TRIPS AGREEMENT

INTRODUCTION:
The intellectual property rights are private rights, but there is need for a
multilateral framework of principles, rules and disciplines dealing with the
intellectual property rights. The World Intellectual Property Organization
(WIPO) and Paris Convention are already covering patents well. However, they
lack the authority to enforce the law. The Agreements of WTO are subject to the
common authority to enforce the law. The Agreement of WTO are subject to the
common dispute settlement system, hence eforts to bring intellectual property
under WTO are made as Trade-Related Aspects of Intellectual Property Rights
(TRIPS).
The TRIPS Agreement is added to the Agreement Establishing the World Trade
Organization (WTO) as Annexure IC. It is multilateral Trade Agreement. The
TRIPS is an integral Part of the WTO Agreement, binding of all members
countries as per Article II of the WTO Agreement. The TRIPS Agreement has no
annexes, or Ministerial Decisions unlike most of the other major WTO
Agreements. The emphasis is on implementation TRIPS.
Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS) is
an international agreement between the member nations of World Trade
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Organization (WTO). TRIPS Agreement is aimed at harmonizing the Intellectual
Property (IP) related laws and regulations worldwide. The TRIPS Agreement
accomplishes this motive by setting minimum standards for protection of
various forms of IP. The nations that are signatory to the TRIPS Agreement
have to abide by these minimum standards in their national laws related to IP.
The TRIPS Agreement generally sets out the minimum standards regarding the
grant of rights to the owner of IP, enforcement requirements in the national
laws, and settlement of disputes and remedies to those whose IP rights get
infringed. The coverage of the TRIPS Agreement encompasses the various areas
of IP including patents, trademarks, copyrights, geographical indications,
industrial designs, etc. The objective of the TRIPS Agreement is to ensure the
protection and enforcement of Intellectual Property Rights (IPR) to contribute to
the promotion of technological innovation, transfer and dissemination of
technology, mutual advantage of producers and users of technological
knowledge in a manner that is conducive to social and economic welfare, and
balance of rights and obligations, worldwide.
TRIPS are a minimum standard agreement, and it encourages countries to
provide a high level of protection for intellectual property and explicitly permits
to do so. The TRIPS Agreement sets out the minimum protection that must be
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given for each category of intellectual property rights in the national law of
each WTO members country. The Agreement also lays down procedures and
remedies to be provided by each country for intellectual property rights
enforcement.
The Paris Convention (1967) for Industrial Patents and the Berne Convention
(1971) for Copyrights are the starting points of the TRIPS. Members are
expected to comply with these standards. Similarly the obligations under the
Rome Convention (1961) and the IPIC Treaty (1986) are also protected under
TRIPS.
TRIPS consists of seven Intellectual property items namely Copyright and
related rights, trade marks, geographical indications, industrial designs,
patents, integrated circuits and undisclosed information. It contains altogether
73 Articles in VII parts.
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BACKGROUND AND HISTORY
In 1944, for the frst time an international agreement was reached upon to
govern the international monitory policy. This was called the Bretton Woods
Agreement. The Bretton Woods Agreement created two institutions to govern
the international monitory policy: International Bank for Reconstruction and
Development (IBRD, the World Bank) in 1945 and the International Monetary
Fund (IMF) in 1946. These were called the Bretton Woods Institutes.
Subsequently, the General Agreement on Tarifs and Trades (GATT) was
established in 1947 to harmonize the trade between various nations. GATT was
the only multilateral instrument governing international trade from 1948 until
the establishment of WTO in 1995. In all, eight rounds of negotiations were
held under GATT. These rounds were held for refning the international trade
and tarif rules. The frst fve rounds exclusively concentrated on the tarifs.
The sixth round included discussion on anti-dumping measures as well which
included provisions for member nations to control the dumping of goods into
their territory by other nations which can afect the member nations economy.
Further, the seventh round discussed tarif and non-tarif measures. The last
GATT round was the Uruguay Round (1986-1994). The Uruguay Round, for the
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frst time introduced discussions on trade related to agriculture, services and
IPR. After long discussions and complex negotiations, fnally in 1994, WTO was
established. WTO became efective from 1st January 1995. All the 123 nations
that participated in the Uruguay Round became the members of WTO. India
also became the member of WTO. At present WTO has 153 members i.e.
almost 90% of Worlds nations.
WTO deals with the rules of trade between nations at a global or near-global
level. The objective of WTO is to provide the common institutional framework
for the conduct of trade relations among its member nations in matters related
to the agreements and associated legal instruments. WTO is responsible for
negotiating and implementing new trade agreements, and is in charge of
monitoring member countries' adherence to all the WTO agreements, signed by
the majority of the world's trading nations. Under the provisions of WTO, many
new agreements, regulations, treaties and conventions were introduced to
provide the framework for implementation, administration and operation of the
multilateral trade agreements between member nations. All these agreements,
treaties, conventions and regulations were based on two principles, namely:
a) Most Favored Nation treatment: Equal treatment for nationals of all trading
partners in the WTO;
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b) National Treatment: Treating ones own nationals and foreigners equally.
Need of TRIPS
To achieve the reduction of distortions and impediments to international trade,
the member countries of the WTO recognized the following:
i) There is the need to promote efective and adequate protection of
intellectual property rights.
ii) There is the need for new rules and disciplines concerning the
intellectual property right;
iii) There is the need to provide adequate standards and principles, scope
and use of trade-related intellectual property rights;
iv) There is the need to provide efective and appropriate means for the
enforcement of trade-related aspects of intellectual property rights
and settlement of disputes between governments regarding them;
v) There is the need for the maximum fexibility in domestic
implementation of laws and regulations in the least-developed
countries.
vi) There is the need to establish a mutually supportive relationship
between the WTO and the World Intellectual Property Organization
(WIPO) as well as other relevant international organizations.
