university of jammu -...

WTO AND DEVELOPING COUNTRIES: A COMPREHENSIVE

STUDY WITH SPECIAL REFERENCE TO TRADE RELATED

ASPECTS OF INTELLECTUAL PROPERTY RIGHTS

THESIS

SUBMITTED TO THE UNIVERSITY OF JAMMU

FOR THE AWARD OF DEGREE OF

DOCTOR OF PHILOSOPHY

IN LAW

SUPERVISOR : SUBMITTED BY:

PROF. B.P.SINGH SEHGAL NAVDEEP KOUR SASAN Professor of Law & Registration Number:

Former Head & Dean RA/Ph.D./1217/10/644-46

FACULTY OF LAW

UNIVERSITY OF JAMMU

JAMMU-180006

2011

FACULTY OF LAW

UNIVERSITY OF JAMMU

CERTIFICATE

This is to certify that NAVDEEP KOUR SASAN, a registered candidate in the Faculty of

Law, University of Jammu, Jammu for the Degree of Doctor of Philosophy under my

supervision has completed her thesis entitled “WTO AND DEVELOPING COUNTRIES:

A COMPREHENSIVE STUDY WITH SPECIAL REFERENCE TO TRADE

RELATED ASPECTS OF INTELLECTUAL PROPERTY RIGHTS”. The work is

worthy of consideration for the award of Ph.D. degree in Law and has not been submitted in

part or in full for any other degree in this or any other University.

I further certify that:

i. That the thesis embodies the work of the candidate;

ii. That the candidate worked under me for the period required under Statutes;

iii. That the candidate has put in the required attendance in the department and;

iv. That the candidate has fulfilled the statutory conditions as laid down in Section 18.

Date: 25.07.2011 Prof. B.P.SINGH SEHGAL Professor of Law & Former Head & Dean (Supervisor)

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ACKNOWLEDGMENTS

All the achievements speak of silent but predominant forces at their back and no one can

claim fulfillment of one’s aim in isolation. I take this opportunity to reserve my indebtedness

for all the help received in accomplishment of this compendium to my highly esteemed

supervisor Prof. B. P. Singh Sehgal, Professor of Law & Former Head & Dean, Faculty of

Law, University of Jammu. Words do not suffice to express my profound indebtedness and

deep sense of gratitude to my revered teacher for his dynamic and untiring guidance,

meticulous supervision and incessant support, constructive criticism, useful suggestions and

encouragement all along the research period. Despite his busy engagements, he found out the

time to read through long-winded versions of this work and provided invaluable advice and

information.

With the feeling of immense pleasure and proud privilege, I owe my thankfulness to Prof.

V.P.Magotra, Head and Dean, Faculty of Law, University of Jammu, for extending all

facilities when required and deserve my acknowledgments for his valuable suggestions.

I owe my gratitude and special thanks to Prof. Kulwant Singh, Director, The Law School,

and former Directors of the Law School, for extending his full cooperation and support

during the course of my work.

I am deeply grateful to Professor Navalgund, National Law School of India University,

Nagarbhavi, Bangalore, for providing me the valuable and relevant material to complete my

research.

I am also thankful to and the library staff of the Department of Law, Department of

Economics and The Law School, University of Jammu for facilitating me in searching the

pertinent material for my work.

I take this opportunity to record my heartiest gratitude to my family members for their love,

affection, emotional support and abiding faith. I will fail in duty if I do not pay my heartiest

thanks to my husband S. Amardeep Singh Raina and my loving daughter Prakriti, who gave

me full support & encouragement in my work and were victims of my ignorance during the

task.

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Last but not the least, I dedicate this work to my beloved mother, Late Smt. AgyaKaur Sasan,

who had always appreciated my capabilities and encouraged me to undertake this task, so as

to accomplish my goals. She will always remain a source of inspiration for me forever.

Dated: 25.07.2011 Navdeep Kour Sasan

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ACRONYMS

AIDS: Acquired Immune Deficiency Syndrome

Art. : Article

BIRPI: Bureaux Internationaux Reunis pour de la Propriete Intellectuelle

CP: Contracting Party

DDA: Doha Development Agenda

DNA: Deoxyribonucleic Acid

DSB: Dispute Settlement Body

DSU: Dispute Settlement Understanding

EC: European Community

EEC: European Economic Commission

EMR: Exclusive Marketing Right

EPC: European Patent Convention

EU: European Union

GATS: General Agreement on Trade in Services

GATT: General Agreement on Tariffs and Trade

GI: Geographical Indication

GSP: Generalized System of Preferences

HIV: Human Immunodeficiency Virus

IBRD: International Bank for Reconstruction and Development

ICIC: International Committee on Intellectual Cooperation

IDA: International Depository Authority

IMF: International Monetary Fund

IP: Intellectual Property

IPEA: International Preliminary Examination Authority

IPIC: Intellectual Property in Respect of Integrated Circuits

IPR: Intellectual Property Rights

ISA: International Searching Authority

ITO: International Trade Organization

LDC: Least Developed Country

MFN: Most Favoured Nation

MTN: Multilateral Trade Negotiation

NCE: New Chemical Entity

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NG: Negotiating Group

NGO: Non-Governmental Organization

NIEO: New International Economic Order

NT: National Treatment

OECD: Organization for Economic Co-operation and Development

PCT: Patent Co-operation Treaty

R&D: Research and Development

TB: Tubercles Bacillus

TNC: Trade Negotiations Committee

TRIMS: Trade Related Investments Measures

TRIPS: Trade Related Aspects of Intellectual Property Rights

UCC: Universal Copyright Convention

UN: United Nations

UNCTAD: United Nations Conference on Trade & Development

UNESCO: United Nations Educational, Scientific and Cultural Organization

UNIDO: United Nations Industrial Development Organization

UPOV: Union Internationale pour la protection des obtentions Vegetates

USPTO: United States Patent and Trademark Office

UR: Uruguay Round

WCT: WIPO Copyright Treaty

WHO: World Health Organization

WIPO: World Intellectual Property Organization

WTO: World Trade Organization

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LIST OF CASES

1. Argentina-Measures Affecting Imports of Footwear, Textiles, Apparel and other items,

Appellate Body Report, WT/DS 56/AB/R and Corr.1, adopted 22 April 1998, DSR

1998.

2. Bajaj Auto Ltd. v. TVS Motor Company Ltd. (2008) ILLJ 726 Mad; MIPR 2008 (1) 217.

3. Canada-Measures Affecting the Export of Civilian Aircraft, Appellate Body Report,

WT/DS 70/AB/R, adopted August 20, 1999, DSR 1999.

4. Canada-Patent Protection of Pharmaceutical Products, WT/DS 114/R, 17 March 2000.

5. Darcy v. Allein, (1602), 1 W. P. C. Moore K. B. 671.

6. Davoll et al. v. Brown, CCD Mass.7 F.Cas.197, 1845.

7. Diamond v. Chakrabarty, 447 US 303(1980).

8. EC Measures concerning Meat and Meat Products (Hormones), The DSU Appellate

Body Report, WT/DS26/AB/R, WT/DS 48/AB/R, adopted 13 February 1998, DSR

1998.

9. Fiest Publications, Inc. v. Rural Telephone Service Co, Inc., 499 U.S. 340 (1991).

10. Glaxo Group Ltd. v. Patents Act. (2009), IEHC 277.

11. India-Patent Protection for Pharmaceutical and Agricultural Chemical Products,

(India-Patent, US) WT/DS 50/AB/R.

12. India – Patent Protection for Pharmaceutical and Agricultural Chemical Products,

(India- Patents, EC) WT/DS 79/R.

13. India-Quantitative Restrictions on Imports of Agricultural, Textile and Industrial

Products, WT/DS90/AB/R, adopted 22 September 1999, DSR 1999.

14. KSR International Co v. Teleflex Inc. et al. 550 US. 398(2007).

15. Novartis AG & Anr. v. Union of India. (2007) 4 MLJ 1153.

16. Pfizer, Inc. v. Apotex, Inc. United States Court of Appeals of Federal Circuit 2006-

1261.

17. Turkey- Textiles, (Turkey- Restrictions on Imports of Textiles and Clothing Products),

WT/DS34/R, 31 May 1999, available at:

www.worldtradelaw.net/reports/wtopanels/turkey-textiles (panel).pdf.

18. United States-Measures Affecting Imports of Woven Wool Shirts and Blouses from

India , Appellate Body Report, WT/DS33/AB/R and Corr. 1 adopted on May 23, 1997,

DSR 1997,

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TABLE OF CONTENTS Page No.

ACKNOWLEDGMENTS i

ACRONYMS iii

LIST OF CASES v

INTRODUCTION 1

1. SOCIAL RELEVANCE AND PRACTICAL UTILITY OF STUDY 2 2. OBJECTIVES OF RESEARCH STUDY UNDERTAKEN 4 3. HYPOTHESIS 5 4. RESEARCH METHODOLOGY 5

4.1 Historical Method 5 4.2 Documentation Method 6 4.3 Structural Functional Method 7 4.4 Analytical Evaluative Method 7 4.5 Statistical Method 7

5. FOCUS OF STUDY 8

CHAPTER I: WORLD TRADE ORGANIZATION AND TRIPS:

A HISTORICAL PERSPECTIVE 12

1. INTRODUCTION 12 2. CONCEPT OF PROPERTY VIS-À-VIS INTELLECTUAL PROPERTY 15 3. SCOPE OF INTELLECTUAL PROPERTY 19 4. GROWTH OF TECHNOLOGY AND GLOBALIZATION:1850-1947 20 5. PROTECTION MECHANISM AT INTERNATIONAL LEVEL 23

5.1 Paris Convention for Protection of Industrial Property 23 5.2 Berne Convention for Protection of Literary and Artistic Works 25

5.2.1 Developing Countries and Berne Convention 26 5.3 Madrid Agreement Concerning the International Registration of Marks 28 5.4 International Convention for the Protection of New Varieties of Plants (U.P.O.V) 30 5.5 Patent Co-operation Treaty (PCT) 32 5.6 The Budapest Treaty on the International Recognition of the Deposit of Micro-Organisms for the Purpose of Patent Procedure 33 5.7 Madrid Agreement for the Repression of False or Deceptive Indication of Sources of Goods 34 5.8 Lisbon Agreement for the Protection of Appellations of Origin and their International Registration 35 5.9 Universal Copyright Convention (UCC) 36 5.10 International Convention for Protection of Performers, Producers of Phonograms and Broadcasting Organizations 37 5.11 WIPO Copyright Treaty (WCT) 39 5.12 WIPO Performances and Phonograms Treaty 40 5.13 Treaty of International Registration of Audiovisual Works 40 5.14 Hague Agreement Concerning the International Deposit of Industrial Designs 41

5.15 Locarno Agreement on Establishing an International Classification For Industrial Designs 42

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6. WORLD INTELLECTUAL PROPERTY ORGANIZATION (WIPO) AND WTO 42

7. LEAGUE OF NATIONS AND INTELLECTUAL PROPERTY 44 7.1 League of Nations and Copyright 46

8. GENERAL AGREEMENT ON TARIFFS AND TRADE (GATT) 48 8.1 Origin of GATT 49 8.2 Equality of Treatment 54 8.3 Reciprocity 54 8.4 Functions of GATT 56

9. UNITED NATIONS CONFERENCE ON TRADE AND DEVELOPMENT (UNCTAD) - ANOTHER FACET OF DEVELOPING COUNTRIES 59

10. URUGYAY ROUND OF GATT AND INTELLECTUAL PROPERTY 62 10.1 Uruguay Declaration, 1986 64 10.2 Trade Negotiations Committee 66 10.3 Chronology of Events Leading to Launch and Conclusion of Uruguay Round Negotiations 66

11. THE FINAL ACT OR MARRAKESH DECLARATION ESTABLISHING THE WORLD TRADE ORGANIZATION (WTO) 68 11.1 Agreement Establishing World Trade Organization (WTO) 69 11.2 Scope of the WTO 70 11.3 Functions of the World Trade Organization 71 11.4 Promotion of Trade Without discrimination 71 11.5 The WTO Structure 72 11.6 Status of the WTO 73 11.7 Decision-Making Process and Amendments 73

12. DIFFERENCE BETWEEN GATT AND WTO 75 13. VOYAGE OF TRIPS FROM URUGUAY TO WTO 76 14. MINISTERIAL CONFERENCES AFTER THE ESTABLISHMENT OF WTO 88

14.1 Singapore Ministerial Declaration 88 14.2 Geneva Ministerial Declaration 89 14.3 Seattle Ministerial Conference 91 14.4 Doha Ministerial Conference 92 14.5 Cancun Ministerial Declaration 93 14.6 Hong Kong Ministerial Conference 94 14.7 Geneva Ministerial Conference 94 14.8 Current Position 94

15. DOHA ROUND AND TRIPS 95

CHAPTER II: EVOLUTION AND ANALYSIS OF TRIPS AGREEMENT 98

1. ORIGIN AND EVOLUTION OF TRIPS 98 1.1 Disagreements between Developed and Developing Countries on IPRs 99 1.2 IPRs under GATT 102

2. TRADE RELATED ASPECTS OF INTELLECTUAL PROPERTY RIGHTS (TRIPS) 110 3. PURPOSE OF TRIPS AGREEMENT 112 4. GENERAL PROVISIONS AND BASIC PRINCIPLES 121

4.1 Nature and Scope of Obligations 121 4.2 Conventions on Intellectual Property 125 4.3 National Treatment 126

4.3.1 Exceptions to National Treatment 127 4.4 Most Favoured Nation Treatment 130

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4.4.1 Exceptions to MFN Principle 130 4.5 Multilateral Agreements on Acquisition or Maintenance of Protection 132 4.6 The Doctrine of Exhaustion of Rights 133 4.7 Objectives of TRIPS Agreement 134 4.8 Principles of TRIPS Agreement 136

5. SUBJECT MATTER OF INTELLECTUAL PROPERTY RIGHTS 138 5.1 Copyright and Related Rights 138

5.1.1 Computer Programs and Data Compilation 139 5.1.2 Rental Rights 141 5.1.3 Term of Protection 142 5.1.4 Limitations and Exceptions to Exclusive Rights in Copy righted Works 142 5.1.5 Related Rights or Neighbouring Rights 143

5.2 Trademarks 146 5.2.1 Rights Conferred by Trademarks to Owners 148 5.2.2 Exceptions or Limitations to Exclusive Right 149 5.2.3 Term of Protection of Trademark 149 5.2.4 Conditions for Subsistence of Trademark 149 5.2.5 Licensing and Assignment of Trademarks 150

5.3 Geographical Indications 150 5.3.1 Additional Protection for Geographical Indications for Wines and Spirits 152 5.3.2 International Negotiations- Exceptions to obligations 153

5.4 Industrial Designs 154 5.5 Patents 157

5.5.1 Rights Conferred to Patent Owner 160 5.5.2 Disclosure of Patent 161 5.5.3 Exceptions to Exclusive Rights Conferred 161 5.5.4 Government use, Compulsory Licensing and Dependent Patents 162 5.5.5 Revocation or Forfeiture of a Patent 165 5.5.6 Term of Protection of Patents 165 5.5.7 Burden of Proof in Process Patents 165

5.6 Layout-Designs (Topographies) of Integrated Circuits 166 5.6.1 Scope of Protection of Layout Designs 167 5.6.2 Term of Protection of Layout designs 168

5.7 Protection of Undisclosed Information 168 5.8 Control of Anti-Competitive Practices in Contractual Licences 170

6. ENFORCEMENT OF INTELLECTUAL PROPERTY RIGHTS 171 6.1 General Obligations Regarding Enforcement of TRIPS Agreement 172 6.2 Civil and Administrative Procedures and Remedies 174

6.2.1 Fair and Equitable Procedures 174 6.2.2 Injunctions 175 6.2.3 Damages 175 6.2.4 Other Remedies for Infringement 176 6.2.5 Right of Information 176 6.2.6 Indemnification of the Defendant 176 6.2.7 Administrative Procedures 177

6.3 Provisional Measures 177 6.4 Special Requirements Related to Border measures 178 6.5 Criminal Procedures 182

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7. ACQUISITION AND MAINTENANCE OF INTELLECTUAL PROPERTY RIGHTS 182

8. DISPUTE PREVENTION AND SETTLEMENT 183 9. TRANSITITIONAL ARRANGEMENTS FOR IMPLEMENTATION OF

TRIPS AGREEMENT 186 9.1 Least Developed Countries 187

10. INSTITUTIONAL ARRANGEMENTS 188 10.1 Review and Amendment 191

CHAPTER III: PATENTS AND TRIPS 193

1. ORIGIN OF PATENTS 194 2. PATENT PROTECTION 195 3. INTERNATIONAL PROTECTION OF PATENTS 197

3.1 Patent Laws under Pre-TRIPS and Post-TRIPS Era 198 3.1.1 Paris Convention for the Protection of Industrial Property 198 3.1.2 TRIPS Agreement and Paris Convention 200

4. INNOVATION AND PATENTABILITY 201 4.1 Patentability criteria in Europe 201 4.2 Patentability criteria in United States 202 4.3 Patentability in India 205

5. EXCEPTIONS TO PATENTABILITY 208 6. ADEQUATE DESCRIPTION OF COMPLETE SPECIFICATION 212 7. TRIPS AGREEMENT AND NEW USES OF KNOWN SUBSTANCES 213

7.1 New use of known substances in India 213 8. DEVELOPING COUNTRIES AND PATENT LAWS PRIOR TO TRIPS AGREEMENT 215

8.1 Inventions Relating to Pharmaceuticals 215 8.1.1 Position of International Pharmaceutical Industry 217

8.1.1.1 Discovery of Drugs(Medicines) 218 8.1.1.2 Drug Production 218 8.1.1.3 Research and Development (R&D) 222 8.1.1.4 International Trade in Pharmaceuticals 226 8.1.1.5 Consumption of Medicines 230 8.1.1.6 Access to Essential Medicines 236 8.1.1.7 Pharmaceuticals and Post-TRIPS Period in India 237

8.2 Rights of Patentees 244 8.3 Burden of Proof 245 8.4 Term of Patent 245

9. PATENTS AND DOHA DECLARATION 247

CHAPTER IV: GEOGRAPHICAL INDICATIONS AND TRIPS 252

1. CONCEPT OF GEOGRAPHICAL INDICATIONS 252 2. GEOGRAPHICAL INDICATIONS AND TRADEMARKS 257 3. PRE-TRIPS PROTECTION OF GIs AT INTERNATIONAL LEVEL 258

3.1 Paris Convention for the Protection of Industrial Property and GIs 259 3.2 Madrid Agreement for the Repression of False Indications of Origin 261 3.3 Lisbon Agreement for the Protection of Appellations of Origin and their International Registration 262

4. BASIS FOR PROTECTION OF GEOGRAPHICAL INDICATION 266 5. TRIPS & GEOGRAPHICAL INDICATIONS OF ORIGIN 269

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6. SCRUTINY OF GIs UNDER TRIPS AGREEMENT OF WTO 271 6.1 Definition and General Protection of GIs 271 6.2 Added Protection of Wines and Spirits 273 6.3 Exemptions to GI Protection 275

7. POLICIES AND APPROACHES OF DEVELOPING COUNTRIES TO PROTECT GEOGRAPHICAL INDICATIONS 277

8. INDIA AND GEOGRAPHICAL INDICATIONS 280 8.1 GIs registered in India 282 8.2 Geographical Indications Act, 1999 283

9. GI DEVELOPMENTS AFTER TRIPS 287

CHAPTER V: DISPUTE SETTLEMENT UNDER TRIPS 289

1. GATT AND DISPUTE SETTLEMENT 290 2. GATT DISPUTE SETTLEMENT RULES AND PROCEDURE 292 3. OBJECTIVES OF CONSULTATION 294 4. CONSULTATIONS AND SETTLEMENT OF GATT DISPUTES 295 5. DEVELOPING COUNTRIES AND GATT DISPUTE SETTLEMENT 297 6. CONCEPT OF DISPUTE SETTLEMENT UNDER GATT 298

6.1 Locus Standi under GATT Dispute Settlement System 298 6.2 Specific Measures and Dispute Settlement 299 6.3 Discretionary Powers 299 6.4 Effect of Modification of Measures During Proceedings 299 6.5 Scope of Dispute Settlement Process 300 6.6 Withdrawal of Inconsistent Provisions 300 6.7 Non-Violation or Situation Complaints 300

7. URUGUAY ROUND AND DISPUTE SETTLEMENT UNDERSTANDING (DSU) 303

8. UNDERSTANDING ON THE RULES AND PROCEDURES GOVERNING SETTLEMENT OF DISPUTES UNDER WTO 304 8.1 Nature and Scope of Understanding 304 8.2 Procedure for Dispute Settlement up to Panel Proceedings 307

8.2.1 Consultations before Formal Request 307 8.2.2 Good Offices, Conciliation and Mediation 310 8.2.3 Panels and Complaints 311 8.2.4 Panel Procedure 315

8.3 Appellate Review Provisions 320 8.4 Enforcement Procedures 324

9. TRIPS AND DISPUTE SETTLEMENT UNDERSTANDING 329 10. CASE STUDY UNDER TRIPS 330

10.1 Case I: India-Patent Protection for Pharmaceutical and Agricultural Chemical Products 331

10.2 Case II: India – Patent Protection for Pharmaceutical and Agricultural Chemical Products 331

CHAPTER VI: CONCLUSION AND SUGGESTIONS 340

BIBLIOGRAPHY 361-372

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INTRODUCTION

Today, there are very few topics in International Trading System, which are as controversial

and challenging as that of Trade Related Aspects of Intellectual Property Rights (TRIPS).1

The TRIPS Agreement is a part of the World Trade Organization (WTO) which embodies

minimum standards for the protection of intellectual property rights at a global level. Despite

that, the controversy surrounds its content as the developing countries, which are members of

the WTO TRIPS, find the implementation and enforcement of such rights a very difficult

task, mainly due to lack of resources, skill and expertise in the subject. Although,

negotiations in the form of multilateral trade rounds, to some extent have been successful to

lessen the gaps between the developed and developing member nations, there still remains so

much to be achieved and negotiated. However, to say that the developing countries have not

achieved anything on the so called level playing field, it would be far from true. The

consequences which a developing country might face on violation of its obligations under the

Agreement, apply equally to the developed country, as is evident from the impartial

recommendations and rulings of the dispute settlement machinery, established under the

Dispute Settlement Understanding of the WTO.

Beginning from Paris Convention on Protection of Industrial Property, 1883 and the

conclusion of the WTO TRIPS Agreement, the legal regime on the subject of intellectual

property has expanded to an extent so as to include various areas that did not find any

reference under earlier international regimes protecting intellectual property rights. The

TRIPS Agreement covers subject matters like: copyrights, geographical indications,

industrial designs, integrated circuit layout designs, patents, trademarks and protection of

undisclosed information. Besides, the Agreement also supports sui generis protection for

other type of similar inventions not covered under it.

A major land mark in the international economic relations was the successful conclusion of

the controversial negotiations on the Agreement on Trade-Related Aspects of Intellectual

Property Rights (TRIPS). It was only after eight years (1986-94) of protracted negotiations

�� 1 Agreement on Trade-Related Aspects of Intellectual Property Rights, April 15,1994, Marrakesh Agreement

Establishing the World Trade Organization , Annex IC, Legal Instruments-Results of the Uruguay Round, 33

I.L.M(International Legal Materials, American Society of International Law) 1125,1197(1994) [hereinafter

TRIPS Agreement].

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that in 1994, the Uruguay Round (UR) of Multilateral Trade Negotiations (MTN) completed

successfully in the establishment of World Trade Organization (WTO) that finally came into

effect on January 1, 1995. At present WTO is the only international organization that deals

with the global rules of trade between nations. Its main task is to make the multilateral

trading system credible and transparent. It supports the trading member nations by acting as a

forum for such trade negotiations; by resolving trade disputes; by overseeing national trade

policies; by administering and implementing the multilateral and plurilateral trade agreements

which form part of WTO and by cooperating with other international institutions involved in

global economic policy making.

Of the 29 individual legal texts forming part of the WTO Agreements’, TRIPS, an

international treaty on the subject of intellectual property, is an attempt to slender the gaps

between the trading nations. TRIPS provide guidelines for the harmonization of intellectual

property laws in World Trade Organization. Member Countries, under the agreement, were

expected to bring changes within the transition period in their national laws for intellectual

property rights to strengthen the framework for protection of intellectual property rights.

In respect of each of the main areas of intellectual property covered by the TRIPS

Agreement, certain minimum standards are set out that every Member to the Agreement is

compulsorily required to comply with. The Agreement sets out these standards by requiring,

first, that the substantive obligations of the main conventions of the WIPO, the Paris

Convention and the Berne Convention, in their most recent versions must be complied with.

The TRIPS Agreement also contains provisions dealing with domestic procedures and

remedies for the enforcement of intellectual property rights and lays down certaingeneral

principlesapplicable to all intellectual property rights(IPRs) enforcement procedures. With

regards to dispute settlement between the Members regarding enforcement and

implementation of the TRIPS obligations, the Agreement refers to WTOs dispute settlement

procedures.

1. SOCIAL RELEVANCE AND PRACTICAL UTILITY OF THE STUDY:

All the nations of the world passing through different stages of development whether

developed, developing or least developed have to depend on each other to meet their

requirements and therefore, no country can remain in seclusion. The production and

consumption needs of a nation cannot be satisfied within the geographical limits or national

boundaries of a country. Trade creates structural changes in a country’s economic

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characteristics, properties and relationship and is the foundation of modern economic activity

and a stimulus to create surplus. Moreover, trade in goods or services which are specifically

intellectual creations, need protection against their infringement done by way of

counterfeiting, piracy, etc. The same can be prevented by enacting uniform laws

internationally and by their effective implementation.

The realization to carry on international trade in an effective and impartial manner, led to the

creation of General Agreement on Tariffs and Trade (GATT) in the late 1940’s, where the

trading nations can benefit from the existence of and adherence to multilaterally agreed set of

rules and procedures, and thereafter, the creation of a forum called World Trade Organization

(WTO). By entering into reciprocal and mutually advantageous arrangements aiming at

reduction of tariffs and other barriers to trade, the WTO provides a common institutional

framework for the conduct of trade relations among its Members in matters related to the

agreements and associated legal instruments included in Annexes to this Agreement, thereby

making all the multilateral agreements binding on all Member nations for bringing

transparency in the trade relations and also raising the standard of living of the people.

With developmental and welfare implications, this study becomes a meaningful exercise with

lot of social relevance and practical utility. In fact, World Trade Organizations’ Trade

Related Aspects of Intellectual Property Rights Agreement (WTO-TRIPS Agreement) has its

direct effect on the social-economic life of both the developed and developing countries.

Hence, an in depth study of its provisions and their implementation naturally assumes lot of

social significance and practical utility.

In this study a detailed analysis of TRIPS Agreement and incorporation of its provisions in

the national legislations of the Member countries with discussion on problems pertaining to

their implementation by them, especially those faced by the developing nations due to the

lack of any specialized knowledge in the field of intellectual property has been made. Besides

that historical aspect of its development has also been discussed so as to understand the

problems faced by the Member countries and the circumstances that necessitated its induction

in the WTO Agreements. Post-TRIPS developments especially, in the field of Patents,

Geographical Indications (GIs) and dispute settlement, which are the controversial areas in

the field of Intellectual Property (IP) law, have been reviewed to analyze the extent of

objectives actually achieved. In this connection, a literature survey has been conducted from

various sources including books, journals, articles, newspapers and original publications of

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the World Trade Organization and World Health Organization (WHO). Besides this the study

will contribute to the existing literature related to the WTO and will undoubtedly impart

information to people, students, researchers and policy formulators regarding the objectives,

achievements and implications of TRIPS Agreement for developing countries. In addition

to this, the utility of the study also lies in the fact that once the problems relating to its

implementation in the developing countries are discovered,on that basis, some suggestions

can be made and strategies can be chalked out by those countries so that they become equal

partners in the World Trade.

2. OBJECTIVES OF RESEARCH STUDY UNDERTAKEN:

The present research study on the topic titled “WTO and Developing Countries: A

Comprehensive Study with special reference to Trade Related Aspects of Intellectual

Property Rights” is pursued with certain objectives in mind so as to analyze various

provisions of TRIPS Agreement since 1995 in the context of developing countries. In order

to make the research study a meaningful exploration, the researcher plans to trace the

developments in the field of intellectual property rights by keeping in mind the following

major objectives which are as under:

1. To trace the developments in the field of intellectual property prior to GATT and

after the establishment of the WTO.

2. To critically summarize the debate on developing countries response to WTO

TRIPS Agreement.

3. To identify the basic concepts and principles of the TRIPS Agreement.

4. To study the relationship of the TRIPS Agreement with various WIPO

administered Conventions, especially those relating to Patents and Geographical

Indications.

5. To identify and study various International Treaties and Conventions on IPRs.

6. To identify the forms of intellectual property addressed by the TRIPS Agreement,

especially the Patents and Geographical Indications, and the basic rules those are

generally applicable to them.

7. To study and compare various national IPR legislations of developing countries.

8. To study TRIPS Agreements’ dispute settlement system and the extent up to which

this system has been successful in advancing the interest of developing countries.

9. To elicit and suggest measures deemed necessary for protecting the interests of

developing countries.

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In short the present research study is an attempt to make a comprehensive review of WTO

TRIPS provisions and developments since its operation and also to examine in light of this

review, its implications for developing countries necessitating them to make amendments in

their various legal and policy provisions, so that the Agreement may contribute effectively to

early progress towards the attainment of its objectives.

3. HYPOTHESIS:

The study is based on the hypothesis that WTO TRIPS Agreement has proved to be

successful to a greater extent in solving the intellectual property rights’ issues after their

insertion in the TRIPS Agreement, which happens to be one of the most sensitive matter

being pursued by the WTO, committed to solve the trade related problems not only of the

developed or industrialized nations but also of the developing ones.

In order to achieve aforementioned objectives of the study, the following hypothesis were

formulated:

1. Under the umbrella of WTO, the developing countries are more secure.

2. The inequities, whichever, exist between the developed and developing countries can

be removed by new rounds of negotiations.

3. Negotiations are the only means to liberally interpret the rules of WTO, and to

translate the interests and demands of developing countries.

4. The rules contained in TRIPS Agreement are flexible.

5. The TRIPS Agreement prescribes only the minimum standards for enforcement of

IPRs that generally allow right holders to protect their legitimate interests on

infringement, through the civil courts or administrative proceedings.

6. TRIPS Agreement dispute settlement system generally rely on the rules of WTO

Dispute Settlement Understanding and is more effective than GATT dispute

settlement.

4. RESEARCH METHODOLOGY:

Following research methods have been used for the purpose of conducting an in-depth study

regarding working of WTO TRIPS Agreement in relation to the trade problems of


4.1. Historical Method:

The study of historical documents viz., Conventions, Agreements etc., and reports has been

made as a part of methodology for the purpose of conducting research in the selected field.

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Historical method is used as an aid in visualizing society as a dynamic organization, as its

structure and functions are progressively growing and experiencing change and

transformation. With the help of this method, one can understand the social institutions and

organizations because no action in the society can take place without social background and

every such action should be studied with that background in view. In the opinion of P.V

Young “the historical method is induction of the members through research in the past and

social factors which have shaped the present.”2 In context of this study, historical background

of the WTO with special reference to intellectual property system has been traced since its

inception, and its objectives, activities, development in the form of amendments in

procedures, rules and new areas taken under TRIPS regime over various years have been

studied and accordingly their in-depth analysis has been done.

4.2. Documentation Method:

Another research method applied for the purpose of collecting relevant data pertaining to the

selected research problem is the documentation method. Documents can be created as well as

possessed by public and private agencies. These documents provide first-hand information

which otherwise would have been collected after a lot of labour. In the words of P.V. Young:

“The documentary sources of information are those which are contained in the published or

unpublished documents, reports, statistics, manuscripts, letters, and diaries and so on”. The

documents can be divided into two categories:

a. Personal Documents; and

b. Public Documents

Personal documents are those which are recorded by the individual himself. These contain his

personal view point on the problem under record. On the other hand, the data generated by

public corporations, autonomous bodies and other similar organizations are placed under the

category of convenience; these can also be divided into primary and secondary. Primary

documents can be contemporary e.g. letters, contracts, court records, census, tape recordings

and films. Retrospective primary records include personal diaries, autobiographies and

reports on institutional visits. Secondary sources include historical documents, statistical

research, research reports based on fields work and research using diaries or autobiographies.

In the present research, the data has been collected from the secondary sources including

�� 2 P.V Young, Scientific Social Survey and Research, New Delhi: Pentice Hall, (1975), at 148.

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books, journals, reports, newspapers, newsletters, periodicals and magazines which have been

accordingly analyzed, evaluated and interpreted.

4.3. Structural Functional Method:

Another method used for the purpose of research in this area of study is structural functional

method. Structure and function can be distinguished in terms of forms versus contents, how

something is done is the structure, what is done is the function.

Fred W. Riggs defined structure as “the basic pattern of activities which will repeat and

function as a result of any such pattern.”3 In this study structural functional method is

applied to analyze the basic structure of the WTO and activities of various countries

participating in this organization comprising of multilateral trade agreements, specifically

TRIPS Agreement. An analysis of WTO TRIPS provisions specifically relating to the patents,

geographical indications and dispute settlement system, with special reference to the

developing countries has been done. Functional pattern of TRIPS and its provisions have

been reviewed and analyzed in the context of developing countries and the performance

appraisal of various negotiations from Uruguay Round (UR) to the Doha Round has been

made to reach out logical conclusions.

4.4. Analytical Evaluative Method:

Analytical evaluative method has been used to make a comprehensive review of WTO TRIPS

and pre- TRIPS activities and developments, in order to assess and evaluate the performance

of each Agreement relating to intellectual property rights. The implications of the Uruguay

Round negotiations relating to IPRs on developing countries have been analyzed and

evaluated and the failure strategies and policies for such developing nations have been

worked out so that they become equal partner in the global trade. The Uruguay Round and

future proposal of world trade with special reference to developing countries have also been

analyzed and evaluated.

4.5. Statistical Method:

Besides this, Statistical method for conducting this study has also been used. Statistical data

regarding pharmaceutical industries of the developed countries and generic industries in the

�� 3 Fred W. Riggs, The Ecology of Public Administration, (1961) at 8283.

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developing countries has been collected through secondary sources, so as to analyze the

impact of product patenting in the field of pharmaceuticals upon the developing countries.

5. FOCUS OF STUDY:

The present study is an attempt to make a comprehensive review of the provisions of WTO

TRIPS Agreement, and the outcome of negotiations under Uruguay Round has been assessed

from the perspective of developing countries. The principal outcome of Uruguay Round

(covering new areas, especially IPRs), that is, the World Trade Organization, ushering a new

world trading order, has been evaluated. An attempt has therefore, been made to look into the

problems faced by the developing countries and suggest the measures and strategies for

future, in order to cope up with the challenges of new world trading order. Keeping in view

objectives of TRIPS viz., the adoption of minimum standards relating to the IPRs and

elimination of discrimination, it has been examined whether the participation of developing

countries in WTO TRIPS is in favour or against the interests of these countries.

Thus in order to conduct this analytical and evaluative study, the entire framework of the

present study has been divided into six chapters, besides bibliography. The Chapter scheme is

as under:

Chapter-I covers historical profile of the WTO. The main features of WTO along with its

general form of working have been made. Besides, provisions of the WTO and various

principles incorporated in the form of reciprocity, national treatment, and non-discrimination

have been analyzed. Concept of property in general and intellectual property in particular and

legal developments in the field intellectual property from 1850 to 1947, that is, introduction

of GATT, followed by the establishment of WTO in 1994 have also been examined.An

effort has been made to trace the development of intellectual property law at an international

level and the role played by the WTO in popularizing importance of this concept, especially

amongst the developing countries, not only for the sake of protecting interests of the title-

holders but also for safeguarding the economic interests of member countries on the whole.

Chapter-IIanalyses the legal provisions of the TRIPS Agreement.It also covers the

negotiations initiated between developed and developing countries during the most protracted

rounds of the GATT, i.e., Uruguay Round (UR), leading to the incorporation of TRIPS

Agreement in the arena of the World Trade Organization (WTO).This Chapter also highlights

certain policy obstacles and trade problems of developing countries and the effect on the

intellectual property rights from such trade between developed and developing countries. The

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complete analysis of all the provisions of the TRIPS Agreement has also been done in this

Chapter.

Emphatically, explaining the importance of implementation of patents under the TRIPS

Agreement, the discussion continues in Chapter-III explaining its impact upon the issue of

public health in the developing countries, especially after the extension of the product patent

protection to the pharmaceuticals. An analysis of the patent system prior to the TRIPS regime

and under TRIPS Agreement till the Doha Development Round has been done. Its outcome

and implications for developing countries have also been outlined. Under this part, study of

national legislations relating to the patents in India has also been done.

Chapter-IV focuses on the comprehensive review of another field of IPRs viz., Geographical

Indications and the implications of TRIPS Agreement on GIs. Geographical Indications

(GIs), an area completely new for the developing countries has also been analyzed for

developing better understanding in the field and for its practical utility. Further, debate on the

extension of GI protection to other goods, other than wines and spirits has also been dealt

with. Certain problems and prospects of developing countries have been stated and future

strategies for such nations have also been highlighted. In addition to this, an in depth analysis

of the new issues under Doha Development Agenda taken up under WTO have been

highlighted in this Chapter.

In Chapter-V, Dispute Settlement under the GATT and TRIPS has been analyzed, and

effectiveness and utility of the system for developing countries has been discussed. Dispute

settlement is an important facet in the implementation and enforcement of the TRIPS

Agreement. A comparison has been made with the GATT system of dispute settlement so as

to determine the effectiveness of the Dispute Settlement Understanding (DSU) in settling the

disputes. For that purpose, case study in the matters of non- implementation of the provisions

by the member countries and the approach adopted by the Dispute Settlement Body (DSB)

has been depicted.This Chapter also assesses the weaknesses under GATT Agreement as far

as the dispute settlement is concerned. Case study in context of developing countries has also

been done.

The last Chapter of this academic venture is concentrated on critical observations regarding

functioning of WTO with special reference to TRIPS Agreement, its provision and policies

towards developing countries. Itcontains conclusion and suggestions, which summarizes the

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entire treatise. Various shortcomings, in the nature of suggestions for the improvement have

been recommended in the concluding Chapter.

As the study is concentrated on the Trade Related Aspects of Intellectual Property Rights

(TRIPS), certain conclusions are drawn which makes it pertinent to recommend certain

suggestions to improve the system, which may be beneficial to the developing countries, in

particular.Inclusion of TRIPS Agreement under Annex 1C of the WTO, though opposed by

the developing countries initially at the time of negotiations under the Uruguay Round (UR),

was mainly due to significant increase in the international trade in goods during the period of

eighties. A number of industrialized countries felt threatened as a consequence of weak

protection extended to Intellectual Property Rights (IPRs) and also that it was adversely

affecting their rights. Hence they raised a voice in the UR to protect their IPRs. The

developing countries, since the inception of TRIPS agreement, were hesitant in adopting this

Agreement due to the fact that compliance with it required amendments and modifications in

their existing laws, where most of them lacked expertise due to the fact that some areas were

totally new to them. This Agreement insists upon the protection that countries must not give

to the intellectual property of its own, but also that of the others. The question if the

developing countries were so dissatisfied with the TRIPS Agreement, than they should not

have accepted the membership of the WTO. One major reason for this muted acceptance is

their interest & financial involvement, which led to the successful conclusion of the Uruguay

Round as a whole. They had an interest in the survival of the multilateral trading system and

its reinforcement. This survival depended upon a successful culmination of the Uruguay

Round, for which it was accepted that a major outcome regarding the intellectual property

laws was essential. Thus, in return of trading benefits the developing countries agreed to

transformation their Intellectual Property laws and to further strengthen the protection given

to IPRs. Concern of the developing countries regarding the negative impact of the TRIPS

upon the access to medicines, however, was met with the adoption of the Declaration on the

TRIPS Agreement and Public Health (Doha Declaration), especially by incorporating

Paragraph 6 in it. The debate over extending additional protection to GI products, other than

wines and spirits still continues with a hope of reaching satisfactory solution in the times to

come. Moreover, the dispute settlement machinery established under the aegis of the WTO

has been successful to a greater extent to cure the defects that were present under the GATT.

Despite the suggestions have been made throughout the entire study, certain suggestions are

also made in the end of the treatise, which include increase in public funding to the

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developing countries for the purpose of R&D in the field of pharmaceuticals, relaxation in

rules regarding grant of compulsory licenses for manufacturing life-saving drugs,

encouragement to parallel imports for controlling price of medicines, promotion of generic

drug industries, undertaking economic and statistical survey for settling the controversy on

GIs and registering more and more of GIs for extending protection to them in their country of

origin, and finally by suggesting desired amendments in the flexible provisions incorporated

in the Dispute Settlement Understanding (DSU) so as to make the implementation of panel

decisions of the Dispute Settlement Body (DSB) more effective and operative.

