Parts and Accessories Association (see also Blakeney 1996b: 2; Stewart 1993: 2254) that the industry lost some $12 billion from counterfeiting of spare parts.17 Meanwhile the agricultural chemical industry

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had complained that its foreign markets were being seriously eroded by the rise in counterfeiting.18 But estimates of the losses to US business abroad suffered from a risk that they were unverified figures, produced without use of a standardised set of criteria or methodology and running the risk that losses might be exaggerated as a result (see also Weissman 1996: 1085). Despite this, the US government lacked both the resources and the inclination to question the evidence presented to them by corporate America. The language used by US business also impressed government officials and politicians. The terms in which their case was expressed were emotive, portraying the ‘theft’ being undertaken by developing countries and those copying US products as ‘pirates’. By using the language of incursion and theft, US companies effectively changed the policy debate (Weissman 1996: 1088). For the US government, producing a response was seen as necessary and proportional to the concerns articulated by US business interests. Initially, this response came in the form of bilateral trade legislation.

Section 337 of the Tariff and Trade Act 1930 Strong measures to combat infringement of domestic intellectual property rights in the United States existed as early as 1974, when Section 337 of the Tariff and Trade Act of 1930 was amended by transferring from the President to an independent government agency, the International Trade Commission (ITC), on the application by the domestic right holder, the power of seizure and forfeiture of infringing goods or to prevent the importation of foreign goods that violated the rights of intellectual property holders in the United States19 (see also Evans 1994: 149; Sell, 1995: 166; Seltzer 1992: 351). In order to establish a violation of Section 337, it is necessary to prove the following: an unfair method of competition and unfair act; the importation of goods into the United States or their sale by the owner, importer or consignee or agent of either; the existence of a domestic industry or one that is in the process of being established; and injury to the domestic industry through the infringement of a valid patent, copyright or trademark. For the complainant US company, Section 337 was a particularly powerful action since, in addition to remedies available in the ITC, the plaintiff is also entitled to action in the federal court (Evans 1994: 149). The effect of Section 337 was to provide a more impartial forum for claims of intellectual property infringement and to speed up the investigations procedure that, owing to earlier delays, had allowed imports under investigation to continue unchecked for several years. By introducing a twelve-month deadline by which the ITC was obliged to complete its investigation, greater advantage fell to the US plaintiff, since it left the defendant foreign importer with little time to prepare a case. The amended Section 337 also carried with it the problem that autonomous national measures designed to deal with goods that infringe intellectual property rights only have an impact on goods imported into the US market and could not prevent counterfeit goods being sold in third-country markets

Origins of the TRIPs Agreement 15 (Evans 1994: 151). Section 337 therefore offered no conciliation to US companies seeking to export their goods to markets where piracy and counterfeiting were rife. That problem could only be addressed through multilateral trade agreements or, in their absence, by using the threat of bilateral trade legislation in US domestic law.

Section 301 of the Trade Act 1984 Before 1984, the US government had pursued an ad hoc approach to intellectual property problems raised by individual companies. US embassies abroad assisted on a case-by-case basis (Sell 1998: 133). But the failure of attempts to reform the WIPO conventions brought the need to adopt a bilateral approach to linking trade and intellectual property sharply into focus (Drahos 1995: 9). In 1984 the US Congress, responding to complaints from business about lack of progress in the Tokyo Round of GATT and in negotiations to revise the WIPO conventions, bowed to pressure for new bilateral trade legislation. The Trade Act of 1984 introduced important amendments to Section 301 of the Trade and Tariff Act of 1974. Section 301 of the Trade Act of 1984 permitted the President to seek the elimination of ‘unjustifiable and unreasonable’20 trade practices and introduced a trade-based approach to intellectual property protection (Sell 1995: 172), with intellectual property protection grafted onto the existing Section 301 policy structure (Ryan 1998: 73). The effect of the amended Section 301 was threefold. First, it gave the Office of the United States Trade Representative (USTR) the right of initiative to investigate the appropriateness of another country’s intellectual property without waiting for a complaint from a US company.21 Second, it explicitly made failure to protect intellectual property rights actionable with trade sanctions and defined as ‘unjustified and unreasonable’ those practices that denied fair and equitable provision of adequate and effective protection of intellectual property rights, expanding the criteria for finding an act ‘unjustifiable’ to include any act, policy or practice that denies protection of intellectual property rights. Third, it included intellectual property protection as a new criterion for the elimination of tariff privileges for imports into the US from designated developing countries under the Generalised System of Preferences (GSP)22 (see also Blakeney 1996a: 544; 1996b: 4; Mesevage 1991: 423; Sell 1995: 172; 1998: 133; Stewart 1993: 2256). Through Section 301 the United States placed considerable pressure on developing countries to meet its demands for intellectual property protection (Henderson 1997: 652). In effect, ‘trade and intellectual property began to merge in 1984’.23 The amended Section 301 was a mandate for the USTR to defend US intellectual property rights in the global economy. By 1985, responding to a complaint lodged with the USTR by the Motion Picture Association (according to Braithwaite and Drahos 2000: 71), the amended Section 301 was being used for the first time against the Republic of Korea after complaints by US

16

Origins of the TRIPs Agreement

companies about the limited scope of Korean intellectual property laws. The threat of sanctions succeeded in changing Korea’s intellectual property laws. It became apparent that the mere threat of Section 301 could be sufficient to exert pressure on developing countries to improve intellectual property protection available in national law through bilateral negotiations. Section 301 was also used against Brazil after complaints about copyright protection for computer programs and software (Blakeney 1996b: 4). In 1987, following a complaint to the USTR by the Pharmaceutical Manufacturers’ Association (Braithwaite and Drahos 2000: 71), the United States brought a further action against Brazil under Section 301, increasing tariffs on Brazilian exports in retaliation for Brazil’s inadequate patent protection for pharmaceutical products (Blakeney 1996a: 545). In October 1988, acting in response to a petition filed by the Pharmaceutical Manufacturers’ Association (Weissman 1996: 1078), the US government for the first time acted on its Section 301 threats, imposing 100 per cent tariffs on $39 million worth of Brazilian imports.24

Bilateral negotiations In addition to Section 301, in 1983 the United States began bilateral negotiations with Taiwan over patent protection for chemical compounds and inadequate copyright protection and in 1984 commenced negotiations with Singapore with regard to the need for improvements in copyright protection for recorded music (see Blakeney 1996a: 545; Stewart 1993: 2256–7). In Singapore’s case, the US record industry reported deficiencies in copyright protection and identified it as the world’s largest producer of pirated work, leading to an estimated loss of $358 million for US industry, with $220 million alone lost by the recording industry through the production and sale of pirated music cassettes and compact discs originating from Singapore (according to Blakeney 1995: 79). Faced with the adverse trade relations with the United States, in 1987 the Singapore Government announced its intention to strengthen national copyright law to adhere to the principles of the Universal Copyright Convention (UCC) and to apply for membership of WIPO (Blakeney 1996b: 4; Stewart 1993: 2257). Even before the Uruguay Round had got under way, the dual strategy of Section 301 and linking intellectual property standards to trade in bilateral negotiations had come to be viewed as a successful strategy by US business and government.

Preparations for the Uruguay Round In 1985 the GATT Council directed the Preparatory Committee of the GATT to identify issues for the forthcoming GATT Round, taking into account the 1982 Ministerial Work Programme.25 In the light of consideration of anticounterfeiting in the 1982 Ministerial Work Programme, the United States

Origins of the TRIPs Agreement 17 proposed the inclusion of all intellectual property rights in the GATT, not just trademarked goods, reaffirming its belief that the GATT was the appropriate forum to seek enforcement of intellectual property rights (Stewart 1993: 2263). Within the Preparatory Committee, the Swiss and Columbian ambassadors proposed a compromise between those advocating the inclusion of intellectual property rights and a number of developing countries that were questioning the competence of the GATT to deal with such matters. The Group of Ten countries (and Brazil and India in particular) continued to maintain that the GATT lacked the competence to address the intellectual property rights (Blakeney 1996a: 544). But developing countries were by no means unanimous in their hostility towards the inclusion of intellectual property in the GATT Round. Newly industrialised countries in South East Asia generally accepted the need to provide more effective protection of intellectual property rights, acknowledged the need to include these issues in the GATT and saw the benefits of a dispute settlement procedure to counterbalance bilateral trade measures by the United States (Evans 1994: 160). On 30 July 1986 the Swiss and Columbian ambassadors produced a proposal that, although it did not receive unanimous support, represented the views of forty delegations (see also Bradley 1987: 83; Evans 1994: 160; Stewart 1993: 2264) and formed the basis of the inclusion of intellectual property in the list of subjects for negotiation in the Ministerial Declaration of 1986.26 Separate proposals were tabled by Brazil27 and Argentina28 (Gervais 1998: 10) but, although all three draft texts were submitted to the Punta del Este Ministerial Conference, it was the Swiss– Colombian proposal that was adopted without substantial changes (see also Evans 1994: 161).

Ministerial Declaration of 1986 The Ministerial Declaration of 20 September 1986, which launched the Uruguay Round of trade negotiations, outlined a whole range of issues for negotiation, including Trade-Related Aspects of Intellectual Property Rights (TRIPs). The objectives of the TRIPs negotiating group were set out as follows: ‘In order to reduce the distortion and impediments to international trade, and taking into account the need to promote effective and adequate protection of intellectual property rights, and to ensure that measures and procedures to enforce intellectual property rights do not themselves become barriers to legitimate trade, the negotiations shall aim to clarify GATT provisions and elaborate as appropriate new rules and disciplines’.29 The negotiations aimed to ‘develop a multilateral framework of principles, rules and disciplines dealing with international trade in counterfeit goods, taking into account work already undertaken in the GATT and without prejudice to complementary initiatives which might be taken by the World Intellectual Property Organisation or elsewhere to deal with these matters’.30

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Business support for the TRIPs Agreement The TRIPs Agreement was made possible by the unprecedented support of business, which not only promoted the agreement but also contributed to its content (Evans 1994: 165). In truth, at the beginning of the GATT Uruguay Round of multilateral trade negotiations in 1986 few people in the USTR knew much about intellectual property (a view corroborated by Ryan 1998: 1). Instead, it was intense lobbying activity from industry, particularly in the United States (Sell 1998: 137), that laid the foundations of linking intellectual property protection to trade in the multilateral context. As James R. Enyart, Director of International Affairs at Monsanto, put it: ‘the rules of international commerce are far too important to leave up to government bureaucrats and their academic advisers. But governments, not businessmen, make rules and they only listen when the chorus gets big enough and the singing loud enough’ (Enyart 1990: 53). So it was that patent and copyright business groups drove trade-related intellectual property policy in the 1980s and 1990s, although the diplomacy was conducted on their behalf by the USTR (Ryan 1998: 8). Pharmaceutical companies and copyright industries were among the most active of these groups because these sectors had relatively low entry barriers and consequently high exposure to piracy. High-level executives from activist companies representing these two industry groups – Ed Pratt, chief executive officer (CEO) of Pfizer and John Opel, CEO of IBM – were members of the US President’s Advisory Committee on Trade Policy and Negotiations (ACTPN). The ACTPN was designed to provide direct input by the US business sector into US trade policy (Drahos 1995: 8). The ACTPN had been established under the 1974 Trade Act and was designed to institutionalise business input (Ryan 1998: 68), provide a forum for creating a trade-related strategy to reform international intellectual property institutions (Ryan 1998: 105) and provide a direct route for US companies to influence US trade policy (Drahos 1995: 8). With a degree of access to the US government that would have been unprecedented for industry in other countries, the ACTPN provided an open line of communication for US industry to influence trade policy that was crucial in the evolution of a trade-based strategy for intellectual property (Braithwaite and Drahos 2000: 61). From 1981 onwards the ACTPN was chaired by Ed Pratt. With a business strategy of marketing its pharmaceutical products in developing countries, Pfizer had particular concerns about reverse engineering and piracy of its patented medicines (Braithwaite and Drahos 2000: 62). The personality and leadership of Ed Pratt did much to galvanise the attitude of others in the US business community, who became more willing to publicly acknowledge that infringement of intellectual property abroad was unacceptable (Drahos 1995: 8). Indeed, it is instructive to note that Ed Pratt has himself referred to his involvement in events leading up to the TRIPs Agreement as being his greatest achievement. Meanwhile, the successes achieved in linking trade to intellectual property in US bilateral trade negotiations began to make a large segment of US high technology and creative industries believe that an

Origins of the TRIPs Agreement 19 improvement in intellectual property standards was achievable on a global scale (Enyart 1990: 54). In 1985 the ACTPN set up a Task Force on Intellectual Property (Drahos 1995: 8). US industry was well represented on the Advisory Committee for Trade Negotiations’ Task Force. In addition to Pratt and Opel, Fritz Attaway (Counsel for the Motion Picture Industry Association) and Abraham Cohen (President of the International Division of the pharmaceutical company Merck) sat on the eight-member committee (see Sell 1995: 175). The recommendations of the Task Force were fundamental to the development of a US strategy for intellectual property (Braithwaite and Drahos 2000: 62). The ACTPN Task Force emphasised the need to educate Congress and the USTR about the importance of protecting intellectual property rights to facilitate investment in developing countries, arguing that US industrial competitiveness was being hindered by the denial of effective intellectual property protection in many developing countries (Ryan 1998: 69). In its report of October 1985 the Task Force recommended that US policy-makers develop a trade-based approach to intellectual property protection (Sell 1995: 175). But, although the strategy of targeting one country at a time through bilateral trade action was useful as a means of improving intellectual property protection in a single country, it also had the drawback of being inefficient as there were far too many countries with errant intellectual property laws (Weissman 1996: 1083). In March 1986 the ACTPN refined its agenda and specifically identified the long-term goal of orienting intellectual property within the GATT (Drahos 1995: 9) as a supplement to bilateral action. The idea was to link intellectual property protection to trade on as many levels as possible (Braithwaite and Drahos 2000: 62), shifting forums from bilateral to multilateral trade relations where this suited the cause of global corporate actors. Later that year the ‘GATT strategy’ (Ryan 1998: 105) was endorsed by the USTR as a means to overcome opposition within WIPO to a new code and as a carrot-and-stick approach to trade and intellectual property negotiations with developing countries, offering, on the one hand, concessions on agriculture and textile tariffs, and technical training of foreign officials in intellectual property issues, in return for higher levels of intellectual property protection to combat piracy and counterfeiting, while, on the other hand, using Section 301 and GSP as leverage in bilateral negotiations aimed at improving intellectual property protection in developing countries (see also Drahos 1995: 9; Sell 1995: 176). Business had displayed a willingness to engage in forum shifting, from WIPO to GATT, when the potential to strengthen global intellectual property protection proved significant (see also Braithwaite and Drahos 2000: 201).

The IPC and IIPA The ACTPN was not only crucial to the development of a business strategy for international intellectual property protection on its own account, it was

20

Origins of the TRIPs Agreement

also significant because it served to focus attention on the fact that developing a new international code on intellectual property required the support of a nucleus of committed US companies with sufficient international business at stake to be willing to spend time and effort on the issue (Enyart 1990: 54). But although John Opel of IBM and Ed Pratt of Pfizer wanted to raise intellectual property as a trade issue through the work of the ACTPN, they did not immediately know how to articulate those concerns. It was here that the emergence of single-issue business groups proved so important in the history of the TRIPs Agreement.31 By the mid-1980s, US business was engaging in a strategic reorganisation of the way it articulated its complaints about piracy and counterfeiting abroad. In addition to organising themselves through the traditional route of sectorspecific interest group representation, a further sphere of influence was sought through the formation of representative groups that represented a number of industries, bound together by the common goal of seeking to strengthen intellectual property protection in foreign markets. In effect, this new breed of representative group was an amalgamation of previously disparate industry groups. The most prominent of these were the Intellectual Property Committee (IPC), representing patent-reliant industries in general in the United States and the proprietary pharmaceutical industry in particular, and the International Intellectual Property Alliance (IIPA), representing the main copyright-reliant industries, including those operating in the film, music and publishing sectors. The IPC grew out of the ACTPN (Braithwaite and Drahos 2000: 71) in the sense that it was Pratt and Opel, ACTPN members, who conceived the idea of an IPC with a membership of CEOs and funded directly from their companies (see also Enyart 1990: 54; Sell 1998: 137). The IPC comprised thirteen founding members: Pfizer; IBM; Merck; General Electric; DuPont; Warner Communications; Hewlett-Packard; Bristol-Meyers; FMC Corporation; General Motors; Johnson and Johnson; Monsanto; and Rockwell International. For the US film and pharmaceutical industries in particular, intellectual property was the backbone of their industries (Braithwaite and Drahos, 2000: 61). The IPC, run by Jacques Gorlin (a former Washington policy-maker, consulting economist to IBM and later head of the Gorlin Group, which continues to provide the secretariat for the IPC to this day), was (according to Ryan 1998: 9) well managed, well staffed, well funded and effective, with a single-issue agenda that allowed it to be more focused, more flexible and more responsive than traditional sector-specific trade associations (Enyart 1990: 54). Unlike the IPC, the IIPA did not initially advocate a multilateral GATTbased approach to copyright protection, but instead favoured bilateral negotiations as the most effective means of strengthening enforcement of copyright protection in developing countries (Ryan 1998: 70). The IIPA, run by Eric Smith (a lawyer and Washington lobbyist), at that time represented the interests of eight trade associations: the Association of American

Origins of the TRIPs Agreement 21 Publishers; the Film Marketing Association; the Association of Data Processing Service Organisations; the Computer and Business Equipment Manufacturers Association; the International Anti-counterfeiting Coalition; the Motion Picture Association of America; the National Music Publishers’ Association; and the Recording Industry Association of America.32 These trade associations, in turn, represented over 1,350 individual companies. The IIPA adopted a strategy of educating US policy-makers who, they believed, knew a great deal about trade in real property goods but little about trade in intellectual property (Ryan 1998: 70). With the objective of conveying to US policy-makers the scale of losses to US industry resulting from piracy of copyrighted works, in 1985 the IIPA submitted a report entitled ‘Piracy of US Copyrighted Works in Ten Selected Countries’ to the ITC, complaining about the detrimental effect of copyright piracy in Brazil, Egypt, Indonesia, Malaysia, Nigeria, the Philippines, the Republic of Korea, Singapore, Thailand and Taiwan (IIPA, 1985; see also Blakeney 1995: 78; 1996a: 545; Ryan 1998: 71; Sell 1995: 164; Stewart 1993: 2254). In its report to the ITC, the IIPA estimated that the industries it represented collectively lost nearly $1.5 billion annually as a result of inadequate copyright protection in the ten countries. Using figures supplied by the industry associations in the United States, the IIPA estimated that the music industry alone lost over $600 million per year and the publishing industry lost over $400 million per year, whereas the movie industry lost over $130 million per year and the software industry lost over $125 million (Stewart 1993: 2254). The IIPA called on the US government to establish an international trading environment in which intellectual property was respected and protected. By the mid-1980s, business pressure had brought intellectual property onto the political agenda and raised the profile of arguments that the government could best assist business by linking the defence of their intellectual property rights to trade. Given the unsuccessful attempts to strengthen international conventions on intellectual property protection, the United States initially sought this linkage through domestic trade law and bilateral trade agreements (Stewart 1993: 2255). But before the GATT strategy could be set in motion, US policy-makers faced a problem. Although copyright-dependent industries had also raised the profile of intellectual property as a trade issue, this time by forming the IIPA to identify quantifiable indicators and present statistical evidence (Ryan 1998: 10, 69) to clearly send the message to policy-makers that US copyright industries were losing out to piracy abroad, some copyright-based industries still adamantly opposed the idea of including copyright protection in the GATT negotiations (Ryan 1998: 106). Since the problem for copyright-based industries was not with substantive provisions of national laws, but rather with lack of enforcement, the music, film and book publishing industries expressed a preference for bilateral trade negotiations and sanctions under Section 301 as the most flexible and effective means of improving enforcement levels (Ryan 1998: 107). Over a series of meetings with representatives of

22

Origins of the TRIPs Agreement

copyright-based industries, the USTR policy-makers put the case for a multilateral negotiating strategy at the GATT, arguing the long-term benefits of a TRIPs Agreement. The advantages of such a move were twofold: first, the inclusion of intellectual property within a multilateral trade agreement would give protection of those rights wide international coverage; and, second, the enforcement mechanisms of any such multilateral agreement would also be available for dealing with infringement of intellectual property rights (see also Braithwaite and Drahos, 2000: 61). Reluctantly, the copyright-dependent industries agreed to support a multilateral negotiating strategy (Ryan 1998: 107), although, crucially, this was to be along side rather than a replacement for the proven route of bilateral Section 301 action. The next task was to get intellectual property on the Uruguay Round GATT negotiating agenda. Government largely left this task to industry and their issue-specific groups, particularly the IPC. In September 1985 Jacques Gorlin wrote, in response to a request from the USTR, a review of the major issues involved in placing intellectual property into the next round of the GATT (see also Drahos 1995: 13). Gorlin’s paper set out a possible model for a GATT code on intellectual property and outlined the problems that would need to be overcome if such a code was ever to be adopted (Drahos 1995: 12). Since US business, represented by Pratt and Opel on the ACTPN, knew that any multilateral initiative would require the support of other developed countries (Braithwaite and Drahos 2000: 71), the first task for the IPC was to form alliances with business groups in Europe, initially through the Confederation of British Industries (CBI) in the UK, the Federation of German Industries (the BDI) in Germany and the Patronat in France. Through these national groups, the IPC then met with the Union of Industrial and Employers’ Confederation of Europe (UNICE), which represented thirtythree national business federations at a European level. The IPC and UNICE then met with officials of the Japanese Federation of Economic Organisations (Keidanren), which represents virtually all business sectors and has good relations with the powerful Japanese Ministry of International Trade and Industry (MITI), with a view to gathering international business support for pursuing a multilateral agreement on intellectual property protection and trade.33 Adopting a similar strategy to their US counterparts, UNICE and Keidanren were then able to use their contacts with policy-makers in the European Communities and Japan to exert pressure aimed at building support for a multilateral agreement on intellectual property protection. This trilateral group of US, European and Japanese business interests was to prove crucial in distilling the fundamental principles of intellectual property contained in a practical code, written in the language of business (Enyart 1990: 55), that was to be so significant when submitted to the delegates to the GATT negotiations during the Uruguay Round. Without the support of European and Japanese business, the proposal for a TRIPs Agreement would never have been included in the Ministerial Declaration at Punta del Este,

Origins of the TRIPs Agreement 23 which set the agenda for the Uruguay Round (see also Braithwaite and Drahos 2000: 87). Despite claims by some scholars in the United States (see, for instance, Ryan 1998: 107) that European and Japanese trade associations were reluctant to support the initiative and that neither they nor their governments were as committed to supporting the initiative as were some groups in the United States, in reality this was far from the case. European accounts of the actual discussions that took place between the IPC, UNICE and Keidanren paint a rather different picture. According to business representatives in Europe who recall the formulation of joint US, European and Japanese proposals, the three industry groups worked well together, not least because strong business interests in Europe were to be found in the pharmaceutical and book publishing sectors, whereas in Japan intellectual property protection for consumer electronics and software was crucial, all groups with a powerful interest in improving international intellectual property protection. The differences that arose between positions of the IPC, UNICE and Keidanren were much more to do with the culture of lobbying and engaging with government on intellectual property matters. In Japan, the Keidanren shared the concerns of the IPC in relation to the growing problem of infringement of intellectual property rights but had no experience of taking issue with MITI on this type of issue. Similarly, the US model of lobbying for improvements in intellectual property protection was very different from the tradition of influencing public policy in the European Communities. Although in the United States industry tends to have a relatively open and direct dialogue with government, in the EC there has been a greater tendency for business to make its views known via representative groups. The result is that, once the views of national industry associations have been articulated by UNICE, there is a likelihood that the case presented to policy-makers may lack coherence and represent only a consensus view of the various national interests. European Commission attempts to take into account the views of a far greater variety of national, industry and consumer interests in the European Communities face a much tougher task in influencing policy-makers than do their counterparts dealing with the US administration. But, far from being reluctant to engage with their governments in support of an international agreement on intellectual property protection during the early stages of formulating a coherent proposal for the TRIPs Agreement, the fact was that European and Japanese business interests simply behaved differently, though not necessarily with less enthusiasm, than their counterparts in the US business community. Such is the under-representation of the role played by European business in accounts of the origins of the TRIPs Agreement emanating from the United States that, despite widespread acknowledgement that the initial drafting of the joint proposals was undertaken by Jacques Gorlin on behalf of the IPC and representing US business interests, the fact that John Beton, Chairman of the UNICE Intellectual Property Working Group, later re-wrote up to half

24

Origins of the TRIPs Agreement

of the original text on behalf of European business interests by the time a joint IPC, UNICE and Keidanren statement of views was ready for publication in 198834 has been completely unrecognised. In June 1988, nearly three years after Jacques Gorlin had drafted the initial paper on intellectual property at the GATT for IBM, the IPC, UNICE and Keidanren issued a joint statement of views on the ‘Basic Framework of GATT Provisions on Intellectual Property’ as a ‘manifesto’ (Drahos 1995: 14) that, it was hoped, would form the basis of a GATT intellectual property code. The Basic Framework (which later became generally known as the ‘White Book’ proposals) was presented to the GATT Secretariat as representing the coordinated views of the US, European and Japanese business communities. A consensus among business groups in developed countries had been achieved with relative ease. The Group of Ten developing countries, namely Argentina, Brazil, Cuba, Egypt, India, Nicaragua, Nigeria, Peru, Tanzania and Yugoslavia, meanwhile denounced the Basic Framework in general and its patent provisions in particular. India argued that developing countries should be free to exclude pharmaceutical products, food and chemicals from patent protection, shorten patent life for other sectors and license foreign patents under preferential terms (Ryan 1998: 110). India argued that a patent conferred in the host country was an obligation to undertake local working, with the use of compulsory licensing being recognised as a legitimate policy tool to prevent foreign companies from abusing their exclusive rights by relying on imports of patented goods. Despite these protestations, the demands of industry representatives made in the White Book proposals were clearly reflected in the final TRIPs Agreement (see Sell 1998: 138). The IPC claimed to have played a key advisory role, at the USTR’s request, in developing the official US proposal on intellectual property that the US government tabled before the TRIPs Working Groups in October 1987 (Weissman 1996: 1084). While the ACTPN (and Ed Pratt, CEO of Pfizer, and John Opel, CEO of IBM, in particular) were working with Jacques Gorlin and the IPC to produce the legal ideas that underpinned the strategy of linking trade to intellectual property in the multilateral setting of GATT, Eric Smith and the IIPA continued to develop links between intellectual property and trade in the bilateral context (Braithwaite and Drahos 2000: 304). Despite the complaints in 1986 from the USTR that other Quad members (the European Communities, Japan and Canada but not the United States) were yet to be convinced about the need to include intellectual property in the Uruguay Round (Braithwaite and Drahos 2000: 204), this might have been the case with governments in the European Communities and Japan but it was certainly not the case with intellectual property-reliant industries in those countries. The pharmaceutical, publishing and drinks industries in Europe, together with the software and computer games sectors in Japan, were all well advanced and articulate in expressing their views on the need for inclusion of intellectual property protection in the Uruguay Round. The IPC

Origins of the TRIPs Agreement 25 initiative proved so successful precisely because it duplicated views that were already prevalent about piracy and counterfeiting among key European and Japanese business sectors. In effect, the most important factor in the IPC’s approach to European and Japanese business groups was above all the act of presenting exactly what global business wanted (in the 1988 Framework Document on Intellectual Property) at the right time to articulate the anxieties of global business interests.

Special 301 of the Omnibus Trade and Tariff Act 1988 In the United States, the perceived success of Section 301 and bilateral negotiations led to increased pressure through industry lobbying (Sell 1998: 134) and from the IIPA in particular (according to Blakeney 1996a: 544; Ryan 1998: 71) for further unilateral action to safeguard US economic interests. This pressure continued well after the Uruguay Round had commenced. The resulting Omnibus Trade and Tariff Act of 198835 introduced Special 301, which enhanced the role of the USTR’s office, transferring to it substantial powers previously held by the President and requiring the USTR to make an annual review of intellectual property practices of foreign trading partners (for further discussion of Special 301’s strategic significance see Anon. 1996: 9; Ryan 1998: 73). Transferring powers to the USTR was intended to reduce the possibility of trade policy priorities being waived in favour of foreign policy or defence considerations (Sell 1998: 134). The 1988 Act, which is still in force, also raised the profile of intellectual property protection under Special 301, requiring the USTR to determine whether the acts, policies and practices of foreign countries deny adequate and effective protection of intellectual property rights or fair and equitable market access for US persons that rely on intellectual property protection.36 The USTR is required to report to Congress, identifying foreign countries that have the most onerous acts, policies and practices that have the greatest adverse impact, either actual or potential, on the relevant US products, and are not engaged in good faith negotiations or making significant progress in negotiations to address these problems. Within thirty days of releasing the National Trade Estimates Report37 to Congress at the end of April each year, the USTR is required to identify those foreign countries that deny adequate and effective protection of intellectual property rights, or deny fair and equitable market access38 to US persons who rely upon intellectual property protection.39 The USTR must decide whether to place those countries identified as ‘priority foreign countries’ on a ‘priority watch list’ or a ‘watch list’. Priority foreign countries are those whose practices are most onerous or egregious40 and have the greatest adverse impact (actual or potential) on the relevant US products41 and who are not making significant progress in bilateral or multilateral intellectual property negotiations42 (see also Evans 1994: 152). Under Special 301, if a country is identified as a priority foreign country the USTR must,

26

Origins of the TRIPs Agreement

within thirty days of identification, initiate a Special 301 investigation of the policies and practices that were the basis of the identification. Investigations are conducted on a fast-track investigation whereby the USTR generally only has six months to complete the investigation and seek to negotiate a bilateral agreement.43 If the foreign country’s practices continue, trade sanctions may then be imposed under Special 301 in the form of increased tariff duties or import restrictions44 (Blakeney 1996b: 5; Evans 1994: 152). A country is notified that it has entered the Special 301 process and that it can expect regular contact from the USTR (Drahos 1995: 10; Sell 1995: 178). The threat of Special 301 provides the United States with strong leverage with regard to countries that do not demonstrate appropriate intellectual property protection (Evans 1994: 152; Stewart 1993: 2257; Welch 1992: 51). It also indicates that the United States would continue to pursue a ‘carrot and stick’ approach to trade policy (Mesevage 1991: 421; Sell 1998: 135). The continued significance of Special 301 in US trade policy was underlined on 1 May 1998, when the then US Trade Representative, Charlene Barshefsky, announcing the results of the 1998 Special 301 Annual Review, commented that, ‘The progress we have achieved as a direct result of this year’s Special 301 annual review underscores the fact that Special 301 is one of the most effective instruments in our trade policy arsenal’.45 In practice, the USTR has a small staff and lacks the resources to conduct surveillance of the application of intellectual property laws in developing countries itself. It is also relatively weak within the US federal government administration. The State Department and the Department of Defense are often able to overrule the USTR when wider issues of foreign policy and defence are seen to have priority over intellectual property protection. This relative weakness of the USTR is clear in relation to Argentina, where failure to adequately protect the intellectual property rights of US businesses went unpunished for several years in the 1990s because Argentina also happened to be a strategically important ally of the United States in South America.46 Instead, the Special 301 procedure is largely reliant on surveillance of foreign countries by US businesses (Drahos 1995: 10) operating in foreign markets and reporting back to the USTR, who then take appropriate action under Special 301 on the basis of reports made by US companies operating abroad (see also Ryan 1998: 80). This business–government partnership is formalised each February when the USTR calls for public comment on its Special 301 announcements in the form of a Request for Written Submissions, published in the Federal Register. Among those submitting Special 301 recommendations each year are the IIPA,47 the Pharmaceutical Research and Manufacturers of America (PhRMA) 48 and the Software Publishers Association. These submissions from industry are the only available estimate of trade losses due to intellectual property infringement that are available to the USTR. What is most striking about Special 301 is the role played by business. In this respect, Susan Sell makes the crucial observation that:

Origins of the TRIPs Agreement 27 [w]hether industry representatives sit across the table suggesting specific revisions of foreign countries’ draft legislation, avail themselves of the Section 301 machinery, play the Generalized System of Preferences (GSP) trump card, compile reports of the latest violations and estimates of lost revenue, conduct raids on pirated goods abroad, or monitor compliance in a vigilant effort to keep the pressure on, they have become important players in the crusade for the world-wide protection of their valuable intellectual property. (Sell 1995: 164) In many respects, the result is that the US approach to intellectual property has heavily reflected the sentiments of US business whose interests constitute invaluable assets (see also Sell 1998: 135).

Assessment As this chapter has already indicated, it is widely recognised that the TRIPs Agreement was largely the result of pressure from US business (see, for example, Braithwaite and Drahos 2000: 63; Drahos 1995: 7; 1998: 245). The received wisdom in accounts of events leading up to the TRIPs Agreement is that in the early 1980s it was US business that led complaints that its interests were being threatened through piracy and counterfeiting abroad (see, for instance, Ryan 1998: 107; Stewart 1993: 2253). But although accounts of the emergence of a business strategy for intellectual property protection through the GATT have tended to emphasise the role of business interests in the United States, there is a danger that an exaggerated view of the United States’ position in the world (see, for example, de Koning 1997: 66) obscures the nature of global business. The complexity of global business interests means that the story of the TRIPs Agreement is perhaps not as straightforward as focusing on developments in the US might have us believe. In practice the interests and concerns of multinational companies, which by their nature transcend national boundaries, also ensured that global business had a vested interest in achieving a TRIPs Agreement regardless of the country in which their head office was located. Although it is certainly true that the United States was in a unique position as regards the leverage that it was able to exert through bilateral trade legislation in the 1980s, and that in some instances multinational corporations take on a US identity (as claimed by Drahos 1995: 16), to focus exclusively on US-based multinationals is simply to identify a proportion of the relevant business interests with a global reach. The reality of developments is more complex. Given that, the Publishers’ Association, representing the worldwide interests of UK book publishers, had first raised copyright infringement as an issue in international trade with the USTR as long ago as 1978, there may even be grounds for claiming that some of the early stimulus for international corporate action against

28

Origins of the TRIPs Agreement

piracy actually came from the United Kingdom. Coincidentally or otherwise, the case brought by the PA in 1978 marked the beginning of a coordinated attempt to combat copyright infringement on a worldwide scale, even advocating a trade-based approach to copyright protection to the USTR some years before Jacques Gorlin led an equivalent US delegation to Europe on behalf of the IPC. So, although the European Communities have been portrayed as being lukewarm on initial proposals for a TRIPs Agreement (see, for instance, Drahos 1995: 12; Ryan 1998: 13), in actual fact the European Commission, alerted by the concerns of European business, had been aware of the need to improve international intellectual property protection since the late 1970s. As Clayton Yeutter (United States Trade Representative between 1985 and 1988) acknowledges, ‘[i]t was the United States and Europe, more than any other GATT members, which understood that strong and effective protection of intellectual property rights was vital to continued trade expansion … But for the unremitting pressure and relentless perseverance by the US and European negotiators, TRIPs would not have succeeded’ (Yeutter, foreword to Gorlin 1999: i, emphasis added). By the time Uruguay Round negotiations had begun in earnest, corporate networking on a global scale had been achieved through the formation of key relationships between individuals, companies and business groups in the United States, Europe and Japan. Global corporate actors were treating the world as one market requiring global standards of intellectual property protection. The mobilisation of business interests had proved so successful in identifying a coherent set of proposals for international intellectual property protection that the forthcoming Uruguay Round of GATT negotiations was awaited with some optimism and a great deal of determination to see the adoption of an intellectual property agreement supportive of the business agenda. Above all, global corporate actors had played a key role in ensuring that the protection of international rights would be an issue taken seriously during the Uruguay Round.

2

Negotiating the TRIPs Agreement

The Negotiating Plan1 for the GATT Uruguay Round, which included the TRIPs Agreement work programme, was agreed on 28 January 1987. It comprised a brief to examine the relevant GATT provisions on the basis of suggestions from GATT Members and factual information presented to the GATT Secretariat. Under the heading ‘Trade-Related Aspects of Intellectual Property Rights, Including Trade in Counterfeit Goods’, the Negotiating Plan set the scene for discussions on intellectual property rights within one of the fourteen negotiating groups established under the ‘Group of Negotiation on Goods’. The ‘Negotiating Group on Trade-Related Aspects of Intellectual Property, Including Trade in Counterfeit Goods’, chaired by Ambassador Lars Anell of Sweden, went on to meet on five occasions in 1987 (according to Stewart 1993: 2266) and a total of twenty-eight times before the Uruguay Round had reached its conclusion (according to Gervais 1998: 12).2 This chapter traces the progress of the Uruguay Round negotiations on intellectual property protection from the announcement of the negotiating plan in 1987 up to the adoption of the final text of the TRIPs Agreement in 1994. Given the intergovernmental nature of the Uruguay Round, the formal proceedings of these negotiations were, on the face of it, dominated by government representatives, with national delegations acting on behalf of GATT Members. A detailed examination of the negotiating positions adopted by national delegations to the Uruguay Round is thus a necessary starting point for this chapter.3 However, an accurate account of what happened during those negotiations cannot stop there. The official Uruguay Round negotiators were greatly concerned with reflecting the interests of multinational business and negotiations were conducted against the background of bilateral trade legislation introduced by the United States. With representatives of global corporate actors close to official negotiators throughout the Uruguay Round and particularly active once the detail of the Agreement came to be discussed, the role of business representatives behind the scenes during the negotiations was crucial both in terms of providing the stimulus for making the link between intellectual property and trade in the GATT and bilateral context, and, at a practical level, in terms of providing the knowledge and drafting expertise that was often lacking among national delegations.

30

Negotiating the TRIPs Agreement

First phase of negotiations In response to the GATT Negotiating Plan, the US delegation in Geneva submitted its own proposal for the protection of intellectual property rights on 19 October 1987.4 The US proposal called for an end to the trade in infringing products through the implementation of customs controls and implementation of legislative norms for the protection of intellectual property rights (Blakeney 1996b: 3), with an assurance that such measures would not create barriers to legitimate trade (Stewart 1993: 2266). The United States asserted that inadequate intellectual property protection leads to trade distortions and the impairment of concessions due to intellectual property piracy that amounts to a non-tariff barrier to trade (Doane 1994: 466–7), and insisted that the negotiations ought comprehensively to include patents, trade secrets, industrial designs, integrated circuit designs, copyright and trademarks, with appropriate national laws based on international conventions (see also Ryan 1998: 109; Stewart 1993: 2266). The European Communities, Japan and Switzerland also tabled proposals in late 1987 (Blakeney 1995: 78). The EC proposal5 suggested that the TRIPs Agreement should adhere to the basic GATT principles of national treatment, non-discrimination, reciprocity and transparency, as well as covering new categories of intellectual property rights, such as semi-conductor layouts and plant varieties (Blakeney 1996b: 3). Under pressure from wine and spirit producers in Europe, the European Communities submitted a later proposal that geographic indications and appellations of origin should also be included in a TRIPs Agreement.6 The initial European proposal lacked any statement concerning substantive standards. It did, however, suggest national enforcement provisions (Doane 1994: 474). The Japanese proposal7 was similar to the submission of the United States (Stewart 1993: 2267) but, in response to the concerns of its domestic computer chip industry, it additionally addressed the difficulties in protecting semi-conductor layout designs (Doane 1994: 475). Switzerland issued a separate set of proposals, suggesting a framework for a TRIPs Agreement and addressed the need for improvement of the enforcement of intellectual property protection (Stewart 1993: 2267). During the first three years of the Uruguay Round, the TRIPs negotiations continued to be stalled by a disagreement between the developed and developing countries over the competence of the GATT to negotiate substantive standards of intellectual property protection (Gorlin 1999: 2). The Mid-Term Review of the Uruguay Round was held in Montreal from 5 to 8 December 1988. It served only to highlight the polarised positions of developed and developing countries in relation to a TRIPs Agreement. Together with agricultural reform, the TRIPs Agreement had become the main stumbling block for the negotiating teams.8 Although differences between the parties had narrowed by late 1988, with negotiators close to an agreement on the framework for a TRIPs package at the Montreal Mid-Term, developing countries, led by India and Brazil, still blocked progress, continuing to insist that WIPO provided the appropriate forum for intellectual property protection (Stewart 1993: 2269).

Negotiating the TRIPs Agreement

31

Overcoming developing country opposition The main reason that early attempts to undertake negotiations during the Uruguay Round failed to achieve progress was that developing countries, led by India and Brazil, still questioned the relevance of intellectual property for the GATT, stressing the role of WIPO as the appropriate forum for intellectual property rights (see also Blakeney 1995: 79; Evans 1994: 139). They also expressed concerns about over-protection of intellectual property rights impeding transfer of technology and increased costs of pharmaceutical and agrochemical products as the result of patent protection (Gervais 1998: 13). The contention was that a TRIPs Agreement would mean the surrender of sovereignty over national development objectives and the denial of access to technology (according to Evans 1994: 166). In developed countries, however, civil society groups and generic manufacturers with an interest in preventing over-protection of pharmaceutical and agrochemical products had relatively little input into the design and application of the TRIPs Agreement (see also Foster 1998: 302–5), the dominant opinion expressed being the proprietary manufacturers view that patent protection stimulates higher levels of investment in research and development. In the face of developing country opposition, the most important stimulus for progress in negotiations came not through multilateral discussions in the Uruguay Round, but through the threat of bilateral trade sanctions being brought by the United States under Special 301 of the Omnibus Trade and Tariff Act of 1988.9 In April 1991 the USTR made its first use of Special 301 by placing India, China and Thailand on the priority watch list because of inadequate patent protection for pharmaceutical products and the widespread pirating of US copyrighted books, records, tapes and videos (for a more detailed account see Blakeney 1996a: 545; Stewart 1993: 2258–9). In addition, China was placed on the priority watch list, having been considered to have inadequate copyright and trademark legislation (for a detailed discussion on US bilateral negotiations with China on intellectual property protection see Ryan 1998: 80–5). Although Thailand and China agreed to reform their intellectual property legislation and were moved from the priority watch list to the watch list in December 1991 and January 1992 respectively (Stewart 1993: 2258), in February 1992 the stakes were raised by the revocation of GSP tariff exceptions for India’s inadequate protection of patents and the placing of an additional twenty-five countries on the priority watch list. When, in 1992, the United States carried out its Special 301 threat and suspended GSP tariff exemptions previously granted to Indian pharmaceutical products (Blakeney 1996b: 6), estimates put the cost to Indian exports to be in the region of $60 million (Henderson 1997: 652). In the face of potential losses of this magnitude India, a chief opponent of the TRIPs Agreement, saw its resolve weakened. For the United States, mindful of the trade disadvantages that its businesses were experiencing in developing countries, to retaliate with measures that would result in equivalent disadvantages for nations not prepared to introduce adequate intellectual property laws was

32

Negotiating the TRIPs Agreement

seen as a legitimate activity. For India and other developing countries, a successful conclusion of the Uruguay Round soon became a pragmatic issue of retaining good trading relations with the United States. In the same year a further twenty-five countries were placed on the priority watch list, with the combined effect of concentrating the minds of the world on the need to achieve progress in negotiations for a TRIPs Agreement (see also Blakeney 1995: 79; 1996a: 545). Initially at least, the use of Special 301 not only raised the international level of awareness of the need for protection of intellectual property, but also provided a negative impact on legislative change (see also Evans 1994: 156). In particular, India and Brazil hardened their position on reform of domestic intellectual property law rather than be coerced by trade sanctions imposed by the United States. Furthermore, the Group of Ten developing countries argued that the Uruguay Round discussions should be limited to an anticounterfeiting code for fashion goods and trademark infringement (according to Evans 1994: 166). The Group of Ten rejected the link between trade and intellectual property, arguing that WIPO would be undermined by a new GATT Agreement on intellectual property. The Group of Ten did not waiver in their opposition until the USTR took the unprecedented step of initiating Special 301 action against the Republic of Korea and Brazil. By threatening bilateral trade sanctions against recalcitrant countries one by one, the United States could effectively be seen to have weakened opposition to a TRIPs Agreement (Blakeney 1995: 79) while ensuring that negotiations could at least take place within the Uruguay Round and increasing the prospects of an acceptable TRIPs Agreement (Doane 1994: 492). As Blakeney has acknowledged (1995: 79; 1996a: 545; 1996b: 5), the fact that Special 301 was definitively introduced as an additional weapon in the armoury of the United States in negotiating for the TRIPs Agreement was made explicitly clear in the 1988 House of Representatives Conference Report on legislation in Congress, which raised the possibility of using Special 301 as a supplement to the US negotiating strategy on TRIPs: [T]he purpose of the provisions dealing with market access is to assist in achieving fair and equitable market opportunities for US persons that rely on intellectual property rights protection. As a complement to US objectives on intellectual property rights protection in the Uruguay Round of trade negotiations, the conferees intend that the President should ensure, wherever possible, that US intellectual property rights are respected and market access provided in international trade with all our trading partners.10 The effect of widespread use of Special 301 and, in particular, the carrying out of the threat to impose trade sanctions on India, encouraged the developing countries to seek agreement in the Uruguay Round on the content of a TRIPs Agreement (a view corroborated by Blakeney 1996a; McGrath

Negotiating the TRIPs Agreement

33

1996: 399). Access to US markets was used as leverage to force developing countries to implement appropriate national legislation protecting intellectual property rights. This meant that countries that were pressurised into implementing such changes were no longer likely to support other developing nations that were continuing to resist the proposals for a TRIPs Agreement. Once the United States had bilaterally persuaded a sufficient number of countries to act on intellectual property rights, it could expect little resistance in the multilateral GATT forum that led to the adoption of the TRIPs Agreement (see also Drahos 1995: 11). The Special 301 strategy of the United States proved successful precisely because it prevented the organisation of effective developing country opposition to the TRIPs proposals. US bilateral intellectual property diplomacy was conducted with multilateral trade negotiation objectives in mind (see also Ryan 1998: 86). From the developing countries’ perspective, sacrificing the principles of common heritage, free flow of information and national sovereignty (see also Drahos 1998: 245) was to be offset within the TRIPs Agreement by the link it forged with the Dispute Settlement Understanding, which offered some respite from the threat of US trade sanctions under Special 301 as the United States kept up an aggressive bilateral trade diplomacy throughout the eight years of the Uruguay Round to keep the issue of intellectual property protection at the forefront of trade negotiations (Ryan 1998: 13). This strategy proved so successful that, by the final stages of the Uruguay Round negotiations, the majority of developing countries were no longer opposing the TRIPs Agreement (see also Drahos 1995: 11). The content of the final text of the Agreement then became much more an issue of discussion of detail between the triumvirate of the United States, Europe and Japan. These developed countries converged towards a consensus that the TRIPs Agreement ought to incorporate the Paris and Berne conventions, apply Berne rules to computer programs by defining them as literary works and go beyond the two conventions to establish minimum standards (see also Ryan 1998: 109). The strategy has been interpreted as being something of a ‘tough guy’ approach on behalf of the United States, using the dependency of developing countries on US market access that had been built up through GSP as leverage against developing country opposition to TRIPs (Drahos 1995: 9; de Koning 1997: 68). By allowing beneficiary countries tariff-free trading access to the US market, the effect of Special 301 was to subsequently make that favourable treatment conditional upon the adoption of domestic legislation protecting intellectual property rights in such a way as was acceptable to the US administration. The notion that the US negotiating strategy for a TRIPs Agreement involved something of a carrot-and-stick approach is certainly a compelling one, and it does appear that the US adopted a deliberate strategy of reshaping its own trade law to give it an array of negotiating instruments during the Uruguay Round.

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Negotiating the TRIPs Agreement

1989 Geneva Ministerial Meeting The Ministerial Meeting held in Geneva from 5 to 8 April 1989 achieved an important breakthrough via a meeting of the Trade Negotiations Committee. Agreement was reached on a framework for TRIPs that paved the way for substantive negotiations (see also Blakeney 1996b: 6; Evans 1994: 169; Gorlin 1999: 2) and clarified the negotiating mandate. At this meeting, consensus was achieved on a framework agreement on the future of negotiations on intellectual property rights11 by recognising the need for action on minimum standards of intellectual property rights and enforcement, but leaving aside the contentious issue of whether GATT or WIPO should be the appropriate forum for discussion (according to Doane 1994: 472; Ryan 1998: 111). The framework agreement included acceptance of the applicability of the basic principles of the GATT and of the relevant intellectual property agreements and conventions; the provision of adequate standards and principles concerning the availability, scope and use of trade-related intellectual property rights; the provision of effective means for the enforcement of trade-related intellectual property rights; and the provision of effective and appropriate procedures for the prevention and settlement of disputes between governments, including the applicability of GATT procedures (Blakeney 1996b: 6).

Emergence of a compromise text The TRIPs negotiating group met twice in July 1989 to discuss, first, the applicability of basic GATT principles to intellectual property and, second, the provision of adequate standards regarding the availability, scope and use of intellectual property rights12 (see also Gervais 1998: 14; Stewart 1993: 2270). During the remainder of 1989, the TRIPs negotiating group received submissions from a number of national delegations.13 These proposals fell within two broad negotiating positions. First, Switzerland, Sweden, Norway, Finland and Australia called for a GATT agreement to take account of existing WIPO-administered conventions on intellectual property, particularly the Paris and Berne conventions, known as the ‘Paris-plus’ and ‘Berne-plus’ approach (Gervais 1998: 15). Second, developing countries called for less onerous obligations and greater discretion for national governments in the application of intellectual property law. India, in particular, emphasised the need for more favourable treatment for developing countries (Stewart 1993: 2271). But on 12 September 1989 there was a significant development when India, under bilateral pressure from the United States via Special 301 and encouraged by WIPO’s acknowledgement of GATT competence in relation to international standards of intellectual property protection,14 announced for the first time that it accepted in principle the international enforcement of intellectual property rights within the GATT (Evans 1994: 168–70). By the end of 1989 there had been numerous proposals by countries participating in negotiations, but few concrete results (Stewart 1993: 2272).

