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Wednesday, March 25, 2009

Trade domination over IPR under the TRIPS Agreement


Pawan Kumar Pandey*


The Agreement on Trade Related Aspects of Intellectual Property Rights (the TRIPS Agreement[1]) which constitutes Annex 1C of the Agreement Establishing the World Trade Organization (WTO) is the most comprehensive and far-reaching international agreement on the subject of intellectual property to date and the most important milestone in the development of international law in this area. The complexity of TRIPS Agreement and its numerous links to the areas that are outside intellectual property, such as the environment and public health, human rights and non-tariff barriers to international trade, only to mention a few, make it very difficult to apprehend all the aspects and implications of the Agreement. Taken alone the area of international trade vis a vis protection of intellectual property has resulted into many misconceptions. TRIPS is an innovative instrument on intellectual property in international trade and It is of utmost importance to understand the relationship between intellectual property and international trade as to how protection or non-protection of intellectual property affects free trade.

There should not be any dilemma in saying that the TRIPS Agreement is the most comprehensive agreement in respect of protection of intellectual property as, firstly, it crosses the traditional line that separates the two main categories of intellectual property rights i.e., copyright and industrial property
[2]. Secondly, unlike previous conventions, it contains detailed enforcement provisions[3].

The agreement contains minimum substantive standards for intellectual property protection in ‘nearly all’ the categories. It goes beyond Berne and Paris Conventions to set up even higher and more specific norms of protection of intellectual property. For example, firstly, the rule of “national treatment” is indeed the cornerstone of the Paris Convention for the Protection of Industrial Property
[4], the Berne Convention for the Protection of Works of Literature and the Arts[5], and the Universal Copyright Convention[6] (UCC). The rule simply obliges Member States to grant to the nationals of other Member States exactly the same substantive protection on the same conditions. The national treatment requirement of the TRIPS Agreement[7] encompasses a broader range of rights than any of these conventions.

The obligation on national treatment under TRIPS Agreement pivots not on rights “in respects of works” as does Berne or “industrial property” as does Paris but on “protection of intellectual property” defined to include nearly all forms of intellectual property that are subject matter of the Agreement.
[8] Again, the obligation, under TRIPS Agreement, on member states is to accord treatment “no less favorable” as opposed to “same” treatment as provided in any of these conventions. The practical consequence of the difference in the language of the agreements is that, even where a WTO member fails to protect the right of their own nationals, the rights of nationals of other WTO members must nevertheless be protected up to the minimal levels as imposed by the TRIPS Agreement. Secondly, the TRIPS provision represents, for the first time, the “most favored nation” principle[9] which is a common feature of international trade agreements. Previously, such provisions had appeared only in bilateral agreements.

Intellectual property rights affect international trade flows in several ways. A firm, for example, may be deterred to export its patented goods into a foreign market, if potential “pirates” can diminish the profitability of the firm’s activity in that market because of a weak IPR regime. Accordingly, a strengthening of a countries Patent regime would tend to increase imports as foreign firms would face increasing net demand for their products reflecting the displacement of pirates. On the other hand, a firm may choose to reduce its sale in a foreign market as a response to strong IPRs protection because of its greater market power in an imitation safe environment.

