How to sell a wonder herb

Subject: [BIO-IPR] How to sell a wonder herb

Resent-Date: Fri, 20 Nov 1998 05:07:58 -0800

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Date: Fri, 20 Nov 1998 21:02:15 +0800

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________________________________________________________

 

TITLE: How To Sell A Wonder Herb

AUTHOR: Max Martin

PUBLICATION: Down to Earth, Vol 7, No 12

DATE: 15 November 1998

SOURCE: Centre for Science and Envionrment (CSE), New Delhi

URL: http://www.oneworld.org/cse/html/dte/dte981115/dte_cover.htm

________________________________________________________

 

HOW TO SELL A WONDER HERB

 

There is arogyapacha. A rare herb with extraordinary medicinal properties.

There is the Kani tribe of Kerala. It has preserved the herb and the

knowledge about its use. Enter scientists and the state government. They try

to sell the herb and share the benefits with the Kanis in the first

experiment of its kind in the world. The project flounders. And how. Max

Martin analyses a failure snatched from the jaws of success.

 

The miracle-makers

 

Scientists are only now finding out the Kanis' knowledge of herbal remedies.

The most outstanding find so far is arogyapacha.

 

SMELL of burning bamboo. The short and wiry figure of Ayyappan Kani. The

elderly man is busy mixing herbs with a strange extraction from a piece of

burnt bamboo. With a beatific smile, he explains that it will treat a boil

on a little girl's belly. The place is Chonanpara, a Kani tribal settlement

in a reserved forest of Kerala's Thiruvananthapuram district. Ayyappan Kani

is a practitioner of malamarunnu, the medicine of the mountain, given to the

Kani tribe by the mythical sage Agastya.

 

About 40 km away in Njaranili village, townsfolk come to consult Eswaran

Kani, a traditional tribal healer. The pious medic explains that people gave

him the nickname 'Eswaran' (meaning god) after he successfully treated some

patients sent back by the Medical College Hospital, Thiruvananthapuram.

 

The Kanis, numbering about 16,000, live in the lush tropical forests of the

Western Ghats. According to Kani myths, their ancestors were exceptionally

adept at shooting arrows. The ancient sage Agastya disarmed a Kani couple to

prevent the birth of a martial race in his abode of peace and meditation.

 

Instead, the couple were given a scroll on herbal remedies. And a boon to

cure the sick with their chants. Kanis are now known for their sure-fire

antidotes. The tribal knowledge of forest plants holds the key to several

new discoveries and wonder drugs, a multi-billion-dollar business worldwide.

 

The Kani tribe's contribution from that treasure trove is arogyapacha

(Trichopus zeylanicus), a herb with tonic qualities. In Malayalam

arogyapacha means 'health green'. Indeed. Its business potential is

comparable to ginseng of Korea, says P Pushpangadan, director, Tropical

Botanical Garden and Research Institute (TBGRI), Thiruvananthapuram. Trained

in Ayurveda and botanical research, Pushpangadan is a pushy seller of ideas.

 

"In South Korea, a large share of the foreign exchange is earned from

ginseng," he notes. With its anti-fatigue properties, arogyapacha is a

potential global hit, he says. Arogyapacha is the quintessential wonder

herb. It possibly has immune-enhancing and liver-protecting qualities, claim

scientists of TBGRI.

 

The discovery and the deal

 

Pushpangadan says he first came across the wonder herb in 1987, before the

birth of TBGRI. During an arduous trek through the forests near the Agastya

hills in Thiruvananthapuram, Pushpangadan and his colleague S Rajasekharan

got a sudden "flush of energy and strength" after eating the seeds of

arogyapacha given to them by two Kani guides.

 

After isolating the herb's rejuvenating properties, TBGRI scientists

developed a traditional drug formula containing 15 per cent arogyapacha.

They scientifically tested its toxicity and efficacy. "It took eight years

of research," says S Rajasekharan, now an ethnobotanist at TBGRI

(ethnobotany is the study of traditional knowledge and custom of a people

relating to plants). "Starving rats ran around after consuming arogyapacha,"

narrates Ayyappan Kani about the tests.

 

In November 1995, TBGRI sold the formula to Arya Vaidya Pharmacy (AVP) of

Coimbatore for a licence fee of Rs 10 lakh to produce the drug for seven

years. The licence fee and the 2 per cent royalty on the profits from the

formulation was to be shared equally by TBGRI and the Kani tribe.

 

Sharing of benefits with Kanis was a promise that TBGRI had made much before

it became the catch phrase in biodiversity conservation. "Right in 1987, the

scientists had promised the Kani tribals due share from any profit arising

from research based on the plants we showed them," says Kuttimathan Kani,

who was one of the guides who introduced Pushpangadan to the herb. "After a

few years of silence, suddenly the two scientists came to visit us two years

ago," he notes. They offered a share to the tribals. "It is the first

experiment of benefit-sharing with a local community in India, and perhaps

the world," says Pushpangadan. He wants it to be a model.

 

The herb clicked in the market. There was instant demand for the

arogyapacha-based formulation called Jeevani, which was sold at the rate of

Rs 160 for a 75-gram jar. There are orders worth a fortune pending from

Southeast Asian countries such as Thailand, says an AVP spokesperson. TBGRI

is now in the process of developing another drug from the same plant: a

non-steroid sports medicine. "We do not have long distance runners in

Kerala. We lack endurance," says Pushpangadan. He notes that another

arogyapacha formulation is being tested in sports schools of the state as an

endurance-enhancing drug.

 

Now, there is a huge demand for the raw material. For full potency, the

wonder herb has be to cultivated in its natural habitat, that is shady and

wet tropical forests. Kuttimathan says that the pharmacy has offered the

tribals a neat Rs 100 per kilogram of arogyapacha leaves. The tribals have

started growing it in their backyard of their forest settlements under a

government scheme. Says Madhavan Kani in Chonanpara: "We would pick up

saplings from the forest and they grow well here."

 

If only it was this simple, we would have brought you a success story. But

the state forest department had different ideas.

 

The red tape vs Kanis

 

When Kanis took arogyapacha leaves out of their settlements for sale, they

were stopped at the forest check-post. At the state forest head office,

Premachandran, chief conservator of forest (CCF), explains the technicality:

"Arogyapacha is not included in the list of minor forest produce." Only

minor forest produce is allowed out of the forest. Forest officials

confiscate any consignment of arogyapacha going out of the forest. M S Joy,

warden of ABP, and a forest guard on duty assure that they would not allow

any of the wonder herb to go out.

 

Arogyapacha is a "rare plant" and is contraband in the free market, points

out T M Manoharan, CCF (vigilance). On TBGRI's part, Rajasekharan argues

that though initial studies suggested that arogyapacha was rare, subsequent

studies showed that it was also found at other places in the region,

including Tamil Nadu. He says cultivating and collecting the plant in the

forest will not wipe it out. This raises a question: what is the forest

department trying to protect except for its control over the poor tribe's

limited means of generating an income? Pushpangadan maintains that TBGRI has

written to the forest department to allow Kanis the right to cultivate and

sell the herb.

 

In 1995, the government's Integrated Tribal Development Project in

Nedumangad initiated a scheme in collaboration with TBGRI to help the Kanis

grow medicinal plants in their settlements. Under the project, 50 select

families received Rs 1,000 each. Reportedly, 20.25 hectares were under

cultivation. "Many people successfully cultivated arogyapacha," notes

Rajasekharan. TBGRI bought the leaves from the Kanis, paying Rs 30 per kg

for chemical trial and for pilot production.

 

During the second harvest, some people uprooted the whole plant from their

gardens and some others took the wild herb from the forest, according to

TBGRI officials. This alerted the forest department against possible

large-scale 'smuggling' of the herb. When Kanis tried to sell the herb, they

were caught. In a widely reported operation in 1996, Manoharan confiscated

10,500 arogyapacha plants from a private nursery at Vithura village in

Thiruvananthapuram. "We are trying to prevent destructive use of the plant,"

Manoharan explains.