Negotiating the TRIPs Agreement

35

In early 1990, five further negotiating texts were put forward by the major players in the TRIPs negotiations, namely the European Communities, Japan, Switzerland, the United States and a group of developing countries15 (Blakeney 1996b: 6). The European Communities were the first of the heavyweight negotiating teams from developed countries to show their hand in the form of a written proposal16 that has been considered ‘the spark which ignited the work towards the TRIPs Agreement’ (Gervais 1998: 15). Rather than simply presenting a set of viewpoints and observations, the European Communities undertook the important step of issuing its proposal in the form of a ‘Draft Agreement on Trade-Related Aspects of Intellectual Property’, setting out in treaty articles basic principles, intellectual property rights and enforcement procedures. Just over a month later, on 11 May 1990, the main elements of the EC proposal were set out again in a separate text tabled by the United States.17 With strong similarities between the EC and US texts, including almost identical structuring of material and the use of identical phrases, it has been suggested that they were the result of a coordinated effort, with transatlantic consultations between the European Commission on the one hand and the USTR and US Patent and Trademark Office on the other preceding the tabling of both documents (Dreier 1996: 257; Gervais 1998: 15). The consensus already achieved among global corporate actors was beginning to feed through to policy-makers participating in the Uruguay Round negotiations. But there remained significant differences between the US and EC texts. Whereas the US did not envisage any exceptions to the subject matter that may be patentable, the EC proved more sympathetic to a key demand of developing countries calling for the exclusion of patents for inventions that would be contrary to public policy and health, plant or animal varieties or the biological processes for their production (Stewart 1993: 2273). The United States and European Communities also differed on the question of the protection for geographical indications and appellations of origin – a key concern of the French wine industry, which brought France into conflict with US wine makers, who argued that their producers were in many cases the descendants of French émigrés and entitled to use names of French origin. Nevertheless, the common structure of the EC–US proposal was to prove sufficiently enduring to remain at the forefront of subsequent TRIPs negotiations and form the basis of the eventual Agreement. The EC and US proposals were followed by a submission from a group of fourteen18 developing countries,19 which contained a mixture of general statements on the nature of intellectual property protection and specific suggestions for provisions of any subsequent agreement, including the fundamental issue of exceptions to patentability that had already been raised by the EC delegation. Switzerland,20 Japan21 and Australia22 also tabled their own proposals. These were the final national submissions to the TRIPs drafting process, adding to the vast amount of paperwork presented for consideration by the TRIPs negotiating group. But despite the submission of

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these five texts, negotiations were largely ‘stalled’ (Stewart 1993: 2274). By the end of 1990, the TRIPs negotiating group had received a total of fortynine proposals representing the views of 105 countries on intellectual property protection (Evans 1994: 170).

The Chairman’s Draft Meanwhile, an attempt to achieve progress by consolidating the various viewpoints of national delegations was being made elsewhere. On 26 January 1990 a ‘Checklist of Issues’ had been produced to codify over 500 points of disagreement (see Ryan 1998: 110) by Lars Anell, ambassador to the GATT from Sweden and chairman of the TRIPs negotiating group, described by those close to the negotiations as being the ‘hero of the hour’.23 From the list of checklist issues, Ambassador Anell and the GATT Secretariat consolidated the proposals of the European Communities, Japan, the United States and developing countries and brokered a draft compromise text (according to Ryan 1998: 111). On 12 July 1990 a meeting of the TRIPs negotiating group received the compromise text that had been drafted by Ambassador Anell on his own initiative, without the language of the text being agreed by national delegations whose views were expressed in the text. This bold move to break the deadlock with a compromise text was made on 18 July 1990 with the Chairman’s report to the Group of Negotiation on Goods, commonly known as the ‘Chairman’s Draft’.24 This report identified the main proposals, setting out countries that had made specific proposals and outlining differences on substantive points (Gervais 1998: 17). It presented the positions of the TRIPs negotiating group, indicating agreed positions with unbracketed language. Bracketed language was used for issues where agreement eluded the negotiators and categorising the views of developed countries in ‘version A’ of the report, with the position of developing countries set out in a separate ‘version B’ (Stewart 1993: 2274). The Chairman’s Draft was the only version of the TRIPs Agreement to attribute positions to specific national delegations. In an attempt to give the impression of closing the gap between the different negotiating positions of the parties, all subsequent drafts were coordinated by the chairman of the TRIPs negotiating committee and the GATT Secretariat (according to Gorlin 1999: 5). Chairman Anell’s strategy of producing 90 per cent of the text in draft, leaving remaining issues to detailed discussions, proved a success and the Chairman’s Draft Compromise Text was a negotiating masterstroke, cutting through differences between the negotiating positions of the various delegations by focusing on areas of common agreement rather than on differences. It also coincided with a change in attitude in developing countries to modernise and liberalise their economies where economic arguments were getting through and intellectual property was increasingly seen as a means of improving international competitiveness by attracting capital and increasing transfers of technology (see also Evans 1994: 140). But misgivings

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remained among the negotiating teams and national delegations reserved their own positions in relation to the detail of patent and copyright law. There was also criticism that the Chairman’s Draft showed a distinct bias towards the US and EC positions (according to Gervais 1998: 19). However, differences between developed country positions were becoming more apparent, particularly over first-to-file versus first-to-invent policies for patents (see Wegner 1996: 543 for a discussion of these differences), neighbouring rights of performers, moral rights under copyright, rental rights under copyright and geographical indications (see Evans 1994: 172; Ryan 1998: 111). In addition, there remained significant disagreement over wellestablished areas of difference between developed and developing countries in relation to the term of patent protection, use of compulsory licences and patentability of plant and animal varieties. Many of the developing countries remained opposed to the idea of a TRIPs Agreement in principle (according to Gervais 1998: 18). There were also fundamental issues of whether the protection of intellectual property rights should be incorporated into the GATT at all, and whether GATT dispute resolution procedures should be applicable to intellectual property disputes (Blakeney 1996b: 6). On 1 October 1990 a revised version of the Chairman’s Draft was submitted to the TRIPs negotiating group, with further revisions incorporated into another version of the Draft issued on 22 November 1990. But amendments to the July Chairman’s Draft had been minor. In any event, it was this version of the draft TRIPs Agreement that was presented to the Brussels Ministerial Meeting at Heysel on 3 December 1990 and became known as the ‘Brussels Draft’.25 By the time the Brussels Draft had emerged, it demonstrated that significant progress had been made by the TRIPs negotiating group (Stewart 1993: 2275). Although many issues were still ‘square bracketed’ (Gervais 1998: 21) to indicate that agreement still had to be reached on specific points, the Brussels Draft of the proposed TRIPs Agreement contained most of the provisions in a form close to their final versions. The remaining issues to be resolved were the question of transitional arrangements for developing countries to implement the TRIPs Agreement (see also Gorlin 1999: 5); the protection of pharmaceutical products by patents; the role of dispute settlement procedures; protection of geographical indications; the status of moral rights relating to copyright; protection of computer programs, databases and sound recordings; and the neighbouring rights of performers and broadcasters (see also Gervais 1998: 21).

The Brussels Draft In the event, when the Brussels Ministerial Meeting collapsed in acrimony over unresolved issues in agriculture negotiations, the protection of intellectual property rights was left until the Uruguay Round could be restarted the following year. Nevertheless, in retrospect, the Brussels Ministerial Meeting proved to be a watershed between the open negotiations

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of 1990 and the more focused discussions to follow. Although the Brussels Draft was to remain the basis for further negotiations, at the end of 1990 with the draft TRIPs Agreement in good shape,26 the pace and style of discussions changed, with Ambassador Anell convening regular informal sessions for key players, without the intrusion of formal reports on the proceedings being prepared by the GATT Secretariat (Gervais 1998: 19). In effect, the TRIPs negotiations had ‘gone underground’ (Gorlin 1999: 5). Throughout 1991, various attempts were made to find ways to resolve the outstanding issues in relation to intellectual property rights. These negotiations took place against the backdrop of a procedural innovation that was to prove crucial to the successful conclusion of the TRIPs Agreement. Until the end of 1990 TRIPs negotiations had been undertaken in the conventional ‘Green Room’ pattern of GATT negotiations (Gorlin 1999: 4). In the Green Room negotiators from all countries involved in the GATT Uruguay Round engaged in discussions with one another across the table of, traditionally, the Green Room of the GATT building in Geneva, with draft texts exchanged and differences narrowed through the successive versions. In February 1991, given the drawbacks associated with achieving agreement among the large number of countries involved in the negotiations, the ‘Green Room’ process was abandoned in favour of a process whereby the Chairman of the TRIPs Working Group himself put forward the draft texts for negotiators to consider. Significantly, although the content of the drafts reflected participating countries’ priorities, the language of these texts was no longer that expressed by the negotiators, but chosen by Ambassador Anell and the GATT Secretariat (Gorlin 1999: 4). The abandonment of the ‘Green Room’ process in effect took much of the heat out of highly politicised arguments about the draft TRIPs Agreement. A second procedural innovation was initiated in the closing days of 1991. The ‘10 plus 10’ Group27 was set up to bring together negotiators from the developed and developing countries that were most active and most skilled in intellectual property protection (see also Evans 1994: 173; Gorlin 1999: 4). Formal meetings were still held each month to allow countries not participating in the informal discussions to express their views (Gervais 1998: 20), although after the Brussels Ministerial Meeting negotiators took a ‘break’ the formal TRIPs negotiating group did not convene again until 27–8 June 1991 (Gervais 1998: 22). Although little progress was made in the formal TRIPs negotiating group from this time on, the meetings did enable the momentum of TRIPs negotiations involving all national delegations to be maintained. In addition, with unresolved issues increasingly those of detail between the United States, the European Communities and Japan, bilateral negotiations took on an increasing significance as the Chairman and GATT Secretariat sought to reduce the number of options on the negotiating table (see also Gervais 1998: 19; Stewart 1993: 2280). The Quad countries (the United States, the European Communities, Japan and Canada) met as a group, deciding on the direction of the negotiations and seeking to resolve

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differences between their positions before presenting a common viewpoint to the other negotiators (Gorlin 1999: 4). With the sharper focus to negotiations in such a limited forum, the personalities of the principal negotiators became increasingly important, particularly in terms of relations between Ambassador Yerxa and Michael Kirk of the US delegation, Peter Carl of the European Commission and Adrian Otten of the GATT Secretariat. As negotiations moved towards discussion of the detail of the text, representatives of corporate actors also began to play a more significant role. Jacques Gorlin of the IPC remained close to the US negotiating team while European business was well represented by Ralf Walter, Head of Patents at Unilever, who became a mover in articulating the views of European industry for the benefit of EC delegates and further mobilised European business interests in support of an Agreement.28 In November 1991 the Director General of GATT, Arthur Dunkel, issued a progress report identifying a range of intellectual property issues that still required resolution. 29 The report noted twenty issues that remained unresolved in the draft TRIPs Agreement, for example in relation to term of patent protection, the availability of patents without discrimination with regard to place of invention, field of technology and whether the product was imported or locally produced, the status of protection for computer programs and rental rights, while the issue of geographical indications for wines and spirits also remained unresolved (Stewart 1993: 2279). The report also highlighted the need to address the transitional periods that would be allowed for developing countries before they would be required to fully comply with the TRIPs Agreement and the need to link implementation of the Agreement to conclusion of the Uruguay Round as a whole (Stewart 1993: 2280).

The Dunkel Draft The following month, on 20 December 1991, the Director General attempted to achieve progress towards conclusion of the Uruguay Round by tabling a Draft Final Act Embodying the Results of the Uruguay Round of Multilateral Trade Negotiations (the so-called ‘Dunkel Draft’). The Dunkel Draft, presented as an all-or-nothing agreement designed to prevent parties from cherry picking parts of the Draft that they found acceptable, included a new version of the TRIPs Agreement,30 produced by the Director General in an attempt to broker a compromise between the differing positions of national delegations (Blakeney 1995: 80). The Dunkel Draft excluded moral rights31 to take account of US opposition, but included protection of computer programs as literary works to be covered by copyright protection under the Berne Convention. On rental rights, differences had to be overcome between Japan and the United States. In Japan, shops allowed customers to rent compact discs for a fraction of the purchase price when authors had given their consent for rental to the public. Since Japanese record companies (such as Sony) also tended to manufacture compact disc players with recording

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features and the blank tapes required for making copies, it was rare that such consent was denied. In the United States, the music industry wanted the TRIPs Agreement to replicate US legislation, which allows record companies to have the absolute right to prohibit commercial rental of their works (Stewart 1993: 2281–2). The IIPA, in particular, complained that the Japanese practice of allowing rental of compact discs would lead to widespread private copying and loss of sales (Gervais 1998: 23). In effect, the Dunkel Draft of TRIPs Agreement replicated existing Japanese law by allowing authors to authorise or prohibit commercial rental to the public of copyright works. For the US music industry, this provision would exacerbate the problem by allowing other countries to take advantage of the Japanese rental arrangements (Stewart 1993: 2283). 32 To reach an Agreement, these remaining differences between the interests of corporate actors in developed countries would first need to be overcome, or at least put to one side. As with negotiations for any multilateral treaty, the Dunkel Draft of the TRIPs Agreement was a document that necessarily reflected the concerns of all main negotiating parties whose assent would be needed for the Agreement to be adopted. The European Communities had received its desired level of protection for geographical indications of wines and spirits, Japan had retained the right of authors to allow rental of copyright works, developing countries (supported by the European Communities) had ensured that plants and animals could be excluded from patentability, and developing countries were also allowed significant transitional periods of five years after the coming to force of the Agreement, with an additional five years for pharmaceutical, agricultural and chemical products, before they were required to apply its provisions (Stewart 1993: 2284). A separate category of least-developed countries was to be allowed an even longer ten-year transitional period across the board before applying TRIPs. But, despite the inclusion of lengthy transitional periods, India remained sufficiently concerned about the likely implications of the TRIPs Agreement to abstain from giving a position on the Dunkel Draft at all (Stewart 1993: 2284). Meanwhile, in the United States, the pharmaceutical industry was becoming increasingly critical of the Dunkel Draft on grounds that developing countries were being allowed too long a transitional period to implement patent laws in accordance with the TRIPs Agreement (according to Blakeney 1996b: 7; Weissman 1996: 1085). And while the pharmaceutical industry objected to transitional periods for developing and least-developed countries, they also objected to the absence of ‘pipeline’ protection from the Dunkel Draft (see also Gervais 1998: 23; Stewart 1993: 2285). Pipeline protection was seen as a vital component of patent law by proprietary pharmaceutical manufacturers because of the long time-lag between the patenting of a new chemical compound by the inventor and the point that the compound actually receives regulatory approval to be used as a medicinal product by humans (for the industry position on pipeline protection, see IFPMA 1995: 32). Essentially, pipeline protection accords an additional period of patent life for

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pharmaceutical products to take account of the long process of clinical trials and market authorisation procedures that can result in eight to ten years of the twenty-year standard patent life of a medicinal product being used up before the drug even comes onto the market. The complaint of the pharmaceutical industry was therefore that the absence of pipeline protection in the Dunkel Draft allowed an insufficient period of exclusive marketing rights for a company to recoup the investment in research and development required to produce new and innovative drugs. The Motion Picture Association of America (MPAA) also opposed the Dunkel Draft, in this case on grounds that the system used to collect royalties on videos marketed in the European Communities discriminated against US companies because of the exceptions to be allowed in TRIPs to the principle of national treatment. The MPAA also complained that the United States’ system of corporate (as opposed to individual) ownership of motion pictures was not reflected in the text, raising the possibility that the Hollywood film studios could be refused royalty rights on the grounds that they were not authors of the work (see also Gervais 1998: 25; Stewart 1993: 2286). Furthermore, in relation to royalties on videos, the MPAA objected to the French practice of imposing a levy on the cost of blank video cassettes and video recorders, with income from the levy then used to support the French film industry. Under French arrangements, foreign companies were only entitled to a small proportion of the levy collected through their status as authors. The MPAA and the IIPA both complained that allowing French distributors of the material to receive a larger share of the levy was contrary to the principle of national treatment (Stewart 1993: 2281). The motion picture industry called instead for the TRIPs Agreement to embody the principle of full national treatment on private copying levies. The dissatisfaction of US business interests was compounded by what was seen as the relative weakness of the TRIPs Agreement as a mechanism for achieving intellectual property protection compared with the proven effectiveness of the Special 301 bilateral approach (according to Evans 1994: 174). Given the extent of their concerns, representatives of the US movie industry kept fulltime staff working on these issues in Geneva right up to the signing of the TRIPs Agreement.33 During 1992 attention once again shifted away from the draft TRIPs Agreement as tensions between the United States and European Communities over agricultural subsidies and quotas threatened to destabilise the whole Uruguay Round negotiating process (Ryan 1998: 111). It was not until the end of 1992, once differences on agricultural issues had been overcome, that TRIPs returned to the fore. At that stage, both India and the United States proposed further revisions to the Dunkel Draft. Taking up the mantel of complaints from the pharmaceutical industry, the United States again proposed the inclusion of pipeline protection in the Agreement, while the issue of national treatment of copyright owners was also put back on the negotiating table to counter the movie industry’s complaints about practices

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such as the French video levy (Stewart 1993: 2286). India, on the other hand, still opposed the principle that the TRIPs Agreement should allow right holders to hold the exclusive right to market patented products and also wanted the inclusion of a requirement that right holders ‘work’ (i.e. manufacture) the patent locally (Stewart 1993: 2286–7). For developing countries, the draft TRIPs Agreement still contained much that they did not like (Ryan 1998: 112) but, despite the initial pessimism of at least one of the key corporate players in the European business community (Unilever’s Ralf Walter feared that intellectual property protection would eventually be abandoned in the final Uruguay Round agreements), ultimately the GATT package as a whole contained major benefits for developing countries in other areas. GATT deals relating to agricultural and textile quotas provided significant payoffs to developing countries willing to accept the TRIPs Agreement (see also Gorlin 1999: 5). In the final stages of negotiations for the TRIPs Agreement, the focus shifted (Stewart 1993: 2287), with less emphasis on dealing with the concerns of developing countries and more time spent dealing with cracks that were beginning to appear in the US–Europe–Japan alliance that had brought the idea of a TRIPs Agreement so close to fruition. In particular, there were still differences outstanding between the United States and Japan on rental rights for copyright works, between the United States and the European Communities on geographical indications for wines and spirits, and between the United States and the European Communities on French video levies for the movie industry. But, in the event, the potential gains of the TRIPs Agreement for developed countries far outstripped the remaining differences between the United States, the European Communities and Japan, garnering consensus in favour of a successful outcome.

The Draft Final Act When Arthur Dunkel, Director General of GATT, tabled the Draft Final Act Embodying the Results of the Multilateral Trade Negotiations, the draft TRIPs Agreement,34 it was, with minor amendments, the same as the final version of TRIPs adopted at the conclusion of the Uruguay Round in Marrakesh on 12–15 April 1994 (Blakeney 1995: 80; 1996a: 545–6). Rather than reinvent international intellectual property law, negotiators had sought to recycle existing WIPO conventions. All substantive provisions of the Paris and Berne conventions, with the exception of moral rights on which the United States held particular objections, were incorporated by reference into the TRIPs Agreement (see also Gervais 1998: 26). To this framework the TRIPs negotiators added new provisions on issues about which national delegations held particular concerns, such as US concerns on rental rights for movies and compact discs and European Communities concerns on geographical indications. With the inclusion of limited exceptions and transitional periods to appease developing countries, the negotiators of the TRIPs Agreement

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then added the crucial enforcement and dispute settlement procedures that had been so absent from the earlier ‘toothless’ WIPO conventions. In sum, the TRIPs Agreement that constitutes Annex 1C of the WTO Agreement adopted at the conclusion of the Uruguay Round forms the central component of an interlocking web of international law, taking into account the references of the earlier WIPO conventions and the dispute settlement procedure of the WTO. A detailed analysis of the text of the TRIPs Agreement is undertaken in the next chapter, setting out the scope of each of its legal provisions and providing analysis of areas where differences occurred in the various versions of the draft Agreement that were tabled during the negotiating process.

Business involvement during the Uruguay Round The corporate lobby maintained its good relations with the delegations representing developed countries throughout the Uruguay Round negotiations on intellectual property protection. US officials in Geneva were in frequent contact with their national industries via the IPC, the IIPA and PhRMA (according to Drahos 1995: 13; Ryan 1998: 109), who, in turn, provided technical and legal expertise and advocacy skills based on years of experience in international intellectual property protection (Drahos 1995: 15). The IIPA and the Business Software Alliance (BSA) provided the USTR with a continuous stream of data on trade losses accrued by US companies as a result of inadequate intellectual property protection in other countries (see Drahos 1995: 11). Since there was no other information available, the USTR became largely reliant on information provided by US companies. Equally, the EC delegation received important business input from European business, and UNICE in particular, while Japanese business advised its government delegation via Keidanren. The three business groups provided expert advice to negotiators in Geneva on an ad hoc basis, while the publication of the trilateral ‘Basic Framework of GATT Provisions on Intellectual Property’ in 1988 offered national delegations a clear statement of business views on which they could base their negotiating positions (see also Doane 1994: 475; Sell 1998: 137). Although it has been criticised by some commentators for containing insufficient detail and having only the ‘political purpose’ of rallying support for global intellectual property protection (see, for instance, Emmert 1990: 1321), the success of the Basic Framework was exactly that. Armed with the trilateral document, representatives of multinational companies at CEO level were then able to travel to Geneva and personally present their arguments to staff of the GATT Secretariat and to national delegations of GATT Member countries (Enyart 1990: 55). In undertaking this task, they also found new allies among the business communities in newly industrialised countries of South East Asia who were also willing to support the trilateral approach.35 For de Koning (1997: 66), the reliance on industry data gave a one-sided approach to the

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nature of the problem. But the reality was that they had little alternative. The influence of business interests was undoubtedly crucial to the developed countries’ negotiating positions on intellectual property protection during the Uruguay Round and played an important role in influencing policy decisions.

Assessment By the final stages of the Uruguay Round negotiations, developing countries had long given up their resistance to the TRIPs Agreement (see also Braithwaite and Drahos 2000: 63). The trilateral alliance between the United States, the European Communities and Japan, supported by their industry experts, had played a crucial negotiating role (see also Drahos 1997: 210). Special 301 bilateral initiatives by the United States had also proved effective as a means of undermining resistance. Related to the threat of Special 301 actions was the fact that developing country opposition to the TRIPs Agreement also ebbed away towards the end of the Uruguay Round because of the inclusion of the dispute settlement procedures within the package of measures for TRIPs implementation. Dispute settlement, it was hoped, offered developing countries some respite from the threat of US trade sanctions (see also Ryan 1998: 13). Towards the end of the Uruguay Round, developing countries were also experiencing ‘negotiation fatigue’ (Braithwaite and Drahos 2000: 197) or, at least, a problem of information deficiencies and lack of technical expertise in relation to intellectual property with only about ten countries actually sending intellectual property experts to the TRIPs negotiations. In the majority of cases, the heads of delegations to the TRIPs negotiations were from national trade ministries or directorates, in some instances, augmented by officials from the national patent offices, but even in these cases the patent office officials were career civil servants who were not necessarily aware of the impact that TRIPs obligations on particular business sectors in developing country economies (according to Gorlin 1999: 6). There was also a lack of real understanding among developing country delegations about how farreaching the economic and social implications of the TRIPs Agreement were likely to be (Drahos 1997: 207). Several developing countries were simply represented by generalist Trade Counsellors from national Permanent Missions to the UN in Geneva (Balasubramanium 2000), even though these negotiators were expected to deal with highly technical and complex legal issues (Gervais 1998: 13). In the absence of the necessary legal expertise within their national administrations, developing countries simply did not have the knowledge necessary to negotiate effectively on the content of the TRIPs Agreement. In contrast, developed country delegations to GATT meetings had access to the highest level of business advice, this proving to be the most effective method for delegates to acquire the negotiating expertise they required. Ed Pratt, CEO of Pfizer, was an adviser to the US Official Delegation at Punta

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del Este (Drahos 1995: 13). Although India and Brazil did formulate counterproposals to the TRIPs Agreement, these were evaluated by Counsel from US industry, who were able to advise the US government negotiating team in Geneva and allow them to ‘pull rank’ in terms of technical expertise (according to Drahos 1995: 15). As Ryan has expressed this, ‘The TRIPs Agreement may have, in an immediate sense, rested on the economic power and diplomatic aggressiveness of the United States. But American power and aggressiveness would have come to little if a detailed agreement drafted by intellectual property specialists had not been on the table’ (Ryan 1998: 93). Perhaps most crucially, the Uruguay Round offered developing countries a high level of potential in terms of issue-linkage and package deals across sectors, particularly in relation to textiles and agriculture. When negotiations on the TRIPs Agreement were finally concluded, it appeared that ‘linkagebargain diplomacy’ (Ryan 1998: 92) had played a significant role. The linkage between trade and intellectual property would not have been an effective negotiating tool during TRIPs negotiations had it not been for the fact that, once the opposition of developing countries began to wane, a coherent set of proposals was already on the table in the form of a draft TRIPs Agreement (see also Ryan 1998: 93). Business succeeded in getting most of what it wanted in the TRIPs Agreement, with industry demands clearly reflected in the final agreement (Sell 1995: 182), particularly in relation to the principle of national treatment, patent term, restrictions on compulsory licences and the reversal of the burden of proof in process patent infringement cases (Sell 1995: 182). Industry demands were reflected clearly in the final TRIPs Agreement (Sell 1998: 138). Indeed, Bennett (1994: 32) has described the conclusion of negotiations on the TRIPs Agreement as ‘a victory for US industry’ while Sell (1995) directly attributes the USTR’s vigorous pursuit of countries with inadequate intellectual property laws through Special 301 actions to the role played by private sector actors and, for Enyart (1990: 56), ‘[i]ndustry has identified a major problem in international trade. It crafted a solution, reduced it to a concrete proposal and sold it to our own and other governments.’ The claim which has been made that, in many ways, US companies succeeded in getting most, if not all,36 of what they wanted in the TRIPs Agreement certainly holds some resonance. The proposals openly advocated by the business community on issues such as patent duration and restrictions on the use of compulsory licences are clearly reflected in the final agreement. Whether or not business groups did, in fact, achieve their main goals in the TRIPs Agreement now remains contingent on whether the enforcement of TRIPs Agreement provisions can be achieved in countries that are signatories to the Agreement. In this respect, the role of multinational companies in policing the new intellectual property system will be crucial. As will be discussed in Chapter 4, it seems likely that industry groups will continue to monitor developments in intellectual property rights in developing countries (see also Sell 1995).

3

Content of the TRIPs Agreement

The successful conclusion of negotiations for the TRIPs Agreement saw the introduction of measures that covered the whole spectrum of intellectual property rights. The TRIPs Agreement built upon the legal base provided by earlier WIPO conventions, including those of Paris and Berne, but also constituted much more than a simple re-codification of international law. On the one hand, the TRIPs Agreement was an exercise in updating and revising conventions administered by WIPO but, on another level, its novelty lay in the fact that for the first time in international law there was an obligation to provide minimum standards of intellectual property protection of a real and binding character. In particular, the transparency arrangements, enforcement mechanisms and linkage to the dispute settlement procedure of the WTO that are discussed in detail in Chapter 4 added much to the arrangements that already existed under WIPO. Before undertaking that review of enforcement mechanisms in Chapter 4, this chapter first offers a provision-by-provision description of the final text of the Agreement on Trade-Related Aspects of Intellectual Property Rights (the TRIPs Agreement) indicating, in particular, those issues that were subject to heated debate during the Uruguay Round negotiations and describing the basis on which compromise was reached before the TRIPs Agreement was finally adopted. To assist the reader, a full text version of the TRIPs Agreement can be found in the appendix. Read in conjunction with the full text, this chapter provides an explanatory background for assessing the implementation, impact and future of the TRIPs Agreement in later chapters. Again to assist the reader, headings used in this chapter reflect those found in the definitive version of the Agreement.1

PART I: GENERAL PROVISIONS AND BASIC PRINCIPLES Nature and scope of obligations As with the previous WIPO-administered conventions, the TRIPs Agreement sets down minimum standards for intellectual property protection. Article 1.1 leaves the possibility for Members to implement more extensive protection

Content of the TRIPs Agreement 47 than required by the Agreement in domestic law, provided that such protection does not contravene the provisions of the TRIPs Agreement. In addition, Article 1.1 makes clear that TRIPs is not intended to be a harmonisation document since Members are free to determine the method of implementing the Agreement within their own legal system and practice. Article 1.3 requires Members to accord the treatment provided for in the Agreement to nationals of other Members, with nationals of other Members understood as those natural or legal persons that would meet the eligibility criteria under the Paris Convention, the Berne Convention, the Rome Convention and the Washington Treaty on Intellectual Property in Respect of Integrated Circuits, assuming a position as if all Members of the WTO were also Members of those conventions. Intellectual property conventions In relation to patents, Article 2.1 explicitly requires Members to comply with Articles 1–12 and 19 of the Paris Convention (1967), which set out the basic standards and principles of protection, while the relationship between the TRIPs Agreement and the other WIPO conventions is clarified by Article 2.2, which maintains that nothing in the Agreement shall derogate from existing obligations that Members have to each other under the Paris Convention, the Berne Convention, the Rome Convention and the Washington Treaty. National treatment National treatment, namely non-discrimination against foreign nationals, as set out in Article 3, has been described as the most important ‘basic principle’ contained in the TRIPs Agreement (Reichman 1995: 347). Article 3.1 requires that WTO Members confer treatment to nationals of other Members no less favourable than that which it accords to its own nationals with regard to the protection of intellectual property, subject to the exceptions already provided in the Paris, Berne and Rome conventions and in the Washington Treaty. In any event, the principle of national treatment is already established by the Paris, Berne and Rome conventions, so in this respect Article 3.1 merely re-emphasises well-established principles (see also Blakeney 1996b: 40). However, Article 3.1 also extends the national treatment principle further in relation to performers, producers of phonograms and broadcasting organisations where rights are provided under the TRIPs Agreement. Exceptions to the national treatment principle are allowed under Article 3.2 in relation to judicial and administrative procedures, including the designation of an address for service or the appointment of an agent within the jurisdiction of a Member. However, these exceptions are only allowed in so far as is necessary to secure compliance with laws and regulations that are not inconsistent with the TRIPs Agreement and where such practices do not constitute a disguised restriction on trade.

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Most-favoured-nation treatment Whereas the national treatment provisions are designed to prohibit discrimination between a Member’s own nationals, the most-favoured-nation measures set out in Article 4 require that nationals of other Members should also be treated without prejudice. Article 4 states that any advantage, favour, privilege or immunity granted by a Member to nationals of any other country with regard to intellectual property protection shall be accorded immediately and unconditionally to the nationals of all other Members. Exceptions to this principle are permitted for any advantage, favour, privilege or immunity of a general nature and not confined to intellectual property protection; granted under the Berne or Rome conventions and authorising that the treatment accorded be a function not of national treatment but of the treatment accorded in another country; in respect of the rights of performers, producers of phonograms and broadcasting organisations not provided under the TRIPs Agreement; or deriving from international intellectual property agreements which entered into force before the WTO Agreement, provided such agreements do not constitute an arbitrary or unjustifiable discrimination against nationals of other Members. Multinational agreements on acquisition or maintenance of protection Under Article 5, the provisions of the TRIPs Agreement on national treatment (Article 3) and most-favoured-nation treatment (Article 4) do not apply to procedures provided in intellectual property agreements concluded under the auspices of the World Intellectual Property Organisation. Exhaustion In the United States, the European Communities and Japan it is possible for a contract of sale for patented goods to specify limitations on the buyer’s right to export or re-sell the goods, elsewhere it is often the case that no such restriction is possible. The issue of whether the first sale of a patented good can exhaust the rights of a patentee has been the subject of widespread debate and, during the TRIPs negotiations, it was the European Communities delegation that insisted on watering down earlier drafts of the Agreement which would have dealt more conclusively with the exhaustion of rights issue. As it was, the final version of the TRIPs Agreement leaves unresolved the issue of exhaustion, with Article 6 declining to address international exhaustion and merely specifying that, subject to Articles 3 and 4, nothing in the TRIPs Agreement will be used to address the issue of exhaustion of intellectual property rights.2 This omission from the TRIPs Agreement is particularly detrimental to holders of pharmaceutical patents, book sellers relying on copyright protection

Content of the TRIPs Agreement 49 and trademarks holders, since it means that WTO Members are free to allow international exhaustion in national law, but are under no obligation to do so. In the case of pharmaceutical patents, drug pricing in the industry has tended to vary from country to country depending on the particular circumstances in national economies and health care systems, with national markets segmented and attempts made for countries with higher-priced products to be shielded from imports from markets with lower-priced goods. For book sellers, the absence of measures to prevent parallel importation was the major disappointment in the TRIPs Agreement.3 In relation to trademarks, a mark holder is not generally considered to have the right to prevent the parallel importation of trademark-protected products, with the imported products often then sold at a lower price than domestically produced products displaying the same mark. The trademark holder cannot prevent importation because rights are generally exhausted after first sale of the product. Despite the efforts of representatives of trademark holders, the TRIPs negotiations failed to reach agreement on the inclusion of a clause that would have prevented parallel importation by allowing trademark holders to prevent the importation of protected products (see also Blakeney 1996b: 42). Objectives Article 7 provides the declaratory statement that ‘protection and enforcement of intellectual property rights should contribute to the promotion of technological innovation and to the transfer and dissemination of technology, to the mutual advantage of producers and users of technical knowledge and in a manner conducive to social and economic welfare, and to a balance of rights and obligations’. Although the practical effect of this statement is unlikely to be great, it does reflect very clearly the concerns of developing countries during the TRIPs negotiations that any agreement should not harm access to technologies and thus hinder the development of these countries. Principles Concerns voiced by developing countries also provided the motivation for Article 8. Article 8.1 sets out that, in amending national laws and regulations, Members may adopt measures necessary to protect public health and nutrition and to promote the public interest in sectors vital to their socio-economic and technological development, provided that such measures are consistent with the TRIPs Agreement. Article 8.2 adds that appropriate measures may be needed to prevent the abuse of intellectual property rights, or the use of practices which unreasonably restrain trade or adversely affect international technology transfer, provided that such provisions are consistent with the TRIPs Agreement.

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PART II: STANDARDS CONCERNING THE AVAILABILITY, SCOPE AND USE OF INTELLECTUAL PROPERTY RIGHTS

Section 1: copyright and related rights Copyright concerns the legal protection of the expression of an idea (rather than the idea itself) in a tangible fixed form.4 The author must demonstrate originality in the work. The copyright holder is accorded the exclusive right of reproduction, distribution, adaptation, performance and display of the copyrighted work. Additional ‘neighbouring’ rights may be accorded to, for example, the producer and broadcaster of visual and sound recordings protected by copyright. Given the potential value of copyright through licensing arrangements and royalty rates in relation to books, music, film, databases and computer software, business saw the potential for benefits being derived from high standards of copyright protection being included within a TRIPs Agreement. From the early 1970s onwards, the unauthorised copying of copyrighted works had become a major commercial problem with significant losses accruing, for example, to the book publishing industry as a result of the proliferation of lithographic photocopying machines, and to the music industry through the relative ease with which sound recordings could be copied onto cassettes by means of home taping. The movie industry was also suffering large losses as a result of pirated video cassettes. Relation to Berne Convention During the Uruguay Round negotiations, it was recognised that the Berne Convention already, for the most part, provided adequate basic standards of copyright protection (see also Otten and Wager 1996: 397). Consequently, the TRIPs Agreement adopts well-established copyright standards. Article 9.1 requires Members to comply with Articles 1–21 of the Berne Convention (1971), but does not require compliance with Article 6bis of the Convention, relating to moral rights. Individual Members are free to instigate a system of moral rights nationally outside the scope of the TRIPs Agreement and, in particular, as part of their general obligations as signatories of the Berne Convention (Blakeney 1996b: 52). As indicated in Chapter 2, the issue of moral rights proved to be controversial for the United States. The protection of moral rights, including the right to be known as the author of the work and the right to prevent others from making deforming changes, is enshrined in the Berne Convention, to which signatories to the TRIPs Agreement in turn agree to adhere. But although the United States is a signatory to both the Berne Convention and the TRIPs Agreement, US copyright law does not make provision for the protection of moral rights. Historically, opposition to according moral rights to the author has arisen because of the dominant position of the Hollywood movie studios, which tend to be the owner of film scripts rather than the

Content of the TRIPs Agreement 51 author of the work holding copyright. The United States was able to become a signatory to the Berne Convention without actually amending its copyright law on moral rights, because at the time it was able to argue that US law protects moral rights through various legal instruments including libel law, invasion of privacy, misappropriation of publicity rights, the federal trademark statute and contract law (Stewart 1993: 2288). Consequently, during negotiations for the TRIPs Agreement, whereas the European Communities, Japan, Switzerland and developing countries proposed the inclusion of measures to ensure the protection of moral rights in the final text, the United States preferred to make reference to the ‘economic’ rights of the Berne Convention that were freely and separately exploitable and transferable (see Stewart 1993: 2289), an implicit reference to the distinction between non-transferable moral rights of the author and the economically transferable nature of other copyrights. It is against this background of opposition from the United States and its movie industry to the inclusion of moral rights that the final text of the TRIPs Agreement was devised, requiring Members to comply with the provisions of the Berne Convention and its Appendix, but with the express exclusion of Article 6bis – namely the provision relating to the protection of moral rights. Article 9.2 confirms the conventional interpretation of copyright protection as extending to ‘expressions, not to ideas, procedures, methods of operation or mathematical concepts as such’, thereby protecting the dichotomy between non-protectable ideas and protectable expressions (Blakeney 1996b: 46). Computer programs and compilations of data In order to keep copyright protection up to date with technological advancements, the TRIPs Agreement adopts a ‘Berne plus’ (Reichman 1995: 370) strategy, according to which Article 10.1 extends protection to computer programs, whether in source or object code, to the type of subject matter to be treated as a ‘literary works’ under the Berne Convention (1971). Similarly Article 10.2 extends the scope of the Berne Convention by according copyright protection to compilations of data, whether in machine readable or other forms, which by reason of the selection or arrangement of their contents constitute intellectual creations. However, it is also clear from Article 10.2 that protection shall only relate to intellectual creations and not to the data or material itself. In TRIPs negotiations leading to the extension of copyright protection to include forms of ‘literary work’ outside the scope of the Berne Convention, there was broad agreement among the developed countries that the pace of technological progress required an extension of traditional notions of literary work, within the meaning of the Berne Convention, in order that both software and database compilations could benefit from copyright protection. As a result of widespread recognition in developed countries that high technology industries required the benefit accorded by copyright protection, Article 10 of the TRIPs Agreement explicitly extended copyright protection to compilations of data and databases and to computer software.

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Rental rights Article 11 grants authors (and their successors in title) of computer programs and cinematographic works the right to authorise or prohibit the commercial rental to the public of copyright works. In particular response to the contentious issue of video rental rights in France, the outcome of TRIPs negotiations was to insert a second sentence in Article 11, asserting that a Member ‘shall be excepted from this obligation in relation to cinematographic works unless such rental has led to widespread copying of such works which is materially impairing the exclusive right of reproduction conferred in that Member on authors and their successors in title’. Term of protection The Berne Convention, under Article 7.1, specifies that the term of protection for copyright works is the life of the author plus an additional fifty years or, alternatively, fifty years after it has been made. What is less clear on reading the Berne Convention is the status of copyright work where a natural person cannot be identified on which to base the period of protection. Article 12 of the TRIPs Agreement clarifies this by setting out that when the term of copyright protection of a work, other than a photographic work or a work of applied art, is calculated on a basis other than the life of a natural person, such a term shall be no less than fifty years from the end of the calendar year of authorised publication or, in the absence of such authorised publication, fifty years from the end of the calendar year of making. Limitations and exceptions Under Article 13 Members are required to ‘confine limitations or exceptions to exclusive rights to special cases which do not conflict with a normal exploitation of the work and do not unreasonably prejudice the legitimate interests of the right holder’. Protection of performers, producers of phonograms (sound recordings) and broadcasting organisations In what Reichman (1995: 368) describes as a ‘bold move’, the TRIPs Agreement takes into account the copyright concerns of the entertainment industry by recognising not only the rights of performers, but also the neighbouring rights of producers and broadcasting organisations. In relation to copyright infringement of phonographic works, business interests played an important role in demonstrating the global scale of the problem and the costs accruing to industry as the result of lost sales through bootlegging, home taping and, a more recent phenomenon in the early 1990s, compact disc burning (or ‘ripping’). Through organisations such as the International Federation of Phonographic Industries (IFPI), the Recording Industry

Content of the TRIPs Agreement 53 Association of America (RIAA), the National Music Publishers’ Association (NMPA) and the IIPA, the music business was able to put its case to TRIPs negotiators for the inclusion of protection for sound recordings within the TRIPs Agreement. Within the TRIPs Agreement, rights relating to sound recordings, performers’ control of fixation, reproduction and broadcasting of their performances are set out in Article 14. Under Article 14.1 performers have the right to authorise or prohibit the fixation of their unfixed performances and the reproduction of such a fixation of their work without authorisation. Performers also have the right to prevent the broadcasting and communication to the public of their live performance. Under Article 14.2 producers of phonograms have the right to authorise or prohibit the direct or indirect reproduction of their phonograms, whereas under Article 14.3 broadcasters are accorded the right to authorise or prohibit the fixation, reproduction of fixations and the re-broadcasting of their broadcasts. In this regard, Article 14 of the TRIPs Agreement underpins the rights of performers, producers and broadcasters by obliging WTO Members to abide by the terms of the Rome Convention (1961). Article 14.4 tackles a difficult issue in TRIPs negotiations, namely Japan’s arrangements for the rental of phonographic works. According to Article 14.4, if, on the date of the conclusion of the GATT Uruguay Round, a Member had in force a system of equitable remuneration of right holders in respect of the rental of phonograms, that Member may maintain such a system provided that the commercial rental of phonograms is not giving rise to the material impairment of the exclusive rights of reproduction of right holders. Material impairment of this type entails abuse of rental by widespread unauthorised copying of rented works (see also Blakeney 1996b: 48). As with other forms of copyright works, under Article 14.5 the term of protection accorded to performers and producers of phonograms is fifty years, in this case being a period calculated from the end of the calendar year in which the fixation was made or the performance took place, with term of protection granted to broadcasters being at least twenty years from the end of the calendar year in which the broadcast took place. In relation to TRIPs negotiations leading to the inclusion of neighbouring rights for producers and broadcasters in the Agreement, as with moral rights it was the United States that voiced opposition to its inclusion in the final text. Given that neighbouring rights are designed to protect the interests of performers, broadcasters and producers of sound recordings, it was the US entertainment industry that on this occasion objected most forcefully to what was being proposed. The root of the problem lay in the fact that the United States was not a signatory to the Rome Convention for the Protection of Performers, Producers of Phonograms and Broadcasting Organisations. The United States was of the view that the rights of performers and broadcasters could be protected adequately without special legislation (Stewart 1993: 2290). As with moral rights, the United States argued that neighbouring rights

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should not be included in the TRIPs Agreement. In the event, the US conceded on the issue of neighbouring rights, with Article 14.6 of the TRIPs Agreement making explicit reference to both conditions, limitations, exceptions and reservations to the granting of copyright as allowed under the Rome Convention, together with explicit reference to the analogous status of Article 18 of the Berne Convention (1971) as it relates to the rights of performers and producers of phonograms.

Section 2: trademarks The need to provide effective protection for trademarks, although not contested by developing countries (according to Pacón 1996: 346), was high on the agenda of developed nations given the rise in instances of counterfeiting goods in the international market and is covered in some detail in Section 2 of the Agreement. Protectable subject matter Section 2 of the TRIPs Agreement defines the minimum rights that must be conferred by a trademark. Article 15.1 defines the scope of trademark protection under the TRIPs Agreement as relating to ‘any sign, or combination of signs capable of distinguishing the goods or services of one undertaking from those of other undertakings, shall be capable of constituting a trademark’. Where signs are not inherently capable of distinguishing the relevant goods or services, Members shall ‘make registrability dependent on distinctiveness acquired through use. Members may require, as a condition of registration, that signs be visually perceptible’. Article 15.2 then limits the scope of Article 15.1 by setting out that it ‘shall not be understood to prevent a Member from denying registration of a trademark on other grounds, provided that they do not derogate from the provisions of the Paris Convention (1967)’. In this context, the Paris Convention allows for the refusal of registration on grounds of a list of possibilities including, for example, marks that are contrary to morality or public order and which may be of such nature as to deceive the public. A key issue during TRIPs negotiations was how to reconcile the requirement for registration of a trademark under US and Canadian law for actual use or intention to use, whereas other countries have traditionally operated systems in which trademark rights may be acquired either through common use or formal registration (Blakeney 1996b: 55–6). In order to reconcile the divergent approaches of the North American legal traditions with those found elsewhere, the final text of Article 15.3 takes account of both approaches, providing that, ‘Members may make registrability depend on use. However, the actual use of a trademark shall not be a condition for filing an application for registration. An application shall not be refused solely on the ground that intended use has not taken place before the expiry of a period of three years from the date of application’.

Content of the TRIPs Agreement 55 Rights conferred Under Article 16.1, the owner of a trademark is granted exclusive right of use where the use of an identical sign for identical goods and services to those in respect of which the trademark is registered where such use would result in a likelihood of confusion. Article 16.2 seeks to strengthen protection for internationally well-know marks, determining the existence of a ‘wellknown trademark’ by taking account of the knowledge of the trademark in that Member country as a result of the promotion of the trademark. Exceptions Article 17 allows Members the scope to provide limited exceptions to the rights conferred by a trademark, such as fair use of descriptive terms, provided that such exceptions take account of the legitimate interests of the owner of the trademark and of third parties. Term of protection Article 18 provides that trademark registration shall be for no less than seven years, to be renewable indefinitely. Requirement of use Article 19 requires that registration of a trademark may be cancelled only after an uninterrupted period of at least three years of non-use, unless there are valid reasons based on obstacles to such use. Other requirements Article 20 is designed to ensure that the use of a trademark will not be unjustifiably burdened with special requirements, ‘such as use with another trademark’ or ‘use in a manner detrimental to its capability to distinguish the goods or services of one undertaking from those of other undertakings’. Licensing and assignment In addition to granting the owner of a registered trademark the right to assign the trademark, Article 21 prohibits the compulsory licensing of trademarks, conferring upon an owner the exclusive right to assign the mark. In this respect, this final version of the TRIPs Agreement differed from developing country proposals, which sought to leave conditions for use of a trademark and duration of the protection granted to individual countries (see also Stewart 1993: 2301). For Pacón (1996: 347–8), there is a tendency for developing countries to view foreign trademark license agreements with a particularly critical eye given the economic and psychological advantage

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enjoyed by foreign trademarks over national ones that can affect the development of the local economy as well as the purchasing behaviour of (and the supply of basic materials to) the domestic population. Contract terms between foreign licensors and national licensees in developing countries that impose a maximum amount on royalties, a refusal to approve the payment of license fees by domestic branches or subsidiaries to the parent company, or the imposition of taxes on royalties are still possible under the TRIPs Agreement provided that they do not infringe Article 20.

Section 3: geographical indications Protection of geographical indications During the TRIPs negotiations, the European Communities (and France in particular) were anxious to use the TRIPs Agreement to protect ‘appellations of origin’, particularly for winemaking regions such as Champagne, Burgundy and Côtes du Rhône. Additional protection was needed in order to resolve differences between the European Communities and the United States in instances where descriptive names for wines of European origin had become commonly used for wines produced, for instance, by Californian vineyards. Consequently, Article 22.2 of the TRIPs Agreement requires countries to provide the legal means to prevent the use of any geographical indication that misleads the public as to the true origin of goods, as well as any use that would constitute an act of unfair competition. In addition, under Article 22.3, any trademark that contains a geographical indication is to be refused or invalidated if it consists of a geographical indication not relating to the territory stated. Article 22.4 extends protection to any geographical indication ‘which, although literally true as to a territory, region or locality in which the goods originate, falsely represents to the public that the goods originate in another territory’. Additional protection for geographical indications for wines and spirits Under Article 23.1, additional protection for geographical indications is provided for wines and spirits that are to be protected even where there is no danger of the public being misled as to the true origin because of the use of expressions such as ‘kind’, ‘type’, ‘style’, ‘imitation’ or the like. This level of protection constitutes a more comprehensive level of protection than the general provisions set out under Article 22 (see also Blakeney 1996b: 72). International negotiations: exceptions Article 24 sets out a list of exceptions to the obligation to protect geographical indications. Article 24.4 excludes from protection any geographical indication

Content of the TRIPs Agreement 57 that has been used for at least ten years before the conclusion of the Uruguay Round of Multilateral Trade Negotiations or registered in good faith before that date. Article 24.6 provides exemption for ‘products of the vine for which the relevant indication is identical with the customary name of a grape variety existing in the territory of that Member as at the date of entry into force of the WTO Agreement’. Under Article 24.9, where a geographical indication has fallen into disuse in the country to which it relates, there is no obligation to protect.

