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 efforts 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

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

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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 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.

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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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TRIPS AGREEMENT

BACKGROUND AND HISTORY

In 1944, for the first 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 Tariffs 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 refining the international trade and tariff rules. The first five rounds

exclusively concentrated on the tariffs. 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 affect the member nation’s economy. Further, the seventh round

discussed tariff and non-tariff measures. The last GATT round was the

Uruguay Round (1986-1994). The Uruguay Round, for the first time

introduced discussions on trade related to agriculture, services and IPR. After

long discussions and complex negotiations, finally in 1994, WTO was 4

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established. WTO became effective 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 World’s 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;

b) National Treatment: Treating one’s own nationals and foreigners equally.

Need of TRIPS

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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 effective 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 effective 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 flexibility 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.

To fulfill 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

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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 different member nations,

WTO provided for different transition time periods in different 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 ratification 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.

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

effect 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)

Layout-designs of Integrated Circuits

Undisclosed Information (including Trade Secrets and Test Data)

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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 first 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

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

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Member. Each of the main elements of protection is defined, 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, first,

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 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 10

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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 effectively 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 Agreement, the main elements of protection are defined, 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

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

that right holders can effectively 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.

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 different 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 specifically 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 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 offered 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 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

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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 fixation, the

reproduction of fixations, and the rebroadcasting by wireless means of

broadcasts, as well as the communication to the public of television

broadcasts of the same.

5.2 TRADEMARKAny 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, figurative 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 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 indefinitely.

5.3 GEOGRAPHICAL INDICATIONS15

TRIPS AGREEMENT

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 fields of technology,

provided 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

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member nations have to provide protection for plant varieties either by

patents or by an effective sui generis system or by any combination thereof.

The term of protection available is usually twenty years counted from the

filing 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 conflict with a normal

exploitation of the patent and do not unreasonably prejudice the legitimate

interests of the patent owner, taking account of the legitimate interests of

third parties.

Article 31 of the Agreement has provisions for allowing the grant a

compulsory license for pharmaceuticals by the government of a member

nation without the 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;

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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 define “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 significantly differ from known

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 filing of application for lay-out designs,

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however, member nations may limit the duration of protection up to fifteen

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 offer 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 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 offices, 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

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which IPR holders can seek effective 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 effective 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

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 effective 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

notified and given opportunity to be heard.

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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

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

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or otherwise make available legal texts such as laws and judicial decisions.

The provisions related to dispute settlement and prevention are governed by

the 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, final judicial decisions, etc. pertaining to the

Agreement, should that be decided upon. Member nations are obligated to

furnish applicable rules or decisions, or sufficient details about them, at the

request of member nations who reasonably believe their rights may be

affected. Confidential 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 (WTO’s procedure for resolving the trade quarrels) also apply

to consultations and the settlement of disputes under the Agreement except

as otherwise specifically provided. Article XXIII of the GATT 1994 provides for

three types of cause of action (a set of facts sufficient to justify a right to

sue) in GATT dispute

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settlement: “violation”, “non-violation” and “situation”.

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 five years (i.e. up till 2000) to make

their national laws compliant with TRIPS. An additional grace period of five

years (i.e. up till 2005) was given to the developing countries to introduce

product patent protection in those fields 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 affords 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 field 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 member nation where the patent protect was sought by the

applicant for the reason of invention being not patentable.

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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 effect

from 1st 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.

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

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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

affordable 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 firms 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 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 trans‐border 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 most‐favoured nation obligation. The United Nations’ World

Intellectual 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 27

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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 Organization’s (WTO’s) 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 firms.

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 firms from member countries are

dissatisfied with the level of IPR protection afforded to their innovations, then

disputes between the innovating firm’s host country and the offending

country are handled through the WTO’s Dispute Settlement Understanding

(DSU). The DSU allows for cross‐agreement 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 Tariffs and Trade (GATT).

The introduction of the TRIPS Agreement into the WTO marked a significant

departure for multilateral trade agreements; the focus of a major agreement

was a nontrade issue for the first 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

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and to reduce barriers and trade‐distorting 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 developed‐country markets for manufactured and

agricultural products. Developed countries viewed intellectual property as

important components of their future industrial strategies, and were

dissatisfied with the level of IPR protection in the markets of many of their

trading partners. This “capture” of the WTO by developed‐countries’

innovating firms 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‐enhancing effects within the confines of neoclassical trade theory

through gains from trade. Deardorff (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 benefit 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

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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 significant relationship cannot be identified, then the

effectiveness of the TRIPS Agreement is uncertain.

The TRIPS Agreement came into effect with the formation of the WTO in

1995. Developing and least‐developed 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 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 first is the

extension of protection for products that are defined 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

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that would authorize payments from commercializing firms 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 firms

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 WTO’s DSU does not

automatically result in the imposition of penalties on member countries that

do not fulfill 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

efforts 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 affect the

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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 flavoured by the existence of the TRIPS

Agreement. Both parties know that the TRIPS Agreement allows for punitive

retaliatory measures against an offending member country, and defendant

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 firms pressured the South

African government to repeal legislation that allowed parallel importation of

HIV/AIDS medication from lower‐price countries. Though the TRIPS

Agreement allows for parallel importation of medications under specific

circumstances, the significant uncertainty surrounding a potential WTO

dispute panel’s interpretation of the Agreement allowed pharmaceutical‐

industry negotiators to use the threat of TRIPS Agreement retaliation to

influence South African legislators.