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To fulfll the above needs, the members countries of the WTO accepted the
TRIPS Agreement.
One of the important agreements among all of WTO Agreements is the TRIPS
Agreement. The TRIPS Agreement has emerged as the most widely impacting
agreement post WTO leading to harmonization of IP related laws and
regulations among member nations. The TRIPS agreement came into force on
1st January, 1995. Taking into consideration the disparities in economic and
technological developments among diferent member nations, WTO provided for
diferent transition time periods in diferent member nations for application of
these rules.
After the Uruguay round, the GATT became the basis for the establishment of
the World Trade Organization. Because ratifcation of TRIPS is a compulsory
requirement of World Trade Organization membership, any country seeking to
obtain easy access to the numerous international markets opened by the World
Trade Organization must enact the strict intellectual property laws mandated
by TRIPS. For this reason, TRIPS is the most important multilateral instrument
for the globalization of intellectual property laws. States like Russia and China
that were very unlikely to join the Berne Convention have found the prospect of
WTO membership a powerful enticement.
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Furthermore, unlike other agreements on intellectual property, TRIPS has a
powerful enforcement mechanism. States can be disciplined through the WTO's
dispute settlement mechanism.
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WHAT IS TRIPS AGREEMENT
The TRIPS Agreement (hereinafter referred to as, the Agreement) is an
international agreement administered by WTO that sets down minimum
standards for many forms of IP regulations. The Agreement, which came into
efect on 1st January, 1995 is till date the most comprehensive multilateral
agreement on IP.
The Agreement covers the following areas of IP:
Copyrights and Related rights (i.e. the rights of performers, producers of
sound recordings and broadcasting organizations)
Trademarks (including service marks)
Geographical Indications (including appellations of origin)
Industrial Designs
Patents (including the protection of new varieties of plants)
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Layout-designs of Integrated Circuits
Undisclosed Information (including Trade Secrets and Test Data)
With respect to the above areas of IP, the Agreement governs the following
issues:
How basic principles of the trading system and other international IP
agreements should be applied?
How to give adequate protection to IPR?
How countries should enforce IPR adequately in their own territories?
How to settle disputes on IP between members of the WTO?
Special transitional arrangements during the period when the new system is
being introduced. The Agreement is the frst agreement under WTO under
which the member nations are required to establish relatively detailed norms
within their national legal systems, as well as to establish enforcement
measures and procedures meeting minimum standards.
The three important features of the Agreement are:
Standards
Enforcement
Dispute Settlement
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THE THREE MAIN FEATURES OF THE AGREEMENT ARE:
STANDARDS: In respect of each of the main areas of intellectual
property covered by the TRIPS Agreement, the Agreement sets out the
minimum standards of protection to be provided by each Member.
Each of the main elements of protection is defned, namely the
subject-matter to be protected, the rights to be conferred and
permissible exceptions to those rights, and the minimum duration of
protection. The Agreement sets these standards by requiring, frst,
that the substantive obligations of the main conventions of the WIPO,
the Paris Convention for the Protection of Industrial Property (Paris
Convention) and the Berne Convention for the Protection of Literary
and Artistic Works (Berne Convention) in their most recent versions
must be complied with. With the exception of the provisions of the
Berne Convention on moral rights, all the main substantive provisions
of these conventions are incorporated by reference and thus become
obligations under the TRIPS Agreement between TRIPS Member
countries. The relevant provisions are to be found in Articles 2.1 and
9.1 of the TRIPS Agreement, which relate, respectively, to the Paris
Convention and to the Berne Convention. Secondly, the TRIPS
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Agreement adds a substantial number of additional obligations on
matters where the pre-existing conventions are silent or were seen as
being inadequate. The TRIPS Agreement is thus sometimes referred to
as a Berne and Paris-plus agreement.
ENFORCEMENT: The second main set of provisions deals with domestic
procedures and remedies for the enforcement of intellectual property
rights. The Agreement lays down certain general principles applicable to
all IPR enforcement procedures. In addition, it contains provisions on
civil and administrative procedures and remedies, provisional measures,
special requirements related to border measures and criminal
procedures, which specify, in a certain amount of detail, the procedures
and remedies that must be available so that right holders can efectively
enforce their rights.
DISPUTE SETTLEMENT: The Agreement makes disputes between
WTO Members about the respect of the TRIPS obligations subject to
the WTO's dispute settlement procedures.
First, in respect of each of the areas of IP covered by the Agreement, each of
the member nations is obliged to provide a minimum set of standards for
protecting the respective IPR. Under each of the areas of IP covered by the
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Agreement, the main elements of protection are defned, namely the subject-
matter to be protected, the rights to be conferred and permissible exceptions
to those rights, and the minimum duration of protection.
Second, each member nation is obliged to provide domestic procedures and
remedies with respect to protection of IPR. The Agreement lays down certain
general principles applicable to all IPR enforcement procedures. The
Agreement also lays down certain other provisions on civil and
administrative procedures and remedies, special requirements related to
border measures and criminal procedures, which specify, in a certain
amount of detail, the procedures and remedies that must be available so
that right holders can efectively enforce their rights.
Third, under the Agreement disputes between WTO member nations
regarding the respect of the TRIPS obligations are subject to the WTO's
dispute settlement procedures.