Section 4: industrial designs Requirements for protection Articles 25.1 places an obligation on WTO Members to protect independently created industrial designs where these are new and original. With a view to recognising the concern of developing countries relating to the protection of textile design (Blakeney 1996b: 79), Article 25.2 provides that the cost of registration should not impair the opportunity to seek and obtain such protection. Protection Under Article 26.1 ‘the owner of a protected industrial design shall have the right to prevent third parties not having his consent from making, selling or importing articles bearing or embodying a design which is a copy, or substantially a copy, of the protected design’, with limited exceptions provided under Article 26.2 and, under Article 26.3, a duration of protection lasting at least ten years.

Section 5: patents Patentable subject matter For industries operating in high technology sectors, patent protection is of crucial importance. Article 27.1 accords patent protection to any inventions, whether products or processes, provided they are new, involve an inventive step and are capable of industrial application.5 Article 27.1 also strengthens the patent right by prohibiting patent discrimination based on the place of invention, field of technology or whether the product is imported or domestically produced. This wording of Article 27.1 seeks to address problems arising in relation to developing countries, where local working requirements are often imposed and certain categories of product, particularly pharmaceuticals and agrochemicals, are excluded from patent protection on public policy grounds. The fact that Article 27 specifies that patent rights are ‘enjoyable without discrimination as to the place of invention, the field

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of technology and whether products are imported or locally produced’ was an important achievement for developed countries during the TRIPs negotiations (see also Ryan 1998: 113). One discrepancy between US intellectual property law and that of other developed countries that could not be easily resolved was the debate over whether to use a first-to-file or a first-to-invent principle for determining the right of priority in patent applications. In the United States, where the firstto-invent system is used, business argues that awarding patents to inventors who can demonstrate through carefully recorded log books that they hold priority is preferable to first-to-file system used in other countries, where a ‘race to the patent office’ may result in a patent being awarded to the first inventor to file a patent application, not to the first person to invent. The system used elsewhere has been criticised by US firms for being unnecessarily bureaucratic and favouring larger businesses, which have the experience and resources to file patent applications regularly, over small firms and the sole inventor,6 and for creating legal uncertainty and undue litigation by leaving open the opportunity for rival inventors to present log books demonstrating that it was in fact they who first invented a patented product. Despite attempts by the European Communities to include a requirement that all signatories to the TRIPs Agreement adopt the first-to-file system for patent applications, the United States had already made its intransigence clear with the so-called ‘Manbeck Compromise’ (a unilateral declaration by the US Assistant Secretary of Commerce repudiating an earlier US pledge to WIPO members that it would move to a first-to-file system).7 There was little surprise, therefore, that the US delegation to the TRIPs negotiations was opposed to changing US domestic legislation. Although the issue of firstto-file was not addressed in the final text of the TRIPs Agreement and continues to be an issue of debate in bilateral negotiations between the United States and the European Communities,8 what the Agreement nevertheless does require is that Members do not discriminate in the availability of patent protection according to the place of invention. In relation to the scope of patentable subject matter, although the majority of developed countries supported the US position that no exclusions should be granted for plants and living organisms, the European Communities nonetheless sided with the developing country view that exceptions should be granted in relation to the patentability of plants and animals (Stewart 1993: 2295). The reason for the EC position was that it faced strong internal opposition to the patenting of living organisms (see Watal 1999: 9). The final outcome of the negotiating process was therefore the list of exceptions allowed under Article 27. In particular, Article 27.2 excludes from patentability protecting ordre public or morality; protecting human, plant or animal life or health; and avoiding serious prejudice to the environment. These exceptions have been criticised on grounds that they are very broad and, without a narrowing interpretation or interpretative statement, could be read as allowing the continued exclusion of certain pharmaceutical products and

Content of the TRIPs Agreement 59 processes from patentability (see also Doane 1994: 478; Gorlin 1993: 37; Ryan 1998: 113). After a proposal by developing countries,9 Article 27.3 also gives WTO Members the right to exclude from patentability diagnostic, therapeutic and surgical methods for the treatment of humans or animals, as well as plants, animals other than micro-organisms and essentially biological processes for the production of plants or animals other than non-biological and microbiological processes. However, Members are required to provide for plant variety protection either by patents or by an alternative sui generis system of protection, in most cases likely to be the International Convention for the Protection of New Varieties of Plants (the UPOV Convention of 2 December 1961), which is further discussed in Chapter 6 of this book. This outcome was reached because, although the United States argued in favour of patent protection, the European Communities favoured a sui generis form of protection (Pacón 1996: 344–5). Although Article 27 has been criticised as substantially limiting protection for the growing biotechnology industry (Doane 1994: 478), it does benefit from a built-in review mechanism, with the wording of Article 27.3 making clear that these issues will be reviewed four years after the entry into force of the Agreement establishing the WTO. It was consequently anticipated that the provisions of Article 27.3 of the TRIPs Agreement would be reviewed at the Seattle WTO Ministerial Meeting in December 1999. In the event, however, procedural matters and public disorder at the Seattle Ministerial Meeting stymied discussion on substantive review of Article 27.3. The builtin review nonetheless remains to be concluded in the future and its implications are further discussed in Chapter 6. Rights conferred Article 28 provides patent holders with the exclusive right to make, use or sell, import assign or transfer a patent through license. Where the subject matter of the patent is a process, the owner is granted the exclusive right to use, offer for sale, sell or import products obtained directly by that process. Conditions on patent applications Article 29 requires Members to ‘disclose the invention in a manner sufficiently clear and complete for the invention to be carried out by a person skilled in the art and may require the applicant to indicate the best mode of carrying out the invention known to the inventor at the filing date or, where priority is claimed, at the priority date of application’. Exceptions to rights conferred The TRIPs Agreement also contains exceptions to the exclusive rights of patent holders. Article 30 sets out that such exceptions must not unreasonably

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conflict with the normal exploitation of the patent nor unreasonably prejudice the legitimate interests of the patent holder. As will be discussed in Chapter 5, this provision has proved particularly problematic in relation to the socalled ‘Bolar Exemptions’ for regulatory approval procedures. Other use without authorisation of the right holder The ‘other use without authorisation’ provisions of Article 31 relate primarily to compulsory licensing, arrangements whereby developing countries have traditionally tended to utilise arrangements requiring the patent holder to ‘work’ the patent locally within a fixed period (normally two or three years) after the patent is granted or be subject to a compulsory licence under which the patent is licensed to a local business in return for reasonable royalty rates. During the TRIPs negotiations, developed countries proposed that the use of such licences be restricted not least because, for businesses operating a global marketing strategy, this requirement to undertake local manufacturing (or ‘working’) of a patent, rather than manufacturing on a regional scale and then importing into a particular national market, was seen to be an onerous and commercially unviable requirement. The United States, in particular, was of the opinion that the use of compulsory licences should be severely restricted and used only in cases of antitrust violation or national emergency (Stewart 1993: 2295). In the event, the final text of the TRIPs Agreement, while not restricting the use of compulsory licences to the degree proposed by the United States, does not include failure to work a patent locally as grounds for compulsory licensing. It is clear from Articles 27 and 31 that local working requirements for compulsory licensing can be satisfied through the importation of patented products if this is sufficient to meet local needs. This ensures that the patent holder is not required to produce the product in every national market where it is patented in order to avoid the granting of a compulsory licence to another party. Under Article 31(a) compulsory licences must be considered on their individual merits. This has been interpreted as excluding blanket approval of compulsory licences for a particular field of technology (Blakeney 1996b: 91). In addition, compulsory licensing will only be permitted if prior efforts have been made to obtain authorisation from the right holder on reasonable commercial terms and conditions (Article 31(b)), except in the case of a national emergency or other circumstances of urgency, or in cases of public non-commercial use, typically relating to public health and national defence. The scope and duration of compulsory licences must be limited to the purpose for which it was authorised (Article 31(c)). They must be non-exclusive (Article 31(d)), be non-assignable (Article 31(e)), be predominantly for the supply of the domestic market of the Member authorising such use (Article 31(f)), include the payment of adequate remuneration to the patent holder (Article 31(h)) and be subject to judicial review (Article 31(i)). There are also limitations on the use of compulsory licences for the exploitation of

Content of the TRIPs Agreement 61 dependent patents (Article 31(l)), namely a patent on an improvement to an invention within the scope of an earlier dominant patent (see also Doane 1994: 479). The task of complying with the provisions of the TRIPs Agreement on compulsory licences will not be easily complied with by developing countries. These countries have often relied on compulsory measures to obtain access to technology and pharmaceutical products (for a fuller discussion of the impact of the TRIPs Agreement on developing countries, see Chapter 5). Given that Grubb (1999: 40) reports that in 1995 even the European Commission found that not a single Member State had fully complied with the compulsory licensing provisions of the TRIPs Agreement, it should be of little surprise that developing countries so often encounter problems in this respect. Revocation/forfeiture and term of protection Article 32 of the TRIPs Agreement requires that an opportunity must exist for judicial review of any decision to revoke or forfeit a patent. Article 33 establishes the minimum duration of patent protection in any Member country as being twenty years from the date of filing. Although this duration of patent term replicates the requirements of the Paris Convention and was generally supported by developed country delegations to the TRIPs negotiations, the European Communities, the United States and Japan were not of one mind on this issue (Pacón 1996: 341). The European Communities, pursuing the European Patent Convention approach, advocated that the term of patent protection is twenty years from filing of the application, to be extended for a further five years in special circumstances, such as in the case of pharmaceutical products required to undergo lengthy regulatory approval procedures before being released onto the market. The United States and Japan, on the other hand, argued twenty years should be the minimum term of protection, with Members free to set longer periods of protection if they so wished. The developing countries were also divided on this issue, leading to their recommendation that patent term should be at the discretion of each Member, with the precise duration of patent protection being a matter for national legislation. The term of twenty years was nonetheless enshrined in the final text of the Agreement. In practice, the requirement of a twentyyear patent term has been a relatively straightforward obligation for most WTO Members to fulfil, with many, including Argentina, Brazil, Indonesia and the Philippines, making this change as early as the beginning of 1997 (according to Grubb 1999: 40). Process patents: burden of proof Article 34 sets out certain conditions under which, in the case of civil litigation relating to the infringement of process patents, when the product obtained

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by the patented process is new (Article 34.1(a)), or when there is a substantial likelihood that the identical product was made by the process and the owner of the patent has been unable through reasonable efforts to determine the process actually used (Article 34.1(b)), the burden is on the alleged infringer to prove that the identical product was produced by a different process. The effect of Article 34 of the TRIPs Agreement is that it is now up to the party accused of marketing an identical product to that of the patent holder to prove that the process used in its manufacture does not infringe the patent. This provision was in line with the proposals of developed countries during TRIPs negotiations and is perceived to offer a regime more favourable to patent holders from developed nations, who would otherwise find the task of proving an infringement of a process patent an unnecessarily onerous task. Pipeline protection But despite the many successes of developed country negotiation strategies in terms of the final version of the TRIPs Agreement, not all key demands were met. Of crucial importance to businesses operating in the proprietary medicines sector had been the demand that pharmaceuticals still in developmental or market-approval stages be subject to ‘pipeline’ protection’ (see also Grubb 1999: 87; Ryan 1998: 88), with the effect that the duration of market approval and drug testing undertaken by national agencies, such as the Food and Drug Agency (FDA) in the United States or the European Medicines Evaluation Agency (EMEA), would be able to benefit from a larger proportion of the twenty-year patent life for a particular pharmaceutical product when it is finally brought to market. In effect, clinical trials and market approval would not erode the term of protection for patented medicinal products. Despite discussion of the need to include pipeline protection in Article 70(8) of the Agreement, in the event it was not included in the final text, largely because developed countries were split on this issue, with the United States in favour of pipeline protection, the European Communities against and Japan offering no firm view. 10 The absence of pipeline protection was seen as particularly harmful for the pharmaceutical industry, which had already seen benefits accrue from the inclusion of pipeline protection in US bilateral trade agreements and the NAFTA Agreement.

Section 6: layout designs (topographies) of integrated circuits Relation to the IPIC Treaty Layout designs (or ‘topographies’) of integrated circuits had been dealt with in international intellectual property law before the TRIPs Agreement by the Washington Treaty on Intellectual Property in Respect of Integrated Circuits of 26 May 1989. During TRIPs negotiations, the European Communities and developing countries both submitted that the Washington

Content of the TRIPs Agreement 63 Treaty should apply through incorporation into the TRIPs Agreement. This differed from the position taken by the United States, which argued instead for reciprocity of foreign layout designs without explicit reference to the Washington Treaty on grounds that the Treaty had very few signatories (Stewart 1993: 2306). Since the term of protection of eight years provided for by the Washington Treaty was less than the term of ten years sought by the two countries responsible for the largest integrated circuit industries, namely the United States and Japan (Blakeney 1996b: 96), both those countries had refused to become signatories to the Washington Treaty. The result was that the integrated circuits provisions of the TRIPs Agreement have been criticised by some of the business representatives interviewed as part of the research for this book as being a ‘third world’ draft. The approach to the incorporation of integrated circuit protection into the TRIPs Agreement has been to utilise the base provided by the Washington Treaty. Article 35 of the TRIPs Agreement requires Members to provide for the protection of the layout-designs of integrated circuits in accordance with Articles 2–7 (other than paragraph 3 of Article 6), Article 12 and paragraph 3 of Article 16 of the Washington Treaty. During TRIPs negotiations, this incorporation of the Washington Treaty into the TRIPs framework had been advocated by developing countries on the grounds that the recently completed Treaty represented the international consensual approach (Blakeney 1996b: 97) but, in line with the developed country perspective that the Washington Treaty also required strengthening, Articles 36 to 39 of the TRIPs Agreement supplement Article 35. Scope of the protection Article 36 requires Members to consider unlawful importing, selling, or otherwise distributing for commercial purposes, a protected layout-design or an integrated circuit in which a protected layout-design is incorporated, without the prior authorisation of the right holder. Acts not requiring the authorisation of the right holder Yet notwithstanding the provisions of Article 36, Article 37.1 permits such acts ‘where the person performing or ordering such acts did not know and had no reasonable ground to know, when acquiring the integrated circuit … that it incorporated an unlawfully reproduced layout-design’, subject to paying the right holder a reasonable royalty. Non-voluntary licensing for use by the government is also permitted under Article 37.2, subject to the conditions for compulsory licensing of patents laid out earlier in the Agreement. Term of protection Crucially, under Article 38.1, the Washington Treaty on Intellectual Property in Respect of Integrated Circuits (1989) is supplemented by the requirement

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that protection must be available for a minimum period of ten years (as originally favoured by the United States and Japan in negotiations for the Washington Treaty), beginning with registration filing or first commercial exploitation or, under Article 38.3, fifteen years after the creation of the layout-design.

Section 7: protection of undisclosed information Developing countries opposed the inclusion of trade secrets as a category of intellectual property and, as such, the issue did not come under the remit of the TRIPs Negotiating Group. Nevertheless, the commercial value of undisclosed information (trade secrets or know-how), as advocated by developed countries, is given recognition in international public law for the first time in Article 39 of the Agreement. Article 39 requires Members to protect undisclosed information (the term trade secret is not used per se) as long as it has commercial value because it is secret and is kept secret. Its inclusion in the TRIPs Agreement has particularly important implications for the proprietary pharmaceutical industry, which has particular concerns about the protection of commercially sensitive information submitted as part of the regulatory approval procedures undergone while obtaining market authorisation for new medicinal products. Largely as a result of pharmaceutical industry concerns, Article 39.1 requires that in the course of ensuring effective protection against unfair competition as provided for in Article 10bis of the Paris Convention (1967), which defines an act of unfair competition as ‘any act of competition contrary to the honest practices in industrial or commercial matters’, Members must protect undisclosed information. Article 39.2 then sets out the range of information to be protected as being that which ‘is secret in the sense that it is not, as a body or in the precise configuration and assembly of its components, generally known among or readily accessible to persons within the circles that normally deal with the kind of information in question’; ‘has commercial value because it is secret’; and ‘has been subject to reasonable steps under the circumstances, by the person lawfully in control of the information, to keep it secret.’ Finally, Article 39.3 specifically seeks to address the particular concerns of the proprietary pharmaceutical industry, which must seek regulatory approval from public bodies such as the US FDA or the EMEA. Article 39.3 requires that, where undisclosed test or other information is required in order to grant market authorisation, Members protect information on new pharmaceutical or agricultural chemical products that utilise new chemical entities against unfair commercial use, except where necessary to protect the public. Attempts were made during negotiations for the TRIPs Agreement to ensure that information included in regulatory submissions of this type would be protected for a specific length of time. In the event, however, the absence of a standard term of protection in developed countries prevented a

Content of the TRIPs Agreement 65 consensus being reached that could then be put forward as a proposal for the TRIPs Agreement. The global proprietary pharmaceutical industry has since expressed its concerns that ‘unfair commercial use’ is not defined in Article 39.3, increasing the likelihood that generic drug companies will benefit from having greater access to data submitted to regulatory authorities.

Section 8: control of anti-competitive practices in contractual licences During negotiations for the TRIPs Agreement, developing countries began to be more vocal in their concerns that increased intellectual property protection would result in abuse by rights holders. Interest grew in preventing the imposition of anti-competitive provisions in contractual licences, with contract restrictions seen as being capable of hindering the transfer of technology to developing nations (see also Pacón 1996: 349). These calls for anti-competitive measures were, in part, addressed in the final text of the TRIPs Agreement by Article 8.2, which permits Members to take appropriate measures to control abuse of intellectual property rights by right holders who use anti-competitive practices to unreasonably restrain trade or adversely affect the international transfer of technology. Article 8.2, in effect, is designed to address the abuse of contractual licensing agreements. But the main instrument designed to control anti-competitive provisions in contractual licences is Article 40. Article 40.1 acknowledges that certain types of licensing agreements can restrain trade and may impede the transfer and dissemination of technology. In the light of this acknowledgement, Article 40.2 reserves the right for Members to provide for legislation to prevent licensing practices or conditions that may in particular cases constitute an abuse of intellectual property rights amounting to anti-competitive practices. Article 40.3 sets up a mechanism for extraterritorial investigation and enforcement (see also Blakeney 1996b: 118) by providing for consultation, with Article 40.4 creating the conditions for further cooperation through the supply of information (see also Otten and Wager 1996: 403) by allowing the opportunity for the Member where the alleged infringer is a citizen or domiciled to enter into consultations with the Member in which the alleged infringement has occurred.

PART III: ENFORCEMENT OF INTELLECTUAL PROPERTY RIGHTS The need to achieve effective international enforcement of intellectual property rights was a key driving force behind the developed countries’ initiative for a TRIPs Agreement capable of overcoming the shortfalls of the earlier WIPO conventions (see also Worthy 1994: 197). Enforcement refers to the procedures set out in the Agreement that provide for action against any act of infringement of intellectual property rights covered by the TRIPs

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Agreement. The provisions of the TRIPs Agreement on enforcement have two basic objectives. First, they seek to ensure that effective means of enforcement are available to right holders. Second, they endeavour to ensure that enforcement procedures are applied in such a manner as to avoid the creation of barriers to legitimate trade and to provide safeguards against their abuse (see also Otten and Wager 1996: 403; Smith 1997: 17). But it should be stated at the outset that it is widely perceived that while the TRIPs Agreement is an extremely good document in terms of defining international norms for intellectual property protection, its provisions relating to enforcement clearly display the characteristics of a difficult compromise reached during the Uruguay Round negotiations. The aim of Part III is to ensure that the provisions on protection of intellectual property rights found elsewhere in the TRIPs Agreement can be enforced by the right holders themselves (see also Smith 1997: 30). In many cases these right holders will be multinational companies operating in local markets and, in this context, Part III directly concerns the ability of corporate interests to defend their intellectual property rights effectively on a global scale.

Section 1: general obligations Given that the failure of the Paris and Berne conventions was largely attributed to the absence of effective mechanisms to enforce WIPOadministered treaties (see also Henderson 1997: 652), developed countries articulated the concerns of corporate interests by insisting from the outset that the TRIPs Agreement must contain enforcement provisions within the overall framework of the GATT. Despite the opposition of developing countries, which suggested that enforcement should take account of the limits of administrative and resource capabilities in each country, the final text of TRIPs reflects developed country proposals that the Agreement should provide for civil, criminal and administrative enforcement, together with remedies in the form of damages, injunctions and seizure of infringing goods. Under Article 41 of the TRIPs Agreement, Members are required to ensure that enforcement procedures are available under their national laws so as to permit effective action against infringement of intellectual property rights, including expeditious remedies to prevent infringements and remedies that constitute a deterrent to further infringements (Article 41.1). Members are required to set up effective national enforcement measures for rights holders, with certain minimal obligations including fair and equitable procedures, that are not unnecessarily complicated or costly and should not entail unreasonable time-limits or unwarranted delays (Article 41.2); to set up procedures to ensure that decisions are based only on the merits of the case and only on evidence in respect of which the parties were offered the opportunity to be heard (Article 41.3); and to provide the opportunity for

Content of the TRIPs Agreement 67 judicial review (Article 41.4). Article 41.5, included in the TRIPs Agreement at the suggestion of India11 to take account of the capacities of developing and least-developed countries (Wooldridge 1997: 15), stipulates that nothing in this part of the Agreement creates an obligation to put in place a judicial system for enforcement of intellectual property rights that is distinct from the system in place for the enforcement of laws in general.

Section 2: civil and administrative procedures and remedies Fair and equitable procedures Article 42 sets out civil judicial procedures, including the right to written notice, the right to independent legal counsel and the right to present relevant evidence. Members must make available fair and equitable remedies and procedures as listed in later Articles of the Agreement, including injunctions, damages and indemnification. These provisions are discussed below. Evidence of proof Article 43 is designed to facilitate the production of evidence by according judicial authorities with the power to order that evidence is produced by the opposing party when the complainant has presented reasonably available evidence sufficient to support its claims and has specified that evidence relevant to the substantiation of its claims which lies in the controls of the opposing party. Article 44 invests judicial authorities with the power to grant injunctions, namely the power to order a party to desist from an infringement and block the importation of products infringing intellectual property rights into the channels of commerce in their jurisdiction. Article 45 gives judicial authorities the power to award damages for infringement, and order that infringing goods be destroyed. Injunctions Under Article 44.1 judicial authorities have the power to order a party to desist from an infringement and to prevent imports of the infringing goods. This power is not as far-reaching as proposals put forward by the United States and European Communities during TRIPs negotiations. Article 44.1.2 does not oblige Members to grant injunctions if the protected subject matter is protected by persons who, at the time of acquisition, believed in good faith that trade with the subject matter would not result in an infringement. This good faith provision was included despite the fact that the US and Japan had strongly opposed a similar provision in the Washington Treaty (Dreier 1996: 262).

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Damages Article 45.1 invests judicial authorities with the power to order an infringer of intellectual property rights to pay the right holder adequate compensation in damages for losses suffered because of the infringement. Article 45.2 allows judicial authorities to order the infringer to pay the rights holder expenses, which may include appropriate attorney’s fees, and to order the recovery of profits and/or damages even where the infringer did not knowingly, or with reasonable grounds to know, engage in infringing activity. Other remedies Article 46 allows judicial authorities to order that goods found to be infringing intellectual property rights are disposed of in a manner that avoids harm being caused to the rights holder, or destroyed (unless this would be contrary to existing constitutional requirements). Any materials or implements that have as their predominant use the creation of infringing goods must also be disposed of. No compensation will be paid to the infringer in either circumstance, but a principle of proportionality and the interests of third parties must be taken into account. Right of information The infringer must inform the right holder of the identity of third parties involved in the production and distribution of infringing goods or services and their channels of distribution (Article 47). Indemnification of the defendant If enforcement measures are found to have been abused, the judicial authorities have the power to order the party at whose request measures were taken to provide adequate compensation for the injury suffered, including appropriate attorney’s fees (Article 48.1). Public authorities and officials are, however, exempt from liability if action has been taken in good faith (Article 48.2). Administrative procedures Under Article 49, any civil remedy that is ordered as a result of administrative procedures on the merits of the case must conform to principles equivalent in substance to Section 2, Part III, of the TRIPs Agreement, relating to enforcement of intellectual property rights.

Content of the TRIPs Agreement 69

Section 3: provisional measures Under Article 50, judicial authorities are to be given the power to order prompt and effective provisional measures to prevent infringement from occurring by stopping the distribution for sale or importation of infringing goods and by preserving evidence of the alleged infringement (Article 50.1); to adopt provisional measures where there is a demonstrable risk of evidence being destroyed (Article 50.2); to require reasonably available evidence in order to satisfy them that the applicant is the right holder (Article 50.3); to provide notice to affected parties without delay (Article 50.4); to allow the defendant to request the revocation of provisional measures (Article 50.6); and to provide compensation to the defendant where provisional measures are revoked or lapse (Article 50.7).

Section 4: special requirements related to border measures Suspension of release by customs authorities The TRIPs Agreement reflects the view that the preferred method of combating counterfeiting and piracy12 is to prevent the infringing activity at its source (see also Otten and Wager 1996: 405). Thus a significant element of the TRIPs Agreement is the role it envisages for customs authorities as agencies to counter intellectual property infringement. Under Article 51 Members are obliged to set up administrative and judicial procedures to be taken by customs officials for the suspension of release into domestic circulation of counterfeit and pirated goods at national borders. In order to oblige customs officials to take action, the right holder must submit written evidence of infringement. Members may also set up equivalent measures to detain goods for export. Application Right holders initiating procedures under Article 51 must provide adequate evidence to satisfy the authorities that there is a prima facie case of an infringement in intellectual property rights and must provide a sufficiently detailed description of the goods to make them easily recognisable by the customs authorities (Article 52). Security or equivalent assurance The TRIPs Agreement also pays considerable attention to ensuring that civil actions are not used as a means of harassing legitimate trade (Otten and

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Wager 1996: 406), Article 53.1 according competent authorities with the power to require security or an equivalent assurance to protect the defendant and the competent authorities and to prevent abuse. The level of security or assurance must not, however, unreasonably deter use of those procedures. Under Article 53.2, the release of suspended goods will be made upon payment of an amount sufficient to protect the right holder by the defendant, but payment of such a security must not prejudice any other remedy available to the right holder, and the security will be returned if the rights holder does not pursue the action within a reasonable period of time. Notice and duration of suspension, indemnification of the importer and of the owner of the goods Both the importer and applicant must be given prompt notification if customs authorities decide to suspend the release of goods into the market (Article 54). If the customs authorities have not been informed that legal proceedings have been initiated within ten days, they will release the goods provided that all other import or export conditions have been met (Article 55). Compensation may be paid to the importer, consignee or owner of the goods for injury caused by wrongful detention of goods (Article 56). Right of inspection and information Article 57 allows competent authorities to inform the right holder of the names and addresses of the consignor, the importer and the consignee and of the quantity of the goods in question. This would clearly assist the right holder in its further investigation of those involved in the counterfeiting and piracy of goods (see also Blakeney 1996b: 137) and would assist the right holder in bringing any civil action in such a case. Ex officio action Article 58 creates the opportunity for Members to permit the competent authorities to act upon their own initiative in suspending the release of goods where they have prima facie evidence that an intellectual property right is being infringed, subject to the opportunity for the importer to appeal, with public authorities and officials exempt from liability where action was taken in good faith. Remedies Under Article 59 the authorities may dispose of infringing goods and should not normally allow the re-exportation of counterfeit trademark goods in an unaltered state.

Content of the TRIPs Agreement 71 De minimis imports A de minimis principle applies whereby Members may exclude from these provisions small quantities of goods of a non-commercial nature contained in travellers’ personal luggage or sent in small consignments (Article 60).

Section 5: criminal procedures Under Article 61 Members are required to provide criminal proceedings and penalties in cases of wilful trademark counterfeiting or copying piracy on a commercial scale, with remedies including fines and imprisonment sufficient to act as a deterrent, together with the availability of remedies including seizure, forfeiture and destruction of the infringing goods.

PART IV: ACQUISITION AND MAINTENANCE OF INTELLECTUAL PROPERTY RIGHTS AND RELATED INTER PARTES PROCEDURES The registration and maintenance of intellectual property rights is dealt with in Article 62, which provides that Members must put in place reasonable procedures and formalities (Article 62.1), with rights granted or registered within a reasonable period of time so as to avoid unwarranted curtailment of the period of protection (Article 62.2).

PART V: DISPUTE PREVENTION AND SETTLEMENT Criticisms that the Paris and Berne conventions had lacked appropriate enforcement provisions (as discussed in Chapter 1) were addressed in Part V of the TRIPs Agreement. Furthermore, a suggestion by the European Communities that the Agreement should provide for the establishment of a Committee on Trade-Related Aspects of Intellectual Property Rights to improve transparency and facilitate dialogue was taken up in Part V with the establishment of the TRIPs Council. Transparency Article 63 of the TRIPs Agreement seeks to minimise disputes between Members by requiring transparency of laws, regulations and administrative practices and court decisions through the publication of relevant intellectual property instruments (Article 63.1). Under Article 63.2 each Member is required to report to the TRIPs Council (see below) on measures pertaining to the Agreement and, under Article 63.3, must be prepared to supply additional information on the extent to which intellectual property instruments meet TRIPs obligations in response to a written request from

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another Member, with the proviso that the withholding of information is permitted on grounds of public or proprietary interest (Article 63.4). The application of Article 63 is addressed in detail in the next chapter. Dispute settlement Despite proposals from developing countries that the TRIPs Agreement should restrict itself to setting out procedures for consultative and conciliatory means of dispute resolution, the final text of the Agreement in fact reflected the developing country viewpoint that the GATT/WTO dispute settlement procedure should be used in the context of TRIPs. As this is set out in the final text of the Agreement, when disputes between Members do arise in relation to the TRIPs Agreement, Article 64 provides that recourse will be made to the dispute settlement procedures set out in Articles XXII and XXIII of GATT 1994. A formalised structure system of dispute resolution is provided through the express application of dispute settlement procedures to intellectual property rights under Article 64 of the TRIPs Agreement, whereby TRIPs incorporates the provisions of Articles XXII and XXIII of the GATT, including the rules and procedures governing the settlement of disputes within the Understanding on Dispute Settlement.

PART VI: TRANSITIONAL ARRANGEMENTS Transitional arrangements In an attempt to alleviate some of the concerns of developing countries, which argued that they needed time to adjust their economies and legal systems to meet the requirements of the TRIPs Agreement (see also Doane 1994: 481), Articles 65 and 66 provide for a period of transition before the TRIPs Agreement comes into force and also allow Members to take measures against the abuse of intellectual property rights and clarifying the competence of GATT and WIPO in relation to intellectual property matters. Under Article 65.1, one year after the coming into force of the TRIPs Agreement, namely by 1 January 1996, developed countries were required to comply with the TRIPs Agreement. Article 65.2 allowed developing countries an additional four years from 1 January 1996 (until 1 January 2000) to bring their laws, regulations and practices into conformity with the new obligations, except in respect to the principles of national treatment (Article 3) and mostfavoured-nation status (Article 4). Crucially, in terms of offsetting the implications of the TRIPs Agreement for public health in developing countries, an additional five years for implementation is also allowed under Article 65.4 to enable developing countries to introduce patents in areas of technology, such as pharmaceutical products, not protected within the territory of that Member prior to the entry into force of the TRIPs Agreement (see also Reichman 1995: 353). Under the arrangements set out in Article 65, thirty-two developed

Content of the TRIPs Agreement 73 countries came forward to have national measures verified as being in accordance with the Agreement on 1 January 1996, one year after TRIPs entered into force. But problems arose because the TRIPs Agreement omitted to provide a definition or definitive list of which particular countries might constitute a ‘developed’ or a ‘developing’ country. Article 65.2 of the TRIPs Agreement merely states that any ‘developing country’ is entitled to delay application of the TRIPs Agreement for a further period of four years. The advantages of Members being able to avail themselves of ‘developing country’ status and delay implementation until 1 January 2000 are clear. Consequently, only the European Communities and its fifteen Member States (the European Communities, represented by the European Commission, have membership of the WTO) plus sixteen other WTO Members are classified as ‘developed countries’. It is difficult to imagine the circumstances in which countries including Israel, Hong Kong, Singapore South Korea and the Gulf states would designate themselves as ‘developing countries’ in other contexts.13 The pharmaceutical industry has been particularly critical of relatively advanced countries, such as Argentina and Turkey, which have taken advantage of developing country status transitional arrangements under the TRIPs Agreement (see Grubb 1999: 39). But such was the incentive structure provided by the possibility of delay under the TRIPs Agreement transitional arrangements that many countries chose to consider themselves developing countries in this case. There is even anecdotal evidence that, during the final stages of TRIPs negotiations, Canada attempted to designate itself a ‘developing country’ in order to avail itself of the year 2000 deadline, although ultimately it relented and agreed to take on the intellectual property commitments associated with developed nation status. Least-developed country members The only countries that are defined as an identifiable group for the purposes of transitional arrangements set out in the TRIPs Agreement are the ‘leastdeveloped countries’, for which transitional arrangements were even more generous. Article 66.1 allows countries on the United Nations list of leastdeveloped countries (UNCTAD 1994) ten years from the date of application of the TRIPs Agreement (i.e. 1 January 2005) to bring their laws, regulations and administrative practices into conformity. The UN list currently comprises forty-seven countries14 of which fifteen were WTO Members at the last count. Least-developed countries were further assisted with the inclusion of Article 66.2, which required developed countries to provide incentives to enterprises and institutions from their territories in order to promote and encourage transfer of technology to least-developed countries, with the aim of creating a sound and viable technological base. Developed countries and business interests, however, criticised Articles 65 and 66 of the Agreement on grounds that the transitional periods allowed were too generous, given that the vast majority of developing countries were already signatories to the Paris and Berne conventions. The transitional

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periods were considered particularly onerous for the pharmaceutical sector (see also Doane 1994: 481; Ryan 1998: 118) because, under Article 65.4 of the Agreement, the additional extension of five years granted before developing countries were required to provide patent protection in areas not previously covered by their patent laws most typically applied to pharmaceuticals and agrochemicals. The ‘non-backsliding’ (Otten and Wager 1996: 408) or ‘standstill’ clause contained in Article 65.5 also forbids countries from using the transitional period to reduce the level of intellectual property protection in a way that would result in a lesser degree of consistency with the requirements of the TRIPs Agreement. Technical cooperation In order to assist developing countries during the transitional period, Article 67 requires developed country Members to cooperate with developing country Members in the preparation of laws and regulations on the protection and enforcement of intellectual property rights, including support for setting up or reinforcing the relevant domestic offices and agencies, and the training of personnel, for the protection of intellectual property rights. The practical implications of this provision are subject to a discussion in Chapter 5.

PART VII: INSTITUTIONAL ARRANGEMENTS; FINAL PROVISIONS Council for Trade-Related Aspects of Intellectual Property Rights Article 68 provides for the establishment of a Council on Trade-Related Aspects of Intellectual Property Rights (the TRIPs Council) to monitor the operation of the Agreement, including monitoring Members’ compliance with their obligations. The TRIPs Council offers a continuing forum for dialogue between WTO Members on intellectual property matters and an informal mechanism for diffusing disputes before recourse is sought to the formal dispute settlement procedure (see also Ryan 1998: 115). Article 68 also requires the TRIPs Council to consult with the World Intellectual Property Organisation in order to establish appropriate cooperation arrangements with bodies of that Organisation (discussed in detail in Chapter 4). International cooperation In order to facilitate cooperation on combating trade in infringing goods, Article 69 sets out the declaratory statement that Members agree to cooperate with one another with a view to eliminating international trade in goods infringing intellectual property rights, with the practical commitment that

Content of the TRIPs Agreement 75 they will notify contact points in their national administrations and be ready to exchange information (particularly between customs authorities) for this purpose. Protecting existing subject matter Article 70 specifies that the TRIPs Agreement does not give rise to obligations in respect of acts that occurred before the date of application of the Agreement (Article 70.1), except where specifically set out in the TRIPs Agreement (Article 70.2), with no obligation to restore protection to subject matter that has fallen into the pubic domain on the date of application of the TRIPs Agreement (Article 70.3). For acts in which specific objects embodying protected subject matter that became infringing under legislation implemented by a Member in conforming with the TRIPs Agreement, the remedies available to the right holder may be limited so that the acts continue to be performed, but with payment of equitable remuneration made to the right holder (Article 70.4). TRIPs provisions relating to rental rights for phonographic works under Articles 11 and 14 need not be applied with retroactive effect for originals or copies purchased prior to the application of the Agreement (Article 70.5). Members are not required to ensure that the scope of patent protection provided for in Article 27.1, whereby patents shall be enjoyable without discrimination as to their field of technology, if governmental authorisation for use was given prior to the date of the TRIPs Agreement (Article 70.6). Where intellectual property rights are conditional upon registration and applications were pending on the date of application of the TRIPs Agreement, the authorisation of such applications was to be amended to take account of any additional protection granted by the TRIPs Agreement (Article 70.7). Despite claims by multinational pharmaceutical companies that pipeline protection was not included in the TRIPs Agreement, closer analysis of Article 70.8 does indicate the existence of a limited form of protection under the transitional arrangements for developing countries. Article 70.8 requires the immediate protection of pharmaceutical and agricultural chemical inventions through the establishment of a means by which patent applications relating to these types of inventions can be filed. This is the so-called ‘mailbox’ provision, whereby a Member country has to accept the filing of patent applications from 1 January 1995. Article 70.9 then allows for exclusive marketing rights for products where patent applications have been made under Article 70.8 for a period of five years prior to the granting or rejection of a product patent application and provided that a patent has been granted for the same product in another Member and marketing approval also obtained in another Member.

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Review and amendment Article 71.1 contains an in-built review mechanism for the TRIPs Agreement. It requires that the Council for TRIPs shall review the implementation of the Agreement after the end of the transitional period allowed for developing countries (namely after 1 January 2000) and then review implementation every two years thereafter. Article 71.1 also allows the Council to undertake reviews on its own initiative in the light of any relevant new developments that may warrant modification of the TRIPs Agreement. Article 71.2 sets the mechanism by which the TRIPs Agreement will be adjusted with the purpose of achieving higher levels of protection of intellectual property rights. In such instances, amendments are to be referred to the WTO Ministerial Conference on the basis of a consensus proposal from the TRIPs Council. No provisions exists for the introduction of lower levels of protection by this or any other mechanism of the TRIPs Agreement. Reservations Article 72 makes clear that no Member may take advantage of reservations in respect of any obligations under the TRIPs Agreement without first receiving the consent of other Members. Security exceptions Article 73 states that nothing in the TRIPs Agreement shall be construed to require a Member to provide any information, the disclosure of which it considers would be contrary to security interests; or to prevent any Member from taking action it considers necessary to protect security interests, fissionable materials or traffic in arms, ammunition or implements of war taken at time of war or national emergency; or to prevent any Member from taking action to pursue its obligations under the United Nations Charter for the maintenance of international peace and security.

Assessment Before the TRIPs Agreement, signatories to international intellectual property agreements were frequently able to avoid the full impact of international law by taking reservations on clauses in treaties or by not ratifying certain protocols or conventions (see Braithwaite and Drahos 2000: 63). Through the binding nature of the TRIPs Agreement, national derogations or failure to ratify were overcome by an unambiguous requirement that all Members of the WTO must implement a common and enlarged set of intellectual property standards that, by reference to the various earlier intellectual property conventions, incorporate a common set of internationally recognised standards of intellectual property protection into

Content of the TRIPs Agreement 77 the WTO framework. With clear-cut obligations enshrined in international law, effective monitoring and enforcement of the TRIPs Agreement became issues of crucial importance. The following chapters examine how such monitoring and enforcement procedures have worked in practice. As will become apparent, once again it is the role played by business interests that has proved significant in this process.

4

Implementing the TRIPs Agreement

In order to ensure that TRIPs Agreement commitments entered into by WTO Members are adhered to, national implementing legislation, administrative practice and judicial arrangements must stand up to scrutiny under a set of WTO institutional arrangements ‘designed to promote compliance’ (Braithwaite and Drahos 2000: 64). The WTO Council for TRIPs (hereafter referred to as the TRIPs Council) lies at the heart of these arrangements, with its role of ensuring transparency of implementation and enforcement measures through scrutiny and surveillance. This chapter begins with an examination of the role of the TRIPs Council. It does so while placing particular emphasis on the interplay between the Council and global corporate actors. It suggests that global corporate actors, the prime movers behind the TRIPs Agreement, also perform a key function in identifying countries that have failed to comply with its provisions. In this context, the chapter demonstrates that global corporate actors have a key role in identifying recalcitrant states and providing governments of WTO Members with evidence of non-compliance. As Reichman (1997: 352) puts it, many trade associations are prepared to ‘pursue an activist program’ in this regard. However, there are risks implicit in this close proximity of corporate actors to the scrutiny process. Reichman (1997: 334) has also warned that, ‘[i]f the Council for TRIPs allows itself to become primarily an instrument for top-down pressures exerted by strong transnational corporations, it could augment a spirit of resentment and resistance simmering in those developing countries whose entrepreneurs must increasingly seek to defend the public interest in free competition in an integrated world market’. But for corporate actors from developed countries that wish to complain about judicial or administrative inefficiencies that they encounter as rights holders in developing countries, there is also the requirement under Article 41(5) of the TRIPs Agreement that they demonstrate evidence of discrimination visà-vis local rights holders as opposed to genuine lack of resources or failure of local administrative or enforcement procedures to closely mirror those found in their home country (see also Reichman 1997: 350). Once WTO Members have undergone the TRIPs Council scrutiny process, the main instrument for ensuring effective implementation of the Agreement

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is the Dispute Settlement Procedure of the WTO. This chapter also suggests that it is global business interests that are playing a leading role in identifying recalcitrant states and bringing to the attention of their governments evidence of non-compliance in foreign markets with the intention of stimulating Dispute Settlement actions by one WTO Member against another. The overall theme of this chapter is therefore that it is the very same global corporate actors that played such a significant role in the formulation of the TRIPs Agreement that are now performing a leading role in monitoring national implementation and enforcement measures. It suggests that the Uruguay Round consensus among global corporate actors has continued through into the implementation phase of the TRIPs Agreement, with organisations representing the proprietary pharmaceutical industry being particularly prepared to cooperate on a global scale both in the exchange of information and by lobbying their respective governments in the United States and the European Communities for intervention via the TRIPs Council and the Dispute Settlement Procedure. Yet, while the Uruguay Round consensus among global corporate actors has continued through into the implementation phase of the TRIPs Agreement, the ability of global corporate actors to influence the international protection of intellectual property rights is now also constrained in two important respects. First, wider political and diplomatic imperatives have limited the ability of the United States and the European Communities to act in every instance of intellectual property infringement brought to its attention by corporate actors. Second, the Uruguay Round consensus among global corporate actors themselves is beginning to fragment as a result of the intensity of complaints raised by US industry via the USTR in both TRIPs Council and Dispute Settlement Procedure contexts, particularly in terms of copyright protection for software, film and television rights. Nevertheless, the chapter concludes that more fundamental problems of ensuring implementation of the TRIPs Agreement lie on the horizon in relation to intellectual property protection in developing countries and these problems are ultimately likely to eclipse disagreements that have begun to undermine the Uruguay Round consensus on the TRIPs Agreement among global business actors.