The protection of intellectual property rights under the TRIPS Agreement appears incidental as the first and foremost objective being regulation of international trade. The first clause of the preamble indicates that the main objective of the Agreement is “to reduce distortions and impediments to international trade”
[10]. This objective is to be accomplished “taking into account” the need to protect and enforce intellectual property rights. This clause of the preamble also recognizes that measures to enforce intellectual property rights may become obstacle to trade. Border measures, for example, might be implemented in a way that allow intellectual property holder to inhibit legitimate trade opportunities of producers. Ineffective protection of intellectual property rights may indeed constitute a barrier in the way of legitimate trade. For example, sale price of a particular patented product when exported to some other country must adequately reflect the costs of R&D as well of manufacturing and distribution of the product. Non protection of Patent rights in that country may lead to counterfeiting and copying of that particular product ultimately resulting into non-competitiveness and thus discouraging the manufacturer to export. In contrast, sometimes intellectual property rights may act as trade barriers. For example, if a particular government grants patents without adequate attention to whether true novelty and inventive steps are involved, it may create unjustified impediments to market entry for a product both of local and foreign origin.
Further, the second paragraph of the preamble addresses the issue of “applicability of the basic principles of GATT 1994”
[11]. As a result, this assimilation of intellectual property into a GATT framework inescapably makes the same GATT principles in respect of trade in goods applicable to intellectual property.
The intention of the drafters was not to create the system of IPR protection that would be considered “optimum” by a particular right holders group, but one that is adequate to protect the basic integrity of the trading system. This statement is further supported by the fact that TRIPS provisions do not cover a number of areas of industrial property which have been dealt with specifically in Paris Convention viz. utility models, trade names and collective marks etc.[12]
The reason is that the TRIPS Agreement focuses on trade-related aspects of intellectual property rights, and thus focuses on those areas where Parties to the General Agreement on Tariff and Trade (GATT) perceived that existing differences as to levels of protection led to distortions and impediments to trade. Thus it can be safely said that the substantive and adjective standards provided by the TRIPS primarily aim to foster international trade. The objective of the intellectual property laws is not to provide the maximum possible returns to the right holders, but to strike the proper balance of private and public interests. In the trade context, the objective is to avoid distortion to the trading system.

Rightly also in India – Patent Protection for Pharmaceutical and Agricultural Chemical Products
[13] the Panel reported:

“…we must bear in mind that the TRIPS Agreement, the entire text of which was newly negotiated in the Uruguay Round and occupies a relatively self contained, sui generis status in the WTO Agreement, nevertheless is an integral part of the WTO system…..Since the TRIPS Agreement is one of the Multilateral Trade Agreements, we must be guided by the jurisprudence established under GATT 1947 in interpreting the provisions of the TRIPS Agreement unless there is a contrary provision.”

Specifically speaking international copyright and international trade is inextricably linked. Any time one country undertakes, within its borders, to protect works originating in other country, it makes at least implicitly a calculation of the decision’s implications for its balance of trade.
[14] Also the major processes of internationalization in copyright law, including the Berne Convention, TRIPS Agreement, EU harmonization directives[15], and the WIPO Internet Treaties[16], all side-step the issue of moral rights in technological works. Instead, there appears to be a tacit consensus in the international community towards moral rights of authors.

In most countries an author’s moral rights are doctrinally separate from his economic rights, a fact reflected in the Berne Convention
[17], guarantying the rights of attribution and integrity.

Express exclusion of authors’ rights under Article 9.1 of the TRIPS Agreement
[18] can lead us to the conclusion that perhaps the authors were not the intended beneficiaries and protection or non-protection of these rights do not directly affect international trade. The reason for the exclusion of the moral rights from the scope of Article was the concern of some countries from the Anglo-American copyright system that strengthened moral rights could possibly represent obstacles to the full enjoyment by a purchaser of a legally obtained license[19].

Similarly, in patent field Article 29.1 to the TRIPS Agreement
[20] confers obligation on inventor to disclose the ‘best mode’ to carry out the invention. The best mode is supposed to be known by the inventor (mostly applicants’ employees), not by the applicant (mostly inventors’ employers)[21]. This specific choice of words has not been accidental. The TRIPS negotiators have simply recognized that inventors and patent applicants seldom are the same person or entity. Fascinatingly, Article 29.1 contains the only reference to the inventor throughout the entire TRIPS Agreement. This ‘discloser of best mode known to the inventor’ does not confer any sort of right on ‘inventors’ but, it being a source of information, ultimately benefits the ‘investors’[22].