STRUCTURE OF THE TRIPS AGREEMENT
The three important features of the Agreement, i.e. standards, enforcement and
dispute settlement are covered in seven parts i.e. the Agreement consists of
seven parts.
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Part I deals with the general provisions and basic principles.
Part II describes the standards concerning the availability, scope and use of
IPR with respect to diferent types of IP.
Part III describes the IPR enforcement obligations of member nations, and
Part IV addresses the provisions for acquiring and Maintaining IPR.
Part V is directed specifcally to dispute settlement under the Agreement.
Part VI concerns transitional arrangements, and the
Part VII concerns various institutional arrangements.
The detailed discussion of the above mentioned seven parts of the Agreement
will follow in subsequent sections of this article.
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GENERAL PROVISIONS AND BASIC PRINCIPLES
Part I of the Agreement deals with the general provisions and basic principles.
Part I of the Agreement has eight Articles out of which Articles 3 and 4 form
the basic fundamentals of the Agreement.
Article 3 deals with National Treatment commitment. Under this article the
member nations are obliged to accord to the nationals of other member
nations, a treatment no less favorable than that it accords to its own nationals
with regard to the protection of IPR. However, this article recognizes certain
exceptions already provided in the Paris Convention (1967), the Berne
Convention (1971), the Rome Convention and the Treaty on Intellectual
Property in Respect of Integrated Circuits.
Article 4 deals with Most-Favored-Nation Treatment. Under the provision of this
article, with regard to the protection of IPR, any advantage, favor, privilege or
immunity granted by a member nation to the nationals of any other country
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shall be accorded immediately and unconditionally to the nationals of all other
member nations, except for a few exceptions mentioned in this article.
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STANDARDS CONCERNING THE AVAILABILITY, SCOPE AND
USE OF IPR
Part II of the agreement consists of 22 articles which deal with each of the
areas of IP covered by the Agreement with respect to the main elements of
protection, such as, the subject-matter to be protected, the rights to be
conferred and permissible exceptions to those rights, and the minimum
duration of protection. This is one of the most important part of the Agreement
as it deals with almost all the forms of IP like, Patents, Trademarks,
Copyrights, Geographical Indications, etc. As an obligation under this part of
the Agreement, all the member nations have to provide same protection to each
of the IPs covered by the Agreement. For example, in all the member nations
the duration of protection ofered by a utility patent has to be for minimum 20
years.
5.1 COPYRIGHT AND RELATED RIGHTS
Copyright protects literary works and other forms of works that constitute
expression of ideas, like painting, etc. Under the provision of Article 10,
Computer Programs, whether in source or object code, are protected as literary
works under the Berne Convention (1971). The term of protection for such kind
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of works under the Agreement is calculated based on the life of a natural
person. Term of protection for copyright is not less than up to 50 years from
date of end of calendar year of making of such a work. The related rights
regarding protection of performers, producers of phonograms (Sound
Recordings) and broadcasting organizations mentioned in Article 14 grants the
producers of phonograms the right to authorize or prohibit the direct or
indirect reproduction of their phonograms. These rights grant the broadcasting
organizations the rights to prohibit the fxation, the reproduction of fxations,
and the rebroadcasting by wireless means of broadcasts, as well as the
communication to the public of television broadcasts of the same.
5.2 TRADEMARK
Any sign, or any combination of signs, capable of distinguishing the goods or
services of one undertaking from those of other undertakings, is capable of
constituting a trademark. Such signs, in particular words including personal
names, letters, numerals, fgurative elements and combinations of colors as
well as any combination of such signs, are eligible for registration as
trademarks. Where signs are not inherently capable of distinguishing the
relevant goods or services, member nations may make registrability to depend
on distinctiveness acquired through use. Member nations may require, as a
condition of registration, that signs be visually perceptible. For initial
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registration, and each renewal of registration of a trademark a term of
protection is no less than seven years. The registration of a trademark is
renewable indefnitely.
5.3 GEOGRAPHICAL INDICATIONS
As per the Agreement, Geographical Indications are indications which identify
certain goods as originating in the territory of a member nation, or a region or
locality in that territory. Geographical Indications are used to protect those
goods whose quality, reputation or other characteristics are essentially because
of their geographical origin. Under the provisions of the Agreement, a member
nation can prohibit other member nations from the use of any designation or
resentation of any goods that indicates or suggests that those goods originate
from a geographical area other than the true place of origin in a manner which
misleads the public. The term of protection for Geographical Indication is
eternal.
5.4 PATENTS
Article 27 of the Agreement deals with patentable subject matter. The
patentable subject matter according to the Agreement constitutes any
inventions, whether products or processes, in all felds of technology, provided
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that they are new, involve an inventive step and are capable of industrial
application. However, the member nations may exclude from patentability,
diagnostic, therapeutic and surgical methods for the treatment of humans or
animals. Further, plants and animals other than micro-organisms, and
essentially biological processes for the production of plants or animals other
than non-biological and microbiological processes may also be excluded from
patentability. Under the provisions of the Agreement the member nations have
to provide protection for plant varieties either by patents or by an efective sui
generis system or by any combination thereof. The term of protection available
is usually twenty years counted from the fling date of the patent application.
Under provisions of Article 21 of the Agreement, member nations may provide
limited exceptions to the exclusive rights conferred by a patent, provided that
such exceptions do not unreasonably confict with a normal exploitation of the
patent and do not unreasonably prejudice the legitimate interests of the patent
owner, taking account of the legitimate interests of third parties.