 

The CCF's next argument is that it is mostly non-tribals or tribals acting

on behalf of non-tribals who smuggle the plant. The forest department is not

convinced that Kanis will benefit from the sale of arogyapacha. They believe

that the sale will benefit private interests and not the tribal community.

 

"It is a way of exploiting the tribals by certain lobbies. They would ask

Kanis to collect the plant and give them a little money or alcohol in

return," says Kerala's forest minister P R Kurup. Such concern for the

tribal people on the part of the forest department is laudable. However,

imposing a blanket ban on taking arogyapacha out of the forest does not help

anybody. Least of all the Kanis.

 

Manoharan says Kanis got little in return for whatever material they

supplied. "If any pharmacy has collected arogyapacha, they have done it

illegally," says Manoharan. G Gangadharan, general manager (product

development) of Arya Vaidya Pharmacy, counters the allegation: "Our initial

lot of 22,000 to 25,000 bottles were made from raw material made available

by TBGRI, as per an agreement. There has been no production for the last one

year."

 

It is improper for a government department to make changes in the law to aid

a private company, notes Manoharan. "TBGRI could have sold the technology to

Oushadhi, the state government's own drug company," he notes. Rajasekharan

says that the Council of Scientific and Industrial Research (CSIR) allows

technology transfer to anyone who offers the biggest return. "There is a

demand for the plant. If the Kanis cannot sell it, somebody else will. They

will be the losers," he sums up.

 

Manoharan suggests artificial regeneration technique for the plant. TBGRI

and a cooperative can help the Kanis cultivate the plant, he recommends,

adding that they should seek permission for it in "due process". "What is

the big hurry?" he asks. Yet he insists that the department's only interest

is in ensuring that the Kanis are benefited.

 

Kanis are puzzled. "We are asked to grow medicinal plants but we cannot sell

them," says Kuttimathan. He picked holes in the forest law while addressing

the media at the first press conference staged by a Kani group at the press

club of Thiruvananthapuram on June 11, 1998. In quite an articulate manner,

he argued that the government should reward Kanis for conserving rare plants

and developing special knowledge about them. He threatened to bring Kani

families to the state secretariat for a sit-in strike. His immediate demand:

allow Kanis to grow, sell and make profit from arogyapacha.

 

"The sale of the leaves would have given us a steady income," says

Kuttimathan. The money meant for tribal development never reaches the Kanis,

he points out.

 

The representatives of the tribe have launched the Kani Community Welfare

Trust in November 1997, and started a bank account. Kuttimathan, secretary

of the trust, notes that it has representation of 40 tribal settlements. But

TBGRI, an autonomous institution under the state government, is yet to get

permission to transfer the money to the account. The Kanis' share of the

money from the TBGRI deal is yet to be given.

 

Kani vs Kani

 

The most bitter conflict of them all is between groups of Kanis themselves.

Kanis have had to take sides in a battle fought on their part by two

competing government agencies: TBGRI and the Kerala Institute for Research,

Training and Development of Scheduled Castes and Scheduled Tribes (KIRTADS).

 

Supported by KIRTADS, many Kani elders believe that their traditional

knowledge is sacred and should remain exclusive.

 

"It (traditional knowledge) should not be sold. But what to do? We are

hungry," says Mallan Kani, a healer and practitioner of the tribal chant in

Mangode settlement. Eswaran Kani, who has been formally trained by KIRTADS,

puts it simply: "The Kanis have sold their secret because of their poverty;

Rs 5 lakh (the Kanis' share of the licence money) is a pittance, considering

the huge profits that can be made from it." He hints that the very name

"arogyapacha" is an outcome of TBGRI's intervention. Kuttimathan has a

different view. He says the younger generation of Kanis rechristened the

wonder herb.

 

Tribal healers such as Eswaran are sticklers of a code of conduct that

emphasises the purity of the practitioner. In September 1995, a group of

nine Kani healers wrote a letter to the chief minister opposing the sale of

their knowledge to a private firm. Eswaran visited Chonanpara to dissuade

the Kanis from entering into the deal with TBGRI and selling arogyapacha.

 

"He went back a bit annoyed with us," says Kuttimathan. "If a healer has the

knowledge, then as an individual he can gain. What is the use to the

community?" he asks.

 

Some of the tribal healers are highly successful. Achappan Vaidyar is not a

Kani. But the healer from Wayanad in northern Kerala has made a fortune.

 

KIRTADS has initiated a three-year training programme for tribal healers

under Achappan's guidance. He is a celebrity in Wayanad, where tribal people

live in penury.

 

"We are now documenting the tribal medical knowledge and details of the

medicinal plants that the tribals use," says Vishwanathan Nair, director,

KIRTADS. A PhD in tribal medicine, Nair says he refused to publish his

thesis as he first wanted to know what the tribals have got. He also fears

that any private firm might grab the tribal knowledge to make profits once

the information is out as a book. There is no law to share benefits with

tribals, he indicates. Nair's fear means that tribal knowledge will remain

canned till a 'brave new world' dawns and the system sheds the red tape.

High hopes.

 

Bureaucracy still haunts him. CSIR's Regional Research Laboratory (RRL) in

Thiruvananthapuram, in collaboration with KIRTADS, had identified some

effective herbal formulations based on tribal knowledge. "The results were

exciting," says Vishwanathan Nair. RRL scientists note that one of them, an

anti-diabetic formulation, proved to be more potent than a popular

allopathic drug. But work on this front was discontinued at RRL following

the transfer of a scientist working on it. There is also a fund crunch. "We

have discontinued research as we do not have adequate humanpower," says

Vijayan Nair, director, RRL. So much so for governmental drug development.

 

Yet, KIRTADS' former partners have differences with TBGRI's unconventional,

market-friendly style. "Please do not involve us in it. We have nothing to

do with pseudo-science," said A D Damodaran, former RRL director and

well-known scientist in Kerala, commenting on the arogyapacha-based drug. In

a telephonic interview, he refused to compare or link RRL's work on tribal

medicine with that of TBGRI.

 

KIRTADS and TBGRI had unproductive interfaces through the 1990s. True to

form, both the institutes turned down offers from each other to work

alongside. Vishwanathan Nair says that in 1996 at a high-level meeting,

KIRTADS' help was sought to organise Kanis and cultivate arogyapacha for

commercial drug production. According to reports, the idea was to involve

1,000 families for cultivation in 2,025 hectares in tribal holdings. "They

wanted pubic (forest) land, and the adivasis' labour to make profit for a

private company which has a monopoly," says Vishwanathan Nair. He refused.

"I said I would not do a contractor's job."

 

In July 1995, TBGRI scientists accused KIRTADS of trying to torpedo the

arogyapacha project. "It is a clash of petty egos," alleges a TBGRI

scientist. The Kanis do not have a role. While KIRTADS director Nair insists

that the tribal medical knowledge should not be diluted by crass

commercialisation, TBGRI scientists accuse KIRTADS of a "totally

unscientific" practice of promoting tribal healers. TBGRI and KIRTADS: the

twain shall never meet.

 

It is a power game which excludes Kanis. In 1995, KIRTADS had sought from

the government the power to screen all who approach Kerala's tribal healers.

It was not given.

 

An innovative, state-level bill has been drafted with KIRTADS's help by K

Abdul Latheef, former faculty member of National Law School of India and

joint coordinator of Kerala Environment and Human Rights Research Centre,

Kozhikode. It gives exclusive rights to tribal communities over their

intellectual property. KIRTADS has been pushing this draft since 1995. But

the legislators are not interested.

 

The well-intentioned draft envisages that a tribal intellectual property

rights (IPRs) council with judicial powers will oversee actions to prevent

'exploitation' and 'misuse' of tribal IPRs. Provided the bill becomes law,

an infringement of tribal IPRs could lead to four years' imprisonment and a

fine of Rs 500,000. Experts, however, note that the tribal IPR law may not

work at the state level. "Constitutionally, it is under the jurisdiction of

the centre," says BK Roy Burman, an expert on tribal IPR issues and a

visiting fellow at the Centre for the Study of Developing Societies, Delhi.