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CH A PTE RCH A PTE RCH A PTE RCH A PTE R ----IIII

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CHAPTER-I

WORLD TRADE ORGANIZATION AND TRIPS: A HISTORICAL

PERSPECTIVE

1. INTRODUCTION

The post-war economic system, instead of putting an end to the disparities in the

developmental economies, rather widened the gaps between the rich and the poor and

aggravated the economic inequalities between the peoples of the world. Consequently, many

new developing nations, having been under colonial domination and imperial oppression for

so long and having been backward for so long, realized their collective strength and a feeling

of being dejected in the world, a new determination originated upon these oppressed

countries and they felt the need of demanding their deserved share in the economic resources

of the world. Additionally, they also advanced their desire to development process along with

the already industrialized or advanced countries.

The economic growth of the developing nations for the first time became one of the principal

areas of concern in the international organizations particularly, the U.N during the period of

1950. The developing countries, many of which were trying to create a meaningful base to

make their political independence or sovereignty expressive, were facing unfavorable

economic situations and had unhappy experiences. These countries, which were relatively

few at that time, started realizing that the central organs of the United Nations (UN) were not

sufficiently responding to their demands relating to trade and economic problems of

development. Thus, they preferred to take these matters to the regional bodies such as, U.N

Regional Economic Commission for Asia and the Far East (ECAFE) and Economic

Commission for Latin America (ECLA), where the majority was clearly on their side and

where their opinion counted. It was there that the developing countries began systematically

gathering the material for presenting their case in other international forums.

In the years that followed, number of countries fighting their way to freedom and political

sovereignty attained numerical dominance in the world organizational set-up. Their problems

acquired a universal shape and their upliftment became historically an inevitable matter with

an urge to develop.

The growing strength under ubiquitous banner ‘the developing countries’, and their firm

determination to establish themselves with an equal status in the world economy, led to some

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very significant developments as the designation of the decade of 1960, by the General

Assembly of the United Nations, as the “United Nations Development Decade”, holding of

United Nations Conference on Trade & Development (UNCTAD) by the General Assembly

of the United Nations in Geneva from March 23 to June 16, 1964. In 1967, at the end of

Geneva Conference of UNCTAD, seventy-seven developing countries, issued a joint

statement signifying their strong view that there is a need to maintain, and further strengthen,

their unity for securing the new approaches in the international economic field. In 1973, the

fourth Summit of the Non-Aligned countries held in Algiers adopted an Action Programme

calling for the establishment of a New International Economic Order (NIEO). On May 1,

1974, the Seventh special session of the U.N. General Assembly adopted a Declaration and

Programme of Action on the Establishment of a New International Economic Order.

The developing countries constitute the majority, that is, about 2/3rd

of membership of the

World Trade Organization (WTO) that came into being on January 1, 1995. Almost all the

major trading nations are the members of the WTO and those who are not are seeking to

accede it. Unlike its predecessor, General Agreement on Tariffs and Trade (GATT), the WTO

is a full-fledged international organization. In addition to trade in goods, the only form of

trade that was covered by the GATT, the WTO covers trade in services and Trade-Related

Aspects of Intellectual Property Rights (TRIPS). The defective GATT approach to dispute

settlement, which allowed the losing party to block adoption of a panel report, has been

replaced by a highly developed and frequently used dispute settlement system. Thus World

Trade Organization (WTO) is not a mere offspring of the General Agreement on Tariffs and

Trade (GATT), but it is an evolutionary step forward, though has certain loopholes that can

be worked out with negotiations, which is very effective and a valid mode in bringing

changes. Henceforth, the WTO system of principles, rules and obligations safeguards the

interests of all the members including that of the developing countries and help the

governments of the member countries to advise and pursue economic reform programmes.

This multinational trade framework of rules can also assist domestic policy making. The

WTO rules do not prescribe a trade policy but they do help governments to make or

strengthen their developmental policies based on open competitive markets. It also covers

trade incorporating intellectual property. As developing countries expand their imports and

exports, the new rules can help to ensure that these countries extract the greatest benefit from

international trade.

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The Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) offers

potential benefits for developing countries by creating a policy framework that could help to

promote technology transfer and foreign direct investment. Its main principles include non-

discrimination, that is Most Favoured Nation (MFN) Clause and National Treatment (NT),

and the equal application by all members of the minimum standards of protection for all

categories of intellectual property rights. The agreement also protects the interests of

developing country companies as owners and exploiters of intellectual property rights.1

The Uruguay Round (UR), the eighth round of the multilateral trade negotiations (MTNs),

which concluded with the signing on April 15, 1994, at Marrakech, Morocco, of the Final

Act, which embodies all the multilateral and plurilateral agreements of the round, was the

most ambitious of the series of negotiations that started its first round at Geneva in 1947,

resulting into General Agreement on Tariffs and Trade (GATT). Trade Related Aspects of

Intellectual Property Rights (TRIPS) were brought within the ambit of GATT rules by the

Uruguay Round (UR). The UR negotiations resulted into the conclusion of the Final

Agreement, whereby it was lastly decided to establish a formal organization called the World

Trade Organization (WTO). The WTO acts more like a world government to supervise

international trade.2 The WTO in its role as a fair trade policeman confirms that countries

obey multilaterally accepted trade rules, carry out recommendations and rulings, and also has

a duty to entertain disputes for their settlement.

Due to the problem of counterfeiting goods, especially software, books, patented food

products and medicines, the developed countries wanted to protect their interests and prevent

losses of sales in the world market. Hence, they desired to bring protection of market power

and prevention of competition by entry of the developing countries, unnecessarily caused by

the counterfeited goods. As a result provisions to protect their interests were incorporated in

the form of TRIPS Agreement, whereby all countries were required to make provisions for

the ‘Mail-Box’ for patent seekers and to give Exclusive Marketing Rights (EMRs) to the

individuals and organizations that had been granted patents. Initially, the developing

countries were against the inclusion of IPRs into the WTO as it was part of WIPO and they

were suspicious that its inclusion in the WTO in the form of TRIPS was only for the purpose

of protection of market power of the industrialized countries and also to prevent competition

�� 1 Peter Gallagher, “Guide to the WTO and Developing Countries”, (2000) at 16.�

2 P.K. Vasudeva, “India and World Trade Organization: Planning and Development”, (2000) at 8.�

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from entering those markets and thus wanted the same to be dealt in by the GATT disciplines

or WIPO only and not by the WTO.

The TRIPS Agreement covers seven categories of Intellectual Property Rights (IPRs) namely,

copyright and related rights, trademarks, geographical indications, industrial design, patents,

integrated circuits and trade secrets. Before we analyze the relationship of TRIPS and these

categories of IPRs, it is imperative that analysis of traditional law on the point must be done.

The question as to what necessitated the inclusion of IPRs into TRIPS can only be answered

after analysis of the historical background of IPRs is done.

2. CONCEPT OF PROPERTY VIS-À-VIS INTELLECTUAL PROPERTY:

The traditional view of the property was not defined properly; rather it was simply recognized

by its application to land and estates and with the development in the society to the movable

chattels at later stage. The term ‘property’ encompasses within itself diverse nature of

meanings and concepts. As in defining real property, a possessor’s interest in a land requires

a kind of physical relation to the land of a kind, which gives a certain degree of physical

control over land. It also requires an intention to exercise such control so as to exclude others

in general, from any occupation of land.3These two attributes viz., physical control and

ability to exclude others are the central aspects of the possessors interest in the property. In

the legal sense, the term property is essentially a bundle of rights flowing from the concept of

ownership and possession. While most types of property have real existence, the value of

property depends on the understanding of use linked with it. However the element of

‘understanding of use’ is an ever varying concept. A matter becomes a ‘resource’ in two

senses:

• a material resource; and

• Intellectual or technological resource.

Once these two resources come together with respect to a substance, it becomes property,

which provides satisfaction, and over which a bundle of rights can be claimed.

The right to property is a right to the collective use of things. It means that ownership in

general, is permanent and inheritable. These rights may relate to tangible or intangible things.

Rights over tangible things like land and chattels are called corporeal property. Rights over

intangible things like ideas, artistic works, literature, etc. are called incorporeal property.

�� 3 J. M. Garon, “Normative Copyright”, Cornell Law Review, Vol.88 (2003) at 1278.�

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While property in common parlance refers to the material objects, in a strictly legal sense, it

refers to the interests over property, which is protected by law.

The legal definition of property as a bundle of absolute rights is a traditional conception of

property. More often than not, some rights in the bundle, conflict with other rights. Thus the

property rights of the person can encroach upon, and interfere with, both the property and

personal rights of the others. This is especially true in the case of intellectual property. Thus,

the concept of absolute property rights is just a matter of theory. All property rights are

restricted, by the rights of others. In practice, each property right is demarcated and defined in

order to balance it with other property rights. Thus for example, a patent holder’s ownership

right is balanced with the right of access to the public at large, by the incorporation of a

number of provisions such as compulsory licenses, limited period of protection etc. Thus

property can be defined as an asset of every kind, whether corporeal or incorporeal, movable

or immovable, and legal documents or instruments demonstrating little to or interests in such

assets.4 Consequently, property can be classified into two main classes, viz,

• Tangible and intangible property; and

• Proprietary rights in rem and proprietary rights in personam.

In the most general sense, ‘intellectual property’ refers to intangible or incorporeal property

such as detailed knowledge of a manufacturing process, a trademark, a patent right or a trade

name. Corporeal property or tangible property is the right of ownership in material things,

whereas, incorporeal property is any other proprietary right in rem that includes intellectual

property rights (IPRs).

Intellectual property rights (IPRs) are defined differently. Intellectual property is all about

human creativity.5 It is the property created by the intellect of human mind. It is a non-

physical property which stems from, or is identified as and whose value is based upon some

idea or ideas. It is a form of legal privilege which allows its holders to control the use of

certain intangible ideas and expressions. This protection is necessary as every human

endeavour which promotes economic, social, scientific and cultural development of society

must be encouraged and the creator must be suitably rewarded by affording legal protection

to his intellectual creation. Thus the intellectual property rights (IPRs) are the legal rights

governing the use of creations of minds. The intellectual property law regulates the creation,

�� 4 K .D. Raju, Intellectual Property Law: WTO and India, (2005) at 1.�

5 Catherine Colstan, Principles of Intellectual Property Law, (1999) at 1.�

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use and exploitation of mental or creative labour. It prevents third parties from becoming

unjustly enriched by reaping what they have not seeded. This is a branch of the law which

protects some of the finer manifestations of human achievements.6

Ownership of intellectual property is similar to ownership of other forms of property. Earlier

many jurists and general public had a view that intellectual property is only an immaterial or

abstract or non-representational concept, but it is not the fact. Even the ideas can be

transformed into tangible property to enjoy the similar ownership rights, as in case of those

enjoyed by the holders of tangible or corporeal property, as land or chattels. When this

intellectual property qualifies under the law, the creator or inventor is granted certain rights.7

For example, the authors of a book can prevent others for copying, or selling it. The owner of

patented invention can prevent others from making, using, or selling the device. However,

these exclusive rights may be lost or taken from the owner and given to the public for their

use without authorization from the originator of that property. As when copyright in a book

comes to an end, anyone can copy that book without consent of the owner.

Intellectual property is found almost everywhere in creative works as books, drama, artistic

works, computer programs, films, music, etc., and in everyday object like computers, mobile

phones, automobiles, drugs, variety of plants, and in almost everything that has developed in

due course of expansion of the civilization. However, not all products of mind qualify for

protection under intellectual property law. All the distinctive features which help us select the

products we purchase, like brand names and designs, fall within the ambit of intellectual

property. Even the name a particular person thinks up to sell his or her services or inventors’

invention for a non-spill cup for babies or bunker bed for children etc., can qualify as

intellectual property. Thus what is protected with respect to intellectual property is the use or

value of ideas. The bundle of rights consisting intellectual property is not on the abstract

ideas, but rather over physical, concrete or tangible manifestations of these ideas.

The system of rewarding special privileges or acknowledging the creations of the maker or

originator of a particular intellectual property had its roots in the Venetian System, the British

System and the American System. In the early 14th

century, certain special privileges were

requested by a section of water millers who had a unique device to be used before performing

the mining activities. The grant of the special privileges to those water millers can be taken to

�� 6W.R. Cornish, Intellectual Property, (3rd Ed., 2001) at 3.�

7 Richard Stim, Intellectual Property: Copyrights, Trademark and Patents, (2001) at 11.�

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mark the birth of the patent system. Later in the year 1323, a German engineer was granted

the first known privilege for the construction of a model grain mill, which could cater the

storage needs of entire Venice.

Venetian Senate Act of 1474 is the first patent statute formulated, followed by the statute of

Mineraria in 1488. This statute codified and regularized the Venetian System of granting

privileges. The Act sought to spur the introduction of new technologies and industries by

awarding patentees the exclusive right to practice their art for a specified period, generally

from ten to fifty years.

In 1602, in the famous case of Darcy v. Allein,8 often known as Case of Monopolies, a

monopoly was granted to a merchant exclusively to import, manufacture and sell playing

cards, though the King’s Bench struck down the monopoly right and held that monopoly was

illegal at common law which was otherwise, misuse of power during reign of James I. But in

1624, the English Parliament passed the Statute of Monopolies, thereby prohibiting

monopolies for the sole buying, selling, making, working or using of anything within

England.9

The Patent Act of 1790 was the America’s first patent statute. The Act was entitled “An Act

to Promote the Progress of Useful Arts”. It provided patent protection for a period of 14 years

for inventions that were “sufficiently useful and important”.10

In ancient India, the BrighuSamhita demonstrates the importance of intellectual property

rights. Though, it was in 1856 that the first patent statute was passed in India. The Act

granted certain exclusive privileges to the inventors of new inventions for a period of 14

years.

The earliest use of the term “intellectual property” appears to be October 1845 Massachusetts

circuit court ruling in the Patent case Davoll et al. v. Brown11

in which Justice Charles L.

Woodbury wrote that “only in this way can we protect intellectual property, the labors of the

mind, productions and interests as much a man’s own … as the wheat he cultivates, or the

�� 81602, 1 W. P. C. Moore K. B. 671.�

9 T. Ramakrishna (Ed.), Basic Principles and Acquisition of Intellectual Property Rights, (1st Edition, 2003), at

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10Id. at 16.�

11 M. M. S. Karki, Intellectual Property Rights: Basic Concepts, (2009) at 78; Woodbury & Minot, CCD Mass.7

F.Cas.197, 1845.�

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flocks he rears.” In Europe, a French author, A. Nion used the term “proprieteintellectuelle”

for the intellectual property, in his book published in 1846.12

However, the use of the term gained popularity only after 1967 when the World Intellectual

Property Organization (WIPO) came into being, which actively tried to promote the term.

3. SCOPE OF INTELLECTUAL PROPERTY:

There is a general understanding, however, that the term intellectual property means a set of

legal rules on the private appropriation of the output of human creativity, such as works of

authorship and inventions.13

But such understanding is not right as it confines the dimension

or scope of intellectual property. In real sense, the scope of intellectual property goes much

beyond literary, artistic, scientific or technical creations. The names and the reputation of

merchants, for example, have nothing to do with creativity. Nonetheless, they are also the

subject matters of intellectual property. Intellectual property is indeed a broad concept. It is a

set of principles and rules that regulate the acquisition, the use, the enforcement and the loss

of rights and interests in differentiating intangible properties that are susceptible of being

used in trade and commerce.14

The subject matter of intellectual property is intangible assets. But at the same time, all

intangible assets are not covered under this field. Only those that serve as elements of

differentiation between the competitors are subject-matters of intellectual property, for

example, personal obligations are intangible assets, yet they are not covered by this field. The

reason is that personal obligations of one do not differentiate it from that of others, so they do

not from part of intellectual property law. This is because intellectual property covers only

intangible assets that serve as elements of differentiation that aspects like novelty, originality

and usefulness are so important for its applications.

Intellectual property law does not protect only the results of creativity and inventiveness but

indicators of source, the merchants’ reputations and trademarks are also the subject matters of

intellectual property, nevertheless they importantly differentiate different firms or industries.

Thus, intellectual property comprises of two areas:

• Copyright and related rights; and

• Industrial property.

�� 12

Id. (A. Nion, Droitscivilis des auteurs, artistes et inventeurs, 1846).�

13NunoPires de Carvalho, The TRIPS Regime of Trademarks and Designs, (2006) at 1.�

14Id.�

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Copyright and related rights are the rights to prevent others from copying the protected work

by reproducing, fixing, translating, adapting or communication. Industrial property, on the

other hand, is the right to prevent others from using the protected assets. A cookery book

provides for a good illustration of the difference. Because the book is protected by copyright,

the recipes it contains may not be reproduced. But the technical instructions it contains may

be used for preparing the various dishes described. In contrast, if a patent is obtained for a

new and inventive recipe, no one can use its technical instructions for cooking. But the patent

itself, that is, the text describing the recipe’s technical specifications may be copied freely.15

Industrial property comprises of three sub-areas:

a. proprietary technical creation, including inventions(patents), utility models, plant

varieties, layout-designs of integrated circuits;

b. distinctive signs i.e. trademarks and service marks, including collective marks,

trade names, slogans, indications of source and geographical indications; and

c. unfair competition or non- proprietary competitive advantages such as merchant’s

reputation, goodwill in general comprising the trade dress, and undisclosed

information, comprising trade secrets and text data.

There are some grey areas between copyright and industrial property. For example, industrial

designs may be protected under copyright vide Article 2(7) of the Berne Convention 1971, or

under industrial property vide Paris Convention 1967 under Article 5 quinines,and Article

25(2) of the TRIPS Agreement, 1994. We can say that to some extent, the distinction between

copyright and industrial property matches to the idea v. expression dichotomy.16

Ideas,

generally, are covered by industrial property rights whereas; expressions are the subject

matter of copyright.

4. GROWTH OF TECHNOLOGY AND GLOBALIZATION: 1850-1947

In 1850, there were probably about 1200 million people living in the world.17

As soon as they

emerged from infancy, the attainment of bare survival became a compulsion. Depending

upon the state of technical knowledge, life in most of the communities was very simple. On

one hand, among the greater part of the world’s population, technical knowledge and skill,

and the variety of natural resources easily available, were so limited that a simple economic

�� 15

Id.at 2.�

16Id. at 3.�

17 William Ashworth, A Short History of the International Economy: 1850-1950, (1952) at 13.�

��

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life was the only way out. On the other hand, the means of carrying out the narrow range of

necessary activities were abundant enough in relation to the size of the population for

economies of simple structure to support a life not without notable achievements and high

enjoyments.

At that time, most of the world’s populations lived in Europe and Asia, and it was in the

comparatively small continent of Europe that the natural increase of population was most

prominent. Europe’s total of about 270 million inhabitants in 1850, was probably nearly

double that of a hundred years earlier.18

The latter half of the eighteenth century and earlier

years of the nineteenth century witnessed great work of maritime exploration that revealed

many territories in the interior of every continent except Europe, that ultimately resulted into

drawing up of the outline map of the world. It proved to be one of the principal steps in the

process of changing the world from a great number of sovereign and culturally self-sufficient

groups into something approaching an economic unit and a single strategic conception.19

In

the mid-nineteenth century, some slight restructuring of population and economic activity

took place as a result of which, more of the resources came into use. The areas which were

discovered later viz., Australia and New Zealand remained under-populated, with their

natural resources used inadequately or not at all, until the coming of mechanical transport, the

railways and steamship, which enabled new settlers and supplies to come to them and their

own produce to be carried away to the already existing markets, easily and cheaply and, in

bulk.20

The levels of technical accomplishments in different parts of the world before the 19th

century

differed enormously. It was greater in Western Europe due to the availability of the number

and variety of tools and instruments to assist in production, which ultimately improved the

living standards. On the whole, Western Europe throughout the 18th

century was technically,

in a handicraft era. The invention of steam engine transformed the industry. The industrial

revolution in Great Britain, between 1760 and 1830 resulted in great economic changes. The

British industries, as a result of transformation in the technique observed an expansion of

markets. Iron, cotton and one or two other consumption goods, such as beer and pottery, and

coal got in more demand, and use of steam-engine also increased, thereby resulting into

�� 18

Id., at 14.�

19Id., at 15.�

20Id., at 16.�

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production of commodities by new methods. These machine-driven industries contributed a

lot to the nation’s economy.

In the United States of America, which was still only thinly populated in relation to its vast

area, the progress of mechanical power and the factory system before 1850 was little more

prominent than in France and Germany. Before the Civil war, the United States was very far

from being a highly industrialized nation. But in the first half of 19th

century, there was

hardly any country which was very far from being agriculturally self-sufficient and the

international trade in basic agricultural products within similar climatic regions gained

momentum. Thus the volume of trade in agricultural and non-agricultural commodities viz.,

clothing increased as a result of mechanization. In the nineteenth century, Britain set out great

amounts of cheap cotton goods and thus changed the pattern of Indian economic life by

undermining its handicraft cotton industry, which had formerly given the country self-

sufficiency in one of the life’s necessities and a small export trade as well.

In the mid-nineteenth century a new economic order, based on increasing mechanization,

greater division of labour and specialization of function, and more complex methods of

organization came into being. The direct impact of mechanization, however, was not

confined to a small group of important manufacturing countries. Rather the application of

mechanical techniques to the transport, affected greater parts of the world by changing

completely the accessibility of markets and raw materials and by spreading some branches of

the engineering industry to almost all the countries.

Between 1870 and 1913, the world’s manufacturing activity increased more than four folds

that of the U.S.A. multiplied by seven, that of Germany by five and that of Britain doubled.21

In 1870, 79 per cent of the world’s manufacture was conducted in U.K., the U.S.A., and

Germany and France.22

So far as the non-industrialized countries were concerned, they had strong motives for

introducing manufacturing industries. Earlier, industrialization had been partly dependent on

the growing export markets in the non-industrialized countries whose economic life gradually

became accustomed to a regular supply of certain machine made products.

The advent of printing press and other means of telecommunication contributed a lot towards

the dispersal of scientific knowledge between the nations. The increased specialization which

�� 21

Id. at 38.�

22Id.�

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characterized economic activity in the second half of the nineteenth century was clearly

connected with the greater interdependence of the nations. The flow of technology on the

other hand, necessitated their protection so as to control the markets. As a result many

countries entered into bilateral or multilateral agreements, aiming at the protection of new

type of property, which got an impetus due to the industrialization. It thus became necessary

to protect the right of the creators, inventors of such property which may be called as

industrial property, copyright etc., now covered within the sphere of intellectual property

rights under the aegis of TRIPS Agreement. It thus becomes pertinent to discuss various

efforts made by the world community to protect the intellectual property.

5. PROTECTION MECHANISM AT INTERNATIONAL LEVEL:

There are various international arrangements, which still govern the domain of intellectual

property rights, though some of them are administered by the WIPO, whereas, some are

administered at the national level between parties to the respective treaties, as such kind of

arrangement is not prohibited by the TRIPS Agreement, which simply provides for the

compliance with the minimum standards set up by it. With the advancement in the

technology and growth of the world markets, various efforts were made at international level

in the form of bilateral or multilateral arrangements to protect the intellectual property

creations, despite the fact that prior to TRIPS Agreement the enforcement mechanism was

not so strong, which became strong with the establishment of the Dispute Settlement Body by

the World Trade Organization later in 1994. Some of such international efforts are discussed

as under:

5.1 Paris Convention for Protection of Industrial Property23:

The Paris Convention for the Protection of Industrial Property was concluded on 20 March,

1883. It is one of the primary international treaties for the protection of intellectual property

as well as for being the first international treaty which fostered greater cooperation among

states in their endeavour to protect the intellectual property. The principles recognized and

elaborated in the Paris Convention have found their way into domestic legislations of nearly

all member States to the Convention and have served as the bedrock for future international

treaties. Almost 173 nations of the world have ratified it.

�� 23

Paris Convention for the Protection of Industrial Property, 20 March 1883. WIPO Database of Intellectual

Property Legislative Texts, Available at: www.wipo.int/treaties/en/ip/paris/pdf/trtdocs_wo020.pdf (last visited

on July 28, 2010).�

��

�

The Convention applies to ‘industrial property’, which includes patents, utility models,

industrial designs, trademarks, service marks, trade names, indications of source or

appellations of origin, and the repression of unfair competition.24

Article 1(3) of the

Convention elaborates the scope of the industrial property as ‘industrial property shall be

understood in the broadest sense and shall apply not only to industry and commerce proper,

but likewise to agricultural and extractive industries and to all manufactured or natural

products for example, wines, grain, tobacco leaf, fruit, cattle, minerals, mineral water, beer,

flowers, and flour.’ The definition appears to be exhaustive covering various forms of

intellectual property recognized in the world today, but does not include ‘copyright’ within its

ambit. The provisions governing copyrights were introduced subsequently in 1886 under the

Berne Convention.

The term ‘intellectual property’ does not find any place in the Paris Convention. But the

definition of ‘industrial property’ is wide enough to include most forms of intellectual

property recognized today. There are 30 Articles in the Convention. The Convention is based

on three guiding principles viz.,

i. National treatment (NT), which requires that every member state should grant the

same protection to nationals of other members states as it grants to its own

nationals.25

ii. Right of priority which confers on any members state, who has filed an application

for a patent in the host country, if filed within the grace period (within 12 months

from the date of filing in the country of origin), the original date of the filling patent

application in the host country shall be considered as the filling date of the patent as

opposed to the subsequent date on which a patent application may actually be filed

in another country. The periods of priority shall be twelve months for patents and

utility models and six months for industrial designs and trademarks.26

iii. Uniform rules, which means that, although the Convention regards the protection of

industrial property rights as a matter of domestic legislation, it establishes a set of

uniform rules that must be observed by each member State to provide minimum

protection for industrial property rights. As in case of patents, Article 5(4) the

�� 24

Article1(2), Paris Convention.�

25Article 3, Paris Convention.�

26Article 4, Paris Convention.�

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Convention set forth limitation on compulsory licenses for failure to work patent

before the expiration of a period of four years from the date of the filling of patent

application or three years from the date of grant of the patent or on conditions of

forfeiture of the patent, provided under Article 5(3) which provides forfeiture of the

patent shall not be provided for except in cases where the grant of compulsory

licenses would not have been sufficient to prevent the said abuses.27

The Paris Convention was subsequently revised at Stockholm on July, 1967 and further

amended on 28 September 1979. This Convention formed the essential background on the

basis of which subsequent international treaties like the Patent Cooperation Treaty came into

existence, to which the member States of the Paris Convention could only become the

members.

5.2 Berne Convention for Protection of Literary and Artistic Works28:

The Berne Convention for the Protection of Literacy and Artistic Works is the oldest

international agreement in the field of copyright. The Convention was signed in 1886 and has

been revised several times. These revisions typically occur at twenty-year intervals; however,

the last revision was done in Paris in 1971. The Paris 1971 Revision was notable because it

added to the Convention, an Appendix containing the Special Provisions Regarding

Developing Countries. The Convention was adopted in order to bring uniformity in the

bilateral treaties that existed in the nineteenth century. The importance of the Convention was

increased when the United States of America abandoned the rival Universal Copyright

Convention and joined the Berne Convention. Another boost for the Convention came up

with the signing of the Agreement on the Trade Related Aspects of Intellectual Property

Rights (TRIPS). Member States of the TRIPS Agreement are directed to implement certain

substantive provisions of the Berne Convention. As of now the Berne Convention has 164

members.

Article 1 of the Convention established a Union of member States to the Convention, with the

aim of protecting the rights of creators of literary and artistic works.

Article 2(1) of the Berne Convention defined the expression ‘literary and artistic works’ as

including every production in the literary, scientific and artistic domain, irrespective of the

�� 27 See G.B. Reddy, Intellectual Property Rights and the Law, (2001) at 31.�

28Available at: www.wipo.int/treaties/en/ip/berne/trtdocs_wo001.html (last visited 9 August 2010).�

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mode or form of the productions’ expression. According to Article 2(1) of the Convention,

literary and artistic work includes:

“books, pamphlets and writings; lectures, addresses, sermons and other

works of the same nature; dramatic or dramatico-musical works;

choreographic works or without words; cinematographic works to which are

assimilated works expressed by a process analogous to cinematography;

works of drawing, painting, architecture, sculpture, engraving and

lithography; photographic works to which are assimilated works expressed by

a process analogous to photography; works of applied art; illustrations,

maps, plans, sketches and three dimensional works relative to geography,

topography, architecture or science.”

This list is not a closed list and can include other works. As computer programs were never

included in the Convention’s list of protected works, but the expression ‘every production in

the literary, scientific and artistic domain’ is wide enough to include other works of the

similar nature. Both published and unpublished works of author are covered under the

Convention.

The Convention has provided for a minimum term of the protection of copyright as life plus

50 years or an alternative of 50 years from publication of anonymous and pseudonymous

works.29

It also provides for certain limitations to the exclusive rights, such as fair use

privilege and possible limitations on the right of recording of musical works. Apart, the

Convention also recognizes the moral right of the author.

5.2.1 Developing Countries and Berne Convention:

An Appendix was added to the Berne Convention by Paris 1971 Revisions of the Convention.

The Appendix contains provisions pertaining to the developing countries. These provisions

were the result of compelling demands of the developing countries during the 1960s for more

changes to the Convention. As a result, countries classified as developing countries by the

United Nations which accept the Convention, may notify the Director General of World

Intellectual Property Organization (WIPO) at the time of depositing their instrument of the

ratification or accession, or may at any time after such deposit declare, that they are availing

themselves of the provisions of Article II or III or of both these Articles.30

Such a country

�� 29Article 7 of the Berne Convention.�

30 Article I (1) of Berne Convention.�

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may instead of relying on the provisions of Article II, make a declaration under Article V (1)

(a).31

A country making declaration under Article V is barred from subsequently relying on

the provisions of Article II, even if it withdraws the declaration under Article V.32

If the Director General is notified of such a declaration before the expiration of a period of

ten years calculated from the commencement of Articles 1 to 21 and the Appendix, the

declaration shall be effective until the expiration of the ten-year period.33

A country availing

of the provisions of Article II or III may review its declaration for successive ten-year period

by depositing a notification with the Director General.34

Such notification should be deposited

within a period of not more than fifteen months and not less than three months before

expiration of the existing ten-year period.35

If the Director General is notified of the

declaration after the expiration of a period of ten years calculated from the commencement of

Articles 1 to 21 and the Appendix, the declaration shall be effective until the expiration of the

existing ten- year period.36

Such a declaration may also be renewed for periods of ten years

each by notifying the Director General within a period of not more than fifteen months and

not less than three months before the expiration of existing ten-year period.37

A country relying on Article II shall be entitled to grant non-transferable and non-exclusive

licenses for the translation of works published in printed or similar forms of reproduction,

instead of relying on the exclusive right of translation under Article 8.38

Such license is

granted on the basis that translation should only be done for purposes of teaching, scholarship

or research.

On the other hand, a country relying on Article III shall be entitled to grant non-transferable

and non-exclusive licenses for the reproduction of works, instead of relying on the exclusive

right of reproduction under Article 9. Article III applies to works published in printed or

similar forms of reproduction, audio-visual fixations including any protected works

�� 31

Id.�

32 Article V (1) (c) of Berne Convention.�

33 Article I (2) (a) of Berne Convention.�

34Id.�

35Id.�

36 Article I (2) (b) of Berne Convention.�

37Id.�

38 Article II (1) of Berne Convention.�

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incorporated in such works, and translations of incorporated text into a language generally

used in the country in which the application for the license is made.39

Most of the developing countries have opted to fully implement the provisions of the

Convention, rather than availing themselves of the facilities provided by the Appendix.

However, the main reason for such countries opting out of the Appendix might well be the

provision in TRIPs requiring member States to comply with most of the provisions of the

Convention.

5.3 Madrid Agreement Concerning the International Registration of Marks40:

The Madrid Agreement of 1891, also commonly referred to as Madrid System, is the

international agreement accountable for the registration of trademarks at the international

level. International registration of trademarks is necessary for owners of a particular mark to

have their trademark rights and protection respected and adhered to in foreign nations. There

are two treaties under the Madrid Agreement, viz,

• The Madrid Agreement Concerning the International Registration of Marks, 1891;

and

• The Protocol relating to the Madrid Agreement Concerning the International

Registration of Marks, implemented in 1989.

The first treaty sets up the actual structure of what is referred to as the Madrid System, which

provides for various regulations, requirements, and restrictions concerning international

trademarks and their registration. The Madrid Protocol is the revision of the original

provisions found in the Madrid System, with the ultimate purpose of allowing for more

flexible consideration of its legislation by countries that have not been part of the Agreement,

or their country’s trademark laws prevented them to meet the established requirements under

the first treaty. The Madrid System provides a trademark owner with the convenience of

being able to register a trademark for international consideration for various countries in one

application and registration process. Registration will give those trademarks the right and

protections instituted by those countries as if it were registered domestically.

The Madrid Agreement is presided by the International Bureau of the World Intellectual

Organization (WIPO). This Agreement currently has 56 members that adhere to its

regulations and provisions. The Madrid Protocol itself, being a separate treaty, is adhered to

�� 39 Article III (1) A Berne Convention.�

40Available at: www.wipo.int/madrid/en/legal_texts/trtdocs_wo015.html (last visited 19 August, 2010).�

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by 83 members. Many of these members are actually party to both the treaties. The Madrid

system still provides for certain advantages that attracted many nations to join the Madrid

Agreement in the first place. The main advantage is that a trademark owner can apply for

international registration domestically to gain protection by any or all of the participating

countries with one application and registration procedure and one collective fee. This

eliminates the need to submit a separate application to each country where the trademark

owners pursues protection. The main requirement of the Madrid Agreement is that the

trademark must be first federally registered in the country of origin for eligibility at the

international level. Changes to the registration, such as names or addresses, can also be done

through one application so as to centrally amend the registration and apply those changes to

the various nations’ own records for those trademarks.

The countries which are member to this Agreement constitute special Union for the

international registration of marks.41

Thus in order to get international protection in the

country of origin, application has to be filed with International Bureau of Intellectual

Property.42

From the date of registration so effected at the International Bureau in accordance

with provisions of Article 3and 3ter, the protection of the mark in each of the contracting

countries concerned shall be the same as if the mark had been filed therein direct.43

Moreover, every mark which has been the subject of international registration shall enjoy the

right of property provided for by Article 4 of the Paris Convention for the Protection of

Industrial Property, without requiring compliance with the formalities prescribed in Section D

of that Article.44

Additionally, as soon as the international registration is made in the name of the proprietor or

his successor in title, the international registration shall be deemed to have replaced the

earlier national registrations, without prejudice to any rights acquired by reason of such

earlier registrations.45

The term of protection after international registration shall be effected

for twenty years and can be renewed under the conditions specified.46

The Agreement was

revised at Brussels on December 14, 1900; at Washington on June 2, 1911; at The Hague on

�� 41

Article 1(1) of Madrid Agreement Concerning the International Registration of Marks, April14, 1891.�

42Id. Article1(2).�

43Id. Article 4(1).�


45Id Article 4 bis.�


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November 6, 1925; at London on June 2, 1934; at Nice on June 15, 1957; and at Stockholm

on July 14, 1967 and also amended on September 28, 1979.

5.4 International Convention for the Protection of New Varieties of Plants, (U.P.O.V)47:

In order to safeguard the interests of the plant breeders who contributed in the field of

agriculture, horticulture etc., by producing new plant varieties, a Convention known as

International Convention for the Protection of New Varieties of Plants was adopted by the

Diplomatic Conference on December 1, 1961 and revised at Geneva in 1972, 1978 and 1991.

The Convention has 42 Articles and established an International Union for the Protection of

New Varieties of Plants known as “UPOV”, an inter-governmental organization with

headquarters in Geneva. The acronym UPOV is derived from the French name of the

Organization, Union Internationale pour la protection des obtentions Vegetates.

UPOV has been established to provide and promote an effective system of plant variety

protection with the aim of encouraging the development of new varieties of plants, for the

benefit of society.

The purpose of the UPOV Convention is to ensure that the members of the Union

acknowledge the achievements of breeders of new varieties of plants, by granting to them an

intellectual property right on the basis of a set of clearly defined principles. The Convention

set some eligibility criteria for plant varieties to qualify for the protection, such as:

• distinctness from existing commonly known varieties: (Art.7)48

• sufficient uniformity; (Art.8)49

• stability; and (Art.9)50

• Newness in the sense that they must not have been commercialized prior to certain

dates established by reference to date of the application for protection (Art.6).51

Like all intellectual property rights, plant breeders’ rights are granted for a fixed period of

time52

, at the end of which varieties protected by them pass into the public domain. The said

�� 47

Available at: http:// upov.int/en/publications/conventions/1961/content.htm (last visited 19 August 2010).�

48International Convention for the Protection of New Varieties of Plants (UPOV Convention 1991 Act)

Available at: http://www.upov.int/en/about/upov_convention. htm [ last visited on 3 Jan, 2011].�

49Id.�

50Id.�

51Id.�


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period of protection has been afforded for a period not shorter than 20 years from the date of

the grant of the breeders’ right. For trees and vines, the said period of protection has to be not

less than 25 years from the said date.53

The protection however, has been afforded to address a long-standing problem in patent law.

As the patent system has not yet developed the mechanism to provide to plant breeders, the

UPOV encourages a sui generis law to provide monopoly rights to plant breeders of new

plant varieties which are akin to invention. Protection is afforded to plant breeders as an

incentive for the development of new varieties of plants, in order to provide suitable progress

in agriculture, horticulture and forestry. Many countries, including developing countries, have

enacted laws in this field to protect such kind of innovative plant varieties near to inventions

granted patent protection. India though not member to UPOV, passed sui generis legislation

protecting not only the plant breeders’ rights on new varieties of seeds but also the farmers’

rights under Plant Variety Protection Farmers Rights Act, 1993

The main activities of UPOV are concerned with promoting international harmonization and

cooperation mainly between the member states and with assisting countries and certain

organizations in the introduction of the UPOV system of plant variety protection. It provides

three basic principles viz,

• National Treatment;

• Maintenance of minimum and uniform standards by member states; and

• Right of Priority.

It requires these basic principles must be included in the domestic laws of the members of the

Union established under the Convention, to lead to a great degree of harmony in those laws

and in practical operation of the protection systems. It has established a detailed set of general

principles for the conduct of the examination of plant varieties for distinctness, uniformity

and stability, and more specific guidelines for about 230 genera and species.

Further it has 68 members, as of January, 2011.54

The Convention provides for the two

permanent organs for its proper governance. They are, the Council, consisting of

representatives from Members States and the Secretariat, directed by a Secretary General.

�� 53

Id. Article 19(2).�

54Available at: http://www.upov.org/export/sites/upov/en/about/members/pdf/pub423.pdf (last updated: 29

March, 2011).�

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5.5 Patent Co-operation Treaty(PCT)55:

In order to overcome the problems in the national system relating to international applications

for patent protection, in September 1966, the Executive Committee of the Paris Union for the

Protection of Industrial Property invited BIRPI (the United International Bureaux for the

Protection of Intellectual Property, the predecessor of WIPO) to undertake a study for finding

solutions to reduce the duplication of the effort both for applicants and national Patent

Offices. As a result, on 19 June 1970, at a Diplomatic Conference held in Washington, D.C.,

a treaty called Patent Cooperation Treaty or “PCT” was adopted. It came into force on 24

January, 1978 and became operational on 1 June, 1978 with an initial 18 contracting States.

The Patent Cooperation Treaty is an agreement for international cooperation in the field of

patents. It is a treaty for rationalization and cooperation with regard to filing, searching and

examination of patent applications and the dissemination of the technical information

contained therein. However, the treaty does not provide for the grant of “International

Patents”. The very task and responsibility of granting patents remains with the Patent Offices’

situated in the countries where the protection is sought or the countries acting for the other

member states of the Paris Convention. The PCT enables and entitles the nationals or

domiciliaries of contracting states to file an international application for patent protection. In

the patent application, applicant should indicate the member states in which he wishes to

obtain protection.