Article 31 of the Agreement has provisions for allowing the grant a compulsory
license for pharmaceuticals by the government of a member nation without the
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consent of the patentee in certain conditions. Compulsory license may be
allotted particularly in following conditions:
Normally the person or company applying for a license has to have tried
to negotiate a voluntary license with the patent holder on reasonable
commercial terms.
Only if that fails can a compulsory license be issued, and Even when a
compulsory license has been issued, the patent owner has to receive
payment;
the TRIPS Agreement says the right holder shall be paid adequate remuneration
in the circumstances of each case, taking into account the economic value of the
authorization, but it does not defne adequate remuneration or economic
value. Compulsory licensing must meet certain additional requirements as
well. For example, it cannot be given exclusively to licensees (e.g. the patent-
holder can continue to produce), and it should be subject to legal review in the
country.)
5.5 INDUSTRIAL DESIGNS
Member nations have to provide for the protection of independently created
industrial designs that are new or original. Member nations may provide that
designs are not new or original if they do not signifcantly difer from known
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designs or combinations of known design features. Member nations may
provide that such protection will not extend to designs dictated essentially by
technical or functional considerations. The term of protection for industrial
designs is 10 years from the creation of the industrial design.
5.6 LAY-OUT DESIGNS FOR INTEGRATED CIRCUITS
Under the provisions of the Agreement, member nations are obliged to provide
protection to the layout-designs (topographies) of integrated circuits in
accordance with the Treaty on Intellectual Property in Respect of Integrated
Circuits. The member nations have to provide for protection of not less than 10
years from the date of fling of application for lay-out designs, however, member
nations may limit the duration of protection up to ffteen years from the date
of creation of the lay-out design.
5.7 PROTECTION OF UNDISCLOSED INFORMATION
Undisclosed information discussed herein is also called Trade Secret. The
member nations are obliged to ofer protection for trade secrets as per the
provisions of the Agreement. The undisclosed information is considered as
trade secret, if: It is secret in the sense that it is not generally known among or
readily accessible to persons within the circles that normally deal with the kind
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of information in question; It has commercial value because it is secret; and It
has been subject to reasonable steps under the circumstances, by the person
lawfully in control of the information, to keep it secret.
ENFORCEMENT OF IPR
The Agreement was not only aimed at providing minimum standards for
protecting IPR but it was also aimed at providing the enforcement of the same.
The Agreement provides minimum standards for the enforcement of IPR that
allows right holders to protect their legitimate interests through civil court or
administrative proceedings. It is not required for a WTO member nation to
establish special or separate courts for IPR, or specially allocate resources, like
man power, special enforcement ofces, etc. for IPR enforcement.
Part III of the Agreement on Enforcement of IPR sets out the obligations of
member nations to establish administrative and judicial mechanisms through
which IPR holders can seek efective protection of their interests. The general
obligation of member nations to provide enforcement mechanisms requires that
enforcement procedures should be available under their national law so as to
permit efective action against any act of infringement of IPR covered by the
Agreement, including expeditious remedies to prevent infringements and
remedies which constitute a deterrent to further infringements. Member
nations are obligated to ensure that enforcement procedures are fair and
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equitable, and not unnecessarily complicated or costly, or entail unreasonable
time limits or unwarranted delays.
Regarding the civil administrative procedures and remedies, the Agreement
provides for equal rights for both the defendant and complaining parties. The
rules of the Agreement provide that both parties should have the opportunity
to present and contest evidence, and that adequate remedial measures should
be available. The Agreement permits member nations to exclude the grant of
injunctions in circumstances involving compulsory licenses and other uses.
The Agreement obligates member nations to make provision for the ordering of
prompt and efective provisional measures to prevent entry of infringing goods
into channels of commerce and preserve evidence against such infringing goods
and their traders. This means that the IPR holder should be entitled to seek a
prompt action against the infringement, whether or not the party alleged to be
acting in an infringing manner can be notifed and given opportunity to be
heard.
With respect to Border Measures, the Agreement requires member nations to
allow certain right holders to prevent release by customs authorities of
infringing goods into circulation especially, with respect to counterfeit
trademarks and pirated copyright goods. The Agreement also provides for
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certain Criminal Measures (penalties) for trademark counterfeiting and
copyright piracy on a commercial scale.
ACQUISITION AND MAINTENANCE OF IPR
Part IV of the Agreement deals with acquisition and maintenance of IPR.
It provides that member nations are obligated to apply reasonable procedures
and formalities in connection with the grant or maintenance of IPR, that
registrations will be undertaken within a reasonable period of time, and that
service mark registrations will be subjected to the same basic Paris Convention
procedures as trademark registrations. The procedures by which IPR are
granted or denied are of great interest to applicants, those opposing
applications and the population that uses the subject matter of such IPR. The
Agreement provides limited guidance in this area.
DISPUTE SETTLEMENT AND PREVENTION
Part V of the agreement deals with dispute settlement and prevention.
Article 63 establishes the transparency requirements. Under these
requirements there is an obligation on the part of member nations to publish
or otherwise make available legal texts such as laws and judicial decisions. The
provisions related to dispute settlement and prevention are governed by the
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TRIPS council. The Article 63 establishes an obligation to notify laws and
regulations to the TRIPS Council or to World Intellectual Property Organization
(WIPO) for the common register, which contains a compilation of laws and
regulations, fnal judicial decisions, etc. pertaining to the Agreement, should
that be decided upon. Member nations are obligated to furnish applicable rules
or decisions, or sufcient details about them, at the request of member nations
who reasonably believe their rights may be afected. Confdential information is
entitled to protection. Each member nation is required to be prepared to
supply, in response to a written request from another member nation, the
information regarding Law, rulings, Judicial decisions and administrative
rulings pertaining to the subject matter of the Agreement (the availability,
scope, acquisition, enforcement and prevention of the abuse of IPR).