 

The story of arogyapacha is that of a bold experiment faltering due to

unrelenting bureaucracy and a policy vacuum. "The irony of the situation is

that TBGRI, the Forest Department and KIRTADS are all part of the same state

government, among whom there is no coordination or even a mechanism for

dialogue," notes R V Anuradha, a New Delhi-based lawyer who submitted a

case-study of this benefit sharing system to the CBD secretariat. The story

of arogyapacha also illustrates how various government institutions try to

push their own agenda in the name of an ethnic community.

 

India's tribal communities have a veritable gold-mine in their traditional

knowledge. But the governments do not have a clue about its proper use.

Bureaucrats will wait till kingdom comes before they let innovations based

on tribal knowledge open for public good. If the knowledge is lost by the

tribal communities, its fate is sealed in government files.

 

That the ancient sage Agastya disarmed Kanis and gave them medicinal

knowledge is myth. But that the bureaucracy will not let them benefit from

this knowledge is reality.

 

-------------------------------------------------

BOX: Political battles

 

The benefit sharing scheme for arogyapacha saw hurdles right from the start.

On July 22, 1995, the then chief minister of Kerala, A K Antony, was to sign

a memorandum of understanding with Arya Vaidya Pharmacy (AVP), marking the

technology transfer from the Tropical Botanical Garden and Research

Institute (TBGRI). It was deferred at the last minute following intervention

from the opposition led by the Communist Party of India-Marxist (CPI-M).

 

The then leader of the opposition V S Achuthanandan argued that the licence

fee was too little considering the huge international market potential of

the formulation. Calling the agreement a "sell-out", he suggested that the

licence fee could have run into crores of rupees.

 

The Marxist leader made a case for state government-run pharmaceutical

companies, such as the Kerala State Drugs and Pharmaceuticals. He contended

that the government could have considered transferring the technology to a

public sector undertaking outside the state. If none of these was feasible,

the government should negotiate with other private drug companies for a

bigger share as royalty, argued the leader of the opposition.

 

P Pushpangadan, director, TBGRI, points out that the licence fee of Rs 10

lakh was adequate as AVP was taking the risk of buying a product untested in

the market. It is a promotional drug, he points out, adding that a 2 per

cent royalty is an internationally acceptable norm. "One to four per cent

royalty is accepted worldwide," he notes.

 

Pushpangadan cites the example of a regional research laboratory of the

Council of Scientific and Industrial Research which transferred the

technology of an Ayurvedic drug in the 1980s for less than Rs 2 lakh.Later,

the Central Drug Research Institute, Lucknow, sold the technology of a

memory drug based on brahmi (Baccopa monnieri) for Rs 10 lakh. "It was a

one-time transfer, though ours is not a complete transfer," says

Pushpangadan. He argues that the seven-year term given to the private firm

would help establish the credentials of the drug, and its licence can be

sold later for higher profits. "It is the highest licence fee (paid for a

drug based on traditional know-how) in India," Pushpangadan declares.

 

According to norms set by the Council of Scientific and Industrial Research,

the scientists who develop a formula are legible for 40 per cent of the

licence fee. "But we did not claim anything," notes S Rajasekharan of TBGRI.

An initial plan to give the scientists one-fourth of the licensing fee was

dropped.

 

Moreover, once the CPI-M-led coalition came to power, it did not take any

initiative. Nor did it try to make the state government's pharmaceutical

company come up with an alternate plan of benefit sharing. The state

government had a clear choice: either make the public sector capable of

commercially utilising such knowledge or the let the private sector do so.

 

Achutanandan's advocacy of favouring state-owned agencies does not hold

water. These agencies are not the market leaders, nor did they make an

effort to buy tribal medicinal know-how.

-------------------------------------------------

 

Down to Earth is a fortnightly journal published by

Centre for Science and Environment, New Delhi

Email:  cse@sdalt.ernet.in

Web:    http://www.oneworld.org/cse

 

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Subject: [BIO-IPR] Implementation of TRIPS

Resent-Date: Tue, 1 Dec 1998 19:22:15 -0800

Resent-From: bio-ipr@cuenet.com

Date: Wed, 02 Dec 1998 11:09:55 +0800

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TITLE: Patent rights in the pharmaceutical area and their enforcement:

experience in the WTO framework with the implementation of the TRIPS

Agreement

AUTHOR: Matthijs Geuze, Counsellor, Intellectual property and Investment

Division, World Trade Organization, Geneva, Switzerland, and Secretary of

the Council for TRIPS

PUBLICATION: The Journal of World Intellectual Property, Vol 1, No 4

DATE: July 1998

SOURCE: Werner Publishing Company, Geneva

________________________________________________________

 

PATENT RIGHTS IN THE PHARMACEUTICAL AREA AND THEIR ENFORCEMENT:

EXPERIENCE IN THE WTO FRAMEWORK WITH THE IMPLEMENTATION OF

THE TRIPS AGREEMENT

 

by Matthijs Geuze*

 

I. INTRODUCTION

 

The Agreement on Trade-Related Aspects on Intellectual Property Rights

(TRIPS Agreement), which forms part of the Marrakesh Agreement Establishing

the World Trade Organization (WTO) has now been in existence for three

years.[1] Transitional arrangements stipulated in the TRIPS Agreement

regulate at which moment WTO Members are obligated to comply with its

provisions. Some of these provisions apply from the outset, i.e. 1 January

1995. These include the so-called "mailbox" and exclusive marketing rights

provisions of Article 70.8 and 70.9 of the Agreement relating to inventions

of pharmaceuticals and agricultural chemical products. Other provisions

apply since 1 January 1996. Developed country Members of the WTO are under

the obligation to comply fully with all provisions of the Agreement from

that date. The Council for TRIPS, the WTO body responsible for overseeing

 

the functioning of the TRIPS Agreement, is monitoring the operation of the

Agreement, and in particular, Members' compliance with their obligations

thereunder, in accordance with Article 68 of the TRIPS Agreement. Much of

the attention has focused on what countries have, or have not, done, to

implement existing obligations under Article 70.8 and 70.9 concerning patent

applications for pharmaceutical and agricultural chemical products; and on

the review of legislation notified to the council as containing provisions

implementing obligation under the agreement. Issues about compliance with

the Agreement or its interpretation have arisen and, in twelve instances,

dispute settlement procedures under the WTO have been formally initiated.

Five of these cases concern the area of patents, of which three come under

the provisions of article 70.8 and 70.9.

 

II. THE MAIN FEATURES OF THE TRIPS AGREEMENT

 

A. Intellectual Property Protection as an Integral Part of the Multilateral

Trading System

 

Through the TRIPS Agreement, the protection if Intellectual Property has

become an integral part of the multilateral trading system as reflected in

the WTO. Indeed it is one of the three pillars of the WTO, the other two

being trade in goods (the area traditionally covered by the GATT) and the

new General agreement in Trade and Services (GATS). The fact that the

protection of intellectual property has thus moved to the center stage of

international economic relations is not surprising, gives its major and

growing importance for the conditions of international competition in many

areas of economic activity. It is important that three consequences of the

place that intellectual property has thus acquired be stressed, in view of

their likely impact on the implementation of the TRIPS Agreement.

 

The first point is that it explains why it was possible to negotiate in the

context of the Uruguay Round such a major advance in the international

protection of intellectual property. It became accepted, at least from the

half-way point of the Uruguay Round negotiations, that a major agreement on

intellectual property was a necessary component of a successful conclusion

to the negotiations, and therefore, in a certain sense, to the maintenance

and strengthening of the multilateral trading as a whole.

 

The second consequence of the place of the TRIPS Agreement within the

trading system is that there is a good prospect that, in due course, there

will be something near to the universal acceptance of the obligations of the

 

TRIPS Agreement. One of the important changes in the WTO compares to the

GATT is that all countries that wish to be Members, and to enjoy the market

access it provides, will have to accept all the main WTP Agreements

including TRIPS Agreement. The WTO currently has one hundred and thirty two

members and many other countries are expected to become Members in the not

too distant future, one their accession negotiations will have been

concluded.