In order to realize its objectives, the PCT has established an international system which

enables the filing of a single patent application with a single Patent Office to have effect in

countries mentioned in the application. Such application is called as an ‘international

application’. That Patent Office, further examines such application by subjecting it to an

international search by the International Searching Authority (ISA) for relevant prior art in

order to decide whether the invention is patentable. Further such applications are subjected to

centralized international publication and an option for an international preliminary

examination by the International Preliminary Examination Authority (IPEA), which gives the

applicant and subsequent Patent Offices that have to decide whether or not to grant a patent to

prepare a report containing an option as to whether the claimed invention meets certain

international criteria for patentability. In a way, the treaty has simplified the procedure for

�� 55World Intellectual Property Organization, Patent Co-operation Treaty, 1970, Available at:

http://www.wipo.int/pct/en/texts/articles/aroc.htm. (Last visited: 3 January 2011).�

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filing of international patent application for patent protection internationally by submitting

mere single application.

The PCT is advantageous for the developing countries, party to the Paris Convention, also as

they can gather information pertaining to the patent documents published in many countries

and also about the most recent state of art resulting from them. Since many important

inventions are the subject of PCT applications, the developing countries can have, through

the international publication of these applications, early and easier access to modern

technological developments. The access is early in the sense, that the international

applications are required to be published 18 months after the priority date of the application.

Thus, it makes it easier to assess the technology revealed in the application when it is

published. The Patent Offices of PCT Contracting States are entitled to receive, free of

charge, a copy of all published international applications, of the PCT Gazette and of any

other publication of general interest published by the International Bureau of WIPO in

connection with the PCT. Moreover, the PCT offers distinct benefits to the developing

countries for participating in this system of international patent cooperation and requires no

payment of contribution. As of now, there were 142 Contracting States to the PCT. India,

China etc., are also members to this treaty.

5.6 The Budapest Treaty on the International Recognition of the Deposit of Micro-

Organisms for the Purpose of Patent Procedure:56

The Budapest Treaty on the International Recognition of the Deposit of Micro-Organisms for

the Purpose of Patent Procedure or Budapest Treaty is an international treaty signed in

Budapest, Hungary, on April 28, 1977. It entered into force on August 9, 1980 and was later

amended on 26 September, 1980. This treaty is administered by World Intellectual Property

Organization (WIPO).

As of now, 73 countries are party to this Treaty. The main objective of the Treaty is to solve

the problems arising due to lack of uniformity in national requirements for micro-organism

deposits. Its’ basic requirement is to disclose an invention sufficiently, in order to enable one

skilled in the field of its reproduction to anticipate it. Several Depository Authorities have

�� 56

World Intellectual Property Organization,The Budapest Treaty on the International Recognition of the Deposit

of Micro-Organisms for the Purpose of Patent Procedure, 1977, Available at:

http://www.wipo.int/treaties/en/registration/Budapest/trtdocc_wooo2.html (last visited: 4 January, 2011).

�

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been provided to be located in member states agreeing to comply with its requirements, such

as period of storage, acceptance of deposits, right to re-deposit, viability to testing, secrecy,

furnishing of samples and import and export restrictions.

Thus the main feature of the Treaty is that a Contracting State which allows or requires the

deposit of micro-organism for the purpose of patent procedure must recognize the deposit of

microorganism with any international depository authority, irrespective of whether such

authority is located within or outside the territory of the said State. As disclosure of the

invention is a basic requirement for the grant of patents, microorganisms are not an exception

to that rule. But at the same time, it is also true that the disclosure of microorganisms in

writing is not possible, so the same can be done only by depositing a sample of the same with

a specialized institution.

“Microorganism” is interpreted in a broad sense, as covering biological material, the deposit

of which is necessary for the purpose of disclosure, so as to obtain a patent. This is

necessarily important in case of inventions relating to food and pharmaceutical fields. In

order to deal with the problem of depositing a sample of microorganism in each country, to

get protection, the Treaty introduced the deposition of microorganism with any International

Depositary Authority (IDA) as an essential requirement for the proposes of patent procedure.

5.7 Madrid Agreement for the Repression of False or Deceptive Indication of Sources of

Goods57:

This Agreement was adopted on 14 April 1891 and revised at Washington on 2 June 1911; at

The Hague on 6 November 1925; at London on 2 June 1934 and at Lisbon on 31 October

1958. This Agreement was appended by Additional Act of Stockholm of 14 July 1967. The

object of this Agreement is to protect the consumers against the false indication of sources of

goods, used by wrongdoers. Under this Agreement, all goods bearing false or misleading

indications by any member State are liable to be prohibited, seized or confiscated.58

According to this Agreement, all goods or deceptive indications of source, by which one of

the Contracting States, or a place situated therein, is directly or indirectly indicated as being

the country or place of origin, must be seized on importation, or such importation must be

�� 57

World Intellectual Property Organization, Madrid Agreement for the Repression of False or Deceptive

Indication of Sources of Goods, 1891, Available at:

http://www.wipo.int/treaties/en/ip/madrid/trtdocs_wo032.html (last visited: 4 January 2011).�

58 The Madrid Agreement, Article 1.�

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prohibited, or other actions and sanctions must be applied in connection with such

importation. It also provides for the cases and the manner in which seizure may be requested

and affected. It prohibits the use, in connection with the sale or display or offering for sale of

any goods, of all indications in the nature of publicity capable of deceiving the public as to

the source of the goods, it is reserved to the courts of each Contracting States to decide what

appellations, other than products of vine, do not, on account of their generic character, come

within the scope of the Agreement. The Agreement is open to the parties to the Paris

Convention.

5.8 Lisbon Agreement for the Protection of Appellations of Origin and their

International Registration59:

The Lisbon Agreement for the Protection of Appellations of Origin and their International

Registration was signed on 31 October, 1958. It established a special Union under Article 19

of the Paris Convention for the Protection of Industrial Property, 1883. The object of the

Agreement is to protect appellations of origin being defined as “the geographical name of a

country, region or locality which serves to designate product originating therein having the

quality and characteristics exclusively or essentially due to the geographical environment

including natural and human factors.”60

The Agreement also defines the “country of origin”

as “the country whose name or the country in which is situated the region or locality whose

name constitutes the appellation of origin which has given the product its reputation.”61

Some

aspects of the Agreement have been superseded by the Agreement on Trade-Related Aspects

of Intellectual Property Rights. It also provides for International Register of Appellations of

Origin, run by the World Intellectual Property Organization. Thus the registration of

appellations of origin shall be affected with the Intellectual Bureau of WIPO.62

The most

important facet of this Agreement is that it protects the consumers from being misled and the

primary objective of “appellations of origin” is to ensure more protection to consumers.

The Lisbon Agreement came into force in 1966, and was revised at Stockholm on 14 July

1967 and amended on 28 September, 1979. As of now it has 27 Contracting Parties.

�� 59

International Treaties and Conventions on Intellectual Property, Available at: http://www.wipo.int/about-

ip/en/iprm/pdf/ch5.pdf (last visited: 4 January 2011).�

60Article 2(1) of Lisbon Agreement.�


62Id. Article 5.�

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5.9 Universal Copyright Convention (UCC)63:

The Universal Copyright Convention or UCC was adopted at Geneva on 6 September 1952.

It is one of the two principal international conventions protecting copyright, the other being

the Berne Convention. It was developed by United Nations Educational, Scientific and

Cultural Organization(UNESCO) as an alternative to the Berne Convention for those States

which disagreed with the provisions of the Berne Convention and were not prepared to sign

up to the terms of the Berne Convention. The United States at that time provided protection

for copyright works only by a fixed term registration and also required that copyright works

must always show the © symbol. This meant that the US needed to make several changes to

its laws before it could comply with the Berne Convention. Consequently, the UCC was

entered into by countries like USA, the then Soviet Union (U.S.S.R) and China, as they did

not join the Berne Convention. The UCC ensured that international protection was available

to authors even in countries that would not become parties to the Berne Convention. Even the

Berne Convention countries also became members of the UCC, in order to ensure that the

work of citizens in Berne Convention countries is also protected in non-Berne Convention

countries.

The UCC is based on the principles of:

• National Treatment; and

• Requirement of maintenance of specific minimum legal safeguard by each

Contracting State.

However, on the demand of the developing countries, the Convention was revised in 1971 at

Paris. Special provisions of the Convention allow the developing countries to obtain

compulsory license under certain conditions, to translate copyright works for teaching,

scholarship and research purposes. Published and unpublished works both were protected

under this Convention.

The US finally signed up the Berne Convention on 1 March 1989 and now only requires

registration for work first published in the US by the US citizens.

As far as the importance of the UCC in the present age is concerned, it is limited as most

countries that are now part of the Union of the Berne Convention. However, to ensure that the

�� 63

The Universal Copyright Convention (Geneva Text--September 6, 1952), Available at:

http://ipmall.info/hosted_resources/lipa/copyrights/The%20Universal%20Copyright%20Convention%20_Gen

eva%20Text--September (last visited: 9 January, 2011).�

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existence of the UCC did not lead to differences with the Berne Convention, Article 17 of the

UCC contains a provision, which states that Convention does not affect any provision of the

Berne Convention, and the appendix Declaration to the Article states that any country that

withdraws from the Berne Convention after 1 January 1951 will not be protected by the UCC

in countries of the Berne Convention Union. This effectively gave the Berne Convention

precedence, and penalizes any country that withdraws from the Berne Convention to adopt

the UCC. However, the UCC has lost its significance on the fact that almost all countries are

either the members of the World Trade Organization (WTO), and are thus conforming to the

Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS).

5.10 International Convention for Protection of Performers, Producers of Phonograms

and Broadcasting Organizations64:

International Convention for Protection of Performers, Producers of Phonograms and

Broadcasting Organization is commonly known as Rome Convention, which was signed on

26 October 1961 and brought into force on 18 May 1964. The first international attempt to

protect related rights occurred at the Diplomatic Conference held in Rome in 1928 to revise

the provisions of the Berne Convention for Protection of Literary and Artistic Works. This

Diplomatic Conference coincided with the association of the International Labour Office in

the fight to protect performers as employed workers. However, at the Revision Conference

of Berne Convention, held at the Brussels in 1948, it became very clear that author’s group

were opposed to the idea of offering copyright protection to performers and the producers of

phonograms. But at the same time, there was a great deal of support for the development of

an international agreement to protect the related rights. Consequently, a draft convention was

prepared by a Committee of Experts convened at The Hague, the Netherlands, in 1960, and

was finally adopted in a convention held in Rome on 26 October 1961. The Convention is

administered by UNESCO, the International Labour Office and by WIPO.

According to Article 24(2) of the Convention, only countries that are both member states of

the United Nations and members of the Berne Union or parties of the Universal Copyright

Convention (UCC) are allowed to become parties of the Convention. However, a country

automatically ceases to be the member of the Convention if it ceases to be a party to either

the Berne Convention or the UCC.

�� 64

World Intellectual Property Organization , International Convention for Protection of Performers, Producers

of Phonograms and Broadcasting Organizations, 1961, Available athttp://www.wipo.int/treaties

/en/ip/rome/trtdocs_wo024.html (last visited: 9 January 2011).�

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Article 2(1) of the Convention stipulates the Principle of national treatment to be applied by

the laws of the Contracting States to performers, producers of phonograms and broadcasting

organizations claiming protection in such state.

Article 3 of the Convention defines:

• “Performers” as actors, singers, musicians, dancers, and other persons who act,

sing, deliver, declaim, play in, or otherwise perform literary or artistic works;

• “Phonogram” as any exclusively aural fixation of sounds of a performance or of

the other sounds; ‘producers of phonograms’ as the person who, or the legal

entity which, first fixes the sounds of a performance or other sounds; and

‘broadcasting’ as the transmission by wireless means for public reception of

sounds or images and sounds.

The Convention under Article 14 grants phonograms and performances incorporated in such

phonograms, performances not incorporated in phonograms, and broadcasts, a minimum term

of protection of twenty years, calculated from the end of the year in which the fixation was

made, or the performance or broadcast took place, to the end of twenty years period. This

term of protection and the principle of national treatment to the nationals of contracting

parties have been extended in the national legislation of many member states of the WTO.

However, an extended term of protection to the related rights can be traced to the provisions

in the TRIPS Agreement requiring member states to protect the rights of performers and

producers of phonograms for a term of fifty years from the end of the year in which the

fixation was made or the performance took place, and broadcasting organizations for a term

of twenty years from the end of the year in which broadcasting took place.65

The Convention can be described as a weak international treaty protecting rights of

performers, producers of phonograms and broadcasting organizations, by virtue of the fact

that it has been adhered to by only a fraction of the Contracting States of the Berne

Convention. Nevertheless, the Convention has probably remedied a lot of deficiencies that

existed in the copyright protection regime. However, the adherence to the provisions of the

Convention has been boosted by the adoption of the TRIPS Agreement as it makes reference

to the minimum rights, conditions, limitations, exceptions and reservations contained in the

Convention.66

Additionally, all the members of WTO are required to grant the minimum

�� 65 Article 14(5) of the TRIPS Agreement.�

66 Article 14(6) of the TRIPS Agreement.�

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rights listed in the TRIPS Agreement to performers, producers of phonograms and

broadcasting organizations.67

5.11 WIPO Copyright Treaty (WCT)68:

The WIPO Copyright Treaty is a special copyright agreement updating the Berne

Convention. It was adopted on 20 December, 1996 at Geneva and entered into force on 6

March 2002. The WCT originated in a WIPO work programme to update the Berne

Convention for the Protection of Literary and Artistic Works, 1886. The process was known

as the ‘Berne Protocol’, since it was conceived as a mechanism to modernize the Berne

Convention without engaging in a full revision of the Convention as was done earlier in 1971.

The WCT was intended to provide copyright protection for computer programs, databases as

intellectual works, and digital communications, including transmission of copyrighted works

over the world-wide internet and other computer networks.

The Treaty obliges the contracting parties to provide legal remedies against the avoidance of

technological measures, e.g., encryption, used by authors in connection with the exercise of

their rights and against the removal or altering of information, such as certain data that

identify works, or their authors, necessary for the management, e.g., licensing, collecting and

distribution of royalties, of their rights.

Article 4 of the WCT makes clear that computer programs are protected as literary works

under Article 2 of the Berne Convention, whatever to be the mode or form of their

expression. Article 5 brings within its ambit the databases that constitute “intellectual

creations”, i.e. the works in which the selection or arrangement of the content is the result of

intellectual effort. The compilation of the content or data is protected as copyright subject

matter, itself, unless the content is independently a work of the intellect, in which case it

enjoys a separate copyright. Under Article 7(1), exclusive rights of rental for computer

programs, cinematographic works, and works embodied in phonograms as determined by

national law of a state have also been recognized.

Article 9 provides the term of protection which extends during the life of author plus 50 years

after his or her death for photographic works. The term of copyright for works other than

�� 67

Article 14(1) (2) and (3) of the TRIPS Agreement.�

68World Intellectual Property Organization,WIPO Copyright Treaty, 1996, Available at:

http://www.wipo.int/treaties/en/ip/wct/trtdocs_wo033.html (last visited: 9 January 2011).�

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photographs is governed by Article 7 of the Berne Convention. Earlier the Berne Convention

provided protection for 25 years to the photographs.

Under Article 15, an Assembly has been established consisting of the members states, to deal

with future questions about maintenance, development, or revision of the treaty. The

International Bureau of WIPO performs any administrative task concerning the WCT.

5.12 WIPO Performances and Phonograms Treaty69:

Adopted on 20 December, 1996 at Geneva, the Treaty is intended to provide protection for

performers of audio works and producers of phonograms, i.e., sound recordings, usually as

‘related’ or ‘neighbouring rights’. Article 4 provides for principle of national treatment and

Article 17 provides for the term of protection to performers and producers of phonograms

extending to a minimum of 50 years to be calculated from first fixation of the sounds in a

phonogram. In case of producers, the 50 years term is computed from the year of publication,

if the phonogram is published. If the phonogram is unpublished, the 50 years term for

producers is computed from first fixation. The audiovisual work such as motion pictures are

not covered by the Treaty and the term of phonogram excludes the audiovisual performances

and includes under Article 2(b) of the Treaty the fixation of sounds or a representation of

sounds other than in the form of a fixation incorporated in a cinematographic or other

audiovisual work.

Article 24 has established an Assembly of the member states in order to provide some

organizational structure for dealing with future questions about maintenance, development or

revision of the Treaty. Under Article 35, the International Bureau of WIPO performs any

administrative task concerning the Treaty.

5.13 Treaty of International Registration of Audio-visual Works70:

This Treaty often known as “Film Register Treaty” was adopted at Geneva on 18 April 1989.

The Treaty was entered into with a desire to increase the legal security in relation to

audiovisual works so as to increase the creation of audiovisual works and the international

flow of such works, and to contribute to combat against piracy of audiovisual works. The

states parties to this Treaty constitute a ‘Union’ for the international registration of

�� 69

World Intellectual Property Organization,WIPO Performances and Phonograms Treaty, 1996, Available at:

http://www.wipo.int/treaties/en/ip/wppt/trtdocs_wo034.html (last visited: 9 January 2011).�

70 World Intellectual Property Organization, Treaty on International Registration of International Works, 1989,

Available at: http://www.wipo.int/treaties/en/ip/frt/trtdocs_wo004.html (last visited: 10 January, 2011).�

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audiovisual works. Article 2 of the Treaty has defined the ‘audiovisual work’ as any work

that consists of a series of fixed related images, with or without accompanying sound,

susceptible of being made visible and , where accompanied by sound, susceptible of being

made audible. Also for the purpose of the registration of statements concerning audiovisual

works and rights in such works, including the rights relating to their exploitation, a provision

for establishment of the ‘International Register of Audiovisual Works’ has been made.71

International Registry, thus, has been established to keep an International Register. The

International Registry of Audiovisual Works is an administrative unit of the International

Bureau of the World Intellectual Property Organization.72

The Union has an Assembly consisting of the contracting parties that deals with all matters

concerning the maintenance and development of the Union and the implementation of this

Treaty.73

Thus all the states’ party to the Union constituted under the Treaty undertake to

combat against piracy of the audiovisual works, thereby enhancing the creation of

audiovisual works and securing the international flow such works.

5.14 Hague Agreement Concerning the International Deposit of Industrial Designs74:

This Agreement is also known as Hague System, which provides a mechanism for registering

an industrial design in several countries by means of a single application. The system is

administered by WIPO. The Hague Agreement comprises of several separate Treaties. The

most important amongst them are, the London Act of 2June 1934, the Hague Act of

November 1960 and the Geneva Act of 2 July 1999.

In order to obtain protection of designs in other country, which is party to the system, a

country has to sign up either The Hague Act or the Geneva Act, as the London Act has been

frozen as of 1 January 2010. As of 13 December 2010, there were 57 contracting parties to

the Hague System.

�� 71

Article 3(1) of the Treaty on the International Registration of Audiovisual Works.�


73Id. Article 5(1) and (3) (a) (i).�

74World Intellectual Property Organization, Hague Agreement Concerning the International Deposit of

Industrial Designs; Available at: http://www.wipo.int/treaties/en/registration/hague/(last visited: 4 January

2011).

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The application filed for international protection has to be examined by International Bureau

of WIPO. After the examination, it is recorded in the International Register and details are

published in the International Designs Bulletin on the WIPO website. However, if any

contracting party feels that a design does not meet its domestic criteria for registrability, as

novelty, it may notify the International Bureau that it refuses to register the design of that

contracting party. Nevertheless, if every contracting party does not issue such a refusal, the

international registration takes effect and provides the same protection as if the design had

been registered under the domestic law of that contracting party.

The term of the international registration is five years, which can be extended for five year up

to the maximum duration permitted by each contracting party.

5.15 Locarno Agreement on Establishing an International Classification for Industrial

Designs75:

This Agreement aims at bringing uniformity in the classification of industrial designs to

facilitate searches for novelty and priority. The Agreement was adopted on 8 October, 1968

by a diplomatic conference in Locarno, Switzerland. It is administered by the International

Bureau of WIPO. All the countries to which to which this Treaty applies constitute a Special

Union and they adopted a single classification for industrial designs to be known as

international classification for industrial designs. Under this treaty a committee of experts

was created to make amendments or additions in the international classification of industrial

designs, necessitated due to the changes in technology and trade. This Agreement contains a

list of goods qualifying for the protection as industrial designs, which comprises of about

6000 entries.76

6. WORLD INTELLECTUAL PROPERTY ORGANIZATION (WIPO) AND WTO :

The genesis of World Intellectual Property Organization (WIPO) goes back to 1883, the year

that marked the birth of the Paris Convention for Protection of Industrial Property. In 1886,

copyright also entered into the international arena with the Berne Convention for the

Protection of Literary and Artistic Works. Like the Paris Convention, the Berne Convention

�� 75

World Intellectual Property Organization, Locarno Agreement on Establishing an International Classification

for Industrial Designs,1968, Available at: http://www.wipo.int/treaties/en/classification/locarno/�

76 WIPO Intellectual Property Handbook: Policy, Law and Use, WIPO Publication No. 489(E), Second Edition,

2004, at 313. Available at: http://www.scribd.com/doc/18227630/WIPO-Handbook (last visited: 9 January

2011).�

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established an international bureau to carry out administrative tasks. In 1893, these two small

bureaux amalgamated to form an international organization called United International

Bureaux for the Protection of Intellectual Property (BIRPI) also known as Bureau

Internationaux Reunis pour de la Propriete Intellectual. Based in Berne, Switzerland, with a

staff of seven, this small organization evolved into World Intellectual Property Organization,

an entity with 184 member states.

The World Intellectual Property Organization (WIPO) was founded on 14July 1967 to

“promote the protection of intellectual property throughout the world”77

and to ensure that

intellectual property rights are maintained and enforced. The protection and promotion of

intellectual property, protection of intellectual property rights throughout the universe and to

harmonize the national legislations respecting such properties of different kinds, to make

international agreement, providing cooperation to states, information, dissemination and

maintaining services as to services for protection of such property rights, are the main

objectives and functions of the organization.

In 1974, WIPO became a specialized agency of the United Nations with a mandate to

administer intellectual property matters recognized by the member states of the U.N. The

Organization has since than expanded its role and demonstrated the importance of intellectual

property rights in global trade and as a catalyst for economic, social and cultural

development. In order to achieve its objective, WIPO is working to create an environment

conducive for an enhanced understanding of the contribution of IP to improve human life.

Moreover, WIPO is also committed to assist developing countries in building their capacity

to deliver efficient IP services, and enable greater access to, and more effective use of, the IP

system to further their national development objectives. At present WIPO administers 24

treaties, including Paris Convention, Berne Convention, Patent Cooperation Treaty, Rome

Convention, Lisbon Treaty, Madrid Agreement, etc.

WIPO is not an elected body like other UN multi-government forums. It usually attempts to

reach its decisions by consensus, where each member state is entitled to one vote irrespective

of its population or contribution to the funding. This factor has led to significant

consequences over certain issues, due to the North-South divide in the politics of intellectual

property. During the 1960s and 1970s, developing countries blocked expansions to

�� 77Article 3 of the Convention Establishing the World Intellectual Property Organization (WIPO) signed at

Stockholm July 14, 1967.�

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intellectual property treaties such as Universal Pharmaceuticals Patents. As a result in the

1980’s the United States and other developed countries introduced Uruguay Round of the

General Agreement on Tariffs and Trade which later led to the establishment of World Trade

Organization, where the North had greater control of the agenda. Thus this strategy finally led

to the making of Agreement on Trade-Related Aspects of Intellectual Property Rights

(TRIPS).

Many committees constituted under the aegis of WIPO such as, the Standing Committee on

Patents (SCP), the Standing Committee on Copyright and Related Rights (SCCR), the

Advisory Committee on Enforcement (ACE) and the Inter-governmental Committee on

Access to Genetic Resources (IGC), Traditional Knowledge and Folklore, and the Working

Group on Reform of Patent Cooperation Treaty perform commendable job in effective

working of the WIPO.78

On 22 December 1995, the World Intellectual Property Organization(WIPO) and the World

Trade Organization(WTO) in order to establish mutually supportive relationship between

them, and with a view to establishing appropriate arrangement between them decided to enter

into an agreement, whereby WIPO agreed to make the laws and regulations, computerized

database in its collection, accessible to the members of the WTO, the WTO Secretariat, the

Council for TRIPS and their nationals in the cases relating to obligation of members under

Article 63(2) of the TRIPS Agreement , or under Article 68 of the TRIPS Agreement relating

to dispute settlement, and the WTO also has the same obligation to provide information

pertaining to the above issues to the WIPO reciprocally. The Agreement came into force on 1

January 1996.

7. LEAGUE OF NATIONS AND INTELLECTUAL PROPERTY:

During the inter-war period, the term “intellectual cooperation” came to be used as an

idealistic expression for the purpose of developing international, moral scientific and artistic

relations among nations. It was in Paris Peace Conference in 1919 that the establishment of

International Organization for Intellectual Cooperation was proposed for the first time.

However, it could not be incorporated in the Convent of the League of Nations, which came

into existence without making any reference to the International Intellectual Cooperation.

�� 78Wikipedia, The Free Encyclopedia, World Intellectual Property Organization, Available at:

http://en.wikipedia.org/wiki/World_Intellectual_Property_Organizationen (last visited: 10 January 2011).�

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However, the suggestions for launching a new project for intellectual work were made

repeatedly from various quarters, even after the Paris Conference. Consequently, in 1922 the

French Association for the League of Nations sent a letter to the Secretary- General of the

League, arguing for the need to establish an “International Bureau for Intellectual Intercourse

and Education.”79

In that letter the French Association emphasized the importance of “more

intimate and active interchange of ideas, impressions, scientific discoveries, moral

improvements and literary and scientific publications.”80

At first Assembly of the League in 1920, the problem of intellectual work was widely

discussed, where the proposal for bringing about an ‘International Organization of

Intellectual Labour’ was made.81

After many discussions, in 1922, the organization came

into existence under the name of the “International Committee on Intellectual Cooperation”

(ICIC). Various characteristic features of the intellectual cooperation were defined at the first

plenary session as:

“The members of the Committee were all personalities eminent in the various branches of

human knowledge, and their relations with their respective governments, which they in no

ways represented, were those of complete independence.

The work of the Committee, the scope of which had been strictly defined either by the

Council or by the Assembly, was to submit to the Assembly a report on the steps to be taken

by the League to facilitate intellectual relations between peoples, particularly in respect of the

communication by scientific information.”82

From the very beginning the ICIC was concerned with intellectual property rights because

they were considered as a crucial part of its programme to improve the relationship between

nations by improving the legal conditions under which literature, music and art were

exchanged. Subsequently, the sub-committee for intellectual property rights met for the first

�� 79

“Institution of an International Bureau for Intellectual Intercourse and Education”, Letter dated 8July 1920,

from the President of the Executive Committee of the French Association for the League of Nations, League

of Nations, Official Journal, No.7, October 1920, at 445-451.�

80Id., at 445.�

81 League of Nations, The Records of the First Assembly, Meetings of the Committees, I Geneva 1920, at 271.�

82 League of Nations, Committee on Intellectual Cooperation, Minutes of the First Session, Geneva, August 1-5,

1922, at 3.�

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time in December 1922.83

As the ICIC had been examining various problems relating to the

intellectual property rights, the Paris Institute was invited to participate at the revision

Conference of the Berne Convention in Rome in 1928. After the Rome Conference, the ICIC

decided to take over responsibility for the Conference’s wish to harmonize the Berne

Convention with the Copyright Agreement of the Pan-American Union.

7.1 League of Nations and Copyright:

In the 19th

century, the literary, artistic and musical works became very common and gained

popularity in the western world. They became subject matter of trade mainly due to the

reason that production and reproduction of such works had become easier due to the progress

in the field of technology which made such process easier. Moreover, the growing awareness

among the people regarding use of such creations made the scope of trading in such works

inevitable. Thus the question of establishing, as to who would be entitled to publish, exploit

and receive literary and artistic works became a matter of great concern.84

Though the States

tried to solve this problem by enacting national legislations, yet the question of protecting

their works on the foreign land and vice versa on their home land became important to be

determined. Hence, the trading between the nations in respect of literary works necessitated

the national governments in Europe to tackle with such situation. After long deliberations, the

Berne Convention for Protection of Literary and Artistic Works was adopted in 1886 by most

of the European book trading countries in collaboration with publishers and authors.

However, the American States passed the first Inter-American Copyright Agreement at the

same time in the Convention of Montevideo in 1889. But the Berne Convention proved to be

of greater significance in affording protection to the intellectual property and made its way

to the World Trade Organization through the World Intellectual Property Organization, which

presently also administers this Convention.

During the period following the outbreak of World War I, as has been discussed earlier,

efforts to protect the intellectual works were made by the League of Nations by the

establishment of ICIC. The League of Nations attempted to establish a global copyright

convention during the 1930’s. The ICIC’s attempt to harmonize the Berne Convention with

�� 83

Report of the Sub-Committee, First Meeting on December 18-19, 1922 in Paris, (United Nations Organization

Geneva Archives).�

84 Isabella Lohr, Selling books: The League of Nations and Globalization of Intellectual Property Rights in the

1930s, op. cit. at 1. Available at: http://www.unige.ch/ses/istec/EBHA2007/papers/Loehr.pdf (last visited: 10

January 2011).�

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copyright agreements of the Pan-American States, required a formal applicationto be made

for getting copyright protection and after having registered a book or another printed work,

the protection could be claimed. Whereas, the Berne Convention in 1928 in Rome, the moral

rights of the author, the droit moral, were acknowledged where author was recognized to

possess individual and exclusive ownership of his work, thereby preventing the states from

interfering into rights of the author to decide to exploit his work or not. The states were

consequently, prevented from imposing any formality on the author or publisher regarding

exploitation of his work. Consequently, the Berne Convention states had a strong interest in

abolishing the formal restrictions so that the American markets would remain open for the

books published by the Europeans whereas, the Pan-American States intended to impose

registration restrictions in order to save their idea of copyright protection not as an

individual’s right but as the right given by the state. Additionally, the right of translation of

work was a contentious issue. As the Berne Convention conferred this as an exclusive right of

the author, hence the question of publishing the translated work was purely within the ambit

of the author. Accordingly to the rule of the right of an author over his work, the right was

valid during the author’s life span plus 30 years. On the other hand, the Pan-American States

insisted upon imposing restrictions upon the author’s right to translate his work. Whereas, the

Berne Union members sought to bind the American publishers to the European authors and

publishers possessing the exclusive right to translate a work, the Pan-American States wished

to liberalize the translation rules so that they had better access to the cultural and scientific

knowledge of the European States in order to catch up in economic development.

Hence, the efforts to draft global copyright convention, with the involvement of League of

Nations, the Paris and Rome institutions began. Although it was found that disagreement

between the two Conventions were not numerous, and the interest of the states to harmonize

their copyright rules with rules of the Berne Convention, but negotiations did not manage to

resolve the different ideas of how to revise the Pan-American copyright treaties in order to

create a common ground for the understanding. Due to this disagreement, the Montevideo

Conference in 1933 between the Pan-American States decided to fix a committee consisting

of fiveSouth American experts, the so-called Montevideo Committee, with the task of

working out a draft for a global copyright convention. Between 1928 and 1936, the Paris

Institute on behalf of the League’s General Assembly established multi-level ties beyond

conventional diplomatic channels. This Institute involved international associations of

authors and publishers to show their expertise. As a result, Committee of Experts was

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constituted. Thus, the preliminary texts for such global copyright convention were prepared

before it became open for inter-governmental discussion.

Consequently, in 1936, the drafts were prepared to be submitted for inter-governmental

debate. But the conference intending revision of Berne Convention and second diplomatic

conference to which all the member states of the Berne and the Pan-American Union were to

be invited, in order to inaugurate the new Convention, the conference was postponed for

some time to bring them together. But the conference was postponed to an indefinite date.

Then Belgian government, which was the member of both Berne Convention and the Pan-

American Union, decided to hold conference in 1938, as drafts for global copyright

convention were ready by that time. Finally, it was decided to hold a diplomatic conference

in Brussels to establish a global copyright system. However, the conference could not be held

due to outbreak of World War II in 1939. Though the holding of the conference for global

copyright convention was prevented due to outbreak of the World War II, but the role of

League of Nations to introduce the concept of international protection of author’s right in the

international politics in the inter-war period could not be negated and deserves to be praised

as it introduced the concept of establishing an international regime of copyright that

culminated finally, after long protracted negotiations in the Uruguay Round of the GATT,

into an international organization as a part of the TRIPS Agreement.

Though the efforts to create global copyright convention failed to bring any fruitful results

during the reign of the League of Nations, nonetheless idea was advanced by the efforts of

various developed country, which faced the scourge of war. As the industrial infrastructure

was completely destroyed by the war, the devastated nations decided to establish an

International Trade Organization with an intention to develop their industries again and also

to create protected world trade markets. Consequently, General Agreement on Tariffs and

Trade (GATT) was adopted as a provisional arrangement to the permanent international

organization that could not be established, and that arrangement continued till it culminated

into the establishment of the World Trade Organization (WTO).

8. GENERAL AGREEMENT ON TARIFFS AND TRADE (GATT):

It has been widely recognized that for the conduct of international trade in an efficient and

equitable manner, trading nations can benefit from the existence of and adherence to

multilaterally agreed set of rules and procedures. This realization led to the creation of

Agreement on Tariffs and Trade in the late 1940s. The emergence of GATT as an

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international organization is the product of U.S. State department officials planning due to the

World War-II. Evolution of GATT may be traced back to the Atlantic Charter issued on 14

August 1941 by the President of United States and the Prime Minister of United Kingdom.

Points 4 and 5 of Atlantic Charter read as follows:

“They will endeavour with due respect for their existing obligations to

further the enjoyment by all States, great or small, victor or vanquished of

access on equal terms to trade and the raw materials of the world which are

needed for their economic prosperity.

They desire to bring about the fullest collaboration between all nations in the

economic field with the object of securing for all improved labour standards,

economic advancement and social security.

The idea was further developed in Article 7 of Mutual Aid Agreement

concluded in February 1942 between the United States and United

Kingdom.”85

The intentions of the leaders of the great nations were clear to establish trade links, so as to

grow and meet their needs, though the concept of equal trade was seen with suspicion by

most of the developing countries that were in the nascent stage of development after

emerging out of the colonization phase. After the World War II, GATT was the first such

effort to establish trade links on established terms taking care of their interests.

8.1 Origin of GATT:

Origin of GATT can be traced back to the Bretton Woods Conference, which was held at

Bretton Woods, New Hampshire in 1944. It was the starting point for the new world

economic order and the world economy was to revolve around three pillars86

:

i. International Bank for Reconstruction and Development i.e. the World Bank

(IBRD);

ii. International Monetary Fund(IMF); and

iii. International Trade Organization (ITO).

�� 85

K. R .Gupta “GATT and Under Developed Countries”, (1976) at 2.�

86Dr. A. S. Dala and Dr. Leena Singh “WTO and Role of India in Multilateral Trade System”, Maharishi

Dayanand University Law Journal, Vol. XII, Part-II, 2007, 82 -90 at 82.

�

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The establishment of a fund to stabilize foreign exchange rates and a Bank to provide the

capital finally came up at the Bretton Woods Conference, held in New Hampshire during July

1944, in the form of IMF and the World Bank respectively. After the establishment of IMF

and International Bank for Reconstruction and Development, another International Trade

Organization (IBRD)was set up to deal with the trade aspects of international economic

relations and to bring about collaboration between all nations in economic field with the main

objective of securing economic advancement, improved standards and social security.

The General Agreement became the founding document for an international institution and

the GATT assumed commercial policy role that has been assigned to ITO. After the

termination of World War II, it was widely recognized that political security cannot be

achieved without the financial and commercial stability. It was only after the establishment of

International Monetary Fund (IMF) and International Bank for Reconstruction and

Development in 1946 that the establishment of an International Trade Organization (ITO)

was felt to look after the trade problems of the world. The negotiations concerning the form

and functions of ITO were first held on a bilateral basis with the United Kingdom.In 1945,

the results of those bilateral negotiations were incorporated in a document entitled ‘Proposals

for Expansion of World Trade and Employment’. The member countries in this proposal had

to conduct their trade relations in accordance with the rules and regulations provided in the

Charter. This Charter contained provisions related to trade barriers, restrictive barriers and

restrictive business practices, inter-governmental commodity arrangements, international

aspects of domestic employment policies and the structure of the organization. The United

Nations in February 1946 called for an international conference on trade and employment and

established a preparatory committee of nineteen countries to prepare a draft Charter for ITO

set by most competent and technical staff of its government. The copies of suggested Charter

were sent to the Secretary General of the United Nations and this was to serve as a basis of

discussion and not as fixed and final views of the United Nations government.87

The Charter

was elaborated and amended in successive conferences from 1946 to 1948 held in London,

New York, Geneva and Havana respectively.

Some other countries also submitted their documents including India, Brazil and the U.K.,

but the draft Charter was incomplete in certain respects including agreement on voting and

other organizational questions. The provisions of State Trading and Treatment of Non-

�� 87United Nations; The Report of The First Session of the Preparatory Committee of the United Nations

Conference on Trade Development, London, 1946, at 52.�

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Members were not clearly worked out. Due to these shortcomings, the draft committee was

again entrusted a job to prepare a detailed draft of the General Agreement on Tariffs and

Trade (GATT).

On 8 November 1946, the United States invited the representatives of other nations to

negotiate the tariff (tax on imports and exports) concessions on reciprocal and mutually

advantageous basis. The London Session of such drafting, aimed at reduction of tariffs and

elimination of preferences, while the second session of the committee, in 1947 held at

Geneva, completed the draft Charter. In addition, at this session, the General Agreement on

Tariffs and Trade was negotiated and the aim was to reduce tariffs and other barriers to

Trade.

In the world conference, held at Havana on 21November 1947, fifty six nations sent their

delegates excluding the USSR and this ended in signing of the Final Act of Havana

Conference by fifty three countries. In 1947, the General Agreement on Tariffs and Trade

was established that was considered to be a temporary arrangement as compared to

International Trade Organization, with more positive and wider objectives. The Havana

Charter aroused many controversies in the United States and its ratification was postponed till

1951. The United States, however, did not ratify the Charter because of the strong opposition

from the business class. The Charter was opposed on several grounds and it contained various

exceptions, escape clauses that could not remove trade restrictions.

The Charter, however, was not only subject to criticism but also had favourable points

including the most favoured nation treatment, reduction of trade barriers and preferential

arrangements, elimination of quantitative restrictions, freedom of transit, regulation and

administration of tariffs, settlement of differences, provisions concerning full employment,

charges on imports and exports and national treatment of internal taxation and regulations.

In short, most of the criticism of the Havana Charter came from the business community who

were very powerful in the U.S and had vested interests. It was for this reason that the Havana

Charter could not be ratified.

However, General Agreement on Tariffs and Trade came into force on 1January 1948. It

originated from a preamble to a treaty on ITO. As an agreement, it provided a framework

within which individual contracting parties could take active part in policy making,

exchanging views, consultations or conducting trade agreements.

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There are number of reasons for the success of GATT which covered a narrow sphere as

compared to ITO. Few of these are:

i. The GATT dealt mainly with the tariffs and other matters related to them whereas,

the ITO was to deal with employment, commodity arrangements, restrictive

business practices etc. The participation by the contracting parties in the GATT did

not require any special legislation as in case of ITO. Moreover, a contracting party

could withdraw from the Agreement by giving 60 days’ notice while the Charter

required 6 months’ notice for withdrawal from the ITO. This created to some extent

an element of uncertainty because any country could withdraw from the agreement

if its immediate interests were jeopardized even if the continuation of the member

in the long term would be in its interest.

ii. The consequences for the non- compliance of the contractual matters of the General

Agreement was that, the sanctions available for the violation of the GATT

provisions were very weak in nature. The only situation at the disposal of the

contracting parties was to release the injured party of its obligations towards the

defaulting party which might lead to retaliation.

The General Agreement neither contained the institutional provisions nor all the substantive

provisions of the Havana Charter, but contained most of the provisions on commercial policy

supported in 1940’s by the U.S diplomats. The U.S negotiators sought to achieve the goals of

free trade, non-discriminatory trade and reduction of tariffs through international negotiations

and abolition of non-tariff barriers within the frame work of a comprehensive code governing

the world trade. The codification limited the right of individual governments to interfere with

the free flow of private trade. The United States faced opposition from many countries, which

felt forced to continue with the existing trade restrictions. This was because of the fact that

role and organization of international trade differed greatly between deficit and surplus

countries, developed and developing countries, market economy and planned economy

countries and so forth.

In the beginning, only a few developing countries acceded to GATT as compared to a number

of countries that subscribed to the Havana Charter.This had been attributed to the revisionof

the provisions contained in the world market for raw materials and food stuffs and the

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provisions pertaining to economic development.88

Most of the Latin American countries did

not form the General agreement and out of seventeen Latin American countries, which signed

the Havana Charter only three were among the twenty three original contracting parties.

Some countries stayed outside GATT and the most of the countries in spite of welcoming the

benefits from tariff concessions did not like outside interference in the conduct of their

commercial policies, especially the developing countries that had gained sovereignty after

decolonization.