Article 64 deals with the dispute settlements. The Articles XXII and XXIII of
GATT 1994 as described and applied by the Dispute Settlement Understanding
(WTOs procedure for resolving the trade quarrels) also apply to consultations
and the settlement of disputes under the Agreement except as otherwise
specifcally provided. Article XXIII of the GATT 1994 provides for three types of
cause of action (a set of facts sufcient to justify a right to sue) in GATT dispute
settlement: violation, non-violation and situation.
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TRANSITIONAL ARRANGEMENTS
Under the transitional arrangements of the Agreement, the member nations
were allowed some transition period to make the national laws compliant with
the Agreement. The developing and least developed countries were given an
extra period as compared to developed nations. Developing countries were
granted a grace period of fve years (i.e. up till 2000) to make their national
laws compliant with TRIPS. An additional grace period of fve years (i.e. up till
2005) was given to the developing countries to introduce product patent
protection in those felds of technology in which there was no provision for
product patent protection.
INSTITUTIONAL ARRANGEMENTS
The Council for TRIPS monitors implementation of the Agreement. Also the
council for TRIPS monitors member nations compliance with the obligations
required under the Agreement. The council for TRIPS afords member nations
the opportunity of consulting on matters relating to TRIPS. It also carries out
other responsibilities assigned to it by the member nations, and provides any
assistance requested by them in the context of dispute settlement procedures.
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TRIPS AGREEMENT AND INDIA
India became a party to the TRIPS Agreement in April 1995. The Patent Act of
1970 was in contravention with the Article 27 of the Agreement. Hence India
needed to take some measures to make its IPR laws compliant with the
Agreement. The Agreement provided a three stage framework for developing
countries like India which did not allow product patents in the areas of
Pharmaceuticals and agricultural chemicals before the Agreement came into
force.
These three stages included:
Introduction of Mail-Box facility from 1st January, 1995 for product
patent applications in the feld of pharmaceuticals and agricultural
chemicals. These Mail-Box applications were not examined till the end
of 2004. But Exclusive Marketing Rights (EMR) could be granted for
the Mail-Box applications for which a patent had been granted in at
least one member nations and the application was not rejected in the
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member nation where the patent protect was sought by the applicant
for the reason of invention being not patentable.
Compliance with the other obligations of the Agreement such as,
rights of patentee, term of protection, compulsory licensing, etc. from
1st January, 2000.
Full implementation of product patents in all technological domains
including pharmaceuticals and agricultural chemicals with efect
from 1
st
January, 2005. Also, all Mail-Box applications were to be
taken for examination from 1st January, 2005.
Thus the Agreement came into force in India from 1st January, 2005. The
Agreement changed the face of the IP regime in the world. Many developing
countries, including India, which had weaker IPR systems (for example,
patents) had to extensively revise their patent laws, or where there were no IPR
regimes (the most important examples being plant variety protection, layout
designs and geographical indications) had to put in place new IPR systems. The
implications of the Agreement have their own pros and cons.
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On the positive side, with the revision of patent laws, a stronger patent
protection system came into existence which is of international standards,
because of which the foreign investors were encouraged to invest in India. It
may be expected that while domestic investment may not respond to a stronger
patent regime in a big way in either the short or long term, Foreign Direct
Investment (FDI) might. Further, the research and development expenditures of
the domestic players tremendously increased in post Agreement period as
compared to the pre- Agreement period. The other positive implication of a
technological nature is the availability of better products which might not have
been available with weaker IPR protection. However, the prices of these better
and patented products may not be afordable for majority of population.
Domestic private sector investment and foreign investment in the seeds sector
has risen. The post Agreement environment has encouraged domestic private
sector and foreign frms to invest in research and development for the
development of better seeds. Some of the geographical indications belonging to
India which are of importance for domestic industry have got protection and
have encouraged investment in these sectors, for example, Darjiling Tea. On the
negative side, the most immediate impact of post Agreement may be seen on
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prices of drugs. The new and required drugs will have product patent
protection unlike the earlier scenario and so the prices might escalate.
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TRIPS IN INTERNATIONAL SCENARIO
Why is TRIPS Important from a Development Perspective?
The TRIPS agreement could have profound implications for development
prospects. These implications could be positive or negative, with the balance
depending on characteristics of each country. Governments can work to
maximize the potential long-run gains (or minimize the losses) from IPRs by
embedding their regimes within a comprehensive set of complementary
policies.
There is a long history of international treaties designed to coordinate
protection of IPR across international borders. The Paris Convention for the
Protection of Intellectual Property and the Berne Convention for the Protection
of Literary and Artistic Works, both established in the 1880s, were the primary
instruments of transborder IPR protection until the formation of the WTO. The
Paris Convention established minimum standards for the protection of
industrial property (patents) and called for national treatment of patents
among signatory countries. The Berne Convention established protection
standards for art and written works, and called for national treatment and a
mostfavoured nation obligation. The United Nations World Intellectual
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Property Organisation (WIPO) was created in 1967 as the administrative body
for multilateral IPR treaties. The WIPO provides technical support to developing
countries in the establishment of IPR laws and shares information with the
WTO. The WIPO is a UN agency, and has no mechanism for enforcing IPR or
the treaties (Paris and Berne) that it administers.
The Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS)
was made part of the World Trade Organizations (WTOs) set of agreements in
the Uruguay Round (UR) negotiations to provide a coercive framework in which
WTO member countries could extraterritorially enforce the Intellectual
Property Rights (IPR) of domestic frms.
Member countries were obliged to undertake legislative reform to establish laws
and regulations that meet with international standards, as described in the
TRIPS Agreement. If innovating frms from member countries are dissatisfed
with the level of IPR protection aforded to their innovations, then disputes
between the innovating frms host country and the ofending country are
handled through the WTOs Dispute Settlement Understanding (DSU). The
DSU allows for crossagreement retaliation, which means that a country that is
found in violation of its TRIPS Agreement obligations can be subjected to
retaliatory trade sanctions under another WTO agreement; usually the General
Agreement on Tarifs and Trade (GATT).
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TRIPS AGREEMENT
The introduction of the TRIPS Agreement into the WTO marked a signifcant
departure for multilateral trade agreements; the focus of a major agreement
was a nontrade issue for the frst time. The requirements that are spelled out in
the TRIPS Agreement confer obligations on how member countries must protect
IPR within their domestic boundaries, while other WTO agreements aim to
provide a predictable regulatory environment for international trade and to
reduce barriers and tradedistorting policies in member countries. Developing
WTO member countries, under pressure from developed countries, agreed to
the inclusion of the TRIPS Agreement in return for promised better access to
developedcountry markets for manufactured and agricultural products.
Developed countries viewed intellectual property as important components of
their future industrial strategies, and were dissatisfed with the level of IPR
protection in the markets of many of their trading partners. This capture of
the WTO by developedcountries innovating frms has been controversial;
Bhagwati (2004) characterises this phenomenon as the transition of the WTO
from a promoter of international trade to a royalty collection agency.
The TRIPS Agreement also diverges from other WTO agreements by introducing
rules that cannot be shown to be welfare increasing at the global level. The
GATT and Agreement on Agriculture can be shown to have global welfare
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TRIPS AGREEMENT
enhancing efects within the confnes of neoclassical trade theory through
gains from trade. Deardorf (1990), however, shows that the marginal cost of
protection (measured as the growth of deadweight loss that results from
monopoly pricing) is constant, or increases, as geographic coverage expands
and the marginal beneft of IPR protection decreases as geographical coverage
expands. There must, therefore, exist an optimal geographic coverage of IPR
protection, beyond which global welfare declines. The fallout of this argument is
that certain countries should be exempt from TRIPS Agreement obligations if
the objective of such an agreement is to maximise global welfare. The TRIPS
Agreement does not strive for such an optimum; rather the TRIPS Agreement
calls for the harmonisation of IPR regulations across all WTO member
Countries. Research provide evidence that the TRIPS Agreement has been, at
least somewhat, successful in its primary objective. If a signifcant relationship
cannot be identifed, then the efectiveness of the TRIPS Agreement is
uncertain.
The TRIPS Agreement came into efect with the formation of the WTO in 1995.
Developing and leastdeveloped member countries were granted initial
implementation delays, and have been granted further delays over the past
several years . The TRIPS Agreement has also been the subject of consultations
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TRIPS AGREEMENT
at the Doha Development Agenda (DDA) negotiations, though primarily on
issues of implementation, not substance.
There are two primary points of IP negotiation in the DDA. The frst is the
extension of protection for products that are defned by geographic indicators,
beyond existing UR protection for wines and spirits. The second issue revolves
around the use of genetic resources and traditional knowledge in
commercialized technology (primarily agricultural products and
pharmaceuticals). A proposal by a group of developing countries would require
patent applications to disclose the country of origin of genetic materials and
traditional knowledge that are used in novel products (WTO, 2008) and the
Plant Genetic Resources Treaty calls for a sui generis system that would
authorize payments from commercializing frms to populations indigenous to
the source of the genetic material. This strategy is an attempt by developing
countries to forestall incidents of biopiracy, in which frms obtain legal rights
over traditional and indigenous products and remedies. If a DDA deal is
completed, then the TRIPS Agreement will remain largely unchanged from its
current structure with only minor implementation amendments.
It is important to note that the nature of the WTOs DSU does not
automatically result in the imposition of penalties on member countries that do
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TRIPS AGREEMENT
not fulfll their Agreement obligations. Retaliatory measures are only
authorized if a complainant country wins a case through the initial, and
usually appellate, body of the WTO. It is therefore important to view the TRIPS
Agreement not only as a means of structuring punitive measures against those
members that violate their obligations, but also as a tool that can be
brandished to make coercive threats against member countries in eforts to
change behavior without instigating formal WTO panels. The jurisprudence
under the TRIPS Agreement provides some guidance on how WTO panels will
interpret international disputes over protection of IPR, but there have been
relatively few TRIPS Agreement disputes (relative to the number of disputes
arising from other WTO agreements, such as the Agreement on Agriculture or
the Agreement on Antidumping). One of the primary avenues through which
the TRIPS Agreement can afect the international protection of IPR is member
countries use of the Agreement as a threat.
Negotiated settlements between countries often precede, and sometimes
prevent, formal WTO cases. These negotiations between complainant and
defendant countries may be favoured by the existence of the TRIPS
Agreement. Both parties know that the TRIPS Agreement allows for punitive
retaliatory measures against an ofending member country, and defendant
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TRIPS AGREEMENT
countries have to weigh the potential costs of trade retaliation in their decisions
on IPR protection reform.