 

The third consequence of the place of TRIPS within the multilateral trading

system is that, under the WTO dispute settlement mechanism, a link may be

made between a country's compliance with its TRIPS obligations and its

enjoyment of the benefits that the WTO provides to it, including with regard

to market access. IN other words, in case of non-compliance with a TRIPS

obligation, a WTO Member country could ultimately be faced with sanctions of

significance to its economy.

 

B. A Brief Summary of the Agreement

 

The TRIPS Agreement covers each of the main areas of intellectual property -

copyright and related rights; trademarks, including service marks;

geographical indications, including appellations of origin; industrial

designs; patents, including plant variety protection; layout designs of

integrated circuits; and undisclosed information including trade secrets.

Most substantive provisions of the main pre-existing international

intellectual property conventions have also been incorporated in the TRIPS

Agreement, so that non-compliance with any of these provisions will also be

subject to dispute settlement within the framework of the WTO. But the TRIPS

Agreement goes much further, especially in the area of industrial property,

where it also establishes, unlike (for the most part) under the Paris

Convention, obligations on the essential features of the intellectual

property protection such as what subject-matter must be protected, what

rights must be conferred to the right-holders, what exceptions to these

rights are permitted or what must be the minimum terms of protection. And

when a country decides to provide more extensive protection that specified

in the Agreement, the national treatment and most-favoured-nation clause

prohibit discrimination between right-holders that are nationals of a WTO

Member, subject to a few exceptions only. The Agreement also specifies, in a

fair amount of detail, procedures and remedies that must be available so as

to allow right-holder to effectively enforce their rights with the

assistance of the judicial authorities. All these obligations apply equally

to all Member countries, subject only to a number of transitional periods,

which will be discussed later.

 

III. THE PATENT SECTION OF THE AGREEMENT

 

The TRIPS Agreement requires Member countries to make patents available for

any inventions, whether products or processes, in all fields of technology

without discrimination, subject to the normal tests of novelty,

inventiveness and industrial applicability. It is also required that patents

be available and patent-rights enjoyable without discrimination so as to the

place of invention and whether products are imported or locally produced

(Article 27.1).

 

There are three permissible exceptions to the basic rule on patentability.

One is for inventions contrary to ordre public or morality; this explicitly

includes inventions dangerous to human, animal or plant life or health, or

seriously prejudicial to the environment. The use of this exception is

subject to the condition that the commercial exploitation of the invention

must also be prevented and this prevention must be necessary for the

protection of ordre public or morality (Article 27.2).

 

The second exception is that Members may exclude from patentability

diagnostic, therapeutic and surgical methods for the treatment of human or

animals (Article 27.3(a)).

 

The third is that Members may exclude plants and animals other than

microorganisms and essentially biological processes for the production of

 

plants or animals other than non-biological and microbiological processes.

However, any country excluding plant varieties from patent protection must

provide an effective sui generis system of protection. Moreover, the whole

provision is subject to review four years after entry into force of the

Agreement (Article 27.3(b)).

 

The exclusive rights that must be conferred by the product patent are the

ones of making, using, offering for sale, selling, and importing for these

purposes. Process patent protection must give rights not only over use of

the process but also over products obtained directly by the process.

Patent-owners shall also have the right to assign, or transfer by

succession, the patent and to include licensing contracts (Article 28).

 

Member 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 the third parties (Article 30).

 

The term of protection available shall not end before the expiration of a

period of twenty years, counted from the filing date (Article 30).

 

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 (Article 29.1).

 

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, where certain conditions indicating a likelihood that the

protected process was used are met (Article 34).

 

Compulsory licensing and government use without authorization of the

right-holder are allowed, but are made subject to conditions aimed at

protecting the legitimate interests of the right-holder. The conditions are

mainly contained in Article 31. These include the obligation, as a general

rule, to grant such licenses only if an unsuccessful attempt has been made

to acquire a voluntary license on reasonable terms and conditions within a

reasonable period of time; the requirement to pay adequate remuneration in

the circumstances of each case, taking into account the economic value of

the license; and the requirement that decisions be subject to judicial or

other independent review by a distinct higher authority. Certain of these

conditions are relaxed where compulsory licenses are employed to remedy

practices that have been established as anti-competitive by a legal process.

These conditions should be read together with the related provision of

Article 27.1, which require that patent-rights shall be enjoyable without

discrimination as to the field of technology, and whether products are

imported or locally produced.

 

Provisions relevant to procedures for the acquisition and maintenance of

patents and other intellectual property rights are contained in Article 62;

particular attention should be paid to paragraphs 2, 4 and 5 of that

article.

 

IV. ENFORCEMENT

 

High substantive standards of protection of intellectual property are of

little use if rights cannot be effectively enforced. The establishment of

such enforcement rules has, therefore, had much attention from the TRIPS

negotiators and, as a result, the TRIPS Agreement lays down, in a fair

amount of detail, the domestic procedures and remedies that Members have to

provide so that the right-holders can enforce their intellectual property

rights effectively.

 

The TRIPS rules on enforcement constitute the first time in any area of

 

international law that such rules on domestic enforcement procedures and

remedies have been negotiated. The Agreement therefore breaks new ground in

elaborating rules on the procedures and remedies that must be available

under national law. These rules aim to recognize basic differences between

national legal systems, while being sufficiently precise to provide for

effective enforcement action as well as safeguards against abuse in the use

of procedures. As provided in Article 1.1 of the Agreement, Member countries

are free to determine the appropriate method of implementing these and other

provisions of the Agreement within their own legal system and practice.

 

In some respects the origin of the TRIPS Agreement lies in proposals put

forward in 1978 and 1979 in the final stages of the Tokyo Round of

multilateral trade negotiations for a GATT agreement on the; prevention of

the import of counterfeit goods. These proposals were not accepted then, but

work continued in the GATT, in particular after the 1982 \ministerial

\meeting. The ideas put forward at that time correspond  broadly to those

which were finally contained in the Section on special requirements related

to border measures in Part III , on enforcement, of the TRIPS Agreement.

However, during the Uruguay Round negotiations it was agreed that the

Agreement should also cover obligations on internal enforcement procedures

and remedies and on minimum substantive standards.

 

The provisions on enforcement are contained in Part III of the Agreement,

which is divided into five Sections. The first Section lays down general

obligations that all enforcement procedures must meet. These are notably

aimed at ensuring their effectiveness and that certain basic principles of

due process are met. The following Sections deal with civil and

administrative procedures and remedies, provisional measures, special

requirements related to border measures and criminal procedures.

 

These provisions have two basic objectives: one is to ensure that effective

means of enforcement are available to right-holders; the second is to ensure

that enforcement procedures are applied in such a manner as to avoid the

creation of barriers to legitimate trade and to provide for safeguards

against their abuse.

 

The obligations set out are of two main types. The first type are those

which prescribe procedures and remedies that must be provided by each

Member-- much of this is set out in terms of the authority that must be

available to judges and courts or other competent authorities, such as

customs. The second type of obligation is what might be described as

"performance" requirements in relation to the workings of these procedures

and remedies in practice; for example, they must be such as to permit

effective action against infringing activity, expeditious and deterrent

remedies and applied in a manner that will avoid the creation of barriers to

legitimate trade.

 

The agreement makes a distinction between infringing activity in general, in

respect of which civil judicial procedures and remedies must be available,

and counterfeiting and piracy-- the more blatant and egregious forms of

infringing activity-- in respect of which additional procedures and remedies

must also be provided, namely border measures and criminal procedures. For

this purpose, counterfeit goods are, in a essence, defined as goods

involving slavish copying of trade marks, and pirated goods as goods which

violate a reproduction right under copyright or related right.

 

The general obligations relating to enforcement are contained in Article 41.

Paragraph 1 contains the "performance" requirements: enforcement procedures

must be such as to permit effective action against any act of infringements

of intellectual property rights, and the remedies available must be

expeditious in order to prevent infringements  and they must constitute a

deterrent to further infringements. On the other hand, these procedures must

be applied in such a manner as to avoid the creation of barriers to

 

legitimate trade and to provide for safeguards against their abuse.