The international trade organization failed to come into existence and GATT succeeded

because of the fact that it dealt mainly with tariffs and matters related to them, thus covering

a narrow sphere.

GATT is a multilateral treaty which lays down agreed rules for the conduct of international

trade. The agreement is based on number of principles which are fundamentally binding for

all including most favoured nation treatment, equal treatment of nations, trade transparency

for general prosperity, opening up of global resources, increase in global production and

exchange of goods. By entering into reciprocal and mutually advantageous arrangements, the

contracting parties to the General Agreement aim at contributing to the objectives by

reducing the tariff barriers to trade and thus eliminating discrimination in international trade.

The main objectives are:

i. Raising the standard of living of the people;

ii. Ensuring full employment, large and steady, growing volume of real income and

effective demand;

iii. Expanding production and international trade; and

iv. Free and non-discriminating trade.

The GATT was a contractual framework which incorporated a set of mutually agreed rules

governing trade relations. It also constituted a forum for the negotiations of trade issues

among member states such as successive rounds of discussions on tariff reductions. In

addition to the countries that had acceded to the GATT as full contracting parties, newly

independent countries also participated in GATT on de facto basis.

�� 88

United Nations Conference on Trade and Development, “The Developing Countries in GATT”, UNCTAD

Document No. E/Conf.46/36, Geneva, March 1964, at 15.

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The GATT formalized two fundamental principles viz,

8.2 Equality of Treatment:

Equality of Treatment or non-discrimination was the significant concept of the General

Agreement, which was expressed in its generalized Most Favoured Nation (MFN) Clause that

required:

“any advantage,favour, privilege or immunity granted by any contracting party to any product

originating in or destined for any other country shall be accorded immediately and un-

conditionally to the like products originating in or destined for the territory of all other

contracting parties.”89

The main purpose of the most favoured nation clause was to prevent preferences or

discrimination against any state. After the break down of free and multilateral trade in 1930’s,

most of the countries started resorting to the bilateral agreements. Bilateral agreements,

however, were discriminatory and exploitative against the third country as these agreements

were based on mutual bargaining and not on any objective principles. Thus, the most

favoured nation clause was an instrument of avoiding unpleasant and unfair consequences of

bilateral agreements on the weaker party. A contracting party could stay away from most

favoured nation treatment, only if it left the membership of GATT and would forego all

concessions provided under the auspices of the GATT. However, a few exceptions permitted

were, in cases of preferences which had been in force when the member signed GATT and in

cases of customers unions, free trade associations and developing countries in certain

circumstances.

8.3 Reciprocity:

Reciprocity in the General Agreement meant exchange of concessions during negotiations,

where every government aimed at maximizing its gains from the trade cooperation.

Reciprocity was a four component relationship where the government A granted concession

X to government B. Since the concession X was of importance to government B, A might ask

for a reciprocal concession Y from B and obtains the same, as shown in Figure 1.

Figure 1

X

Y

�� 89

Article 1 of the GATT�

Govt. A Govt. B

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Thus, the MFN clause and the principle of the reciprocity supplemented each other in such a

way that the latter provided the basic rules in the trade negotiations while the former

extended any negotiated benefits to all other parties as contributions towards trade

liberalization on a multi-lateral basis with an immediate effect, when it conferred any

privilege or concession to any other contracting party.

Other governing principles of the GATT included:

i. Contracting Parties should use the procedure of consultation directly with other

Contracting Parties or with the Contracting Parties collectively in cases of dispute

and to avoid damage to one another’s trading interests; and

ii. Contracting Parties should take such joint action as is necessary to further the

objectives of the Agreement.

Non-discrimination is the central concept of the General agreement expressed in famous

Most-Favoured Nation clause (Article 1). But sometimes trade restrictions are also

indispensable for developing countries. The reduction in tariffs and elimination of

discrimination was on reciprocal and mutually advantageous basis. But the articles of

agreement however, did not insist on strict reciprocity which was contrary to the principle

accepted by developing countries, that the advanced countries should help the developing

countries in their programmes of economic development to reduce the inequalities in

distribution of world wealth and income. Assistance to less developed countries should be

given through trade only without affecting the allocation of productive resources. However,

trade restrictions were obligatory for developing countries and if so, they should be of

selective nature which does not restrict the total world trade and development. These

restrictions had been permitted under exceptions and escape clauses or through grant of

special waivers from the obligations under GATT. The advantages of free trade stipulated in

the GATT could not be ruled out as:

i. They enabled developing countries to obtain capital goods, machinery, raw

materials etc. required for executing certain development programmes.

ii. They enabled the technologically weak developing countries to import technical

knowledge, skills, managerial talents and entrepreneurship which were more

important than the material items, especial for their growth.

iii. It served as a vehicle for international movement of capital. No doubt capital

movements might take place even in the absence of trade but its facilitating

conditions of international capital resource could not be denied; and

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iv. Free trade promoted healthy competition and checked inefficient one-track policies.

8.4 Functions of GATT:

The responsibilities and functions of the General Agreement on Tariffs and Trade, and in

particular, the magnitude to which they extended far beyond the matters of tariffs to hold the

basic principles underlying the conduct of international trade, can be illustrated by

summarizing the Agreement.

The first, three Articles of the Agreement dealt directly with the tariffs. Article I dealt with

the Most Favoured Nation (MFN) obligations and forbade the contracting parties from

granting new preferences.90

Article II, which, in a way was the basic tariff Article, incorporated the schedules of tariff

concessions resulting from the tariffs conference.

Article III dealt with the agreed rules relating to the application of internal taxes guaranteeing

that important goods would be accorded the similar treatment as the domestic products.

Articles IV to X of the Agreement related to the general rules and principles regarding transit

trade, anti-dumping and countervailing duties, customs valuation, customs formalities and

make of origin. Articles XI to XIV of the Agreement dealt with quantitative restrictions on

imports & exports.

Article XV dealt with relations between the contracting parties and the IMF. Articles XVI,

XVII, XIX XX and XXI dealt with subsidies, state trading, emergency measures and general

and security exceptions respectively. Articles XVIII included the provisions of the

Agreement relating to government assistance for economic development. The most important

provisions of these articles were based on the recognition that the tariff structure of the

developing nations had to be flexible. Articles XXII and XXIII provided for the action by the

contracting parties for settling disputes that might arise due to the application of the GATT.

Article XXIV incorporated rules regarding the establishment of customers unions and free

trade areas. Article XXVIII dealt with the general principles tariff negotiations and other

articles dealt with the technical matters relating to the operations of Agreement. Article XXV

provided for joint action of the member-countries and formed the legal basis for the large part

that the GATT played in the expansion of world trade and in providing an international forum

for the discussion of problems relating to international trade. Annual meetings of the

�� 90

M.C. Vaish and Sudama Singh, “International Economics”, (1983) at 337.�

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contracting parties were important from the point of view of policy decisions to be taken by

the contracting parties.

A review of the functioning of the GATT, however, points clearly to the fact that it was the

developed countries that were benefited the most from the multilateral liberalization and the

consequent expansion of international trade. The developing countries suffered from a

persistent tendency towards external imbalance and a deterioration of their terms of trade

with the developed world.

Committee III of the GATT commented as follows on the situation in a report by the

contracting Parties on November 15, 1961:

“……While the economies of industrialized countries, in the wake of increased levels of

trade, have continued to expand, export earnings of less developed countries, as a group, have

remained relatively stagnant as a rule, among other things, of the continuing deterioration of

their terms of trade.”91

Consequently, the main complaint of the developing countries against the GATT had been

that the institutional set up of GATT was based in favour of the rich countries and hindered

undesirably their efforts towards growth and development. They contended that it was not

appropriate to assume that there was complete equality among all the member countries of

the GATT and that it was unjust to base the activities of GATT on such assumed equality.

Moreover, the fact that the initiative for the formation of the GATT was taken and the

formulation of its policies was influenced predominantly by the developed countries vetoed

the area for the developing countries to exert pressure in the functioning of the GATT and,

thus, undermined the efforts of these developing countries to derive the benefits that they

truly deserved. It also lacked the enforcement power and legally binding character of the

Havana Charter since it did not require the total incorporation of its principles into the

municipal law and it was financially dependent on the United Nations. In fact, the many

weaknesses of the GATT were admitted both by the developing and the developed member

countries themselves and it was rather unfortunate that there had not, so far, been any serious

and sincere efforts on their part to overcome these difficulties and improve the efficiency and

utility of the GATT.

�� 91

Abdulqawi Yusuf, ‘Legal Aspects of Trade Preferences for Developing States: A Study’in Influence of

Development Needs on the Evolution of the International Law, (1982) at 61.

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Under the regime of GATT various tariff negotiations conferences were held in Annecy

(France) in 1949, at Torquay (England) in 1951, and in Geneva in 1956, 1960-61 (Dillon

Round) 1964-67(Kennedy Round), 1968-79 (Tokyo Round) and 1986-94 (Uruguay Round),

which are represented in the tabulated form in Table I as under :

TABLE I

GATT TRADE ROUNDS

Start of Round Name of Round Subjects Covered

April 1947 Geneva Tariffs

April 1949 Annecy Tariffs

September 1950 Torquay Tariffs

January 1956 Geneva II Tariffs

September 1960 Dillon Tariffs

May 1964 Kennedy Tariffs and Anti- Dumping

September 1973 Tokyo Tariffs and Non-Tariffs and

framework Agreements

September 1986-94 Uruguay

Tariffs and Non –Tariffs

measures, rules, services,

TRIPS,TRIMS, dispute

settlement, textiles,

agriculture, creation of WTO,

etc.

Source: GATT Publication, 1991.

In 1993, the GATT was updated as GATT 1994, to include new obligation on its contracting

members. One of the most significant changes was the creation of the World Trade

Organization in which the 75 existing members and European Communities became the

founding members. GATT was set of rules agreed upon by the nations, but the WTO is an

institutional body.

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9. UNITED NATIONS CONFERENCE ON TRADE AND DEVELOPMENT

(UNCTAD)-ANOTHER FACET OF DEVELOPING COUNTRIES:

The economic growth of the developing nations for the first time became one of the major

areas of concern in the international organizations particularly, the U.N during the period of

1950. The developing countries, many of which were trying to create a significant base to

make their political independence or sovereignty meaningful, were facing harsh economic

circumstances and had unhappy experiences. These countries, which were relatively few at

that time, started realizing that the central organs of the United Nations (UN) were not

sufficiently reacting to their demands relating to trade and economic problems of

development. Thus, they preferred to take these matters to the regional bodies such as U.N

Regional Economic Commission for Asia and the Far East (ECAFE) and Regional Economic

Commission for Latin America (ECLA), where the majority was clearly on their side and

where their view counted. It was there, that the developing countries began systematically

collecting the material for presenting their case in other international forums, or in other

words, it was the beginning of journey of the developing countries towards their participation

and sharing in the liberalized trading world.

In the years that followed, number of countries fighting their way to freedom and political

sovereignty attained numerical dominance in the world organizational set-up and made their

way into challenging force.92

Their problems attained a universal shape and their upliftment

became historically an inevitable matter with an urge to develop.

To deal with that growing feeling of dissatisfaction amongst the newly sovereign nations,

which were in the state of development, in 1961, the General Assembly of the U.N. officially

designated the decade 1960s as the United Nations Development Decade, and set the

attainment of a minimum annual growth rate of five percent in income by all developing

countries as the target for achievement by 1970.93

At the same time, the General Assembly

adopted a resolution entitled “International Trade as the Primary Instrument for Economic

Development.94

Thus, in order to promote economic opportunity for developing countries and assist in their

fair and equitable amalgamation into the world economy, UNCTAD was founded in 1964 at

the time when the developing countries were frustrated over the instability in the international

�� 92

P. Rajendra Kumar, Third World Development and New International Economic Order, (1988) at18.�

93Id.�

94Id.�

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commodity markets that reflected unfair terms of trade contributing to their growing poverty.

The first United Nations Conference on Trade and Development (UNCTAD) met in Geneva

from March 23 to June 16, 1964. It was the largest and one of the most important

international conferences covering the entire field of trade and development problems and

policies. This conference, for the first time in history, dealt with the problems of trade and

development of the underdeveloped countries, including developing and least developed

countries. It helped in a new era of international effort to accelerate the processes of

development and leading the way towards a more just and rational international economic

order.95

The recommendations of the first UNCTAD set forth new objectives and modes for

providing guidelines for trade and international co-operation, with particular reference to the

problems affecting the developing countries, regardless of their economic and social systems.

It recommended to the U.N General Assembly that the UNCTAD should be established as an

organ of the General Assembly. That recommendation was accepted by the General

Assembly and it passed a Resolution 1995 (XIX) of 30 December 1964,96

and UNCTAD was

thereby established as an organ of the General Assembly.

Up to 2008, twelve UNCTAD conferences have been held, and the thirteenth is scheduled to

be held in 2012 in Doha, Qatar. The first Conference was held in Geneva in 1964, second in

New Delhi in 1968, the third in Santiago in 1972, fourth in Nairobi in 1976, the fifth in

Manila in 1979, the sixth in Belgrade in 1983, the seventh in Geneva in 1987, the eighth in

Cartagena in 1992, the ninth in Midrand in 1996, tenth in Bangkok in 2000, the eleventh in

Sao Paula in 2004, and twelfth in Accra in 2008. One of the biggest achievements of the

UNCTAD has been that the developing countries have managed to get duty-free or reduced

rates on manufactured goods and some agricultural goods, exported to the developed

countries. This has been possible due to formulation of Generalized System of Preferences

(GSP) by the developed countries, under which it was agreed by them to allow certain

exports from the developing countries either duty-free or at reduced rates, that is import by

the developed countries from the developing countries in some goods, would enjoy a

competitive advantage over that of the developed country imports. During 1970 to 1980, the

�� 95

Id., op. cit., 42 at 69.�

96 Resolution adopted by General Assembly of the United Nations in its 19th Session, Dated: 30 December 1964.

Available at: http://www.un.org/documents/ga/res/19/ares19.htm (last visited: 11 January, 2011).�

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UNCTAD was very closely associated with the idea on New International Economic Order

(NIEO).

UNCTAD has played a very significant role in international intellectual property matters and,

in particular, conducted important work relating to intellectual property and development

including the relationship between intellectual property and technology transfer. It played a

very important role during the negotiations between the UN and WIPO for inclusion of

WIPO as a specialized agency of the UN. However, its role from the period of adoption of

TRIPS Agreement and thereafter, in regards to the intellectual property has been limited, due

to the fact that the developed country members to the TRIPS never wanted UNCTAD to deal

with the matters relating to IP, as it had served as an important forum for developing

countries to grow strategies and analytical work which established the serious negative

consequences for technology development and related objectives that arose from the existing

intellectual property regimes.97

Though the developing countries’ efforts to include

intellectual property in the mandate of UNCTAD will continue, at the same time the

developed countries also continue to speak against that mandate.

With regards to TRIPS Agreement after it came into force on 1 January 1995, the UNCTAD

called upon the developed countries and international organizations to provide technical and

monetary resources needed by developing countries for implementation of the TRIPS

Agreement. In its report, “The TRIPS Agreement and Developing Countries,”98

UNCTAD

expressed its opinion about the difficulties that the developing countries would face in

securing finances needed to amend IP laws, and for imparting training for effective

implementation of the TRIPS Agreement. It further expressed that the best way of attracting

foreign direct investment would be to extend protection to the intellectual property rights, but

at the same time it showed its suspicion that doing so might lead to higher prices for

protected technologies and products in the developing countries. Consequently, the report

emphasized upon the fact that a balance must be drawn between the developing nations and

transnational corporations. Moreover, it stressed upon the need to understand, that the nations

would be benefitted from the additional technology transfer only when investors have a

�� 97

J. Braithwaite and P. Dharos, Global Business Regulation, (2000) at 68.�

98 International Centre for Trade and Sustainable Development, UNCTAD Urges Help for TRIPS in Developing

Countries, Bridges Weekly Trade News Digest, Vol.1, No.8, 24 March 1997. Available at:

http://ictsd.org/i/news/bridgesweekly/90711/ (last visited: 12 January 2011).�

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comfortable feeling that the country of their investment has IP laws protecting their interests

sufficiently.

The extent to which UNCTAD has been successful to improve the economic conditions and

participation of the developing countries, still remains to be answered, but the question

regarding the enhancement of its developmental role or its strengthening was discussed

during the twelfth conference of UNCTAD, where it was emphasized that the UNCTAD has

to be made more effective, as it is losing its ground in satisfying the developing countries. For

that it had to prioritize and focus on the areas of particular current importance. Some areas

where concentration is required are: investment, aid for trade, transfer of technology and

knowledge for development, impact of trade liberalization on the poor countries, etc.99

Besides discussing their economic and commercial interests under UNCTAD, the developing

countries also joined the developed nations during the negotiation rounds held under the aegis

of GATT, especially the Uruguay Round, which was the longest of all the rounds held under

GATT. The developing countries participated to a greater extent to safeguard their interests in

different areas that were the subject-matter of trading. The Uruguay Round was of greater

significance for the developing countries as a new subject viz., intellectual property, was to

be negotiated for its introduction under the international trade regime, which was a matter of

great concern for the developing countries.

10. URUGYAY ROUND OF GATT AND INTELLECTUAL PROPERTY:

With the main objective of non-discrimination through most favoured nation treatment,

GATT had launched a series of rounds of negotiations to begin with for tariff reduction and

later, for reduction of non-tariff barriers also. The Uruguay Round was the multilateral trade

round held under the auspices of the General Agreement on Tariffs and Trade (GATT). The

developing countries actively participated in Uruguay Round with the hope of reaching

agreements to stop the growing protectionism practiced by developed countries who were

leading players in the world trade. The industrialized countries discovered a wealth of

opportunity in the Uruguay Round to initiate and arrive at agreements concerning

negotiations on trade in services; intellectual property rights etc., which otherwise were

problematic areas for negotiations with developing countries. At no time had been the canopy

�� 99

United Nations Conference on Trade and Development, Twelfth Session, Accra, Ghana, 20-25 April 2008

Agenda Item 8(d), TD/L.418. Available at: http://www.unctad.org/en/docs/tdl418_en.pdf (last visited: 11

January 2011).�

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of GATT so extensive in covering many areas so as to include goods trade, foreign

investment and related measures, trade in services, intellectual property rights including

patents, geographical indications, etc. However, those matters were discussed and negotiated

and led to the making of the Final Act. The Final Act of Uruguay Round aimed to bring about

increasingly higher levels of liberalization and growth in the world trade. The underlying

implications were in terms of sea-changes in existing bilateral and multilateral relationships

in world trade, thereby, influencing the pattern of trade and the paths of expansion of the

developing countries. In addition to these, the Agreement consists of two important

institutional measures. The Agreement for World Trade Organization and new set of dispute

settlement procedures both intended to support in effective implementation of the substantive

rules established in the Agreement. Keeping in view the trade interests of the developing

countries, the Uruguay Round needs to be analyzed, especially to know the role of the

developing countries in negotiating their welfare.

The Uruguay Round (UR) negotiation was the eighth post-war multilateral trade round

conducted under the General Agreement on Tariffs and Trade (GATT). Like other GATT

negotiations or rounds, its purpose was to liberalize trade. Unlike earlier GATT negotiations

that intended to create a more open and predictable trade regime, the UR produced a deep

change in the trade regime in response to deep transformation in the international economic

relations. The UR brought rather, a system change in the world economy.100

The Uruguay Round was the outcome of a period of recession in early 1980’s that affected all

countries. In contrast to the Tokyo Round, the seventh in series, where mainly developed

countries were active parties and the developing countries were less involved, as only 29

developing countries signed one or more of the Tokyo Round Agreements by 31 March 1994,

in contrast, the Final Act of the Uruguay Round was signed by 111 countries and majority of

them were the developing countries. Developing countries were active in all phases of the

Uruguay Round, and their participation widened the range of the package deal and the

compromises that finally were decided upon. The strong support of the developing countries

was influential in inspiring the major parties, viz., The United States and European Union, to

settle their differences on one or the other issues involved in the negotiations. In the UR, the

participating countries not only took up all of the issues that had been on the Tokyo Round

agenda, but also took into account some new issues, amongst them the intellectual property

�� 100 Gilbert R. Winham, “An Interpretative History of the Uruguay Round Negotiations”, in ‘The World Trade

Organization: Legal, Economic and Political Analysis’, (Eds.) Patrick F.J. Macrory, et al. Vol. I, (2005) at 4.�

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remained the most controversial. It also included the institutional issues viz., the

establishment of a permanent organization, the World Trade Organization (WTO), besides

other issues like services, investment, textiles etc., which had been excluded from GATT

multilateral disciplines.

The Uruguay Round commenced formally on 20 September, 1986 with the adoption of the

Uruguay Declaration and Ministerial Meeting of the GATT contracting parties held in Punta

del Este, Uruguay. However, the movement for initiating this meeting had already been

started by the United States in 1979 which wanted the inclusion of services in new GATT

negotiations. Though the European Community officials had been initially doubtful about

such a move, but later on became proponents of new negotiations to include trade in services.

Consequently, in 1982, after a continuous pressure by the United States and its supporters, a

GATT Ministerial meeting was held to examine the multilateral trading system and also to

consider initiation of a new negotiation. The meeting failed to find consensus on the later

point. The failure mainly occurred due to the opposition by the developing countries to a new

negotiation that would include services and other new issues before adequate progress had

been made on traditional issues such as textiles and agriculture. This opposition led to one of

the severest tests of the trading system in GATT history, and was only partially reconciled by

the time the Uruguay Round got underway. However, in the Uruguay Declaration of 1986,

after a week-long Ministerial Meeting, it was decided between the developed and the

developing countries that the services would be negotiated separately from goods. This

formula ultimately permitted the Uruguay Round to begin with. The “Uruguay Round” was

an official name given in honour of the host country of the meeting.

10.1 Uruguay Declaration, 1986:

It is a common name given to the Punta Del Este Declaration, held from 15-20 September

1986, on the occasion of the special session of GATT Contracting Parties, which became the

basis of initiation of the Uruguay Round. The Uruguay Declaration drew a distinction

between goods and services to be negotiated separately in two parts.

Part I of the Punta Del Este Declaration covered the negotiations on trade in goods and

consisted of a preamble and seven sections.101

The Preamble contained the basic decision to

negotiate and contained the determination of GATT members to stop and reverse

protectionism, remove distortions to trade, preserve GATT principles and forward its

�� 101

John Croome, Reshaping World Trading System: A History of the Uruguay Round, (1995) at 33.�

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objectives, and develop a more open, viable and durable multilateral trading system. It was

thus to promote the growth and development.

The first section reflected the considerations set out in the preamble. The negotiations were to

be aimed at liberalizing and expanding world trade, to the benefit of all countries, especially

the developing countries. Various matters, over which no agreement had been reached to

negotiate, specifically were to be discussed as important trade issues in the Declaration. They

were relating to the trade in high technology products, difficulties in commodity markets etc.

The second section stated general principles for the negotiations. They were to be transparent

so that fear in the minds of smaller countries that they would be affected by deals with larger

participants, might not arise.

The next two sections set out the specific aims for each area of negotiations on goods.

Thirteen subjects for negotiations were given: tariffs, non-tariff measures, tropical products,

natural resource-based products, textiles and clothing, agriculture, GATT Articles,

safeguards, the MTN agreements and arrangements, subsidies and countervailing measures,

dispute settlement, trade related aspects of intellectual property rights, including trade in

counterfeit goods, and trade-related investment-measures. A fourteenth negotiating subject

was added by a section on “Functioning of the GATT system.”102

The last two sections of

Part I defined participation in the negotiations on goods and organizational matters. Ministers

agreed that the negotiations should be open to GATT members, to countries which in practice

had been treated as if they were members and had, by April 1987, applied for membership, to

countries which had already applied for membership, and to the developing countries that

started accession procedures by April 1987. These conditions efficiently set participation in

the Round at more than 100 countries even from the beginning and permitted almost any

country to take full part, except that they offered no opening to the Soviet-Union, and

specifically provided that non-members of GATT would have no say in decision to change or

add to the GATT rules.103

Part II of the Uruguay Declaration on services was very brief as compared to subject sections

stipulated in Part I. It set out the aims of negotiations on services. It made it very clear that

the negotiations on services were to be directed by Group of Negotiations on services that

shall follow GATT procedures and practices.

�� 102

Id. at 34.�

103Id. at 35.�

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Before the adoption of the Declaration, Uruguay package was agreed that included not only

the points on which agreement had been reached but also those on which no agreement could

be made.

10.2 Trade Negotiations Committee:

The Trade Negotiations Committee, the group of Negotiations on Goods and the Group of

Negotiations on Services held their first meetings in Geneva respectively. After some

discussions by these three, negotiating groups were established for each of the fifteen subjects

identified in the Punta Del Este Declaration or Uruguay Declaration that is the fourteen

goods-related subjects in Part I and services in Part II. The Surveillance Body was set up to

see that the performance remain in place and to review the rollback commitments. Starting

with the Negotiating Group on Tariffs, on 10 February 1987, each of the negotiating groups

on different subjects started its work.

10.3 Chronology of Events Leading to Launch and Conclusion of Uruguay Round

Negotiations :

The events leading to the launch and conclusion of Uruguay Round Negotiations, finally

leading to the signing of the Final Act establishing the World Trade Organization can be

divided into six stages.

i. First Stage or the Ministerial Declaration at Punta Del Este (Uruguay): The meeting

held in September 15-20, 1986, adopted a Ministerial Declaration, which was the biggest

negotiating mandate on trade ever agreed. Agriculture was included in the GATT

negotiations for the first time by this Declaration. This Ministerial Declaration marks the

beginning of the Uruguay Round. It aimed at further liberalization and expansion of the

world trade to benefit all the countries, especially a less developed contracting parties,

including improvement of access to markets by reduction and illumination of tariffs and

also to improve the role of GATT.

ii. Second Stage or Montreal Mid-Term Review Ministerial Meeting: All GATT

negotiations up to the Uruguay Round were concerned only with trade in goods. The

countries in the Uruguay Declaration agreed to the fact that negotiations on particular

subjects were pertaining to issues that were appropriate for a GATT negotiation. But for

the three new subjects included in the Uruguay mandate for the Uruguay Round,

however, there was no such harmony of views. Even though settlement had been reached

to negotiate on trade in services, TRIPS and Trade-Related Investments Measures

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(TRIMS), the agreement was decided upon by many countries only with deep

unwillingness and only after imposing conditions on negotiating mandate and also on the

manner in which the negotiations would be handled. These negotiations were very tough

with an uncertainty over their results.

As a subject of GATT negotiations, intellectual property raised many difficulties. Know-how

and brand names belonged to a larger extent to the rich and most developed countries, and in

particular to large corporations that led to the rising up of strong and aggressive feelings in

developing countries. The developing countries demanded free and greatly advantageous

protection in the field of patents, copyright and trademarks. Against this, several factors

helped to move negotiations. One was the high priority given to the issue by developing

countries, particularly by the United States.104

However, all participants in the Round soon

became aware that an Agreement on TRIPS was, whether they liked it or not, an essential

element for any final package.

Negotiations, from September 1986 to December 1988 included the initiation of the

negotiation complete to the Montreal Mid-term Review of December 1988, which was an

event intended by the negotiators as an assessment session to prepare for final movement

towards an agreement. The main effort of negotiation at this stage was the exploration of

country positions, and the development of policy mechanism to discipline national trade

practices. The Montreal Mid-Term Review established solid progress in many areas e.g.,

dispute settlement and Services Trade entered the Uruguay Round agenda.

iii. Third Stage or Brussels Ministerial Meeting: From December 1988 to December 1990,

an effort was made to produce definitive wordings in legal drafts and to settle innumerous

bilateral and multilateral issues between parties. The Negotiations were technical and

were intended to conclude at the Brussels Ministerial Meeting in December 1990.

However the Meeting did not turn out to be success due to the absence of convergence in

the draft agreements.

iv. Fourth Stage or Dunkel Draft: From December 1990 to December 1991, due to the

efforts by Director General Arthur Dunkel, the negotiations left off at third stage gained

momentum, as a result of which, an agreement on a revised formula for agricultural

negotiations came into being. Draft texts were under construction in most of the areas. A

deadline was set for December1991. Though the negotiations came to a halt in

�� 104

Id. at 120.�

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December 1991, but the GATT Director General asked the Chairman of negotiating

groups to table a document that represented their own view of a consensus text in their

area of responsibility. These documents, which were partially but not completely

negotiated texts, were compiled in the “Draft Final Act Embodying the results of the

Uruguay Round of multilateral Trade negotiations”, (DFA) known also as the Dunkel

Draft.

v. Fifth Stage: From December 1991 to June 1993, the period could be characterized as

totally different from the preceding stages. In this stage, the negotiations, especially

relating to agriculture, turned into a politicized contest between superpowers, that is, the

U.S and E.U Officials. Thus blockage halted progress in the areas other than agriculture.

Before the end of this period, the EU and the US reached a partial resolution on

agriculture.

vi. Sixth Stage: The sixth stage extended from June to December 1993 and was relatively

brief. The U.S- E.U dispute over agriculture was resolved on December 5, 1993. This

agreement paved the way for tariffs and service concessions, and agreements on anti-

dumping and audio-visual services. The negotiation concluded on15 December 1993 in

Geneva, Switzerland. During this stage TRIPS entered the agenda, much against the

wishes of the developing countries.

Thus, the Uruguay round of multilateral trade negotiations was concluded on 15 December

1993, after seven years of protracted negotiations. This has been the most complex and

controversial of the eight rounds of negotiations by GATT since its inception in 1947.

11. THE FINAL ACT OR MARRAKESH DECLARATION ESTABLISHING THE

WORLD TRADE ORGANIZATION (WTO):

Ministers representing the 124 Governments and the European Communities participating in

the Uruguay Round adopted the Marrakesh Declaration Establishing the World Trade

Organization on 15 April 1994. In this Declaration, “The Final Act” was signed on 15 April

1994 at Marrakesh in Morocco.

The Final Act threads together 25 agreements, declarations and decisions in the goods sector

alone, including agreements on Trade Related Aspects of Intellectual Property Rights

(TRIPS), Trade Related Aspects of Investment Measures, (TRIMS), General Agreement on

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Trade in Services (GATS) and the Agreement Establishing the World Trade Organization

(WTO).105

Thus the Final Act was a stronger and clearer legal framework that was adopted for the

conduct of international trade, including a more operative and dependable dispute settlement

mechanism. The Final Act provided for the global reduction of tariffs by 40 percent and also

wider market-opening agreements on the goods.106

The establishment of a multilateral

structure of disciplines dealing with trade in services and the protection of trade-related

intellectual property rights was a great achievement.

The signing of the Final Act Embodying the Results of the Uruguay Round of Multilateral

Trade Negotiations’ and the adoption of associated Ministerial Decisions introduced the

changeover from the GATT to the WTO.

A Preparatory Committee was established to make the ground for the entry into force of the

WTO Agreement and also to see that all steps essential to ratify the WTO Agreement for

coming into force by January 1995 must be finished. Thus the Marrakesh Ministerial Meeting

was the final meeting, which also concluded the work of the Trade Negotiations Committee

(TNC).

As multilateral negotiations usually involve compromises, the results do not always meet the

anticipations of individual countries. Although no country leaves the negotiating table as a

winner or a loser, but the final results are always benefiting. The negotiations, on the whole

brought about the positive conclusions. In particular, they resulted in:

• An improved framework of multilateral rules governing international trade; and

• Further improvements in access to foreign markets for both goods and services.

One of the other achievements of the Round was the establishment of the WTO. The GATT

has ceased to be separate institution and has become part of the WTO. The Organization is

responsible for supervising the implementation of the multilateral trade rules.

11.1 Agreement Establishing World Trade Organization (WTO):

The main objective of establishing the World Trade Organization was to raise standards of

living, guaranteeing full employment and expanding the production of the trade in goods and

services after making a best use of the world’s resources in accordance with the objective of

�� 105 P. K. Vasudeva, India and World Trade Organization: Planning and Development, (2000) at 3.�

106Id.�

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sustainable development. Moreover, it was also intended that the developing and least

developing countries should secure a share in growth in international trade proportionate to

the needs of their economic development. Thus, in order to fulfill these objectives an interest

was shown by about 123 countries into reciprocal and mutually advantageous arrangements

directed to the substantial reduction of tariffs and other barriers to trade and to the elimination

of discriminatory treatment in international trade relations. All those countries resolved,

therefore, to develop an integrated, more feasible and durable multilateral trading system

incorporating the General Agreement on Tariffs and Trade, the results of past trade

liberalization efforts, and all the results of the Uruguay Round of Multilateral Trade

Negotiations (MTNs).

Consequently, the World Trade Organization (hereinafter referred to as “the WTO”) was

established on 1 January 1995.107

Governments had concluded the Uruguay Round

negotiations on 15 December 1993 and Ministers gave their political support to the results by

signing the Final Act at a meeting in Marrakesh, Morocco in April 1994. The Marrakesh

Declaration of 15 April 1994 declared that the results of the Uruguay Round would support

the world economy and lead to more trade, investment, employment and income growth

throughout the world. The WTO is the embodiment of the Uruguay Round results and the

successor to the General Agreement on Tariffs and Trade (GATT). The WTO has larger

membership than GATT.

11.2 Scope of the WTO:

Article II of the Agreement Establishing the World trade Organization deals with the scope of

the WTO. Its scope is an under:

i. The WTO shall provide the common institutional framework for the conduct of trade

relations among its members in matters related to the agreements and associated

legal instruments included in Annexes to this Agreement.

ii. All the Agreements and legal instruments included in Multilateral Trade Agreements,

contained in Annexes 1, 2 and 3 are binding on all members.

iii. All the agreements and legal instruments included in the Plurilateral Trade

Agreements contained in Annex 4 are also binding for those members who have

accepted them. Moreover, they are considered to be the part of the WTO

Agreements.

�� 107

Article 1 of the Marrakesh Declaration Establishing WTO, Morocco, 1994.�

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iv. The General Agreement on Tariffs and Trade (GATT), 1994 specified in Annex 1A

is legally distinct from General Agreement on Tariffs and Trade, dated 30 October

1947, annexed to the Final Act adopted at the conclusion of the Second Session of

the Preparatory Committee of the United Nations Conference on Trade and

Employment, as subsequently rectified, amended or modified, hereinafter “GATT

1947.”

11.3 Functions of the World Trade Organization:

Article III of the Agreement Establishing the World Trade Organization stipulates the

functions of the WTO which are as under:

i. Administering and implementing the multilateral and plurilateral trade agreements

which together make up the WTO;

ii. Acting as a forum for multilateral trade negotiations;

iii. Seeking to resolve trade dispute;

iv. Overseeing national trade policies; and

v. Cooperating with other international institutions involved in global economic policy

making.

Thus, the WTO Agreement contains some 29 included legal texts covering everything from

agriculture to textiles and clothing, and from services to government procurement, rules of

origin and most importantly intellectual property. Added to these are more than 25 additional

ministerial declarations, decisions and understandings, which spell out further obligations and

commitments for WTO members.

11.4 Promotion of Trade Without Discrimination:

The main principle that guided the former GATT and directs the present WTO is to promote

trade without discrimination. For almost 50 years, key provision of GATT banned

discrimination among members and between imported and domestically produced

commodities. According to Article I of the GATT, the famous ‘most favoured nation’ (MFN)

clause, members are bound to grant to the products of other members treatment no less

favourable than that accorded to the products of any other country. A second form of non-

discrimination known as “national treatment” requires that once goods have entered a market,

they must be treated no less favorably than the equivalent domestically produced goods. This

is Article III of the GATT. Apart from the revised GATT, known as “GATT 1994’, several

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other WTO agreements contain important provisions relating to MFN and the national

treatment.

The case for open trade, continually pursued to be accomplished by the GATT and WTO, is

based on pure commercial sense. All countries, including the poorest have assets, viz.,

human, industrial, natural, financial, etc., which they can use to produce goods and services

for their domestic market or to compete externally. Liberal trade policies also allow

unrestricted flow of goods and services ultimately, resulting into expanded markets.

The WTO permits tariffs and other forms of protection. It is a system of rules dedicated to

open, impartial and undistorted competition.

11.5 The WTO Structure:

Article IV of the Agreement Establishing World Trade Organization describes the structure

of the WTO. The structure of the WTO is dominated by its highest authority viz., the

Ministerial Conference. This body is composed of representatives of all WTO members. It

meets at least every two years and is empowered to make decisions on all matters under any

of the multilateral trade agreement.

The day to day work of the WTO is entrusted to a number of subsidiary bodies; primarily, the

General Council, also composed of all WTO members, which is required to report to the

Ministerial Conference. The General Council also is set up in two particular forms as; the

Dispute Settlement Body and the Trade Policy Review Body. The former overseas the

dispute settlement procedure and the later conduct the regular reviews of trade policies of

individual WTO members.

The General Council delegates responsibility to three other bodies namely- the Councils for

Trade in Goods, Trade in Services and Trade Related Aspects of Intellectual Property Rights.

The Council for Goods looks into the implementation and functioning of all the agreements

covering trade in goods, though many such agreements have their own specific overseeing

bodies. The latter two Councils have responsibility for their respective WTO agreements and

may establish their own subsidiary bodies as necessary.

Further, three other bodies are established by the Ministerial Conference and report to the

General Council. The Committee on Trade and Development is concerned with issues

relating to the developing countries and especially, to the least developed among them. The

Committee on Balance of Payments is responsible for consultations among WTO members

and countries which resort to trade restrictive measures in order to handle their balance of

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payments difficulties. Finally, issues relating to WTO’s financing and budget are dealt with

Committee on Budget, Finance and Administration

Each of the plurilateral agreements of the WTO dealing with civil aircraft, government

procurement, dairy products and bovine meat, establish their own management bodies which

are required to report to the General Council.

Article VI of the Agreement Establishing World Trade Organization provides that the WTO

shall consist of a Secretariat headed by a Director General to be appointed by the Ministerial

Conference, which shall further provide for powers, duties, conditions of service and term of

office of the Director-General. The Director General further appoints the members of the staff

of the secretariat and determines their duties and conditions of service in accordance with the

regulations adopted by the Ministerial Conference.

The responsibilities of the Director-General and his staff are exclusively of international

nature. A duty has been imposed on the Director- General and his staff that they should not

seek or accept instructions from any government or any other authority external to the WTO.

As against their duties, an obligation has been imposed on the members of the WTO to

respect the international character of the responsibilities of the Director General and his staff

and also not to influence them in discharge of their duties.

11.6 Status of the WTO:

The WTO is a legal personality, which is accorded legal capacity for the exercise of its

functions by its members. While exercising its functions it enjoys certain privileges and

immunities as are provided by its members. The officials of the WTO as well as

representatives of the member States also enjoy such privileges and immunities as are

necessary for the independent exercise of their functions in connection with the WTO.108

11.7 Decision-Making Process and Amendments:

The WTO reaches at a decision on any matter contained within its scope, by consensus as

was followed under GATT 1947. However, where consensus it not possible, the matter at

issue is to be decided by voting. Each member of WTO has one vote at the meetings of the

Ministerial Conference and the General Council.109

However, in case of European

Communities they have a number of votes equal to the number of their member States which

�� 108Article VII of the Agreement Establishing World Trade Organization.�

109 Article IX of the Agreement Establishing World Trade Organization.�

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are the members of the WTO. In case the Ministerial Conference and General Council have

to take a decision, it has to be taken by a majority of the votes casted, unless otherwise

provided in WTO Agreement or in the relevant Multilateral Trade Agreement. The decision

to waive off an obligation imposed on a member by this Agreement or any Multilateral Trade

Agreements lies with the Ministerial Conference provided that any such decision is taken by

three-fourths of the members of the WTO. Moreover, the decision granting a waiver has to be

a speaking order. That means, it must state the exceptional circumstances justifying the

decision, the terms and conditions governing the application of waiver and the date on which

waiver terminates must also be stipulated. However, the action to waive off obligations is not

a suo moto action but is always taken on a request by the Member State. Trade Agreements

including decision on interpretations and waivers, are always taken in accordance to the

provisions of the Agreement in question.110

The Marrakesh Agreement Establishing World Trade Organization also contains provision

for the amendment of the Agreement or the Multilateral Trade Agreements provided in

Annex I.111

Any Member of the WTO or the Councils in paragraph 5 of Article IV can submit

a proposal to amend the provisions of this Agreement or the Multilateral Trade Agreements.