On the similar pattern drafting the TRIPS Agreement, in the area of Geographical Indications (GIs), was far from an unadulterated exercise in intellectual property theory. Treating different types of goods differently for purposes of GI protection may, to some, appear to be unjustified because the definition of GIs does not
distinguish between product types.[23] Nothing in Article 22.1 suggests that different types of GIs are meant to be treated differently. If the ‘extension’ discussions were purely one of intellectual property policy, it would make sense to treat all products in the same manner legally. However, one may note that the WTO TRIPS Council discussions take place in the context of trade policy and the additional protection provided to geographical indications for wines and spirits resulted from the Uruguay Round of multilateral trade negotiations. One submission on this issue explains that the compromise was due to the link at that time between the negotiations on GIs and negotiations on agriculture.[24] Further, exception provided under Article 24.4 is also primarily guided by trade policy.[25]

Even in the area of Industrial Designs, the interface of Intellectual Property and Trade is evident under Article 25.2 of the TRIPS Agreement
[26] in the form of concessions made in respect of textiles.

The TRIPS Agreement also establishes a binding, transparent and rules based dispute settlement mechanism. The WTO
Understanding on the Rules and Procedures Governing the Settlement of Disputes enforces the commitments made by WTO Members under TRIPS. The availability of a binding dispute settlement mechanism to enforce obligations under TRIPS helps to ensure that exporters from any member state can continue to expand and diversify trading opportunities in intellectual property and value-added products. Further, the agreement has created a transparency mechanism i.e., each WTO member is required to provide details of their national intellectual property laws and systems, and to answer questions about their intellectual property systems.[27]

The relationship between intellectual property and international trade has legal consequences, namely that intellectual property, under present WTO/GATT setup, may not be considered in isolation. In this perspective trade rules are not necessarily the same that have historically been and now under TRIPS Agreement the GATT principles of international trade are being applied to intellectual property. “In a way it can be said that TRIPS model of intellectual property is very much one of individual property rights freely assignable in the market place. Moral rights have not been stressed. The TRIPS has very little to offer to secondary producers and end users, even independent local inventors, developers, artists and performers who are not antagonistic to the notion of property rights.”
[28]

The TRIPS Agreement is a ground-breaking document that offers new grounds to cover a field creatively related to international trade that is not covered in the GATT 1994. The agreement recognizes that widely varying standards in the protection and enforcement of intellectual property rights and the lack of a multilateral framework of principles, rules and disciplines dealing with international trade in counterfeit goods have been a growing source of tension in international economic relations. Rules and disciplines were needed to cope with these tensions. To that end, the agreement addresses the applicability of basic GATT principles and those of relevant international intellectual property agreements; the provision of adequate intellectual property rights; the provision of effective enforcement measures for those rights; multilateral dispute settlement; and transitional arrangements.