 

The following three paragraphs contain certain general principles, the aim

of which is to guarantee due process. Paragraph 2  deals with enforcement

procedures. Such procedures must be fair and equitable, and they may not be

unnecessarily complicated or costly, or entail unreasonable time-limits or

unwanted delays. Paragraph 3 concerns decisions on the merits of a case.

Such decisions shall preferably be reasoned in writing and they shall be

made available at least to the parties to the proceeding without undue

delay. Decisions on the merits of a case shall be based only on evidence in

respect of which parties were offered that opportunity to be heard.

Paragraph 4 requires that 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 is no obligation to

provide an opportunity for review of acquittals in criminal cases.

 

As mentioned earlier, Member countries are free to determine the appropriate

method of implementing the provisions on enforcement within their own legal

system and practice. In addition, Paragraph 5 contains an understanding

according to which the provisions on enforcement do not create any

obligation to put in place a judicial system for the enforcement of law in

general, nor does it affect the capacity of Members to enforce their law in

general. In addition, it is stated that nothing in these provisions create

any obligation with respect to the distribution of resources as between

enforcement of intellectual property issues in one or a limited number of

courts, in order to ensure the availability of necessary expertise.

 

Section 2 of Part III, on enforcement, requires that civil judicial

procedures must be available in respect of any activity infringing

intellectual property rights covered by the Agreement. The provisions of the

Section elaborate in more detail basic features that such procedures must

provide for: on evidence, injunctions, damages and some other remedies.

These provisions apply also to administrative procedures on the merits of a

case, to the extent that any civil remedy can be ordered as a result of such

procedures.

 

The Section also contains certain principles aimed at ensuring due process.

Defendants are entitled to written notice which is timely and contains

sufficient details of the claims. Parties must be allowed to be represented

by independent legal counsel, and procedures may not impose overly

burdensome requirements concerning mandatory personal appearances. All

parties are entitled to substantiate their claims and to present all

relevant evidence, while confidential information must be identified and

protected.

 

Section 3 of Part III concerns provisional measures. Again, as specified in

Article 41 of the Agreement, enforcement procedures must permit effective

action against infringements and must include expeditious remedies. As

judicial authorities are empowered to provide provisional relief for the

right-holder in order to stop an alleged infringement immediately.

 

The stipulations on provisional measures require each country to ensure that

its judicial authorities have the authority to order such measures promptly

and effectively. The measures must be available in respect of any

intellectual property right. These provisions apply also to administrative

procedure. Two main objectives for the use of provisional measures are

spelled out. One is to prevent an infringement from occurring, and to

prevent infringing goods from entering into the channels of commerce. This

includes preventing imported goods from being dispersed into domestic

distribution channels immediately after customs clearance. The other purpose

 

is to preserve relevant evidence with regard to the alleged infringement. In

order to accomplish these objectives, it may be necessary to take action

without prior hearing of the other side. Therefore, the judicial authorities

must have the authority to adopt provisional measures without hearing the

defendant, 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. Sections 3 and 4 of Part III contain, in

particular, specific provisions on safeguards against abuse of such measure.

 

Section 4 of Part III contains special requirements related to border

measures. The emphasis in the enforcement part of the TRIPS Agreement is on

internal enforcement mechanisms, which, if  effective, would enable

infringing activity to be stopped at the source of production. Compared to

special border measures, this is both a more efficient way of enforcing

intellectual property rights and one which is less liable to give rise to

risk of discrimination against imports. However, the Agreement recognizes

that enforcement at the source of production will no always be possible and

that in any event not all countries in the world are Members of the WTO and,

therefore, have obligations under the TRIPS Agreement. Consequently, the

Agreement recognizes the  importance of border enforcement procedures that

will enable right-holders to obtain the co-operation of customs

administrations so as to prevent the release of infringing imports from

passing the customs and dispersing into domestic distribution channels,

which would often make it more difficult to take efficient action. In this

regard, the Agreement will require, for many countries, the establishment of

new legislation and the putting in place of new procedures.

 

The fifth and final Section in Part III of the TRIPS Agreement deals with

criminal procedures. Provision must be made for these to be applied at least

in cases of willful trade-mark counterfeiting or copyright piracy on a

commercial scale.

 

Reference should  also be made to Article 69 of the Agreement, which

requires WIPO Members to co-operate with each other with a view to

eliminating international trade in goods infringing intellectual property

rights. In this regard, they have committed themselves to establish contact

points in their national administrations and be ready to exchange

information with each other on trade in infringing goods. In particular,

they must promote the exchange of information and co-operation between

customs authorities with regard to trade in counterfeit and pirated goods.

Co-operation within this framework will also facilitate customs' work in

fighting counterfeiting and piracy.

 

V. GENERAL PROVISION AND BASIC PRINCIPLES

 

Like the pre-existing international intellectual property rights

conventions, the TRIPS Agreement is a minimum standards agreement. It leaves

Members free to provide more extensive protection of intellectual property

if they so wish--for purely domestic reasons or because they have concluded

international agreements to this effect, whether bilateral, regional, as for

example in the case of the European Communities and the North American Free

Trade Agreement (NAFTA), or multilateral, such as in the World Intellectual

Property Organization(WIPO). This is made clear in Article 1.1, which

provides that Members may, but shall not be obliged to, implement in their

law more extensive protection than is required by the Agreement, provided

that such protection does not contravene the provisions of the Agreement.

Article 1.1 also makes it clear that the Agreement is not intended to be a

harmonization agreement; provided that Members conform to the minimum

requirements established by the Agreement , they are left free to determine

the appropriate method of doing so within their own legal system and

practice.

 

As in the main pre-existing intellectual property conventions, the basic

 

obligation on each Member country is to accord the treatment in regard to

the protection of intellectual property provided for under the Agreement to

the persons of other Members. Article 1.3 defines who these persons are.

These persons are referred to as "nationals" but include persons, natural or

legal, who have a close attachment to other Members without necessarily

being nationals. The criteria for determining which persons must thus

benefit from the treatment provided for under the Agreement are those laid

down for this purpose in the main pre-existing intellectual property

conventions of the WIPO, applied of course with respect to all WIPO Members

whether or not they are party to those conventions.

 

Article 3, 4 and 5 include the fundamental rules on national treatment and

most-favoured-nation (MFN) treatment of foreign nationals, which are common

to all categories of intellectual property covered by the Agreement. These

obligations cover not only the substantive standards of protection but also

matters affecting the availability, acquisition, scope, maintenance, and

enforcement of intellectual property rights as wall as those matters

affecting the use of intellectual property rights specifically addressed in

the Agreement. While the national treatment clause forbids discrimination

between a Member's own nationals and the nationals of other Members, the MFN

treatment clause forbids discrimination between the nationals of other

Members. In respect of the national treatment obligation, the exceptions

allowed under the pre-existing intellectual property conventions of WIPO are

also allowed under TRIPS. Where these exceptions allow material reciprocity,

a consequential exception to MFN treatment is also permitted. Certain other

limited exceptions to the MFN obligations are also provided for.

 

As issue that the Uruguay Round negotiations left unresolved is the question

of exhaustion. Article 6 provides that for the purposes of dispute

settlement under the TRIPS Agreement, nothing in the Agreement shall be used

to address the issue of the exhaustion of intellectual property rights,

provided that the national treatment and MFN treatment obligations are

compiled with.

 

Article 7 of the Agreement is entitled "Objectives." It should be read in

conjunction with the Preamble which reproduces the basic Uruguay Round

negotiating objectives established in the TRIPS area by the 1986 Punta del

Este Declaration and the 1988/89 Mid-Term Review. There is also an Article

entitled "Principles" (Article 8) which recognizes the right of Members to

adopt measures for public health and other public interest reasons and to

prevent the abuse of intellectual property rights, provided that such

measures are consistent with the provisions of the TRIPS Agreement.

Developing countries attach importance to these Articles, which put emphasis

on the transfer and dissemination of technology.