The decision on amendment was again to be taken by the consensus, followed by the

acceptance of the same. But, if no such consensus is reached by the Ministerial Conference

within the established period, the Ministerial Conference is free to decide by a two-thirds

majority of the members to accept or reject the proposal for amendment. However, in the

amendment to the provisions of the rest of the matters, other than those provided in

Paragraphs 2, 5 and 6 of Article X, require a vote by two-thirds of the members. In case of

Paragraphs 2, 5 and 6 of Article X, the amendments become effective only when they are

accepted by all the members of the WTO. The matters which require acceptance by all the

members to be an amendment are:

• Article IX and X of this Agreement;

• Article I and II of GATT 1994;

• Article II:1 of GATS; and

• Article 4 of the Agreement on TRIPS.

All these matters affect the rights and obligations of the members.

�� 110

Id. Article IX (5). �

111Id. Article X.�

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Any member who accepts an amendment to this Agreement or to Multilateral Trade

Agreement in Annex I require to deposit an instrument of acceptance with the Director-

General of the WTO within the period of acceptance specified by the Ministerial Conference.

However, the amendments of the Plurilateral Agreements are governed by the provisions of

that particular Agreement.112

12. DIFFERENCE BETWEEN GATT AND WTO:

The WTO is not a mere extension of GATT. On the contrary, it completely replaces its

predecessor and has a very different character. The major differences between the two bodies

are following:

• The GATT was a set of rules, a multilateral agreement, with no institutional

foundation. It had only a small associated secretariat which had its origin in an

attempt to establish an International Trade Organization in the 1940s. However, the

WTO is a permanent institution with its own secretariat at Geneva.

• The GATT was applied on a provisional basis. Even after 40 years, governments

chose to treat it as a permanent commitment. The WTO replaced GATT with full

and permanent commitments.

• The GATT rules applied to trade in commodity goods. In addition to goods, the

WTO covers trade in services and Trade-Related Aspects of Intellectual Property

rights (TRIPS).

• While GATT was a multilateral instrument, however, by the 1980s many new

agreements of plurilateral nature were added that were selective in character. On

the contrary, the agreements which constitute the WTO are almost all multilateral

and, thus, involve commitments for the entire membership.

• The WTO dispute settlement system is faster, more spontaneous, and thus much

less vulnerable to blockages as compared to the old GATT system. The

implementation of WTO dispute findings will also be more easily assumed.

The “GATT 1947” continued to exist until the end of 1995 in order to provide time for all

GATT members to accede to the WTO, and to permit an overlap of activity in areas like

dispute settlement. Moreover, GATT lives on as “GATT 1994”, the amended and updated

�� 112

Id. Article 10(10)�

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version of GATT 1947, which is an integral part of the WTO Agreement and which continues

to provide the key disciplines affecting international trade in goods.

13. VOYAGE OF TRIPS FROM URUGUAY TO WTO:

The Punta Del Este Declaration or the Uruguay Declaration set separate goals for

negotiations on intellectual property issues and on counterfeiting. For intellectual property

questions in general, the negotiations were asked to clarify GATT provisions and elaborate

the appropriate new rules and disciplines in order to reduce distortions and obstacles in the

growth of international trade.113

Reflecting the persistent belief of many developing countries

that GATT was the appropriate place for debating most issues of intellectual property, the

TRIPS negotiations were agreed to be without partiality to action that might be taken on the

same issues in the World Intellectual Property Organization (WIPO) or elsewhere.

The WIPO found a reference in the Uruguay Declaration, so as to remind the world of the

fact that multilateral negotiations on intellectual property issues have a very long past, and

have resulted in a large number of agreements that laid down rules to govern different aspects

of protection for intellectual property prior to the establishment of WIPO in 1969, after it was

signed at Stockholm on 14 July 1967. In particular two WIPO administered agreements, viz.,

the Paris Convention and the Berne Convention, embodied centrally important rules for two

of the most important areas of intellectual property, particularly relating to industrial property

including patents, trademarks and designs and copyrights. Further, the UNESCO

administered Universal Copyright Convention was another important agreement governing

relations of various nations, who were not signatories to the Berne Convention, relating to

copyrights. Rome Convention concerning protection of performers, broadcasters, and

producers of sound recordings was another important agreement, which in other words

protected the ‘related rights’, which were not covered by various copyright agreements.

Various regional agreements were also made to provide protection to various intellectual

property fields.

The central purpose of all these agreements was to give foreigners the same protection for

their intellectual property in the signatory countries as was given to nationals of those

countries and to specify some minimum standards of protection. But these agreements could

not provide a system of protection that would be recognized internationally by all the nations

of the world. The reason was simple that all the countries did not sign all of these agreements;

�� 113

Supra, John Croome, at 130.�

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differ in the level of details relating to protection; and they also left to governments a

considerable choice as to what protection should be given. In general, they did not deal with

the question of enforcement of rights, but left this question to be dealt in by the national

authorities concerned. All such issues were to be discussed at the TRIPS negotiations so as to

come to conclusion that the creations, innovations etc. were protected internationally under

similar set of rules and principles.

The TRIPS negotiations were extremely difficult throughout the first two years of the

Uruguay Round. However, a great deal of useful work was accomplished in identifying and

clarifying issues and views on what was entirely a new subject for many negotiators.

However, consensus on what the TRIPS Agreement should pursue to realize, could not be

made out due to division of thoughts between the contracting parties to the Uruguay Round

of GATT. As a result of this agreement, two different theories of interpretation of Uruguay

mandate were evolved. The first theory, which was supported by the United States and to

some extent by the other developed countries, interpreted the mandate as an invitation to

negotiate better protection for intellectual property. On the contrary, the supporters of second

theory viz., the developing countries, interpreted that the group was committed to negotiate

on how to discourage trade in counterfeit goods, but otherwise to look only at intellectual

property issues directly connected with trade.

There were however, differences in approaches to protect intellectual property, as could be

gathered from earlier multilateral negotiations in UNCTAD and WIPO. Developed countries,

and particularly the most industrialized among them, saw intellectual property as the produce

of the creative capability and intellectual work of their individual citizens and companies, as

the legitimate basis for those individuals and companies to earn trading benefits.

Consequently, they had an opinion that various profits could not be achieved unless the

intellectual property concerned was given protection against its misuse by the others. They

also contended that in the absence of such a protection, and the promise of future reward,

research and development which led to invention and new products, would not happen, so as

to ultimately keeping the society at disadvantage. This argument was highlighted by the

developed world, as a reason to protect the pharmaceutical manufacturers and such other

goods that require a great deal of Research and Development (R&D), thus ultimately

involving lot of money, time to develop, seek approval for protection and finally exploitation

of the same.

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Developing countries, on the other hand, had a different viewpoint. They did not dispute the

patent and copyright protection in general. But it was improper to them to afford such

protection as demanded by the developed nations. This was on account of the fact that they

had little intellectual property of their own to protect, and they did not see reason to support

international standards of protection that would require them to pay large sums to use

technology they needed or which might even deny them access to that technology.

Particularly pharmaceuticals and high-technology products were the basic reasons for such a

friction between the North and South. But, at the same time the developing countries required

them for maintaining national health and development, to which they could not restrict the

access due to high prices enforced through excessive protection of intellectual property.

The developed countries argued that intellectual property rights were frequently given

inadequate protection, and that even such rights that have been afforded also fail to be

effectively enforced. The United States from the very beginning had an intension to put

forward proposals to improve both protection and enforcement of the intellectual property

rights. However, the other developed countries adopted a more careful approach as they did

not take a firm stand on whether improved standards of protection should actually be

negotiated in the TRIPS group. Rather, they put greater pressure on the need for intellectual

property rights and their enforcement not to create obstacles to the legitimate trade.

Nonetheless, they also wanted that the issues, which were new to GATT, should also be

negotiated. However, the developing countries wanted to prevent negotiations focusing on

protection of intellectual property, as they would affect trade. They further contended that

divergent national concerns, reflecting different levels of development and social concerns

could convince the governments of different countries to legitimately differ also in the

protection they would afford the intellectual property. Thus they wanted to limit their

negotiations to issues that were related to trade. Some developing countries, with India and

Brazil in the front, also insisted that the group of such countries had no mandate to negotiate

on the actual norms or standards of protection to be given, as they believed that it was the

subject-matter of WIPO and not of GATT.

By late 1987, views and issues had begun to take a form, and it was becoming clearer that

about half a dozen broad sets of problems were faced by the group including the enforcement

of intellectual property rights; the rights themselves; the use of those rights by other than their

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holders; dispute settlement; the existing GATT rules; and whether negotiations on these

problems could be undertaken within the Uruguay Round.114

However, enforcement issues were most generally, accepted partly because they involved the

treatment of goods crossing the national frontiers and partly because of the reason that they

were not dealt in with elsewhere. Moreover, the draft pertaining to the counterfeit agreement,

that was another important issue, was mainly related to the provisions meant to stop

international trade in goods bearing false trademarks. The interest of developed countries

mainly revolved around the fact that similar action should be taken to stop imports and

exports of goods which infringed upon the intellectual property rights in other ways. An

example was that of the goods that rather than bearing counterfeit trademarks, actually stole

the copyright content of products belonging to others. In this leading example was that of the

piracy in audio and video cassettes offering unauthorized copies of musical performances and

movies, which enjoyed copyright protection. As far as enforcement issues were concerned,

Section 337 of the Tariff Act of United States was found to discriminatory against imported

goods as it provided defenses if American competitors claimed that these infringed their

patent or other intellectual property rights.115

Also the enforcement problems included the

lack of action within national frontiers to protect intellectual property rights.

Nonetheless, the most controversial of all the issues was the question whether the TRIPS

negotiating group should involve itself in the substance of intellectual property rights. This

was the issue where the developing countries felt offended as they believed that harmonized

international standards would affect their social and developmental needs and also that the

WIPO and other specialized organizations were the proper place to discuss issues relating to

the intellectual property rights. On the contrary, the developed countries were not convinced

by such convictions of the developing countries. In particular, they objected to the limits

imposed by many developing countries on patent protection for pharmaceuticals and other

chemicals, including short patent terms and in some cases no patent protection at all, the

compulsory grant of licenses to local firms, and requirements to manufacture locally as a

condition for receiving a patent. A further patent issue was lack of protection for advanced

technologies such as integrated circuits and biotechnology. Yet another was the basic United

States rule different from that of the other countries, that gave priority in recognizing patent

eligibility according to the date of the invention when it was made in the United States, but

�� 114

Id.at 133.�

115Id.�

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which still based the priority of applications for foreign inventions only on the date on which

the application was filed. Moreover, other issue was that of the related rights in the copyright

where the producers, performers and broadcasting organizations were accorded right to

initiate proceedings against pirates, and the same was not given to the authors of the works.

At the same time the European Communities also had been pressing upon their demand of

offering more protection to the names of wines, spirits and other products such as Cheese,

which were strictly protected in their own countries but were not, afforded protection in the

other countries. The problem that the protection to appellations of origin failed to protect

certain regional names such as “Champagne”, “Burgundy” and “Sherry” which were rather

used as generic or semi-generic terms in the United States, Australia and some other

countries.

The question concerning the transfer of technology and access to patented and otherwise

protected knowledge by the developing countries had been fought previously in their

discussions or negotiations in UNCTAD. In the TRIPS, however, the focus was slimmer and

the main areas of thrust were to control abusive, anti-competitive practices in the contractual

licensing of intellectual property rights and to ensure that compulsory licenses, that is, the use

of patented product or process without authorization by the patent holder, would be allowed

only in prudently defined conditions, and against compensation to the patent holder.

Dispute settlement of matters relating to intellectual property rights was another important

issue, as the existing international agreement on intellectual property was inadequate to

provide practical means for one government to seek redress if another failed to live up to its

promises. The developed countries were of the view that by such dialogues on dispute

settlement, the GATT dispute settlement procedure would be accessible in an upgraded form.

But the developing countries had mixed views on this possibility. As it was viewed that

multilateral dispute settlement would be an effective alternative against unilateral judgment

and measures, particularly the one contained under section 301 of the US Trade Law.116

Additionally, some of the GATT rules, as argued by the developed countries, such as

‘General Exceptions’ under Article XX (d) that permitted measures necessary for “the

protection of patents, trademarks and copyrights, and the prevention of deceptive practices,”

warranted an upgrading, as no GATT rules provided explicit requirements for enforcement of

intellectual property rights, nor did they establish such rights in the proper sense of term.

�� 116

Id. at 134.�

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Consequently, the developed countries demanded new rules and disciplines. While the

developing countries contended that absence of relevant rules simply indicated that the

problems raised were not within the competence of GATT and there was no need of bringing

any improvement in the GATT rules under the Uruguay Round of Negotiations.

The use of the words ‘as appropriate’ under The Uruguay Mandate (Punta del Este Mandate)

made it possible for the advocates and opponents of negotiations to claim that their view was

justified. But at the same time, the participating governments who had learned of each other’s

concerns, but differed strongly on what should be done, realized that such views had a risk of

driving the negotiations somewhere else. But in October 1987, the United States gave an

aspiring suggestion that some comprehensive GATT agreement on intellectual property

matters covering minimum standards for protection and enforcement in national law of

patents, trademarks, copyrights, trade secrets and layout design of semiconductors must be

negotiated. Further dispute settlement procedures allowing withdrawal of GATT benefits if a

government did not meet its obligations should also be provided. But this proposal met with a

strong initial opposition from most developing countries, whereas, developed countries

welcomed such a proposal except Japan, despite the fact that they intended more importance

on countering trade obstacles created by procedures to enforce intellectual property rights.

Moreover, they also differed on whether GATT should itself set minimum standards for

protection.

The criterion for introducing minimum standards for protection of intellectual property

though became clearer to the developed countries and the European Community, who further

wished-for protection of “appellations of origin”, but the developing countries did not show

any change in their opinions that GATT was not the appropriate place to negotiate norms

relating to protection, except on the question of trade in counterfeit goods, which they

believed was different from the other TRIPS issues.

Due to the approaching of the mid-term review, the TRIPS negotiating group like others’ was

required to formulate a text to be recommended in the Montreal Mid- Term Review as a basis

for completing the negotiations. But any attempts to agree on a text- relating the most

contentious issues with a hope that later substantive negotiations would overcome these

differences, could be risky due to different approach of the developed and developing

countries. As on one hand, the developing countries were not ready to negotiate a wide-

ranging agreement on intellectual property, whereas on the other, the Americans gave a too

high priority to TRIPS, there was every possibility of blockage at Montreal Ministerial

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Conference, which ultimately could threaten the future of the Uruguay Round as whole.

Thus, TRIPS could be considered as the main issue on which the outcome of the Uruguay

Round of talks depended.

The situation became uglier in mid- November 1988 where the negotiators differed

completely on a text proposed for Montreal by the group’s Chairman, Lars Anell, and

Sweden’s Ambassador to GATT. The text called for detailed work on the applicability of

basic GATT principles, on obligations to enforce intellectual property rights, on the

specification of reference points regarding the availability, scope and use of such rights, and

on dispute settlement. It is also called for negotiation of an agreement on trade in counterfeit

goods and referred to the need to enable the flow of technology and to provide transitional

arrangements and technical cooperation for developing countries. The developing countries

had an opinion that the text was very wide and they proposed amendments to it. They

asserted their earlier view that neither the negotiating group, nor the GATT itself could deal

with substantive matters of intellectual property rights. Moreover, the further works should be

restricted to narrower issues which were covered by the Uruguay Mandate.

On the Anell’s text, however, three separate proposals were put forward by Brazil, United

States and Switzerland, which were forwarded along with Anell’s text as its alternatives, each

enclosed within the square brackets which indicated lack of agreement. Brazil proposed

exclusion of intellectual property and that the same to be dealt by the other organizations

other than GATT. The United States proposed inclusion of intellectual property agreements

covering standards, border and internal enforcement measures, dispute settlement and GATT

principles. It further proposed that when its substance is settled, a separate code of TRIPS

Agreement rather than applicable to all GATT members should be adopted. Switzerland

called for protecting and enforcing intellectual property rights through ‘existing or new norms

of standards’ rather than detailed work on key issues pertaining to intellectual property as

suggested in Anell’s text.

The Montreal Meeting often called as Mid-Term Review where all the Trade Negotiation

Committees (TNCs) on different negotiating subjects were required to discuss their reports,

six out of the fifteen negotiating groups had been able to reach full agreement on the areas

such as Non-Tariff Measures, Natural Resource-based Products, GATT Articles, MTN

Agreements and Arrangements, Subsidies and Countervailing Measures, and TRIMS.

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TRIPS, as has been mentioned earlier, remained a toughest nut to fissure in the mid-term

review. However, at Montreal, the consultations on TRIPS were the direct continuation of

incomplete deliberations. The outcome of such consultations was an agreement on future

work based both on the Anell’s Text and the Text that had been under negotiation in

Montreal. Its biggest attainment was that an agreement to include negotiations on ‘the

provisions of adequate standards and principles’ on the availability, scope and use of

intellectual property rights, was arrived at to be made part of the Uruguay Round. Further, the

negotiations were to cover the applicability of basic principles of the GATT and of relevant

intellectual property agreements as well as ‘effective and expeditious’ procedures for

multilateral dispute settlement. However, all these were the central beams of the proposals

made by the United States and other developed countries. The mid-term review thus, decided

that the goal of the TRIPS negotiations in the terms of TRIPS was to reach agreements on

matters fundamental to any system of intellectual property protection. However, the Montreal

Meeting settled the questions relating to subjects for negotiations. It provided that adequate

standards and principles; including what kind of intellectual property should be covered, what

rights should be made available, and how could they be exercised; ‘effective and appropriate’

means to enforce intellectual property rights and ‘effective and expeditious’ procedures to

resolve disputes between governments multilaterally, were to be subjects for negotiations.

Added to these matters was the negotiation of rules to prevent trade in counterfeit goods.

However, no decision until the end of the Round as to GATT or some other institution would

administer the resulting agreement on TRIPS.

With these novel ground-rules, the TRIPS negotiations, at last entered to tough discussion

and bargaining. The North- South opposition that had marked the TRIPS discussion up to

1988 reduced, though not resumed with great numbers of national proposals. Thus by the end

of 1989, fifteen detailed proposals had been made on standards for intellectual property

rights, eleven on enforcement, and several more on other issues.117

The question as to how far the basic principles of GATT might be applied to intellectual

property rights also came for negotiation. As GATT, the Berne and the Paris Conventions

provided the principle of national treatment, but only the GATT provided for MFN treatment,

meaning that no distinction could be made between foreign countries regarding availability of

any privilege, immunity, etc., afforded to its own nationals. Many developing countries also

�� 117

Id.at 252.�

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wanted that their special needs should be recognized. The developed countries agreed that

developing countries would actually be benefitted by giving better protection to intellectual

property, because this would attract foreign investment research, and transfer of technology

that would support their economic development. This discussion formed part of a long-

running argument over whether a TRIPS Agreement could respond adequately to the needs of

developing countries first by giving them more time than developed countries to adopt to its

rules, or whether it should provide permanently different rules for them.

On the issue of standards or norms of protection, proposals were made for minimum

standards in areas which effectively covered all the main categories of intellectual property

viz., copyright and related rights, trademarks, geographical indications, industrial designs,

patents, layout design for integrated circuits, and trade secrets. In general, these proposals

intended to strengthen protection, for instance by requiring a minimum and, if possible,

standard patent life, lighter rules to limit compulsory licensing, and a ban on use of

geographical names for products actually originating elsewhere. Though all the proposals

tended to reflect particular national interest, the strongest disagreements were expressed over

patent protection for pharmaceuticals. Several developing countries did not grant patents for

pharmaceuticals at all; others required that licenses to manufacture patented pharmaceuticals

be granted. Two strongly held views clashed head on: developing countries agreed the

primacy of public health needs; the manufacturers, to a large extent from America and

Europe, pointed to the huge research costs and long delays in approval as justifying lengthy

patent protection. However, there was not much difference of view with regards to proposals

for enforcement of intellectual property protection. Participants recognized that no country

was required to make fundamental changes in its legal system because of an agreement on

intellectual property. The emphasis was on setting obligations that would be harmonious with

the basic features of different national legal systems, but be adequately defined to ensure

some essential requirements. These included fair, straight forward and reasonably rapid

procedures; adequate civil remedies to prevent irreparable damage; and; in case of blatant

disregards of property owners’ rights, criminal penalties or suspension of imports of goods

that infringed rights.

By the beginning of 1990, the TRIPS negotiating group was clear with its issues and

proposals, the points of difference and there was every possibility that a very substantial

agreement could emerge from the negotiations. This stand still phase where only informal

talks emerged due to disinclination on the part of the developing countries to continue so fast

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as long as other areas of the negotiations in which they had greater interest did not find pace

with other issues going fast, ended. The European Community in the month of March, and

then the United States, Switzerland, Japan and a group of fourteen developing countries put

forward draft legal texts for a full TRIPS agreement. The fourteen developing countries

included China, Egypt, India, Nigeria, Pakistan, Tanzania, Zimbabwe and seven from Latin

America viz., Argentina, Brazil, Chile, Columbia, Cuba, Peru and Uruguay. They offered

quite strong rules to be incorporated into the GATT system, on counterfeit and pirated goods

and general provisions on enforcement. On standards, they stressed upon the obligations of

holders of intellectual property rights, and offered no minimum level of protection for patents

or copyright. On the other hand the four developed country’s proposal provided for a TRIPS

Agreement integrated with the GATT itself. By mid-summer, most work of TRIPS was

focused in open but informal negotiations on a “composite draft text.” In the first round of

discussions, in order to tackle with a text on TRIPS, about 25 delegations were involved.118

Very little was achieved, in actual sense of terms, as far as differences between the two major

players viz., the United States and European Community were concerned, they were not yet

to settle the considerable differences that divided them. Moreover, the basic difference of

approach between the four developed- country texts on the one hand, and the draft by

fourteen developing countries on the other, remained unsettled.

Before the Brussels meeting in December 1990, the single text was revised many times.

However, majority of differences had been settled, the key ones remained unresolved. Major

unsettled issues included copyright questions e.g., protection of computer programs, rental

rights, rights of the performers and length of protection of sound recordings, differences on

geographical indications, questions on patents as to the term, compulsory licensing and on

coverage and decision relating to transition and other arrangements to be provided for the

developing and least- developed countries.

Though the negotiations went well in Brussels, but never reached the point of resolving the

most critical issues. As long as there was no agreement in prospect on agriculture or textiles,

the developing countries, in particular, were not ready to discuss the patenting of

pharmaceuticals, or the inclusion of full TRIPS agreement into GATT. Moreover, they were

also not ready to settle the issue of transition periods. On some of the matters, however, a

�� 118

Id. at 255.�

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drafting group in Brussels made progress in defining possible negotiations on many points,

including a number of issues on standards, and all unsettled problems on enforcement.

In spite of Dunkel’s assessment in July 1991 that intellectual property negotiations appeared

“ripe for the final political trade-offs”, serious negotiations did not re-start until the

autumn.119

The main issue for negotiation among TRIPS participants as a whole revolved

around the question as to what would be the basis of obligation that countries have to accept

in order to give protection to pharmaceutical products. What special arrangements would be

provided to the developing countries? What minimum standards would be set for the length

of patent protection? How would the rules be related to the GATT system, and how would

the dispute settlement provisions operate? However, no decision could materialize on such

the issues, and Lars Anell was of the opinion that delegates were not prepared to negotiate

seriously.120

During the second week of December, the negotiators started a continuous series of informal

consultations and meetings. As a result, on 18 December, the TRIPS group held its last

meeting, with a draft text before it that was 95% negotiated.121

Thus Anell made the text to

go forward in the Draft Final Act. Thus the draft text was ready and the TRIPS negotiations

were successfully over. The text included in the Draft Final Act of December 1991 proved to

be the definite result of the Uruguay Round negotiations on intellectual property, except for

two small modifications of substance in final stage. By mid-autumn 1991, the general shape

of the TRIPS text had become clear and many points had been effectively settled. The most

important decision in the TRIPS Agreement to be adopted included the minimum levels of

protection, the question of patent coverage as well as that of pharmaceuticals, geographical

indications, and transitional periods. Patent protection, undoubtedly the most controversial

single issue in the whole TRIPS negotiations, was to be available for twenty years for

products and processes in all fields, except that it did not need to be extended to certain

animal and plant inventions. Developing countries which had not allowed patents on

pharmaceutical products were allowed ten years of transition period to introduce such

protection. In general developed countries were to have one year, developing countries five

years and least -developing countries eleven years, to meet the requirements of the

agreement. On geographical indications, a compromise was made that generally gave

�� 119

Id. at 318.�

120Id.�

121Id. at 319.�

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protection against misleading use and unfair competition, and gave stronger protection to

wines and spirits. However, a separate agreement on counterfeit goods and dispute

settlement, and the relationship with GATT were decided by the Uruguay Round due to the

broad ranging agreement on intellectual property.

On 20 December 1991, the Trade Negotiations Committee (TNC) received the Draft Final

Act and an expectation ascended that it would be acceptable to all the participants in the

Uruguay Round. However, the expectation was sharply disappointed. But in December 1991,

Dunkel called in TNC for rigorous, non-stop bilateral, plurilateral and multilateral

negotiations on market access. A similar fluctuating feeling and uncertainty prevailed in the

sector of services negotiations as well. Consequently, direct proposals were made to Dunkel

for changes in the Draft Final Act. On the other hand, several governments had to face heavy

pressure from domestic interests not to accept particular elements in some texts. Violent riots

by farmers against the admission of foreign rice took place in Korea and Japan, and large-

scale demonstrations by farmers in Western Europe also collapsed on several occasions into

disorder.

The TRIPS Agreement requirement to provide patent protection for pharmaceuticals and

seeds stimulated severe controversy in India, and Dunkel’s effigy was burnt as he was held

personally responsible for the Draft Final Act known in India as ‘the Dunkel Draft’.

However, Dr. Manmohan Singh, the then Finance Minister of India expressed his fear that

“drug prices would go up after the implementation of the TRIPS Agreement. As about 90%

of the drugs used in India were not covered by the patent laws in the GATT agreement

earlier. Moreover, in the case of balance 10-15% drugs, the prices would not go up.”122

On the other hand, American pharmaceuticals manufacturers found unfair the late

introduction of patent protection for products already in the pipeline leading to market

launch.

After protracted efforts and negotiations on the matters on which no consensus could be

arrived at earlier, Peter Sutherland, the newly elected GATT Director-General replacing

Arthur Dunkel, made many efforts to get approval of Uruguay Round agreements including

TRIPS and for reaching an end to the negotiations. The form and accuracy of the

negotiations texts which were approved on 15 December, 1994 had to be checked. The TNC

met several times more to develop a work programme for adoption at the conference in April

�� 122

Manmohan Singh, ‘India Ready to Participate at WTO’, Economic Times, January 18, 1995�

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1994, held in Marrakesh at Morocco, at which ministers’ signed the agreements. One

decision reached was to advance the date for entry into force of the World Trade

Organization and the other Uruguay Round agreements: the Final Act of 15 December, 1994

had set 1 July 1995 as the target date, but it was brought forward by six months to 1 January

1995. Ultimately, on New Year’s Day 1995, which was 1 January 1995, the World Trade

Organization came into being.

14. MINISTERIAL CONFERENCES AFTER THE ESTABLISHMENT OF WTO :

The highest decision making body in the WTO is the Ministerial Conference, which usually

meets after every two years. It can take decision on all matters relating to any of the

multilateral trade agreements under the WTO. Up to 2009, seven Ministerial Conferences had

been held to discuss various issues, which are as under:

14.1 Singapore Ministerial Declaration:

The Ministers met in Singapore from 9 to 13 December 1996, for the first regular biennial

meeting of the WTO at Ministerial level, as called for in Article IV of the Agreement

Establishing the World Trade Organization, to further strengthen the WTO as a forum for

negotiation, the continuing liberalization of trade within a rule-based system, and the

multilateral review and assessment of trade policies, and in particular to access the

implementation of commitments made under the WTO Agreement and decisions; to review

the ongoing negotiations and work programme; to examine developments in the World

Trade; and to address the challenges of an evolving world economy.

The ministers declared the fact that for nearly 50 years members wanted to fulfill their

objective of conducting trade in such a way, so as to raise standards of living worldwide,

right from GATT to the WTO. They further declared that the rise in global trade facilitated

by trade liberalization within the rules-based system had created more and better-paid jobs in

many countries. The achievements of the WTO during its first two years were witness to the

desire of the members to work together to make possibilities that the multilateral system

provided to promote sustainable growth and development besides contributing to a more

stable and secure climate in international relations.

In order to meet their goal of sustainable development for the common good, certain

commodities dealing with the role of the WTO, were renewed, and were:

• A fair, equitable liberalization and elimination of tariff and non-tariff barriers to

trade in goods;

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• Progressive liberalization of trade in services;

• Rejection of all forms of protectionism;

• Elimination of discriminatory treatment in international trade relations;

• Integration of developing and least-developed countries and economies in

transition into the multilateral system; and

• The maximum possible level of transparency.

Regarding the implementation issues, the Ministers declared that high priority was attached

to full and effective implementation of the WTO Agreement in a manner consistent with the

goal of trade liberalization. They found that the implementation to be satisfactory, although

some Members had expressed dissatisfaction with certain aspects, thereby making it clear

that further efforts were required as had been indicated in report of relevant WTO bodies.

Developing countries role in the multilateral trading system was declared to be important for

their economic development and for global expansion. The Ministers further indicated that

the WTO Agreement embodied provisions conferring differential and more favourable

treatment for developing countries. Moreover, they also acknowledged the fact that the

developing countries had undertaken significant new commitments, both substantive and

procedural to be fulfilled and also recognized the fact that such countries were making efforts

to comply with them by introducing amendments in their national legislations so as to bring

them in conformity with the WTO agreements. Thus to bring such changes, an assurance was

given that technical assistance under the agreed guidelines would be made available to them.

Disagreements between the developed and developing countries arose mainly on four issues

for which that conference established four permanent groups: transparency in government

procurement, trade facilitation (customs issues), trade and competition. These issues came to

be known as the ‘Singapore issues’. These issues were pushed at successive ministerial

conferences by the European Union, Japan and Korea, and opposed by the most developing

countries.

14.2 Geneva Ministerial Declaration:

The second Ministerial Conference also known as Geneva WTO Ministerial Declaration was

adopted on 20 May 1998. It was declared that the work under existing agreements and

decisions had resulted in significant new steps from the time they met in Singapore. By the

time of this declaration, it was observed that negotiations on basic telecommunications and

financial services were made and Information Technology Agreement had also been

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implemented. As a result of turbulences in the financial markets, it was stressed that all

markets must be kept open that would provide a long-lasting solution to such difficulties.

Thus, they rejected the use of any protectionist measures and agreed to work together in the

WTO to improve the consistency of international economic policy-making, with a view to

maximizing the contribution that an open, rule-based trading system could make to substitute

stable growth for economies at all levels of development.

They further recognized the importance of enhancing public understanding of the benefits of

the multilateral trading system in order to build support for it and agree to work towards that

end. It was emphasized that full and faithful implementation of the WTO Agreement and

Ministerial Decisions was imperative for the credibility of the multilateral trading system and

for maintaining the thrust for expanding global trade, and for the purpose of creating jobs and

raising standards of living in all parts of the world.

In order to ensure full and faithful implementation of WTO Agreements and to prepare for

the Third Session of the Ministerial Conference, it was decided at Geneva that a process

would be established under the direction of the General Council, who would further submit

recommendations regarding the WTO’s work programme, including further liberalization to

respond to the range of interests and concerns of all members, within the WTO framework, to

enable them to take decisions at the third session of the Ministerial Conference.

Consequently, it was decided that the General Council would meet in special session in

September 1998 and periodically thereafter to ensure full and timely completion of its work,

fully respecting the principle of decision-making by consensus. It provided that the General

Council’s work programme shall include the following123

:

a. Recommendations concerning:

i. The issues, including those brought forward by members, relating to

implementation of existing agreements and decisions;

ii. The negotiations already authorized at Marrakesh to ensure that such negotiations

begin on time;

iii. Further work already provided for under other existing agreements and decisions

taken at Marrakesh;

b. Recommendations concerning other possible future work on the basis of the work

programme initiated at Singapore;

�� 123

See Paragraph 9 of Geneva Ministerial Declaration, 1998.�

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c. Recommendations on the follow-up to the High-level Meeting on Least-Developed

countries;

d. Recommendations arising from consideration of other matters proposed and agreed to by

Members concerning their multilateral trade relations.

Besides above, the General Council was also asked to submit to the third session of

Ministerial Conference, on the basis of consensus, recommendations for decision concerning

the further organization and management of the work programme arising from the above

works, including the scope, structure and time-frames so as to ensure that the work

programme has begun and settled expeditiously.

14.3 Seattle Ministerial Conference:

The third Ministerial Conference was held in Seattle from 30 November to 3 December 1999

to convene Third session of the WTO Ministerial Conference. In the conference, 155

Members of the WTO participated. It was observed that the world trade had increased under

agreed rules and fostered growth, development and employment. Moreover, the system

proved its worth as crucial element in promoting recovery from the financial disturbances of

1997-1998. It was recognized that trade liberalization had yet to benefit many poor people,

particularly those in developing countries. They ensured that for such purpose, the benefits of

multilateral trading system continue to grow and were shared more broadly and in a fairer

manner among the members and the people. Moreover trade should make its full contribution

to eliminate poverty.

Further, full and faithful implementation of the WTO Agreements and Decisions was also

committed. They undertook to take positive and concrete measures to ensure that developing

countries & transition economies secured a share in the growth of international trade

proportionate with their economic development needs. Thus they emphasized that reduction

and elimination of protection on products and sectors of interest to developing countries

would contribute to this goal. Recognizing that developing countries may need flexibility in

the implementation of multilateral trade agreements and compliments, they showed their

commitment to make all areas of special and differential treatment effective and operational.

Paragraph 29 of the Seattle Conference dealt with Trade-Related Aspects of Intellectual

Property Rights. It was recognized that the work shall be undertaken in regard to

geographical indications to complete negotiations on the establishment of a multilateral

system of notification and registration of geographical indications for wines as provided in

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Article 23(4) of the TRIPS Agreement. Moreover, an issue relevant to a notification and

registration system of spirits was also made part of that work. Further, decision to be taken on

the extension of the protection required by Article 23 to additional product areas was also

emphasized.

Paragraph 45 of the conference declared that taking into account the work done under the

built-in agenda in the Council for TRIPS, it shall consider the extension to additional product

areas of the protection required by Article 23; shall examine, in cooperation with other

relevant intergovernmental organizations, the scope for protection covering intellectual

property issues relating to traditional knowledge and folklore under the TRIPS Agreement

and other currently available legal means and practices, both national and international and

also shall in undertaking the review of the implementation of the Agreement provided for in

Article 71(1) of TRIPS Agreement and pursuing the review of the provisions of Article 27(3)

(b), examine, on the basis of proposals be members, ways of enhancing the extent to which

the Agreement responded fully to its objectives and principles contained in its Preamble and

its Article 7 and 8 as well as to now international legal and technological developments and

practices.

The Council for TRIPS was directed to report on the above work and make recommendations

as appropriate to the Fourth Session. Since no agreement was reached, the developed nations

pushed that any new trade negotiations must include the Singapore issues. Thus negotiations

started at Seattle and may be called the Millennium Round but, due to several different events

including protests activity outside the Conference, the so called “Battle-of Seattle”, the

negotiations were never started. Due to the failure of Millennium Round, it was decided that

negotiations would not start again until the next Ministerial Conference in 2001 in Doha,

Qatar. Thus the third Conference ended in a failure.

14.4 Doha Ministerial Conference:

The fourth Ministerial Conference was held in Doha, Qatar in November 2001 where Doha

Development Roundor Doha Development Agenda (DDA) was launched that continues even

today. It is the current trade negotiations round of the World Trade Organization. Their

objective is to lower trade barriers around the world, which allows countries to increase trade

globally. As of 2008, talks have delayed over a divide on major issues, such as agriculture,

industrial tariffs and non-tariffs barriers, services, and trade remedies. The most significant

differences are between developed nations led by European Union (EU), the United States

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(USA), and Japan and the major developing countries led and represented mainly by Brazil,

China, India, South Korea, and South Africa.

After 10 years of trade negotiations to further open world trade, the Doha Development

Agenda is on the edge of failure. The latest round of negotiation began in 2010 as an effort to

find an agreement to bring it to a successful conclusion, but the negotiations between the key

players, viz., the US, China, India and Brazil were deadlocked. The disagreement on the three

key areas relating to chemicals, industrial machinery and electronics on granting more

concessions still continues between the US on one side and India, China and Brazil on the

other that are ready to grant the concessions, but not to the extent the US is demanding.

14.5 Cancun Ministerial Declaration:

The fifth Ministerial Conference was held in 2003 in Cancun, Mexico, where talks were

intended to bring concrete agreement on the Doha round objectives. The GI protection was

on the Agenda for deliberations at the fifth Ministerial Conference. However, these talks

collapsed after four days during which the members could not agree on a framework to

continue negotiations. Low key talks continued since the ministerial meeting in the Doha but

progress was almost non-existent. This meeting was intended to create a framework for

further negotiations.

The Cancun Ministerial collapsed for several reasons which are:

• Differences over the Singapore issues appeared incapable of resolution. Though the

EU had withdrawn on some of its demands, but several developing countries

refused any consideration of such issues at all.

• The wide difference between developed and developing countries across virtually

all topics was a major obstacle. The U.S. - E.U. agricultural proposals and that of

the G20 developing nations led by India, China, Brazil, etc., showed different

approaches to special and differential treatment.

The collapse appeared like a triumph for the developing countries. The failure to continue the

round resulted in a serious loss of momentum and brought into question whether the 1

January 2005 deadline to end Doha Development Agenda would be met. The North-South

divide was most prominent on issues of agriculture. The developing countries considered the

rejection of deal unfavourable to them as their victory to prove their worth and strength. Their

strength to change the direction of negotiations was clear from the formation of new trade

block of developing and industrialized nations: the G20. Since its creation, the G20 has had

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fluctuating membership, but is mainly led by the G4- the People’s Republic of China, India,

Brazil and South Africa. While the G20 presume to negotiate on behalf of all the developing

countries, many of the poorest nations still continue to have little influence over the emerging

WTO proposals.

14.6 Hong Kong Ministerial Conference:

The sixth WTO Ministerial Conference took place in Hong Kong from 13 to 18 December,

2005. Although an outbreak of dialogues took place in the fall of 2005, the WTO Director-

General, Pascal Lamy, announced in November 2005 that a comprehensive agreement on

modalities would not be forthcoming in Hong Kong, and that the talks would take account of

the negotiating sectors where similarity of opinions was stated.

Trade ministers representing most of the world’s governments reached a deal that had fixed a

deadline for removing subsidies on agricultural exports by 2013. The final assertion from the

consultations also required industrialized countries to open their markets to goods from the

world’s poorest nations, a goal of the United Nations for negotiations to try to finish a

complete set of global free trade rules by the end of 2006. The conference further pushed

back the expected completion of round until the end of 2006.

14.7 Geneva Ministerial Conference:

Following a gap of several years, due to the continued efforts to end the Doha Round after the

sixth Ministerial Conference by holding talks in Geneva in 2006, in Potsdam in 2007and

Geneva in 2008, the WTO members agreed in May 2009 that the Seventh Ministerial

Conference would take place in Geneva from 30 November to 2 December 2009. Ministers

met against the context of financial and economic crisis to review all areas of the WTO’s

work. The conference was attended by nearly 3,000 delegates representing all 153 WTO

members as well as 56 observers.124

At the Conference, ministers recognized the crucial role

of the rules-based multilateral trading system in mitigating the effects of the economic crisis

and focused on what the WTO could do to assist economic recovery.

14.8 Current Position:

Several countries have called for talks for the Doha Round to start again. Brazil and Pascal

Lamy have led this process. LuizInacio Lula da Silva, President of Brazil, called several

�� 124 World Trade Organization, Annual Report 2010, at 8, 12, Available at: www.wto.org (last visited 1 February

2011).�

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countries’ leaders to urge them to reintroduce dialogues. Lamy visited India to deliberate

likely way outs to the deadlock. In early 2010, Brazil and Lamy focused on the role of the

United States in disabling the deadlock. Brazilian President, Lula urged Barack Obama to end

the trade dispute between Brazil and the US over cotton subsidies following his increase in

tariffs on over 100 US goods. Agriculture has become the most delicate agenda for both

developing and developed countries.

15. DOHA ROUND AND TRIPS:

The Doha Ministerial Declaration stressed on the significance of implementation and

interpretation of Trade-Related Aspects of Intellectual Property Rights (TRIPS) which is

consistent with the public health and the provision of due importance to access to medicines,

and research and development (R&D) in the field.125

The Declaration further stipulated the

WTO Member agreed to negotiations regarding establishment of a multilateral system of

notification and registration of geographical indication of wines and spirits by the fifth

session of the Ministerial Conference in Hong Kong in December 2005.126

Further regarding

the issues related to the extension of the protection of geographical indications provided for

in Article 23 of TRIPS Agreement to products other than wines and spirits, the Council for

TRIPS pursuant to paragraph 12 of that Declaration was instructed to address those issues.127

While some progress had been made since the Doha Round on some of the issues related to

intellectual property, a number of issues are still unresolved.