The TRIPs Council, scrutiny and surveillance The formal role of carrying out scrutiny and surveillance of national measures implementing the TRIPs Agreement,1 as set out in Article 63.2 of the TRIPs Agreement, lies with the TRIPs Council. Article 63.2 requires that WTO Members notify the TRIPs Council of the relevant national laws and regulations so that all other Members can review that country’s operation of the TRIPs Agreement and ask questions to ascertain whether notified legislation does in fact comply with obligations under the TRIPs Agreement.2 This coordination of scrutiny and surveillance work with a view to achieving transparency of national implementation measures is one of the main roles

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of the TRIPs Council.3 The emphasis on scrutiny and surveillance, especially during the transitional phases allowed for developing and least-developed countries, is designed to motivate Members into changing legislation and administrative procedures by putting pressure on them through the TRIPs Council in a ‘relatively non-confrontational’ (Reichman 1996: 368) mode that stops short of Dispute Settlement Panels. It is important to remember that differences in national legislation implementing the TRIPs Agreement do not themselves amount to a breach of the Agreement’s provisions (see also Dreier 1996: 276). The TRIPs Agreement sets down minimum standards. Within the minimum standards framework the Agreement is designed to accommodate diversity by allowing WTO Members to retain discretion as to the precise national provisions used to ensure effective protection of intellectual property rights. The scrutiny and surveillance role of the TRIPs Council is designed to play a key role in providing for the transparency of national arrangements necessary to ensure that diversity does not amount to lax standards. Once the transitional period for each category of countries has come to an end, each Member is required to submit two documents for scrutiny by the TRIPs Council. The first document is a notification attesting to how the national laws of that country comply with the TRIPs Agreement. This is known as an ‘Article 63.2 notification’.4 The second document is a checklist of issues on enforcement of intellectual property rights, which is a response by each Member to a questionnaire sent to it by the TRIPs Council in order to monitor enforcement.5 Once these documents have been submitted, that Member is subject to a scrutiny process, during which all WTO Members (not only those that have already reached the end of the transitional period) are able to ask additional questions to ascertain how the national laws of the country under scrutiny are in accordance with the Agreement.6 As with the negotiations for the TRIPs Agreement discussed in previous chapters, only WTO Members (not corporate actors, other organisations or individuals) may directly engage in this process. Adrian Otten, Director of the Intellectual Property and Investment Division of the WTO Secretariat, has identified five categories of benefits that arise from the TRIPs Council scrutiny process: 1 2 3 4 5

the effect of encouraging Members to take greater care in drafting legislation; clearing up misunderstandings otherwise likely to lead to disputes (termed the ‘mediatory’ role by Reichman 1997: 335); identification of deficiencies in notified laws and regulations; identification of deficiencies in interpretation of TRIPs obligations; and providing information about how trading partners are implementing the TRIPs Agreement (Otten 1998: 525). But the scrutiny procedure, designed to facilitate the transparency of

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national provisions, nonetheless has the potential to create a substantial logjam of work for the TRIPs Council. Bearing in mind that, for the thirtytwo developed countries that offered themselves up for scrutiny in 1996, over 16,000 separate questions were posed by other TRIPs Council Members, there is significant potential for questions posed of the more than ninety developing countries for whom transitional arrangements ended in 2000 to create an administrative and bureaucratic jungle from which the TRIPs Council would take years to emerge. Bureaucratic problems may well be exacerbated by the fact that there is no filtering mechanism to prevent duplication, with the same question being asked by more than one Member. During the pre-2000 transitional period, one method of preventing the build-up of work for the TRIPs Council was seen to be encouraging developing countries to come forward early for scrutiny, so enabling them to ‘run in’ (Otten and Wager 1996: 409; Braithwaite and Drahos 2000: 63) their new intellectual property and enforcement regimes prior to becoming internationally liable for their performance. Particular pressure was exerted on Hong Kong and Singapore in this respect, with the argument made that submitting themselves for scrutiny early would then allow those countries greater access to the advice and expertise of the international community in order to ensure that they made the necessary adjustments prior to the end of the transitional period. In the event, however, no developing countries chose to come forward early for TRIPs Council scrutiny. The reason was that they were reluctant to jeopardise their developing country status in any future WTO Agreements. Despite the widely held view in the European Communities that there are in reality only twenty or thirty developing countries of sufficient commercial importance as to require scrutiny by the TRIPs Council as a matter of priority, the view of the policy community in the United States remains far more pessimistic. In the United States, there are concerns among corporate actors that a ‘Millennium timebomb’ is waiting to explode now that the transitional period for developing countries has come to an end. These concerns are based on the belief that developing countries are deliberately prevaricating in taking steps to introduce national implementing legislation. More pertinently, these fears have been directed towards a distinction based on an acknowledgement that while appropriate legislation is generally now on the statute books in developing countries, practical administrative measures to ensure protection of intellectual property rights locally have yet to be put in place. The problem for the TRIPs Council in undertaking scrutiny of developing country enforcement of intellectual property rights therefore remains a very real one of bureaucratic complexity and administrative burden. The workload of the TRIPs Council is further exacerbated by the fact that countries that have joined the WTO since the completion of the Uruguay Round are not eligible to avail themselves of the transitional periods, whatever their status as developing or least-developed countries. In a process akin to new Member States of the European Communities taking on the full acquis

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communautaire from day one of their membership, new WTO Members must likewise immediately demonstrate enforcement of the TRIPs Agreement. In this respect, it is not sufficient for a country to demonstrate that it has good intellectual property laws on its statute books. Severe problems of piracy and counterfeiting, often controlled by organised crime syndicates, present the TRIPs Council with clear shortcomings in the practice of intellectual property protection that cannot be readily addressed by means of the purely administrative powers at its disposal. It is the shortcomings of administrative practice in developing countries that can be most effectively addressed by means of advice and training of local officials. The potential for assistance of this type to improve implementation problems in developing countries is discussed in Chapter 6, with particular reference given to the role of global corporate actors in promoting best practice. With regard to the thirty-two developed countries that put themselves forward for TRIPs Council scrutiny in the first wave, there have been few substantive issues of difficulty in implementing the TRIPs Agreement. Greater problems are anticipated when, at the end of transitional periods for developing and least-developed countries, they too are required to demonstrate implementation.7 This discrepancy between the likelihood of implementation problems in developed and developing countries arises because the TRIPs Agreement more closely reflects existing law and practice in developed nations than it does the aspirations and preferences of the developing world. Yet the administrative burden placed on the TRIPs Council in relation to developed country scrutiny has itself not been insignificant. The fact that almost half of the questions put to the UK in the TRIPs Council scrutiny process came from one WTO Member – the United States – offers some indication why this has been the case. The reason, according to business representatives and policy-makers in the United States who were interviewed for this book, for the high number of questions asked by the US delegation to the TRIPs Council is that to allow an apparent lack of appropriate enforcement of the TRIPs Agreement by the UK to go unchecked would send the wrong message to developing countries that lax enforcement standards are acceptable. US business has therefore urged continued vigilance on the part of the USTR as a way to keep up pressure for effective enforcement of global intellectual property rights and ensure that the TRIPs Agreement, for which they fought so long and hard, remains something more than just an empty shell. Yet the potential for ongoing bureaucratic complexity in the TRIPs Council scrutiny process can be seen precisely in the nature of the some of the fourteen questions posed by the United States of the United Kingdom. For instance, the United States asked the United Kingdom: ‘Please explain whether procedures, permissible under Article 51 of the TRIPs Agreement, are available to stop the export of goods suspected of infringing copyright and/or trademarks’ and ‘Article 54 requires that the importer and the applicant be notified promptly of the suspension or release of goods. Please specify the

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period within which the competent authority [is required] to issue a notice that the release of goods has been suspended’. The respective responses given by the UK8 that, ‘As set out in the responses from the United Kingdom to Questions 15 and 16 of the “Checklist” …’ and ‘This question has been adequately answered in the United Kingdom Responses to Questions 15–17 of the “Checklist” …’ indicate that there is great potential for repetition of information that has already been provided if TRIPs Council Members choose to be overly rigorous or pedantic in the volume and nature of the questions that they choose to pose. That is not to say, however, that the European Communities have not also been vigilant in monitoring compliance with the TRIPs Agreement in the territories of other WTO Members. A number of complaints raised by the European Communities before the WTO Dispute Settlement Procedure are discussed later in this chapter. There have not, however, been many instances in which Members of the TRIPs Council have been able to criticise the United States for its provisions implementing the TRIPs Agreement, despite the fact that US measures have been portrayed as ‘inadequate’ because of its reluctance to abandon a number of long-standing discriminatory provisions in domestic law (see Wegner 1996: 381). But the fact that the United States has not faced sustained criticism over its implementation of the TRIPs Agreement is perhaps less surprising given that the TRIPs Agreement had its origins so firmly rooted in proposals initiated by the United States during the Uruguay Round, with the effect that the text of the final agreement already closely mirrored existing law and policy in that country.9

Global corporate actors, scrutiny and surveillance Attitudes in the European Communities with regard to ensuring effective implementation of the TRIPs Agreement are, on the face of it, similar to those in the United States. The major difference is that corporate sponsorship of politicians plays such an overt role in ensuring direct industry influence of US trade policy, whereas in the European Communities corporate actors must use their resources to target a wider range of national and EC institutions. The diffuse nature of national and European industry federations often makes difficult the establishment of a common EC industry viewpoint at anything less than the lowest common denominator. From an institutional point of view, the European Commission relies on industry to provide the main source of information on infringement of intellectual property rights in particular countries. The Commission takes on board industry views both on an ad hoc basis and through consultative meetings with representatives of the business community. In July 1998, for instance, the Commission met with representatives of European corporate actors to hear their concerns about TRIPs enforcement problems, the builtin agenda of TRIPs provisions where progress is envisaged by the TRIPs Council, and intellectual property issues that business considers necessary

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for inclusion in any future WTO round of trade negotiations. Most importantly, the European Commission has been receptive to pharmaceutical industry views in its decision to enter complaints and engage in Dispute Settlement Procedures against both India and Canada. These disputes are discussed later in the chapter. Information provided by EC businesses operating in foreign markets is augmented by reports on legislative and administrative arrangements provided by the Commission delegations in these countries but, as regards the actual situation on the ground, it is business that provides the main source of information on which the Commission formulates its perspectives on the shortcomings of national arrangements to implement the TRIPs Agreement. These perspectives are compiled as a database by the Directorate General for External Affairs of the European Commission and offer EC policy-makers an important source of information about TRIPs implementation standards elsewhere in the world. The view of European Commission officials is that the perspective of industry and government in the European Communities differs from that in the United States. Global corporate actors based in the United States are, in the view of the European Commission, less comfortable than their European counterparts with national laws in other jurisdictions that substantially differ from their own. Because the nature of the European integration process over the past fifty years has so fundamentally dealt with adapting to and assimilating legal instruments derived from supranational institutions, both government and business in the European Communities have greater experience of accommodating the diversity in public policy that they encounter in different markets. This is an important cultural difference between business and government attitudes towards the TRIPs Agreement in the European Communities and their counterparts in the United States. It is a difference of perspective on the role and significance of transnational legal instruments that informs attitudes towards the TRIPs Agreement and forms a key distinction between perspectives on enforcement of the TRIPs Agreement on either side of the Atlantic. Put simply, there is greater experience of adapting to changing legal environments in the European Communities than exists among their counterparts in business and government in the United States. As a result of this difference, the potential for a divergence of views and fragmentation of the transatlantic consensus achieved between the United States and European Communities during the Uruguay Round negotiations now hangs over the process of implementing the Agreement. Policy-makers in the European Communities have identified two sets of issues that are likely to lead to problems in the enforcement of the TRIPs Agreement. First, they predict arguments that national implementing legislation does not follow the spirit of the TRIPs Agreement and, second, they predict that US business in particular will not be satisfied with measures taken in other countries to implement the TRIPs Agreement. The latter is

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likely to prove particularly problematic if it is an accurate reflection of US business attitudes towards enforcement, the prediction itself being based on the presumption that US firms are less used to operating in foreign jurisdictions than their EC counterparts, and want to have conditions more closely resembling their own domestic legislation. More worrying still for the future of the US–EC Uruguay Round consensus on intellectual property protection are concerns expressed by elements in the European business community that US industry will try to ensure not only that there is a level playing field for international intellectual property law, but that intellectual property standards in other countries will be on terms favourable to global corporate actors based in the United States. This is not necessarily a means for US firms to gain competitive advantage, but rather an expectation on the part of US business that they themselves must be given the appropriate legal environment in which to enforce corporate intellectual property rights in accordance with national administrative and judicial procedures. The role of the Business Software Alliance (BSA), for example, has been identified as a significant factor in mobilising US government officials to enter into the consultations with Sweden concerning the latter’s failure to fulfil obligations under the TRIPs Agreement (the US complaint against Sweden is discussed in greater detail later in this chapter). In comparison with the relatively proactive approach taken by US business in ensuring that national implementing measures in other countries create a receptive legal environment for future local enforcement actions by the companies themselves, European business has generally been less well informed on the significance of issues raised during the TRIPs Agreement implementation process. The reason for the relatively low profile of EC business in ensuring that acceptable measures have been put in place by countries implementing the TRIPs Agreement is a purely practical one: there are simply fewer experts on the TRIPs Agreement in Europe than there are in the United States and furthermore, from a business perspective, there are fewer qualified patent attorneys in Europe, generally earning smaller salaries than their US counterparts. This imbalance between the United States and Europe is turned on its head when one looks at public sector expertise and resources. The European Commission, augmented on the TRIPs Council by national representatives of the fifteen EC Member States, provides the most active delegation in Geneva. The Office of the United States Trade Representative, on the other hand, has few resources by comparison and so has little choice but to rely on US business advice and expertise to provide information that is used as the main basis of Special 301 decisions and complaints made to the WTO. Since the fifteen Member States in practice operate through an arrangement of ‘joint competence’ with the European Communities on WTO matters (a legal principle discussed later in this chapter), national delegations adopt a strategy of allowing the European Communities to take the lead in the TRIPs Council and, in this respect, the European Commission representative to the TRIPs Council speaks on behalf

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of all fifteen Member States, who will normally have adopted a common position and coordinated their response prior to the TRIPs Council meeting. This arrangement has profound implications for the ways in which corporate actors in Europe seek to influence public policy decisions on implementation of the TRIPs Agreement. For corporate actors, the need to approach national officials who, in turn, seek to influence EC policy decisions, creates an additional level of complexity. In the United Kingdom, for instance, the role of the European Commission in the scrutiny process is underwritten at a national level by the Patent Office, an agency of the UK government. The UK delegation to the TRIPs Council is provided by the Patent Office, which takes account of the views of UK business via the Standing Committee on Industrial Property (SACIP). SACIP comprises seventeen representatives of the legal profession, industry and consumer groups, intellectual property interests and academia,10 with a larger number of associate members also representing industry views. The main advantage of SACIP is that its representatives from the business community provide the UK delegation to the TRIPs Council with practical knowledge of local market and legal conditions in other countries that can then be used to demonstrate the extent of inadequacies in intellectual property protection experienced by UK firms operating abroad. From a UK government perspective, SACIP also plays an important role because information provided by industry is then used: first, to brief senior government ministers embarking on overseas trade delegations so that concerns about intellectual property rights can be raised with the appropriate foreign officials; second, to exert pressure through UK trade missions in countries about which concerns have been raised; third, so issues can be raised through international forums such as the TRIPs Council; and, fourth, so that bilateral contacts can be made between lower officials within the respective governments with a view to resolving potential problems as early as possible. But for UK business, although the Patent Office is generally thought of as being sympathetic to industry and despite the potential benefits of the relationship between a formal standing committee such as SACIP and representations made to the TRIPs Council by the Patent Office representatives on behalf of UK business, two problems with the current system have been identified by corporate actors. First, the reliance on a formalised standing committee structure as a mechanism for receiving the views of industry is in some cases thought to be unnecessarily inflexible by the companies in the very industries whose concerns it is designed to hear. This inflexibility is seen as particularly noticeable in comparison to the somewhat greater flexibility offered in the United States, where leading companies are able to make a direct input into the work of the USTR, often simply by making a telephone call directly to the appropriate USTR official. Second, several respondents interviewed for this book expressed the view that SACIP exists primarily as a route for the Patent Office to collect comments on policy proposals that it itself initiates, rather that being

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responsive to the views generated by UK companies. Rather than rely on SACIP and Patent Office influence, large UK companies often prefer instead to make their views known directly to the EC delegation to the TRIPs Council via their European-level trade associations, such as the European Federation of Pharmaceutical Industry Associations (EFPIA). In industries with a global reach, such as the proprietary pharmaceutical sector, it is even common for businesses to bypass the European-level representation provided by an organisation such as EFPIA,11 the European Communities and the Member State delegations to the TRIPs Council altogether, going instead directly to the USTR via global networks such as the grouping of the heads of patent offices of the worldwide proprietary pharmaceutical companies, Interpat. Although Interpat has rarely been afforded the attention that it deserves, its role is of great significance. Originally set up in the early 1970s, Interpat has operated without a permanent secretariat. Instead, it functions through a series of working groups, each chaired by a senior patent official from one of the participating companies. In this way, Interpat is run by and on behalf of the heads of patent departments of the leading proprietary pharmaceutical companies12 worldwide as a single-issue organisation unsullied by the workload often associated with the need to take on board a wider range of corporate issues outside the direct sphere of patent protection. Interpat’s sole purpose is to provide ‘an international forum for fostering improvements in intellectual property law with respect to pharmaceuticals’ (Gorlin 1999: 1). Although rarely publicised, in the post-Uruguay Round era, it is Interpat that has undertaken much of the crucial scrutiny and surveillance work on behalf of the global proprietary pharmaceutical industry. Since the global proprietary pharmaceutical industry is largely US-based, numerically the main influence on Interpat comes from US companies.13 The role of Interpat (and other groups representing business interests) in initiating complaints made through the WTO Dispute Settlement Procedure is discussed below.

Dispute Settlement Procedure Although WTO Members have encountered relatively few difficulties in implementing the TRIPs Agreement in relation to the legislative measures necessary to undergo scrutiny by the TRIPs Council, problems have arisen in relation to putting those measures into practice (see also Dreier 1996: 271), that is to say the achievement of ‘performance requirements’ (Otten and Wager 1996: 403) in relation to the workings of procedures and remedies required by the TRIPs Agreement and set out in national law. It is in this respect that ‘enforcing the enforcement procedures of the TRIPs Agreement’ (Reichman 1997: 276) through the Dispute Settlement Procedures of the WTO becomes so important. It is widely considered a positive feature of the Uruguay Round of GATT that a considerably strengthened version of the earlier Dispute Settlement Procedure emerged from the negotiations (see Cooper Dreyfus and Lowenfeld 1997: 268). With the exception of the

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requirement for notification and scrutiny under Article 63, the TRIPs Agreement does not contain explicit provisions in relation to the settlement of disputes. Instead, Article 64.1 refers disputes under the TRIPs Agreement to general WTO provisions as set out in the Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU) of 15 April 1994.14 One of the acknowledged strengths of the Dispute Settlement Procedure is that it encourages bilateral ‘out of court’ settlement of disputes (Otten 1998: 527). The DSU procedures begin with mutual consultation and attempts to achieve conciliation (see also Dörmer 2000: 5). If a dispute cannot be resolved through consultations, the complainant Member may then request that the Dispute Settlement Body (DSB) establish a Panel to resolve the dispute (see also Lee and von Lewinski 1996). The WTO Dispute Settlement Procedure allows for the creation of three- or five-person Dispute Settlement Panels, comprising trade experts, to reach decisions on whether a Member has violated the TRIPs Agreement in terms of measures taken to enforce the intellectual property protection. The Panel Procedure benefits from the binding and automatic nature of Panel findings, with a speedy resolution ensured by the requirement that the Panel make its report within six months. Dispute Settlement Panel Decisions can be appealed, on matters of law but not fact, to a standing seven-member Appellate Body. Decisions of a Panel or Appellate Body are binding unless every Member, including the complainant, agrees to reject them, a process known as ‘reverse consensus’ (see also Dörmer 2000: 6), which turns on its head past GATT practice by eliminating the de facto veto that existed under the pre-1994 Dispute Settlement Procedure (see also Weissman 1996: 1095). A Member that is found by a Panel or Appellate Body to be in contravention of the TRIPs Agreement must revise its national provisions to bring them in line with the Panel’s interpretation. If the recommendations of the Panel are not implemented within a reasonable time limit, the WTO Dispute Settlement Body may authorise the complainant Member to suspend trade concessions or other WTO obligations to the Member that has been found to be in breach (see also Grubb 1999: 39). The effectiveness of the Dispute Settlement Procedure is enhanced by provision for an aggrieved Member to withdraw from the offending Member concessions in the same area of trade or, if this is not practicable or effective, in another trade area (see also Grubb 1999: 39; Otten and Wager 1999: 412). From the perspective of developing countries, however, this threat of ‘crosssectoral retaliation’ (Weissman 1996: 1095) is of great concern. When a Dispute Settlement Panel finds in favour of the complainant, that Member and any third parties to the dispute can impose trade sanctions across a range of economic sectors, regardless of the sector in which the original infringement of the TRIPs Agreement had occurred. In much the same way as Special 301 has proved so successful as coercing countries to amend their intellectual property law in bilateral relations between the United States and its trading partners, the WTO Dispute Settlement Procedure now holds out the prospect of trade sanctions with equivalence in terms of cross-sectoral scope being

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linked to enforcement of the TRIPs Agreement. Sanctions are intended, however, to be very much a last resort (according to Otten and Wager 1999: 412) and thus far the mere threat has, in many instances, been sufficient to elicit improvements to national intellectual property law.

Global corporate actors and the Dispute Settlement Procedure Having recourse to the Dispute Settlement Procedure of the WTO as a means to ensure effective implementation of the TRIPs Agreement has considerable benefits. However, from the perspective of business, the Dispute Settlement Procedures have the drawback that if a company or individual is aggrieved because of a failure to enforce the TRIPs Agreement in a particular foreign market, that company does not have locus standi, namely a right to bring an action before the WTO. Although it is corporate intellectual property rights that are likely to be infringed if inadequate national intellectual property arrangements are in place, disputes are ‘mediated’ at the WTO through ‘the agency of inter-governmental diplomacy’ (May 2000: 72). Crucially, to have their complaints heard before the WTO, corporate actors face the constraint that they must petition their own national governments, as Members of the WTO, to bring an action through the Dispute Settlement Procedure on their behalf (see also Bello 1997: 357; Grubb 1999: 39; Macdonald-Brown and Ferera 1998: 70). The implication of excluding a private right of action under the TRIPs Agreement is that decisions on whether to proceed with complaints under the Dispute Settlement Procedure will ultimately be made not by global corporate actors but by government officials, such as the USTR in the United States. In the European Communities, the situation is further complicated by the need for the European Commission to achieve a consensus among all fifteen Member States before pursuing a complaint against another WTO Member. The practical effect of this arrangement is that, whereas in the United States businesses must petition the US government and convince the USTR that it should take up a complaint on its behalf, in the European Communities the obstacles to be overcome by businesses are multiplied by the need to petition the EC Member States individually in addition to convincing the European Commission of the seriousness of its complaint. Where a complaint is brought by one Member State against another, the Commission will mediate and seek resolution of the dispute, in effect coordinating TRIPs compliance throughout the European Communities. Where the complaint is brought by an EC Member State against a third country (i.e. a non-EC country), the principle of joint competence that exists between the European Communities and its Member States comes into play. Joint competence was established as a legal principle by the European Court of Justice in its Opinion 1/94 of 15 November 1994.15 In that Opinion the Court affirmed the exclusive competence of the Community for the

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conclusion of the TRIPs Agreement as regards the border measures contained in Section 4 of Part III of TRIPs, namely those provisions concerning the prohibition of the release for free circulation of counterfeit goods to be determined by the customs authorities at the European Communities’ external borders. The Court’s Opinion affirmed that this issue is to be considered part of the joint trade policy within the meaning of Article 113 of the EC Treaty.16 Despite the claim by the Commission that it was exclusively competent in other aspects of the TRIPs Agreement, the Court did not recognise exclusive EC competence beyond this single issue. But neither did the Court accept the argument of Member States that enforcement of the TRIPs Agreement fell within the exclusive competence of individual Member States. Instead, the Court chose to develop the notion of joint competence, divided between the Community and the Member States, for enforcement of the TRIPs Agreement beyond the issue of controls at EC external borders. In practice, joint competence translates into a practical requirement that each party in the EC works on the basis of consensus decision-making. To achieve consensus, regular meetings are held between the Commission and Member State representatives in Brussels, augmented by formal meetings hosted by the EC permanent representation to the WTO in Geneva. On the basis of this consensus-building exercise, it is the Commission that takes the lead in the TRIPs Council on behalf of the Member States, utilising its mandate from the Member States to speak with a voice for all fifteen EC countries and, during the Article 63.2 TRIPs notification proceedings, coordinating the responses of all EC Member States so that particular countries are not isolated from the positions taken by other EC Member States. The Article 113 procedure, in principle at least, offers a mechanism for trade sanctions to be imposed upon recalcitrant trading partners in much the same way as Special 301 has operated in the United States. Within the Article 113 Committee, EC Member States have a procedural right to ask the Commission to investigate allegations of inadequate intellectual property protection in non-Member States by virtue of the EC Trade Barriers Regulation 2641/84.17 The Commission must then make a decision whether or not there are sufficient grounds for identifying a violation of the Regulation. 18 If such grounds can be identified, a procedural right is established as to action that can be taken against that country, normally in the form of the suspension of trade privileges with the European Communities. But there are inherent problems in the Article 113 system derived from the fact that unanimity among the fifteen Member States is required before the Committee can decide to take action in the form of trade sanctions against a country deemed to provide inadequate protection of intellectual property rights. The political reality of requiring unanimity before action can be taken by the Article 113 Committee is that at any given moment it is likely that at least one Member State will be engaged in a crucial stage of bilateral political

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dialogue with, or a diplomatic visit to, a country that will lead it to step back from supporting the sanctioning of action by the Article 113 Committee. In order to bypass this institutional constraint, in reality, rather than engage in the Article 113 procedure, it is more common for representatives of the business community in the European Communities to come to the Commission on an informal basis with evidence of the adverse market conditions in a particular country. The Commission will then seek to exert pressure on that country to reform its national provision by diplomatic means, without recourse to the Trade Barriers Regulation. In the United States the formal route for corporate actors to influence government on TRIPs implementation is via the network of eighteen Industry Specific Advisory Committees (ISACs) and the Industry Functional Advisory Committee (IFAC). In practice, however, US business perceives the informal route as being the more effective means of achieving its objectives vis-à-vis the USTR. In the vast majority of cases, where the priorities of the USTR are ‘congruent’ (Ryan 1998: 87) with those of groups representing US industry, ‘public–private cooperation’ (Bello 1997: 357) characterises the relationship between business and government in the United States. This relationship is symbiotic: the absence of any private right of corporate actors to be heard as parties in complaints raised under the WTO Dispute Settlement Procedure ensures that business interests rely on government sponsorship of their cause while, conversely, corporate actors play a key role in providing information and advice on implementation and enforcement of the TRIPs Agreement in the territories of other WTO Members to an underresourced and over-stretched USTR. Companies with global interests continually feed information to organisations such as the IIPA and IPC about intellectual property infringements in foreign markets (see also Braithwaite and Drahos 2000: 87), which in turn present recommendations to the USTR. The USTR then undertakes an inter-agency review of the issues (see also Bello 1997: 357). Complaints raised by business interests are then articulated by the USTR through the Special 301 process, TRIPs Council scrutiny procedures and through the WTO Dispute Settlement Procedure. The role of corporate actors and their representative business groups in monitoring implementation of TRIPs provisions – and alerting the USTR as to the need to consider both Special 301 measures and complaints under the WTO Dispute Settlement Procedure against recalcitrant states – is therefore crucial to the whole implementation process.19 In the wake of their role in the formulation of the TRIPs Agreement, it is the single-issue groups representing corporate intellectual property interests, particularly the IPC and the IIPA, that have now re-invented themselves as guardians of TRIPs implementation. Despite the decision of some companies not to remain members of the IPC once the core objectives of securing the TRIPs Agreement had been achieved on the basis that this no longer represents good value for money,20 the redefinition of the roles played by the single-issue groups has proved generally successful in maintaining the

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momentum of membership involvement and the USTR still values the work of these single-issue interest groups.21 In addition to the IPC and IIPA, which provide representation for the US patent and copyright industries respectively, the International Trademark Association (INTA) operates a ‘TRIPs 2000 Subcommittee’. The INTA Subcommittee has, for example, produced a detailed assessment of the level of compliance with the TRIPs Agreement in over sixty countries (International Trade Association 1999), finding that enforcement remains problematic in many developing countries. It is through their networks of local branches, agents and representatives worldwide that business interests represented by organisations such as the IPC, IIPA and INTA provide the USTR with a detailed accurate picture of intellectual property standards in their respective markets. Copyright-reliant industries such as the phonographic and video movie industries represented by the IIPA, in which the cost of reproducing high-quality pirated copies is relatively low, have been particularly ‘aggressive’ (Ryan 1998: 155) in enforcing their intellectual property rights through global networks of surveillance, public awareness campaigns and pressure exerted on the governments of recalcitrant WTO Members and via complaints to the USTR, with the associated threat of Special 301 actions. Furthermore, once WTO Member countries have put in place the required measures to ensure effective enforcement, the ‘unstated inference’ (Reichman 1996: 369) is that private domestic enforcement actions, brought by rights holders under domestic law, will augment the top-down role of the TRIPs Council and reduce the need for Dispute Settlement actions. Civil litigation brought by businesses operating in local markets has the potential to assist in ensuring effective enforcement of intellectual property protection. Yet doubts remain whether this system will work effectively in practice given that, in the majority of countries, intellectual property actions are dealt with by non-specialist district courts that are often alleged to be unsympathetic to foreign owners of intellectual property rights (see Waters 1996: 767). Global corporate actors, particularly proprietary pharmaceutical manufacturers, also operate an effective network of global surveillance through ongoing relationships with local firms of patent attorneys. It is these local agents who are well placed to provide multinational companies with information about changes to domestic law. However, the value of this information resource should not be overstated. Information provided by local agents is of variable quality and it is often the case that the patent attorneys who are best placed to know about changes to domestic intellectual property law are those attached to large legal firms that conduct general litigation work as opposed to those which concentrate simply upon patent application procedures locally. Global surveillance of copyright infringement suffered by US owners is coordinated by the IIPA, which submits a detailed annual report on copyright infringement and piracy worldwide to the USTR by way of background information and recommendations prior to the USTR’s decisions on initiating

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the Special 301 procedure or complaints to the WTO Dispute Settlement Body. As it did in the pre-TRIPs international legal landscape, the IIPA continues to highlight piracy losses on both a regional and a global basis, emphasising industry variations and the economic impact of losses (see, for example, IIPA 1998; Smith 1996: 559). The IIPA is assisted in the preparation of its reports by a network of US trade associations whose member companies, operating through branches, subsidiaries and agents in local markets, are the actors best placed to provide an accurate (if unverified) account of local trading conditions and intellectual property infringements. The motion picture, music, book and software industries are particularly active in this respect (see also Ryan 1998: 71). The IIPA collates information it receives from its member trade associations and undertakes lobbying activities on their behalf with the aid of estimates of losses to US industry abroad. In 1998 the IIPA estimated that losses to the US economy in the previous year as a result of copyright infringement amounted to almost $10.8 billion,22 of which the motion picture industry estimated losses of $1,584 million; the sound recordings and music industry $1,321.8 million; computer programs and business applications $3,964.4 million; games and entertainment software $3,249.2 million; and book publishing $664.1 million.23 A similar report is prepared annually by the PhRMA, which each year produces a country-by-country assessment for the USTR detailing intellectual property infringement abroad that is likely to lead to losses to the US proprietary pharmaceutical industry.24 In 1998, for example, the PhRMA estimated that annual losses in Argentina and India due to the absence of patent protection for pharmaceutical products amounted to approximately $500 million in each country.25 On receipt of complaints relating to intellectual property infringement, the role that the USTR engages in to manage its relations with corporate actors is very much that of an institutional ‘gatekeeper’ (Bello 1997: 359). As in the case of the European Communities, US policy-makers are often constrained by wider issues of political diplomacy when considering whether to act on complaints by private business interests regarding TRIPs Agreement implementation problems. Judith Bello, for instance (who served as General Counsel and Deputy General Counsel at the USTR between 1985 and 1989) has acknowledged that security issues and foreign policy matters may well influence the US administration’s decision on whether or not to bring a complaint against another WTO Member under the Dispute Settlement Procedure (Bello 1997: 357). The significance of international politics in determining whether or not WTO Members will be the subject of US complaints under the Dispute Settlement Procedure was corroborated during the research for this book. US business representatives complained that US policy towards developing countries on compliance with the TRIPs Agreement is ‘blunted’ by the fact that the USTR is not the only agency in the US administration with an interest in, for example, South America and South Africa. The USTR has been slow

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to take action against Argentina26 for inadequate patent protection of pharmaceutical products and against South Africa for measures allowing parallel imports. This reluctance to act on the part of the USTR has been attributed to the wider diplomatic significance of a US strategic ally in South America (in the case of Argentina) and the rebuilding of political institutions in South Africa following the ending of apartheid. Turkey is also described as being ‘untouchable’ by US business interests, because its value as a member of NATO far outweighs the inadequacy of measures taken to achieve effective intellectual property protection. Within the Federal government administration, the formal mechanism for coordinating intellectual policy is a subcommittee of the Trade Policy Staff Committee (TPSC). This is chaired by the Director of Intellectual Property at the USTR and comprises representatives of the Treasury, Commerce, State and Labor Departments. In theory, tensions between competing departmental interests in relation to intellectual property protection are dealt with by the TPSC, the Trade Policy Review Group (TPRG), chaired by the Deputy USTR, or by the National Economic Council. However, the frustration of US business representatives is that, in practice, the USTR is perceived to be a relatively weak institutional actor in comparison with the State Department and the Defense Department, lacking the political constituency to limit the intervention of other parts of the administration on trade issues. The overall result of this complex web of security issues, diplomatic imperatives and inter-departmental priorities is that the decision not to act on the basis of complaints from business relating to infringement of intellectual property rights will, on occasion, win out over US corporate interests. If the US administration does agree to bring a case before the WTO Dispute Settlement Procedure, corporate interests and the USTR-led interagency government team (Bello 1997: 357) then cooperate closely in drafting the request for consultations with the WTO Member in question and, if those informal consultations do not adequately rectify the problem, in the formulation of the complaint made by the US delegation to the WTO at meetings of the Dispute Settlement Body. In practice, although the USTR will take the lead in representing the United States before a Panel in the WTO Dispute Settlement Procedure, it will do so only after closely consulting with corporate interests at home, who in turn have generated the original complaint and are well placed to provide technical expertise and specialist knowledge throughout the course of the WTO Dispute Settlement Panel’s deliberations (see also Bello 1997: 361). Although few disputes have so far been initiated in relation to the TRIPs Agreement, with only four Panels so far concluding their deliberations in instances of complaints relating to non-compliance with Agreement obligations, the significance of the dispute settlement mechanism as a means of ensuring that Members provide effective enforcement is already clear. It offers a far more effective mechanism than that available under the previous

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GATT 1947 provisions (see Gutowski 1999: 743). The remainder of this chapter examines WTO disputes relating to the TRIPs Agreement and indicates the significant role played by global corporate actors in initiating and contributing to the outcome of these activities.

Copyright protection of sound recordings The first WTO dispute specifically27 arising from an alleged failure to implement provisions of the TRIPs Agreement was the US complaint of 9 February 1996 that Japanese copyright law did not comply with the requirements of Article 14 of the TRIPs Agreement in respect of protection of sound recordings.28 The music recording industry, represented by the International Federation of Phonographic Industries (IFPI) and the Recording Industry Association of America (RIAA), was at the forefront of complaints that, as Japan only provided retroactive copyright protection for sound recordings since copyright law was amended in 1971, it had failed to meet its obligations under Article 18 of the Berne Convention, as adopted in Article 14.6 of the TRIPs Agreement. Through the IFPI and RIAA, the global music recording industry was able to put its case to the US Trade Representative. However, the industry also adopted a dual strategy of putting its case to US and EC policy-makers concurrently, with equivalent complaints being raised by the IFPI in Europe. As a result, on 6 May 1996 the European Communities and their Member States also requested consultations with Japan.29 In the light of consultations, the Japanese government indicated that it was willing to amend its copyright law to provide for protection of sound recordings for the full term of fifty years, as provided for in the TRIPs Agreement (see also Geuze and Wager 1999: 376; Giust 1997: 91) and, on 24 January 1997, the United States and Japan informed the Dispute Settlement Body of the WTO that they had reached a mutually acceptable solution to the dispute.30 On 7 November 1997 the European Communities and Japan also notified a mutually agreed result to the consultations.31 Japan notified the TRIPs Council of the appropriate amendments to its copyright law on 25 August 1997.32 The resolution of this dispute has, in some respects, been seen as setting the pattern of using the WTO Dispute Settlement Procedure as the mechanism to resolve intellectual property disputes in preference to unilateral trade sanctions of the type previously resolved via the US Special 301 mechanism (Vaver 2000: 9). It also demonstrates that global corporate actors, in this case the music industry, were prepared to adopt a dual strategy, initiating complaints to the WTO by both the United States and the European Communities as a means of exerting maximum pressure on a recalcitrant Member.

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Mailbox protection for pharmaceutical and agricultural chemical products The dual strategy of linked US and EC complaints was also utilised to ensure mailbox protection for pharmaceutical and agricultural chemical products in India. It will be recalled from the description of the TRIPs Agreement given in Chapter 3 that, under transitional arrangements for developing and least-developed countries, arrangements are set out in Article 70.8 of the TRIPs Agreement which oblige WTO Members to establish a system for filing patent applications on pharmaceutical and agricultural products (the so-called ‘mailbox protection’ provisions), while Article 70.9 requires Member countries to set up a system to grant exclusive marketing rights to such patent applicants if they meet certain criteria.33 Mailbox protection under the TRIPs Agreement implies that a WTO Member that chooses to avail itself of the extended transitional arrangements for developing and least-developed countries, and which does not currently offer product patent protection for pharmaceutical products, must set up a mechanism by which to accept patent applications for inventions made after the TRIPs Agreement came into force. These applications will sit unprocessed in a ‘mailbox’ until that country ends its transitional arrangement and becomes fully TRIPs-compliant. Products subject to mailbox patent protection are also subject to exclusive marketing rights for a maximum of five years if the product comes onto the market before the patent law comes into effect.34 Despite the ten-year transitional period for developing countries to conform to TRIPs Agreement requirements for mailbox protection, in order to allow for the filing of pharmaceutical patent applications these measures were required to be in place immediately. Problems, however, arose in Pakistan and India, where no such provisions had existed prior to the TRIPs Agreement. In the case of Pakistan, on 30 April 1996 the United States, acting on a complaint from the PhRMA, requested consultations under Article 4 of the Dispute Settlement Understanding and Article 64 of the TRIPs Agreement, alleging that Pakistan had failed to meet its obligations under Articles 70.8 and 70.9 of the TRIPs Agreement, namely a requirement to establish systems that conform to Articles 27, 65 and 70.35 Faced with the threat of a WTO Dispute Settlement Panel, Pakistan and the United States entered into consultations that ultimately led to the introduction of the appropriate provisions in Pakistan without the need to actually institute formal proceedings (see also Gutowski 1999: 739). The issue was resolved when Pakistan notified the TRIPs Council36 that it had introduced implementing legislation which retroactively validated mailbox applications from 1 January 1995 (see also Geuze and Wager 1999: 378; Grubb 1999: 42). Pakistan introduced the appropriate legislative provisions before formal proceedings before a WTO Dispute Settlement Body Panel were initiated. In India’s case, the United States (again responding to the PhRMA’s articulation of US-based proprietary pharmaceutical manufacturers’ concerns) complained to the WTO on 2 July 1996, alleging an infringement

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of Articles 70.8 and 70.9 of the TRIPs Agreement, requiring the patent protection of pharmaceutical and agricultural chemical products, and the granting of exclusive marketing rights for these products under Article 70.9 (see also Macdonald-Brown and Ferera 1998: 69). The United States was later joined in its complaint by the European Communities, which, following the intervention of EFPIA on behalf of the European pharmaceutical industry, lent support to the United States’ complaint and asked the Panel to find that India, not having carried out its obligations under Articles 70.8 and 70.9 of the TRIPs Agreement, should bring its domestic law into conformity with these obligations. The complaint arose because India had ratified the WTO Agreements on 31 December 1994 by governmental decree, without seeking the approval of the Indian Parliament, and simultaneously amended the Patent Ordinance in order to allow for mailbox applications. This Patent [Amendment] Ordinance 1994 subsequently lapsed because it had not been confirmed within six weeks of the re-assembly of the Indian Parliament, as required by the Indian Constitution. In practice, the Indian Patent Office continued to allow mailbox applications to be made, but without appropriate legislation to make receipt of such applications a legal requirement. In spite of two failed attempts by the Indian Parliament to re-introduce the Patent [Amendment] Ordinance in order to bring national law into line with the TRIPs Agreement, political instability prevented its adoption by the Indian Parliament. Meanwhile, between 1 January 1995 and 15 October 1997 a total of 1,924 applications for pharmaceutical and agricultural products were submitted to the Indian Patent Office, of which 531 were from US companies.37 The implications of this situation were that, even though in practice the filing of patent applications was possible, from a global business perspective, in the absence of seeing the appropriate legal provisions in place commercial certainty was being undermined. Despite reassurances from the Indian Patent Office that all mailbox applications were being dealt with appropriately, one proprietary pharmaceutical company interviewed for this book reported that its applications were disappearing into a ‘black hole’, with no acknowledgement from the Indian Patent Office as to whether applications had even been accepted or not. This view was corroborated by Harvey E. Bale Jr, Senior Vice President of the PhRMA, who, in a letter to the USTR appended to the Panel’s Report,38 complained that PhRMA companies were experiencing great losses in India because of its failure to provide patent protection for pharmaceutical products. But it was not only US companies that were members of the PhRMA. In preparation for the Dispute Settlement Panel, the worldwide proprietary pharmaceutical industry acted globally via Interpat and established an India International Task Force, chaired by a senior executive and patent expert based in the UK at GlaxoWellcome. The Interpat Task Force played an important role in coordinating information of the industry losses in India that was then fed into the Dispute Settlement

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Procedure to demonstrate definitively the level of losses being experienced by global research-based pharmaceutical companies in India. In response to evidence of losses provided by industry, the US complaint against India contended that India had failed to establish a suitable mailbox system for pharmaceutical and agricultural chemical product patents during the TRIPs Agreement transitional arrangements and that India had failed to establish a system of exclusive marketing rights by 1 January 1995 (see also Macdonald-Brown and Ferera 1998: 69). India, on the other hand, argued that WTO Members were free to determine the means by which mailbox applications were to be dealt with, and that it had initially decided to provide for such a means through administrative instructions to the Indian Patent Office, to be followed later by a Bill of Parliament. On 7 November 1996 the US requested that the DSB establish a Panel to examine its complaints. The Panel was established on 20 November 1996 and, in its Report concluded that, as it had not been persuaded that India’s ‘administrative instructions’ would prevail over the contradictory mandatory provisions of the Patents Act, India had not adequately achieved the object and purpose of Article 70.8 of the TRIPs Agreement and had not protected the legitimate expectations of inventors of pharmaceutical and agricultural chemical products. The Panel Report39 and Appellate Body Report40 have been interpreted (see in particular Geuze and Wager 1999: 353) as meaning that mailbox applications filed in India and handled by the Patent Office under its administrative instructions to accept them might be overruled by an Indian court, if that court took the view that the administrative instructions setting up the mailbox system could not prevail over the contrary provisions of the Indian Patent Act. Since the mailbox system related to patents for pharmaceutical products considered unpatentable under the Act, there was potential for any patent granted under this system to be invalidated. The Panel emphasised that there must be a sufficient degree of predictability to fulfil the ‘legitimate expectations’ of Members and therefore took the view that India did have an obligation to take legislative, rather than just administrative, measures (see also Macdonald-Brown and Ferera 1998: 71). With respect to Article 70.9 of the TRIPs Agreement, India did not dispute that its national authorities lacked the legal powers to grant exclusive marketing rights, as required, but argued among its defences that, since no applications for exclusive marketing rights had actually been received, they had therefore not refused any application for rights. The Panel rejected India’s arguments: what mattered was the existence of legislation that required the executive to act in a way that was consistent with the obligations under the TRIPs Agreement and, in the absence of such legislation, the legitimate expectations of WTO Members could not be protected (see also MacdonaldBrown and Ferera 1998: 72). The Panel cited the evidence submitted by Harvey Bale on behalf of PhRMA to demonstrate unsuccessful attempts by Eli Lilly Corporation to acquire information about obtaining exclusive marketing rights in India.

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The Panel concluded that the obligation under Article 70.9 to grant exclusive marketing rights was a legitimate expectation that had not been fulfilled by India. The Panel therefore recommended that the WTO Dispute Settlement Body request that India bring its transitional arrangements in line with its obligations under the TRIPs Agreement. However, significantly, the Appellate Body reversed the Panel’s view that India had undermined the ‘legitimate expectations’ of WTO Members. The Panel had found that the ‘legitimate expectations’ test was mandated by prior GATT jurisprudence, including a number of Panel Reports laying down the principle of trade protecting the conditions of competition that flows from multilateral trade agreements, supported by Article 31 of the Vienna Convention on the Law of Treaties, which required a ‘good faith’ standard that indirectly protected ‘legitimate expectations. The Appellate Body, although finding against India in relation to Articles 70.8 and 70.9, rejected this ‘legitimate expectations’ test as being derived from GATT jurisprudence on non-violatory acts of nullification or impairment, a type of action expressly suspended during the transitional periods for developing countries allowed under the TRIPs Agreement (see Reichman 1998: 595). The Appellate Body also refused to endorse the Panel’s findings that India must eliminate any reasonable doubts regarding whether mailbox applications and patents eventually based on them could be rejected or invalidated because the matter for which protection was sought was unpatentable in the country in question at the filing or priority date.41 The consequences of the Appellate Body’s rejection of the ‘legitimate expectations’ test are discussed further in Chapter 6. The Indian Patents (Amendment) Ordinance was finally passed on 8 January 1999 to amend the Patents Act to comply with the obligations of Articles 70.8 and 70.9 of the TRIPs Agreement.42 Despite this progress,43 the matter may not be satisfactorily resolved as far as the proprietary pharmaceutical industry is concerned. In early 1999 the United States expressed its concern that the Ordinance still failed to meet the standards required by the TRIPs Agreement and called for discussions with Indian officials at the earliest opportunity.44 The India mailbox dispute was the first intellectual property complaint to go through the entire WTO Dispute Settlement Procedure. As such, it has been widely hailed as demonstrating a willingness on the part of the WTO to take swift action to ensure effective enforcement of the TRIPs Agreement (for excellent accounts of the Panel’s deliberations, see also Gutowski 1999: 742; Henderson 1997: 657–60; Macdonald-Brown and Ferera 1998: 69). What the mailbox dispute also demonstrates is the willingness of the global pharmaceutical industry to organise its information-gathering expertise through Interpat, lobby effectively in the United States via PhRMA and in the European Communities via EFPIA, and adopt a dual strategy of encouraging a US complaint with third-party support from the European Communities. In the subsequent Bolar exemptions/stockpiling complaint against Canada, that strategy was modified by the global pharmaceutical

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industry to take account of domestic political circumstances in the United States. In that instance, the European Communities provided the most appropriate venue for pharmaceutical industry complaints, as the following section demonstrates.

Bolar exemptions and stockpiling There are instances in which it is expedient for the United States to allow the European Communities to take the lead in WTO Dispute Settlement Proceedings for political and diplomatic reasons. The Canada–EC dispute is a case in point. On 19 December 1997 the European Communities and its Member States initiated a complaint against Canada concerning its obligations under Articles 27.1, 28 and 33 of the TRIPs Agreement45 and the incompatibility of Sections 55.2(1) and 55.2(3) of the Canadian Patent Act with the TRIPs Agreement. The lead taken by the European Communities, in preference to a complaint by the US, can be accounted for by the existence of the so-called ‘Bolar exemption’. This provision of US law made it politically unacceptable in domestic terms for the US pharmaceutical industry to make a formal complaint about the stockpiling of pharmaceutical products in Canada and expect that complaint to be taken up by the USTR. The disputed provisions of Canadian patent law in turn owed much of their origins to pressure from a new set of corporate actors. Canadian generic drug manufacturers such as Novafarm, which had been largely absent from the debate about the content of the TRIPs Agreement during its formative stages, now saw the potential of direct benefits from replicating and expanding upon the US Bolar provisions. The Bolar provision is derived from the case of Roche v. Bolar,46 in which Bolar Pharmaceuticals Co. Inc. had been intending to introduce a generic version of a Roche pharmaceutical product into the United States as soon as the patent held on this product expired.47 Bolar carried out clinical testing of its version of the product while the patent held by Roche was still in force. The US Federal Circuit Court held that the exception to patent infringement for experimental use that had been allowed in earlier case law did not cover experiments where there was a clear commercial goal, as opposed to purely speculative research which was patent protected. The US Congress later overruled the decision in Roche v. Bolar in the Drug Price Competition and Patent Term Restoration Act of 1984 (the so-called Hatch–Waxman Act), which specified that it was not an infringement of a patent to make, use or sell a patented invention solely for uses reasonably related to the development and submission of information under a Federal law which regulates the manufacture, use or sale of drugs (see also Evans 1994: 148; Grubb 1999: 162). In the light the Hatch–Waxman Act, the Abbreviated New Drug Approval (ANDA) procedure allows generic companies to carry out testing at any time, regardless of patent protection on the original product, with

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regulatory approval being granted for the generic version of the drug on the expiration of the patent. Following the Hatch–Waxman Act, generic drug manufacturers worldwide began to lobby other countries to introduce equivalent measures, with the implication that they would locate manufacturing facilities in countries with regulatory arrangements that were sympathetic to the idea of ‘Bolar exemptions’.48 It was against this background that the US approach has been taken a step further by Canada. The Canadian approach can be partly explained by the situation in that country before the TRIPs Agreement, whereby the influence of a large generic drug industry, led by companies such as Novafarm, was augmented by a long history of compulsory licences which only allowed 4 per cent of royalties to be payable to the patentee (compared with 25–30 per cent for analogous provisions in the UK). Canada sought to support domestic generic drug manufacturers by introducing their own version of the Bolar exemption in Sections 55.2(1) and 55.2(2) of the Canadian Patent Act. Section 55.2(1) permitted a third party, without the consent of the patent holder, to use a patented invention to carry out experiments and tests required (such as for proof of safety and bioequivalency) to obtain marketing approval of their copy of an innovative medicine before the expiration of the relevant patent in order to ensure market access immediately following the patent expiry. Furthermore, Section 55.2(2) of the Canadian Patent Act, used in conjunction with the Manufacturing and Storage of Patented Medicines Regulations, permitted the manufacture and stockpiling of patented products for a period of up to six months before patent expiry for sale after expiry (see also Wilcox and D’Aguiar 2000: 11). Canadian law was therefore going even further than the US Hatch–Waxman approach by allowing not only testing for regulatory approval while the patent was still in force but also the manufacture and stockpiling of the generic drug for release onto the market as soon as the patent on the product had expired. Given the politically sensitive issue of the Hatch–Waxman Act at home, United States proprietary pharmaceutical companies felt unable to take the lead in raising complaints about the compatibility of Section 55.2 of the Canadian Patent Act with the TRIPs Agreement by raising the issue with the USTR. Instead, through the coordination mechanism offered to global proprietary pharmaceutical companies by Interpat, US pharmaceutical companies encouraged their European counterparts to take the lead by raising the issue with the European Commission, both as individual companies and via EFPIA. As a result, on 19 December 1997 the EC complained that Canadian legislation allowed for experimental use of patented inventions by a third party for the preparation of market access, without the consent of the patent holder, immediately following expiry of the patent. The European Communities also complained that provisions in Canadian law allowed for manufacturing and stockpiling of patent products for a period of up to six months before patent expiry. The European Communities claimed that

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Sections 55.2(1) and 55.2(2) of the Canadian Patent Act were not compatible with Article 28.1 of the TRIPs Agreement, which provides that a patent system shall confer on its owner the exclusive right to prevent third parties not having the owner’s consent from, among others, the acts of making and using. Furthermore, the EC complained that, since the described provision aims at pharmaceutical inventions only, there also exists a violation of Article 27.1 of the TRIPs Agreement, which provides that patent rights shall be enjoyable without discrimination as to the field of technology and provides no basis for treating pharmaceutical patents differently from other types of product. However, the Dispute Settlement Panel agreed that Section 55.2(1) of the Patent Act (the regulatory review exception) did amount to a ‘limited exception’ within the meaning of Article 30 of the TRIPs Agreement.49 The exception for regulatory review under Section 55.2(1) was limited because of its narrow scope, being confined to the requirements of the regulatory review process. Canada had also claimed that the United States had entered into negotiations for the TRIPs Agreement with the intention of preserving the Bolar exemption present in US domestic law and that the Canadian regulatory review exception under Section 55.2(1) amounted to an equivalent measure. The Panel rejected this argument on grounds that there was no material evidence to support this interpretation of the United States negotiating position. Yet the reluctance of the United States to take the lead in this complaint against Canada, preferring instead to rely on the European Communities to bring a dispute settlement action, the successful resolution of which, to a large part, would be of direct benefit to US pharmaceutical companies who were faced with the threat of cheap generic drugs flooding the lucrative US market if Canada’s regulatory review and stockpiling exceptions remained intact, lends some credence to this version of events. In the event, the complicity of the United States in negotiating a built-in ‘Bolar exemption’ for the TRIPs Agreement did not need to be proved for the Panel to accept that Section 55.1(2) of the Canadian Patent Act amounted to a limited exception to a patent holder’s rights under Article 30. With respect to Section 55.2(2), although Canada acknowledged that its domestic law was not in accordance with Article 28.1 of the TRIPs Agreement, the conclusions of the WTO Panel focused on the application of Article 30. The Panel considered the requirements of Article 30 and found the stockpiling exception not to be ‘limited’ in the narrow sense envisaged by the TRIPs Agreement since the stockpiling provision had no limitations on the quantity of production during the final six months of patent term or the market destinations of such products (see also Wilcox and D’Aguiar 2000: 12). The Panel therefore considered that stockpiling was a substantial curtailment of the patent holder’s rights contrary to Articles 28.1 and 30 of the TRIPs Agreement. Finally, the EC claimed that the regulatory review exception under Section 55.2(1) of the Patent Act was in breach of Canada’s obligations under Article 27.1 of the TRIPs Agreement, since it discriminated on the basis of the field

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of technology in focusing on the pharmaceutical industry. The Panel, however, failed to find evidence that the European Communities had shown either a discriminatory effect or a discriminatory purpose to the regulatory review exception under Section 55.2(1). As a result of its deliberations, on 20 March 2000 the WTO Panel’s Report50 concluded that Canada’s stockpiling exception under Section 55.2(2) of the Patent Act was inconsistent with obligations under the TRIPs Agreement, but that Canada’s provisions under Section 55.2(1) allowing regulatory review of generic products before the end of the term of protection for an equivalent patent product were not inconsistent with its obligations under the TRIPs Agreement. On 6 May 1999 the United States filed its own complaint against Canada in relation to term of patent protection.51 Steering clear of Section 55 of the Canadian Patent Act, which was the source of the Canada–EC dispute and which remained politically sensitive in the United States, the United States instead complained that Section 45 of the Canada Patent Act was incompatible with Articles 33 and 70 of the TRIPs Agreement, which requires WTO Members to provide patent term of at least twenty years from the date of filing of the patent application.52 From the point of view of the United States, Canada applied a term of protection that was in many cases shorter than twenty years. The US complaint explicitly referred to the damage this measure was causing to the pharmaceutical industry and provided evidence from Pfizer Inc. to demonstrate that its anti-depressant drug Zoloft, for which patent protection had expired in August 1999 at the end of its seventeenyear term in Canada, should not, under the terms of the TRIPs Agreement, have expired.53 The background to the dispute lay in the fact that, before 1 October 1989, Canada provided patent protection for a term of seventeen years from the date of grant of a patent. With effect from 1 October 1989, Canada changed the Patent Act to provide patent protection for a term of twenty years from the date of filing of the application for a patent. No retroactive effect was applied to patents granted before that date. On 5 May 2000, the WTO Panel,54 in conclusions upheld on appeal,55 agreed with the US complaint that Section 45 of the Canadian Patent Act was incompatible with Article 33 of the TRIPs Agreement (which specifies a minimum term of twenty years patent protection) and reiterated that Article 70.2 of the Agreement furthermore underlines this requirement by specifying that no provisions exist for the introduction of lower levels of protection than those set out in the Agreement. The proprietary pharmaceutical industry again faced the possibility of measures equivalent to Bolar and stockpiling provisions being introduced in Israel. Once more, the dual strategy of the United States and European Communities approach was used to exert pressure in favour of an acceptable legislative framework for patent protection. In this instance, since the legislation was still at the preparatory stage, US–EC intervention took the form of diplomatic representations. The origins of proposals to introduce

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these measures in Israel can be found in the Tel Aviv District Court’s decision in Eli Lilly v. Teva Pharmaceutical Industries Ltd.56 The generic drug industry in Israel was faced with the uncompetitive regulatory environment in comparison with manufacturers based in other countries (particularly those in Canada and the United States) that could enter into trials to improve on a patent or to obtain data for regulatory approval by virtue of Bolar exemptions. With the prospect of generic drug manufacturers, and Teva in particular, relocating their operations outside Israel in order to gain access to trials before patents on pharmaceutical products expired, the Israeli government had originally planned to mirror Canadian provisions by allowing regulatory approval work and stockpiling of patented pharmaceutical products. This move was widely seen by the global proprietary pharmaceutical industry as significantly benefiting Israeli generic drug manufacturer Teva and, in opposition to the introduction of stockpiling provisions in Israel, it was Interpat that led the proprietary pharmaceutical industry’s initiative, providing a global presence to the pressure exerted on Israel not to introduce stockpiling provisions. On 17 February 1998, after over three years of discussions with the United States and the European Communities, the Israeli Parliament (the Knesset) finally passed an amendment to the Patent Law that allows generic companies to undertake trials necessary for filing a request for regulatory review before a pharmaceutical patent has expired, but offsets this benefit to generic companies with an extension to patent term in the case of pharmaceutical patents (Cohen 1998: 24). The outcome should therefore be acceptable to companies represented by Interpat: the patent owner is protected in Israeli law in the sense that generic companies cannot undertake stockpiling or any other activity beyond obtaining regulatory approval while a pharmaceutical product is still under patent protection.57 When a country considering introducing standards of intellectual property protection falls within the sphere of influence of a particular developed country, global corporate actors have demonstrated that they are prepared to engage in forum shopping not only in relation to negotiating the TRIPs Agreement, as seen in earlier chapters, but also in securing appropriate implementation. Forum shopping will occur when a particular developed country offers the best route for achieving the preferred outcome of global corporate actors. In relation to Cyprus, the global proprietary pharmaceutical industry expressed concerns in early 1998 about possible Bolar-type exemptions and stockpiling measures in Cyprus. Given the strategically important location of Cyprus, close to the European mainland, providing a potential site for offshore generic manufacturers to produce and stockpile copies of patented pharmaceutical products, the issue was taken up by the European Communities. The European Commission, in consultation with representatives of the proprietary pharmaceutical industry via EFPIA and PhRMA, made clear its views to the Cypriot government. By adopting a strategy of linking intellectual property to trade in relation to lucrative bilateral EC–Cyprus trade agreements and in the face of widely reported

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concern that Cyprus’s EC candidacy and its reputation as a country considered safe for foreign business investment would be adversely affected,58 plans to allow stockpiling of patented products under the Cyprus (Patent) Bill were dropped.