 

VI. TRANSITIONAL ARRANGEMENTS AND TECHNICAL CO-OPERATION

 

A. Transitional Periods

 

The Agreement gives all original WTO Members transitional periods so that

they can meet their obligations under it.[2]

 

The transitional periods, which depend on the level of development of the

country concerned, are contained in Articles 65 and 66. The general

transitional period applicable to developed country Members was one year;

this period ended on 1 January 1996. For developing countries, the general

transitional period is five years, i.e. until 1 January 2000, and for those

countries on the United Nations list of least-developed countries the period

is eleven years, i.e. 1 January 2006. A country whose economy is in

transition, but which is not a developing country, may nonetheless delay

application until the year 2000, if it meets the three tests specified in

Article 65.3.

 

However, all Members, even those availing themselves of the longer

transitional periods, have had to comply with the national treatment and MFN

treatment obligations as of 1 January 1996. Moreover, there are two

 

important substantive obligations that have been effective for all Members

from the entry into the force of the TRIPS Agreement on 1 January 1995. One

is the so-called "non-backsliding" clause in Article 65.5 which concerns

changes made during the transitional period, and the other so-called

"mailbox" obligations relating to pharmaceutical and agricultural chemical

products that are the subject of patent applications filed during the

transitional period (Article 70.8 and 70.9).

 

The "non-backsliding" clause in Article 65.5 forbids countries from using

the transitional period to reduce the level of protection of intellectual

property in a way which would result in a lesser degree of consistency with

requirements of the Agreement. In the connection, it may also be noted that

the transition periods of the TRIPS Agreement cannot provide, of course, any

legal basis for a country to escape from international obligations that it

has already accepted in another context.

 

Somewhat more complicated transition rules apply in the situation where a

developing county does not at present give product patent protection to

pharmaceutical or agricultural chemical inventions. According to Article

65.4, such a developing country may delay up to ten years the extension of

patent protection to such inventions. However, in accordance with the

"mailbox" obligations referred  to above, it has to accept, form 1 January

1995, the filing of patent applications in these areas of technology

(Article 70.8) and, if a product that has been the subject of such a patent

application obtains marketing approval before the decision on the grant of

the patent is taken, there is an obligation under Article 70.9 to grant,

subject to certain conditions, exclusive marketing rights for a period of up

to five years to tide over the gap. The practical effect of these various

transition provisions should be that inventions which meet the criteria for

patentability on  or after the date of entry into force of the Agreement

itself will normally be eligible for protection in such countries by the

time that protection becomes of commercial significance--either by the grant

of a patent after the expiry of the ten-year transition period or by an

exclusive marketing right if such products get marketing approval before

that time.

 

B. Protection of Existing Subject-Matter

 

Another important aspect of the transition arrangement under the TRIPS

Agreement is contained in the provisions relating to the treatment of

subject-matter already existing at the time that a Member starts applying

the provisions of the Agreement. As provided in Article 70.2, the rules of

the TRIPS Agreement generally apply to subject-matter existing on the date

of the Agreement for the Member in question and which is protected in that

Member on the said date. Some more specific provisions in this regard,

relevant to the patent area, can be found in paragraphs 4, 6 and 7 of

Article 70.

 

C. Technical Co-operation

 

Given the extensive changes to the legislation, institutions and practices

of may Member, especially developing ones, required by the TRIPS Agreement,

technical co-operation is of great importance. Article 76 of the TRIPS

Agreement allows for developed country Members to provide, on request and on

mutually agreed terms and conditions, technical and financial co-operation

in favor of developing and least-developed country Members. According to

Article67, the objective of such co-operation is to facilitate the

implementation of the Agreement. The Article specifies that such assistance

shall include assistance in the preparation of laws and as on the prevention

of their abuse, and support regarding the establishment or reinforcement of

domestic offices and agencies relevant to these matters, including the

training of personnel.

 

Most developed countries already have considerable programmes which are

being directed towards assisting with the implementation of TRIPS

 

obligations. The Council has agreed that these Members shall annually

provide updated information to the Council on their technical  co-operation

activities. It has also requested intergovernmental organizations with

observer status in the TRIPS Council to provide information. In addition,

the WTO Secretariat has provided information on its technical co-operation

activities related to the implementation of the TRIPS Agreement. The Council

has also decided that developed country Members should establish and notify

contact points in their administrations for technical co-operation purposes

on TRIPS.

 

The provision of such information to the TRIPS Council serves two main

purposes. In regard to the technical co-operation activities of developed

country Members vis-a-vis developing country Members, it serves as a vehicle

for the Council to carry out its task of monitoring the operation of the

Agreement, in this case its Article 67. However, more generally, the

provision of information also serves to seek technical and financial

co-operation to know what types of assistance are being made available and

to whom they might address their request.

 

Several intergovernmental organizations have activities in this field. The

most important of these organizations is the WIPO, which has increased its

resources in order to be able to respond to the additional demand on

technical co-operation related to the implementation of the TRIPS Agreement.

To facilitate implementation of the TRIPS Agreement, the Council for TRIPS

has concluded with the WIPO an agreement on co-operation between WIPO and

the WTO, which came into force on 1 January 1996. Technical co-operation is

one of the three main areas covered by this Agreement. The Agreement

provides that the International Bureau of the WIPO and the WTO Secretariat

shall enhance co-operation in their legal/technical assistance and technical

co-operation activities relating to the TRIPS Agreement for developing

countries, so as to maximize the usefulness of those activities and ensure

their mutually supportive nature. The assistance made available by each

Secretariat to the Members of its own Organization will be made available

also to the Members of the other Organization. The General Assembly of the

WIPO has agreed that the International Bureau should make arrangements so as

to be able to respond to request from developing countries for WIPO legal

and technical assistance relating to the TRIPS Agreement and that it should

expand the coverage of the TRIPS Agreement in existing WIPO development

co-operation activities.

 

VII. MONITORING COMPLIANCE

 

One of the characteristics that the WTO inherited from the GATT is the

effort made to continuously monitor compliance with the obligations entered

into. This is done through a combination of mechanisms. One involves the

right of WTO Members to raise, at any time, either bilaterally and/or on the

floor of the TRIPS Council (which meets five to six times a year), any

concern that is has about compliance on the part of any other Member. In

this connection, a number of issues have been raised in the Council.[3]

 

One of the issues that has been addressed at each meeting held by the

Council for TRIPS since March 1995, and which is highly relevant to the

subject of this article, concerns the implementation of the "mailbox" and

exclusive marketing rights provisions of Article 70.8 and 70.9 of the TRIPS

Agreement. WTO Members to which these provisions apply (see above) are

required to notify measures taken to implement them to the TRIPS Council.

Notifications have been received from some twenty countries, but concerns

have been voiced in the Council that the information provided has been

incomplete and also that it is sometimes difficult to find out exactly what

the situation is in some countries.

 

A. Review of Implementing Legislation

 

There are also mechanisms aimed at a more systematic monitoring of

 

compliance. These involve, first, notification requirements under which

Members are required to notify their national implementing legislation and

various other pieces of information (for example, to respond to a check-list

of question of their enforcement procedures and remedies); and, second, the

review of their legislation by other Members in the TRIPS Council.

 

The review process consist of countries giving advance notice in writing of

questions they wish to put on the legislation of the other Members, written

responses to those question an follow-up questions and answers on the floor

of the Council in the week-long meetings devoted to the reviews. The results

are circulated in a series of WTO documents,[4] one for each country, which

are initially restricted but will be progressively made available to all,

including through the WTO home page on the Internet.[5] Notifications are

circulated as unrestricted documents, including countries' responses to the

above-mentioned check-list on enforcement, and can be viewed and downloaded

from the WTO's Internet home page immediately after their circulation.