The relationship between TRIPS and public health, pursuant to the Doha Ministerial

Declaration, was first discussed in the year 2001in the WTO Council for TRIPS, which after

a long-drawn-out discussion concluded in the adoption of the Doha Declaration on TRIPS

Agreement and Public Health of 14 November 2001. It stated that TRIPS Agreement should

not avert measures by WTO members to protect public health. A waiver in August 2003 was

granted to address the problems that countries with insufficient or no pharmaceutical

manufacturing capacity were facing in making use of compulsory licensing. On 6 December

2005, an amendment to TRIPS Agreement was made for implementation of the August 2003

waiver. Article 31(f) of the TRIPS Agreement provides: “products made under compulsory

licensing must be predominantly for the supply of the domestic market.” Thus before August

2003, the WTO Members countries like India manufacturing cheap generic medicines

�� 125

Paragraph 17, Doha Ministerial Declaration, 2001.�

126 Paragraph 18 , Doha Ministerial Declaration, 2001.�

127Id. �

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produced under the compulsory licensing right granted by the Declaration on TRIPS

Agreement and Public Health to meet public health needs and also to deal with national

emergency or other circumstances of extreme emergency, such as against HIV/AIDS,

tuberculosis(TB), malaria and other epidemics, could not export drugs under compulsory

licensing to the poor countries of Africa as the same could be sold in the domestic markets

vide obligation imposed under Article 31(f) of the TRIPs Agreement. However, waiver from

Article 31(f) of the TRIPS Agreement on 30August 2003, was allowed to poor countries

which were unable to manufacture medicines themselves and they granted permission to

import cheap generic medicines made under compulsory licensing from cheap producers like

India.

Another issues besides extended GI protection beyond wines and spirits, which is currently

been debated is related to non-violation complaints Article XIII (b) and (c) of GATT 1994.

The provision allows the WTO Members to bring disputes to the WTO, which are based on

the loss of an expected benefits caused by another member’s action, even if such action does

not constitute violation of a WTO provision. However, it was agreed by the WTO members

to not to use non-violation complaints under Article 64(2) of the TRIPS Agreement against

the developing countries for the first five years of the WTO. It has been extended since then.

Also there was discussion on whether non-violation complaints should be allowed in the

TRIPS as such and if so, to what extent and how could they be incorporated in the WTO’s

dispute settlement procedures.

The Doha Declaration also directed the WTO Council for TRIPS to make recommendation to

the Cancun Ministerial Conference and till then the WTO Members agreed to restrain them

from resorting to non-violation complaints. In May 2003, the chairperson of the WTO

Council for TRIPS proposed four possibilities out of which most of the members favoured

banning non-violation complaints completely, or extending the suspension. However, no

consensus was reached.

Thus it is clear that the negotiations on most of the contentious issues have not progressed

much. Differing stands on wines and spirits are being discussed in the Special session of the

TRIPS Council, while the extension issue is being discussed in the TRIPS Council. The Doha

Round which has stretched for more than 10 years, longest after the Uruguay Round, is

expected to decrease the differences between the developed and developing countries in the

near future.

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After getting acquainted with developmental history of the intellectual property law and the

rights protected thereunder, and culmination of all the international efforts into the

establishment of an institutional structure, viz., the World Trade Organization (WTO)

administering various agreements, including the Agreement on Trade Related Aspects of

Intellectual Property Rights (TRIPS), it becomes relevant to do a complete dissection of the

TRIPS Agreement and also study its implications on the developing countries that raised a

great suspicion regarding on the negative impacts it would have on them. Thus in the next

Chapters, analysis of the TRIPS Agreement and its effects in the field of patents and

geographical indications is done. The role of the Dispute Settlement Body in resolving the

differences between the member states and interpreting the provisions of TRIPS Agreement

is also done.

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CH A PTE RCH A PTE RCH A PTE RCH A PTE R ----IIIIIIII

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CHAPTER-II

EVOLUTION AND ANALYSIS OF TRIPS AGREEMENT

1. ORIGIN AND EVOLUTION OF TRIPS:

The need for intellectual property protection is the result of pressures of those responsible for

new industrial or technological breakthroughs to get profit on their value on one hand and on

the other hand,the need of the consumers to get access to them at a very little or no asking

price. These unsurprisingly led to strong political discussions and legislative enactments such

as copyright laws, enacted after the invention of Printing Press, and the national and

international standards on industrial property protection adopted in the stir of industrial

revolution in Europe in the 19th century.1

However in 1980s, new trade policy efforts were started by the developed countries in order

to protect the Intellectual Property Rights (IPRs). The introduction of electronics-based

technologies and goods prone to copying due to their utility and economic value; the

growing efficiency of newly mechanized developing countries in the manufacturing sector;

the increasing globalization of the markets and the rising consciousness of intellectual

property by the enterprises of the developed countries as a highly important asset, led to the

adoption of various policy decisions that finally finished into an Agreement on the Trade-

Related Aspects of Intellectual Property Rights (TRIPS) in 1994 within the framework of the

Uruguay Round of Multilateral Trade Negotiations (MTN) at the General Agreement on

Tariffs and Trade (GATT).2

Industrialization was the major objective of the developing countries, which could be

achieved by the advancement of science and technology. One of the easiest methods for

gaining access to such technology was its transfer from the technologically advanced nations,

in the form of patents or other industrial property rights. However, the flow of technology

was obstructed by the technology holders in the developed countries after they obtained

patent in the developing countries and then they demanded more protection in such countries,

so as to establish import monopolies, rather than to work.

�� 1Abdulqawi A. Yusuf, “TRIPS: Background, Principles and General Provisions” in International Property &

International Trade: The TRIPS Agreement (Eds.) Carlos M. Correa and Abdulqawi A. Yusuf, (2008) at 3.�

2GATT, Final Act Embodying the Result of the Uruguay Round of Multilateral Trade Negotiations, Doc.

MTN/FA/Add. I (15 December 1993).�

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The growing awareness about the use of intellectual properties amongst the developing

countries compelled the developed nations to have common standards governing the

protection of the intellectual property rights. TRIPS Agreement is an outcome of such rising

consciousness. The developing countries were never in favour of the inclusion of the TRIPS

under the surveillance of the WTO. In order to understand the factors leading to the adoption

of the TRIPS Agreement, it is necessary to trace the origin and evolution of TRIPS

Agreement. For doing so examination of the following is required to be done:

1.1 Disagreements between developed and developing countries on IPRs; and

1.2 IPRs under GATT.

1.1 Disagreements Between Developed and Developing Countries on IPRs:

There have been many differences on the scope of the protection of intellectual property

rights (IPRs) between technologically innovative countries and those in the progression of

industrialization. The latter group has repeatedly limited the scope of protection granted to

the foreign intellectual products as part of their catching-up strategies.This notion of

restricted protection of intellectual property was prevalent in the 19th century; and in some

areas of the intellectual property like pharmaceuticals, agro-chemical patents, until very

recently national legislations had no or very weak protection, which is true of a number of

countries that are now developed; it has also been true of many developing countries prior to

the adoption of the TRIPS Agreement. As noted in a report by the Office of Technology

Assessment (OTA) of the US Congress3:

“Historically, there have been political tensions between nations whose role

as producers of intellectual property allowed them greater access to such

products, and nations that imported technology products, and had only

limited access to them. When the United States was still a relatively young

and developing country, for example, it refused to respect international

intellectual property rights on the grounds that it was freely entitled to

foreign works to further its social and economic development.”

However, the disinclination of late-arrivers’ in the field of IPRs to toughen the protection of

IPRs emerged from the point that at a stage when the technological ability of a particular

�� 3US Congress, Office of Technology Assessment, Intellectual Property Rights in an Age of Electronics

Information, OTA-CIT-302 (Washington DC, US Government Printing Office, April 1986), at 228.

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country is weak, and its enterprises are not able to take substantial advantage of the incentive

provided by intellectual property protection, the benefits gained from such protection,

including the incremental contribution to the technological progress worldwide, may be

eclipsed if they were prevented from acquiring and adapting foreign technology without

consent of its creator, or to import new products and processes from alternative or cheaper

sources producing such technologies, as in case of medicines that were produced by

industrially growing developing countries like India, which by applying reverse engineering

techniques on the patented processes were producing cheaper medicines and exporting to the

other developing and least developed countries, including the developed countries.

Patents and copyrights had long been the main instruments for the protection of intellectual

property rights. The Paris Convention on the Protection of Industrial Property and the Berne

Convention on the Protection of Literary and Artistic works were concluded in 1883 and

1885 respectively, to provide such protection under international Law. Both the Treaties are

administered by the World Intellectual Property Organization (WIPO), which replaced in

1967 the United International Bureau for the Protection of Intellectual Property (BIRPI)

originally created for that purpose; whereas a third treaty dealing exclusively with copyright

was Universal Copyright Convention (UCC), which was concluded in 1952 under the

umbrella of UNESCO.

With a view to encourage the economic and social development, in 1970’s the developing

countries sought to obtain more flexibility in the application of the provisions of the Paris and

Berne Conventions so that they may have greater access to the foreign technologies and

thereby develop. With regard to patents, for example, developing countries wanted to stress

local exploitation requirements, the authorization of parallel imports, and greater range for

compulsory licensing in the absence of local exploitation for the purpose of firming up the

developmental and social welfare function of the exclusive rights granted to the patent

holders. These ideas were clearly reflected in the initiatives taken by the developing countries

in the 1970s, in the context of World Intellectual Property Organization (WIPO), for the

revision of Paris Convention on the Protection of Industrial Property. Additionally, in the

field of copyright protection, similar efforts were made. As in 1971, during the revision

process of the Berne Convention, developing countries called for relaxing of copyright

protection in the interest of parity in knowledge distribution and as a mean of authorizing

somewhat speedy reprinting and translation of books related to educational and scientific

development.

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The seventh revision of the Paris Convention which began in 1980, failed to achieve any

results due to the rift between the developed and developing countries On one hand the

developing countries were pursued for a greater use of industrial property rights granted in

their territories, whereas on the other hand, the developed countries were adamant to provide

firm protection to the holders of patent rights.4

Conversely, the 1971 revision process of the Berne Convention resulted in the introduction of

substantial amendments to the Convention. These are contained in an Appendix to the

Convention entitled ‘Special Provisions Regarding Developing Countries’, which enabled

any country in conformity with the established practice of General Assembly of the United

Nations ‘to grant non-exclusive, non-transferable licenses to its nationals for the reproduction

or translation of foreign-owned copyright works for educational or research purposes.’5

During the same period, the developing countries led another important initiative, in the

context of the United Nations Conference on Trade and Development (UNCTAD) in 1964,

when they were greatly discontented with the working of the GATT. Thus a new organization

was felt necessary for dealing with the problems of world trade and development and for the

reduction of trade gaps with the developed countries. The U.N Charter embodies the goals of

the promotion of the social and economic advancement of all people and of international

economic cooperation. As a possible alternative to I.T.O (International Trade Organization)

the U.N Committee recommended the setting up of UNCTAD, consequently the General

Assembly established the sub-organ, the UNCTAD in 1965.6

Thus, the UNCTAD was established for enabling the transfer of technology to their

enterprises, for securing remunerative, reasonable and steady prices for the developing

nations.7 It also suggested that each developed nation should transfer annually at least one per

cent of its income to less developed countries in Groups A & C, usually called in Group of

77, (Group C are less developed as compared to A)8 in way of foreign trade.9

�� 4WIPO, ‘Basic Proposals for the Diplomatic Conference on the Revision of the Paris Convention’ [November

1979] Industrial Property.�

5Berne Convention for the Protection of Literary and Artistic Works, Paris Act of 24 July 1971, WIPO(Geneva

1984).�

6B.S. Murthy, International Relations and Organizations, (2010) at 212.�

7S.R. Myneni, International Relations and Organizations, (1st Edition, 2005) at 224.�

8Supra, B. S. Murthy, at 212.�

9Supra, S. R. Myneni, at 224.�

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However, the initiatives in the form of various UNCTADs (UNCTAD I- VI up to 1983) did

not do well due to the strong resistance of developed countries who were looking for

strengthening protection of IPRs worldwide, and had also raised the matter first in WIPO, but

then decided to move the negotiations to GATT where market access for the manufactured

products of developing countries could be offered in exchange for their acceptance of

providing better protection to IPRs. The issue of IPR protection was, called for consideration

in the Uruguay Round of GATT in 1986.

As a result of that, the developing countries, in order to create an equilibrium between two

concerns viz., protection of property rights granted for the promotion of creativity on one

hand, and maximization of social welfare arising for the diffusion of that creativity on the

other, both domestically and internationally were pursuing specific strategies for adoption of

lower and more flexible standard of intellectual property protection.

1.2 IPRs under GATT:

While the developing countries felt let down by the GATT, especially when in April, 1989 an

agreement was reached on a frame work for TRIPS, they started to follow particular

approaches for protection of IPRs, and the opposite trend was gaining momentum in the more

advance industrialized countries. Thus, the United States started using Section 337 of the US

Tariff Act, 1930 to fight the infringement of US patents by foreign enterprises.10 It also

introduced, together with European Economic Commission (EEC), a draft agreement on

measure to discourage the importation of counterfeit goods into the Tokyo Round of

multilateral trade negotiations at the GATT.11

However, the US-EEC proposed agreement on counterfeit goods, also known as counterfeit

code, was never adopted by the Tokyo Round, but Deliberations on anti-counterfeit measures

persisted in the GATT through the early 1980’s and until the launching of the Uruguay

Round, which called for the attention and adoption of an international instrument on Trade-

Related Aspects of Intellectual Property Rights (TRIPS). As before 1986-94, that is, the

Uruguay Round Negotiations, there was no explicit agreement on intellectual property rights

in the framework of GATT multilateral trading system. Though measures concerning the

�� 10

Supra, Abdulqawi A. Yusuf, at 7.�

11GATT, Agreement on Measures to Discourage the Importation of Counterfeit Goods, Doc. L/4817 (31 July

1979).

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problem of counterfeiting goods were initiated in the form of Anti-Counterfeit Code (ACC)

and also some principles contained in the GATT had a bearing on intellectual property

measures taken on imports or exports.

Thus prior to Tokyo Round of trade negotiations in 1979, the GATT was devoid of any

mention of intellectual property. But Article XX (b) of GATT that reads: “subject to the

requirement that such measures are not applied in a manner which could constitute a means

of arbitrary or unjustifiable discrimination between countries where the same conditions

prevail, or a disguised restriction on international trade, nothing in this agreement shall be

construed to prevent the adoption or enforcement by any contracting party of measures: (b)

necessary to protect human, animal or plant life or health”, contains a reference to the

intellectual property.

Due to the reluctance of developing countries to take on stiff rules and obligations on

Intellectual Property Rights (IPRs), the US got more concerned and took initiative for

including IPRs in the agenda of various trade negotiations.12 In this attempt, the developing

countries were targeted at the level of protection and in the enforcement of IPRs.13 Hence, the

US succeeded in putting TRIPS under UR agenda and a set of single undertaking where

members had no other option, but to sign all the 12 agreements together and no chance of

pick and choose was made available.14

Although the GATT linking was new in many respects, since standard setting in the area of

IPRs was customarily done within the structure of World Intellectual Property Organization

(WIPO), the trade disagreement was perhaps as old as the international regime on IPRs itself.

Though, the promotion of international trade figured importantly in the letter of invitation to

the first International Congress for the consideration of Patent Protection held in Vienna in

1872. It was stated inter alia, that:

“We live no longer in the day of industrial action, which is removed from foreign

competition, and where slow communication prevents or delays the utilization of inventions.

We live at a time of liberal customs policy; steam and electricity have newly united once

�� 12Mitsvo Matsushita, Thomas J. Schoembaum and Petros C. Maveroidis, The WTO Law, Practice and Policy,

2003) at 397.�

13 S.K. Verma, ‘Enforcement of Intellectual Property Rights: TRIPS Procedure and India’, Journal of the Indian

Law Institute, Vol.46 (2), 2004, at 320-321.�

14 Michael Trebilcock and Robert Howse, The Regulation of International Trade, (2nd Ed.), 1999, at 320-321;

Also See, K.D Raju, Intellectual Property Law: WTO and India, op. cit. 7 at 11.�

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isolated seats of industry in a way undreamt of; and the mutual exchange of goods shows

today a magnitude which a generation ago one could not have imagined. Under such altered

relations the patent granted for an invention in one country becomes in fact a restriction

unprofitable and obstructive, if the same invention without limitation or increase in price

becomes in an adjoining country common property.”15

“The artisan who in the one country must work with the auxiliary material there patented and

therefore dearer in price, will suffer an essential injury as soon as the same material is

produced in the other country, not only without restriction, but with a damaging competition.

Moreover a continuance of the hitherto antagonistic views and measures would scarcely

conduce to preservation of general harmony; and if, for example, patent protections were

maintained in one country, so as to attract thereby skilled operatives from another, thereby

skilled operatives from another, then the danger of disturbance of the international industrial

balance might readily be apprehended.”16

“Such and similar inconveniences can only be met by the common action of all civilized

states, disposed to the maintenance of patent protection.”17

Notwithstanding the fact that more than 100 years had passed since this rationalization was

given for expansion of international rules on patent protection, the resemblance of these

arguments to those made by the advocates of new rules and disciplines on trade-related

aspects of IRPs in the 1980s is very remarkable.18

However, equal efforts were made in 1980-84 Conference to revise the Paris Convention for

the Protection of Industrial Property but unluckily such efforts went futile.19 But that situation

encouraged a strengthening of national remedies by the United States, and the efforts to

include intellectual property beyond counterfeiting and piracy on the agenda of approaching

eighth round of multilateral trade negotiation in GATT were made very effectually.

However, the trade efforts of the United States resulted into the inclusion of IPRs in the

ministerial mandate of Punta Del Este which devised, the terms of a political compromise, the

�� 15 Carlos M. Corrrea and Abdulqawi A. Yusuf, Intellectual Property & International Trade: The TRIPS

Agreement, (2008) at 7.�

16Id. at 8.�

17Id. op. cit. 12 at 8.�

18Id. op. cit. 13 at 8.�

19 Adopted 20 March 1883 as revised at the Stockholm Revision Conference, 14 July 1967, 828 U.N.T.S 305

(here in after the Paris Convention).�

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idea of trade-related aspects of intellectual property rights (TRIPS).20 Two years of analysis

and discussions in Negotiating Group (NG) 11 of the Trade Negotiations Committee (TNC)

led to the expanded and refined Montreal mandate achieved in Geneva in April 1989.21 As

the task ahead was huge and the problems were complex, thus a checklist was prepared by

the GATT Secretariat in early 1990 which listed a total of 161 conceptual and substantial

problems to be settled.22 Deliberations on the complications continued up to spring 1990,

however, changing approaches began to appear when first legal texts were submitted on the

basis of a great number of communications by industrialized and developing countries and

conceptual papers were tested formally and informally. But the draft proposals by the

European Economic Community of March 1990 were a landmark.23 The United States,

Switzerland and Japan also tracked it in submission of comprehensive draft proposals.24 A

group of 14 developing countries expounded detailed proposals focusing on enforcement

against trademark counterfeiting and copyright piracy.25 Consequently, the negotiations based

on these contending legal texts, started to focus on single items, working them over and over

in numerous versions drafted on its own responsibility by the Chairman of NG11,

Ambassador Anell of Sweden, with the skillful assistance of the Secretariat. The process was

conducted in a transparent manner. A group called “Ten plus Ten” did not exclude any

contracting party interested in the matter. At later stage, smaller drafting groups chaired by

Director David Hartridge and Counselor Adrian Otten from the Secretariat, further refined

the text. Due to such flexible alliances, the relationship between industrialized and

�� 20

Id. op. cit.10 at 387.�

21Petersmann, ‘The Mid- Term Review Agreement of the Uruguay Round and the 1989 Improvements to the

GATT Dispute Settlement Procedures’, German Yearbook of International Law (1989) 280-322 at 296- 299.�

22Checklist of Issues, Prepared by the Secretariat, 26 January 1990, Negotiating Group on Trade-Related

Aspects of Intellectual Property Rights, including Trade in Counterfeit Goods, Nr.163; Also see, Supra,

Thomas Cottier, op. cit.12 at 387.�

23Draft Agreement on Trade-Related Aspects of Intellectual Property Rights, MTN. GNG/NGII/W/68(29 March,

1990).�

24Draft Agreement on Trade Related Aspects of Intellectual Property Rights: Communication by the United

States. MTN. GNG /NG11/W/70(11 May, 1990); Draft Amended to the General Agreement on the Tariffs and

Trade on the Protection of Trade- Related Intellectual Property Rights: Communication from Switzerland

MTN.GNG/NG11/ W/73 (14 May 1990); Main Elements of a Legal Text for TRIPS, Communication from

Japan MTN. GNG/NG11/W /74 (15 May 1990). �

25Communications from Argentina, Brazil, Chile, China, Colombia, Cuba, Egypt, India, Nigeria, Peru,

Tanzania and Uruguay, (later joined by Pakistan and Zimbabwe), MTN. GNG/ NG11/W/ 71(14 May 1990).�

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developing countries changed, although the industrialized countries were to share overall

interests, work and progress. Thus it facilitated personal interaction among negotiations as

against traditional block grouping in the U.N system. On the eve of the Brussels Ministerial

Meeting, a partly bracketed legal text was achieved. A separate draft agreement limited to the

trade in counterfeit and pirated goods as a formal alternative for decision on the ministerial

level was also included.26

Work continued at the Brussels Meeting until interrupted by the break-down of negotiations

on agriculture. A number of politically sensitive issues remained to be solved and they

depended on the overall outcome of the Uruguay Round.

During the process of negotiations, attitudes changed and evolved in various ways. The

European Economic Community, which was reluctant to approve the GATT approach in the

beginning, encouraged by the ambitious submissions from private sector such as that from the

proposals by U.S., European and Japanese industries and by the other participants, gradually

emerged as a major demandeur or seeker.27 However, the United States Delegations and

constituencies indicated a gradually decreased interest as the process moved ahead. Perhaps

unexpected demands, such as abolition of the first-to-invent principle and non-discrimination

in administrative patent procedures, the inclusion of moral rights and neighboring rights in

United States law, increased tensions within the industrialized countries. In many areas,

changes in the laws of industrialized countries were desirable due to progress. These areas

were geographical indications, non-discrimination, acquisition, government use and

compulsory licensing. But there is no doubt to the fact that the developing countries have

come furthest in changing their philosophy and outlook towards intellectual property in the

four years of discussions, though various political and economic reasons may be accredited to

that. Despite the trade politics, it is true that the process began to shift legal and economic

attitudes towards the functions of IPRs for the benefit of long-term social and economic

development. The development can clearly be linked to increasing orientation towards less

intervention, open-market economics in many less developed countries and Eastern Europe

which corresponds with and has been generally encouraged by, the Uruguay Round. It is

evident that the positions of industrialized countries were primarily demarcated in order to

define their assets on export markets. The developing countries however, were doubtful about

�� 26

Draft Final Act Embodying the Result of the Uruguay Round of Multilateral Trade Negotiations,

MTN.TNG/W/35 (26 November 1990) 193-237 (hereinafter, Draft Text).�

27Supra, Thomas Cottier, at 388-389.�

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the fact that IPR protection and the absence of higher standards would actually stimulate any

social and economic development. However, it is accepted that adequate protection of IPRs is

a beneficial factor in order to increase the flow of technology and know-how and to

encourage investment by enabling licensing agreements. But the question arises whether

increased protection brings about growth and equitable development. It depends mostly on

other factors and policies, in particular to what extent government, industries and investors

respect the increased level of protection and how far the developed countries establish fair

terms of trade for developing countries in order to redress the global unevenness and avoid

further capital drain to the North. IPRs are merely one aspect in a larger contract. But it

seems safe to say that satisfactory levels of protection are necessary requirement for

achieving successful amalgamation in the world economy to which contracting parties to the

GATT were legally committed. They are also necessary in order to secure market access of

protected products of foreign markets. In other words, IPR protection was functional within

GATT to some extent.

From the very beginning, the relationship between a GATT agreement in intellectual property

and existing international conventions, viz., the Berne Convention for the Protection of

Literary and Artistic Works, the Rome Convention for the Protection of Performers,

Producers of Phonograms and Broadcasting Organizations, and the Washington Treaty on

Intellectual Property in Respect of Integrated Circuits has been controversial. The

controversy revolved around the question whether the GATT should draw rules from the

existing standards and enforce them or should it build a system of its own, particularly

addressing problems of trade distortions. Regarding that issue various methods were tested,

ranging from independence to an obligation to adhere to relevant agreements. An initial

Swiss proposal suggested the application of basic GATT principles and the elaboration of

suggestive lists subject to further development stating situations which would be considered

trade distortive. No formal links with the existing systems were made.28

The European Economic Community on the other hand, contended for a long time on a

requirement to observe the Berne, Rome, Paris and Washington Conventions. A solution

which finally came out was the Doctrine of Incorporation by Reference where it was settled

that the GATT agreement would not prejudice prevailing obligations of the Paris Convention �� 28

Proposal by Switzerland, MTN. GNG/NG11/W/23(29 June 1988).

�

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(1967), the Berne Convention (1971) and the Washington Treaty and it was agreed that the

other provisions would be added in such a way so as to keep the already existing body of law

alive. As a result, the existing conventions were to be applied and construed in future dispute

settlements and build a coherent body of case law.

The original GATT approach could best be considered as lenient but cautions towards IPR

regulatory measures considered susceptive of impeding free trade competition. It was

therefore self-contradictory that the prescription of higher standards of protection for

intellectual property rights should have been advocated within the framework of such an

instrument as the GATT. This contradiction was clearly reflected in the positions assumed by

the developed and developing nations regarding the appropriateness of a GATT-based

approach. It has been described as follows:

“On the other hand, the industrialized countries that subscribe to free-market principles at

home want to impose a highly regulated market for intellectual goods on the rest of the

world, one in which authors and inventors may ‘reap where they have sown’. On the other

hand, the developing countries that restrict free competition at home envision a totally

unregulated world market for intellectual goods, one in which “competition is the life blood

of commerce.”29

The GATT connection was outwardly insisted upon by the developed countries, not because

of a conviction that the strengthening of IP protection would contribute to the liberalization of

international trade, but as a bargaining piece for the access of developing countries’ products

to the market of industrialized countries. There was an assumption that, unlike WIPO

negotiations where countries had to consider only the direct arguments for and against higher

standards of protection, the GATT negotiations would force developing countries to offer

concessions on IPRs in exchanging for what they might gain in other fields for example,

agriculture, textiles, and tropical products. An additional plea of the GATT forum for the

developed countries consisted in the opportunity it provided for effective enforcement of

agreements and for dispute settlement mechanism, both of which were practically lacking in

the WIPO-administered Conventions.

�� 29 J.H. Reichman, ‘Intellectual Property in International Trade: Opportunities and Risks of a GATT Connection’

(1989) 22 Vanderbilt Journal of Transnational Law, 795-796.

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Although the GATT- based approach was initially attacked by the developing countries, even

after the adoption of the Punta Del Este Ministerial Declaration which placed it on the agenda

of the Uruguay Round negotiations, the meeting of various factors and political pressures led

them to agreement in the establishment of higher IPR standards in the GATT framework.

First, the US government started to make the effective intellectual property protection a

precondition for access to the US market under the Generalized System of Preferences (GSP)

for developing countries. Secondly, by threatening trade relationship for inadequate

intellectual property protection, the US and later the EEC, was able to include significant

changes in the IPR law of many developing countries. Thirdly, as more developing countries

adopted free market policies, the enactment of effective IPR legislation became equated with

a good conduct certificate.

Fourthly, a multilateral framework came to be supposed by the developing countries

themselves as a lesser evil than bilateral concessions, especially in view of the fact that it

could lead to trade-offs in other areas such as agriculture, textiles and tropical products.

Thus in May 1990, a ‘Group of 14’ developing countries submitted detailed proposals on

TRIPS, comprising not only draft rules on counterfeit goods and border measures, but also

standards and principles concerning the availability, scope and use of intellectual property

rights.

The submission of these proposals, which constituted a major breakthrough in the TRIPS

negotiations, indicated the acceptance by the developing countries of a GATT-based

standard-setting approach in IPRs. It also set out these countries’ conceptions and views on

the scope and contents of such standards.

The proposals consisted of two parts. Part I entitled: ‘Intellectual Property and International

Trade’, dealt mainly with the norms and principles to be applied to the trade in counterfeit

and pirated goods and provided for the establishment of certain procedures and remedies to

discourage such trade, while trying to ensure an unhindered flow of trade in legitimate goods.

Part II entitled: ‘Standards and Principles Concerning the Availability, Scope and Use of

Intellectual Property Rights’, set out the objectives and principles underlying an agreement

on such standards relating to different categories of IPRs, i.e., patents, trademarks, industrial

designs, geographical indications, copyrights and neighboring rights, and integrated circuit

layout designs. The Group of 14 as well as other developing countries participating in the

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negotiations initially objected to the inclusion of secret know-how, that is, undisclosed

information in the TRIPS Agreement as a category of IPRs.

By separating the proposed text of a TRIPS Agreement in two parts, the developing countries

wanted, in the first instance, to indicate their determination to highlight the part dealing with

trade in counterfeit goods while minimizing the part relating to substantive standards on

IPRs. Secondly, with regard to the latter part, the developing countries wanted to highlight

the importance of the public policy objectives underlying national IRR systems, the necessity

of recognizing those objectives at the international level and the need to specify some basic

principles which could subsequently explain the application of any standards established in

the TRIPS Agreement. Thirdly, they insisted on the need to respect and safeguard national

legal systems and traditions on IPRs, in view of the varied needs and levels of development

of States participating in the IPR negotiations.

Thus the developing countries resisted the inclusion of TRIPS in the UR on two grounds.

First IPRs have nothing to do with trade. Secondly, the World Intellectual Property

Organization (WIPO) already has agreement on IPRs. For many reasons the arguments were

rejected and TRIPS was finally adopted as a single undertaking under the WTO with its

establishment.

2. TRADE RELATED ASPECTS OF INTELLECTUAL PROPERTY RIGHTS

(TRIPS):

The Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) is

fabricated upon a long tradition of intellectual property rights protection in the national and

international laws of various western market economies, or the developed countries’ creation.

Before the advent of the TRIPS Agreement, a wide range of international treaties existed.

Due to deficiencies in the international IP system, especially relating to the level of the

protection, implementation and enforcement of existing laws on the field necessitated the

GATT contracting parties to vest the regulatory power in the WTO with respect to trade-

related aspects of intellectual property protection. TRIPS emerged as the third pillar of the

multilateral trading system.

The TRIPS Agreement contains five distinctive features, viz,

• Regulatory standards, which are required to be observed by every member country;

• Sets relatively high standards of protection and requirements, as in case of

substantive as well as procedural rights and obligations;

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• High abstract nature of the intellectual property rights (IPRs) i.e., intellectual

property is innate to creative ideas and information, or expression in products and

not only to the traded products in commerce;

• It clearly speaks about private rights of economic traders; and

• The agreement fully incorporates substantive rules enshrined in other international

agreements.

The TRIPs Agreement expressively highlights the international intellectual property system.

As a result of introduction of TRIPS Agreement into the WTO, and also because of the

availability of the transition periods to bring the national laws in conformity with the TRIPS

Agreement, changes in domestic laws varied in degree. For industrialized and a number of

advanced developing countries, the TRIPS Agreement largely reflects accepted domestic

standards. For some, it added new forms of protection, such as the protection of geographical

indications or the protection of undisclosed information as a defined intellectual property

right. For other, adjustments were necessary mainly in the field of rules relating to civil and

administrative enforcement. In case of industrialized countries, however, the amendments in

their national laws were not that difficult as the Agreement assures implementation and

provides important refinements, but did not require most of them to make deep changes in

their intellectual property legislation.

At the same time, the situation was different for majority of the developing countries and

transitional economies who had not been out prior to the TRIPS Agreement to bilateral

agreements, in particular with the United States, seeking higher levels of IP protection.

Though the level of protection were required to be elevated within certain time period as was

allowed under the TRIPS Agreement, but the implementation of the new standards caused

political unrest in the various countries including India where large protects were made with a

fear that it was not beneficial for them, especially in case of patent protection to the

pharmaceuticals where high costs are involved in research and development (R&D). The

TRIPS agreement rather, was a check on their capacity to imitate and build upon foreign

technology, which was reduced after the implementation of this Agreement.

Existing economic research on IPRs was only encouraged by the adoption of the Agreement.

The first results indicated that developing countries, prior to the TRIPS Agreement, tended to

reduce the levels of protection established under the colonial rule in order to get benefit from

reproductive potential and talent. They raised their standards of protection only when their

own creative industries emerged. However, the TRIPS Agreement cut short this process. For

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many countries, it was professed as hindering development since reproductive prospective

was reduced, both domestically and internationally. But such suspicion, if taken in other

would be beneficial in long run as they improve the rule of law, good governance, the

framework for technology transfer etc.30

The TRIPS Agreement is understood as increasing the gaps between industrial and

developing countries, as a majority of the WTO members consider the Agreement to be

primarily for the benefit of industrialized countries for whom such Agreement is of vital

importance as it regulates essential conditions of competition between them in third country

markets, including those of the developing countries. Many representing the developing

countries, non-governmental organizations and academia believed that introducing TRIPS

into the WTO was conceptually wrong and was against the grain of trade liberalization,

enhanced market access and competition generally furthered by the WTO law and policy.31

3. PURPOSE OF TRIPS AGREEMENT:

The TRIPS Agreement contains a detailed preamble, where the negotiating parties expressed

the objectives they wanted to achieve through the component of WTO system. The Preamble

reflects to a large extent the mandate given in the Punta Del Este Ministerial Declaration of

the Uruguay Round of Multilateral Trade Negotiations (MTNs). Though the provisions of

preamble reflect the different positions that the discussing parties brought to the negotiating

table, it significantly reflects the preferential approach advocated by the United States and

other developed countries with regard to intellectual property.

The Preamble did not show much concern to the interests of developing countries regarding

the implications of stronger IPRs for their economies. Rather it refers to the intention to

reduce the distortions and barriers to the international trade. Additionally, it refers to the need

of encouraging effective and sufficient protection of IPRs and to ensure that measures and

procedures to enforce IPRs do not themselves become obstructions to legitimate trade. The

wording of this paragraph was drawn from Punta Del Este Ministerial Declaration that

launched the Uruguay Round.

�� 30JayashreeWatal, Intellectual Property Rights in the WTO and Developing Countries, (2000).�

31 Patrick F. J. Macrory, Aurthor E. Appleton and Michael G. Plummer, The World Trade Organization: Legal,

Economic and Political Analysis, Vol. I, at 1045.

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Accordingly the main objective of this Agreement seems to be the reduction of distortions

and obstacles to international trade. It suggests that improving the protection of the IPRs

could contribute to such reduction to come in line with the overall objective of the WTO.

This idea contained in the Preamble, however, contradicts with Article XX (d) of GATT 1947

which permitted GATT contracting parties to justify trade restrictions imposed by IPRs.

Since IPRs may grant a right to the title-holder to prevent the importation of the protected

subject-matter, they can in fact be used to divide markets and create obstacles to trade.

Likewise, exports of products protected by IPRs may also be prevented by the title-holders, if

same is done without his consent. For example, the provision contained in Article 31 (f) of

the TRIPS Agreement prohibited the export of patented medicines, for which compulsory

license has been obtained, to the poor countries having no capacity to manufacture

pharmaceuticals, before waiver of that provision in 2003. This exercise of patent rights

trigged the controversy at Doha Round of negotiations and ultimately resulted in a special

waiver from Article 31 (f) of the TRIPS Agreement to export drugs to the poor countries, out

of their domestic markets, upon fulfillment of certain conditions.32

The question of absence or lack of adequate protection of IPRs as well as lack of adequate

enforcement measures had been raised by the developed countries while negotiating in the

Uruguay Round of GATT.

As regards inadequacies in the scope and availability of rights, the developed countries made

reference to the absence in some of the developing countries of the patent or copyright laws

or of the protection of designs, computer programs, or geographical indications; exclusion of

categories of products or of work from protection; insufficient duration of protection; the

misuse of compulsory licensing; and procedural obstacles or de facto discrimination that

made it difficult for foreign firms to obtain protection for their intellectual property. With

regard to difficulties faced by the owners of intellectual property right owners regarding the

enforcement of their rights, mention was made about lack of police enforcement or access to

border enforcement measures in appropriate circumstances; difficulties of getting access

tocompetent judicial or administrative bodies; procedural problems with the burden of proof

and assembly of evidence etc.33

�� 32

See Paragraph 6 of the Doha Declaration on TRIPS Agreement and Public Health, 30 August 2003.�

33 See Carlos M. Correa, Trade Related Aspects of Intellectual Property Rights, (2007) at 3.�

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Moreover, it was also argued that shortcomings in availability and enforcement of IPRs may

constitute a barrier to trade, as potential exports by inventors or creators be prevented or

diminished by infringing copies of their products circulated in the foreign markets. Thus, it

was necessary to protect such works or inventions and also to provide stringent enforcement

measures in the case of infringement.

Thus preamble recognizes the need for new rules and disciplines in the field of IPRs,

comprising not only adequate principles and standards of IPRs but also effective enforcement

measures; a multilateral framework for dealing with counterfeit goods; dispute settlement

procedures; and transitional arrangements for developing countries.

The Preamble of the TRIPS Agreement recognizes the underlying public policy objectives of

national systems for the protection of intellectual property, including developmental and

technological objectives and the special needs of the least developed country members in

respect of maximum flexibility in the domestic implementation of laws and regulations in

order to enable them to create a sound and viable technological base. The acknowledgement

of the role of the public policy objectives in the design of national IPR systems was one of

the major demands of the developing countries and was expressed in the preamble of Part I of

the “Group of 14” proposals that included the developing countries. Some of these public

policy objectives are specified in Article 7 of the Agreement. Others are recognized either

explicitly in the rules regarding the availability, scope and use of specific IPRs, such as

copyright, patents, trademarks, etc. or implicitly in the conditions, exceptions and limitations

that parties to the agreement may impose on the granting of IPRs.

The need for maximum flexibility in the domestic implementation of the IPR laws and

regulations is recognized solely in respect of the least developed countries. This distinction is

further elaborated in Part IV of the Agreement, on transitional arrangements under Article

65,66 and 67 of the Agreement, whereby the least developed countries are singled out for

special treatment both in the application of the provisions of the Agreement and in the

promotion and encouragement of technology transfer.

The importance of resolving disputes on IPRS through multilateral, rather than bilateral,

procedures is also emphasized in the preamble. This was one the major concerns expressed

by the developing countries during the negotiations, in view of the bilateral pressures

extended by the US through its domestic legislation to ensure the strengthening of IPR

standards and their effective enforcement in other countries.

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The Preamble of the TRIPS Agreement, thus, reaffirms on the one hand, the objectives

sought by the developing countries as enunciated in the Punta Del Este Ministerial

Declaration; whereas, on the other hand, it includes the objectives put forward by the

developing countries who insisted on the importance of recognizing the public policy

objectives underlying the intellectual property regime, be it national or international. Thus

these divergent views of the two blocks comprising of developed and developing countries

with differing objects and purposes of the TRIPS Agreement ultimately and substantially

contributed to the final conclusion of the agreement.

The first Paragraph of the Preamble was invoked by Canada in Canada-Patent Protection of

Pharmaceutical Products,34but the Panel only incidentally mentioned it as one of the other

provisions of the TRIPS Agreement which indicate its object and purpose. The second

Paragraph of the Preamble states ‘the need’ to introduce ‘new rules and disciplines’ in

relation to number of matters which are:

a. The Basic Principles of GATT 1994 and the Relevant International Intellectual

Property Agreements or Conventions:

GATT 1947 contained very few provisions specially pertaining to intellectual property, as

Article IX(6) on marks of origin, and Articles XIII(3) and XVIII(10), which required that

balance of payment safeguards and measures restricting imports, do not prevent compliance

with patent, trademark, copyright or similar procedure. However, the most important

reference to intellectual property rights (IPRs) was in Article XX (d), which allowed, among

other general exceptions, compliance with laws or regulations which were not inconsistent

with the provisions of the Agreement, including those relating to the protection of patents,

trademarks and copyrights, and the prevention of deceptive practices.’ Though, at the initial

stages of the TRIPS negotiations, certain other GATT provisions were also identified as

being relevant to IPRs. Article X, XXII and XXIII were considered to have a relevance to

enforcement issues in connection with intellectual property rights. Regarding other issues

Article I, III and IX (6) were referred and it was said that the General Agreement recognized

both the legitimacy of measures to protect intellectual property rights and those affecting

trade. But later on it was pointed out that General Agreement contained little apart from

�� 34 World Trade Organization, Dispute Settlement: Dispute 114, Available at:

http://www.wto.org/english/tratop_e/dispu_e/cases_e/ds114_e.htm (last visited: 13 January 2011).�

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Article IX(6)to address the issue raised in connection with the inadequate enforcement of

intellectual property rights.