Signs of fragmentation of the global corporate consensus Despite a trend for global corporate actors seeking to overcome institutional and political constraints by forming strategic alliances and engaging in a dual strategy of US and EC complaints, or even forum shifting from the United States to the European Communities in relation to patent protection for pharmaceutical products, in the copyright sector, complaints raised by US companies in relation to standards of intellectual property protection in the European Communities have marked a move away from the dual strategy of global corporate actors utilising both US and EC routes to influence foreign governments. In the copyright sector it is European states that have found themselves falling foul of complaints by the United States. The cracks in the Uruguay Round consensus between business and policy-makers in the United States and the European Communities became apparent as early as 1997, when the Business Software Alliance (BSA), which represents the interests of the US computer software industry, played a significant role in mobilising US government officials to enter into the consultations with Sweden concerning the latter’s failure to fulfil obligations under the TRIPs Agreement. The US complaint concerned Articles 50, 63 and 64 of the TRIPs Agreement, under which WTO Members are required to make available ex parte provisions in civil proceedings. This requires national courts to impose provisional measures in order to prevent infringements and to preserve evidence (see Dörmer 2000: 24). On 18 May 1997 the United States requested consultations with Sweden59 regarding the failure of anton piller60 orders under Swedish law to allow sufficient scope for premises to be searched without warning in order to determine whether an infringement of intellectual property rights had taken place.61 In response, on 25 November 1998 the Swedish Parliament adopted legislation that amended Swedish intellectual property law to allow a court to grant an anton piller order to a search for evidence of infringement if there is reason to believe that an individual has or soon will infringe intellectual property rights (see also Geuze and Wager 1999: 381; Gutowski 1999: 740). On 2 December 1998 this enabled the United States and Sweden to notify the WTO Dispute Settlement Body that the issue had been resolved. What is particularly notable about this case is that, in its objections to Swedish legislation implementing the TRIPs Agreement, it was the software industry, through the BSA and the International Chamber of Commerce, that instigated the complaint. Although resolved without recourse to the formal WTO Dispute Settlement Procedure, this complaint was seen in the

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European Communities as an attempt by US software companies to create a legal environment sympathetic to their interests, motivated by the desire to ensure that users products licensed by their member companies were actually paying for software used through legitimate means in the face of the European tradition of guarding against abuses of anton piller orders by maintaining restrictive provisions on their use. Further evidence of the fragmentation of the US–EC consensus, at least in relation to copyright protection, can be seen in relation to copyright protection for films and television broadcasts. Following a complaint from the MPAA, the United States requested consultations with Greece62 on 30 April 1998, and made a parallel request for consultations with the European Communities,63 claiming inadequate copyright protection for films and television programmes broadcasts by TV companies in Greece (see Dörmer 2000: 25). Most recently, the European Communities complained that the United States had failed to meet its copyright obligations under the TRIPs Agreement. On 26 January 1999, the European Communities, later joined as third parties by Australia, Brazil, Canada, Japan and Switzerland, complained to the Dispute Settlement Body that Section 110(5) of the United States Copyright Act, as amended by the Fairness in Music Licensing Act of 27 October 1998, ran contrary to Article 13 of the TRIPs Agreement and therefore was not consistent with the Berne Convention, as incorporated into the TRIPs Agreement by Article 9.1. The amended Section 110(5) contained an exception to the exclusive rights of copyright holders in instances where copyrighted work was communicated to the public in commercial premises on ‘homestyle’ audio-visual equipment (the type of receiving equipment commonly used in private homes). On 15 June 2000 the Dispute Settlement Panel upheld the main substantive elements of the complaint64 and, as a result, the United States was required to bring the ‘homestyle’ provisions of its Copyright Act into conformity with its obligations under the TRIPs Agreement.

Assessment Through their involvement in the TRIPs Council scrutiny process and complaints raised on their behalf by WTO Members through the Dispute Settlement Procedure, global corporate actors have demonstrated a high level of activity designed to ensure effective implementation of the TRIPs Agreement. In this respect, the Agreement has not only allowed global business interests greater commercial certainty that intellectual property rights will be adequately protected, but has also provided a more ‘reliable and coherent’ (Worthy 1994: 198) international legal framework for securing effective implementation and enforcement than had existed under the earlier WIPO-administered intellectual property conventions. By participating in scrutiny and implementation work, corporate alliances

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have come to the fore on a global scale. These global alliances both augment, and at times supersede, the predominance of earlier, regionally organised, corporate interest representation that characterised the pre-Uruguay Round landscape. In many respects, for business sectors such as proprietary pharmaceuticals, computer software, film and television, where companies increasingly face common problems globally in relation to TRIPs implementation, the quest for common solutions via the TRIPs Agreement and through the redefinition of business interests on a global scale has been seen as a logical and necessary step. Following the end of the transitional period for developing country implementation of the TRIPs Agreement, attention now turns to concerns that, despite introducing national legislation to ensure that domestic provisions are compliant with TRIPs, developing countries may not in practice be able to achieve the levels of effective enforcement that the developed countries negotiating the TRIPs Agreement had foreseen. It is through their networks of branches, subsidiaries and local agents that global corporate actors are well placed to monitor the effectiveness of national enforcement on the ground in developing countries. Furthermore, global business interests remain mindful of the risks associated with WTO Dispute Settlement Panellists engaging in judicial activism, applying a more accommodating and less stringent standard of review to developing countries (see, for example, Bello 1997: 364). Such a degree of differential treatment runs contrary to the principles underpinning the TRIPs Agreement itself. Given the limited extent of Panel findings in relation to the fulfilment of TRIPs Agreement obligations so far decided, it remains to be seen how the WTO Dispute Settlement Body will respond. The relationship between global corporate actors and developing countries is considered in detail in the next chapter.

5

Impact of the TRIPs Agreement on developing countries

Any future renegotiation of the TRIPs Agreement must to take into account concerns that the costs of complying with its provisions far outweigh the benefits for developing countries. In examining these concerns, this chapter pays particular attention to predictions that the effects of the TRIPs Agreement on economic development and health care provision are likely to be adverse, with domestic judicial and administrative arrangements unable to cope with the burden of enforcement. But there is also a need to balance predictions of the costs of the TRIPs Agreement against estimates of the potential benefits that may accrue to developing countries. Before looking at the costs, the first section of the chapter examines the benefits of increased foreign direct investment, transfer of technology, local innovation and the protection afforded to developing countries by use of the WTO Dispute Settlement Procedure as an alternative to bilateral trade disputes. Finally, the chapter assesses the extent to which enforcement difficulties are likely to be encountered in developing countries and examines the degree to which the administrative burden of enforcement can be offset by technical assistance from international institutions, developed country governments and global corporate actors, all of whom provide support to developing countries as they seek to enforce the Agreement.

Beneficial effects of the TRIPs Agreement Essentially, four types of benefit for developing countries can be identified as a result of the TRIPs Agreement: first, as multinational companies begin to feel that their intellectual property assets are secure in developing country markets, increased foreign direct investment (FDI) will result (see also United Nations Conference on Trade and Development 1996); second, levels of technology transfer or licensing are more likely to occur against a secure legal background and will ultimately lead to the transfer of know-how and expertise that will contribute to local economic growth; third, the availability of intellectual property protection locally will result in higher levels of domestic innovation (see also Cosbey 2001: 18; Lehman 1999); and, fourth, the threat of bilateral trade sanctions from the United States may be less

Impact of the TRIPs Agreement on developing countries 109 likely because of the linkage of the TRIPs Agreement to the WTO Dispute Settlement Understanding. Each of these potential benefits is discussed in turn below. Encouraging foreign direct investment When, during the Uruguay Round negotiations, developing countries agreed to accept the TRIPs Agreement it was as part of a package deal whereby protection of intellectual property rights was a trade-off for concessions on agricultural products and textiles (see also Durán and Michalopoulos 1999: 861; Grubb 1999: 49; Gutowski 1999: 756). Developed countries also argued that enhanced global protection of intellectual property rights would stimulate higher levels of investment in developing countries (see also Correa 2000: 23; Durán and Michalopoulos 1999: 853). This proposition was supported by the work of Rapp and Rozek (1990), who, in their study of the correlation between a country’s economic development and its level of patent protection, identified benefits for developing countries that were prepared to introduce higher standards of intellectual property protection. Their findings are based on three rationales: first, that a well-developed patent regime encourages economic growth through increased innovation and investment; second, that, conversely, weak patent regimes impede economic development; and, third, that the significance of intellectual property rights increases as economic development occurs because of greater potential for exploitation.1 With regard to the first of Rapp and Rozek’s rationales, in practice, the degree to which the TRIPs Agreement can be expected to encourage direct investment and technology transfer is likely to vary significantly not only between developing countries (United Nations Conference on Trade and Development 1996), but also between sectors (see also Bronckers 1994: 1248), between economic activities and between product type (see also Correa 2000: 26). Correa (2000: 270), however, remains generally pessimistic about the prospects for significant flows of foreign (as opposed to domestic) levels of investment, reporting a United Nations (1993) study which concluded that innovative companies in developed countries are likely to sell directly to developing countries rather than transfer technology through FDI and licensing agreements, and concluding that there is no evidence that intellectual property protection will positively influence access to FDI at all (see also Di Pietro 2001: 3). In any case, Primo Braga and Fink (1998: 541) observe that FDI flows to developing countries tend to be concentrated in a few countries, with four – China, Mexico, Malaysia and Brazil – accounting for 55 per cent of all FDI flows to developing countries in 1994 and 1995 (see also Primo Braga et al. 2000:18). There is also little evidence that intellectual property protection is a key factor in encouraging research and development (Durán and Michalopoulos 1999: 855).

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Although it is widely anticipated that the TRIPs Agreement will produce short-term net benefits for multinational companies based in developed countries (see, for instance, McCabe 1998: 54; Oddi 1996: 458), in the longer term the potential benefits of innovation, joint ventures and investment through greater transfer of technology and inflows of FDI may go some way to redress the balance in favour of developing countries (see also Di Pietro 2001: 4; Evans 1994: 143; Gutowski 1999: 752; Stanback 1989: 536). But the reality is that the time frame of this self-correcting effect remains uncertain (see Abbott 1996: 392–3) and the prospects for FDI flows to developing countries remain hard to predict. Encouraging technology transfer The transfer of technology from developed to developing countries is likely to be encouraged by higher levels of intellectual property protection for three reasons: first, the publication of patents may provide the background information needed to stimulate new inventions in developing countries; second, the existence of patent protection may convince developed country patent owners to engage in licensing arrangements or undertake foreign direct investment in developing countries; and, third, improvements in intellectual property protection in developing countries may create the incentives for developed country businesses to invest in new product research, such as medicines to cure tropical diseases, that it has hitherto lacked the economic justification to undertake (Durán and Michalopoulos 1999: 589). Creating incentive structures for local inventors Levels of innovation in developing countries may also increase in high technology sectors such as proprietary pharmaceuticals (see also Gutowski 1999: 758) as a result of higher standards of intellectual property protection. Some authors, however, warn that since developing countries rarely possess a large stock of local inventors who could benefit from intellectual property protection (Primo Braga et al. 2000: 25), any resultant benefits are far outweighed by the cost of importing technology from foreign intellectual property owners (Sodipo 1997: 276; Stanback 1989: 535). The problems associated with applying standards of intellectual property protection across cultures via the TRIPs Agreement have also led to predictions that public discontent will grow if the Agreement is perceived as a threat to national autonomy (Smith 1999: 223), particularly if developed countries are perceived to ‘cream off scarce resources in royalty payments’ (Evans 1994: 143; see also Emmert 1990: 1355). Oddi (1996: 460), moreover, predicts that implementation of the TRIPs Agreement will largely entrench import monopolies for multinational companies, who will have little incentive for local working of inventions, with the likelihood that developing countries will remain ‘consumer countries rather than productive participants in world trade’. Certainly, there is some

Impact of the TRIPs Agreement on developing countries 111 evidence that the majority of patents granted by developing countries are held by foreigners or foreign-owned companies, which then benefit from royalties with no guarantee that the patent will be worked locally (see Henderson 1997: 654–5) or even that patented technology originating from developed countries will produce solutions to problems unique to developing nations (Mesevage 1991: 439). It has also been argued that in many respects, innovative domestic industries in developing countries suffer as much from inadequate intellectual property protection as do foreign companies (see also Sell 1998: 213) and, as developing countries acquire strong constituencies of domestic intellectual property owners, the TRIPs Agreement may well be more widely seen to be in the national interest (see also Tasar 2000: 33). The transition from technological imitators to innovators (Acharya 1996: 159) in the ‘tiger’ economies of Hong Kong, Singapore, South Korea and Taiwan has resulted in a set of developing countries that face the same pressures as industrialised countries, with a rise in cost base leading to a need to improve productivity through increased investment in research and development (see Grubb 1999: 49), and it is instructive to note that these tiger economies abandoned their opposition to the TRIPs Agreement as the Uruguay Round negotiations progressed (Acharya 1996: 159). But for many developing countries, the progression from technological imitators to innovators and creators of their own stock of intellectual property remains largely unattainable. Offsetting bilateral trade tensions For developing countries, perhaps the most immediate incentive for ensuring effective implementation and enforcement of the TRIPs Agreement may actually be avoiding punitive sanctions on a multilateral or bilateral level if non-compliance is detected (McGrath 1996: 401). In this respect, to developing countries anxious to reduce trade tensions the legal certainty offered by the linkage between the TRIPs Agreement and the WTO Dispute Settlement Understanding may appear preferable to bilateral agreements likely to result in sanctions, such as those threatened under Special 301 of the US Trade Act (see also Gutowski 1999: 757). For Oddi (1996: 469) the wider benefits of WTO membership may offset the narrower disadvantages of the TRIPs Agreement. It remains to be seen how far the TRIPs Agreement will stimulate the transfer of technology to developing countries through the granting of licences – although not cost-free licences (Abbott 1996: 399) – and an increased willingness to invest in research and development in emerging markets (see also Pacón 1996: 356). Limits on the beneficial effects of the TRIPs Agreement But adequate protection of intellectual property rights is only one factor that influences technology transfer, corporate location and investment decisions. The likely impact of the TRIPs Agreement is extremely difficult to

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disaggregate from other factors, such as the availability of a skilled workforce, tax incentives, local transportation infrastructure, currency and political stability, and the size of domestic markets,2 although some studies have attempted to do so. Abbott (1996: 391) highlights an absence of correlation between developing countries that grant high levels of intellectual property protection and the level of FDI, observing that ironically among the countries that appeared on the USTR’s watch list for worst violators of intellectual property rights, namely Argentina, Brazil, North Korea and the People’s Republic of China, are some that have received the most significant inflows of US FDI over the past decade. Emmert (1990: 1367–9) furthermore argues that economic policy measures such as tax incentives, import policy, tariffs and rules on the employment of foreign experts have an adverse effect on R&D, these policy measures often being more important than the protection of intellectual property in determining flows of inward investment. Overall, there is a range of reasons why global corporate actors may well not be unduly influenced by improved protection of intellectual property protection when considering corporate location decisions relating to developing countries (see also Abbott 1998: 504; Correa 2000: 24; Mesevage 1991: 439; Verma 1996: 353). The United Nations Conference on Trade and Development (UNCTAD), in its study (1996) of the economic and social implications of the TRIPs Agreement, concluded that developing countries should try to strike a balance between the needs of innovative firms and their licensees for protection from easy appropriation of their intellectual property, on the one hand, and the needs of follow-on competitors and consumers, on the other. In the case of India, during the US complaint in relation to mailbox protection, the US government and multinational pharmaceutical companies argued that India should seize implementation of the TRIPs Agreement with enthusiasm as a means of attracting foreign investment, creating a viable domestic research-based pharmaceutical industry to augment the large generic drug manufacturing sector that exists at present and increasing the rate of technology transfer (according to Henderson 1997: 661). This scenario assumes that local entrepreneurs can be found and that access to know-how can be secured (see Mesevage 1991: 442). There is some evidence that proprietary medicine manufacturers in India, such as Lupin, Ranbaxy and Dr. Reddy’s, are well placed to take advantage of patent protection for pharmaceutical products (Ahuja 1994: 28; Parker 2001: 24) and Acharya (1996 164) has expressed optimism that intellectual property protection is likely to become a benefit for Indian industry as it develops rather than a burden in much the same way as it did for the tiger economies of South East Asia. However, it should be noted that the proprietary pharmaceutical industry in Italy did not prosper under similar circumstances when patent protection was accorded to products in that sector in the recent past (see Giust 1997: 96), so the prospects for growth in domestic industries should not be overestimated. Although it may be that intellectual property protection will stimulate local innovation in developing countries, it should also be pointed

Impact of the TRIPs Agreement on developing countries 113 out that Reichman and Lange (1998: 46) remain mindful that this innovation might have been achieved anyway by less socially costly means than the TRIPs Agreement. Acharya (1996: 162) is unable to find irrefutable evidence to ascertain whether the absence of strong intellectual property protection has been a significant deterrent to innovation for foreign investment in India, where it would appear that access to a low-cost and skilled workforce has played a more significant role in the strategic decision-making of multinational companies than has the relative absence of a comprehensive intellectual property regime. This has particularly been the case in the computer software sector, where India has a thriving local industry (see also Cosbey 2001: 18), but it should be acknowledged that this industry relies less on copyright for protection of its core business assets than the pharmaceutical industry, for example, relies on patent protection. There may subsequently be a case for generalising less on a country-by-country basis and more significantly on the basis of global markets, in particular high technology sectors such as software and pharmaceutical products. Overall, there are likely to be winners from implementation of the TRIPs Agreement in India among the ‘talented class’ who will not find it necessary to emigrate in order to advance their careers in high technology industries and among the sick who will benefit from the investment in research and development designed to find cures for diseases in that subcontinent (Adelman and Baldia 1996: 533). But there will also be losers: those who will be required to pay more for medicines than they would in a patent-free environment.3 It is to the losers from the TRIPs Agreement that this chapter now turns its attention.

Costs of the TRIPs Agreement Set against the potential benefits of the TRIPs Agreement for developing countries, the costs of compliance should not be underestimated (Greer 1973: 223; Kitch 1994: 166; de Koning 1997: 72). Patent protection, for instance, is likely to restrict access to technologies and information that may be crucial for sustaining the health of poor populations and supporting development in both the industrial and the agricultural sectors. McGrath (1996: 399) predicts that, since the majority of patents are held by developed nations, poor countries will be forced to pay high monopoly prices for patented products under the regime promulgated by the TRIPs Agreement, with the result that economic dependence on the developed world is likely to be exacerbated (see also McCabe 1998: 54). If this scenario is correct, the most immediate impact of the TRIPs Agreement on developing countries would be higher prices4 for patented pharmaceutical products,5 only in part offset by improved conditions for access to foreign technology (see also Correa 2000: 24, 36; Foster 1998: 309).

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Access to affordable pharmaceutical products The debate about higher prices for patented products in developing countries has come to be epitomised by concerns that access to affordable drugs will be hindered (see Drahos 1997: 207). For many developing countries, the underlying rationale for excluding pharmaceutical products from patent protection in the pre-TRIPs era was to enhance access to medicines and health care (see also Durán and Michalopoulos 1999: 856). Under the terms of the TRIPs Agreement, these countries now face the prospect that cheap, patentfree generic pharmaceutical products will be replaced by an increased reliance on patented pharmaceutical products imported by global corporate actors. It will be recalled from Chapter 3 that, under the transitional arrangements provided by Article 65.4 of the TRIPs Agreement, developing countries may delay product patent protection to areas of technology not previously protectable when the Agreement came into force in that Member. Article 65.4 allows developing countries that did not previously grant patents to pharmaceutical products to delay until 1 January 2005. Once these transitional periods have expired, there is a widespread expectation that the cost of pharmaceutical products is likely to increase as a result of the TRIPs Agreement. Even when these transitional periods have expired there is, of course, nothing to stop developing countries availing themselves of Article 31 of the TRIPs Agreement by issuing compulsory licences on grounds of public health needs (see also Durán and Michalopoulos 1999: 862), provided that adequate compensation is paid to the right holder. But, in practice, granting compulsory licences may have its drawbacks. It may be difficult for developing countries to establish a local manufacturing facility capable of exploiting a compulsory licence, foreign companies may be reluctant to invest in developing countries with a propensity to grant compulsory licences and the internal procedures for granting compulsory licences might not have been put in place (Abbott 2001: 12). As a result, Henderson (1997: 662) and Adelman and Baldia (1996: 531) report that, although medicines sold in India are at present up to 3,010 per cent cheaper than the same pharmaceutical product sold in developed countries, prices are likely to rise rapidly in the former market once patent protection for pharmaceutical products becomes fully applicable from 1 January 2005 onwards. In response to these concerns, the Health and Pharmaceuticals Programme of Consumers International Regional Office for Asia and the Pacific (CIROAP) has been set up to campaign for national health care policies in developing countries and ensure access to affordable medicinal products (see Balasubramaniam 2000). In practice, however, the actual price increases of proprietary pharmaceutical products in developing countries are likely to vary depending on whether new products dominate the market or whether off-patent alternative treatments are also available (Primo Braga et al. 2000: 33). The potential impact of the TRIPs Agreement on access to affordable medicines in developing countries was demonstrated most graphically in

Impact of the TRIPs Agreement on developing countries 115 March 2001 by the threatened action of forty-two global pharmaceutical companies6 in South Africa. The companies, represented by the Pharmaceutical Manufacturers Association of South Africa, complained to that country’s Constitutional Court, objecting that the South African Medicines Act would have given the Health Minister the power to grant compulsory licences for patented pharmaceutical products when public health was at stake. The threatened legal action concerned Article 10 of the South African Medicines and Related Substances Control Amendment Act 1997, which adds Section 15c to the 1965 Medicines and Related Substances Control Act by allowing the Health Minister to abrogate patent rights, issue compulsory licences and allow parallel importation of pharmaceuticals in order to reduce the price of medicinal products (see also Ostergard 1999: 875; Watal 1999: 18). These powers were, it was claimed by the Pharmaceutical Manufacturers Association of South Africa, contrary to Article 31 of the TRIPs Agreement, particularly the requirement that compulsory licensing be granted only on a non-exclusive and non-assignable basis, with the possibility of judicial review and with adequate remuneration for the patent holder. The case proved particularly emotive because access to anti-retroviral medicines for the treatment of HIV/AIDS, such as AZT (Zidovudine), was constrained in South Africa by the prohibitively high price of the drugs (see Tickell 2001: 3).7 Notably, despite complaints by the US Government that the amended Section 15c of the 1965 Act would be contrary to Articles 6, 27, 28 and 31 of the TRIPs Agreement, the United States itself did not choose to bring the matter before the WTO Dispute Settlement Body (see also Wooldridge 2000: 109). It can be surmised that, on political and public relations grounds, the United States had stepped back from upholding the intellectual property rights of US companies abroad on wider grounds of security and international diplomacy. In short, the US State Department appeared to have ruled out action against South Africa because of the political significance of the postapartheid regime in that country.8 The trend for lower prices for patented drugs in developing countries continued in August 2001 when Roche, the Swiss pharmaceutical manufacturer, agreed to a substantial price cut for its patented AIDS drug, Nelfinavir, in Brazil.9 Although Roche had initially offered a price reduction of 30 per cent, the Brazilian government argued that this was insufficient and threatened to issue a compulsory licence on public health grounds. As a result of further price cuts, the issue was resolved with the local manufacture of Nelfinavir also secured, because Roche was able to announce the commercial viability of producing the drug locally in the light of Brazil’s large order. The price of patented drugs may also have an adverse effect on public health if the medicinal product is marketed at such a prohibitively high price that it excludes consumer access for large sections of the local population (see also Acharya 1996: 160). One possibility for developing countries would be to seek recourse to Article 27.2 of the TRIPs Agreement, which allows

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WTO Members to exclude inventions from patentability where there are legitimate reasons on grounds of ordre public or morality, including to protect human, animal or plant life or health or to avoid serious prejudice to the environment. But the scope of the public health exception remains limited. It denies local manufacturers the right to commercially exploit products locally where a patent application from a foreign-based multinational company has been refused. But the picture of unreasonably high drug prices in developing countries is not one that is uniformly accepted. Adelman and Baldia (1996: 531) and Grubb (1999: 48), for instance, counter that newly introduced patent laws will have no effect on products that are already on the market, particularly since the great majority of products on the Essential Drugs List of the WTO are no longer patented in any country. Grubb highlights a report by Redwood (1994) which found that in 1993 proprietary pharmaceutical products operating under developed country standards of patent protection would have accounted for only 10 per cent of the drug market in India. Even when proprietary medicines are prohibitively expensive in developing countries, Grubb10 suggests that alternative therapies are normally available if the patented drug is priced too highly. The global proprietary pharmaceutical industry also claims that it reinvests 14 per cent of total sales income on R&D, with only one in every 10,000 substances undergoing R&D proving a success in terms of beneficial medical results; even many of these fail at the clinical trial stage and never reach the market (see also Nogués 1990: 87). Patenting of indigenous knowledge Controversies have also raged over the interpretation of the TRIPs Agreement that allows for the patenting of knowledge widely shared by indigenous peoples (see also Wilder 2001: 526).11 Because rights to indigenous knowledge are not explicitly protected in the TRIPs Agreement, the complaint has been that patents allow global corporate actors to appropriate medicinal treatments used widely in developing countries. In India, for instance, applications have been put before the US Patent and Trademark Office (USPTO) for patents on turmeric and treatments derived from the neem tree, which have both been used for centuries as remedies by local communities. On examination of the turmeric and neem patent applications, the USPTO has, however, reached different conclusions as to the patentability of the subject matter put forward. In the case of turmeric, a patent application was filed in the United States based on the claim that turmeric augments the healing process of chronic and acute wounds. On re-examination, the claimed invention was found to be part of the public domain of knowledge in India (see Cullet 1999: 627) and a patent subsequently denied. Patents have, however, been granted on the dozen or so applications filed before the USPTO that relate to the properties of the neem tree. Neem has been used in India as a medicine, toothpaste, form of contraception and insecticide for hundreds of years (see Cullet 1999: 628; Shiva and Holla-Bhar 1996: 150), yet the granting of patents

Impact of the TRIPs Agreement on developing countries 117 by the USPTO appears to allow for the appropriation of indigenous knowledge to an extent not envisaged by developing countries. Attempts, led by NGOs, are now under way to strengthen the rights of indigenous peoples. These attempts are discussed in Chapter 6.

The challenge for developing countries: effective enforcement The task of achieving developing country compliance with the provisions of the TRIPs Agreement operates on two levels: first, implementation and second, enforcement. Implementation, namely the adoption of appropriate legislation to bring national judicial and administrative procedures into conformity with the TRIPs Agreement, has generally been less problematic for developing countries than practical enforcement of standards of intellectual property protection on the ground. The reason that implementation has been achieved with relative ease is that many developing countries amended their intellectual property laws prior to the TRIPs Agreement in response to pressure exerted by the United States bilaterally under Special 301 (according to Ryan 1998: 144). But implementation of the policy requirements of the TRIPs Agreement is very different from the ongoing effective enforcement of intellectual property rights. As Susan Sell puts it, ‘there is a sharp distinction between the adoption of these policies and their enforcement’ (Sell 1998: 188; see also de Koning 1997: 63). Although appropriate provisions may well be on the statute books in developing countries now that the transitional period for implementing the provisions of the TRIPs Agreement has expired, effective enforcement may take years to achieve (see also Dreier 1996: 272) and incur unexpectedly high costs on developing countries (Stanback 1989: 536) that are required to improve their judicial, administrative and enforcement procedures. Given the broad remit of enforcement provisions set out in Part III of the TRIPs Agreement, which includes border measures, civil actions and criminal proceedings, 12 the need for expertise extends across a wide range of professions from the judiciary, customs officials and local trading standards officers, to the local police force (see also Trainer 2000: 16). In this respect, enforcing the TRIPs Agreement challenges the administrative and judicial capacity of developing countries (see Di Pietro 2001: 2; Sherwood 1997: 136). An absence of legal expertise within the court system and an absence of technical expertise among local enforcement officers presents a situation whereby long delays are likely in handing down judgements relating to enforcement of measures (see also Daniel 1999: 18). One area in which developing countries are reported to be encountering particular difficulties is in relation to border measures (see, for example, Smith 1997: 30), with Dreier (1996: 271) identifying a number of problems as developing countries seek to secure their borders against unlawful importation of infringing goods in the face of difficult terrain, long coastlines, desert or jungle borders. Corruption among government officials who are

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‘overlooking infringements’ has also been reported to be a problem (Tasar 2000: 31). Customs officials often lack sufficient expertise to identify counterfeit trademark and pirated copyright goods, but identifying patentinfringing goods has proved even more problematic as a result of the nature of the commodity (such as generic pharmaceutical products) (see also Smith 1997: 30). In the face of the perceived limitations of public sector TRIPs enforcement activities in developing countries, one recent trend has been the emergence of private enforcement agencies such as Enforcers of Intellectual Property Rights in India Ltd,13 which advertises its services as an India-wide network of private agents who engage in infringement investigation, litigation support and multi-jurisdictional actions. Intellectual property private investigators of this type, who offer their services to local or multinational companies concerned about inadequate public sector enforcement mechanisms, are likely to become a growth area in developing countries in the future.

Likely outcomes A number of predictions have been made about the most likely course of action that developing countries will take in response to the TRIPs Agreement. Reichman (1998: 587–8) predicts that developing countries will find plenty of ‘wiggle room’ and ‘grey areas’ in the TRIPs Agreement in which to exploit the bulk of the domestic intellectual property laws that remains outside the minimum standards set out by the Agreement. Moreover, he points out, the ‘wiggle room’ may be greatest in relation to key areas of new technologies, including computer programs, databases, digitised telecommunications networks, and biogenetic engineering (Reichman 1998: 589). Subramanian and Watal (2000: 405) have even suggested that developing countries should use their commitments to implement the TRIPs Agreement as a retaliatory weapon, terminating or shortening intellectual property rights owned by foreign nationals in the event of developed country trading partners failing to comply with their WTO obligations in other areas and where conventional trade retaliation proves an insufficient sanction. Less pessimistic is the view adopted by Primo Braga and Fink (1998: 552), who suggest that developing country concerns about the monopolistic behaviour of multinational companies, with the associated lack of benefits to local entrepreneurs and consumers under the TRIPs Agreement, can be alleviated. They suggest that assistance for developing countries can be achieved by: 1

2

using global business actors as ‘honest brokers’ to bring together different interests and educate policy-makers and the public about the complex trade-offs associated with intellectual property protection; providing bilateral and multilateral assistance in setting up administrative structures for protecting intellectual property rights;

Impact of the TRIPs Agreement on developing countries 119 3

4

enhancing the environment under which intellectual property rights operate through competition-related policies, rights to biotechnological resources and indigenous knowledge; and providing bilateral and multilateral support to research the role of intellectual property rights in the economic development process.

Technical assistance for developing countries The availability of technical assistance for developing and least-developed countries is not only seen as crucial in ensuring the effective enforcement of the TRIPs Agreement (see, in particular, Khlestov, 1997; Otten and Wager 1996: 410). It is also a potentially effective mechanism by which developed countries and global corporate actors can offset the worst excesses of cost implications associated with TRIPs compliance in developing countries. The provision of technical assistance is also an area in which collaboration between the TRIPs Council of the WTO and the World Intellectual Property Organisation (WIPO) has been viewed as being of great significance, adding ‘a new urgency’ to the role of WIPO (Ryan 1998: 132) and, despite the rise of the WTO as arguably the primary global economic institution responsible for international intellectual property protection, WIPO has remained an important organization in the provision of advice and expertise on compliance with international intellectual property obligations (see Otten 1998: 529). The concerns that were raised during the Uruguay Round negotiations about the likelihood of GATT institutions duplicating and recreating WIPO’s expertise and administrative apparatus (see, in particular, Merges 1990: 241 and an appraisal of the administrative culture of WIPO in Ryan 1998: 137–8) have proved largely unfounded. In fact, because WIPO possesses a large budget derived from its status as a UN agency, has accumulated vast specialist expertise over the years and can draw on the knowledge and experience of the hundreds of international and national NGOs to which it has granted observer status (according to Braithwaite and Drahos 2000: 68), the benefits of collaboration between the WTO and WIPO on international intellectual property protection have proved self-evident. To this end, the TRIPs Council and WIPO concluded an agreement on cooperation, which came into force on 1 January 1996. 14 The agreement provides for cooperation in three main areas: first, notification, access to and translation of national laws and regulations; second, implementation of procedures for protection of national emblems; and, third, technical cooperation. In the post-Uruguay Round era, the role of WIPO has been redefined. It now plays an important role in the provision of information and advice to developing countries. WIPO now regularly organises workshops to train customs and judicial officials from developing countries and, given its far larger resource base than the WTO, is well placed to continue to play an active role in educating and advising developing countries of how best to enforce their international obligations (see also Durán and Michalopoulos

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1999: 863). It has been reported that global business interests have praised the teaching function of WIPO (Ryan 1008: 131). This is perhaps not surprising if one accepts Reichman’s (1998: 592) assertion that some of the firms, trade associations and governments in the developed world have exerted pressure on international organisations such as WIPO in an attempt to constrain the advice that is offered to developing countries, with the aim of replicating developed country laws rather than adopting a more imaginative approach. The implication that attempts have been made by global business interests to capture WIPO therefore appears to hang over its role in providing technical assistance for developing countries. A more explicit role for global corporate actors is also envisaged under Article 67 of the TRIPs Agreement. Article 67 of the TRIPs Agreement requires that developed countries provide technical and financial cooperation to enable developing and leastdeveloped countries to enhance their enforcement capabilities (see also Bronckers 1994: 1279; Durán and Michalopoulos 1999: 856). Reichman (1997: 355) even proposes that (corporate) rights holders should devote a share of their expected gains to making a contribution to local enforcement agencies in poorer developing countries. The WTO TRIPs Secretariat has declared that the TRIPs Council will monitor closely the assistance given by developed country governments and private actors in this respect (Giust 1997: 96; Otten and Wager 1996: 410). Technical assistance of this type is essential for developing countries to reform their intellectual property systems. Without this assistance, many developing countries would simply lack the financial resources, expertise and administrative capacity to achieve effective enforcement. In the short term, therefore, the help of government officials and global corporate actors from developed countries is seen as crucial in assisting legislative, administrative and enforcement bodies in the developing world (Verma 1996: 359). Groups representing corporate intellectual property interests in the United States have been active in fulfilling this role, with the IPC involved in providing training sessions for government officials from developing countries; it has cooperated with WIPO by providing a list of named speakers from business who are willing to assist with training and awareness exercises in the developing world. Global business has also been active through the establishment of public–private partnerships between international intergovernmental institutions and global corporate actors, formalised under the umbrella of the United Nations Economic Commission for Europe (UN/ECE) Advisory Group on the Implementation of Intellectual Property Rights for Investment. The Advisory Group has the objective of encouraging improved standards of intellectual property protection in Eastern Europe and the Commonwealth of Independent States (CIS), with sponsorship provided by Gillette, the IFPI, Merck, Microsoft, Philip Morris and corporate sector organisations including Interpat.15 Yet the view from the United States – a view held in both business and government – tends to be much more mixed on the issue of providing

Impact of the TRIPs Agreement on developing countries 121 information and advice than in the European Communities. Some business groups are largely opposed to providing technical assistance to developing countries, with the IIPA of the opinion that the requisite political will necessary to achieve enforcement of the TRIPs Agreement in developing countries does not necessarily require any technical assistance on the part of developed countries at all, assistance often being seen as a sign of weakness on the part of developed countries at the very time that pressure needs to be exerted on developing nations. Other business groups, such as the IPC, have taken part in business delegations to developing countries with a view to disseminating best practice in intellectual property protection. The European Communities, on the other hand, have sought to distinguish between getting the appropriate legislative instruments on the statute books in developing countries, for which technical assistance is not necessarily required, and enforcing intellectual property protection, for which training of government officials and the judiciary can usefully be offered. There are even those within the European Commission who hold the view that the apparent US antipathy towards the provision of technical assistance to developing countries is actually because the US government does not, in reality, have access to the financial resources to undertake the type of technical aid programme that the European Communities have operated so well. While the United States has been able to offer a small amount of technical assistance via FBI training of enforcement officers in developing countries, the view from the European Communities is that an under-resourced administration like the USTR does not have the capability to engage in the type of initiative pioneered by the European Commission. For this reason it is largely left to the European Communities to fund technical assistance projects and to stress the need for a balanced carrot and stick approach to granting financial and technical assistance. From the EC perspective, the ‘stick’ comes in the form of bilateral trade agreements which include a requirement that improvements be made in intellectual property protection in return for trade privileges, in this respect no different from the US bilateral approach used so effectively since the mid-1980s. EC business has played an important role in the provision of information and advice in developing countries. The Scottish whisky distillers, for example, have undertaken an ongoing programme of advising customs officials from countries with particularly large markets for counterfeit brands of whisky (such as Bulgaria) and of training officials to detect the genuine spirits. Similarly the phonographic industry, which is particularly strong in the United Kingdom, has been active in advising customs officials on how to detect counterfeit compact disc recordings. In this respect, the frontline experience and expertise of UK business gives it a notable advantage over its national government officials. The involvement of UK business in the provision of assistance for developing countries also provides the United Kingdom with the opportunity to send a list of technical assistance programmes to the TRIPs Council annually. Although the submission of such a list is not a legal

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requirement, it provides the United Kingdom with the opportunity to underpin the UK’s record of assistance for developing countries, particularly through the know-how fund for Central and Eastern Europe, with practical examples from the industries concerned. The European Communities also play an important role in the provision of information and advice for developing countries through financial assistance to fund education programmes such as the Technical Assistance to the Commonwealth of Independent States and Mongolia (TACIS) programme16 and the Poland and Hungary: Aid for Economic Restructuring (PHARE) programme,17 which provides assistance for other countries in Central and Eastern Europe. Similarly, the European Communities have provided technical assistance to countries in the Association of South East Asian Nations (ASEAN) 18 and China to assist with improvements on intellectual property protection.

Assessment The likelihood is that the TRIPs Agreement will have an adverse short-term socio-economic impact on developing countries, only partly offset by the provision of advice and assistance from WIPO, developed country governments and global corporate actors. The result is that the debate on the impact of TRIPs has fundamentally changed since the Agreement was first devised. In the light of predictions that the TRIPs Agreement will have an adverse impact on developing countries, the arguments against international standards of intellectual property protection have grown considerably since the end of the Uruguay Round negotiations. In the light of these concerns, the prospects for review and renegotiation of the TRIPs Agreement are examined in the next chapter.

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Future of the TRIPs Agreement

Global corporate actors see the TRIPs Agreement as a major achievement. It is certainly true that, by raising intellectual property as a significant issue for international trade during the Uruguay Round, business interests in developed countries demonstrated a remarkable propensity to engage in alliance building, achieving a consensus in favour of improved international intellectual property protection that was to hold firm throughout negotiations for the TRIPs Agreement. Corporate actors also showed themselves to be astute negotiators, recognising early on the importance of strategic repositioning and forum shifting from an initial bilateral approach reliant on US trade legislation to a multilateral approach involving US, European and Japanese actors with the objective of linking intellectual property to trade through the Uruguay Round of GATT. The consensus achieved demonstrated the heterogeneity of corporate interests worldwide and raised intellectual property rights as a new agenda item for international trade negotiations. Without the global corporate consensus there quite simply would have been no WTO Agreement on Trade-Related Aspects of Intellectual Property Rights. Technical support provided by industry experts was also crucial, providing US and EC delegations to the Uruguay Round with the detailed practical knowledge of intellectual property rights that public officials on occasion lacked. There is now a risk, however, that although global corporate actors are working hard to maintain the momentum that made possible the achievements of the Uruguay Round, those efforts may be undermined by a fragmentation of the very consensus among global corporate actors and developed country governments that made the TRIPs Agreement possible in the first place. This chapter considers the extent to which global business interests have been able to hold together the industry consensus that proved so significant during the Uruguay Round negotiations. It also considers the extent to which fragmentation of the consensus has been precipitated by a range of pressures both internal to the global business community and external to it.

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Will the Uruguay Round consensus hold? The Transatlantic Business Dialogue At the outset it must be acknowledged that, to a large extent, the common interests that made possible the Uruguay Round consensus still exist. Global corporate actors and developed countries have worked hard on preparations for a review of the built-in agenda of the TRIPs Agreement. At the same time monitoring implementation and enforcement has become a high priority following the expiration of the Article 65 transitional arrangements for developing countries. One of the main venues for maintaining the global business consensus on these issues has been the Transatlantic Business Dialogue (TABD). The TABD, which held its first conference in Seville in November 1995, was initially conceived as a mechanism through which companies and business associations could develop joint US–EC trade policy recommendations by working together with the European Commission and the US Administration. The TABD now involves representatives of a range of companies in the United States and Europe that have transatlantic commercial interests. It seeks to offer a framework for cooperation between the transatlantic business community and the governments of the United States and European Communities across a range of issues including standards, certification and regulatory policy; market access; government procurement; investment; business practices; export controls; taxation; customs; small and medium-sized enterprises; and intellectual property rights.1 With respect to intellectual property rights, the TABD has provided a forum for dealing with unresolved issues on intellectual property protection in respect to deficiencies in both bilateral and multilateral arrangements. In May 1996, under the auspices of its Intellectual Property Issues Group, the TABD produced an interim report on what needed to be done to revise the TRIPs Agreement. By October 1997 those interim findings had been formalised, at a symposium involving officials from the US government and the European Commission, into an Intellectual Property Issues Group Action Plan. Among the recommendations contained in the Action Plan was an undertaking that the United States and European Communities should work together at both government and industry levels to coordinate efforts to provide training and technical assistance designed to assist developing countries in meeting their obligations in accordance with Article 67 of the TRIPs Agreement. The Action Plan also recognised the importance of effective enforcement mechanisms as a means of reducing piracy levels through remedies, damages and criminal penalties. By November 1996 the aims of the Action Plan were formalised in the TABD Chicago Declaration, which included calls on the United States and European Communities to launch efforts to ensure accelerated implementation of TRIPs obligations in developing countries and to achieve maintenance of non-discriminatory regimes conducive to full market access

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for intellectual property protected products. Chicago also set in motion the process of drafting a so-called ‘Living Annex’ to the Declaration, setting out the deficiencies in intellectual property protection and enforcement in developing countries that the TABD wished to bring to the attention of the US and EC authorities. In the Annex, the TABD identified countries having deficiencies in their intellectual property protection and enforcement resulting in significant commercial losses to industry. The Annex remains undated so that it can be regularly updated, with initial priority given to those countries representing the most important markets for US and EC business, namely Argentina, Brazil, Canada, Hungary, Israel, India, Indonesia, Japan, Mexico, the People’s Republic of China, the Russian Federation and Turkey. In addition to the TABD’s concerns about inadequate intellectual property protection in developing countries, the Living Annex sets out a range of differences between the United States and the European Communities, where first-to-file continues to be a major issue within patent harmonisation. The United States, it will be recalled, has a patent system based on the principle of first-to-invent with the result that, from the EC perspective, legal uncertainty and additional costs are introduced into the patent system.2 The European Commission initiative on a ‘New Transatlantic Marketplace,3 raised the stakes on first-to-invent further in March 1998, describing the US system as ‘anachronistic’ and ‘extremely demanding in terms of evidence for all inventive activities’.4 The significance of these differences between the United States and the European Communities as factors contributing to fragmentation of the Uruguay Round consensus is discussed later in the chapter. The IPC and the ‘Millennium timebomb’ A related proposal to focus the attention of the business community on implementation and enforcement of the TRIPs Agreement in developing countries was initiated in February 1998 when the IPC, which spearheaded the original business transatlantic initiative during negotiations for the TRIPs Agreement, proposed to UNICE that TRIPs implementation issues should mark a continuation of the IPC–UNICE alliance that had worked so successfully during TRIPs negotiations. The IPC proposal resulted in what became known as the ‘Gorlin Draft’, an international strategy which sought to prevent a ‘Millennium timebomb’ of developing countries coming forward in accordance with the Article 63 TRIPs Council review procedure on 1 January 2000 to demonstrate the conformity of national measures taken to ensure effective enforcement of the TRIPs Agreement. In practice the IPC and UNICE feared that developing countries would be unable to provide evidence that those enforcement levels had been met, effectively extending the transitional periods available for developing country compliance.5 In addition, the Gorlin Draft anticipated that the WTO Dispute Settlement Procedures

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would be overwhelmed by a flood of WTO intellectual property complaints with the result that the effectiveness of the WTO to develop and enforce international rules would be seriously called into question. The strategy recommended in the Gorlin Draft was fourfold: first, that industry should seek to activate governments, namely to encourage the WTO delegations from the developed world to put pressure on developing countries in the TRIPs Council to ensure effective enforcement; second, to initiate a process by which representatives from industry would participate in regional conferences designed to raise awareness of the significance of intellectual property protection in developing countries; third, to ensure that industry continued to engage bilateral investigations, namely monitoring and surveillance exercises to ascertain whether developing countries were meeting their obligations under the TRIPs Agreement; and, fourth, to encourage the provision of technical assistance to developing countries via industry involvement in initiatives undertaken by WIPO, public awareness campaigns and Embassy programmes organised in developing countries. The Gorlin Draft resulted, on 5 May 1998, in the issuance of a joint IPC– UNICE statement, expressing concern that a large number of developing countries would not have adopted the laws and regulations necessary to bring them into compliance with the TRIPs Agreement by the ending of the Article 65 transitional arrangements. The joint statement concluded by calling on the European Commission and the United States and European governments to intensify their efforts to ensure proper and timely TRIPs implementation in developing countries. Global business has also continued to press its case for close scrutiny of developing country implementation and enforcement of the TRIPs Agreement through a direct dialogue with the WTO Secretariat in Geneva. In September 1998 a joint IPC–UNICE delegation travelled to Geneva to advise the TRIPs Secretariat on industry priorities, particularly in relation to ensuring that all obligations under the TRIPs Agreement are complied with before undertaking a new round of WTO trade negotiations and making recommendations as to how to avert a ‘Millennium timebomb’ in developing countries. That delegation from the business community included Jacques Gorlin of the IPC and strong representation from the global proprietary pharmaceutical industry in the form of patent experts from GlaxoWellcome and Pfizer. The pharmaceutical industry: pipeline protection and supplementary protection certificates The global proprietary pharmaceutical industry has also been active in seeking refinement of the TRIPs Agreement, with calls for pipeline protection for medicinal products and improvements to the arrangements under TRIPs for the handling of confidential information required for regulatory approval. Article 39.3 requires that Members protect undisclosed test or other information against unfair commercial use, except where necessary to protect

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the public, during the process of approving the marketing of new pharmaceutical or agricultural chemical products that utilise new chemical entities. The omission of a fixed period of protection for data included in regulatory submissions leaves open the prospect of individual countries offering lax standards, given that discretion as to the length of duration for data protection is to be retained by WTO Members. The pharmaceutical industry in the United Kingdom has been particularly critical of Article 39.3 on the grounds that it does not provide sufficient protection for information provided as regulatory submissions because the TRIPs Agreement provides insufficient clarity as to the term of protection that is required. In most EC countries, including the United Kingdom, ten-year protection exists, with Spain increasing its term of protection from six to ten years at the end of the 1990s. Nevertheless, Portugal continues to offer protection for a maximum of six years, and data protection for regulatory submissions in the United States only operates for a five-year period. Similarly, the global pharmaceutical industry remains dissatisfied that the TRIPs Agreement does not provide for an extension to the term of patent protection equivalent to the five-year supplementary extension certificates that are available for pharmaceutical and agricultural chemical products in, for instance, the United Kingdom, the United States and Japan. In this respect, the TRIPs Agreement merely provides for a basic twenty-year period of patent protection which, it is argued by industry, fails to take account of the regulatory approval procedures that new drugs and chemical substances must undergo for a number of years before they can be made available on the market. The reason why supplementary extensions to the duration of patent life were not included in the TRIPs Agreement appears to have been that having moved from a pre-TRIPs situation in which more pressing issues, such as use of compulsory licences, had been dealt with to the benefit of the pharmaceutical and agricultural chemical industries, it was then difficult to sustain a negotiating position to the effect that these same companies should benefit from positive discrimination in the form of supplementary patent certificates.