 

The review process should be seen primarily as a "dispute prevention"

mechanism. In this regard, it has a number of functions"

- first, the prospect of it may have been a useful ex ante effect on legal

drafters;

- second, it can and does help remove misunderstandings about a country's

legislation;

- third, it leads to the identification of areas of differences of

interpretation as well as deficiencies in Members' legislation. Sometimes

these matters will be pursued bilaterally. They may eventually be taken up

by the dispute settlement system, or constitute part of the issues that will

be addressed when the TRIPS Agreement as a whole comes up for review after

the year 2000. Of course, if the matter is not felt to be of commercial

significance, it may simply be put aside, at least for the time being;

-the fourth benefit which has flowed from the process is that it is an

important educational tool for developing and transition-economy WTO Members

still in the process of bringing their legislation into TRIPS conformity.

 

One thing should be emphasized: the review does no, either explicitly of

implicitly, lead to the granting of a "clean bill of health" to a Member's

legislation. The fact that a matter was not raised or, if raised, not

pursued in the follow-up to the review, does not in any way prejudice a

Member's right to raise the matter subsequently and , ultimately, have

recourse to dispute settlement.

 

B. Experience with the Review Exercise

 

Because of the transitional arrangements of the Agreement, the notification

and review mechanism have been largely only applicable so far to some thirty

developed country Members. From these countries, the WTO Secretariat

received notifications of some 20,000 pages of TRIPW implementing

legislation and over 12,000 of these were circulated to all WTO Members.

Given the magnitude of the work, the review task has been divided into four

components. It started with the areas of copyright and related rights in

July 1996. Legislation on trade marks, geographical indications and

industrial designs was reviewed in November 1996, while the areas of

patents, layout designs of integrated circuits, undisclosed information and

the control of anti-competitive practices in contractual licenses were up

for review in May 1997. The area of enforcement was the subject of review in

November 1997.

 

In the review, WTO Members posed more than 4,000 questions to each other,

and 768 of these were related to the part of the review which included the

area of patents. As mentioned above, many misunderstandings were indeed

cleared up. However, in a significant number of instances, the country whose

legislation was under review has been willing to accept that it still has

further work to do in order to make its laws conform fully with the TRIPS

Agreement.[6]

 

VIII. DISPUTE SETTLEMENT

 

A. Main Features of the WTO Dispute Settlement System

 

WWTO Members are committed, if they wish to seek redress of violation of a

TRIPS obligation (or any other WTO obligation), to have recourse to, and

abide by, the multilateral WTO dispute settlement procedures. In such cases,

they undertake not to make a determination that a violation has occurred

except in accordance with these procedures and not to retaliate except in

accordance with authorization from the WTO's General Council (i.e. all WTO

Members together) acting in its capacity of Dispute Settlement Body

(DSB).[7]

 

The WTO dispute settlement system is a strengthened version of the

pre-existing GATT mechanism. Disputes which cannot be settled through

consultations can be can be brought to a panel of three or five persons who,

after hearing the parties to the dispute and obtaining such advice as they

find appropriate, will make findings on the legal consistency of the

contested measures. The major element of strengthening that has been

introduced is the elimination of the means by which it has been possible for

defending or losing countries to delay or block the dispute settlement

process. This has been done, on the one hand, by the introduction of

stricter time-limits for the different stages of the dispute settlement

process and, on the other hand, by laying down that panel reports will

adopted, unless these is a consensus against their adoption in the DSB--the

so-called rule of negative consensus.[8] Thus, the system has become

considerably more juridical in nature than hitherto. In the light of this

more binding and automatic nature of panel findings, provisions has been

made for recourse to a standing Appellate Body (composed of seven persons,

three of whom shall serve on any one case) whose findings are also subject

to adoption by the DSB, shall take place within sixty days after its

circulation, unless a party to the dispute decides to appeal, or the DSB

decides by consensus not to adopt the report. The same rules applies with

respect to Appellate Cody reports, except that the time-period for adoption

is shorter, namely thirty days after the report's circulation.

 

Another important feature of the dispute settlement system should also be

mentioned. This concerns what is often referred to as cross-retaliation;

that is, the extent to which it should be possible for an aggrieved Member

to withdraw concessions or obligations in another area of the WTO from a

country failing to comply with a dispute settlement finding within a

reasonable period of time, for example to curtail market access for textile

or agricultural products as a result of a failure to comply with a TRIPS

panel ruling. As can be imagined, this was a particularly delicate part of

negotiations, but a necessary component of an institutional link between the

TRIPS Agreement and the other results of the Uruguay Round. Clearly, a

system of world trade rules will only be effective if there is much at stake

for countries that do not comply with them. At the same time, it should be

said that the dispute settlement system is very much designed so as to help

the parties find a mutually agreed solution. Since the GATT system came into

existence fifty years ago, the country in question, in the end did not

retaliate. This element of the system is more a threat that gives

credibility to the system than anything else.

 

B. Experience with WTO Dispute Settlement in the TRIPS Area

 

Before discussing the experience so far with the formal use of the system,

it should be emphasized that what surfaces by way of formal invocations is

only the tip of the iceberg; in a very interesting number of cases, concerns

about compliance are discussed and resolved through informal consultations

between the interested WTO Members. It is normally only if informal

mechanisms do not yield satisfactory results that a WTO Member will have

formal recourse to the dispute settlement system of the WTO.

 

With regard to the TRIPS Agreement, the dispute settlement system has been

 

formally invoked, to date, on twelve occasions in respect of nine separate

matters (i.e. in respect of each of two matters, separate complaints were

made by two Members, while in respect of one matter the complaint was

addressed to two Members).

 

With respect to the mailbox and exclusive marketing rights arrangements in

India for pharmaceutical and agricultural chemical products, a Panel was

established which issued its Report on 5 September 1997.[9] This first TRIPS

Panel found that India was not in compliance with its obligations under

Article 70.8 and 70.9 of the TRIPS Agreement. As was to be expected, the

case went to the Appellate Body, which issued its Report on 19 December

1997. The Appellate Body upheld the Panel's conclusions on Article 70.8(a)

and 70.9, because it had failed to establish a mechanism that adequately

preserves novelty and priority in respect of applications for product

patents in respect of pharmaceutical and agricultural chemical inventions

during the transitional period to which it is entitled under Article 65 of

the Agreement, and had failed to establish a system for the grant of

exclusive marketing rights. The Member countries of the WTO adopted the

Panel Report and the Appellate Body Report, which modified the Panel Report

in some respects, at the DSB Meeting of 16 January 1998. These first Panel

and Appellate Body Reports in the TRIPS area can, as any documents issued in

WTO dispute settlement cases, be viewed and downloaded from WTO Internet

home page.[10] After the issuance of the Panel Report in this case, which

was initiated by the United States, the EC also requested the establishment

of a Panel on this matter. This case[11] is still pending.

 

A Panel has also been established and is presently working on certain

Indonesian measures affecting the automobile industry; the issues before

this Panel include a complaint relating to the area of trade marks.[12]

 

In respect of the three matters. The issues were resolved successfully as a

result of the first stage of the formal dispute settlement procedures

(consultations). These concern complaints from two Members about the

protection of existing sound recordings in Japan;[13] a complaint about the

mailbox and exclusive marketing rights arrangements in Pakistan for

pharmaceuticals and agricultural chemical products;[14] and a complaint

about the term of protection for existing patent in Portugal.[15]

 

In respect of four other matters, bilateral consultations are under way.

These concern a complaint addressed by one Member to both Ireland and the

European Communities on copyright and neighbouring rights protection in

Ireland;[16] complaints about provisional measures in the context of civil

proceedings in Denmark,(17) and Sweden;[18] and a complaint about patent

protection of pharmaceutical products in Canada.[19]

 

In most cases referred to above, the United States was the complainant, with

the European Communities and their Member States also making the complaints

in respect of two of the matters (those relating to the Japanese and Indian

measures).

 

The case relating to Canadian patent law was initiated by the European

Communities and their Member States only on 19 December 1997, and concerns

Articles 27.1, 28 and 33 of the TRIPS Agreement. In the view of the EC,

Canadian patent legislation is not compatible with Canadian obligations

under the TRIPS Agreement, since it does not provide for the full protection

of patented pharmaceutical inventions for the preparation of market access,

without the consent of the patent-holder, immediately following the expiry

of the patent; the EC has also referred to provisions allowing for

manufacturing and stockpiling patented products for a period of up to six

months before patent expiry. Australia, Switzerland and the United States

have asked to be joined in the consultations with Canada requested by the

EC.