The three basic principles of GATT however, were included in the TRIPS Agreement. These

principles were:

1. National treatment;

2. Most-favoured-nation (MFN) treatment; and

3. Transparency.

The principle of national treatment was not new in the IPR field. It was one of the pillars of

the Paris Convention for the protection of Industrial Property, 1883 and other conventions

entered into the pre-TRIPS era. In GATT such a principle was applied to goods, while in the

case of IPR it directly benefits title-holders.

The TRIPS Agreement extended the application to IPR of the two other basic principles of

GATT viz., MFN and transparency, which were absent in the Pre-TRIPS Conventions on

IPRs.

Moreover, the TRIPS Agreement is not only subject to the GATT principles, but to whole

system of rules and disciplines incorporated into GATT 1994.35

b. The Standards and Principles Concerning the Availability, Scope and Use of

Intellectual Property Rights:

The TRIPS Agreement sets forth the principles and standards in order to ensure the

availability of a maximum level of protection to IPRs. It also determines the scope of such

rights by defining the set of rights conferred to the title-holders as has been done in Article 28

of the Agreement. Since IPRs confer negative rights, that is right to prevent infringement.

The use of such rights aims to ensure their enforcement, but at the same time include other

acts, such as licensing or assignment for the exploitation of protected subject matter.

While the Preamble and the title of the Agreement itself refer to ‘trade-related’ aspects of

IPRs, negotiating parties did not make too much effort to theoretically distinguish those rights

from non-trade-related aspects of such rights. In fact, except the ‘moral rights’ of authors, all

other aspects are covered in the provisions of the Agreement.

�� 35 F Weiss, “International Public Law Aspects of TRIPS’ in J Cohen Jehorem et al, Trade Related Aspects of

Copyright, (1996)at 82.�

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The question as to what are the adequate standards and principles is a matter of opinion or

convenience. As what may be adequate at certain point of time, may not be so when

circumstances have changed. Likewise, which is adequate for developed countries may not be

so far the developing countries. As by looking into the history of intellectual property, it can

well be established that the developed countries have adopted the IPR systems to the

conditions prevailing at different stages of their developmental changes during the pre-TRIPS

era.

Although, the TRIPS Agreement sets forth minimum standards of IPR protection and does

not constitute harmonized system, it obliges all WTO Members, independently of their level

of development, to apply the same standards. No special and differential treatment for

developing countries and least developed countries (LDCs) was allowed by the Agreement,

except for the possibility of applying transitional periods, all of which have expired so far

except for LDCs, which has been further extended up to 2016.This has been one of the most

criticized aspects of the TRIPS Agreement.

Whatever the reasons that led developing countries to finally accept the TRIPS agreement

were, the fact is that the Agreement established what the negotiated parties deemed

‘adequate’ standards and principles in this area.

c. The Enforcement of Trade-Related Intellectual Property Rights and Difference in

Status of Countries :

Unlike the pre-existing conventions on IPRs, the TRIPS Agreement included a detailed set of

provisions on the enforcement of such rights. Such provisions reflected the view of the US

and other developed countries, which contended that ensuring the availability of rights was

not sufficient but the right-holders should also get right to effectively exercise these rights by

preventing others from misusing them.

This Paragraph of Preamble makes it clear “differences in national legal systems’ are to be

taken into consideration with regard to enforcement measures. It is clear that the Agreement

is more with regard to the availability of rights than to enforcement measures, as the

differences in national legal systems are only taken into account with regard to latter.

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d. The Prevention and Settlement of Disputes Between Governments:

The adoption of the TRIPS Agreement as a component of the WTO system36 means that any

dispute or controversy relating to compliance with the minimum standards established by the

Agreement should be resolved under the multilateral procedures of the WTO. The adoption

by another member of unilateral trade sanctions would be incompatible with the multilateral

rules. Any complaint should be brought to and settled according to the rules of the Dispute

Settlement Understanding (DSU) by the Dispute Settlement Body (DSB).

e. Transitional Arrangements :

The TRIPS Agreement allowed the developing countries, economies in transition or LDCs to

delay, without any prior approval, the implementation of the obligations contained in the

Agreement, with the exception of Articles 3, 4 and 5.

This possibility was regarded as one of means to curb developing countries; reluctance to

accept new standards on IPRs and to provide them time to bring legislative reforms so as to

bring them in conformity with the TRIPS Agreement.

Despite such provision, many developing countries did not take benefit of the transition

period under Article 65(4) and rather adopted TRIPS-consistent legislation before the expiry

of such periods. This provision was very beneficial in regards to the pharmaceutical products,

but only handful of countries got the benefit. India which was producing reverse-engineered

pharmaceuticals got the benefit of the same and amended its Patent Act of 1970 in the year

2005 to bring it in conformity with TRIPS.

The Preamble further emphasized the need for a multilateral framework of principles, rules

and disciplines in order to deal with international trade in counterfeit goods. There was

mention of such a provision due to the fact that in the Tokyo Round of GATT, the US with

the support of the European Community (EC) demanded that there was a need to adopt

multilateral rules to flight counterfeiting. The US increased draft on counterfeiting but, the

same never got support from the contracting parties. However, the issue of counterfeiting was

finally introduced into the GATT agenda in November 1982 where a Group of Experts

established to advise the General Council, recommended, in 1985, the multilateral action to

be taken on the matter of counterfeiting. It was there that developing countries agreed to

initiate negotiations on IPRs, as in the Punta Del Este Conference they got an impression that

matter of counterfeit goods would be taken into account.

�� 36 The TRIPS Agreement is contained in Annex 1C to the Marrakesh Agreement Establishing the WTO.�

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While the developing countries maintained that the negotiations would not be beyond the

matter of counterfeiting, the developed countries actively engaged themselves in launching

proposals for dealing with the issue of IPRs, which finally got reflected in the TRIPS

Agreement.

The Preamble further recognized that intellectual property rights are private rights. The term

‘private rights’ in the Preamble aims at portraying IPRs as an investment in intangible assets’

and it clearly forbids the expropriation of IPRs without compensation. However, the public

interest, including developmental and technological objectives imposes limitations on the

rights of the owner.

Thus the Agreement intends to protect the intellectual property keeping in account the public

policy objectives as well as developmental and technological objectives. But there is no

reference to the issues which concerns the developing countries, such as transfer of

technology. The negotiators expressed the need to promote effective and adequate protection

of intellectual property rights but not to promote its transfer. However, the special needs of

the least-developed country Members in respect of maximum flexibility in the domestic

implementation of laws and regulations in order to enable them to create a sound and viable

technological base find a mention in the Preamble of the TRIPS Agreement. Though the

special needs of the least developed countries in order to be TRIPS compliant have been

recognized, but on careful reading, it becomes clear that such recognition is significantly

limited. The maximum stability provided is with regard to domestic implementation of laws

and regulations but does not extend to the obligations themselves. Moreover the room for

‘maximum flexibility’ is restricted only to the extent of enabling them to create a sound and

viable technological base. Thus it could be inferred that the flexibility that LDCs need in

implementing the TRIPS obligations to protect public health, improve nutrition, alleviate

poverty, or achieve other objectives was ignored during the TRIPS negotiations.

The Preamble, however, emphasizes the importance of reducing tensions by reaching

strengthened commitments to resolve disputes or trade-related intellectual property issues

through multilateral procedures. The seventh Paragraph emphasizes the same procedures as

has been referred to in the second Preambular paragraph mentioning the procedures for the

multilateral prevention and settlement of disputes. However, seventh paragraph goes further

by adding the concept that ‘tensions’ may be reduced by strengthened commitments’ to use

the multilateral solutions. Many developing countries have continued to be subject to

unilateral demands by some developed countries like the US and EU, in the area of IPRs,

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aiming not only to implementations of the standards provided in the TRIPS Agreement, but

often asking for “TRIPS-plus” protection, that is level of protection beyond the minimum

standards required by the TRIPS Agreement.

It is true that acceptance by developing countries of the TRIPS Agreement was due to the

expectation of increased markets and the fear that if they do not agree they would be

increasingly vulnerable to unilateral pressure by the major powers.

The eighth paragraph of preamble has shown a desire to establish a mutually supportive

relationship between the WTO and the World Intellectual Property Organization (WIPO) as

well as other relevant international organization.

Developing countries tried to resist the negotiations on TRIPS until they realized, by mid-

1989, that they would not be able to prevent a new set of rules on IPRs being adopted. One of

the resistances was that the World Intellectual Property Organization (WIPO) was the

specialized United Nations (UN) organization in the area of IPRs, and that GATT or its

successor was not the appropriate place for norm-setting in IPRs. However, the proponents of

the TRIPS Agreement that is the developed countries, claimed contrary to the view held by

the developing countries and had the opinion that WIPO lacked ‘teeth’ to ensure the

enforceability of the obligations administered by that organization. Thus they tended to move

to a forum that would ensure greater capacity to force changes in legislation and enforcement

of rights. This drawing force of the developed countries gave them protection in the field of

pharmaceuticals, entertainment, and information industries, which was rather more than what

they had expected at time when the negotiations were launched.

The role of the WIPO during the negotiations of TRIPS Agreement was limited as the

organization was not allowed to participate in the negotiations and was rather, allowed to

witness the formal meetings as an observer. WIPO provided technical inputs to the

negotiating parties. After the TRIPS Agreement was adopted, WIPO came back into the

norm-setting scene with the adoption of treaties on copyright and performer’s rights in 1996

and on patent law. Since then, however, their efforts to further harmonize patent law have

become increasingly controversial and raised growing opposition from developing countries,

like Argentina and Brazil, but supported by other developing countries, on the Establishment

of a Developmental Agenda for WIPO.

The provision for cooperation of TRIPS with WIPO regarding the establishment of a

common registry for notified laws and regulations was contemplated in Article 63(2) of the

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TRIPS Agreement.37 WIPO and WTO signed an agreement in 1995 to cooperate in different

areas relevant to the implementation of the TRIPS Agreement. Among other things, it ensures

WTO members access to the WIPO collection of laws and regulations, provides that the

communication of emblems and transmittal of objections under the TRIPS Agreement shall

be administered by the International Bureau in accordance with the procedures applicable

under Article 6 ter of the Paris Convention (1967), and requires the International Bureau of

WIPO and the WTO Secretarial to enhance their cooperation on assistance for developing

countries relating to TRIPS. However, the mention of WIPO in this provision of the preamble

does not mean that the role of other international organizations, such as UNESCO in the area

of IPRs is disregarded. Despite the expressed desire in the Preamble, the two organizations

have no coordination in work and, in some cases; the same issue are dealt with both of them.

Preambular provisions are significant for the interpretation of treaty obligations. They do not

create by themselves any rights or obligations enforceable through dispute resolution. In fact,

owing to the controversial nature of the issues covered by the TRIPS Agreement, many of its

provisions are unclear or deliberately leave room for interpretation. The context provided by

the Preamble becomes, hence particularly relevant in such cases.

4. GENERAL PROVISIONS AND BASIC PRINCIPLES:

Part I of the TRIPS Agreement deals with general provisions and basic principles covering

Articles 1-8 which may be discussed under various heads viz.,

4.1 Nature and Scope of Obligations:

Article 1 (1) of the TRIPS Agreement provides a minimum limit on the member States

regarding the implementation of the Agreement and leaves upon them to decide the method

of implementing such provisions. The first sentence of the Article 1(1) of the TRIPS

Agreement re-states a basic principle of international law, that is, pactasuntservanda, which

under Article 26 of the Vienna Convention on the Law of Treaties means that every treaty in

force is binding upon the parties to it and must be performed by them in good faith. The

TRIPS Agreement makes clear that the obligations imposed under it are to be given effect by

Members within their respective jurisdictions. However, this article does not specify as to

how such obligations are to be implemented, as in the countries such treaties become

effective only when ratified, especially in the countries applying dualistic approach. But, in

the countries adopting a monist approach, the Agreement may be directly applied by judicial

�� 37

Supra, Carlos M. Correa, at 16.�

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and administrative authorities, to the extent that the provisions are clear enough and self-

contained. Moreover, there also are also jurisdictions in which direct application of the

TRIPS Agreement has been denied by law or the courts. As in case of U.S, certain national

laws forbid the application of any such provision to any person or circumstance that is

inconsistent with any law of the United States.38

In case of developing countries, the implementation of the TRIPS Agreement has been very

difficult and problematic. This was mainly due to the fact that the cost involved in research &

development was very high, which was difficult to be spent by the developing countries that

would in turn depend upon innovations made in the industrialized countries for their

development. Thus, the way in which the Agreement is implemented may have important

repercussions on the conditions for the access to and use of technology, particularly in

developing countries and on their economic and social development. The implementation of

the TRIPS Agreement was a very cumbersome procedure for the countries, especially those

requiring major amendments to their national laws, dealing with intellectual property rights

(IPRs), with short periods. While most of the countries did not avail of the benefit of the

flexibility, some of the developing countries did avail that and amended their national

legislations only just before the expiry of the time period given to them to make such

appropriate amendments.

The word ‘more extensive’ protection used in Article 1(1) of TRIPS may mean, longer terms

of protection or the patenting of matters that Members may exclude from patents in

accordance with Article 27(3) (b). Thus the Agreement requires that the members States are

simply obliged to implement the provisions of the agreement. But at the same time may

provide additional protection; which should not be in contravention to the provisions of this

Agreement. Moreover, a ‘more extensive’ protection may also result from the weakening of

requirements for the acquisition of rights, or from the stipulation or conditions that are not

present in the TRIPS Agreement.

However, the method of implementing the TRIPS Agreement provisions is left at the entire

discretion of the Member countries as they have been left free to determine within their own

legal system and practice. This is mainly due to the reason that there are considerable

differences between legal systems, particularly in the field of copyright and neighbouring

rights, trademarks, and trade secrets protection. Other differences may arise from various

�� 38Section 102(a) (1) of Uruguay Round Agreement Act (URAA).�

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levels of economic and technological development and, particularly, from the institutional

capacity and resources available to grant IPRs and to ensure their enforcement. Thus Article

1(1) allows multiplicity in the methods of implementing the provisions of the Agreement.

Accordingly the members have been given a free hand to implement the Agreement’s

provisions within their ‘own legal systems and practice’, that is, to determine how such

provisions will be put into practice. Conversely, it created problems in case of the countries

that had no prior practice in many areas in which the Agreement imposed standards of

protection.

The term “intellectual property” finds reference in the Preamble and in the initial provisions

of Part I of the Agreement, while in Articles 5, 6, 7, 8, 40 and in several provisions of Part III

of the TRIPS.

For the purpose of the TRIPS Agreement, the areas that are covered under the term

“intellectual property” include copyright and related rights, trademarks, geographical

indications, industrial designs, patents, layout-designs (topographies) of integrated circuits,

and undisclosed information. The Agreement does not, however, define the term intellectual

property’, but rather it specifies which are the covered rights. They are laid down under

Sections 1 through 7 of Part II of the Agreement. Nonetheless, definition of the term

‘intellectual property’ may be found in the Convention Establishing the World Intellectual

Property Organization (WIPO), where Article 2(viii) of Convention states that the intellectual

property shall include the rights relating to literary, artistic and scientific works,

performances of performing artists, phonograms and broadcasts, inventions in all fields of

human endeavour, service marks, and commercial, and other rights resulting from intellectual

activity in the industrial, scientific, literary or artistic fields. But this definition includes

subject matter that is in the public domain, as well as matters that are not deemed, under

many national systems, subject to property rights.

The wording of Article 1(2) of TRIPS leaves many questions open as far as interpretation of

other provisions is concerned. First, the different sections of the Agreement do not contain

clear-cut categories of intellectual property. As in case of Section 5 of Part II dealing with the

patents that refers to the protection of patent varieties under an effective generis regime, but

does not elaborate the standards thereto, create confusion. Second, it is unclear whether the

categories refer to subject matter or to the rights conferred. If the former interpretation is

applied, then it would mean any right not covered by the TRIPS Agreement that is conferred

at the national level would be subject to the provisions of the Agreement. On the other hand,

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if it is understood that protection of ‘intellectual property’ only applies to the intellectual

property rights specifically addressed under the Agreement, then the members would not be

bound to respect the general and enforcement provisions of the Agreement in respect of rights

not covered by the Agreement, even if related to subject matter dealt with therein.

Article 1(3) defines who can be benefitted from the protection established by the Agreement.

The beneficiaries are the ‘nationals of other members’. Footnote 1 to Article 1(3) provided in

the TRIPS Agreement also clarifies the application of this concept to the nationals of the

separate customs territory member of the WTO, as in the case of EC. This footnote also

clarifies the concept of ‘nationals’ of a Member, which include the natural and legal persons

who are domiciled or who have a real and effective industrial and commercial establishment

in that Member. This means that domicile in territory of a member is sufficient to qualify for

protection. Non-profit organizations, which do not have a real and effective industrial or

commercial establishment in a Member, also qualify as beneficiaries of protection.

The reference to ‘other members’ also makes clear that the Agreement does not apply to

purely domestic relations. While domestic laws may not differentiate the treatment given to

nationals and foreigners, the nationals cannot claim any right under the TRIPS Agreement,

nor are members under any obligations to implement the Agreements’ provisions in their

regard. The rights which nationals might get, is not a matter of international treaty, but rather

a matter of domestic legislation. The question as to who is eligible for protection depends

upon the fact that what has been determined by each Convention, viz., Paris Convention,

Rome Convention and IPIC Treaty, referred to in Article 2 of the Agreement.

As under the Paris Convention (1967), protection is conferred to the nationals of any country

of the Paris Union. No requirement as to domicile or establishment in the country where

protection is claimed may be imposed upon nationals of countries of the Union for the

enjoyment of any industrial property rights [Article 2(1) and (2)]. Moreover, nationals of

countries outside the Union who are domiciled or who have real and effective industrial or

commercial establishments in the territory of one of the countries of the Union shall be

treated in the same manner as nationals of the countries of the Union (Article 3).

In the Berne Convention (1971), the protection to the authors, who are nationals of one of the

countries of Berne Union, are given protection for their works, whether published or not. In

case of authors, who are not nationals of one of the countries of the Union, protection is given

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to their works that are first published in one of those countries, or simultaneously in a country

outside the Union and a country of the Union [Article 3(3)].

In case of the Rome Convention, the protection is exclusively related to the performance and

the nationality of the performer is not a criterion for getting protection. It is sufficient if any

of the conditions is satisfied as provided under Article 4 of the Convention. Protection is also

granted to the performers if their performance takes place in another contracting state or the

performance is incorporated in a Phonogram which is protected under Article 5 of this

Convention, or the performance, not being fixed on a phonogram, is carried by a broadcast is

protected by Article 6 of this Convention.

The concept of ‘nationals’ is to be interpreted, in accordance with public international law, as

covering natural and legal persons to whom the legislation of the State whose nationality is

claimed accords that status.

While the preamble of the TRIPS Agreement provides that IPRs are private rights, the

concept of nationals is to be deemed to also include States, as well as any division thereof if

they hold the IPRs covered by the Agreement. However, this provision does not make it

clear, whether the rights held by international organizations would also be subject to the rules

of the TRIPS Agreement, unless they hold such rights on behalf of its members.

Finally, footnote 2 clarified that the members are obliged to comply with the conventions

spelled out in accordance with their latest revision and to the extent provided for the

Agreement. This requirement aims at reducing the fragmentation that may be found within

WIPO administered conventions, as contracting parties have been able to adhere to and apply

different versions of the Paris and Berne Conventions.

4.2 Conventions on Intellectual Property :

Article 2 of the TRIPS Agreement obliges Members to comply with the substantive

provisions of the widely adopted Stockholm Act of 1967 of the 1883 Paris Convention which

covers aspects of patents, trademarks, trade names and protection against unfair competition.

The negotiators of the TRIPS Agreement, especially the proponents of IPRs, aimed at

ensuring compliance with the main existing international convention on IPRs and

supplementing them with additional obligations. The TRIPS Agreement is, in fact, built on

the three major conventions on intellectual property and to the Treaty on Intellectual property

in Respect of Integrated Circuits (IPIC). However, the Agreement does not mention

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specifically other pre-existing IPR conventions. Article 5 makes, however, a general

reference to multilateral agreements concluded under the auspices of WIPO.

The TRIPS Agreement makes a distinction between the conventions that need to be compiled

with, even by the countries which have not adhered to them, but Rome Convention for the

Protection of Performers, Producers of Phonograms, and Broadcasting Organizations would

continue to binding for the countries that have adopted it. This means that all members of the

WTO are under an obligation to comply with the substantive provisions of the Paris

Convention, as well as with rules governing special agreements and with the substantive

provisions and the Appendix of the Berne Convention, as revised in 1971.

Article 2(1) is formulated in the form of a positive mandate and mentions the Articles1-12

and Article 19 of the Paris Convention, in respect of which such mandate extends. Those are

Parts II, III and IV of the TRIPS Agreement. One important implication of Article 2(1) is that

it must be compiled with even by Members that are not contracting parties to the Paris

Convention.

Article 2(2) of the TRIPS Agreement is negatively formulated and refers to the obligations

that Members may have. It preserves the obligations provided for under the Paris and Rome

Conventions, and the IPIC Treaty. It makes clear that TRIPS Agreement is not intended to

override such conventions. Thus the Members cannot apply the TRIPS Agreement in a

manner that leads to a violation of the obligations under the conventions referred in Article

2(2). Thus it can be inferred that in areas that are not covered by the TRIPS Agreement, the

members continue to be bound by the respective conventions they have already observed.

Article 2(2) is a non-derogation clause. It does not impose any obligation. It only applies to

the members that are parties to the Paris, Rome Conventions and the IPIC Treaty.

4.3 National Treatment:

The principle of national treatment underlies all international conventions on intellectual

property. It is also contained in Article III of the GATT. Though similar in some respects, the

role played by the principle in these two categories of instruments is quite different. Under

the GATT system, the main function of national treatment is to ensure non-discrimination

between foreign and national products; while in the IP conventions it applies to persons, and

in particular to the right holders. The role of national treatment in case of IP Conventions is to

act a tool for harmonization of national legislation on IPRs.

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Article 3(1) of the TRIPS Agreement requires Members States to accord to the nationals of

other member States treatment no less favourable than that it accords to its own nationals

with regard to the protection of intellectual property. The obligation extends to all parts of the

Agreement, including the availability, acquisition, scope, maintenance and enforcement of

IPRs as well as those matters affecting the use of intellectual property rights specifically

addressed in the Agreement. Importantly, it extends national treatment to copyright law, still

absent under the Berne Convention.

The national treatment principle essentially protects against discrimination of foreigners vis-

a-vis nationals. Thus each contracting party should accord to the nationals of other parties no

less favourable treatment than it accords to its own nationals. The national treatment principle

has been retained in the TRIPS Agreement, jointly with detail minimum standards that limit

the flexibility inherent thereto.

The application of the national treatment principle had been qualified in the pre-TRIPS

conventions by a number of exceptions. The TRIPS Agreement incorporates that principle

subject to the exceptions specifically provided under the Paris Convention, the Berne

Convention, the Rome Convention, and the Washington Treaty on integrated Circuits (IPIC).

The preservation of exceptions to the national treatment principle recognizes that reciprocity

has often been required under IPRS laws and treaties. In most cases, such exceptions can be

directly applied by members. In two cases, that is, Berne and Rome Conventions however,

they are conditional upon notification to the Council for TRIPS.

4.3.1 Exceptions to National Treatment:

The exceptions to the national treatment provided for under the Conventions and Treaties

referred to be the following:

Paris Convention:

(i) The provisions of the laws of each of the countries party to the Paris Convention

relating to judicial or administrative procedure and to jurisdiction, which may be

required by the laws on industrial property, are expressly reserved [Article 2(3)];

(ii) The provisions of the laws of each of the countries party to the Paris Convention

relating to the designation of an address for service or the appointment of an

agent, which may be required by the laws on industrial property, are expressly

reserved [Article 2(3)].

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Berne Convention:

(i) Where the work is protected in the country of origin only as an industrial design

and not as a work of applied art, i.e., by copyright law, that work is entitled in

another country, party to the Berne Convention only to such special protection as

is granted in that country to industrial designs, even though copyright protection is

available in that country [Article 2 (7)];

(ii) Where a country not party to the Berne convention fails to protect in an adequate

manner the works of authors who are nationals of one of the countries party to the

Berne Convention, the latter country may restrict the protection given on the basis

of their first publication in that country, to the works of authors who are , at the

date of the first publication thereof, nationals of the other country and are not

habitually resident in one of the countries party to the Berne Convention; if the

country of first publication avails itself of this right, the other countries party to

the Berne Conventions are not required to grant to works thus subjected to special

treatment a wider protection than that granted to them in the country if first

publication [Article 6(1)];

(iii) In the country where protection is claimed, the term of protection shall not,

unless the legislation of that country otherwise provides, exceed the term fixed in

the country of origin of the work [Article7 (8)];

(iv) The right enjoyed by the author, or after his death, by the persons or institutions

authorized by national legislation, to an interest in any sale of the work, which is

either an original work of art or an original manuscript of a writer or composer,

subsequent to the first transfer by the author of the work may be claimed in a

country party to the Berne Convention only if legislation in the country to which

the author belongs so permits, and to the extent permitted by the country where

this right is claimed [Article 14 ter (1) and (2)];

(v) In relation to the right of translation of works whose country of origin is a

country, other than certain developing countries, which having used the limited

possibility of reservations available in that respect, has declared its intension to

apply the provisions on the right of translation contained in the Berne Convention

of 1886 as completed by the Additional Act of Paris of 1896, any country has the

right to apply a protection which is equivalent to the protection granted by the

country of origin [Article 30 (2) (b)].

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Rome Convention:

(i) Article 15 of the Rome Convention allows for certain fair use exceptions to

protection.

(ii) Article 16 (1) (a) (iii) and (iv) allows for limitations on the obligation to pay

equitable remuneration for secondary uses of phonograms based on reciprocity

principle. This exception means that States that have provided for a remuneration

right for their domestic performers may declare a reservation and exclude foreign

performers.

(iii)Article 16 (1) (b) allows contracting states to exempt protection to television

broadcasts in public places, permitting affecting States to withdraw such

protection.

(iv) Article 17 allows contracting states granted protection of producers of

phonograms solely on the basis of fixation on 26 October 1961, to maintain that

criterion for certain purposes.

IPIC Treaty:

(i) Any contracting Party is free not to apply national treatment as far as any

obligations to appoint an agent or to designate an address for service are

concerned [Article 5(2)];

(ii) Any contracting party is free not to apply national treatment as far as the special

rules applicable to foreigners in court proceedings are concerned [Article 5(2)].

Footnote 3 to Article 3 of the TRIPS Agreement provides a broad definition of ‘protection’

with the intention of preventing discrimination not only with regard to the availability and

scope of intellectual property rights, their maintenance and enforcement, but also with regard

to their acquisition and use. This broad concept may provide legal platform to claim national

treatment before IPRs are acquired in conformity with applicable procedures, thereby

excluding the possibility of conditioning the acquisition of IPRs on the fulfillment of certain

requirements, including the grant of reciprocity to the members’ own nationals.

Article 3(2) of the TRIPS Agreement qualifies those exceptions referred to in Article 3(1)

that relate to judicial and administrative procedures, including the designation of an address

for service or the appointment of an agent for foreign right holders, thus facilitating

intercourse with the authorities. Exceptions are only permitted where necessary to secure

compliance with laws and regulations that are not inconsistent with the Agreement, and they

must need to be applied in a way that constitutes a disguised restriction on trade. The wording

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of these exceptions is very narrow. Obligations to appoint an agent for service are common in

all fields of registered IPRs, such as trademarks or patents, and it is difficult to see why they

should be limited to the exceptions set out in Paragraph 1 of the Article 3 and should be read

in its overall context to cover all rights that are subject to limitation.

4.4 Most Favoured Nation Treatment:

Unlike all other intellectual property conventions, Article 4 of the Agreement includes an

obligation of most-favoured nation treatment. This obligation reflects the influence of GATT

Article I and obliges all parties to extend privileges accorded to one member immediately and

unconditionally to all other WTO Members.

Article 4 of the TRIPS Agreement imposes an obligation upon a Member State to against

similar kind of advantage, favour, privilege or immunity to the nationals of any other country

with regards to the protection of Intellectual Property without imposing any condition and

with an immediate effect. Thus, if two or more states parties to the TRIPS Agreement enter

into an agreement which establishes higher standards of protection than those granted in

TRIPS, these States will be under an obligation to extend the same advantages, favour,

immunity and privileges to the nationals of all other Sates parties to the TRIPS Agreement.

The application of this principle is exempted in connection with procedures for the

acquisition of maintenance of intellectual property rights under multilateral agreements

concluded under the auspices of WIPO (Article5). This is the case; in particular, of the Patent

Cooperation Treaty 1970.There are however, a number of exceptions to the MFN principle

based on the existing or future international agreements or in connection with certain subject

matter.

4.4.1 Exceptions to MFN Principle:

a. International Agreements on Judicial Assistance or Law Enforcement:

The Agreements referred to in the first exception are of general nature and not particularly

confined to the protection of intellectual property. This exception would apply, for instance,

in relation to the Inter-American Convention on Mutual Assistance on Criminal Matters

(1992), and to the New York Convention on the Recognition and Enforcement of Foreign

Arbitral Awards (1958).39

�� 39

Supra, Carlos M. Correa, at 67.�

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This exception would also apply in cases where a treaty on judicial assistance and law

enforcement contains particular provisions on intellectual property to the extent that the treaty

is not confined to intellectual property.

b. Rights Granted Under the Berne Convention (1971) or the Rome Convention Based

on the Treatment Accorded in Another Country:

This exception will apply, for instance, in the case of Article 7(8) of the Berne Convention, as

it permits limitation of the protection to be granted in the country of protection to the extent

of protection conferred in the country of origin of the work. The same is also true in relation

to Article 14 ter of the Berne Convention, which provides with respect to original works of

art and original manuscripts of writers and composers for an inalienable right to an interest in

any sale of the work subsequent to the first transfer by the author of the work.40 However,

this right may be requested in a country of the Union only if legislation in the country to

which the author belongs so permits and to the extent permitted by the country where this

protection is asked for.41

c. Rights of Performers, Producers of Phonograms and Broadcasting Organizations or

Related Rights Not Provided Under This Agreement:

Certain aspects of related rights or neighbouring rights to copyrights are also exempted from

the most-favoured-nation obligations. This exclusion has the same effect as the second

sentence of Article 3(1). It prevents back-door profits for Members that have not adhered to

the Rome Convention.

d. Rights Originating From Pre-TRIPS Agreement:

International agreements relating to protection of intellectual property rights are exempted

from the MFN obligation if they entered into force prior to the entry into force of the

Uruguay Round agreements and provided they were notified to the Council of Trade Related

Aspects of IPRs of the World Trade Organization. To qualify for the exemption, such

agreements should not also constitute an arbitrary or unjustifiable discrimination against

nationals of other members. Although the provision does not clearly indicate who should

determine whether or not such agreements constitute an arbitrary or unjustifiable

discrimination against others, it may be assumed that they will be closely scrutinized by the

Council subsequent to their notification.

�� 40Article 14 ter (1) of the Berne Convention.�

41Id. Article.14 ter (2).�

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4.5 Multilateral Agreements on Acquisition or Maintenance of Protection:

Article 5 of TRIPS Agreement is an exception to Article 3 and 4 and deals with procedures

provided in Multilateral Agreements relating to the acquisition or maintenance of IPRs. The

purpose of incorporating Article 5 in the Agreement was to see that the Members who were

not parties to such agreements do not enjoy the advantages without granting similar treatment

to the nationals of those Members who are parties to the Agreement. However, the

application of this exception is subject to the following conditions:

(i) The procedure must relate to the acquisition or maintenance of intellectual

property rights. Agreement relating to enforcement procedures as well as

agreements regulating substantive aspects is excluded.

(ii) The agreements must have been concluded under the auspices of WIPO.

Moreover, a number of WIPO agreements clearly fall under this provision. They are:

• Patent Cooperation Treaty (PCT);

• Madrid Agreement (and Protocol) concerning the International Registration of

Marks;

• Hague Agreement concerning the International Deposit of Industrial Designs;

• Trademark Law Treaty;

• Budapest Treaty on the International Recognition of the Deposit of

Microorganisms for the Purposes of Patent Procedure; and

• Patent Law Treaty.

There are certain WIPO treaties that contain both substantive and procedural provisions, such

as Lisbon Agreement for the Protection of Appellations of Origin and their International

Registration (1958). Whatever procedure provided in WIPO treaties relating to acquisition or

maintenance of IPRs, is not required to obey the obligations of national treatment and MFN

clause under Article 3 and 4 of the TRIPS Agreement.

The limitation to WIPO treaties excludes regional agreements, such as the European Patent

Convention. Additionally even the WIPO Agreements providing procedural rules on

acquisition and maintenance of IPRs have also been exempted from the ambit of obligations

under Article 3 and 4 of the TRIPS Agreement. Even an amendment to an existing WIPO

agreement is also exempted from observing national treatment or MFN clause requirements.

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4.6 The Doctrine of Exhaustion of Rights:

Intellectual property rights are of a ‘universal nature’. They exist individually of the specific

products in which they might be integrated. Intellectual property rights theoretically follow

the product downstream, and possibly control the use of the product. The IPRs thus have the

competence to enlarge endlessly over the time period, thereby interfering with the

downstream markets indefinitely. It therefore, is necessary to put an end, at some point, to the

effect of intellectual property rights on individual products in the market. This concept is

called “exhaustion of rights.”42 This doctrine is a necessary ingredient in balancing the

significance of exclusive intellectual property rights against the market interest and needs of

the society. In a national context, IP rights with respect to specific products are exhausted as

soon as the product is put on the market and sold by the right holder or with its consent, e.g.,

by way of license agreement. At this point, the right holder can no longer influence a further

transfer of the product on the market by legal means. His or her rights have been ‘exhausted’.

Exhaustion is related to one specific aspect of intellectual property rights, that is, the right of

sale after first sale or in other words, the right to control the resale of the protected product

after first sale by means of intellectual property rights. However, it does not affect the

existence and exercise of rights in respect to all action taken without the consent of the right

holder, for example, counterfeiting, piracy, the use of patented invention or the confusing use

of a trademark. In other words, exhaustion does not affect the core and essence of an

intellectual property right.

The issue of exhaustion of rights is addressed in Article 6 of the TRIPS Agreement which

constitutes an “agreement to disagree”. The TRIPS Agreement leaves it entirely to the

member States to regulate the exhaustion of rights, although it acknowledges it as an issue.

The exhaustion of IPRs is one of the issue that have traditionally divided the developed and

the developing countries. Article 6 has left Member countries freedom to incorporate the

principle of exhaustion of rights into their domestic law with national, regional or

international reach. The issue as such cannot be the subject matter of a dispute settlement

under the Agreement. In a submission to the Council for TRIPS, a number of developing

countries stated in this regard that Article 6 of the TRIPS Agreement is extremely relevant for

Members, especially developing countries, and particularly the least developed and smaller

economies among them. Article 6 provides that Members are free to incorporate the principle

�� 42 Patrick F.J. Macrory, Authur E. Appleton and Michael G. Plummer (Eds.), the World Trade Organization:

Legal, Economic and Political Analysis, Vol. I.�

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of international exhaustion of rights in national legislation. Consequently, any Member can

determine the extent to which the principle of exhaustion of rights is applied in its own

jurisdiction, without breaching any obligation under the TRIPS Agreement.”43

In the application of exhaustion rules, first they are subject to the provisions of non-

discrimination, that is, national treatment and most-favoured- nation treatment. While

members remain free to adopt whichever doctrine of exhaustion they wish.

Most importantly, the right to allow parallel imports under Article 6 of the TRIPS Agreement

was categorically confirmed by the Doha Declaration on TRIPS Agreement and Public

Health under Paragraph 5(d) which gave a free hand to each Member to establish its own

regime for exhaustion without challenge. Developing countries were interested to clarify in

the Doha Declaration the members’ right to adopt an international principle of exhaustion of

rights, in accordance with Article 6 of the Agreement. Thus paragraph 5(d) provides a

clarification to it. Though this paragraph does not add substantively to the TRIPS Agreement,

it certainly supports Members wishing to apply an international exhaustion principle that it

would be legitimate and fully consistent with the Agreement to do so. This paragraph,

however, does not solve all the issues, particularly when the rights of the title-holder may be

deemed exhausted in the country of exportation. This means that national laws providing for

an international exhaustion of rights and the legality of parallel imports are TRIPS-compliant

as long as they do not contravene MFN and National treatment provisions.

4.7 Objectives of TRIPS Agreement:

The specific objectives of the TRIPS Agreement are stated in Article 7.The TRIPS

Agreement reflects the importance of effective protection of intellectual property rights for

social and economic development. At the same time, the Agreement emphasizes that the

goals of social and economic development need to be considered in shaping intellectual

property regimes.

Article 7 of the Agreement, based on a proposal submitted by developing countries represents

a compromise with developed countries. It reflects the prevailing justification for the granting

of IPRs in the technology-related fields, as a tool for the promotion of innovation, but also the

developing countries concerns about transfer and dissemination of technology.

�� 43

Supra, Carlos M. Correa, op. cit. 4 at 75.�

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Article 7 of the TRIPS Agreement provides important elements for the interpretation and

implementation of the rights and obligations under the Agreement. The fact that Article 7

reflects a compromise between the developed countries, supporting protection of the IPRs

based upon their role on innovation, and the developing countries who were concerned about

the impact that IPRs might have on the economic and social development. Despite these

differences of opinion, in general, Article 7 refers to the protection and enforcement of

intellectual property rights, but particularly it deals with innovation and technology. It thus

focuses on certain types of IPRs, such as patents, some categories of trade secrets and

integrated circuits layout-designs. However, the objectives of IPRs regarding copyright and

related rights, trademarks, geographical indications and industrial designs are not fully dealt

in by this provision. This is mainly due to the reason that developing countries were

suspicious about the impact of higher standards of IPR protection on the access to

innovations and the products and services derived therefrom.

However, the focus on technology based IPRs does not mean that Article 7 is irrelevant for

other types of IPRs. It states that IPRs should contribute to the promotion of technological

innovation and to the transfer and dissemination of technology. Thus at least two principal

conclusions may be drawn from Article 7. First it embodies an international recognition of

the primary public-policy objectives for which governments grant protection and enforcement

to IPRs, namely the promotion of technological innovation and the transfer and dissemination

of technology. Secondly, it underlies the fact that these objectives have to be pursued in such

a manner as to benefit the producers and users of technological knowledge to be conducive to

social and economic welfare and result in a balance of rights and obligations. The last phase

is a rather vague reference to the concept of intellectual property bargain or to the balance of

rights and obligations which has traditionally provided a philosophical support for the

enactment of national legislations on IPRS.

The objectives provide an important framework for the interpretation and application of the

provisions of the TRIPS Agreement. They provide the overall criteria against which the

adequacy and effectiveness of national legislation for the protection and enforcement of IPRs

should be measured. They also serve as a reminder that the rights should be granted to

creators and innovators, but such rights have to be balanced by measures beneficial to social

and economic welfare.

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4.8 Principles of TRIPS Agreement:

Article 8 of the Agreement entitled ‘principles’ contains two general provisions, one dealing

with what may be called the public interest principle, and the other referring more

specifically to measures aimed at preventing abuse of intellectual property rights. Measures

to be adopted under the former are generally of a positive nature, while under the latter

preventive or defensive measures may be adopted.

Article 8 is also known as important provision for framing national laws that respond to

particular public health and other public interests. It makes clear that the measures may be

adopted in order to prevent or remedy abuses of intellectual property rights. In all cases,

however, national laws must be consistent with the TRIPS Agreement. Moreover, this

consistency should be assessed in the light of Article 7 and the preamble, which is, taking the

balance of rights and obligations and the social and economic welfare into account. In fact,

nothing in the TRIPS Agreement should be read as preventing Members from adopting

measures to protect public health.

Article 8(1) broadly recognizes Member’s rights in formulating or amending their laws and

regulations. It not only refers to laws and regulations on IPRs but to measures adopted in

other fields such as, those that restrict the manufacture or commercialization of IPR-protected

goods. The purpose of the measures referred to under Article 8(1) may be two-fold:

a. to protect public health and nutrition; or

b. to promote public interest in sectors of vital importance to their socio-economic and

technological development.