Signs of fragmentation in the Uruguay Round consensus on intellectual property In the wake of the successes of global corporate actors and developed country governments in terms of achieving consensus on the need for a TRIPs Agreement during the Uruguay Round, there are indications that the consensus is now beginning to fragment. These signs of fragmentation can be categorised into the following issues: the role of institutions as gatekeepers, principally the USTR and the EC’s Article 113 Committee, which must respond to the wider imperatives of international diplomacy in addition to safeguarding the intellectual property interests of its nationals abroad; factors internal to the global business community that have led to cracks in the

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Uruguay Round consensus previously enjoyed during TRIPs negotiations; factors external to the global business community in the form of entry by new actors that have been mobilised since the end of the Uruguay Round; and the impact of Reports issued by Dispute Settlement Panels of the WTO that have limited the scope of complaints which have been allowed relating to the TRIPs Agreement. This chapter examines each of these in turn.

Institutions as gatekeepers The limits of international diplomacy As discussed in Chapter 4, the role that the USTR engages in to manage its relations with corporate actors is very much that of an institutional ‘gatekeeper’, with US policy-makers often constrained by wider issues of political diplomacy when considering whether to act on complaints by private business interests regarding TRIPs Agreement implementation problems. This gatekeeper role creates a situation in which, by using its discretionary powers to decide whether to bring complaints relating to compliance with the TRIPs Agreement before the WTO, the US Administration will be mindful of wider issues relating to national security and foreign policy. Policy issues outside the scope of trade relations therefore have a considerable potential to influence the US Administration’s decision on whether or not to bring a complaint against another WTO Member under the Dispute Settlement Procedure. As a result, US corporate actors have complained that the stated US policy of ensuring compliance with the TRIPs Agreement is hindered by wider concerns relating to international diplomacy, with the USTR not the only agency in the Administration with an interest in developing countries. The result has been that the USTR has in the past been reluctant to initiate complaints against Argentina for inadequate patent protection of pharmaceutical products or against South Africa for measures allowing parallel imports and arrangements for granting compulsory licensing for pharmaceutical products. This reluctance to act on the part of the USTR remains a source of frustration for corporate actors that fear the achievements of the TRIPs Agreement will be undermined if the US Administration continues to allow wider diplomatic concerns to take precedence over the need to ensure effective intellectual property protection via complaints to the Dispute Settlement Body. Chapter 4 also showed that similar diplomatic constraints have been encountered in the European Communities, where the Article 113 Committee procedure in principle offers a mechanism for action against recalcitrant trading partners with each EC Member State holding the procedural right to ask the Commission to investigate allegations of inadequate intellectual property protection in non-Member States. As in the United States, however, international diplomacy often creates problems leading to inaction against

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recalcitrant third countries. Since unanimity among the fifteen EC Member States is required before the Article 113 Committee can decide to take action against a country deemed to provide inadequate protection of intellectual property rights, the reality is that at any given moment it is likely that at least one Member State will be at a sensitive stage in its relations with a country that will lead it to step back from supporting the sanctioning of action by the Article 113 Committee. In this respect, the Committee frequently acts as a ‘gatekeeper’ in much the same way as the USTR, filtering out complaints based on grounds of inadequate intellectual property protection where international relations concerns take primacy over narrower trade issues.

Disputes between actors in developed countries For many global corporate actors, trade-related intellectual property rights have now ceased to be an issue deemed to be of sufficient urgency to garner consensus among an otherwise disparate corporate lobby in its relations with government policy-makers with regard to trade matters. In this respect, the TRIPs Agreement is seen by many of the key players involved in building business consensus in the run-up to the Uruguay Round as being only achievable at a particular moment in time through a coming together of pan-industry global business interests. Some credence can be accorded to the view that the developed country consensus that lay at the heart of the TRIPs Agreement has begun to show increasing signs of strain since the conclusion of the Uruguay Round if one observes the series of complaints brought before the WTO Dispute Settlement Body. As predicted by Reichman (1995: 390), the TRIPs Agreement has set developed countries against other developed countries. In addition to the disputes already discussed in Chapter 4, the European Communities have made complaints to the DSB in relation to Sections 301–10 of US Trade Act of 19746 and in relation to Section 110(5) of the US Copyright Act,7 and the United States has made a complaint in relation to Section 44 of the Canadian Patent Act.8 These disputes between developed country governments have dominated Dispute Settlement Panels’ deliberations in relation to the TRIPs Agreement to an extent that is surprising, even given that the existence of transitional periods under Article 65 of the TRIPs Agreement may thus far have limited the number of disputes involving developing countries. Even outside the realm of Dispute Settlement Panels, tensions between the United States and the European Communities were apparent as early as March 1998, when European Commissioner Sir Leon Brittan announced proposals for a new US–Europe trade area. The Brittan proposals highlighted the differences between the United States and the European Communities on first-to-file and were criticised by many intellectual property experts in the corporate sector precisely because they raised the differences between US and EC business interests at the expense of an opportunity to present a

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common front against poor intellectual property protection in developing countries. Given that the European Communities have continued to put pressure on the United States bilaterally to adopt a first-to-file procedure, the issue appears likely to continue to be divisive and has significant potential to undermine developed country consensus during any future review of the TRIPs Agreement (see also Watal 1999: 17). The potential of the first-to-file debate to undermine developed country consensus is also apparent at the level of the TABD. Although there have been calls from IPC and Interpat for the TABD to become a more cooperative forum in which the interests of business in the United States and European Communities can be coordinated so as to present a unified voice to developing country governments, in practice companies have criticised the tendency for the TABD to spend too much time and effort trying to resolve the first-to-file issue. Even where the TABD has been able to act coherently in relation to intellectual property protection, such as via the ‘Living Annex’ to the Chicago Declaration, there are concerns among the business community that this strategy of putting pressure on developing countries can be counterproductive, sending the wrong message by indicating that global corporate actors are exerting undue pressure to improve intellectual property protection within developing countries in a manner which is interpreted as challenging developing countries’ national sovereignty. The immediate task for groups representing global business interests must be to ensure that developing countries have fulfilled their obligations at the end of the transitional period, then worry about what the terms of the TRIPs Agreement actually require later, finally dealing with ‘wish lists’ of what the TRIPs Agreement would look like in an ideal world. Yet, although the remit of single-issue groups representing business interests, such as the IPC and IIPA, now includes monitoring implementation of the TRIPs Agreement in developing countries, in practice companies are now more focused on industryspecific intellectual property issues. Although the key to the success in getting intellectual property protection on to the Uruguay Round agenda and subsequently achieving the terms set out in the TRIPs Agreement was the cohesiveness of US industry and its willingness to speak with one voice, the pre-TRIPs Agreement consensus across industries on a global scale has now become more focused on gaining competitive advantage than on common goals. Even within industry sectors, there are signs of tension in the previously solid pro-TRIPs Uruguay Round consensus. On pipeline protection, for example, individual proprietary pharmaceutical companies are seeking to gain competitive advantage by disputing when the retroactive effect should start, with arguments centring on commencing retroactivity depending on when their own patents and those of their competitor firms were first filed.

Entry of new actors The global corporate consensus in favour of the TRIPs Agreement also faces threats as new actors, namely industries, NGOs, WTO Members and

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international institutions not active during the Uruguay Round process in relation to intellectual property negotiations, enter the debate on the future of TRIPs. Industry Of particular significance among these new actors are generic drug manufacturers that have entered the debate on the current impact and future reform of the TRIPs Agreement in a concerted manner since the end of the Uruguay Round, becoming better organised and more likely to present the generic industry’s viewpoint on an international scale (Waters 1996: 771). In the pharmaceutical sector the impact of a better coordinated and more articulate generic drug industry is that proprietary companies no longer have a clear route of access to government in relation to public policy on international intellectual property protection. There is also concern among proprietary pharmaceutical companies that generic companies are already thinking about how to work at the margins of the TRIPs Agreement, using loopholes and interpretations of the text in a manner capable of allowing competitive advantage to accrue to manufacturers of off-patent pharmaceutical products. There may be some genuine grounds for these concerns given the attempted interpretation of Bolar exemptions and related stockpiling provisions rules in Canada, Israel and Cyprus, as discussed in Chapter 4. Non-governmental organisations NGOs with concerns about the impact of the TRIPs Agreement in relation to health care, developmental and environmental issues (see also Newell 2000: 117) are increasingly articulating their views in a way that was almost entirely absent during the Uruguay Round negotiations leading to the TRIPs Agreement. These NGOs are likely to enjoy a much higher profile in any future round of WTO negotiations, not least because the WTO is now anxious to improve the legitimacy of its activities through interaction with civil society groups.9 NGOs are, for their part, seeking to provide a voice capable of speaking up for developing countries (see also Abbott 1996: 400), which were perceived as lacking negotiating expertise and bargaining power during the Uruguay Round. In this respect, US-based groups such as the International Forum on Globalization10 and Public Citizen11 have been active in predicting that the TRIPs Agreement will have adverse effects on developing countries, particularly due to rising consumer prices, infringements on the rights of indigenous peoples and adverse effects on biodiversity (see also Drahos 1997: 206). Blakeney (2001: 540) also describes the work of the federation of indigenous peoples groups that, on 25 July 1999, issued a statement expressing concern that Article 27.3(b) of the TRIPs Agreement would further denigrate and undermine their rights to cultural and intellectual heritage. A coalition of NGOs and local groups in developing countries is therefore highlighting

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the likelihood of a negative effect of the Agreement in a way that was simply not evident during the Uruguay Round negotiations.12 The perceived plight of farmers in developing countries is a case in point. The crucial international agreement relating to farmers in developing countries is the UPOV Convention on Plant Breeders’ Rights, which, although not explicitly mentioned in the TRIPs Agreement, has been widely taken as a model for many developing countries that opt to exclude from patentability plant varieties, relying instead on a sui generis system as specified in Article 27.3(b). Adopting the UPOV Convention on the basis that it offers the most readily available form of sui generis protection, however, has drawbacks for developing country farmers. The UPOV Convention has been revised three times, in 1972, 1978 and 1991. Although the last revision of the Convention is still acknowledged as being far less extensive in scope than the TRIPs Agreement provisions on patent protection (Pacón 1996: 345), in a move described by Reichman (1995: 359) as having ‘elevated these standards of protection from a modified copyright model to a modified patent model’, WTO Members opting to become signatories to the 1991 version of UPOV as a means of avoiding patent protection for plant varieties do face drawbacks. The main problem is that, whereas the 1978 version of the UPOV Convention had been widely interpreted as allowing farmers to save and exchange seed (Tancer and Tancer 1999: 907), the 1991 version does not allow this. As a result, there is concern among NGOs and developing country governments that global corporate actors such as Monsanto, one of the largest seed companies worldwide, will require farmers to purchase their seed and agree to monitoring of their crops to ensure that they are not retained and used for next year’s planting (Tancer and Tancer 1999: 906). In the light of growing concern about the impact of the 1991 version of the UPOV Convention, there have been attempts by the African countries to alleviate the plight of farmers in developing countries by clarify the meaning of sui generis protection within Article 27.3(b) to provide for the continuation of traditional farming practices including the right to exchange and save seeds (see Tancer and Tancer 1999: 908). Meanwhile, from the perspective of global corporate actors, there are indications that the TABD will seek to take steps to encourage developed country governments to reduce the flexibility allowed under Article 27.3(b) during the Doha Development Round by insisting on more specific reference to the standards provided under the 1991 version of UPOV in relation to the types of sui generis protection available for plant varieties (see also Durán and Michalopoulos 1999: 864). World Trade Organisation Members Although developing countries made little contribution during the formulation of the TRIPs Agreement, save for adopting an early negotiating strategy of stating a preference for WIPO over GATT as the most appropriate forum for discussing intellectual property rights (see also Blakeney 2001:

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537), as the impact of the TRIPs Agreement has become more widely understood the response from developing countries has become more pronounced. In formulating their response to the TRIPs Agreement, developing countries have, however, to some extent been hindered by an absence of reliable economic impact assessment (see also Watal 1999: 29) and arguably need a period of reflection now that the transitional period has come to an end in order to assess the actual implications, as opposed to the predicted impact discussed in Chapter 5, of the TRIPs Agreement. Nevertheless, developing countries have already begun to complain bitterly that developed countries have failed to take account of their obligations under Article 66.2 of the TRIPs Agreement to provide adequate incentives for businesses to promote technology transfer to developing nations. Developing countries have, according to Durán and Michalopoulos (1999: 866), sought to encourage technology transfer further by including a full review of the effectiveness of Article 66.2 implementation in any renegotiation of the Agreement. Applicant countries for WTO membership will also bring fresh implementation problems for the TRIPs Agreement. The People’s Republic of China, for instance, received approval for its application for membership of the WTO at the Ministerial Meeting in Doha, Qatar, in November 2001. China is almost completely up to speed in legislative terms but still has major problems with intellectual property enforcement (see Dessler 1995). The Russian Federation, which remains an applicant for WTO membership, has its own problems in relation to legislation giving effect to copyright protection that will need to be resolved. International institutions International institutions such as the World Health Organization (WHO) have expressed particular concerns about the implications of higher prices of patented pharmaceutical products (see also Wilder 2001: 526). These organisations, together with NGOs such as Oxfam,13 have campaigned in support of South African plans to allow parallel imports and compulsory licensing to ensure access to medicines required locally to combat the HIV virus. In many respects, this debate on access to essential medicines has come to typify current anxieties about the impact of the TRIPs Agreement, with senior policy-makers taking part in seminars on this topic, such as those organised jointly by the WHO and WTO Secretariats in April 2001,14 by the Royal Institute of International Affairs, London, in July 2001,15 and via special discussions on intellectual property and access to medicines within the TRIPs Council in June16 and September 2001.17 Some commentators have sought to encourage debate on whether the WHO or other international institutions can do anything to persuade developed countries and global corporate actors to display a more sensitive understanding of the needs of developing countries (Abbott 2001: 13),

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particularly when consumers in those countries are unable to pay the full price for proprietary pharmaceutical products (Wooldridge 2000: 111). But, conversely, there are also reports that global corporate actors have sought to exert pressure on international organisations, such as WIPO, the WHO and UNCTAD, with a view to constraining the advice given to developing countries to that of strict compliance with the TRIPs Agreement (Reichman 1998: 592). In response to concerns about the implications of higher prices of patented pharmaceutical products, at the Fourth WTO Ministerial Conference in Doha, Qatar, on 14 November 2001, Members adopted a ‘Declaration on the TRIPs Agreement and Public Health’.18 The Declaration recognised the gravity of the public health problems afflicting many developing and least-developed countries, especially those resulting from HIV/AIDS, tuberculosis, malaria and other epidemics. It stressed the need for the TRIPs Agreement to be part of the wider national and international action to address these problems. The Declaration recorded the WTO Members’ agreement that TRIPs does not and should not prevent measures to protect public health and affirmed that the TRIPs Agreement should be interpreted and implemented in a manner supportive of WTO Members’ right to protect public health and, in particular, to promote access to medicines for all. Accordingly, the Declaration recognised the flexibilities contained in the TRIPs Agreement with respect to the right to grant compulsory licences and the freedom to determine the grounds upon which such licences are granted; the right of each Member to determine what constitutes a national emergency or other circumstances of extreme emergency, it being understood that public health crises can represent a national emergency or other circumstances of extreme urgency; and the effect of provisions of the TRIPs Agreement that allow each Member freedom to establish its own regime for exhaustion of intellectual property rights, subject to the national treatment and mostfavoured-nation treatment provisions of Articles 3 and 4 of the TRIPs Agreement. The Declaration then recognised that WTO Members with insufficient or no manufacturing capacities in the pharmaceutical sector could face difficulties in making effective use of compulsory licensing under the TRIPs Agreement and instructed the TRIPs Council to find an expeditious solution to this problem and to report to the General Council of the WTO before the end of 2002. Finally, with particular regard to least-developed (but not developing) countries the Declaration reaffirmed the commitment of developed countries to provide incentives to their enterprises and institutions to promote and encourage technology transfer to least-developed countries pursuant to Article 66.2. Furthermore, under the terms of the Declaration, least-developed country Members are not be obliged, with respect to pharmaceutical products, to implement the provisions of the TRIPs Agreement relating to patents (Section 5 of Part II) or the protection of undisclosed information (Section 7 of Part II) or to enforce rights provided for under these sections until 1 January 2016. This timescale is introduced without prejudice to the right of least-

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developed country Members to seek other extensions of the transitional periods as provided by Article 66.1. However, as Abbott (2001: 36) points out, although the Ministerial Declaration may well be useful as a near-term mechanism for addressing developing and least-developed country concerns, it will not carry the same weight as the TRIPs Agreement itself in the Dispute Settlement Procedure. In the longer term, negotiating amendments to the TRIPs Agreement during the Doha Development Round still remains a distinct possibility.

Limiting the scope of the TRIPs Agreement: the role of Dispute Settlement Panels Limits to the interpretation of the TRIPs Agreement also appear to have been set in relation to the ‘legitimate expectations’ doctrine as interpreted by the Appellate Body in the India–US Mailbox Dispute, discussed in Chapter 4. Reichman has been quick to acknowledge that, in the light of the Appellate Body Report on the mailbox dispute, ‘one can no longer argue that activist panels may fill the gaps in international intellectual property law by reference to the “legitimate expectations of members and private rights holders concerning conditions of competition” ’ (Reichman 1998: 596). The Appellate Body Report appears to confirm that the TRIPs Agreement leaves developing countries free to introduce laws and policies in relation to intellectual property protection provided these were not expressly harmonized in the TRIPs standards themselves’ (Reichman 1998: 597). It follows that ‘developed countries are unlikely to prevail in actions for failure to respect the enforcement procedures of the TRIPs Agreement unless they can show a pattern of flagrant violations … because developing countries need not provide foreign rights holders with a better quality of legal product than is available to their own citizens, which is usually poor by our standards’ (Reichman: 1998: 598).19

Prospects for the future: renegotiating the TRIPs Agreement? Given that any revision of the TRIPs Agreement will take place in the context of the Doha Development Round of WTO trade negotiations (see also Watal 1999: 29), as during the Uruguay Round negotiations intellectual property protection will in all probability be used in trade-offs in other sectors such as agriculture (see also Durán and Michalopoulos 1999: 865). One suggestion has been that developing countries should ensure that, in a move away from the package deals done during the Uruguay Round, any revisions of the TRIPs Agreement should be achieved on their own merits, with no bargaining across diverse trade issues (Gerhart 2000: 312). As net importers of intellectual property rights, developing countries should also occupy a negotiating stance as consumers, not producers, of intellectual property and in doing so form

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global alliances with NGOs, consumers, health care representatives and providers of educational facilities worldwide to devise a coherent and reasoned argument for improved access/lower royalty payments to technology protected by intellectual property rights. Developed country priorities Amendments to the TRIPs Agreement that would be desirable to global corporate actors, on the other hand, include tightening up the text, closing loopholes and adding omissions such as pipeline protection. The main issues for business interests are undoubtedly transitional periods, enforcement problems and a willingness to prosecute for non-implementation. Developed countries, in their communications to the WTO General Council in preparation for the 1999 Seattle Ministerial Conference, also made clear their priorities for further negotiation and/or review of the TRIPs Agreement. The United States20 proposed including the issue of biotechnology patents and noted that Article 27.3(b) required the review of provisions allowing Members to exclude plants and animals from patentability for four years after the entry into force of the WTO Agreement. The European Communities21 noted that the ‘built-in agenda’ of TRIPs included a review of provisions on geographical indications, including a multinational register for wines, spirits and other products, explicitly stated that there should be no question of lowering standards or granting further transitional periods in any future negotiation of the TRIPs Agreement, noted that differences between the first-to-file and first-to-invent patent systems led to unnecessary burdens for inventors, and called for the WTO to build upon international consensus reached by WIPO in the field of copyright and related rights and in the context of the information society. On this last point, intellectual property rights in relation to electronic commerce are not at present covered by the TRIPs Agreement (see also Ryan 1998: 199). In 1996 WIPO concluded the Copyright Treaty22 (which deals in particular with online communications through the internet) and the Performances and Phonograms Treaty.23 The European Communities have subsequently adopted a Directive on copyright in order to implement the WIPO treaties, whereas the US has introduced the Digital Millennium Copyright Act.24 There have been discussions about incorporating these treaties within any future revision of the TRIPs Agreement. Japan25 called for full implementation of the TRIPs Agreement and shared priorities of the European Communities in relation to patent harmonisation around the first-to-file system, the need for the TRIPs Agreement to take account of higher levels of protection achieved in other treaties or conventions (presumably the WIPO copyright treaties), and reiterated that any negotiations should not discuss reducing the current level of protection for intellectual property rights (see also Watal 1999: 6).

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Developing country priorities Many developing countries and those actors, including NGOs, expressing concerns about the impact of the TRIPs Agreement see the built-in agenda and the opportunity for the TRIPs Council to review the application of the TRIPs Agreement as offering some prospect of renegotiation and relief from the costs of compliance. The built-in agenda, it will be recalled, required that a review of Articles 22.1, 23.4, 24.1 and 27.3(b) commence in 1999. These provisions concern unresolved issues from the Uruguay Round negotiations relating to geographical indications (Articles 22.1, 23.4 and 24.2) and a review of patent protection for plants and animals other than microorganisms and sui generis protection for plant varieties (Article 27.3(b)).26 Moreover, Article 71.1 of the Agreement provides for the TRIPs Council to review its implementation after the expiry of the 1 January 2000 deadline for the ending of the transitional period for developing countries and every two years thereafter (see Article 65.2) (Durán and Michalopoulos 1999: 853). There are, however, different interpretations of how the review of the builtin agenda should be conducted. Grubb’s (1999: 46) opinion on the review of Article 27.3(b), for instance, is that it should be strictly on the narrow issue of whether the exclusion of plants and animals from patentability should be retained in the TRIPs Agreement, although there are concerns that environmental NGOs and some developing countries will use the built-in review as a ‘foot in the door’ to renegotiate the TRIPs Agreement more widely. Equally, it has been claimed by developing countries that, according to the first sentence of Article 71.1, a review of the entire TRIPs Agreement should have been initiated in the year 2000. Grubb (1999: 47) and Blakeney (2001: 534), however, interpret the provisions of Article 71.1 merely as referring to a review of TRIPs implementation, since it would make no sense to commence renegotiation of the Agreement before full implementation has been achieved and its impacts properly assessed. In relation to sui generis protection, the review of Article 27.3(b) has already begun within the TRIPs Council as part of the built-in agenda of the Agreement. It should be borne in mind that this issue was not settled definitively during the Uruguay Round negotiations because of differences between the US and EC positions (see also Watal 1999: 5) rather than because of recognition of developing country opposition to the patenting of plants and animal inventions. Although the United States remains keen on identifying the UPOV Convention as the reference treaty for the interpretation of sui generis protection, environmental NGOs, wholly absent from the original TRIPs Agreement negotiations, are now actively campaigning for the whole of Article 27.3 to be deleted (Blakeney 2001: 537) on grounds of morality and ethics. Developed countries are reluctant to reappraise the status of Article 27.3(b), particularly with the issue still not fully resolved internally within the European Communities (Watal 1999: 9). Developing countries are also concerned about possible discrepancies

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between the UN Convention on Biodiversity (CBD) 27 and the TRIPs Agreement. The CBD recognises that nations have sovereignty over biological resources and acknowledges the benefits of equitable sharing of any benefits arising from these resources or from traditional knowledge related to biological diversity (see also Durán and Michalopoulos 1999: 867). Developing countries, including India28, Kenya29 and Venezuela,30 have already suggested that the TRIPs Agreement should be re-examined to reconcile any differences between TRIPs and the CBD, particularly in relation to Article 27.3(b), in order to prohibit the granting of patents to those inventions made with foreign genetic material that are inconsistent with Article 15 of the CBD relating to the recognition of sovereignty and access to genetic resources (Wilder 2001: 521). But although the issues of biodiversity are likely to remain emotive and high on the agenda of any debate about revision of the TRIPs Agreement, developed countries are reluctant to re-open the debate in the face of strong public campaigns from NGOs. In other areas, developing countries have sought to use the built-in review to their advantage, even when the issues relate primarily to developed country interests. Geographical indications, for instance, that were originally included in the TRIPs Agreement on the insistence of the European Communities and Switzerland are now being taken seriously by developing countries as part of the built-in review as a possible means of protecting regionally specific handicrafts, foodstuffs and agricultural produce (see also Blakeney 2001: 541).

Likely outcomes The TRIPs Agreement contains compromises and is imperfect in many respects. The nature of some of these compromises is recognised by the builtin agenda for the Agreement. According to Article 27.3(b), for instance, its provisions were to be reviewed by the TRIPs Council four years after the entry into force of the Agreement. But there is no consensus on whether this review should be with respect to substantive issues or merely implementation. Tancer and Tancer (1999: 904) argue that it would be illogical to have implementation as the basis for the review given that developing countries had until five years after the entry into force of the Agreement (and ten years in the case of least-developed countries) before they were required to comply with its provisions. The most likely outcome of attempts to revise the TRIPs Agreement is that, in the medium term, no substantive revision of the TRIPs Agreement will be made (see also Watal 1999: 29). The Seattle Ministerial of 1999 ended without agreement on substantive issues, which remain on the table for future discussion, and developed countries remain of the opinion that the provisions of the TRIPs Agreement should not be tampered with, the focus of any review instead being on enforcement and implementation questions (see also Tancer and Tancer 1999: 892), particularly in the light of findings made by the TRIPs Council via the Article 63(2) review procedure (Blakeney 2001: 535) and

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Dispute Settlement Panels (see also Watal 1999: 1). The developed countries do, however, want to see revisions to the TRIPs Agreement in terms of a tightening up of the text. Tim Trainer, President of the Anti-Counterfeiting Coalition, for instance, has predicted (Anon. 1999: 5) that parts of the TRIPs Agreement may have to be looked at again with respect to anti-counterfeiting measures, where ambiguities in the language of Articles 51 to 60 on border measures are seen as leading to difficulties in determining the correct interpretation of the provisions.

Assessment There is a widespread acknowledgement among corporate actors that, given the achievements of the Uruguay Round negotiations with regard to intellectual property protection, it is perhaps churlish to criticise the final text of the TRIPs Agreement for its shortcomings. However, it is clear that, in many important respects, the negotiating space that granted global corporate actors and developed country governments a relatively ‘free run’ during the Uruguay Round has now been occupied by a range of new actors bringing their own issues, priorities and concerns to the negotiating table. Despite the post-TRIPs initiatives undertaken by the TABD, IPC–UNICE and developed country governments, the window of opportunity that emerged when global corporate actors seized the initiative and galvanised a broad range of interests in support of intellectual property protection during the Uruguay Round seems unlikely to be re-opened.

Appendix: full text of the Agreement on Trade-Related Aspects of Intellectual Property Rights (the TRIPs Agreement)

Preamble Members, Desiring to reduce distortions and impediments to international trade, and taking into account the need to promote effective and adequate protection of intellectual property rights, and to ensure that measures and procedures to enforce intellectual property rights do not themselves become barriers to legitimate trade; Recognizing, to this end, the need for new rules and disciplines concerning: (a) the applicability of the basic principles of GATT 1994 and of relevant international intellectual property agreements or conventions; (b) the provision of adequate standards and principles concerning the availability, scope and use of trade-related intellectual property rights; (c) the provision of effective and appropriate means for the enforcement of trade-related intellectual property rights, taking into account differences in national legal systems; (d) the provision of effective and expeditious procedures for the multilateral prevention and settlement of disputes between governments; and (e) transitional arrangements aiming at the fullest participation in the results of the negotiations; Recognizing the need for a multilateral framework of principles, rules and disciplines dealing with international trade in counterfeit goods; Recognizing that intellectual property rights are private rights; Recognizing the underlying public policy objectives of national systems for the protection of intellectual property, including developmental and technological objectives; Recognizing also the special needs of the least-developed country Members in respect of maximum flexibility in the domestic implementation of laws and regulations in order to enable them to create a sound and viable technological base; Emphasizing the importance of reducing tensions by reaching strengthened

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commitments to resolve disputes on trade-related intellectual property issues through multilateral procedures; Desiring to establish a mutually supportive relationship between the WTO and the World Intellectual Property Organization (referred to in this Agreement as ‘WIPO’) as well as other relevant international organizations; Hereby agree as follows:

PART I: GENERAL PROVISIONS AND BASIC PRINCIPLES Article 1 Nature and scope of obligations 1

2

3

Members shall give effect to the provisions of this Agreement. Members may, but shall not be obliged to, implement in their law more extensive protection than is required by this Agreement, provided that such protection does not contravene the provisions of this Agreement. Members shall be free to determine the appropriate method of implementing the provisions of this Agreement within their own legal system and practice. For the purposes of this Agreement, the term ‘intellectual property’ refers to all categories of intellectual property that are the subject of Sections 1 through 7 of Part II. Members shall accord the treatment provided for in this Agreement to the nationals of other Members.1 In respect of the relevant intellectual property right, the nationals of other Members shall be understood as those natural or legal persons that would meet the criteria for eligibility for protection provided for in the Paris Convention (1967), the Berne Convention (1971), the Rome Convention and the Treaty on Intellectual Property in Respect of Integrated Circuits, were all Members of the WTO Members of those conventions.2 Any Member availing itself of the possibilities provided in paragraph 3 of Article 5 or paragraph 2 of Article 6 of the Rome Convention shall make a notification as foreseen in those provisions to the Council for Trade-Related Aspects of Intellectual Property Rights (the ‘Council for TRIPs’).

Article 2 Intellectual property conventions 1 2

In respect of Parts II, III and IV of this Agreement, Members shall comply with Articles 1 through 12, and Article 19, of the Paris Convention (1967). Nothing in Parts I to IV of this Agreement shall derogate from existing obligations that Members may have to each other under the Paris Convention, the Berne Convention, the Rome Convention and the Treaty on Intellectual Property in Respect of Integrated Circuits.

142 Appendix Article 3 National treatment 1

2

Each Member shall accord to the nationals of other Members treatment no less favourable than that it accords to its own nationals with regard to the protection3 of intellectual property, subject to the exceptions already provided in, respectively, the Paris Convention (1967), the Berne Convention (1971), the Rome Convention or the Treaty on Intellectual Property in Respect of Integrated Circuits. In respect of performers, producers of phonograms and broadcasting organizations, this obligation only applies in respect of the rights provided under this Agreement. Any Member availing itself of the possibilities provided in Article 6 of the Berne Convention (1971) or paragraph 1(b) of Article 16 of the Rome Convention shall make a notification as foreseen in those provisions to the Council for TRIPs. Members may avail themselves of the exceptions permitted under paragraph 1 in relation to judicial and administrative procedures, including the designation of an address for service or the appointment of an agent within the jurisdiction of a Member, only where such exceptions are necessary to secure compliance with laws and regulations which are not inconsistent with the provisions of this Agreement and where such practices are not applied in a manner which would constitute a disguised restriction on trade.

Article 4 Most-favoured-nation treatment With regard to the protection of intellectual property, any advantage, favour, privilege or immunity granted by a Member to the nationals of any other country shall be accorded immediately and unconditionally to the nationals of all other Members. Exempted from this obligation are any advantage, favour, privilege or immunity accorded by a Member: (a) deriving from international agreements on judicial assistance or law enforcement of a general nature and not particularly confined to the protection of intellectual property; (b) granted in accordance with the provisions of the Berne Convention (1971) or the Rome Convention authorizing that the treatment accorded be a function not of national treatment but of the treatment accorded in another country; (c) in respect of the rights of performers, producers of phonograms and broadcasting organizations not provided under this Agreement; (d) deriving from international agreements related to the protection of intellectual property which entered into force prior to the entry into force

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of the WTO Agreement, provided that such agreements are notified to the Council for TRIPs and do not constitute an arbitrary or unjustifiable discrimination against nationals of other Members. Article 5 Multilateral agreements on acquisition or maintenance of protection The obligations under Articles 3 and 4 do not apply to procedures provided in multilateral agreements concluded under the auspices of WIPO relating to the acquisition or maintenance of intellectual property rights. Article 6 Exhaustion For the purposes of dispute settlement under this Agreement, subject to the provisions of Articles 3 and 4 nothing in this Agreement shall be used to address the issue of the exhaustion of intellectual property rights. Article 7 Objectives The protection and enforcement of intellectual property rights should contribute to the promotion of technological innovation and to the transfer and dissemination of technology, to the mutual advantage of producers and users of technological knowledge and in a manner conducive to social and economic welfare, and to a balance of rights and obligations. Article 8 Principles 1

2

Members may, in formulating or amending their laws and regulations, adopt measures necessary to protect public health and nutrition, and to promote the public interest in sectors of vital importance to their socioeconomic and technological development, provided that such measures are consistent with the provisions of this Agreement. Appropriate measures, provided that they are consistent with the provisions of this Agreement, may be needed to prevent the abuse of intellectual property rights by right holders or the resort to practices which unreasonably restrain trade or adversely affect the international transfer of technology.

144 Appendix PART II: STANDARDS CONCERNING THE AVAILABILITY, SCOPE AND USE OF INTELLECTUAL PROPERTY RIGHTS

Section 1: copyright and related rights Article 9 Relation to the Berne Convention 1

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Members shall comply with Articles 1 through 21 of the Berne Convention (1971) and the Appendix thereto. However, Members shall not have rights or obligations under this Agreement in respect of the rights conferred under Article 6bis of that Convention or of the rights derived therefrom. Copyright protection shall extend to expressions and not to ideas, procedures, methods of operation or mathematical concepts as such.

Article 10 Computer programs and compilations of data 1 2

Computer programs, whether in source or object code, shall be protected as literary works under the Berne Convention (1971). Compilations of data or other material, whether in machine readable or other form, which by reason of the selection or arrangement of their contents constitute intellectual creations shall be protected as such. Such protection, which shall not extend to the data or material itself, shall be without prejudice to any copyright subsisting in the data or material itself.

Article 11 Rental rights In respect of at least computer programs and cinematographic works, a Member shall provide authors and their successors in title the right to authorize or to prohibit the commercial rental to the public of originals or copies of their copyright works. A Member shall be excepted from this obligation in respect of cinematographic works unless such rental has led to widespread copying of such works which is materially impairing the exclusive right of reproduction conferred in that Member on authors and their successors in title. In respect of computer programs, this obligation does not apply to rentals where the program itself is not the essential object of the rental.

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Article 12 Term of protection Whenever the term of protection of a work, other than a photographic work or a work of applied art, is calculated on a basis other than the life of a natural person, such term shall be no less than 50 years from the end of the calendar year of authorized publication, or, failing such authorized publication within 50 years from the making of the work, 50 years from the end of the calendar year of making. Article 13 Limitations and exceptions Members shall confine limitations or exceptions to exclusive rights to certain special cases which do not conflict with a normal exploitation of the work and do not unreasonably prejudice the legitimate interests of the right holder. Article 14 Protection of performers, producers of phonograms (sound recordings) and broadcasting organizations 1

2 3

4

In respect of a fixation of their performance on a phonogram, performers shall have the possibility of preventing the following acts when undertaken without their authorization: the fixation of their unfixed performance and the reproduction of such fixation. Performers shall also have the possibility of preventing the following acts when undertaken without their authorization: the broadcasting by wireless means and the communication to the public of their live performance. Producers of phonograms shall enjoy the right to authorize or prohibit the direct or indirect reproduction of their phonograms. Broadcasting organizations shall have the right to prohibit the following acts when undertaken without their authorization: the fixation, the reproduction of fixations, and the rebroadcasting by wireless means of broadcasts, as well as the communication to the public of television broadcasts of the same. Where Members do not grant such rights to broadcasting organizations, they shall provide owners of copyright in the subject matter of broadcasts with the possibility of preventing the above acts, subject to the provisions of the Berne Convention (1971). The provisions of Article 11 in respect of computer programs shall apply mutatis mutandis to producers of phonograms and any other right holders in phonograms as determined in a Member’s law. If on 15 April 1994 a Member has in force a system of equitable remuneration of right holders

146 Appendix

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6

in respect of the rental of phonograms, it may maintain such system provided that the commercial rental of phonograms is not giving rise to the material impairment of the exclusive rights of reproduction of right holders. The term of the protection available under this Agreement to performers and producers of phonograms shall last at least until the end of a period of 50 years computed from the end of the calendar year in which the fixation was made or the performance took place. The term of protection granted pursuant to paragraph 3 shall last for at least 20 years from the end of the calendar year in which the broadcast took place. Any Member may, in relation to the rights conferred under paragraphs 1, 2 and 3, provide for conditions, limitations, exceptions and reservations to the extent permitted by the Rome Convention. However, the provisions of Article 18 of the Berne Convention (1971) shall also apply, mutatis mutandis, to the rights of performers and producers of phonograms in phonograms.

Section 2: trademarks Article 15 Protectable subject matter 1

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4 5

Any sign, or any combination of signs, capable of distinguishing the goods or services of one undertaking from those of other undertakings, shall be capable of constituting a trademark. Such signs, in particular words including personal names, letters, numerals, figurative elements and combinations of colours as well as any combination of such signs, shall be eligible for registration as trademarks. Where signs are not inherently capable of distinguishing the relevant goods or services, Members may make registrability depend on distinctiveness acquired through use. Members may require, as a condition of registration, that signs be visually perceptible. Paragraph 1 shall not be understood to prevent a Member from denying registration of a trademark on other grounds, provided that they do not derogate from the provisions of the Paris Convention (1967). Members may make registrability depend on use. However, actual use of a trademark shall not be a condition for filing an application for registration. An application shall not be refused solely on the ground that intended use has not taken place before the expiry of a period of three years from the date of application. The nature of the goods or services to which a trademark is to be applied shall in no case form an obstacle to registration of the trademark. Members shall publish each trademark either before it is registered or promptly after it is registered and shall afford a reasonable opportunity

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for petitions to cancel the registration. In addition, Members may afford an opportunity for the registration of a trademark to be opposed. Article 16 Rights conferred 1

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The owner of a registered trademark shall have the exclusive right to prevent all third parties not having the owner’s consent from using in the course of trade identical or similar signs for goods or services which are identical or similar to those in respect of which the trademark is registered where such use would result in a likelihood of confusion. In case of the use of an identical sign for identical goods or services, a likelihood of confusion shall be presumed. The rights described above shall not prejudice any existing prior rights, nor shall they affect the possibility of Members making rights available on the basis of use. Article 6bis of the Paris Convention (1967) shall apply, mutatis mutandis, to services. In determining whether a trademark is well-known, Members shall take account of the knowledge of the trademark in the relevant sector of the public, including knowledge in the Member concerned which has been obtained as a result of the promotion of the trademark. Article 6bis of the Paris Convention (1967) shall apply, mutatis mutandis, to goods or services which are not similar to those in respect of which a trademark is registered, provided that use of that trademark in relation to those goods or services would indicate a connection between those goods or services and the owner of the registered trademark and provided that the interests of the owner of the registered trademark are likely to be damaged by such use.

Article 17 Exceptions Members may provide limited exceptions to the rights conferred by a trademark, such as fair use of descriptive terms, provided that such exceptions take account of the legitimate interests of the owner of the trademark and of third parties. Article 18 Term of protection Initial registration, and each renewal of registration, of a trademark shall be for a term of no less than seven years. The registration of a trademark shall be renewable indefinitely.

148 Appendix Article 19 Requirement of use 1

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If use is required to maintain a registration, the registration may be cancelled only after an uninterrupted period of at least three years of non-use, unless valid reasons based on the existence of obstacles to such use are shown by the trademark owner. Circumstances arising independently of the will of the owner of the trademark which constitute an obstacle to the use of the trademark, such as import restrictions on or other government requirements for goods or services protected by the trademark, shall be recognized as valid reasons for non-use. When subject to the control of its owner, use of a trademark by another person shall be recognized as use of the trademark for the purpose of maintaining the registration.

Article 20 Other requirements The use of a trademark in the course of trade shall not be unjustifiably encumbered by special requirements, such as use with another trademark, use in a special form or use in a manner detrimental to its capability to distinguish the goods or services of one undertaking from those of other undertakings. This will not preclude a requirement prescribing the use of the trademark identifying the undertaking producing the goods or services along with, but without linking it to, the trademark distinguishing the specific goods or services in question of that undertaking. Article 21 Licensing and assignment Members may determine conditions on the licensing and assignment of trademarks, it being understood that the compulsory licensing of trademarks shall not be permitted and that the owner of a registered trademark shall have the right to assign the trademark with or without the transfer of the business to which the trademark belongs.

Section 3: geographical indications Article 22 Protection of geographical indications 1

Geographical indications are, for the purposes of this Agreement,

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indications which identify a good as originating in the territory of a Member, or a region or locality in that territory, where a given quality, reputation or other characteristic of the good is essentially attributable to its geographical origin. In respect of geographical indications, Members shall provide the legal means for interested parties to prevent: (a) the use of any means in the designation or presentation of a good that indicates or suggests that the good in question originates in a geographical area other than the true place of origin in a manner which misleads the public as to the geographical origin of the good; (b) any use which constitutes an act of unfair competition within the meaning of Article 10bis of the Paris Convention (1967).

3

4

A Member shall, ex officio if its legislation so permits or at the request of an interested party, refuse or invalidate the registration of a trademark which contains or consists of a geographical indication with respect to goods not originating in the territory indicated, if use of the indication in the trademark for such goods in that Member is of such a nature as to mislead the public as to the true place of origin. The protection under paragraphs 1, 2 and 3 shall be applicable against a geographical indication which, although literally true as to the territory, region or locality in which the goods originate, falsely represents to the public that the goods originate in another territory.

Article 23 Additional protection for geographical indications for wines and spirits 1

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Each Member shall provide the legal means for interested parties to prevent use of a geographical indication identifying wines for wines not originating in the place indicated by the geographical indication in question or identifying spirits for spirits not originating in the place indicated by the geographical indication in question, even where the true origin of the goods is indicated or the geographical indication is used in translation or accompanied by expressions such as ‘kind’, ‘type’, ‘style’, ‘imitation’ or the like.4 The registration of a trademark for wines which contains or consists of a geographical indication identifying wines or for spirits which contains or consists of a geographical indication identifying spirits shall be refused or invalidated, ex officio if a Member’s legislation so permits or at the request of an interested party, with respect to such wines or spirits not having this origin. In the case of homonymous geographical indications for wines, protection shall be accorded to each indication, subject to the provisions of paragraph

150 Appendix

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4 of Article 22. Each Member shall determine the practical conditions under which the homonymous indications in question will be differentiated from each other, taking into account the need to ensure equitable treatment of the producers concerned and that consumers are not misled. In order to facilitate the protection of geographical indications for wines, negotiations shall be undertaken in the Council for TRIPs concerning the establishment of a multilateral system of notification and registration of geographical indications for wines eligible for protection in those Members participating in the system.

Article 24 International negotiations: exceptions 1

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5

Members agree to enter into negotiations aimed at increasing the protection of individual geographical indications under Article 23. The provisions of paragraphs 4 through 8 below shall not be used by a Member to refuse to conduct negotiations or to conclude bilateral or multilateral agreements. In the context of such negotiations, Members shall be willing to consider the continued applicability of these provisions to individual geographical indications whose use was the subject of such negotiations. The Council for TRIPs shall keep under review the application of the provisions of this Section; the first such review shall take place within two years of the entry into force of the WTO Agreement. Any matter affecting the compliance with the obligations under these provisions may be drawn to the attention of the Council, which, at the request of a Member, shall consult with any Member or Members in respect of such matter in respect of which it has not been possible to find a satisfactory solution through bilateral or plurilateral consultations between the Members concerned. The Council shall take such action as may be agreed to facilitate the operation and further the objectives of this Section. In implementing this Section, a Member shall not diminish the protection of geographical indications that existed in that Member immediately prior to the date of entry into force of the WTO Agreement. Nothing in this Section shall require a Member to prevent continued and similar use of a particular geographical indication of another Member identifying wines or spirits in connection with goods or services by any of its nationals or domiciliaries who have used that geographical indication in a continuous manner with regard to the same or related goods or services in the territory of that Member either (a) for at least 10 years preceding 15 April 1994 or (b) in good faith preceding that date. Where a trademark has been applied for or registered in good faith, or where rights to a trademark have been acquired through use in good faith either:

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(a) before the date of application of these provisions in that Member as defined in Part VI; or (b) before the geographical indication is protected in its country of origin;

6

7

8

9

measures adopted to implement this Section shall not prejudice eligibility for or the validity of the registration of a trademark, or the right to use a trademark, on the basis that such a trademark is identical with, or similar to, a geographical indication. Nothing in this Section shall require a Member to apply its provisions in respect of a geographical indication of any other Member with respect to goods or services for which the relevant indication is identical with the term customary in common language as the common name for such goods or services in the territory of that Member. Nothing in this Section shall require a Member to apply its provisions in respect of a geographical indication of any other Member with respect to products of the vine for which the relevant indication is identical with the customary name of a grape variety existing in the territory of that Member as of the date of entry into force of the WTO Agreement. A Member may provide that any request made under this Section in connection with the use or registration of a trademark must be presented within five years after the adverse use of the protected indication has become generally known in that Member or after the date of registration of the trademark in that Member provided that the trademark has been published by that date, if such date is earlier than the date on which the adverse use became generally known in that Member, provided that the geographical indication is not used or registered in bad faith. The provisions of this Section shall in no way prejudice the right of any person to use, in the course of trade, that person’s name or the name of that person’s predecessor in business, except where such name is used in such a manner as to mislead the public. There shall be no obligation under this Agreement to protect geographical indications which are not or cease to be protected in their country of origin, or which have fallen into disuse in that country.

Section 4: industrial designs Article 25 Requirements for protection 1

Members shall provide for the protection of independently created industrial designs that are new or original. Members may provide that designs are not new or original if they do not significantly differ from known designs or combinations of known design features. Members may provide that such protection shall not extend to designs dictated essentially by technical or functional considerations.

152 Appendix 2

Each Member shall ensure that requirements for securing protection for textile designs, in particular in regard to any cost, examination or publication, do not unreasonably impair the opportunity to seek and obtain such protection. Members shall be free to meet this obligation through industrial design law or through copyright law.

Article 26 Protection 1

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3

The owner of a protected industrial design shall have the right to prevent third parties not having the owner’s consent from making, selling or importing articles bearing or embodying a design which is a copy, or substantially a copy, of the protected design, when such acts are undertaken for commercial purposes. Members may provide limited exceptions to the protection of industrial designs, provided that such exceptions do not unreasonably conflict with the normal exploitation of protected industrial designs and do not unreasonably prejudice the legitimate interests of the owner of the protected design, taking account of the legitimate interests of third parties. The duration of protection available shall amount to at least 10 years.

