MILE 12

Assessment

INTELLECTUAL PROPERTY RIGHTS

PROFESSOR THOMAS COTTIER & PROFESSOR FREDERICK ABBOTT

By Ankur Mahanta

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TRIPS-Plus Agreements: A Discussion on ACTA

The US and EU have been forum shifting from bilateral to multilateral and now, plurilateral standard setting, in order to secure stronger Intellectual Property (IP) protection for export of knowledge-goods.1 These negotiations have resulted in IP provisions that go well beyond the global minimum standards established by the Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement (often referred to as TRIPS-plus standards), and are the subject matter of intense debate cutting across developed and developing countries.2 This paper argues that the TRIPS Agreement does not preclude WTO Members from agreeing to TRIPS-plus standards, as flexibilities within the TRIPS Agreement permit measures that limit the rights conferred or raise the level of protection above the minimum standards negotiated under the TRIPS Agreement. The paper then discusses the potential benefits and risks of TRIPS-plus standard setting by examining the recently concluded, but not ratified, Anti-Counterfeiting Trade Agreement (ACTA). In India Patents (US),3 the Appellate Body, while reviewing the Panels findings that India did not meet its obligations under the TRIPS Agreement in providing a sound legal basis to preserve novelty and priority of certain patent applications, notes that Article 1.1 of the TRIPS Agreement states, in pertinent part: Members shall be free to determine the appropriate method of implementing the provisions of this Agreement within their own legal system and practice. The Appellate Body concludes that India, as a member, is free to determine the appropriate method of implementing its obligations under the TRIPS Agreement within the context of its own legal system.4 Further, TRIPS Article 1.1, second sentence, states: 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. The non-binding (may) clause in TRIPS Article 1.1, second sentence, read along with the
1

Ruth, M., Regionalism, Bilateralism, and TRIPS-plus Agreements: The Threat to Developing

Countries, Human Development Office Occasional Paper, Human Development Report 2005, 2005.
2

The discussions on TRIPS-plus agreements and its impact also cut across many international

institutions, including at the UN Human Rights Commission, World Health Organisation, UN Development Programme and World Trade Organisation.
3

See, Appellate Body Report on India Patents (US), para. 59. Ibid. para. 59.

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flexibilities built in TRIPS Article.1.1, as to the nature and scope of obligations of Members, signifies these flexibilities can operate downwards, like exceptions to rights conferred, as well as upwards, like extension of the scope of patentability beyond the minimum standards established by TRIPS Article 27. However, the proviso contained in TRIPS Article 1.1, second sentence, [...] provided that such protection does not contravene the provisions of this Agreement, is of particular significance in the discussion of legality and compatibility of TRIPS-plus Agreements, like the ACTA. The EU, US and Japan, among the OECD countries, have favoured upward flexibilities (or, TRIPS-plus measures), via, regional, bilateral and now plurilateral agreements. 5
6

At the

regional level, the enlargement of the EU to 25 member states has achieved the strongest IP regulatory system, although the NAFTA (North America) to a greater extent, and smaller regional arrangements like ASEAN (South-east Asia) and SACU (Southern Africa) have adopted some form of harmonisation in IP regulations. Bilaterally, the EU, through the EPAs, and the US, through its FTAs, has typically insisted on TRIP-plus provisions with developing countries.7 These regional and bilateral TRIPS-plus arrangements place considerable obligations on partner countries, some of which could undermine the development agenda set forth in the TRIPS Agreement.8 Moreover, once a WTO member agrees to a higher standard of IP protection, either bilaterally or regionally, it is obliged to immediately and unconditionally extend those standards to the nationals of other WTO members under the MFN provision in TRIPS Article 4. TRIPS-plus arrangements at the bilateral and regional levels are often negotiated through a give-and-take policy, where some concessions are granted based on stronger IP regulation commitments. However, in a plurilateral agreement, particularly ACTA, third country members states, even though not signatories to such an agreement, would receive the concessions negotiated by ACTA member states. These would extend from

These TRIPS-plus agreements are, in no small measure, a response to the concerns raised by makers

of brand name goods that were hurt by counterfeiting and generic goods from newly industrialising and large developing countries, particularly, big pharma companies, record labels and chemical producers.
6

For a detailed discussion,see, Ruth, M., Regionalism, Bilateralism, and TRIPS-plus Agreements: The

Threat to Developing Countries, Human Development Office Occasional Paper, Human Development Report 2005, 2005.
7

Abbott, F.M., Toward a New Era of Objective Assessment in the Field of TRIPS and Variable

Geometry for the Preservation of Multilateralism, Journal of International Economic Law, 8, 77., 2005.
8

UNCTAD-ICTSD, Intellectual Property Rights: Implications for Development, Policy Discussion Paper,

Geneva, 2003.

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substantive standards of IP protection to enforcement mechanisms and lastly to non-IP issues such as treatment of transit goods.