It can be safely concluded that in the present day context of globalized economy the TRIPS Agreement has, for once, shifted the center of magnitude of the international intellectual property regime, by making it subject to external forces. The theoretical principles of intellectual property have been modified to suit trade necessities. TRIPS is intended to maximize the contribution of intellectual property systems to economic growth through trade and investment. In other words, Intellectual Property Rights are invariably and inevitably getting affected by international trade policies and what the TRIPS provisions mirror is the intellectual property in international trade and the same fact has to be accepted as a daylight reality.
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* Lecturer in Law, Dr. Ram Manohar Lohia National Law University, Lucknow , India. He has previously served as Lecturer in Law at University of Delhi and National Law University, Jodhpur. He has been actively involved in research and writings in the field of Intellectual Property Law. He has been member of Chair in IPR at the National Law University Jodhpur established by Ministry of Human Resource Development, Government of India. He has also coordinated a National workshop on Copyright and has presented research papers at several national conferences and seminars. In May 2008 he was invited by Albert-Ludwigs University, Freiberg, Germany to present a research paper in “Indo-German Conference on IPR”. During his visit to Germany he also participated in round – table meet on “Innovation in India: Current Policy and Trends” organized by the BMW Foundation. Again, he visited the European Patent office (EPO), Munich, and participated in the deliberations on “EC-ASEAN Intellectual Property Rights Co-operation Programme.
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References:
[1] The acronym “TRIPS” appeared for the first time in GATT document MTN.GNG/NG11/10 of November 30, 1988, paragraph 14.
[2] Prior to the TRIPS, IPRs were principally regulated at international level by a number of treaties administered by World Intellectual Property Organization (WIPO). For example, two earlier WIPO administered treaties i.e. Berne Convention on Literary and Artistic Works (1971) and Paris Convention on Industrial Property (1967) covered areas of copyright and industrial property respectively.
[3] Though Berne and Paris Conventions already had certain enforcement provisions but they were general in nature and mainly depended on existence of national laws. See Berne Convention, Articles 5.2, 6bis.3, 10bis.1, 13.3 and 16; Paris Convention, Articles 9, 10 and 13ter.
[4] Article 2
[5] Article 5
[6] Article II
[7] The TRIPS Agreement, Article 3.1
[8] Article 1.2
[9] The TRIPS Agreement, Article 4
[10] Preamble to the TRIPS Agreement can be referred here. Para 1to the preamble reads: “Desiring to reduce distortions and impediments to international trade, and taking into account the need to promote effective and adequate protection of intellectual property rights, and to ensure that measures and procedures to enforce intellectual property rights do not themselves become barriers to legitimate trade”.
[11] Para 2 (a) to the preamble reads:
“Recognizing, to this end, the need for new rules and disciplines concerning:
the applicability of the basic principles of GATT 1994 and of relevant international intellectual property agreements or conventions
[12] See Paris Convention, Articles 1.2, 4, 7bis and 8
[13] WT/DS50/R, of September 5, 1997. Later on Appellate Body upheld two of the Panel’s findings and reversed one (see WT/DS50/AB/R, of December 19, 1997).
[14] Paul Goldstein, International Copyright: Principles, Law, and Practice, Oxford University Press, New York, 2001, p.47, para. 2.3
[15] The E-Commerce Directive (2000/31/EC); and the InfoSoc Directive (2001/29/EC).
[16] The two international treaties administered by WIPO viz. WIPO Copyright Treaty (WCT) and WIPO Phonograms and Performances Treaty (WPPT) form part of WIPO’s ‘Digital Agenda’ and provide for the protection of copyright and related rights on internet.
[17] Article 6bis of Berne Convention
[18] Article 9.1 of the TRIPS Agreement exempts WTO Members from rights and obligations under Berne Convention in respect of Protection of Moral Rights of the authors.
[19] This position is based on the view that moral rights can not be waived by the author. Although there is a popular tendency to view moral rights as absolute, legislation in only a few countries follow this extreme. France, for example, recognizes these rights as “perpetual, inalienable and imprescriptibly”. (France, Intellectual Property Code Article L 121-1).
[20] Article 29.1 of the TRIPS Agreement can be referred here.
[21] In most of the Patent legislations throughout the world the right to apply for a Patent belongs to the owner of the invention i.e. the inventor himself, or any one who can claim the invention from him. Most inventions are made by employees, as part of their job. In such cases the employer owns the invention and can apply to patent it, although he needs the inventor’s signature.
[22] See WIPO document WIPO/GRTKF/IC/2/9, of December 3, 2001: “….patent law is not necessarily about protection of inventors, but about appropriating inventions.”
[23] The TRIPS Agreement , Article 22.1

[24] See Council for Trade-Related Aspects of Intellectual Property Rights, Communication from Bulgaria et al. 6, IP/C/W/204 (Sept. 18, 2000).
[25] The TRIPS Agreement, Article 24.4 permits the continued use of Geographical Indications in good faith, or even sometimes in bad faith, when used before a specified date i.e. April 15, 1994. (the date when the Agreement was signed in Marrakesh).
[26] The TRIPS Agreement, Article 25.2
[27] The TRIPS Agreement, Article 63
[28] Autar Krishen Koul, The General Agreement on Tariffs and Trade (GATT)/World Trade Organization (WTO) Law Economics And Politics, Satyam Books, New Delhi, 2005, Pp. 480, 481.

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