Section 5: patents Article 27 Patentable subject matter 1

2

Subject to the provisions of paragraphs 2 and 3, patents shall be available for any inventions, whether products or processes, in all fields of technology, provided that they are new, involve an inventive step and are capable of industrial application.5 Subject to paragraph 4 of Article 65, paragraph 8 of Article 70 and paragraph 3 of this Article, patents shall be available and patent rights enjoyable without discrimination as to the place of invention, the field of technology and whether products are imported or locally produced. Members may exclude from patentability inventions, the prevention within their territory of the commercial exploitation of which is necessary to protect ordre public or morality, including to protect human, animal or plant life or health or to avoid serious prejudice to the environment, provided that such exclusion is not made merely because the exploitation is prohibited by their law.

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Members may also exclude from patentability: (a) diagnostic, therapeutic and surgical methods for the treatment of humans or animals; (b) plants and animals other than micro-organisms, and essentially biological processes for the production of plants or animals other than non-biological and microbiological processes. However, Members shall provide for the protection of plant varieties either by patents or by an effective sui generis system or by any combination thereof. The provisions of this subparagraph shall be reviewed four years after the date of entry into force of the WTO Agreement.

Article 28 Rights conferred 1

A patent shall confer on its owner the following exclusive rights: (a) where the subject matter of a patent is a product, to prevent third parties not having the owner’s consent from the acts of: making, using, offering for sale, selling, or importing6 for these purposes that product; (b) where the subject matter of a patent is a process, to prevent third parties not having the owner’s consent from the act of using the process, and from the acts of: using, offering for sale, selling, or importing for these purposes at least the product obtained directly by that process.

2

Patent owners shall also have the right to assign, or transfer by succession, the patent and to conclude licensing contracts.

Article 29 Conditions on patent applicants 1

2

Members shall require that an applicant for a patent shall disclose the invention in a manner sufficiently clear and complete for the invention to be carried out by a person skilled in the art and may require the applicant to indicate the best mode for carrying out the invention known to the inventor at the filing date or, where priority is claimed, at the priority date of the application. Members may require an applicant for a patent to provide information concerning the applicant’s corresponding foreign applications and grants.

154 Appendix Article 30 Exceptions to rights conferred Members may provide limited exceptions to the exclusive rights conferred by a patent, provided that such exceptions do not unreasonably conflict with a normal exploitation of the patent and do not unreasonably prejudice the legitimate interests of the patent owner, taking account of the legitimate interests of third parties. Article 31 Other use without authorization of the right holder Where the law of a Member allows for other use7 of the subject matter of a patent without the authorization of the right holder, including use by the government or third parties authorized by the government, the following provisions shall be respected: (a) authorization of such use shall be considered on its individual merits; (b) such use may only be permitted if, prior to such use, the proposed user has made efforts to obtain authorization from the right holder on reasonable commercial terms and conditions and that such efforts have not been successful within a reasonable period of time. This requirement may be waived by a Member in the case of a national emergency or other circumstances of extreme urgency or in cases of public non-commercial use. In situations of national emergency or other circumstances of extreme urgency, the right holder shall, nevertheless, be notified as soon as reasonably practicable. In the case of public non-commercial use, where the government or contractor, without making a patent search, knows or has demonstrable grounds to know that a valid patent is or will be used by or for the government, the right holder shall be informed promptly; (c) the scope and duration of such use shall be limited to the purpose for which it was authorized, and in the case of semi-conductor technology shall only be for public non-commercial use or to remedy a practice determined after judicial or administrative process to be anti-competitive; (d) such use shall be non-exclusive; (e) such use shall be non-assignable, except with that part of the enterprise or goodwill which enjoys such use; (f) any such use shall be authorized predominantly for the supply of the domestic market of the Member authorizing such use; (g) authorization for such use shall be liable, subject to adequate protection of the legitimate interests of the persons so authorized, to be terminated if and when the circumstances which led to it cease to exist and are unlikely to recur. The competent authority shall have the authority to

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review, upon motivated request, the continued existence of these circumstances; the right holder shall be paid adequate remuneration in the circumstances of each case, taking into account the economic value of the authorization; the legal validity of any decision relating to the authorization of such use shall be subject to judicial review or other independent review by a distinct higher authority in that Member; any decision relating to the remuneration provided in respect of such use shall be subject to judicial review or other independent review by a distinct higher authority in that Member; Members are not obliged to apply the conditions set forth in subparagraphs (b) and (f) where such use is permitted to remedy a practice determined after judicial or administrative process to be anticompetitive. The need to correct anti-competitive practices may be taken into account in determining the amount of remuneration in such cases. Competent authorities shall have the authority to refuse termination of authorization if and when the conditions which led to such authorization are likely to recur; where such use is authorized to permit the exploitation of a patent (‘the second patent’) which cannot be exploited without infringing another patent (‘the first patent’), the following additional conditions shall apply: (i) the invention claimed in the second patent shall involve an important technical advance of considerable economic significance in relation to the invention claimed in the first patent; (ii) the owner of the first patent shall be entitled to a cross-licence on reasonable terms to use the invention claimed in the second patent; and (iii) the use authorized in respect of the first patent shall be nonassignable except with the assignment of the second patent.

Article 32 Revocation/forfeiture An opportunity for judicial review of any decision to revoke or forfeit a patent shall be available. Article 33 Term of protection The term of protection available shall not end before the expiration of a period of twenty years counted from the filing date.8

156 Appendix Article 34 Process patents: burden of proof 1

For the purposes of civil proceedings in respect of the infringement of the rights of the owner referred to in paragraph 1(b) of Article 28, if the subject matter of a patent is a process for obtaining a product, the judicial authorities shall have the authority to order the defendant to prove that the process to obtain an identical product is different from the patented process. Therefore, Members shall provide, in at least one of the following circumstances, that any identical product when produced without the consent of the patent owner shall, in the absence of proof to the contrary, be deemed to have been obtained by the patented process: (a) if the product obtained by the patented process is new; (b) if there is a substantial likelihood that the identical product was made by the process and the owner of the patent has been unable through reasonable efforts to determine the process actually used.

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Any Member shall be free to provide that the burden of proof indicated in paragraph 1 shall be on the alleged infringer only if the condition referred to in subparagraph (a) is fulfilled or only if the condition referred to in subparagraph (b) is fulfilled. In the adduction of proof to the contrary, the legitimate interests of defendants in protecting their manufacturing and business secrets shall be taken into account.

Section 6: layout-designs (topographies) of integrated circuits Article 35 Relation to the IPIC Treaty Members agree to provide protection to the layout-designs (topographies) of integrated circuits (referred to in this Agreement as ‘layout-designs’) in accordance with Articles 2 through 7 (other than paragraph 3 of Article 6), Article 12 and paragraph 3 of Article 16 of the Treaty on Intellectual Property in Respect of Integrated Circuits and, in addition, to comply with the following provisions. Article 36 Scope of the protection Subject to the provisions of paragraph 1 of Article 37, Members shall consider

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unlawful the following acts if performed without the authorization of the right holder:9 importing, selling, or otherwise distributing for commercial purposes a protected layout-design, an integrated circuit in which a protected layout-design is incorporated, or an article incorporating such an integrated circuit only in so far as it continues to contain an unlawfully reproduced layoutdesign. Article 37 Acts not requiring the authorization of the right holder 1

2

Notwithstanding Article 36, no Member shall consider unlawful the performance of any of the acts referred to in that Article in respect of an integrated circuit incorporating an unlawfully reproduced layout-design or any article incorporating such an integrated circuit where the person performing or ordering such acts did not know and had no reasonable ground to know, when acquiring the integrated circuit or article incorporating such an integrated circuit, that it incorporated an unlawfully reproduced layout-design. Members shall provide that, after the time that such person has received sufficient notice that the layoutdesign was unlawfully reproduced, that person may perform any of the acts with respect to the stock on hand or ordered before such time, but shall be liable to pay to the right holder a sum equivalent to a reasonable royalty such as would be payable under a freely negotiated licence in respect of such a layout-design. The conditions set out in subparagraphs (a) through (k) of Article 31 shall apply mutatis mutandis in the event of any non-voluntary licensing of a layout-design or of its use by or for the government without the authorization of the right holder.

Article 38 Term of protection 1

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In Members requiring registration as a condition of protection, the term of protection of layout-designs shall not end before the expiration of a period of 10 years counted from the date of filing an application for registration or from the first commercial exploitation wherever in the world it occurs. In Members not requiring registration as a condition for protection, layout-designs shall be protected for a term of no less than 10 years from the date of the first commercial exploitation wherever in the world it occurs. Notwithstanding paragraphs 1 and 2, a Member may provide that protection shall lapse 15 years after the creation of the layout-design.

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Section 7: protection of undisclosed information Article 39 1

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In the course of ensuring effective protection against unfair competition as provided in Article 10bis of the Paris Convention (1967), Members shall protect undisclosed information in accordance with paragraph 2 and data submitted to governments or governmental agencies in accordance with paragraph 3. Natural and legal persons shall have the possibility of preventing information lawfully within their control from being disclosed to, acquired by, or used by others without their consent in a manner contrary to honest commercial practices10 so long as such information: (a) is secret in the sense that it is not, as a body or in the precise configuration and assembly of its components, generally known among or readily accessible to persons within the circles that normally deal with the kind of information in question; (b) has commercial value because it is secret; and (c) has been subject to reasonable steps under the circumstances, by the person lawfully in control of the information, to keep it secret.

3

Members, when requiring, as a condition of approving the marketing of pharmaceutical or of agricultural chemical products which utilize new chemical entities, the submission of undisclosed test or other data, the origination of which involves a considerable effort, shall protect such data against unfair commercial use. In addition, Members shall protect such data against disclosure, except where necessary to protect the public, or unless steps are taken to ensure that the data are protected against unfair commercial use.

Section 8: control of anti-competitive practices in contractual licences Article 40 1

2

Members agree that some licensing practices or conditions pertaining to intellectual property rights which restrain competition may have adverse effects on trade and may impede the transfer and dissemination of technology. Nothing in this Agreement shall prevent Members from specifying in their legislation licensing practices or conditions that may in particular cases constitute an abuse of intellectual property rights having an adverse effect on competition in the relevant market. As provided above, a Member may adopt, consistently with the other provisions of this

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Agreement, appropriate measures to prevent or control such practices, which may include for example exclusive grantback conditions, conditions preventing challenges to validity and coercive package licensing, in the light of the relevant laws and regulations of that Member. Each Member shall enter, upon request, into consultations with any other Member which has cause to believe that an intellectual property right owner that is a national or domiciliary of the Member to which the request for consultations has been addressed is undertaking practices in violation of the requesting Member’s laws and regulations on the subject matter of this Section, and which wishes to secure compliance with such legislation, without prejudice to any action under the law and to the full freedom of an ultimate decision of either Member. The Member addressed shall accord full and sympathetic consideration to, and shall afford adequate opportunity for, consultations with the requesting Member, and shall cooperate through supply of publicly available nonconfidential information of relevance to the matter in question and of other information available to the Member, subject to domestic law and to the conclusion of mutually satisfactory agreements concerning the safeguarding of its confidentiality by the requesting Member. A Member whose nationals or domiciliaries are subject to proceedings in another Member concerning alleged violation of that other Member’s laws and regulations on the subject matter of this Section shall, upon request, be granted an opportunity for consultations by the other Member under the same conditions as those foreseen in paragraph 3.

PART III: ENFORCEMENT OF INTELLECTUAL PROPERTY RIGHTS

Section 1: general obligations Article 41 1

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3

Members shall ensure that enforcement procedures as specified in this Part are available under their law so as to permit effective action against any act of infringement of intellectual property rights covered by this Agreement, including expeditious remedies to prevent infringements and remedies which constitute a deterrent to further infringements. These procedures shall be applied in such a manner as to avoid the creation of barriers to legitimate trade and to provide for safeguards against their abuse. Procedures concerning the enforcement of intellectual property rights shall be fair and equitable. They shall not be unnecessarily complicated or costly, or entail unreasonable time-limits or unwarranted delays. Decisions on the merits of a case shall preferably be in writing and reasoned. They shall be made available at least to the parties to the

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proceeding without undue delay. Decisions on the merits of a case shall be based only on evidence in respect of which parties were offered the opportunity to be heard. Parties to a proceeding shall have an opportunity for review by a judicial authority of final administrative decisions and, subject to jurisdictional provisions in a Member’s law concerning the importance of a case, of at least the legal aspects of initial judicial decisions on the merits of a case. However, there shall be no obligation to provide an opportunity for review of acquittals in criminal cases. It is understood that this Part does not create any obligation to put in place a judicial system for the enforcement of intellectual property rights distinct from that for the enforcement of law in general, nor does it affect the capacity of Members to enforce their law in general. Nothing in this Part creates any obligation with respect to the distribution of resources as between enforcement of intellectual property rights and the enforcement of law in general.

Section 2: civil and administrative procedures and remedies Article 42 Fair and equitable procedures Members shall make available to right holders11 civil judicial procedures concerning the enforcement of any intellectual property right covered by this Agreement. Defendants shall have the right to written notice which is timely and contains sufficient detail, including the basis of the claims. Parties shall be allowed to be represented by independent legal counsel, and procedures shall not impose overly burdensome requirements concerning mandatory personal appearances. All parties to such procedures shall be duly entitled to substantiate their claims and to present all relevant evidence. The procedure shall provide a means to identify and protect confidential information, unless this would be contrary to existing constitutional requirements. Article 43 Evidence 1

The judicial authorities shall have the authority, where a party has presented reasonably available evidence sufficient to support its claims and has specified evidence relevant to substantiation of its claims which lies in the control of the opposing party, to order that this evidence be produced by the opposing party, subject in appropriate cases to conditions which ensure the protection of confidential information.

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In cases in which a party to a proceeding voluntarily and without good reason refuses access to, or otherwise does not provide necessary information within a reasonable period, or significantly impedes a procedure relating to an enforcement action, a Member may accord judicial authorities the authority to make preliminary and final determinations, affirmative or negative, on the basis of the information presented to them, including the complaint or the allegation presented by the party adversely affected by the denial of access to information, subject to providing the parties an opportunity to be heard on the allegations or evidence.

Article 44 Injunctions 1

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The judicial authorities shall have the authority to order a party to desist from an infringement, inter alia, to prevent the entry into the channels of commerce in their jurisdiction of imported goods that involve the infringement of an intellectual property right, immediately after customs clearance of such goods. Members are not obliged to accord such authority in respect of protected subject matter acquired or ordered by a person prior to knowing or having reasonable grounds to know that dealing in such subject matter would entail the infringement of an intellectual property right. Notwithstanding the other provisions of this Part and provided that the provisions of Part II specifically addressing use by governments, or by third parties authorized by a government, without the authorization of the right holder are complied with, Members may limit the remedies available against such use to payment of remuneration in accordance with subparagraph (h) of Article 31. In other cases, the remedies under this Part shall apply or, where these remedies are inconsistent with a Member’s law, declaratory judgments and adequate compensation shall be available.

Article 45 Damages 1

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The judicial authorities shall have the authority to order the infringer to pay the right holder damages adequate to compensate for the injury the right holder has suffered because of an infringement of that person’s intellectual property right by an infringer who knowingly, or with reasonable grounds to know, engaged in infringing activity. The judicial authorities shall also have the authority to order the infringer to pay the right holder expenses, which may include appropriate attorney’s fees. In appropriate cases, Members may authorize the judicial

162 Appendix authorities to order recovery of profits and/or payment of pre-established damages even where the infringer did not knowingly, or with reasonable grounds to know, engage in infringing activity. Article 46 Other remedies In order to create an effective deterrent to infringement, the judicial authorities shall have the authority to order that goods that they have found to be infringing be, without compensation of any sort, disposed of outside the channels of commerce in such a manner as to avoid any harm caused to the right holder, or, unless this would be contrary to existing constitutional requirements, destroyed. The judicial authorities shall also have the authority to order that materials and implements the predominant use of which has been in the creation of the infringing goods be, without compensation of any sort, disposed of outside the channels of commerce in such a manner as to minimize the risks of further infringements. In considering such requests, the need for proportionality between the seriousness of the infringement and the remedies ordered as well as the interests of third parties shall be taken into account. In regard to counterfeit trademark goods, the simple removal of the trademark unlawfully affixed shall not be sufficient, other than in exceptional cases, to permit release of the goods into the channels of commerce. Article 47 Right of information Members may provide that the judicial authorities shall have the authority, unless this would be out of proportion to the seriousness of the infringement, to order the infringer to inform the right holder of the identity of third persons involved in the production and distribution of the infringing goods or services and of their channels of distribution. Article 48 Indemnification of the defendant 1

The judicial authorities shall have the authority to order a party at whose request measures were taken and who has abused enforcement procedures to provide to a party wrongfully enjoined or restrained adequate compensation for the injury suffered because of such abuse. The judicial authorities shall also have the authority to order the applicant to pay the defendant expenses, which may include appropriate attorney’s fees.

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In respect of the administration of any law pertaining to the protection or enforcement of intellectual property rights, Members shall only exempt both public authorities and officials from liability to appropriate remedial measures where actions are taken or intended in good faith in the course of the administration of that law.

Article 49 Administrative procedures To the extent that any civil remedy can be ordered as a result of administrative procedures on the merits of a case, such procedures shall conform to principles equivalent in substance to those set forth in this Section.

Section 3: provisional measures Article 50 1

The judicial authorities shall have the authority to order prompt and effective provisional measures: (a) to prevent an infringement of any intellectual property right from occurring, and in particular to prevent the entry into the channels of commerce in their jurisdiction of goods, including imported goods immediately after customs clearance; (b) to preserve relevant evidence in regard to the alleged infringement.

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The judicial authorities shall have the authority to adopt provisional measures inaudita altera parte where appropriate, in particular where any delay is likely to cause irreparable harm to the right holder, or where there is a demonstrable risk of evidence being destroyed. The judicial authorities shall have the authority to require the applicant to provide any reasonably available evidence in order to satisfy themselves with a sufficient degree of certainty that the applicant is the right holder and that the applicant’s right is being infringed or that such infringement is imminent, and to order the applicant to provide a security or equivalent assurance sufficient to protect the defendant and to prevent abuse. Where provisional measures have been adopted inaudita altera parte, the parties affected shall be given notice, without delay after the execution of the measures at the latest. A review, including a right to be heard, shall take place upon request of the defendant with a view to deciding, within a reasonable period after the notification of the measures, whether these measures shall be modified, revoked or confirmed. The applicant may be required to supply other information necessary for the identification of the goods concerned by the authority that will execute the provisional measures.

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Without prejudice to paragraph 4, provisional measures taken on the basis of paragraphs 1 and 2 shall, upon request by the defendant, be revoked or otherwise cease to have effect, if proceedings leading to a decision on the merits of the case are not initiated within a reasonable period, to be determined by the judicial authority ordering the measures where a Member’s law so permits or, in the absence of such a determination, not to exceed 20 working days or 31 calendar days, whichever is the longer. Where the provisional measures are revoked or where they lapse due to any act or omission by the applicant, or where it is subsequently found that there has been no infringement or threat of infringement of an intellectual property right, the judicial authorities shall have the authority to order the applicant, upon request of the defendant, to provide the defendant appropriate compensation for any injury caused by these measures. To the extent that any provisional measure can be ordered as a result of administrative procedures, such procedures shall conform to principles equivalent in substance to those set forth in this Section.

Section 4: special requirements related to border measures12 Article 51 Suspension of release by customs authorities Members shall, in conformity with the provisions set out below, adopt procedures13 to enable a right holder, who has valid grounds for suspecting that the importation of counterfeit trademark or pirated copyright goods14 may take place, to lodge an application in writing with competent authorities, administrative or judicial, for the suspension by the customs authorities of the release into free circulation of such goods. Members may enable such an application to be made in respect of goods which involve other infringements of intellectual property rights, provided that the requirements of this Section are met. Members may also provide for corresponding procedures concerning the suspension by the customs authorities of the release of infringing goods destined for exportation from their territories. Article 52 Application Any right holder initiating the procedures under Article 51 shall be required to provide adequate evidence to satisfy the competent authorities that, under the laws of the country of importation, there is prima facie an infringement

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of the right holder’s intellectual property right and to supply a sufficiently detailed description of the goods to make them readily recognizable by the customs authorities. The competent authorities shall inform the applicant within a reasonable period whether they have accepted the application and, where determined by the competent authorities, the period for which the customs authorities will take action. Article 53 Security or equivalent assurance 1

2

The competent authorities shall have the authority to require an applicant to provide a security or equivalent assurance sufficient to protect the defendant and the competent authorities and to prevent abuse. Such security or equivalent assurance shall not unreasonably deter recourse to these procedures. Where pursuant to an application under this Section the release of goods involving industrial designs, patents, layout-designs or undisclosed information into free circulation has been suspended by customs authorities on the basis of a decision other than by a judicial or other independent authority, and the period provided for in Article 55 has expired without the granting of provisional relief by the duly empowered authority, and provided that all other conditions for importation have been complied with, the owner, importer, or consignee of such goods shall be entitled to their release on the posting of a security in an amount sufficient to protect the right holder for any infringement. Payment of such security shall not prejudice any other remedy available to the right holder, it being understood that the security shall be released if the right holder fails to pursue the right of action within a reasonable period of time.

Article 54 Notice of suspension The importer and the applicant shall be promptly notified of the suspension of the release of goods according to Article 51. Article 55 Duration of suspension If, within a period not exceeding 10 working days after the applicant has been served notice of the suspension, the customs authorities have not been informed that proceedings leading to a decision on the merits of the case

166 Appendix have been initiated by a party other than the defendant, or that the duly empowered authority has taken provisional measures prolonging the suspension of the release of the goods, the goods shall be released, provided that all other conditions for importation or exportation have been complied with; in appropriate cases, this time-limit may be extended by another 10 working days. If proceedings leading to a decision on the merits of the case have been initiated, a review, including a right to be heard, shall take place upon request of the defendant with a view to deciding, within a reasonable period, whether these measures shall be modified, revoked or confirmed. Notwithstanding the above, where the suspension of the release of goods is carried out or continued in accordance with a provisional judicial measure, the provisions of paragraph 6 of Article 50 shall apply. Article 56 Indemnification of the importer and of the owner of the goods Relevant authorities shall have the authority to order the applicant to pay the importer, the consignee and the owner of the goods appropriate compensation for any injury caused to them through the wrongful detention of goods or through the detention of goods released pursuant to Article 55. Article 57 Right of inspection and information Without prejudice to the protection of confidential information, Members shall provide the competent authorities the authority to give the right holder sufficient opportunity to have any goods detained by the customs authorities inspected in order to substantiate the right holder’s claims. The competent authorities shall also have authority to give the importer an equivalent opportunity to have any such goods inspected. Where a positive determination has been made on the merits of a case, Members may provide the competent authorities the authority to inform the right holder of the names and addresses of the consignor, the importer and the consignee and of the quantity of the goods in question. Article 58 Ex officio action Where Members require competent authorities to act upon their own initiative and to suspend the release of goods in respect of which they have acquired prima facie evidence that an intellectual property right is being infringed:

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(a) the competent authorities may at any time seek from the right holder any information that may assist them to exercise these powers; (b) the importer and the right holder shall be promptly notified of the suspension. Where the importer has lodged an appeal against the suspension with the competent authorities, the suspension shall be subject to the conditions, mutatis mutandis, set out at Article 55; (c) Members shall only exempt both public authorities and officials from liability to appropriate remedial measures where actions are taken or intended in good faith. Article 59 Remedies Without prejudice to other rights of action open to the right holder and subject to the right of the defendant to seek review by a judicial authority, competent authorities shall have the authority to order the destruction or disposal of infringing goods in accordance with the principles set out in Article 46. In regard to counterfeit trademark goods, the authorities shall not allow the reexportation of the infringing goods in an unaltered state or subject them to a different customs procedure, other than in exceptional circumstances. Article 60 De minimis imports Members may exclude from the application of the above provisions small quantities of goods of a non-commercial nature contained in travellers’ personal luggage or sent in small consignments.

Section 5: criminal procedures Article 61 Members shall provide for criminal procedures and penalties to be applied at least in cases of wilful trademark counterfeiting or copyright piracy on a commercial scale. Remedies available shall include imprisonment and/or monetary fines sufficient to provide a deterrent, consistently with the level of penalties applied for crimes of a corresponding gravity. In appropriate cases, remedies available shall also include the seizure, forfeiture and destruction of the infringing goods and of any materials and implements the predominant use of which has been in the commission of the offence. Members may provide for criminal procedures and penalties to be applied in other cases of infringement of intellectual property rights, in particular where they are committed wilfully and on a commercial scale.

168 Appendix PART IV: ACQUISITION AND MAINTENANCE OF INTELLECTUAL PROPERTY RIGHTS AND RELATED INTER PARTES PROCEDURES Article 62 1

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Members may require, as a condition of the acquisition or maintenance of the intellectual property rights provided for under Sections 2 through 6 of Part II, compliance with reasonable procedures and formalities. Such procedures and formalities shall be consistent with the provisions of this Agreement. Where the acquisition of an intellectual property right is subject to the right being granted or registered, Members shall ensure that the procedures for grant or registration, subject to compliance with the substantive conditions for acquisition of the right, permit the granting or registration of the right within a reasonable period of time so as to avoid unwarranted curtailment of the period of protection. Article 4 of the Paris Convention (1967) shall apply mutatis mutandis to service marks. Procedures concerning the acquisition or maintenance of intellectual property rights and, where a Member’s law provides for such procedures, administrative revocation and inter partes procedures such as opposition, revocation and cancellation, shall be governed by the general principles set out in paragraphs 2 and 3 of Article 41. Final administrative decisions in any of the procedures referred to under paragraph 4 shall be subject to review by a judicial or quasi-judicial authority. However, there shall be no obligation to provide an opportunity for such review of decisions in cases of unsuccessful opposition or administrative revocation, provided that the grounds for such procedures can be the subject of invalidation procedures.

PART V: DISPUTE PREVENTION AND SETTLEMENT Article 63 Transparency 1

Laws and regulations, and final judicial decisions and administrative rulings of general application, made effective by a Member pertaining to the subject matter of this Agreement (the availability, scope, acquisition, enforcement and prevention of the abuse of intellectual property rights) shall be published, or where such publication is not practicable made publicly available, in a national language, in such a manner as to enable governments and right holders to become acquainted with them. Agreements concerning the subject matter of this Agreement

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which are in force between the government or a governmental agency of a Member and the government or a governmental agency of another Member shall also be published. Members shall notify the laws and regulations referred to in paragraph 1 to the Council for TRIPs in order to assist that Council in its review of the operation of this Agreement. The Council shall attempt to minimize the burden on Members in carrying out this obligation and may decide to waive the obligation to notify such laws and regulations directly to the Council if consultations with WIPO on the establishment of a common register containing these laws and regulations are successful. The Council shall also consider in this connection any action required regarding notifications pursuant to the obligations under this Agreement stemming from the provisions of Article 6ter of the Paris Convention (1967). Each Member shall be prepared to supply, in response to a written request from another Member, information of the sort referred to in paragraph 1. A Member, having reason to believe that a specific judicial decision or administrative ruling or bilateral agreement in the area of intellectual property rights affects its rights under this Agreement, may also request in writing to be given access to or be informed in sufficient detail of such specific judicial decisions or administrative rulings or bilateral agreements. Nothing in paragraphs 1, 2 and 3 shall require Members to disclose confidential information which would impede law enforcement or otherwise be contrary to the public interest or would prejudice the legitimate commercial interests of particular enterprises, public or private.

Article 64 Dispute settlement 1

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The provisions of Articles XXII and XXIII of GATT 1994 as elaborated and applied by the Dispute Settlement Understanding shall apply to consultations and the settlement of disputes under this Agreement except as otherwise specifically provided herein. Subparagraphs 1(b) and 1(c) of Article XXIII of GATT 1994 shall not apply to the settlement of disputes under this Agreement for a period of five years from the date of entry into force of the WTO Agreement. During the time period referred to in paragraph 2, the Council for TRIPs shall examine the scope and modalities for complaints of the type provided for under subparagraphs 1(b) and 1(c) of Article XXIII of GATT 1994 made pursuant to this Agreement, and submit its recommendations to the Ministerial Conference for approval. Any decision of the Ministerial Conference to approve such recommendations or to extend the period in paragraph 2 shall be made only by consensus, and approved

170 Appendix recommendations shall be effective for all Members without further formal acceptance process.

PART VI: TRANSITIONAL ARRANGEMENTS Article 65 Transitional arrangements 1

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4

5

Subject to the provisions of paragraphs 2, 3 and 4, no Member shall be obliged to apply the provisions of this Agreement before the expiry of a general period of one year following the date of entry into force of the WTO Agreement. A developing country Member is entitled to delay for a further period of four years the date of application, as defined in paragraph 1, of the provisions of this Agreement other than Articles 3, 4 and 5. Any other Member which is in the process of transformation from a centrally-planned into a market, free-enterprise economy and which is undertaking structural reform of its intellectual property system and facing special problems in the preparation and implementation of intellectual property laws and regulations, may also benefit from a period of delay as foreseen in paragraph 2. To the extent that a developing country Member is obliged by this Agreement to extend product patent protection to areas of technology not so protectable in its territory on the general date of application of this Agreement for that Member, as defined in paragraph 2, it may delay the application of the provisions on product patents of Section 5 of Part II to such areas of technology for an additional period of five years. A Member availing itself of a transitional period under paragraphs 1, 2, 3 or 4 shall ensure that any changes in its laws, regulations and practice made during that period do not result in a lesser degree of consistency with the provisions of this Agreement.

Article 66 Least-developed country members 1

In view of the special needs and requirements of least-developed country Members, their economic, financial and administrative constraints, and their need for flexibility to create a viable technological base, such Members shall not be required to apply the provisions of this Agreement, other than Articles 3, 4 and 5, for a period of 10 years from the date of application as defined under paragraph 1 of Article 65. The Council for TRIPs shall, upon duly motivated request by a least-developed country Member, accord extensions of this period.

Appendix 2

171

Developed country Members shall provide incentives to enterprises and institutions in their territories for the purpose of promoting and encouraging technology transfer to least-developed country Members in order to enable them to create a sound and viable technological base.

Article 67 Technical cooperation In order to facilitate the implementation of this Agreement, developed country Members shall provide, on request and on mutually agreed terms and conditions, technical and financial cooperation in favour of developing and least-developed country Members. Such cooperation shall include assistance in the preparation of laws and regulations on the protection and enforcement of intellectual property rights as well as on the prevention of their abuse, and shall include support regarding the establishment or reinforcement of domestic offices and agencies relevant to these matters, including the training of personnel.

PART VII: INSTITUTIONAL ARRANGEMENTS; FINAL PROVISIONS Article 68 Council for Trade-Related Aspects of Intellectual Property Rights The Council for TRIPs shall monitor the operation of this Agreement and, in particular, Members’ compliance with their obligations hereunder, and shall afford Members the opportunity of consulting on matters relating to the trade-related aspects of intellectual property rights. It shall carry out such other responsibilities as assigned to it by the Members, and it shall, in particular, provide any assistance requested by them in the context of dispute settlement procedures. In carrying out its functions, the Council for TRIPs may consult with and seek information from any source it deems appropriate. In consultation with WIPO, the Council shall seek to establish, within one year of its first meeting, appropriate arrangements for cooperation with bodies of that Organization. Article 69 International cooperation Members agree to cooperate with each other with a view to eliminating international trade in goods infringing intellectual property rights. For this purpose, they shall establish and notify contact points in their administrations

172 Appendix and be ready to exchange information on trade in infringing goods. They shall, in particular, promote the exchange of information and cooperation between customs authorities with regard to trade in counterfeit trademark goods and pirated copyright goods. Article 70 Protection of existing subject matter 1

2

3

4

5

6

This Agreement does not give rise to obligations in respect of acts which occurred before the date of application of the Agreement for the Member in question. Except as otherwise provided for in this Agreement, this Agreement gives rise to obligations in respect of all subject matter existing at the date of application of this Agreement for the Member in question, and which is protected in that Member on the said date, or which meets or comes subsequently to meet the criteria for protection under the terms of this Agreement. In respect of this paragraph and paragraphs 3 and 4, copyright obligations with respect to existing works shall be solely determined under Article 18 of the Berne Convention (1971), and obligations with respect to the rights of producers of phonograms and performers in existing phonograms shall be determined solely under Article 18 of the Berne Convention (1971) as made applicable under paragraph 6 of Article 14 of this Agreement. There shall be no obligation to restore protection to subject matter which on the date of application of this Agreement for the Member in question has fallen into the public domain. In respect of any acts in respect of specific objects embodying protected subject matter which become infringing under the terms of legislation in conformity with this Agreement, and which were commenced, or in respect of which a significant investment was made, before the date of acceptance of the WTO Agreement by that Member, any Member may provide for a limitation of the remedies available to the right holder as to the continued performance of such acts after the date of application of this Agreement for that Member. In such cases the Member shall, however, at least provide for the payment of equitable remuneration. A Member is not obliged to apply the provisions of Article 11 and of paragraph 4 of Article 14 with respect to originals or copies purchased prior to the date of application of this Agreement for that Member. Members shall not be required to apply Article 31, or the requirement in paragraph 1 of Article 27 that patent rights shall be enjoyable without discrimination as to the field of technology, to use without the authorization of the right holder where authorization for such use was granted by the government before the date this Agreement became known.

Appendix 7

8

173

In the case of intellectual property rights for which protection is conditional upon registration, applications for protection which are pending on the date of application of this Agreement for the Member in question shall be permitted to be amended to claim any enhanced protection provided under the provisions of this Agreement. Such amendments shall not include new matter. Where a Member does not make available as of the date of entry into force of the WTO Agreement patent protection for pharmaceutical and agricultural chemical products commensurate with its obligations under Article 27, that Member shall: (a) notwithstanding the provisions of Part VI, provide as from the date of entry into force of the WTO Agreement a means by which applications for patents for such inventions can be filed; (b) apply to these applications, as of the date of application of this Agreement, the criteria for patentability as laid down in this Agreement as if those criteria were being applied on the date of filing in that Member or, where priority is available and claimed, the priority date of the application; and (c) provide patent protection in accordance with this Agreement as from the grant of the patent and for the remainder of the patent term, counted from the filing date in accordance with Article 33 of this Agreement, for those of these applications that meet the criteria for protection referred to in subparagraph (b).

9

Where a product is the subject of a patent application in a Member in accordance with paragraph 8(a), exclusive marketing rights shall be granted, notwithstanding the provisions of Part VI, for a period of five years after obtaining marketing approval in that Member or until a product patent is granted or rejected in that Member, whichever period is shorter, provided that, subsequent to the entry into force of the WTO Agreement, a patent application has been filed and a patent granted for that product in another Member and marketing approval obtained in such other Member.

Article 71 Review and amendment 1

The Council for TRIPs shall review the implementation of this Agreement after the expiration of the transitional period referred to in paragraph 2 of Article 65. The Council shall, having regard to the experience gained in its implementation, review it two years after that date, and at identical intervals thereafter. The Council may also undertake reviews in the light of any relevant new developments which might warrant modification or amendment of this Agreement.

174 Appendix 2

Amendments merely serving the purpose of adjusting to higher levels of protection of intellectual property rights achieved, and in force, in other multilateral agreements and accepted under those agreements by all Members of the WTO may be referred to the Ministerial Conference for action in accordance with paragraph 6 of Article X of the WTO Agreement on the basis of a consensus proposal from the Council for TRIPs.

Article 72 Reservations Reservations may not be entered in respect of any of the provisions of this Agreement without the consent of the other Members. Article 73 Security exceptions Nothing in this Agreement shall be construed: (a) to require a Member to furnish any information the disclosure of which it considers contrary to its essential security interests; or (b) to prevent a Member from taking any action which it considers necessary for the protection of its essential security interests; (i) relating to fissionable materials or the materials from which they are derived; (ii) relating to the traffic in arms, ammunition and implements of war and to such traffic in other goods and materials as is carried on directly or indirectly for the purpose of supplying a military establishment; (iii) taken in time of war or other emergency in international relations; or (c) to prevent a Member from taking any action in pursuance of its obligations under the United Nations Charter for the maintenance of international peace and security.

Notes

Introduction 1

The term ‘European Communities’ (or EC) is used to connote the activities of the EC institutions and the collective views of its Member States throughout this book in preference to the terms ‘European Union’ or ‘European Community’. This allows for a consistency in terminology throughout the book and takes account of the specific legal standing of the European Communities in the WTO Agreement and all subsequent documentation. The fifteen Member States of the European Communities are: Austria; Belgium; Denmark; Finland; France; Germany; Greece; Ireland; Italy; Luxembourg; The Netherlands; Portugal; Spain, Sweden; United Kingdom.

1 Origins of the TRIPs Agreement 1

2 3 4

By 26 July 2001 there were 142 Members of the WTO. A full list of Members, with dates of membership, and countries or organisations holding Observer status can be found on the WTO web site at http://www.wto.org/english/thewto_e/ whatis_e/tif_e/org6_e.htm (26 July 2001). On 11 November 2001 the WTO Ministerial Conference in Doha, Qatar, also approved applications of the People’s Republic of China and Chinese Taipei, which are set to become the 143rd and 144th Members of the WTO http://www-chil.wto-ministerial.org/english/ thewto_e/minist_e/min01_e/min01_11nov_e.htm (16 November 2001). Piracy generally refers to misappropriation of inventions protected by patents or works protected by copyright. Counterfeiting refers to imitation goods infringing trademarks. This range of issues is set out in Article 1 of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs). The global pharmaceutical industry is divided into two types of undertaking: proprietary and generic drug manufacturers. Proprietary manufacturers invest heavily in research and development (R&D) and the costs of regulatory approval procedures (including clinical trials). They rely on patent protection to recoup their investment costs and improve shareholder dividends. For generic manufacturers, the ability to bring cheap copies of medicines onto the market is assisted by less stringent patent protection (for a good discussion of the tensions that exist between research-based and generic drug manufacturers, see Foster 1998: 296). Proprietary pharmaceutical companies engaged in research into new medicinal products estimate that the cost of inventing and bringing a new product to market at 1995 prices is more than US$ 300 million and that on a cumulative cash flow basis the break-even point for pharmaceutical companies may not be reached until some 18 years after patent filing (IFPMA 1995: 29). The

176

5 6 7 8 9

10 11 12 13 14 15 16 17

Notes International Federation of Pharmaceutical Manufacturers Associations (IFPMA) has identified that, in order for a patent to yield value to researchbased companies in the pharmaceutical industry, three features must be present: first, patent term must be of sufficient duration for the patent holder to be able to obtain a return on investment; second, the patent must cover the invention that is the subject of the patent, namely the new chemical entity or product and not simply the process by which it has been prepared; third, the rights of the patent holder must be effectively enforced (IFPMA 1995: 29). As Adelman and Baldia (1996: 510) point out, the dilemma of the free-rider problem in the pharmaceutical sector is therefore that the cost of developing new drugs is left almost entirely to the developed world, with the effect that research and development targeted towards finding cures for locally endemic diseases may not be forthcoming if the patent system is not designed in such a way that it encourages investment. GATT Doc. No. L/4817 (31 July 1979). Agreement on Measures to Discourage the Importance of Counterfeit Goods, GATT Doc. No. L/5382 (18 October 1982). Thirty-Eighth Session at Ministerial Level Ministerial Declaration, GATT BISD, 30th Supp. at 9 (1983). GATT Doc. No. L/5758 (1982). Outside the WIPO framework there also existed a separate international copyright treaty, the Universal Copyright Convention (UCC) of 1952. The UCC was concluded under the auspices of UNESCO, primarily as a way to involve the United States and South American countries in the international framework of intellectual property protection (Blakeney 1995: 76). The UCC requires the domestic law of a country to adhere to the Convention before becoming a signatory, this requirement being more stringent than the Paris and Berne conventions, which merely suggest that signatories will be in a position under domestic law to give effect to the provision of the conventions but, with the withdrawal of the United States from UNESCO in 1984 and its accession to the Berne Convention in 1988 the UCC became a far less significant treaty. For a historical view of intellectual property protection in the United States see Damschroder (1988). The full text of the Paris Convention for the Protection of Industrial Property is available at http://www.wipo.int/treaties/ip/paris/index.html (22 October 2001). The text of the Berne Convention for the Protection of Literary and Artistic Works is available at http://www.wipo.int/treaties/ip/berne/index.html (22 October 2001). A full list of contracting parties to the Paris Convention for the Protection of Industrial Property is available at: http://www.wipo.int/treaties/docs/english/dparties.doc (22 October 2001). A full list of contracting parties to the Berne Convention for the Protection of Literary and Artistic Works is available at http://www.wipo.int/treaties/docs/ english/e-berne.doc (22 October 2001). United Nations Department of Economic and Social Affairs, UNCTAD Secretariat, The Role of the Patent System in the Transfer of Technology to Developing Countries, U.N. Doc. No. TD/B/AC.11/19 (1974). According to Clive Bradley, former Director of The Publishers’ Association, in interview with the author 30 July 1998, London. Possible Renewal of the Generalised System of Preferences – Hearing Before the Subcommittee on Trade of the U.S. House of Representatives Committee on Ways and Means, 98th Cong. 1st Sess. 57 (1983). Unfair Foreign Trade Practices, Stealing American Intellectual Property: Imitation is Not Flattery, 98th Cong. 2nd Sess. 1–3 (1984).

Notes

177

18 Ibid. p. 46. 19 Tariff Act of 1930, Chapter 497, Section 337, 46 Stat. 703 (1930) (codified as amended at 19 USC sec. 1337(d)(e) (1988)). 20 98 Stat. 2948 (1984). 21 Although the post of US Trade Representative had existed since the Trade Expansion Act of 1962, it was not until 1974 that the position was accorded full Cabinet rank and the Office of the United States Trade Representative established as a Cabinet-level agency within the Executive Office of the Presidency (see Tancer and Tancer 1999: 891). 22 The GSP scheme provides for special tariff preferences for imports from designated developing countries trading with the United States. 23 According to Emory Simon, then in the Office of the United States Trade Representative (quoted in Sell 1995: 170). 24 In 1990 the United States lifted its sanctions in response to an undertaking by Brazil to revise its patent laws but continued to list Brazil as a priority foreign country in response to its failure to meet its undertakings for patent law reform. 25 Decision of 28 November 1985 on Establishment of the Preparatory Committee, GATT Doc. No. L/5925, reprinted in GATT, BISD 32nd Supp. at 10 (1986). 26 Ministerial Declaration on the Uruguay Round, GATT Doc. No. MIN.DEC (20 September 1986): 7–8. 27 PREP.COM(86)/W/41/Rev.1 (16 July 1986). 28 PREP.COM(86)/W/49 (29 July 1986). 29 Ministerial Declaration on the Uruguay Round, GATT Doc. No. MIN.DEC (20 September 1986). 30 Ibid. pp. 8–9. 31 According to Jacques Gorlin, Consulting Economist, The Gorlin Group, and coordinator of the Intellectual Property Committee. Interview with the author, Washington, DC, 1 April 1998. 32 In addition, a number of other business associations have been identified as playing a significant role in the Special 301 process: the Computer Software and Services Industry Association, the Business Software Alliance, the Pharmaceutical Manufacturers Association, the Chemical Manufacturers Association, the National Agricultural Chemicals Association, the Motor Equipment Manufacturers Association, the Auto Exports Council, Intellectual Property Owners Inc., and the Semiconductor Industry Association (Sell 1995: 166). 33 According to Jacques Gorlin. Interview with the author, Washington DC, 1 April 1998. See also the accounts events given by Drahos (1995: 12), Enyart (1990: 54) and Sell (1998: 137). 34 The significance of the role played by European business interests in drafting proposals for a framework of GATT provisions on intellectual property was the subject of a discussion between the author and John Beton, President of the Trade Mark Patent and Design Federation in the UK (1983–85) and Chairman of the UNICE Intellectual Property Working Group, conducted at the University of Warwick, 7 April 1998. 35 19 U.S.C. section 2242 (1990). 36 Special 301 was amended in the United States Uruguay Round Agreements Act to clarify that a country can be found to deny adequate and effective intellectual property protection even if it is in compliance with its obligations under the TRIPs Agreement. 37 Required by 19 U.S.C. section 2241(b) (1988). 38 19 U.S.C. section 2242(a)(1)(A) (1988). 39 Omnibus Trade and Competitiveness Act (1988 sec. 1303). 40 19 U.S.C. section 2242(b)(1)(A) (1988). 41 19 U.S.C. section 2242(b)(1)(B) (1988).

178

Notes

42 43 44 45 46

19 U.S.C. section 2242(b)(1)(C) (1988). 19 U.S.C. section 2414(a)(3)(A)-(B) (1988). 19 U.S.C. section 2416(b) (1988). Office of the United States Trade Representative Press Release, 1 May 1998. The US has since alleged that Argentina has failed to comply with provisions of the TRIPs Agreement with respect to adequate protection of confidential information submitted for the approval of agrochemical products and the granting of exclusive marketing rights (see Bensadon 1999: 6). 47 For instance, 1998 Special 301 Recommendations submitted to the United States Trade Representative on February 28, 1998, Washington DC: International Intellectual Property Alliance. 48 The US pharmaceutical industry trade association, the Pharmaceutical Manufacturers’ Association, changed its name to the Pharmaceutical Research and Manufacturers’ Association (PhRMA) in 1994 in order to distinguish the work of research-based companies from generic competitors, the latter which relied on imitation of patented products of the former (see also Weissman 1996: 1089). 2 Negotiating the TRIPs Agreement 1 2

3

4 5 6 7 8 9 10 11 12 13

14 15

GATT Doc. No. GATT/1405 (5 February 1987). A unit of the GATT Secretariat was created to assist the TRIPs Negotiating Group, headed by David Hartridge (who later became Director of the WTO Trade in Services Division) with Adrian Otten (now the Director of the WTO Intellectual Property and Investment Division) as his assistant. In early 2001 the WTO made available eighty-seven previously restricted documents that throw more light on the progress of negotiations leading to the TRIPs Agreement. The eighty-seven documents, including a full list set out in GATT Doc. No. MTN.GNG/NG11/W/67/Rev.1 (30 March 1990), can be downloaded from the WTO web site at http://www.wto.org/english/tratop_e/ trips_e/trips_e.htm (16 November 2001). GATT Doc. No. MTN.GNG/NG11/W/14 (20 October 1987). GATT Doc. No. MTN.GNG/NG11/W/16 (20 November 1987). GATT Doc. MTN.GNG/NG11/W/26 (7 July 1988). GATT Doc. No. MTN.GNG/NG11/W/17 (23 November 1987). See conclusions of the Montreal Mid-Term Review in GATT Doc. No. MTN.TNC/ 7(MIN) (9 December 1988). Special 301 actions were not reserved for developing countries. In 1991 Australia was placed on the priority watch list because of the limits imposed on the importation of audio-visual material from the United States. HR Conf. Rep. No. 576, 100th Cong. 2d Sess. 580 (1988). GATT Doc. No. MTN.TNC/11 (21 April 1989). GATT Doc. Nos. MTN.GNG/NG11/13 (3–4 July 1989) and MTN.GNG/NG11/ 14 (12–14 July 1989). Proposals were tabled by Australia in GATT Doc. No. MTN.GNG/NG11/W/35 (10 July, 1989); by the Nordic countries in GATT Doc. No. MTN.GNG/NG11/W/ 36 (10 July, 1989); by India in GATT Doc. No. MTN.GNG/NG11/W/37 (10 July 1989); by Switzerland in GATT Doc. No. MTN.GNG/NG11/W/38 (11 July 1989); by Korea in GATT Doc. No. MTN.GNG/NG11/W/48 (26 October 1989); by Hong Kong in GATT Doc. No. MTN.GNG/NG11/W/51 (29 November 1989); by Austria in GATT Doc. No. MTN.GNG/NG11/W/55 (8 December 1989); and by Brazil in GATT Doc. No. MTN.GNG/NG11/W/57 (11 December 1989). WIPO Doc. WO/INF/29 (September 1988). The group of developing countries consisted of Argentina, Brazil, Chile, China,

Notes

16 17 18 19 20 21 22 23

24 25 26

27

28 29 30 31 32

33

34 35 36

179

Colombia, Cuba, Egypt, India, Nigeria, Peru, Tanzania and Uruguay. Pakistan and Zimbabwe joined the group later and subscribed to the principles already set out in the developing countries’ proposal. GATT Doc. No. MTN/GNG/NG11/W/68 (29 March 1990). GATT Doc. No. MTN.GNG/NG11/W/70 (11 May 1990). The fourteen developing countries were: Argentina, Brazil, Chile, China, Columbia, Cuba, Egypt, India, Nigeria, Pakistan, Peru, Tanzania, Uruguay and Zimbabwe. GATT Doc. No. MTN.GNG/NG11/W/71 (14 May 1990). GATT Doc. No. MTN.GNG/NG11/W/73 (14 May 1990). GATT Doc. No. MTN.GNG/NG11/W74 (15 May 1990). GATT Doc. No. MTN.GNG/NG11/W75 (13 June 1990). In interviews conducted by the author with Jacques Gorlin, Consulting Economist to the Gorlin Group and coordinator of the Intellectual Property Committee, Washington DC. Interview with the author, 1 April 1998, and John Beton, Chairman of the UNICE Intellectual Property Working Group. Interview with the author, 7 April 1998. See also Ryan (1998: 112). GATT Doc. No. MTN.GNG/NG11/W/76 (18 July 1990). GATT Doc. No. MTN.TNC/W/35/Rev.1 (3 December 1990). According to John Beton, President of the Trade Mark Patent and Design Federation in the UK (1983–85) and Chairman of the UNICE Intellectual Property Working Group. Interview with the author, University of Warwick, 7 April 1998. In reality the size and membership of the ‘10 plus 10’ Group varied depending on the issue to be discussed at any particular meeting, with the Group as small as ‘5 + 5’ and as large as twenty-five on different occasions. Countries that regularly participated include the United States, Canada, the European Communities, Japan, Argentina, Brazil, the Nordic countries, Hong Kong, India, Malaysia, Switzerland and Thailand. According to John Beton, President of the Trade Mark Patent and Design Federation (TMPDF) in the UK (1983–85) and Chairman of the UNICE Intellectual Property Working Group. Interview with the author, 7 April 1998. Progress of Work in Negotiating Groups: Stock Taking, GATT Doc. No. MTN.TNC/W/ 89/Add.1 (7 November 1991). Agreement on Trade-Related Aspects of Intellectual Property Rights, Including Trade in Counterfeit Goods (Annex III) in Dunkel Draft. For a discussion of moral rights and other detailed provisions of the TRIPs Agreement see Chapter 3. Copyright industries criticised the provisions on legal protection of computer programs because of: the absence of coverage of the legal status of videogram producers and direct satellite broadcasting; and the concept of theft in relation to cable and satellite communications (see also Blakeney 1996b: 7; Oman 1993: 160). But to no avail: the final text of the TRIPs Agreement adopted in Marrakesh on 15 April 1994 contained the main elements of the Dunkel Draft that had been so vigorously opposed by the motion picture industry (see also Gervais 1998: 25). Annex III, Draft Final Act Embodying the Results of the Uruguay Round of Multilateral Trade Negotiations, MTN.TNC/W/FA (20 December 1991). Enyart (1990: 55), for instance, describes discussions between high technology industries through the Korea–US Business Council. The US pharmaceutical industry called for ‘pipeline protection’ to be included in the TRIPs Agreement, whereby ideas are protected when they are still in the research and development stage. The current duration of pipeline protection in

180

Notes the US is ten years, but pharmaceutical companies claim that the absence of pipeline protection from the TRIPs Agreement will be detrimental to US firms, which will not have sufficient time to recoup expenditure on research and development once clinical trials and market authorisation procedures have eroded the patent life of new medicinal products (see McGrath 1995: 403).