Benefits and Risks of ACTA The final text of ACTA, which has been negotiated over eleven rounds, is considered a much watered down version of the initial wish list that would have imposed some draconian traderestrictions on international trade.9 The present discussion is based on the benefits and risks arising from the final text negotiated in November 2010. The original mandate of ACTA, which survives in the final text, is to enhance cooperation in the enforcement mechanisms of IP protection in member countries. Counterfeiting and piracy in international trade has increased enormously in the past decade, and is considered welfare-reducing for both developed and developing countries.10 In 2009, trade in counterfeit and pirated goods was estimated at US$ 250 billion (or, nearly 2 per cent of global exports).11 In the joint statement issued after the conclusion of negotiations, members of ACTA stated that, It [ACTA] includes state-of-the-art provisions on the enforcement of intellectual property rights, including provisions on civil, criminal, border and digital environment enforcement measures, robust cooperation mechanisms among ACTA Parties to assist in their enforcement efforts, and establishment of best practices for effective IPR enforcement.12 Major proponents of the ACTA, including business and industry organisations across the Atlantic and certain government arms of these countries, have stressed that ACTA will boost legal trade in products protected by IP laws and in turn benefit innovation, creativity, quality and brand exclusivity that are the competitive advantages of their industries in the world market. ACTA contain general provisions for balanced enforcement procedures and hence do not extend the scope of IP protection granted under national laws. However, the legal compatibility of these enforcement provisions, coupled with political economy concerns, has raised serious concerns as to the risk it poses on the world trading system.

Abbott, F.M., Tradings End: Is ACTA the Leading Edge of a Protectionist Wave?, Intellectual Property

Watch, 6 May 2011.

10

OECD, The Economic Impact of Counterfeiting and Piracy, June 2008. Executive Sumamry. OECD, Magnitude of Counterfeiting and Piracy of Tangible Goods: An Update, The Economic Impact

11

of Counterfeiting and Piracy, November 2009.

12

Accessed from, http://www.ustr.gov/about-us/press-office/press-releases/2011/october/joint-press-

statement-anti-counterfeiting-trade-ag, on 25 February 2012.

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The scepticism over ACTA has poured in from NGOs, academics, multilateral organisations and developing country members at the WTO. Yu argues, Although intellectual property is a largely legal construct, it is not just about law and economics. It is also about politics.13 He considers the emergence of a non-multilateral era and the politics behind the development of an international IP regime, before calling the ACTA a bad country club agreement. 14 Although ACTA do not contain any substantive standards of protection, the enforcement mechanisms it addresses raise critical concerns. In an opinion paper submitted by European Academics on ACTA, the Agreements incompatibilities with European as well as International law were elucidated.15 Civil Enforcement: Article 44 of TRIPS provides protection to accused infringers, as regards time limits for preliminary injunctions, although ACTA do not contain any comparable provision. This limits the rights of potential infringers even as rights holders are granted additional rights. Further, ACTA Article 11 strengthens the right of information by making it compulsory (voluntary under TRIPS Article 47), and the right may be directed against infringers or alleged infringers (only against infringers in TRIPS Article 47). The proportionality requirement established under TRIPS Article 46 and Article 47 find no mention within ACTA. ACTA, moreover, refers to the measure of damages that are beyond the commensurate economic loss by adopting a criteria for damages in Article 9, where, the value of the infringed goods or services measured by the market price, or the suggested retail price (emphasis added), over and above what is required under TRIPS Article 45.1. Border Measures: A major concern over ACTA is the lack of sufficient safeguards on Public health issues, including, international trade in generic drugs and. ACTA members are obliged to provide border enforcements against trade of goods infringing any IP rights covered by TRIPS, except patent rights and test data that are excluded through Footnote 6 to Article 16. However, extending border measures to goods suspected of ordinary trademark infringement could restrict trade in generics in transit. Moreover, the rights of third parties are clearly curtailed in the ACTA as defendants. ACTA Article 12.1(a) provides judicial authorities the right against alleged third party violators that is in general a violation of TRIPS Article 41.4 that instructs parties to a proceeding the right for review.
13

Yu, P.K., ACTA and its Complex Politics, The WIPO Journal, Volume 3 Issue 1, 2011. Ibid. p. 5. Opinion of European Academics on Anti-Counterfeiting Trade Agreement. Downloaded from

14

15

www.statewatch.org/news/2011/jul/acta-academics-opinion.pdf on 24 February 2012.

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ACTA also eliminates safeguards available under TRIPS Article 55 that contains mandatory limits to the period of detention, whereas, ACTA Article 19 merely states that the initiation of infringement proceedings be undertaken within a reasonable period of time. Criminal Enforcement: the ACTA Article 23 effectively brings under its fold parallel trade by defining commercial scale as activities for direct and indirect economic or commercial activities. The criminal provisions effectively overrule the holding of the WTO dispute settlement panel in the China-Enforcement case regarding interpretation of commercial scale.16 This illustrative list of non-compatibility of the ACTA with the TRIPS Agreement demonstrates that TRIPS-plus agreements have tried to create a trading environment that is restrictive of trade liberalisation agenda as well as curtail the built-in flexibilities of the TRIPS Agreement. The problem becomes even more pronounced when the MFN obligation of TRIPS Article 4 extend the stricter IP regulations to other WTO members. The issue from a developing country perspective becomes two-pronged: first, whether stronger IP protection increases the willingness of companies to invest in its economy, which is not necessarily the case, 17 and second, the recourse available in international law over concerns on ACTA vis-a-vis its developmental goals.

16

Abbott, F.M., Tradings End: Is ACTA the Leading Edge of a Protectionist Wave?, Intellectual

Property Watch, 6 May 2011.

17

Sinha, M., IPR Rules and their Uncertain Effects, Business Line, 2 June 2011. Accessed from

http://www.thehindubusinessline.com/opinion/article2068519.ece on 24 February 2012.