CASE LAWS :
Trebilcock and Howse (2005) discuss one important such case in which lawyers
representing US and EU pharmaceutical frms pressured the South African
government to repeal legislation that allowed parallel importation of HIV/AIDS
medication from lowerprice countries. Though the TRIPS Agreement allows for
parallel importation of medications under specifc circumstances, the
signifcant uncertainty surrounding a potential WTO dispute panels
interpretation of the Agreement allowed pharmaceuticalindustry negotiators to
use the threat of TRIPS Agreement retaliation to infuence South African
legislators.
The implementation of a levy on geneticallymodifed soybean seeds in Brazil is
another example in which a negotiated agreement may have averted a formal
WTO case. A large share of Brazils herbicidetolerant soybean crop is grown
from farmersaved seeds, for which no royalties are paid to innovating frms.
The Brazilian National Association of Seed Producers agreed to the application
of a levy on soybean seeds, some of the proceeds of which are directed to the
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TRIPS AGREEMENT
IPowning frms (The Western Producer, 2005). Farmers can either pay a levy
on certifed seeds at the point of purchase and receive a certifcate of
authenticity, or can deliver their crops to points of sale (usually elevators) and
be charged the levy if they cannot produce a certifcate of authenticity. These
cases speak to the potential for the TRIPS Agreement to act as a credible threat
in disputes over IPR protection.
The efects of the TRIPS Agreement on developed and developing countries are
expected to difer because many of the TRIPS Agreements disciplines call for
harmonization of IPR protection to levels that already exist in many developed
countries; this suggests that the TRIPS binary variable will be larger/more
signifcant for developing than for developed countries.
Another important reason for separating the efects by geography is that the
TRIPS Agreement, as part of the WTO set of agreements, is subject to the DSU.
Countries that do not fulfll their obligations may be subject to punitive
barriers on their exports to other WTO member countries. As such, the
efectiveness of the TRIPS Agreement in determining the level of IPR across
regions can provide some information on the efectiveness of the TRIPS
Agreement as a coercive threat. Countries that have a lot to lose from trade
retaliation may respond diferently than those with little to lose.
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TRIPS AGREEMENT
The efects of the TRIPS Agreement on IPR protection in Europe are positive,
but not signifcant. This result is expected because many European countries
maintained IPR protection regimes that were near or at TRIPS Agreement levels
before 1995. Note that this aggregation includes all European countries, not
just member countries of the European Union. Relatively low income European
countries such as Bulgaria, Hungary and Romania are included in this group
and can explain why the estimated efect of the TRIPS Agreement is larger for
Europe than the estimated efect for developed countries.
The results for North America, consisting of Canada and the US, are also
insignifcant. The estimated efects of the TRIPS Agreement on countries in
Central and South America are large and highly signifcant. Changes in
deterministic microeconomic (education, R&D, governance) and
microeconomic (GDP) variables have had positive and signifcant efects on IPR
protection, and the presence of the TRIPS Agreement has signifcantly
increased these countries commitments to IPR protection. the results suggest
that countries in Central and South America take seriously the threat of cross
agreement trade retaliation. This result is consistent with the high degree of
trade dependence that many Central and South American countries have on
the US (the chief proponent of the TRIPS Agreement).
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TRIPS AGREEMENT
These countries have a lot to lose if retaliatory sanctions are imposed on their
exports to the US. These countries also had to make signifcant adjustments to
their domestic IPR systems in order to be compliant with the TRIPS Agreement,
unlike most countries in North American and Europe. The results for North
Africa and the Middle East are similar to those of Central and South America
in both signifcance and magnitude.
No SubSaharan African countries are bound by TRIPS until 2013, with the
exception of South Africa. The estimated coefcient for SubSaharan Africa is
positive, but is insignifcant; this suggests that the TRIPS Agreement has not
signifcantly afected IPR protection in South Africa. South Africa is relatively
dependent on exports to developed countries, but this does not seem to have
resulted in the TRIPS Agreement having a signifcant efect on protection of
IPR. It is possible that South Africas geographic and political positioning
(neighboring countries that have weak IPR protection and are not bound by the
TRIPS Agreement) have ofset any coercive efects that the WTO Agreements
might have on other (non SubSaharan) countries.
The efect of the TRIPS Agreement on countries in Oceania is not signifcant.
This result is anticipated because this aggregation includes only Australia and
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TRIPS AGREEMENT
New Zealand countries where IPR protection was relatively strong prior to the
implementation of the TRIPS Agreement. The TRIPS Agreement binary variable
has had positive and signifcant efects of IPR protection in Asian countries.
The rationale for this result is similar to the results for Central and South
America; several Asian countries are heavily dependent on access to consumer
markets in Europe and the US and take seriously the threat of trade
retaliation.
TRIPS Agreement has had signifcant efects on IPR protection over its
implementation period, but the signifcance of these efects depends on
countries development levels. We fnd that disaggregating the panel of
countries by level of development yields diferent results for developed and
developing countries, even when controlling for per capita income. The TRIPS
Agreement has had signifcant efects on IPR protection in developing
countries, but has not measurably afected developed countries level of IPR
protection. This result is consistent with the setting of TRIPS Agreements
standards to conform closely to IPR protection regimes that were already in
place in many developed countries. Developed countries did not have to
markedly alter their regimes to be compliant with the TRIPS Agreement.
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TRIPS AGREEMENT
We also fnd that the efects of the TRIPS Agreement vary across regions. The
TRIPS Agreement has had positive and signifcant efects on IPR protection in
Central and South America, in Asia and in North Africa and the Middle East.