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The implementation of a levy on genetically‐modified soybean seeds in Brazil

is another example in which a negotiated agreement may have averted a

formal WTO case. A large share of Brazil’s herbicide‐tolerant soybean crop is

grown from farmer‐saved seeds, for which no royalties are paid to innovating

firms. 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 IP‐owning firms (The Western Producer, 2005). Farmers can

either pay a levy on certified seeds at the point of purchase and receive a

certificate of authenticity, or can deliver their crops to points of sale (usually

elevators) and be charged the levy if they cannot produce a certificate of

authenticity. These cases speak to the potential for the TRIPS Agreement to

act as a credible threat in disputes over IPR protection.

The effects of the TRIPS Agreement on developed and developing countries

are expected to differ because many of the TRIPS Agreement’s 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 significant for developing than for developed countries.

Another important reason for separating the effects by geography is that the

TRIPS Agreement, as part of the WTO set of agreements, is subject to the

DSU. Countries that do not fulfill their obligations may be subject to punitive

barriers on their exports to other WTO member countries. As such, the

effectiveness of the TRIPS Agreement in determining the level of IPR across 33

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regions can provide some information on the effectiveness of the TRIPS

Agreement as a coercive threat. Countries that have a lot to lose from trade

retaliation may respond differently than those with little to lose.

The effects of the TRIPS Agreement on IPR protection in Europe are positive,

but not significant. 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 effect of the TRIPS

Agreement is larger for Europe than the estimated effect for developed

countries.

The results for North America, consisting of Canada and the US, are also

insignificant. The estimated effects of the TRIPS Agreement on countries in

Central and South America are large and highly significant. Changes in

deterministic microeconomic (education, R&D, governance) and

microeconomic (GDP) variables have had positive and significant effects on

IPR protection, and the presence of the TRIPS Agreement has significantly

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

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degree of trade dependence that many Central and South American

countries have on the US (the chief proponent of the 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 significant

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 significance and magnitude.

No Sub‐Saharan African countries are bound by TRIPS until 2013, with the

exception of South Africa. The estimated coefficient for Sub‐Saharan Africa is

positive, but is insignificant; this suggests that the TRIPS Agreement has not

significantly affected 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 significant effect on

protection of IPR. It is possible that South Africa’s geographic and political

positioning (neighboring countries that have weak IPR protection and are not

bound by the TRIPS Agreement) have offset any coercive effects that the

WTO Agreements might have on other (non Sub‐Saharan) countries.

The effect of the TRIPS Agreement on countries in Oceania is not significant.

This result is anticipated because this aggregation includes only Australia

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and 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 significant effects 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 significant effects on IPR protection over its

implementation period, but the significance of these effects depends on

countries’ development levels. We find that disaggregating the panel of

countries by level of development yields different results for developed and

developing countries, even when controlling for per capita income. The TRIPS

Agreement has had significant effects on IPR protection in developing

countries, but has not measurably affected 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.

We also find that the effects of the TRIPS Agreement vary across regions.

The TRIPS Agreement has had positive and significant effects on IPR

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protection in Central and South America, in Asia and in North Africa and the

Middle East. The TRIPS Agreement has not significantly affected protection of

IPR in Sub‐Saharan Africa, however the only Sub‐Saharan 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 Agreement’s 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 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 significantly than others. We

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observe that regions with high export dependence on developed countries

have made significant changes to their IPR protection system.

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CONCLUSIONS AND SUGGESSTION:

The poorest countries are unlikely to administer and enforce the

required TRIPS standards effectively for some time to come. It would

be beneficial to increase financial 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 financing administration efforts in the poorest countries.

TRIPS could be clarified as to the minimum requirements for plant

variety rights. Poor agricultural economies need to maintain a farmer’s

privilege without significantly reducing the benefits 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 in sharing benefits from such inventions. International

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benchmarks in this regard would be informative for implementing

policies for protecting genetic resources.

More attention could be paid to establishing sufficient market

segmentation in certain goods (medicines, environmental technologies,

education materials, and the like) that providers would be willing to offer

steep discounts to authorities and consumers in poor countries. Thus,

some re-visitation of Article 6 (exhaustion) could be beneficial, 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 beneficial for TRIPS to be made more

explicit about allowable scope for fair use in digital works.

It is premature to negotiate stronger patent eligibility requirements in

life forms (Article 27.3) and that language could be clarified to make

such patent requirements a matter of national policy.

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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 difficulties 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 efficient 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.

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,

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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 Understanding

FDI: Foreign Direct Investment

GATT: General Agreement on Trade and Tariff

IMF: International Monetary Fund

IP: Intellectual Property

IPR: Intellectual Property Rights

TRIPS: Trade Related Aspects of Intellectual Property

WB: World Bank

WIPO: World Intellectual Property Organization

WTO: World Trade Organization

EU: European

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REFERENCES:

TRIPS Agreement: An Overview : prepared by Ashish Jogi and Deepti Nigam

TRIPS and Development: sida

The Effects 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 10th Anniversary of the TRIPS Agreement held on 23rd and 24th June 2004 : European Commission, DG Trade

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