3 Content of the TRIPs Agreement 1

2

3 4 5

6 7 8

9 10

11 12 13 14

Helpful analyses of the TRIPs Agreement have also been offered by Blakeney (1996b), who provides a useful article-by-article summary of the Agreement, Gervais (1998), who compares the final text of the TRIPs Agreement with two earlier drafts, and Gorlin (1999), who examines the provisions of the TRIPs Agreement with particular relevance to the pharmaceutical industry. For good discussions of issues relating to international exhaustion see Bronckers (1994: 1265), Grubb (1999: 368–9), Pacón (1996: 337), Verma (1998: 534) and for those relating to the exhaustion of rights doctrine in the European Communities see O’Regan (1995: 26). According to Clive Bradley, former Director of the Publishers’ Association. Interview with the author, London, 30 July 1998. For a good discussion of the scope of copyright protection under the TRIPs Agreement see Jaszi (1996: 595). A footnote to Article 27.1 clarifies an anomaly between the European Communities and the United States, by stating that ‘inventive step’ and ‘capable of industrial application’ should be considered synonymous with ‘non-obvious’ and ‘useful’, as the last two terms are commonly used in US patent law. Interview with Koos Rasser, Head of Patents, Procter and Gamble Inc., Washington, DC, 31 March 1998. For a good discussion of the US position on first-to-file, and the ‘Manbeck Compromise’ in particular, see Wegner 1996: 541. Action to reduce the excessive cost of patent litigation, especially the costs arising from the first-to-invent system in the United States, was discussed by the Transatlantic Business Dialogue (TABD) during an US–EU Symposium on Intellectual Property on 6–8 October 1997 in Washington DC. It went on to be identified as a key bilateral issue for future discussions in the resultant TABD Intellectual Property Issues Group Action Plan. The European Commission Communication, ‘The New Transatlantic Marketplace’, of 11 March 1998 also referred to the US first-to-invent system, calling it ‘anachronistic’ and criticising it as being ‘extremely demanding in terms of evidence for all inventive activities and [for creating] the potential for extensive and highly costly litigation’ (p. 19). GATT Doc. No. MTN.GNG/NG11/W/71, 14 May 1990. According to Peter Richardson, Senior Assistant General Counsel and General Patent Counsel, Pfizer Inc. Interview with the author, 30 March 1998. This view was corroborated from the European perspective by John Beton, President of the Trade Mark Patent and Design Federation (TMPDF) in the UK (1983–85) and Chairman of the UNICE Intellectual Property Working Group. Interview with the author, 7 April 1998. GATT Doc. No. MTN.GNG/NG11/W/40, 5 September 1989. Footnote 14 to Article 51 of the TRIPs Agreement defines ‘counterfeit’ goods as those involving copying of trademarks, whereas ‘pirated’ goods are those that infringe a copyright or a related right. Eric Smith of the IIPA also criticises some of the same countries listed here (Smith 1996: 575). Afghanistan, Bangladesh, Benin, Bhutan, Botswana, Burkina Faso, Burundi,

Notes

181

Cambodia, Cape Verde Islands, Central African Republic, Chad, Comoros, Djibouti, Equatorial Guinea, Ethiopia, Gambia, Guinea, Guinea-Bissau, Haiti, Kiribati, Lao PDR, Lesotho, Liberia, Madagascar, Malawi, Maldives, Mali, Mauritania, Mozambique, Myanmar, Nepal, Niger, Rwanda, Samoa, Sao Tomé and Principe, Sierra Leone, Solomon Islands, Somalia, Sudan, Togo, Tuvalu, Uganda, United Republic of Tanzania, Vanuatu, Yemen, Zambia, Zaire (UNCTAD 1994). 4 Implementing the TRIPs Agreement 1 2

3

4 5 6 7

8 9

For a fuller discussion of the role of the TRIPs Council see Geuze and Wager (1999: 347–84), Otten and Wager (1996: 410); and Dörmer (2000: 3). Notifications under Article 63.2 of the TRIPs Agreement and the Annual Reports of the TRIPs Council can be found on the WTO website at http:// docsonline.wto.org/gen_browse.asp (26 July 2001). Procedures for notification of national laws and regulations are set out in document IP/C/2. The format for listing notifications is in document IP/C/4. The checklist of issues on enforcement required by the TRIPs Council is in document IP/C/5. The Annual Report of the TRIPs Council for 2000 is in document IP/C/22. The TRIPs Council also has a mandate to seek resolution of a set of issues not resolved during the Uruguay Round negotiations. This ‘built-in agenda’ of issues subject to reconciliation in the Council comprises Article 23.4 (the establishment of a multilateral system of notification and registration of geographical indications for wines), Article 24.2 (review of any matter affecting compliance with obligations regarding geographical indications) and Article 27.3.b (review of patent protection for plants and animals other than microorganisms and sui generis protection for plant varieties). Although there is a great degree of scepticism amongst national representatives on the TRIPs Council that these issues can actually be resolved, under the terms of the Agreement they are required to attempt conciliation (for a discussion of the built-in agenda of the TRIPs Agreement, see also Otten 1998: 531). In addition, Article 71.1 required the TRIPs Council to commence a review the Agreement at the end of 2000 in the context of examining the need for modification or amendment to the Agreement as a whole. For example, The Patent Office: TRIPs Agreement Article 63(2) Notification United Kingdom (1996). For example, The Patent Office: TRIPs Agreement Checklist of Issues on Enforcement of Intellectual Property Rights Response by the United Kingdom (1996). A review and analysis of Article 63.2 notifications can be found in Willis (2000: 180). Ireland and the UK, for instance, demonstrated from the outset a willingness to examine the compatibility of national law (particularly compulsory licensing provisions) with the TRIPs Agreement and demonstrated a resolve to ensure that patent law was fully in accordance with the TRIPs Agreement (for a discussion of compulsory licensing provisions, see Giust 1997: 83–6). Review of Legislation on Enforcement Replies from the United Kingdom to questions posed by the United States (Council for TRIPs IR-17, 14 November 1997). However a WTO Dispute Settlement Panel is investigating a complaint against the United States on grounds that Section 110(5) of the Copyright Act is incompatible with the TRIPs Agreement. See S/160/R and DS/160/12. A list of Dispute Body and Appellate Body Reports is available on the WTO website at http://www.wto.org/english/tratop_e/dispu_e/distab_e.htm#patent (26 July 2001).

182

Notes

10 The membership of the Standing Advisory Committee on Industrial Property (SACIP) consists of: the Law Society; the Law Society of Scotland; the Bar Council; the Institute of Patentees and Inventors; the Trade Marks, Patents and Designs Federation; the Confederation of British Industry; the Intellectual Property Law Unit of Queen Mary and Westfield College, University of London; the British Retail Consortium; the Incorporated Society of British Advertisers; the Chartered Society of Designers; the Chartered Institute of Patent Agents; the Institute of Trade Mark Agents; the Association of British Chambers of Commerce; the Consumers’ Association/National Consumers’ Council; the Federation of Small Businesses; and the Licensing Executives Society of Britain and Ireland. 11 There is frustration that EFPIA remains inflexible as regards representation allowed at its meetings in Brussels. Only one representative of the UK Association of British Pharmaceutical Industries (ABPI) is allowed to attend EFPIA meetings, despite the strength and expertise of the UK proprietary pharmaceutical sector. 12 In 1999 the members of Interpat were Takeda Chemical Industries, BristolMeyers Squibb Company, Novartis International AG, Novo Nordisk A/S, American Home Products Corporation, BASF AG, Eli Lilly and Company, Solvay SA, Bayer AG, Ares-Serono International AG, Merck & Co. Inc., AKZO Nobel Pharma International BV, GlaxoWellcome plc, Yamanouchi Pharmaceutical Co. Ltd, Boehringer Ingelheim Gmbh, Hoechst Marion Roussel, Schering AG, Schering Plough Corporation, F. Hoffmann-La Roche AG, Sankyo Co. Ltd., Astra AB, Pfizer Inc., SmithKlein Beecham plc, Rhone-Polenc-Rorer SA, Merck KgaA, Zeneca Group plc, Synthelabo, Abbott Laboratories G.D., Searle & Co., Sanofi and Eisai Co. Ltd (Gorlin 1999: 1). 13 Nevertheless, a senior executive of GlaxoWellcome chaired the influential India International Task Force of Interpat during preparations for the US–India WTO Dispute Settlement Panel. 14 The Dispute Settlement Understanding is contained in the WTO Agreement, Annex 2: Understanding on Rules and Procedures Governing the Settlement of Disputes. 15 Opinion 1/94, Re. the Uruguay Round Treaties [1995] Common Market Law Reports 1: 205 in which the European Court of Justice decided that the European Community and its Member States were jointly competent to conclude the TRIPs Agreement. 16 For a discussion of EC competence and the TRIPs Agreement see Dreier (1996: 268) and Wooldridge (1997: 1). 17 Council Regulation (EEC) No. 2641/84 of 17 September 1984 on the strengthening of the common commercial policy with regard in particular to protection against illicit commercial practices, OJL 252/1 (1984), 20 September 1984. 18 For a good discussion of cases involving intellectual property that have been brought under the Regulation see O’Regan (1995: 20). 19 According to Jacques Gorlin, Consulting Economist, The Gorlin Group and coordinator of the Intellectual Property Committee. Interview with the author, Washington, DC, 1 April 1998. 20 According to one senior executive of a company that was formerly an IPC Member, before the TRIPs Agreement was concluded the annual fee for membership of the IPC was $40,000 per annum. This was reduced to $25,000 per annum for each company after conclusion of the TRIPs Agreement. Interview with the author 31 March 1998. 21 In the domestic context, US businesses (both large and small firms) and universities also make their views know to policy-makers through their membership of the Intellectual Property Owners (IPO), another single-issue group which lobbies on behalf of its members in Washington, DC.

Notes

183

22 Letter from the Eric Smith, President of the IIPA, to Joseph Papovich, Assistant USTR for Services, Investment and Intellectual Property, 23 February 1998. A copy of the letter was given to the author by Eric Smith on 2 April 1998. 23 These reported losses are estimates calculated on the basis of information provided by the IIPA’s member associations. Although not independently corroborated, the IIPA has stated its belief that these estimates actually underestimate losses due to piracy experienced by the US copyright-based industries. 24 In 1998 the PhRMA began its communication to member companies, requesting the completion of a fax-back form indicating countries where inadequate patent protection for pharmaceutical products had been identified, with the suggestion that ‘As we approach the end of January and the middle of a Washington winter, we are reminded that it is ‘Special 301’ Season again.’ Memo from the Pharmaceutical Research and Manufacturers of America, 28 January 1998. 25 Submission of the Pharmaceutical Research and Manufacturers of America for the ‘Special 301’ Report on Intellectual Property Barriers 1998, 13 February 1998. 26 The United States finally initiated a complaint against Argentina under the WTO Dispute Settlement Procedure on 6 May 1999, alleging an infringement of Articles 27, 65(2) and 70(9) of the TRIPs Agreement in respect to patent protection for pharmaceutical products, WT/DS171/1. 27 An earlier dispute between the United States and Indonesia on the national motor programme, covering a wide range alleged infringements to the GATT, Agreement on Trade-Related Investment Measures and Agreement on Subsidies and Countervailing Measures, had already made reference to the TRIPs Agreement. WT/DS59. 28 WT/DS28. 29 WT/DS42. 30 WT/DS28/4. 31 WT/DS42/4. 32 IP/N/1/JPN/C/1/Rev.1. 33 Exclusive marketing rights must be granted provided that (1) a mailbox application in respect of the product has been filed in the relevant country; (2) a patent application has been filed in respect of the same product in another WTO Member after 1 January 1995; (3) other Member has granted a patent; (4) other Member approved the marketing of the product; and (5) the member in which the mailbox application has been made must have approved the marketing of the product (Macdonald-Brown and Ferera 1998: 69). 34 For a detailed discussion of mailbox application procedures, see IFPMA (1995: 32). 35 WT/DS36/4. 36 IP/N/1/PAK/1. 37 Figures contained in India’s statement of appeal, WT/DS50.AB/R (quoted in Dörmer 2000: 15). 38 Appendix 3 of Panel Report WT/DS50/R. 39 WT/DS50/R. 40 WT/DS50/AB/R. 41 Because India was entitled to a transitional period under Article 65 and because Article 1.1 of the TRIPs Agreement explicitly states that Members ‘shall be free to determine the appropriate method of implementing the provisions of this Agreement within their own legal system and practice (see also Reichman 1998: 595). 42 T/DS50/10/Add.1. Status report by India. 43 As a postscript to the US complaint against India, after the Panel Report on the complaint by the United States against India had been issued, the European Communities also requested the establishment of a Panel on the same matter

184

44 45 46 47 48 49

50 51 52

53 54 55 56 57 58 59 60

61 62 63 64

Notes to examine their own complaints relating to India’s obligations under Article 70.8 and 70.9 of the TRIPs Agreement. The purpose of the EC’s complaint on the same grounds as those of the United States can be accounted for by the fact that WTO Member countries are only entitled to compensation and mandated retaliatory action if that Member has obtained authorisation after themselves filing a complaint under the Dispute Settlement Procedures (see Geuze and Wager 1999: 350). The Panel Report on the dispute between the European Communities and India was subsequently issued on 24 August 1998, confirming the basic tenants of the earlier Panel Report on the US complaint against India and rejecting India’s procedural claims that the European Communities should have initiated its complaints at the same time as the dispute between the United States and India, in which the European Communities had been a third party. WS/DS50/11. Communication from the permanent mission of the United States. These concerns now appear to have been overcome. WT/DS114/1. Roche Products Inc. v. Bolar Pharmaceuticals Co. Inc., 221 USPQ 937 (Fed. Cir. 1984). Explanations of the Bolar provision can also be found in Engelberg (1999), Hantman (1985), Krulwich (1985), Milenkovich (1999), Molzon (1995), Savina (1998) and Tancer (1995). Although Grubb (1999: 162) reminds us that this is a misnomer since the Court in Roche v. Bolar decided that an infringement had taken place. Article 30 of the TRIPs Agreement allows for limited exceptions to the exclusive rights conferred by a patent provided that such exceptions do not unreasonably conflict with the normal exploitation of the patent and do not unreasonably prejudice the legitimate interests of the patent owner, taking into account the legitimate interests of third parties. WT/DS114/R. WT/DS170/1. On 30 April 1996 the United States also requested consultations with Portugal complaining that the Portuguese Industrial Property Act did not provide the minimum period of twenty years patent protection as required by Article 33 of the TRIPs Agreement. On 3 October 1996 the United States and Portugal notified the WTO Dispute Settlement Body that an agreement had been reached whereby Portugal issued a regulation ensuring twenty years patent protection. WT/DS170/R, p. 31. First submission from the United States (18 November 1999). WT/DS170/R. WT/DS170/AB/R. Tel-Aviv District Court 1512/93. For a good overview of the amendments to Israeli law see Ophir (2000). ‘EU Worries Over Cyprus Patent Bill’, The Cyprus Weekly, 26 September to 2 October 1997. WT/DS86/2. An order to compel one party to permit the other to enter premises on grounds of a court order for the detention and preservation of documents. The name is derived from the case of Anton Piller K.G. v. Manufacturing Processes Ltd [1976] 1 All E.R. 779. On 14 May 1997 the United States also requested consultations with Denmark in respect to Articles 50, 63 and 65 of the TRIPs Agreement. WT/DS125/1. WT/124/1. WT/DS160.

Notes

185

5 Impact of the TRIPs Agreement on developing countries 1 2 3 4 5

6 7

8 9 10 11 12 13 14 15 16 17

18

Henderson (1997: 655), however, has criticised Rapp and Rozek on grounds that their argument assumes that developing countries would see benefits accrue from intellectual property protection in the same way as developed countries. UNCTAD-Doc. TD/B/40(2)/17, TD/B/WG.5/12 of 1994, Final Report of the Ad Hoc Working Group on the Interrelationship between Investment and Technology to the Trade and Development Board, No. 27. For those too poor to pay, they suggest a system of subsidies. Durán and Michalopoulos (1999: 862) nevertheless point out that there is sufficient flexibility in the TRIPs Agreement to allow developing countries to impose price controls. In 1988 the World Intellectual Property Organisation listed forty-eight countries that did not provide patent protection for pharmaceutical products: Argentina, Australia, Bolivia, Brazil, Bulgaria, Chad, China, Colombia, Cuba, Czechoslovakia, Ecuador, Egypt, Finland, German Democratic Republic, Ghana, Greece, Hungary, Iceland, India, Iran, Iraq, Korea, Lebanon, Libya, Malawi, Mexico, Monaco, Mongolia, Morocco, New Zealand, Norway, Pakistan, Peru, Poland, Portugal, Romania, Soviet Union, Spain, Syria, Thailand, Tunisia, Turkey, Uruguay, Venezuela, Vietnam, Yugoslavia, Zambia, Zimbabwe (according to Nogués 1990: 83). Including GlaxoSmithKlein, Merck, Eli Lilly, Bayer AG and Bristol-Meyers Squibb. Against this it must be acknowledged that the United States, where a large proportion of proprietary drug manufacturers with global reach are based, is also the world’s leading donor of assistance to control HIV and AIDS in developing countries with expenditure by the United States Agency for International Development to combat HIV and AIDS in sub-Saharan Africa amounting to £125 million in 1999 (Wooldridge 2000: 104). According to Jacques Gorlin, Consulting Economist, The Gorlin Group. Interview with the author, Washington, DC, 1 April 1998. ‘Brazil and Roche agree deal on Aids drug price cut’, Financial Times 31 August 2001, available at http://www.ft.com (4 September 2001). Philip W. Grubb is Intellectual Property Counsel for Swiss pharmaceutical company Novartis. On indigenous knowledge and intellectual property rights see Blakeney (2000), Drahos (1996–97), Drahos (2000), de Koning (1997–98), Kongolo (2001). See the description of Part III of the TRIPs Agreement set out in Chapter 3. The website of Enforcers of Intellectual Property Rights (India) Ltd can be found at http://www.antipiracy-india.com (13 August 2001). Agreement between the World Intellectual Property Organisation and the World Trade Organisation (22 December 1995). The UN/ECE Advisory Group on the Implementation of Intellectual Property Rights for Investment website can be found at http://www.unece-ipr.org/ (11 September 2001). The partner countries in the EC TACIS programme are Armenia, Azerbaijan, Belarus, Georgia, Kazakhstan, Kyrgystan, Moldova, Mongolia, Russia, Tadjikistan, Turkmenistan, Ukraine and Uzbekistan. The acronym PHARE is derived from the French name for the assistance programme: Pologne-Hongrie: aide à la reconstruction économique. The partner countries in the EC PHARE programme are Albania, Bosnia-Herzegovina, Bulgaria, the Czech Republic, Estonia, Macedonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia and Slovenia. The ASEAN web site can be found at: http://www.asean.or.id/ (22 October 2001).

186

Notes

6 Future of the TRIPs Agreement 1 2 3

4 5

6 7 8 9 10 11 12

13 14

15 16

17

18 19

The website of the Transatlantic Business Dialogue can be found at http:// www.tabd.com/ (8 October 2001). Differences between the United States and European Communities on first-toinvent and first-to-file are also highlighted in the TABD 1988 Mid-Year Report and Scorecard. Draft Communication from the Commission to the Council, the European Parliament and the Economic and Social Commission on The New Transatlantic Marketplace from Sir Leon Brittan, Martin Bangemann and Mario Monti, 11 March 1998. Ibid. p. 19. The concerns of the IPC and UNICE were, to some extent, confirmed by the request for an extension to the transitional period allowed under Article 65 made by Cuba, the Dominican Republic, Egypt and Honduras (WT/GC/W/209) (quoted in Wilder 2001: 516). WT/DS/152/R, 22 December 1999. WT/DS160/R, 15 June 2000. WT/DS170/AB/R. 18 September 2000. See, for example, the World Trade Organisation statement on NGOs at http:// www.wto.org/english/forums_e/ngo_e/intro_e.htm (29 October 2001). The website for the International Forum on Globalization can be found at http:/ /www.ifg.org/ (11 September 2001). The website for Public Citizen can be found at http://www.citizen.org/ (11 September 2001). Nevertheless, a flaw in the arguments of those opposing the TRIPs Agreement is that the gathering of empirical evidence to support propositions concerning the costs and benefits of developing country compliance with the TRIPs Agreement has been ‘largely lacking’ (Bronckers 1994: 1248), although a notable recent exception is Maskus (2000). ‘Oxfam Urges Charitable Stance on Drugs Patents’, Financial Times, 12 February 2001, p. 6; ‘Drugs Companies in Challenge to South Africa Over Patent Rights’, Financial Times, 5 March 2001, p. 11. A joint WHO/WTO/Norwegian Foreign Affairs Ministry/Global Health Council workshop was held at Hosbjor, Norway, from 8 to 11 April 2001 to discuss ‘Differential Pricing and Financing of Essential Drugs’. At the meeting, attended by experts rather than government representatives, participants called for improved funding for essential drugs in developing countries. The final report of the workshop is available on the World Trade Organisation website at: http:/ /www.wto.org/english/tratop_e/trips_e/tn_hosbjor_e.htm#finalreports (23 August 2001). ‘The Economics of Essential Medicine’ seminar held at the Royal Institute of International Affairs, Chatham House, London on 10 July 2001. A report on the first discussion of the TRIPs Council on ‘Intellectual Property and Access to Medicines’ that took place on 20 June 2001 can be found on the WTO website at: http://www.wto.org/english/tratop_e/trips_e/ counciljun01_e.htm (20 October 2001). A report on the second discussion of the TRIPs Council on ‘Intellectual Property and Access to Medicines’ that took place 19 and 21 September 2001 can be found on the WTO website at: http://www.wto.org/english/tratop_e/trips_e/ councilsep01_e.htm (12 October 2001). WT/MIN(01)/DEC/W/2. Reichman does, however, acknowledge that there is a countervailing risk that a developed country, such as the United States, might resort to unilateral pressures under Section 301 or a similar measure in other developed countries (Reichman 1998: 598).

Notes

187

20 WT/GC/W/115, 19 November 1998. 21 WT/GC/W/193, 2 June 1999. 22 A copy of the WIPO Copyright Treaty is available on the World Intellectual Property Organisation website at http://www.wipo.int/treaties/ip/copyright/ index.html (7 September 2001). 23 A copy of the WIPO Performances and Phonograms Treaty is available on the World Intellectual Property Organisation website at http://www.wipo.int/treaties/ ip/performances/index.html (7 September 2001). 24 A copy of the Digital Millennium Copyright Act is available on the Electronic Frontier Foundation website at http://www.eff.org/ip/DMCA/hr2281_ dmca_law_19981020_pl105–304.html (7 September 2001). 25 WT/GC/W/242, 6 July 1999. 26 At the first special session of the TRIPs Council on 8 March 2002 WTO Members embarked on a two-phase programme for completing negotiations on a multilateral registration system for geographical indications for wines and spirits, see http://www.wto.org/english/news_e/news02_e/trips_ss_020308_e.htm (27 March 2002). A review of Article 27.3(b) was discussed in the TRIPs Council on 5–7 March 2002), when attention focused on organising the work programme, see http://www.wto.org/english/news_e/news02_e/trips_reg_020307_e.htm (27 March 2002). 27 See http://www.biodiv.org/ (7 September 2001). 28 WT/GC/W/225, 2 July 1999. 29 WT/GC/W/302. 30 WT/GC/W/282. Appendix 1

2

3

4 5 6

When ‘nationals’ are referred to in this Agreement, they shall be deemed, in the case of a separate customs territory Member of the WTO, to mean persons, natural or legal, who are domiciled or who have a real and effective industrial or commercial establishment in that customs territory. In this Agreement, ‘Paris Convention’ refers to the Paris Convention for the Protection of Industrial Property; ‘Paris Convention (1967)’ refers to the Stockholm Act of this Convention of 14 July 1967. ‘Berne Convention’ refers to the Berne Convention for the Protection of Literary and Artistic Works; ‘Berne Convention (1971)’ refers to the Paris Act of this Convention of 24 July 1971. ‘Rome Convention’ refers to the International Convention for the Protection of Performers, Producers of Phonograms and Broadcasting Organizations, adopted at Rome on 26 October 1961. ‘Treaty on Intellectual Property in Respect of Integrated Circuits’ (IPIC Treaty) refers to the Treaty on Intellectual Property in Respect of Integrated Circuits, adopted at Washington on 26 May 1989. ‘WTO Agreement’ refers to the Agreement Establishing the WTO. For the purposes of Articles 3 and 4, ‘protection’ shall include matters affecting the availability, acquisition, scope, maintenance and enforcement of intellectual property rights as well as those matters affecting the use of intellectual property rights specifically addressed in this Agreement. Notwithstanding the first sentence of Article 42, Members may, with respect to these obligations, instead provide for enforcement by administrative action. For the purposes of this Article, the terms ‘inventive step’ and ‘capable of industrial application’ may be deemed by a Member to be synonymous with the terms ‘non-obvious’ and ‘useful’ respectively. This right, like all other rights conferred under this Agreement in respect of the use, sale, importation or other distribution of goods, is subject to the provisions of Article 6.

188 7 8 9 10

11 12

13 14

Notes ‘Other use’ refers to use other than that allowed under Article 30. It is understood that those Members which do not have a system of original grant may provide that the term of protection shall be computed from the filing date in the system of original grant. The term ‘right holder’ in this Section shall be understood as having the same meaning as the term ‘holder of the right’ in the IPIC Treaty. For the purpose of this provision, ‘a manner contrary to honest commercial practices’ shall mean at least practices such as breach of contract, breach of confidence and inducement to breach, and includes the acquisition of undisclosed information by third parties who knew, or were grossly negligent in failing to know, that such practices were involved in the acquisition. For the purpose of this Part, the term ‘right holder’ includes federations and associations having legal standing to assert such rights. Where a Member has dismantled substantially all controls over movement of goods across its border with another Member with which it forms part of a customs union, it shall not be required to apply the provisions of this Section at that border. It is understood that there shall be no obligation to apply such procedures to imports of goods put on the market in another country by or with the consent of the right holder, or to goods in transit. For the purposes of this Agreement: (a) ‘counterfeit trademark goods’ shall mean any goods, including packaging, bearing without authorization a trademark which is identical to the trademark validly registered in respect of such goods, or which cannot be distinguished in its essential aspects from such a trademark, and which thereby infringes the rights of the owner of the trademark in question under the law of the country of importation; (b) ‘pirated copyright goods’ shall mean any goods which are copies made without the consent of the right holder or person duly authorized by the right holder in the country of production and which are made directly or indirectly from an article where the making of that copy would have constituted an infringement of a copyright or a related right under the law of the country of importation.

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Index

about this book: argument 1–3; outline 3–6 acquisition/maintenance of rights 48, 71–2, 168 ACTPN (Advisory Committee on Trade Policy and Negotiations) 18–19, 22, 24 administrative procedures (enforcement) 67–8, 160–3 agreement text: acquisition/ maintenance of rights 168; administrative procedures (enforcement) 160–3; anticompetitive practices 158–9; applications for patents 153; assignment of trademarks 148; availability of property rights 144–59; Berne Convention: relationship to 144; border measures: special requirements 164–7; broadcasting organisations (copyright protection) 145–6; civil remedies 160–3; computer programs (copyright protection) 144; contractual licences: anticompetitive practices 158–9; conventions on intellectual property 141; copyright (and related rights) 144–6; copyright works: protection term 145; Council on Trade-Related Aspects of Intellectual Property Rights (TRIPs Council) 171; criminal procedures 167; customs authorities, suspension of release by 164; damages 161–2; data compilations (copyright protection) 144; disputes: settlement of 168–70; enforcement 159–67; evidence of infringement 160–1; ex officio action on suspended goods 166–7;

exceptions: protection for geographical indications 150–1; exceptions: rights conferred by patents 154; exceptions: rights conferred by trademarks 147; exhaustion of rights 143; existing subject matter: protection of 172–3; fair and equitable enforcement procedures 160; forfeit of patent protection 155; general provisions/ basic principles 46–9; geographical indications 148–51; imports de minimis 167; indemnification, defendants 162–3; indemnification: suspended goods 166; industrial designs 151–2; infringement: judicial remedies on 161–2; injunctions 161; inspection of suspended goods: right of 166; institutional arrangements: final provisions 171–4; integrated circuits, protection term 157; integrated circuits: topographies of 156–7; international cooperation 171–2; IPIC Treaty: relationship with 156; least-developed countries 170–1; licensing of trademarks 148; limitations/exceptions to exclusive rights 145; maintenance of protection: multinational agreements 48; matter patentable 152–3; matter protectable by trademark 146–7; most-favourednation treatment 142–3; multilateral agreements, acquisition/maintenance of protection 143; national treatment 142; objectives 140–1, 143; obligations: nature and scope 141; patent protection term 155; patents

Index 152–6; performers’ rights (copyright protection) 145–6; phonograms (copyright protection) 145–6; preamble 140–1; principles 143; process patents: burden of proof 156; protection of existing subject matter 172–3; provisional measures 163–4; rental rights (copyright works) 144; reservations 174; review and amendment 173–4; revocation of patent protection 155; right of information 162; rights conferred by patents 153; rights conferred by trademarks 147; scope of property rights 144–59; security exceptions 174; security for release of suspended goods 165; spirits, geographical indication 149–50; suspension of release by customs 164–6; technical cooperation 171; trademark protection term 147; trademarks 146–8; transitional arrangements 170; transparency 168–9; unauthorised use of integrated circuits 157; unauthorised use of patents 154–5; undisclosed information 158; use of property rights 144–59; use requirement for trademarks 148; wines: geographical indication 149–50 agricultural chemical products: mailbox protection 96–100 ANDA (Abbreviated New Drug Approval) 100 Anell, Lars 29, 36, 38 anti-competitive practices: control of 65, 158–9 anti-counterfeiting: coalitions 13–14; code 8–9 appellations of origin 56 applications for patents: conditions for 59, 153 ASEAN (Association of South East Asian Nations) 122 assessments: content of TRIPs 76–7; future of TRIPs 139; impact of TRIPs on developing countries 122; implementation of TRIPs 106–7; negotiating TRIPs 44–5; origins of TRIPs 27–8 assignment of trademarks 55–6, 148 Attaway, Fritz 19 availability of property rights 50–65, 144–59

197

Bale, Harvey E. Jr 13, 97, 98 Barshefsky, Charlene 26 BDI (Federation of German Industries) 22 Bello, Judith 93 Berne Convention 10–12, 47, 50–1, 106, 144 bilateral negotiations 16 bilateral trade tensions 111 Bolar exemptions 100–5 border measures 69–71, 164–7 Brittan, Sir Leon 129 broadcasting organisations (copyright protection) 52–4, 145–6 Brussels Draft 37–9 BSA (Business Software Alliance) 43, 105 bureaucratic complexity (of TRIPs Council) 80–2 business: involvement during Uruguay Round 43–4; strategy 12–14; support 18–19; transatlantic dialogue 124–5 Canadian Patent Act 101–3, 129 Carl, Peter 39 CBD (UN Convention on Biodiversity) 138 CBI (Confederation of British Industries) 22 Chairman’s Draft 36–7 Chicago Declaration see TABD CIROAP (Consumers International Regional Office for Asia and the Pacific) 114 CIS (Commonwealth of Independent States) 120 civil remedies 67–8, 160–3 Cohen, Abraham 19 compromise text: emergence of 34–6 computer programs (copyright protection) 51–2, 144 consensus: fragmentation of 105–6, 127–8 content of TRIPs: acquisition/ maintenance of rights 71–2; acquisition of protection: multinational agreements 48; administrative procedures (enforcement) 67–8; anticompetitive practices: control of 65; appellations of origin 56; applications for patents: conditions for 59; assessment 76–7; assignment of trademarks 55–6; availability of

198

Index

rights 50–65; Berne Convention: relationship to 50–1; border measures: special requirements for 69–71; broadcasting organisations (copyright protection) 52–4; civil remedies 67–8; computer programs (copyright protection) 51–2; contractual licences: anticompetitive practices 65; conventions on intellectual property 47; copyright (and related rights) 50–4; Council on Trade-Related Aspects of Intellectual Property Rights (TRIPs Council) 74; criminal procedures 71; customs authorities: suspension of release by 69–70; damages 68; data compilations (copyright protection) 51–2; disputes: settlement of 72; enforcement 65–71; evidence of infringement 67; ex officio action on suspended goods 70; exceptions: protection for geographical indications 56–7; exceptions: rights conferred by patents 59–60; exhaustion of rights 48–9; existing subject matter: protection of 75; fair and equitable enforcement procedures 67; forfeit of patent protection 61; general provisions/ basic principles 46–9; geographical indications 56–7; imports de minimis 71; indemnification: defendants 68; indemnification: suspended goods 70; industrial designs 57; injunctions 67; inspection of suspended goods: right of 70; institutional arrangements and final provisions 74–6; integrated circuits: topographies of 62–4; international cooperation 74–5; IPIC Treaty: relationship with 62–3; least-developed countries 73–4; licensing of trademarks 55–6; limitations/exceptions to exclusive rights 52; maintenance of protection: multinational agreements 48; matter patentable 57–9; matter protectable by trademark 54; most-favoured-nation treatment 48; national treatment 47; objectives 49; obligations: nature and scope 46–7; patents 57–62; performers’ rights (copyright protection) 52–4; phonograms

(copyright protection) 52–4; pipeline protection 62; principles 49; process patents: burden of proof 61–2; protection of existing subject matter 75; protection term ( trademarks) 55; protection term (copyright works) 52; protection term (integrated circuits) 63–4; protection term (patents) 61; provisional measures 69; re-export of counterfeit goods 70; rental rights (copyright works) 52; reservations 76; review and amendment 76; revocation of patent protection 61; right of information 68; rights conferred by patents 59; rights conferred by trademarks 55; scope of rights 50–65; security exceptions 76; security for release of suspended goods 69–70; spirits: geographical indication 56; suspension of release by customs 69–70; technical cooperation 74; trademarks 54–6; transitional arrangements 72–4; transparency 71–2; unauthorised use of integrated circuits 63; unauthorised use of patents 60–1; undisclosed information 64–5; use of rights 50–65; use requirement for trademarks 55; wines: geographical indication 56 contractual licences: anti-competitive practices 65, 158–9 conventions on intellectual property 141 Copyright Act (UK) 13 Copyright Act (US) 106, 129 Copyright Alliance 13 copyright protection: and related rights 50–4, 144–6; sound recordings 95 Council on Trade-Related Aspects of Intellectual Property Rights (TRIPs Council) 74, 78–83, 171 counterfeit trademark goods 188 criminal procedures 71, 167 customs authorities: suspension of release by 69–70, 164 Cyprus (Patent) Bill 104–5 damages 68, 161–2 data compilations (copyright protection) 51–2, 144 developed countries: disputes in 129–30; renegotiation priorities 136 developing countries: affordable

Index pharmaceuticals, access to 114–16; assessment of TRIPs for 122; beneficial effects 108–13; bilateral trade tensions 111; costs of TRIPs for 113–17; draft proposals submitted by 35–6; EC view on 81; enforcement: a challenge for 117–18; foreign direct investment 109–10; hostility to inclusion of property protection in GATT 17; limitations on benefits 111–13; local investment: incentive structure for 110–11; outcomes for TRIPs predicted 118–19; overcoming opposition 31–3; patenting indigenous knowledge 116–17; renegotiation priorities 137–8; technical assistance 119–22; technology transfer 110; see also G10 Digital Millennium Copyright Act (US) 136 diplomacy: limits of 128–9 dispute settlement: articles concerning 72, 168–70; Panels 135; procedures 87–95 Doha Development Round 2–3, 135 Doha Ministerial Conference (2001) 133–5 Draft Final Act 42–3 DSB (Dispute Settlement Body) 88, 98, 106, 115, 129 DSU (Dispute Settlement Understanding) 88, 96 Dunkel, Arthur 39, 42 Dunkel Draft 39–42 EC (European Communities): business input from 43; description of term 175; developing countries 121–2; differences with US 35, 106; diplomatic constraints 128–9; Dispute Settlement Procedure 89–91; first phase of negotiations 30; firstto-file system for patents 58–9; global scrutiny and surveillance 83–7; India: establishment of panel on 183–4; need for protection, understanding of 28; priorities of developed countries 136 EFPIA (European Federation of Pharmaceutical Industry Associations) 87, 97, 99, 182 Eli Lilly v. Teva Pharmaceutical Industries Ltd 103–4 EMEA (European Medicines Evaluation Agency) 62, 64

199

enforcement: articles concerning 65– 71, 159–67; challenge of (for developing countries) 117–18; lack of 21–2 Enforcers of IPR in India Ltd 118 Enyart, James R. 18 Essential Drugs List (WTO) 116 evidence of infringement 67, 160–1 ex officio action 70, 166–7 exceptions: on protection for geographical indications 56–7, 150–1; to rights conferred by patents 59–60, 154; to rights conferred by trademarks 147 exemptions (Bolar provisions for) 100–5 exhaustion of rights 48–9, 143 existing subject matter, protection of 75, 172–3 FDA (Food and Drug Agency) 62, 64 first-to-file system for patents 58–9 foreign direct investment 109–10 forfeit of patent protection 61, 155 future of TRIPs: assessment 139; consensus: fragmentation on 127–8; developed countries: disputes in 129–30; developed countries: renegotiation priorities 136; developing countries: renegotiation priorities 137–8; diplomacy: limits of 128–9; Dispute Settlement Panels 135; industry: new actors within 131; institutions as gatekeepers 128–9; international institutions: new actors within 133–5; IPC (Intellectual Property Committee) 125–6; limiting the scope of TRIPs 135; ‘Millennium timebomb’ 125–6; new entries 130–5; nongovernmental organisations: new actors within 131–2; outcomes predicted 138–9; pharmaceutical industry 126–7; pipeline protection 126–7; protection certificates: supplementary 126–7; renegotiation of TRIPs 135–8; transatlantic business dialogue 124–5; Uruguay Round 124–8; WTO Members: new actors within 132–3 gatekeepers: institutions as 128–9 GATT (General Agreement on Tariffs and Trade): basic framework of provisions 24, 43–4; ministerial declaration (1986) 17; ministerial

200

Index

meeting (1982) 9–10; ministerial meeting (1989) 34; see also Doha Development Round; Tokyo Round; Uruguay Round geographical indications 56–7, 148–51 global corporate actors 83–7, 89–95 global corporate consensus: fragmentation of 105–6 Globalization: International Forum on 131 Gorlin, Jacques 20, 24, 28, 39, 126 Gorlin Draft 125–6 GSP (Generalized System of Preferences) 15, 27 G10 (Group of Ten Developing Countries) 17, 24, 32, 38 Hatch–Waxman Act (1984) 100–1 IFPI (International Federation of Phonographic Industries) 52–3, 95 IIPA (International Intellectual Property Alliance) 20–1, 24, 26, 40, 43, 53, 91–3, 121 implementation of TRIPs: agricultural chemical products, mailbox protection for 96–100; assessment 106–7; copyright protection: sound recordings 95; Dispute Settlement Procedure 87–95; exemptions (Bolar provisions for) 100–5; global corporate actors 83–7, 89–95; global corporate consensus: fragmentation of 105–6; mailbox protection 96– 100; pharmaceutical products: mailbox protection for 96–100; scrutiny/surveillance 79–87; sound recordings: copyright protection of 95; stockpiling 100–5; TRIPs Council 78–83 imports de minimis 71, 167 indemnification: of the defendant 68, 162–3; for suspended goods 70, 166 Indian Patent Office 97–9 indigenous knowledge: patents for 116– 17 industrial designs 57, 151–2 industry: new actors within 131 infringement: evidence of 67, 160–1; judicial remedies on 161–2 injunctions 67, 161 inspection of suspended goods: right of 70, 166 institutional arrangements: final provisions 74–6, 171–4

INTA (International Trademark Association) 92 integrated circuits: topographies of 62– 4, 156–7 intellectual property: conventions concerning 47; perceptions of rights to 8 International Affairs: Royal Institute of 133 international cooperation 74–5, 171–2 international institutions: new actors within 133–5 Interpat 99, 182 investment: incentive structure for local 110–11 IPC (Intellectual Property Committee) 20, 22–5, 43, 91–2, 125–6 IPIC (Intellectual Property in Respect of Integrated Circuits) Treaty 47, 62–4, 67, 156 ISACs (Industry Specific Advisory Committees) 91 Israeli Patent Amendment 103–4 Japan 22, 23, 43, 95, 136 Keidanren (Federation of Economic Organizations, Japan) 22, 23, 43 Kirk, Michael 39 least-developed countries 73–4, 170–1 licensing of trademarks 55–6, 148 limitations: on benefits for developing countries 111–13; and exceptions to exclusive rights 52, 145; on scope of TRIPs 135 mailbox protection 96–100 Manbeck Compromise 58 marketing rights: exclusivity of 183 matter patentable 57–9, 152–3 matter protectable by trademark 54, 146–7 ‘Millennium timebomb’ 125–6 MITI (Ministry of International Trade and Industry, Japan) 22, 23 most-favoured-nation treatment 48, 142–3 MPAA (Motion Picture Association of America) 41, 106 multinational agreements: acquisition of protection 48; maintenance of protection 143

Index national treatment 47, 142 negotiating TRIPs: assessment 44–5; Brussels Draft 37–9; business involvement during Uruguay Round 43–4; Chairman’s Draft 36–7; compromise text: emergence of 34– 6; developing country opposition: overcoming 31–3; Draft Final Act 42–3; Dunkel Draft 39–42; first phase 30; ministerial meeting (Geneva, 1989) 34 NMPA (National Music Publishers’ Association) 53 non-governmental organisations (NGOs): new actors within 131–2 objectives of agreement 49, 140–1, 143 obligations: nature and scope of agreement 46–7, 141 Omnibus Trade and Tariff Act (1988) 25–7 Opel, John 18, 20, 24 origins of TRIPs: anti-counterfeiting code 8–9; assessments 27–8; bilateral negotiations 16; business strategy for protection 12–14; business support 18–19; GATT ministerial meeting (1982) 9–10; IIPA (International Intellectual Property Alliance) 20–1, 24; intellectual property rights: perceptions of 8; IPC (Intellectual Property Committee) 20, 22–5; ministerial declaration (1986) 17; Omnibus Trade and Tariff Act (1988) 25–7; Tariff and Trade Act (1930) 14–15; Trade Act (1984) 15– 16, 32–3; Uruguay Round, preparations for 16–17; watershed (1984) 12; WIPO conventions, attempts to revise 10–12 Otten, Adrian 39, 80 outcomes predicted: in developing countries 118–19; on future of TRIPs 138–9 PA (Publishers’ Association) 13, 27–8 Paris Convention 10–12, 47, 64 Patent [Amendment] Ordinance (India, 1994/99) 97–9 Patent and Trademark Office (US) 35 patents: articles concerning 57–62, 152–6; litigation: cost of 180 performers’ rights (copyright

201

protection) 52–4, 145–6 PHARE programme 122 pharmaceutical industry: future of TRIPs for 126–7; mailbox protection for products of 96–100; organisation of 175–6, 178 phonograms (copyright protection) 52–4, 145–6 PhRMA (Pharmaceutical Research and Manufacturers of America) 26, 43, 93, 96–7, 99, 183 pipeline protection 62, 126–7 piracy of copyright works 21, 188 ‘Piracy of US Copyrighted Works in Ten Selected Countries’ (IIPA) 21 Pratt, Ed 18, 20, 24, 44–5 preamble to agreement 140–1 principles of agreement 49, 143 process patents, burden of proof 61–2, 156 prospects see future of TRIPs protection of existing subject matter 75, 172–3; supplementary certificates 126–7; term for copyright works 52, 145; term for integrated circuits 63–4, 157; term for patents 61, 155; term for trademarks 55, 147 provisional measures 69, 163–4 Public Citizen 131 Quad Group 38–9 re-export of counterfeit goods 70 release of goods: suspension by customs 69–70, 164 renegotiation of TRIPs 135–8 rental rights (copyright works) 52, 144 reservations: consent on 76, 174 review and amendment 76, 173–4 revocation of patent protection 61, 155 RIAA (Recording Industry Association of America) 53, 95 rights: conferred by patents 59, 153; conferred by trademarks 55, 147; right of information 68, 162; scope of 50–65, 144–59 Roche v. Bolar Pharmaceuticals Co. Inc. 100 Rome Convention 47, 53–4 SACIP (Standing Advisory Committee on Industrial Property) 86–7, 182 scrutiny/surveillance 79–87 Section 301 see Trade Act (1984)

202

Index

security: exceptions on 76, 174; for release of suspended goods 69–70, 165 Sell, Susan 26–7 Smith, Eric 20, 24 Software Publishers Association 26 sound recordings: copyright protection of 95 South African Medicines and Related Substances Control Act (1997) 115 Special 301 see Omnibus Trade and Tariff Act (1988) spirits: geographical indication 56, 149–50 stockpiling 100–5 suspension of release by customs 69–70, 164–6 TABD (Transatlantic Business Dialogue) 124–5, 130, 132 TACIS (Technical Assistance to the CIS) 122 Tariff and Trade Act (1930) 14–15 technical cooperation: articles concerning 74, 171; assistance for developing countries 119–22 technology transfer 110 terms of protection see protection text of agreement see agreement text Tokyo Round 9, 15 TPRG (Trade Policy Review Group) 94 TPSC (Trade Policy Staff Committee) 94 Trade Act (1984) 15–16, 111 Trade Estimates Report: US National 25 trademarks 54–6, 146–8 Trainer, Tim 139 transitional arrangements 72–4, 170 transparency 71–2, 168–9 TRIPs Council 74, 78–83, 171 UCC (Universal Copyright Convention) 16, 176 UN/ECE (UN Economic Commission for Europe) 120 unauthorised use of: integrated circuits 63, 157; patents 60–1, 154–5 UNCTAD (UN Conference on Trade and Development) 11, 112, 134 undisclosed information 64–5, 158 UNICE (Union of Industrial and Employers’ Confederation of Europe) 22–4, 43, 125–6

United States: representation of see USTR UPOV Convention 59, 132 Uruguay Round: business involvement during 43–4; consensus: will it hold? 124–8; developing country opposition 31–3; intellectual property, getting it accepted on 22–3, 28; issues not resolved by 181; negotiating plan 29; origins of TRIPs 1–2; preparations for 16–17 USPTO (US Patent and Trademark Office) 116–17 USTR (United States Trade Representative): business input 43; differences with EC 35, 106; diplomacy: limitations of 128–9; dispute settlement procedure 89, 91–5; global scrutiny and surveillance 86–7; multilateral negotiating strategy 22, 24; overcoming developing country opposition 31, 32; Section 301 of Trade Act (1984) 15–16; Special 301 of Omnibus Trade and Tariff Act (1988) 25–7 utilisation: of property rights 50–65, 144–59; requirement for trademarks 55, 148 Walter, Ralf 39, 42 Washington Treaty see IPIC Treaty watershed (1984) 12 WHO (World Health Organization) 133–4 wines: geographical indication 56, 149–50 WIPO (World Intellectual Property Organisation): conventions, attempts to revise 10–12; conventions: ‘toothless’ nature of 13; protection for pharmaceuticals: list of countries not providing 185; technical assistance for developing countries 119–21; watershed for (1984) 12; see also Berne Convention; Paris Convention WTO (World Trade Organisation): new actors within membership 132–3; technical assistance for developing countries 119–21 Yeutter, Clayton 28