The TRIPS Agreement has not signifcantly afected protection of IPR in Sub
Saharan Africa, however the only SubSaharan African country that is bound
by the TRIPS Agreement is South Africa.
TRIPS has had positive outcomes for developing countries, with transfers to
India, China and Taiwan, not only in terms of locating production facilities in
these countries, but also in terms of locating research and development
facilities there. These are regions with low labour costs, adequate standards of
education and stable political systems. Therefore, if these prerequisites are in
place, there will be clear shifts in favour of developing countries as a result of
the TRIPS Agreement. In this respect, intellectual property rights are the only
means for recovering the costs of knowledge innovation and securing jobs. But
there needs to be a balanced system.
Countries that are relatively dependent on exports to countries that pushed for
the TRIPS Agreements inclusion in the WTO (i.e., developed countries) may
take the threat of retaliatory trade sanctions seriously because they have much
to lose in the form of lost exports. This provides evidence that the TRIPS
Agreement has been successful as a coercive threat in international trade
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TRIPS AGREEMENT
relations. An interesting extension of this research would be to investigate the
reasons that some developing countries/regions have responded to the TRIPS
Agreement more signifcantly than others. We observe that regions with high
export dependence on developed countries have made signifcant changes to
their IPR protection system.
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TRIPS AGREEMENT
CONCLUSIONS AND SUGGESSTION:
The poorest countries are unlikely to administer and enforce the required
TRIPS standards efectively for some time to come. It would be benefcial
to increase fnancial and technical assistance for improving
administration capacities. One promising idea would be for WTO and
WIPO members to agree that a small additional levy would be assessed
on patent applications at the Patent Cooperation Treaty (PCT), and
perhaps also on multilateral trademark applications, for purposes of
fnancing administration eforts in the poorest countries.
TRIPS could be clarifed as to the minimum requirements for plant
variety rights. Poor agricultural economies need to maintain a farmers
privilege without signifcantly reducing the benefts to the original right
holder.
Attention should be paid to overcoming the inconsistencies between
TRIPS and the Convention on Biodiversity. The former agreement
recognizes only private rights in technologies and products developed
from genetic resources, while the latter recognizes the interests of states
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TRIPS AGREEMENT
in sharing benefts from such inventions. International benchmarks in
this regard would be informative for implementing policies for protecting
genetic resources.
More attention could be paid to establishing sufcient market segmentation
in certain goods (medicines, environmental technologies, education
materials, and the like) that providers would be willing to ofer steep
discounts to authorities and consumers in poor countries. Thus, some re-
visitation of Article 6 (exhaustion) could be benefcial, along with linking it
to competition issues and technology transfer.
There are no international norms on the scope of fair use in copyright,
an increasingly important issue in the internet age. Widespread access of
students and researchers to digital products is important but unimpeded
electronic copying harms interests of copyright owners. The WIPO
Copyright Treaty attempts to balance these concerns by requiring
signatories to provide legal remedies against the circumvention of
technological protection measures, while recognizing the need for fair
use. It would be benefcial for TRIPS to be made more explicit about
allowable scope for fair use in digital works.
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TRIPS AGREEMENT
It is premature to negotiate stronger patent eligibility requirements in life
forms (Article 27.3) and that language could be clarifed to make such
patent requirements a matter of national policy.
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TRIPS AGREEMENT
There is no doubt that TRIPS will remain a debated issue for years to come. It
has shown issues that deserve to be pursued further. In the EU we strongly
believe in the virtues of IP as an engine for creation and innovation. At the
same time, we do not remain blind to the difculties and challenges entailed by
IP protection in certain areas and in certain regions in the world, especially in
the developing world. Hence, there is a need to look at IP with an open mind
and not be afraid to address shortcomings.
It is also important to bear in mind that, at present, we have the means to
catalyze ideas and innovations in ways that are less dominated by the economy
of scarcity. Systems of free dissemination and free-of-cost access may prove
efcient in certain areas.
For EU trade policy, the challenge is to follow an approach that takes into due
account the legitimate interest of industry and users, developed and developing
economies, small and large enterprises, researchers and students, public and
private goods. We must avoid lopsided and biased policies.
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TRIPS AGREEMENT
In conclusion, Pascal Lamy said that, when considering changes to TRIPS, we
must continue to keep its basic purpose to mind. The purpose of IP, he said, is
to enhance creativity and innovation for the economic and social development
and welfare of all, and so must be the purpose of the globalisation of IP.
LIST OF ACRONYMS
DSU: Dispute Settlement Understandin
FDI: F!rein Dire"t In#estment
GATT: General Areement !n Trade and Tari$
IMF: Internati!nal M!netar% Fund
IP: Intelle"tual Pr!pert%
IPR: Intelle"tual Pr!pert% Ri&ts
TRIPS: Trade Related Aspe"ts !' Intelle"tual Pr!pert%
(): (!rld )an*
(IPO: (!rld Intelle"tual Pr!pert% Orani+ati!n
(TO: (!rld Trade Orani+ati!n
EU: Eur!pean
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TRIPS AGREEMENT
REFERENCES:
TRIPS Agreement: An Overview : prepared by Ashish Jogi and Deepti
Nigam
TRIPS and Development: sida
The Efects of the TRIPS Agreement on International Protection of
Intellectual Property Rights Ryan Cardwell Pascal L. Ghazalian**
THE TRIPS AGREEMENT TEN YEARS LATER : A Report of a
Conference Commemorating the 10
th
Anniversary of the TRIPS Agreement
held on 23
rd
and 24
th
June 2004 : European Commission, DG Trade
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