 

So far, experience with dispute settlement under the TRIPS Agreement, and

 

indeed with the WTO dispute settlement system as a whole, has been

promising. The system has been quite intensively used, although in the TRIPS

area predominantly by one country, and does seem to be leading to a high

proportion of cases which are resolved through a mutually satisfactory

bilateral solution. Provided that such solutions are consistent with the WTO

rules, they are the solutions which are preferred. Incidentally, it would

seem that constraints on the use of the system are more related to the

availability of resources within WTO Members and within the WTO Secretariat

what with the number of cases which potentially would be susceptible to

resolution in this way. Experience in the GATT has been that, where

international rules are seen as creating private rights are respected, tends

to be particularly high.

 

IX. THE TRIPS BUILT-IN AGENDA

 

The primary focus of activity in the TRIPS area is on the implementation of

existing obligations, rather than on new initiatives. And, as reflected

above, any obligations are subject to transitional periods. However, the

TRIPS Agreement itself provides for further work in a number of areas.

 

Some of these built-in agenda items concern geographical indications. In

this regard,` the TRIPS Council gas initiated preliminary work on issues

relevant to the negotiations called for in Article 23.4 of the TRIPS

Agreement concerning the establishment of a multilateral system of

notification and registrations of geographical indications for wines. It is

also agreed that issues relevant to such system for spirits will be part of

this preliminary work.[20] An information-gathering activity, as agreed by

the Council in February 1997, has taken place but Members have not yet

agreed on what the next step in the work should be. The TRIPS provisions on

geographical indications also call for a review of their application, as

stipulated in Article 24.4 of the TRIPS Agreement. The modalities for

conducting this review are still the subject of informal consultations

between Members in the TRIPS Council. Ideas have been put forward by some

delegations for expanding the coverage of the higher level of protection, at

present only required by the TRIPS Agreement in respect of wines and

spirits. However, there are differing views and differing degrees of

enthusiasm for pursuing work in these areas and it is unlikely that concrete

results will emerge rapidly.

 

Article 27.3(b) of the TRIPS Agreement also calls for a review of its

provisions on the protection of plant and animal inventions during the

course of 1999. While it has been agreed that analytical work and

information exchange to prepare for this review might be undertaken in

advance, no specific suggestions have been put forward as yet.(21) The same

goes for the requirement in Article 64.3 of the Agreement for an examination

of the appropriateness of "non-violation" complaints in the TRIPS area. The

TRIPS Agreement also calls for an overall review of its implementation after

the year 2000. In this regard, it may be noted that suggestions have been

made, although no work has yet been initiated, to see whether a consensus

could be found for a possible major new negotiating exercise after the year

2000, when further negotiations or reviews are already required by the WTO

Agreement in a range of areas including, apart from intellectual property,

agriculture and services.

 

* Counsellor, Intellectual property and Investment Division, World Trade

Organization, Geneva, Switzerland, and Secretary of the Council for TRIPS.

The view presented in this article are the responsibility of the author and

should not be taken as necessarily those of the World Trade Organization or

the WTO Secretariat. The text of the article is based on the contents of a

presentation at a conference organized by the Institute for the

International Research Ltd. under the title Maximizing Patent Protection in

the Pharmaceutical Industry, held in London on 20 and 21 January 1998. It

 

uses various portions of an article, entitled Compliance with TRIPS: The

Emerging World View, by my colleagues Adrian Otten and Hannu Wager,

Vanderbilt Journal of Transnational Law, Vol.29 No.3, may 1996, pp.391-413,

with the kind permission of the authors.

 

NOTES

 

[1] The Marrakesh Agreement, which entered into force on 1 January 1995,

encompasses as a whole some 500 pages of legal texts and some 25,000 pages

of tariff concessions, as negotiated during the Uruguay Round of

multilateral trade negotiations between 1986 and 1994 by countries party to

the GATT (General Agreement on Tariffs and Trade).

[2] Since WTO came into existence, Ecuador, Bulgaria, Mongolia and Panama

have negotiated their terms of membership and acceded to the WTO and thirty

other countries are in the process of doing so, including China and Russia.

In the accession negotiations, countries that wish to join the WTO are being

required to agree to comply with the TRIPS Agreement without the benefit of

any transition period.

[3] Reference is made to the TRIPS Council's Annual Reports, which can be

found in WTO documents WT/GC/W/25, Section VI, IP/C/12.

[4] IP/Q/ - documents.

 

[5] http://www.wto.org.

[6] See the WTO's Newsletter FOCUS, No. 25, December 1997, p.6.

[7] Article 23 of the WTO Dispute. Dispute Settlement Understanding (DSU).

[8] Elements of the dispute settlements procedure:

- consultations aimed at a mutually agreed solution are encouraged

throughout the procedures and are in are case mandatory first stage of the

proceedings in any given case;

- request by the aggrieved party to the DSB for the establishment of a

panel, which should make recommendations to the DSB unless a mutually agreed

solution is found;

- possibility of appeal to the WTO Appellate Body (7 persons of which three

serve on any one case). Appeal suspends a decision by the DSB on the panel

report. A mutually agreed solution terminates the proceedings;

-the DSB adopts a panel or Appellate Body report unless it decides by

consensus not to adopt the report ( in case of appeal, twelve to 15 months

after the proceedings started);

-WTO Member is to inform the DSB as to how it intends to comply with the

ruling (60 days). A disagreement about the intended time-period for

implementation is subject to binding arbitration (90 days). A disagreement

about whether the intended implementation is consistent with the panel or

Appellate Body ruling is to be decided by the DSB after dispute settlement

proceedings before, or wherever possible, the original panel 90 days;

-in case of non-compliance with the ruling, the aggrieved party has the

possibility to request to negotiate a mutually acceptable compensation and,

if such negotiations fail, to request the DSB to authorize retaliation by

the suspension of concessions. Objection to level the suspension is subject

to binding arbitration (60 days);

 

-implementation of the ruling kept under surveillance in the DSB.

[9] Dispute IP/D/5: see WTO documents under symbol WT/DS50.

[10]  supra, footnote 5; WTO documents WT/DS50/R and WT/DS50/AB/R.

[11] Dispute IP/D/7: see WTO documents under symbol WT/DS79.

[12] Dispute IP/D/6: see WTO documents under symbol WT/DS59.

[13] Dispute IP/D/1: see WTO documents under symbol WT/DS28. And Dispute

IP/D/4: see WTO documents under symbol WT/DS42.

[14] Dispute IP/D/2: see WTO documents under symbol WT/DS36.

[15] Dispute IP/D/3: see WTO documents under symbol WT/DS37.

[16] Dispute IP/D/8: see WTO documents under symbol WT/DS82. And Dispute

IP/D/12: see WTO documents under symbol WT/DS115.

[17] Dispute IP/D/9: see WTO documents under symbol WT/DS83.

[18] Dispute IP/D/10: see WTO documents under symbol WT/DS86.

[19] Dispute IP/D/11: see WTO documents under symbol WT/DS114.

[20] See the TRIPS Council's Annual Report or 1996, WTO, Geneva, paragraph

34.

[21] In this connection, it should be noted however that the relationship

between the TRIPS Agreement and Environment has been discussed in the WTO

 

Committee on Trade and Environment, which has the task to examine, inter

alia, that relationship. This Committee has discussed a variety of issues in

this connection and has agreed that further work is required to help develop

a common appreciation, including on such matters as the generation of

environmentally sound technology and products, facilitating the access to

and transfer of such technology, environmentally unsound technologies, the

creation of incentives for the conservation of biological diversity and a

fair and equitable share in the benefits arising out of the use of genetic

resources.

 

The Journal Of World Intellectual Property

Vol.1, No.4, July 1998, pp.585-603

Werner Publishing Company, Geneva