The wording in Article 8(1) allows Members substantial room for interpretation. First refers

to measures to promote public interest. Members that invoke this provision need not prove

that such measures actually achieve their intended objectives, but that they are suitable in the

particular context where they apply.

Moreover, the definition of the term ‘public interest’ lies with the concerned Member. It is

clearly a domestic issue. As such Members cannot challenge what public interest is in

accordance with the views of particular member. It may be deemed to include any matter that

affects the public. Additionally, again it is up to the Member States to decide as to what are

the sectors of vital importance necessary for the socio-economic and technological

development.

Finally, the concept of socio-economic and technological development is such as broad field

that it can include any sector, socially economically or technologically relevant. The only

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limitation to this freedom to legislate for the public interest is that, such measures must be

consistent with the provisions of this Agreement. This limitation was not contained in the

original proposal by the developing countries and was apparently added to the insistence of

the developed countries.

The TRIPS Agreement obligates Member States to adopt certain minimum standards of IPR

protection. Its main aim is thus, to harmonize national legislation on IPRs at least in so far as

the minimum standards established by the agreement are concerned. In this context, the

function of a ‘public interest’ principle is to qualify the scope of harmonization at the national

level. In other words, exceptions could be made to the enactment and application of the

minimum standards on grounds of public interest as defined in Article 8(1). But at the same

time the public interest measures aggregately must be consistent with the TRIPS Agreement,

through inconsistent with some of the specific standards laid down in the TRIPS Agreement.

The wide scope of the legislative flexibility provided by Article 8(1) was more recently

confirmed through the Doha Declaration on the TRIPS Agreement and Public Health adopted

by Fourth WTO Ministerial Conference in November 2001. Paragraph 4 of the Declaration

expresses this flexibility with respect to Public health.

Article 8(2) of the TRIPS Agreement deals with the prevention of abuse of intellectual

property rights by the right holders. Unlike Article 8(1) which expressly empowers Member

States to adopt public interest measures, this provision limits itself to the enunciation of a

general principle on the possible need for appropriate measures to prevent ‘abuse of IPRs’ by

right holders or their resort to practices which unreasonably restrain trade or adversely affect

the international transfer of technology. Thus Article 8(2) is an important provision for

framing national laws that respond to public interests. It makes clear that measures may be

adopted in order to prevent or remedy abuses of IPRs and practices that unreasonably restrain

trade or the transfer of technology. Article 8(2) refers to three types of behavior by IPR-

holders:

a. Abuse of Intellectual Property rights by right holder;

b. Practices which reasonably restrain trade; or

c. Practices which adversely affect the international transfer of technology.

There is every possibility that IPR-holders may use their rights in a manner that unjustifiably

restrains trade. However, purely private business practices restricting trade that are not

supported by the government cannot be attacked under WTO rules.

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Transfer of technology ranks high in priorities of developing countries. Article 8(2) is also an

important tool for the discussion of transfer of technology in the context of the TRIPS

Agreement. It recognizes the need to adopt ‘appropriate measures’ to prevent the resort to

practices which adversely affect the international transfer of technology. The only limitation

is that the provisions in the national laws must be consistent with the provisions of TRIPS

Agreement.

5. SUBJECT MATTER OF INTELLECTUAL PROPERTY RIGHTS:

Part II of the TRIPS Agreement covers various subject matters requiring protection and

enforcement by the member countries. They are copyright and related rights, trademarks,

geographical indications, industrial designs, patents, layout-designs (Topographies) of

integrated circuits, protection of undisclosed information and control of anti-competitive

practices in contractual licenses.

5.1 Copyright and Related Rights:

Article 9 through 14 of the TRIPS Agreement contained in Section I of Part II deals with the

copyright and related rights. As has been discussed in Chapter I, it is clear that the provisions

on copyright relating to creators of literary and artistic works are based upon the Berne

Convention, the substantive provisions of which are incorporated into the TRIPs Agreement.

Specifically, Article 9-13 of TRIPS Agreement specifies the minimum standards for the

protection of copyright. Article 14 relates to the rights of performers, producers of

phonograms and broadcasting organizations.

Article 9 of the TRIPS Agreement obliges the Members for adhering to the Berne

Convention. During the TRIPS negotiation no developing country expressed any reservation

on this way of showing adherence to the Berne Convention. Article 9(1) establishes the

relationship between the TRIPS Agreement and the Berne Convention. It obliges the Member

States to comply with Articles 1 through 21 of the Convention. The commentators have

acknowledged that most Members considered Berne Convention as an appropriate standard

for copyright protection.44 As in case of the US, in October 1987, it clearly called for

exemption to the exclusive rights granted under copyright to be limited to the Berne

Convention. The EC also explicitly called for observance to the provisions of both the Paris

and Berne Conventions. The Berne Convention emphasized that the enjoyment and exercise

�� 44JayashreeWatal, Intellectual Property Rights in the WTO and Developing Countries, (2001), op. cit. 12 at 210.�

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of copyright cannot be subjected to any formality such as registration as the same gets

protected the moment it is created, subject to the fulfillment of the conditions of originality.45

Article 9(1) of the TRIPS Agreement, however, clearly exempts moral rights from protection

under copyright by referring to Article 6 bis of the Berne Convention. This exception to

adherence to the Berne Convention in the TRIPS text was due to raising up an objection by

the United States to Article 6 bis of that Convention, which obliges members to protect the

moral rights of authors. Article 6 bis, paragraph (1) of the Berne Convention states:

“independently of the author’s economic rights, and even after the transfer of the said rights,

the author shall have the right to claim authorship of the work and to object to any distortion,

multilateral or other modification of, or other derogatory action in relation to, the said work,

which could be prejudicial to his honor or reputation.”

Thus, under Article 6 bis, the authors of the copyrighted works retain their privilege to claim

paternity of the work even after they have authorized reproduction or use. Further any

modification of the work that the author considers derogatory to the works or is prejudicial to

his honour or reputation, can also be objected by the author of the work. The relationship

between TRIPS and Berne Convention was explained in the case of United States, Section

110 (5) of the US Copyright Act,46 brought by EC, where it was held that the rules of Berne

Convention have to be read as applying to the WTO Members and also that they have been

incorporated into TRIPS. Further, it was held that the Berne Convention and the TRIPS

Agreement from part of the overall framework for multilateral protection.

Article 9(2) of the TRIPS Agreement awards copyright protection only to expressions and not

to ideas, procedures, method of operation, or mathematical concepts. TRIPS Agreement,

however, does not define these excluded elements for which no protection is provided. Thus

it is for the domestic courts and the Member States to decide as to what exactly constitutes a

non- protected procedure or method of operation as opposed to protected expression.

5.1.1 Computer Programs and Data Compilation:

Article 10 expands the traditional subject matter of copyright to include computer programs

and complications of the data by creating an obligation to protect them as literary works.

�� 45Article 5(2) of the Berne Convention.�

46 Graeme B. Dinwoodie, ‘A New Copyright Order: Why National Courts Should Create Global Norms’, 149

University of Pennsylvania Law Review 469 (2000).�

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As regards information technologies, the TRIPS Agreement selects copyright protection to

computer programs and not for patent protection, the availability of which remains unsettled

and controversial in most developed countries.47 Article 1 of the Berne Convention, however

uses the term ‘literary and artistic works’ that might be the subject-matter of protection by the

Members of the Berne Union, and in Article 2 defines this term as ‘every production in the

literary, scientific or artistic domain, whatever may be the mode or from of its expression.

Although, no explanation as to what would constitute the literary or artistic works, non-

inclusion of specific works has led to a debate on, whether computer programs were included

or not. However, the TRIPS Agreement under Article 10 has clarified this picture that the

computer programs are eligible for protection under copyright law. The protection to

computer programs is available whether in ‘source’ or ‘object code’, as literary works.

Software is first created in ‘source code’ using a programming language, easily understood

by others. This is then translated into a machine-readable from known as ‘object code’. The

software is generally sold or licensed with the object code and the source code is kept secret.

Decompiling or reverse engineering the object can reveal the source code, which is very

difficult and time consuming process.48 By including computer programs within the meaning

of literary works, the shorter term of protection of 25 years applicable to works of applied art

under the Berne Convention was explicitly excluded.49 The debate on whether functional

object code of a computer program was also protectable under copyright came to an end as

TRIPS Agreement provides protection to both source and object code. Many national

copyright laws provide certain limitations to the principle of exclusive right in case of

computer programs, if the same are meant for normal use. The legitimate fair use also

exempts from infringement of the copyright. Thus it is very difficult to decide whether a

particular use of the copyrighted material in other forms as de-compilation of software would

amount to fair use if meant for personal use. It is for the protection of computer software

under the patented regime of the TRIPS Agreement. The TRIPS Agreement, in addition to

the copyright protection, also provides for trade secret protection to computer programs in

Article 39, although this is not so effective form of IP protection for software in itself, since

reverse engineering is allowed and all elements of software cannot be kept secret.50

�� 47Pamela Samuelson, Randall Davis, Mitchell D. Kapor and J.H. Reichman, ‘A Manifesto Concerning Legal

Protection of Computer Programs’, 94 Columbia Law Review (1994) 2308, 2361-64.�

48Supra, JayashreeWatal, op. cit. 34 at 216.�

49Article 7 (4) of the Berne Convention.�

50Supra, JayashreeWatal, at 218.�

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Article 10(2) of the TRIPS Agreement, like Article 2(5) of the Berne Convention, also

requires originality in the selection and arrangement of the contents of a compilation. Mere

creating a list works or extracts without engaging in any creativity is not sufficient to get

copyright protection. If the database is protectable, the copyright protection only extends to

the creative element, that is, the selection and arrangement of the data and not to the material

or data itself. Thus many databases such as phone books or telephone directory, which are

arranged and structured in a way that does not fulfill the originality requirement as was held

by the US Supreme Court, cannot become the subject matter of protection as copyright

works.51 Databases such as encyclopedia or anthology etc., can be considered creative

selection or arrangement of the editor, and thus subject-matter for protection.

TRIPS Article 10(2) elaborates this provision of Berne Convention to include:

• A database or other compilation of data or other material;

• Material in both machine-readable or other form; and

• Compilation of non-copyrightable material.

The developing countries agreed for its inclusion in the TRIPS Agreement, since this was

perceived to be within the limits set by the Berne Convention. However, after the finalization

of the TRIPS Agreement, developed countries like the US and EU found this level of

protection inadequate to cover all types of databases. Therefore, they sought to include in

WIPO, an international treaty for sui generis law for protection of databases that may not

even qualify as creative works. However, it could not ripe out and the initiatives failed in

December 1996.

5.1.2 Rental Rights:

Article 11 provides the exclusive right to authors and their successors to authorize or prohibit

the commercial rental of their computer programs and, subject to impairment tests, to their

cinematographic works. Copyright only gives authors the right to prevent copying or

reproduction and use of the protected work in certain ways. In accordance with principle of

exhaustion, the work, once it is legitimately placed in the market, cannot be prevented from

being resold or commercialized.

Article 11 of the TRIPS Agreement, for the first time introduced in international copyright

law, the rental rights, that is, the right of authors to authorize or prohibit rentals of their work.

This concept was primarily directed at computer programs and sound recordings where it was

�� 51

Fiest Publications, Inc. v. Rural Telephone Service Co, Inc., 499 U.S. 340 (1991).�

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perceived that a single act of rental could result in the private copying of the work, an act not

prohibited under copyright or related rights. Once rentals are allowed, wide scale private

copying of the work is not easy to prevent, thus affecting the legitimate interests of the right

holder. Had there been no development of technology, thereby enabling good quality or easy

private copying, there would not have been the need for protecting such right.

There were discussions in the TRIPS negotiations regarding the issue of rental rights, which

were opposed by the developing countries. But in the end, rental rights were included for

computer programs, sound recordings and, in certain circumstances, for cinematographic

works, the latter being supported by India.52 For the cinematographic works, the rental rights

become relevant only when there is such widespread copying of these works that the

exclusive right of reproduction granted by the copyright is materially impaired.

5.1.3 Term of Protection

Following Article 7(1) of the Berne Convention, Article 12 of the TRIPS Agreement sets the

term of protection of most works that are calculated on a basis other than the life of the author

to a minimum duration of fifty years from the end of the calendar year of authorized

publication, making, or phonogram fixation or performance.

Article 7(1) of the Berne Convention states the minimum term of protection on copyrighted

works shall be the life of the author plus fifty years post mortem auctoris, that is, after death.

In case of cinematographic works, a similar kind of protection was afforded which was

applicable from the date of making such work publicly available. However, copyright in

photographs and works of applied art subsists only for 25 years. The term of protection of the

photographic works has now been extended to 50 years under WCT negotiated in WIPO in

December 1996.

Article 12 of the TRIPS merely clarifies that where the term of 50 years is set other than on

the basis of the life of an author, the term should commence from the date of first authorized

publication of the work. Where no such publication takes place for 50 years from making of

the work, this term should be 50 years from making of the work. This provision is meant to

cover copyright owners who are legal entities.

5.1.4 Limitations and Exceptions to Exclusive Rights in Copyrighted Works:

Article 13 requires Members to confine limitations or exceptions to exclusive rights to:

�� 52

Supra, JayashreeWatal, at 222.�

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i. cases that do not conflict with normal exploitation of the work; and

ii. cases that do not unreasonably prejudice the legitimate interests of the right holder.

The wording of Article 13 has roots in Article 9(2) of the Berne Convention that allows

exceptions to the exclusive right of reproduction given by copyright law. It states: “it shall be

a matter of legislation in the countries of the Union to permit the reproduction of such works

in certain special cases, provided that such reproduction does not conflict with the normal

exploitation of the work and does not unreasonably prejudice the legitimate interests of the

author.”

TRIPS Article 13 applies to all exceptions to the rights of a copyright owner. These

provisions exempted use of official texts, current news or facts, speeches or lectures,

quotations, use for teaching and grant of compulsory licenses.53 Such exceptions also find

mention under Indian copyright law.54 Article 13 of TRIPS Agreement permits members to

provide for exceptions and limitations to the copyright standards-laid down, ‘in special cases

provided these do not conflict with the exploitation of the work and do not unreasonably

prejudice the legitimate interests of the right holder.’

Taking into account these exceptions allowed under the Berne Convention, national copyright

laws have permitted wide scale exceptions such as use for private, non-profit, or educational

purposes.

5.1.5 Related Rights or Neighbouring Rights:

In the field of related rights or neighbouring rights, Article 14 grants improved protection of

rights of performers, phonogram producers, and broadcasting organizations. In contrast to the

legal regime of copyright, where the TRIPS Agreementincorporates the provisions of the

Berne Convention, as far as the right of performers, producers of phonograms and

broadcasting organizations are concerned, the provisions of the Rome Convention, 1961 have

not been included. Here, the TRIPS Agreement limits itself to reproducing, in a simplified

form, the substantive rights recognized by the Rome Convention.55 A significant modification

with respect to the Rome Convention has been made, by extending the duration of the rights

�� 53


54 Section 52 of the Indian Copyright Act,1999.�

55 Jerome H. Reichamn, ‘Universal Minimum Standards of Intellectual Property Protection under the TRIPS

Component of the WTO,’ in Intellectual Property and International Trade: the TRIPS Agreement, Carlos M.

Correa and Abdulqawi A. Yusuf (eds.), (2008) at 138.�

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of performers and producers of phonograms. The two Conventions viz., the Berne

Convention for copyright and Rome Convention for neighbouring rights are the result of

differentiation between the protection of copyright and the protection of neighbouring rights,

existing within European continental law.

With respect to performers, Article 14(1) of the TRIPS Agreement sets out the protection to

be granted, that is, preventing unauthorized phonogram fixation, reproduction of such

fixation, and broadcasting by wireless means and communication to the public. TRIPS

requires Members to prevent the unlawful fixation and reproduction of such fixation of live

performances on phonograms only, the unauthorized reproduction of phonograms and the

unauthorized fixation or rebroadcast of radio or television programs, including satellite

broadcasts. In respect of these rights, WTO Members have to afford national treatment to all,

as stipulated in Article 3 of TRIPS Agreement. This right afforded to the performers under

Article 14(1) of the TRIPS Agreement is much more limited than granted to performers under

Article 7 of the Rome Convention, since performers cannot prevent the authorized fixation

and reproduction of such fixation in an audiovisual medium. Even under the Rome

Convention, under Article 19, this right is fairly weak as once the performer has consented to

the incorporation of his performance in a visual or audio-visual fixation, he can no longer

control further reproduction or fixation. For instance, a consenting playback singer in a

cinema cannot prevent the further fixation or reproduction of a sound or video recording of

the song he has sung. The lack of exclusive rights for related rights makes the protection for

performers weaker than that given to authors.

This provision of TRIPS is an exact replica of Article 10 of the Rome Convention. However,

Article 12 of that convention, relating to secondary uses of phonograms, which allows for a

single equitable remuneration to performers or to producers of commercial phonograms for

direct broadcasting or for public communication of protected phonograms, is not applicable

under TRIPS. Thus under TRIPS Agreement, the producers of sound recordings cannot

prohibit radio broadcasts or playing in public places such as restaurants or bars. However, the

copyright owners of phonograms can do so under the Berne Convention and TRIPS.

Further Article 14 (3) confers rights on the broadcasting organizations to prevent certain acts

undertaken with their authorization. Broadcasting organizations are given the same rights

provided in Article 13 of the Rome Convention, namely the right to prohibit, when

undertaken without their permission, the fixation, the reproduction of fixations and the re-

broadcasting by wireless means of broadcasts, as well as the communication to the public of

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television broadcasts of the same. However, this right of the broadcasting organizations is not

an absolute right, since it is allowed not to recognize this right of the broadcasting

organizations when a Member State provides owners of the Copyright in the subject matter of

broadcasts with the possibility of preventing the acts mentioned in Article 14(3) of TRIPS

Agreement. In such a case, Article 11 bis of the Berne Convention shall be applicable. This

means that the Member States may exclude the rights attributed to the broadcasting

organizations under Article 14(3) only when their legislation considers broadcasting

programmes as protected by the copyright.

These rights provided by the Members to the owners of copyright in the subject matter of

broadcasts are subjected to the provisions of the Berne Convention, 1971.

Phonogram producers enjoy exclusive rental rights under Article 14(4) of the TRIPS

Agreement. Any Member State can continue with the system of equitable remuneration of

right holders of phonograms, if on 15 April 1994, that system was in force. However, the

only limitation to the prevalence of such system is that the commercial rental should not

prejudice substantially the exclusive rights of reproduction of right holders. Developing

countries cannot take advantage of this provision if they do not meet these criteria provided

under Article 14(4) of TRIPS, more particularly those did not have such a system in place by

the given date.

Further, Article 14(5) of the TRIPS Agreement deals with the term of protection of related

rights or neighbouring rights. The minimum term of protection for the performers’ rights and

producers of sound recordings is 50 years under TRIPS Agreement, while the same under the

Rome Convention is only 20 years.56 The rights of the broadcasting organizations, on the

other hand, run for at least 20 years from the date of the broadcast, which is similar to the

period of protection afforded under the Rome Convention and under national laws of many

Member States.

The TRIPS Agreement establishes certain limitations and exceptions in relation to protection

of copyright and related rights. With regard to the rights of performers, producers of

phonograms and broadcasting organizations, Article 14(6) stipulates that any Member State

may provide for conditions, limitations, exceptions and reservations to the extent permitted

by the Rome Convention. Therefore, this provision has to be read in combination with Article

15 of the Rome Convention. Moreover, as regards the rights over phonograms, it is provided

�� 56 Article 14 of the Rome Convention.�

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that Article 18 of the Berne Convention must be applied, which refers to the protection of the

existent works at the time of entry into force of the Convention. According to Article 14(6),

the provisions of Article 18 of the Berne Convention shall be applied mutatis mutandis to the

rights in phonograms of performers and producers of phonograms. This means that, contrary

to the Rome Convention, which does not provide for retrospective application of its

provisions contained in Article 20, the TRIPS Agreement establishes such retroactivity when

applying mutatis mutandis Article 18 of the Berne Convention.57Thus, conditions, limitations,

exceptions and reservations can be provided by the Members with regards to related rights to

the extent permitted by the Rome Convention, principally those provided for by Articles 12,

15 and 16 of the Convention.

5.2 Trademarks:

Protection of trademark was almost universally recognized, in the national laws of both

developed and developing countries, even before the TRIPS Agreement. TRIPS have only

marginally raised the standard of protection of trademarks in both developed and developing

countries. The TRIPS Agreement significantly improves trademark protection of goods and

services in countries other than Western Europe and North America.58

Section 2 contained in Part II of the TRIPS Agreement deals with the trademarks. Article 15

to 21 of the Agreement provide information about the trademark protection, rights,

exceptions, term of protection, requirements of use, licensing and assignment, etc.

Article 15(1) of TRIPS Agreement gives a definition as to what constitutes a trademark and

lays down in some detail, the dos and don’ts of such protection.

Article 15(1) offers a uniform minimum definition of trademark for goods and services,

including protection of combinations of colours, but leaving aside other features such as

sound or scent marks which are protected by domestic law in some countries, such as United

States. Thus Article 15(1) of TRIPS defines a trademark and the basic obligation of all

members with regard to such protection. It defines trademark as any sign, or any combination

of signs, capable of distinguishing the goods and services of one undertaking from those of

other undertakings. At the same time, the Agreement provides that such signs or

combinations of the same should be eligible for registration as trademarks.

�� 57 Alberto Bercovitz, ‘Copyright and Related Rights,’ in Intellectual Property and International Trade: the

TRIPS Agreement, Carlos M. Correa and Abdulqawi A. Yusuf (2008), at 141.�

58Supra, Patrick F. J. Macrory, et al, at 1087.�

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TRIPS Agreement includes list of such signs which shall be eligible for registration. These

are personal names, letters, numerals, figurative elements and combinations of colours as

well as any combinations of such signs. However, where signs are not inherently capable of

distinguishing the products of one enterprise from others, TRIPS Agreement provides that in

such cases registrability may be made contingent on distinctiveness acquired through use. It

is thus, obligatory upon all the WTO Members to allow the registration of such marks. The

option allows for a provision in the trademark law requiring secondary meaning derived

through use. Service marks for the first time offered registration requirements. The

developing countries initially opposed such an extension in the TRIPS negotiations; however,

they had no basic objections to protecting service marks on par with trademarks.

A Member state is free to deny registration of trademarks on the grounds other than listed

under paragraph 1 of Article 15. But such a rejection should not be derogatory to the

provisions of the Paris convention of 1967. The Paris Convention provides an exhaustive list

of grounds on which a mark registered in a country of origin may be refused protection in

other Member countries. The three grounds are: where these are previous rights; where the

marks are lacking distinctiveness or have become generic; when they are opposing to

morality or public order; and where they possess a tendency to deceive the public.59

Further, Article 6(1) of the Paris Convention sets out an important principle of independence

of protection in different countries wherein a trademark cannot be refused registration or

invalidated on the basis of action taken, or not taken in another jurisdiction, including the

country of origin.60

Article 15(3) allows the Members to make registration dependent upon intended use, but it

cannot be made a condition at the same time of application. This provision makes use of the

trademark a prior condition for registration. However, the application for registration cannot

be refused only on the found that the applicant has not used the mark within three years of the

making of such application. Article 15(4) reiterates Article 7 of the Paris Convention that

prohibits any hindrance to registration of trademark on the grounds of the nature of goods and

extends this to services. Article 15(5) imposes an obligation upon the members States to

publish trademark either before or after registration so as to invite opposition, if any, to refuse

�� 59


60Id.�

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or cancel the registration. Thus publication of trademark is a necessary prerequisite for its

existence.

5.2.1 Rights Conferred by Trademarks to Owners:

Article 16(1) specifies the owner’s exclusive rights to prevent third parties from using similar

marks for goods or services when such use would produce a likelihood of confusion. It lays

down that the owner of a registered trademark has the right to stop unauthorized third parties

from making use of his mark or any similar signs for goods and services that are identical or

similar to those in respect of which the original mark has been registered where such use

would result in likelihood of confusion. Likelihood of confusion can be presumed in case of

identical signs applied to identical goods and services. However, regarding the question of

implementation of standard of presumption of likelihood of confusion in case of identical

marks or identical goods, TRIPS Council in November 1996 revealed that some countries,

like the US and Japan, consider this obligation as met through interpretation in courts while

others have actually amended their trademark laws to implement this higher standard.61

Moreover, the owners’ right can’t be treated absolute, so far as prior rights on such goods or

services are concerned, nor such provision in Article 16(1) of TRIPS can prevent the

members for making such right available on the basis of use.

The protection of well-known trademarks is extended to services under Article 16(2) and

internationally well-known trademarks are subject to the minimum standards of protection.

Article 6 bis of the Paris Convention, 1967 obliges protection of marks, belonging to an

owner in any other country, which is member to the convention. Such marks should be well-

known in the member country of registration or use, and Article 6 bis prevents their use on

identical or similar goods. The question as to whether a mark is well known or not is left to

the judgment of the competent authorities in the country of registration. Article 16(2)

provides that Article 6 bis of the Paris Convention should be applied as such to services.

According to Article 16(3), it is no longer possible to use famous marks in relation to

products other than the famous product, e.g., Nike for a sport drink, if such use suggests a

linkage with the right holder that is likely to damage his or her reputation. Thus, though the

goods or services are not similar to the registered trademark, but use of trademark in relation

to those goods or services creates connection with them and the owner of registered

�� 61

Id, op. cit. 32 at 254.�

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trademark, if because of such connection, the interest of owner is likely to be damaged, then

Article 6 bis of the Paris Connection 1967 shall apply.

5.2.2 Exceptions or Limitations to Exclusive Right:

Article 17 of TRIPS Agreement makes a provision for the Members to provide exceptions to

the rights conferred by a trademark, such as fair use of descriptive terms, provided such

exceptions take account of the legitimate interests of the owner of the trademark and a third

parties.

The exclusive right conferred on the owner of trademark is not absolute and is subjected to

the principle of fair use of the descriptive terms. The Member State while providing fair use

of the goods or services must take into account the legitimate interest of owner of the

trademark and third party.

5.2.3 Term of Protection of Trademark:

The term of protection under Article 18 is a minimum term of not less than seven years with

an indefinite possibility of renewal. National trademark laws generally specify the initial term

of protection of registered trademarks, but allow these to be renewed indefinitely. This is the

only field in IPRs where there is no time limit for protection after an initial period of seven

years. However, renewal of a trademark can be subject to use requirements, so that marks are

not simply reserved and not used. Such reservation of marks without their use can reduce the

number of marks available for new registration.

5.2.4 Conditions for Subsistence of Trademark:

According to Article 19(1), the registration of a trademark can be cancelled only after a

period of non-use of three years. It specifies that cancellation of trademark cannot take place

if the existence of obstacles to use of such trademark is shown by its owner. Import

restriction on goods or services or other government requirements on goods and services to

which the trademark is applied are specified as valid reasons justifying non-use of trademark.

These reasons for incorporating the grounds not accounting for non-use were directed mainly

at developing countries as the developed countries were most likely to use all possible

reasons to cancel registrations. Further Article 19(2) of the TRIPS Agreement specifies the

use of trademark by another person, under the control of trademark owner, would amount to

use of trademark. Thus use of trademark by another person would also constitute use for the

purpose of maintaining the registration, subject to the control of the trademark holder.

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Article 20 prohibits the use of trademarks with special requirements e.g., for use only in

combination with another trademark. As far as the use trademark is concerned, Article 20 of

TRIPS Agreement makes it clear that such use to sustain registration would not attract special

requirements. However there would be additional requirements besides use, that the

trademark must identify the undertaking producing the goods or services.

5.2.5 Licensing and Assignment of Trademarks:

Article 21 of TRIPS Agreement excludes all compulsory licensing in the field of trademarks.

The practice of merging, under a compulsory license, a local trademark with a foreign mark

in order to launch and promote a product is no longer possible under the TRIPS Agreement.

Article 21 provides that the Member is free to determine the conditions on the licensing and

assignment of trademarks but cannot compel the owner of a registered trademark to transfer

the goodwill or business along with the trademark. This transfer of goodwill or business is no

longer criteria for granting assignment. Japan deleted the requirement of transfer of the

business along with the trademark in 1959.62 Use of the trademark by registered user, in

general, amounts to use by the registered proprietor. In some countries like Malaysia and

other Commonwealth countries, an assignment of a registered trademark is used in good faith

by the assignor in the country of its registration before such assignment. Ordinarily, the

unregistered marks cannot be transferred by way of assignment without transferring business.

Thus Members are free to determine the conditions for licensing and assignment of

trademarks without prejudice to right of the trademark holder to assign the trademark with or

without the transfer of the business.

5.3 Geographical Indications:

Article 22 through 24 of TRIPS Agreement, contained in section 3 of Part II deals with

Geographical Indications (GIs). Special trademark protection for goods, the quality and

reputation of which; are attributable to their particular geographic origin, was one of the most

contentious areas of negotiations under TRIPS regime. The protection of sources of origin

and appellation of origin has been a long- standing interest and concern mainly to Europeans.

Articles 22 of TRIPS Agreement provide very concise and clear definition of geographical

indications. Article 22(1) defines GIs as: “Geographical indications are, for the purposes of

this Agreement, indications which identify a good as originating in the territory of a Member,

or a region or locality in that territory, where a given quality, reputation or other

�� 62

Id, op. cit. 42 at 259.�

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characteristics of the good is essentially attributable to its geographical origin.” This

definition condenses eligibility narrower than for trademarks or collective marks but is still

broader than the concept of appellation of origin as defined in the 1958 Lisbon Agreement for

the Protection of Appellations of Origin.

Unlike trademarks, GIs are distinctive signs that identify products of several undertakings

located in a specified geographical area. As far as the ownership of GIs is concerned, no one

enterprise or even group of enterprises owns this distinctive sign and therefore, unlike

trademarks, there is no right conferred on any entity to grant or refuse authorization on use.

Instead, all undertakings located in the specific geographical area are allowed to use the

geographical indication on the specified products produced by them. The TRIPS Agreement

has not been successful in satisfying the demands of many developing countries demanding

protection under GIs for certain agricultural products.

The definition of the term ‘Geographical Indications’ used in TRIPS Agreement includes

both the terms viz., ‘appellations of origin’ or ‘indication of source’. The TRIPS Agreement

applies only to goods and does not include services, a demand made particularly by

Switzerland in the negotiations, citing the example of tourism.63 However the TRIPS

Agreement goes beyond the definition of ‘appellations of origin’ defined under Article 2(1)

of the Lisbon Agreement as “the geographical name of the country, region or locality, which

serves to designate a product originating therein, the quality and characteristic of which are

due exclusively or essentially to geographical environment, including natural and human

factors.” TRIPS protect geographical marks that are identified even where no other

characteristic of the good is essentially attributable to its geographic origin.

Further Article 22(2) (a) and (b) provides for two levels of protection for geographical

indications at the basic level in the form of deceptive use or that amounting to unfair

competition. TRIPS Agreement requires all geographical indications must be protected

against their use in such a way so as to mislead the public or against an act that amounts to

unfair competition. This obligation is met within most countries that allow such GIs to be

registered as collective marks or certification marks and, or allow passing-off actions to be

instituted in civil courts. As a result of inclusion of unfair competition in Article 22(2) (b),

which has been defined in Article 10 bis (3) of the Paris Convention, no significant

substantive improvement for GIs concerning foodstuffs and industrial products has been

�� 63


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achieved. Thus, the use of an indication referring to the true origin of the product is not

deemed to be act of unfair competition and does not imply consumer deception even though

the denomination of the products refers to a different geographical area. The proper labeling

of products as to their true geographical origin, therefore, allows for extensive use of

geographical attributes in the denomination of a product.

Article 22(3) stipulates that the registration of geographical indications as trademarks shall be

refused or invalidated at least at the request of an interested party, if their use is likely to

mislead the public as to the true place of origin. As a result of this, most countries disallow

the registration of geographical names as trademarks, unless they have different meaning.

Article 22(4) of TRIPS Agreement, however provides that protection shall also be afforded to

those goods, which though exist in specific territory, region or locality, falsely represents to

the public that the goods originate in another territory

5.3.1 Additional Protection for Geographical Indications for Wines and Spirits:

A higher, absolute level of protection of goodwill and reputation has been introduced in

Article 23(1) for wines and spirits, with respect to which even where there is no doubt about

the true origin of a product, no linkage may be made directly or indirectly to other

geographical names. Protection afforded to wines and spirits is much stronger as compared to

that afforded to other GIs under Article 22 of the TRIPS Agreement. Thus this provision

makes it incumbent upon the member countries to provide protection for wines and spirits,

though not originating in the place indicated in the geographical indication. Even where GIs

are accompanied by expressions such as “kind”, “type”, “style”, “imitation” or the “like”, the

protection must be afforded by each Member State. However, the TRIPS Agreement makes

absolute the prohibition on the registration of wines and spirits in respect of such products not

having the same origin, as stipulated under Article 23(2). In the case of homonymous

geographical indications for wines which have the same place name and are literary true but

are liable to mislead the public as to their origin, WTO members are to decide the conditions

of protection, balancing the interests of the producers with that of the consumers. Article

23(3) of TRIPS contains a provision in respect of homonymous geographical indications for

wines whereby the protection is accorded to each indication, subject to the provisions of

paragraph 4 of Article 22. Each Member is free to determine the practical conditions under

which the homonymous indications in question will be differentiated from each other, taking

into account the need to ensure equitable treatment of the producers concerned and that

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consumers are not mislead. The Members States must treat them as other attempts to deceive

the public and thus, their registration as trademark must be refused or invalidated.

Further Article 23(4) of TRIPS provides that the members are under an obligation to

negotiate for the establishment of a multilateral system of notification and registration of

geographical indications for wines and spirits. Such negotiations shall be undertaken in the

Council for TRIPS.

5.3.2 International Negotiations- Exceptions to Obligations:

There are various exceptions to the obligations in Section 3 that takes away significantly from

the benefits to the owners of geographical indications. Under Article 24(1) Members are

under an obligation to enter into negotiations aimed at increasing the protection of individual

geographical indications. Efforts undertaken to this effect within the TRIPS Council between

1995 and 2000 did not materialize. The negotiation is the only way out to set out difference

of options regarding protection of GIs.

Further Article 24(2) puts an obligation upon the TRIPS Council to review the application for

GI negotiation. In case of non-compliance of obligations, TRIPS Council shall be informed

about the issue and it shall take such action so as to facilitate the operation and furthering the

objectives of Section III dealing with GIs. Further Article 24(3) provides that in

implementing the provisions of Section III, the Member should not diminish the protection to

GIs which, it granted before the entry into force of WTO Agreement.

Article 24(4) provides that particular geographical indications for wines and spirits that have

been in continued prior use for at least 10 years prior to April 1994, or in good faith before

this date, can continue to be used. Article 24(4) of TRIPS is flexible provision, as it requires

no proof of good faith if use has been made for at least 10 years. Thus the Member need not

prevent any of its nationals or domiciliary using GI in a continuous manner for at 10 years or

in good faith before that period of 10 years.

Additionally, where a trademark identical or similar to a GI has been applied for or registered

or used in good faith before the application of these provisions of TRIPS in the member

country or before the protection of the geographical indication in the country of origin, the

obligations in Section III with regard to registration do not apply. This has been clearly

mentioned in Article 24(5) of the TRIPS Agreement that protects existing trademark

registered in good faith, or for which an application for registration has been filled in good

faith prior to the entry into force of the Agreement or to the protection of geographical

indications in its country of origin.

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Article 24(6), 24(8) and 24(9) exempt generic use of indications, person’s names, and

indications that are no longer in use or are no longer protected in their country of origin.

Article 24(6) of TRIPS is an exception to the obligations in section III with GIs. According to

this provision if a GI has become generic i.e., identical with the common name for such

goods or services or in case of wines, identical to the customary name of a grape variety

found in that Member State, it shall be exempted from obligation under section III of TRIPS

Agreement. Thus the Member State is not under any obligation to apply its provisions as

provided under section III to goods or services having acquired generic character or to the

wines similar to grape variety existing in that Member State. Since it is the governments or

courts of WTO Members that will decide whether or not a particular geographical indication

has become generic or needs to be protected, this provision is likely to give rise to

considerable disputes and perhaps, further bilateral negotiations.

Article 24(7) provides a retroactive protection to geographical indication by incorporating a

provision which facilitates the members to make a request in connection with the use or

registration of a trademark, if the same is found to affect the protected indication adversely.

The request may made within 5 years after, adverse use of the protected indication has

become generally known after the registration of trademark in that Member State , provided

before the adverse use of GI, the trademark has been published. But the same is further

subject to an exception that the GI should not have been used or registered in bad faith.

Further Article 24(8) exempts any person to use that person’s name or name of his

predecessor in course of trade, if the same is not to mislead the public. Thus the Members are

not under an obligation to apply the provisions of Section III to such persons if they use their

name or the name of their predecessor in a way so as not to mislead or cheat the public.

The most important of all the exceptions to obligations on GIs is that where a GI is not or

ceases to be protected in its country of origin or has fallen into disuse in that country,

Members States shall be under no obligation to protect such GIs. It is provided under Article

24(9) of TRIPS Agreement.

5.4 Industrial Designs:

Article 25 and 26 of Section 4 in Part II of TRIPS Agreement contain provisions regarding

the scope of protection, term of protection and exceptions to rights conferred in relation to the

industrial designs. The negotiations regarding industrial designs were difficult as there was

controversy as to whether the standards of protection to be granted for industrial design

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should be based on the protection available in Europe or in the United States. One of the main

practical interests at stake was trade in automobile spare parts. The automotive industry

wanted to obtain protection from cheaper parts produced by foreign competitors. Extension

of protection, however, was opposed by developing countries and the car insurance

industry.64 Certain improvement in the protection of industrial designs was also the result of

intervention by the textile industry that wanted greater protection for fashion designs.

Article 25 of TRIPS Agreement obliges the Members to provide the protection to

independently created industrial designs possessing the element of newness or originality.

Members must ensure that the requirements for obtaining protection for textile designs do not

unreasonably impair the opportunity to obtain such protection as textile design does not

remain in fashion for a very long time.

Thus Article 25(1) of TRIPS deals with scope of protection of industrial designs and explains

the situations where such protection might be afforded. This provision obliges the Members

to provide protection only to those industrial designs that have been created independently

from the influence of earlier existing designs and those that can be treated as new or original.

However, Members could provide that designs are neither new nor original, if there is no

substantial difference from those existing designs or from combinations of known design

features, as that feature is to be judged solely by eye and if no difference appears between the

two designs, than the later cannot be treated as new, thus cannot be protected. Additionally,

those designs with only technical or functional changes might also not be provided protection

by the Member States.

In this area there were more of intra-North differences rather than North-South differences.

The European community refused to accept that some Members could levy the requirement

of both ‘novelty’ and ‘originality’ for the protection of industrial designs.65 Thus a

compromising language was inducted in Article 25, so as to accommodate both points of

view as it enabled members to deny protection to designs that do not significantly differ from

known designs.

Designs, those are the descriptive of the ordinary shape of an object are also usually excluded

from the grant of such protection as these may not be novel or original and, even if they are,

cannot be taken away from the public domain.

�� 64

Supra, Patrick F.J. Macrory, et al, at 1091.�

65Supra, JayashreeWatal, op.cit.5 at 279.�

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Article 25(2) was included in acknowledgment of the short lifespan of such design creations

due to changes in fashion and amounts to a novel instrument in design protection. Article

25(2) creates an obligation to, and puts pressures for, facilitating filing procedures in

countries extremely slow in registering designs which depend on fashion cycles. Moreover, in

many countries copyright protection can also be used as a possible way for protecting designs

without any registration requirements. For example, Section 15 of the Indian Copyright Act,

1999 provides for protection to the designs as a copyright, however, if the number of such

designs produced by industrial methods exceeds fifty, then the protection is provided under

Designs Act, 2000.The cost, examination or publication cannot create hindrances in seeking

protection for textile designs unreasonably.

Articles 26(1) of TRIPS provide an exclusive right to the owner of the protected industrial

design to make sell or import article bearing that design. At the same time, the owner of the

design has been given an exclusive right to prevent third party from exploiting his design or

exploiting one which is substantially a copy of the protected design solely for the purpose of

trade and commerce. Thus without the consent of the holder of design, the same cannot be

used for commercial purposes by any third person, as proprietor of the design has right to

prevent others from using the same.

Article 26(2) of TRIPS provides limited exceptions that do not unreasonably conflict with the

legitimate interests of the right holder, taking into account the legitimate interests of third

parties. Here ‘third parties’ could mean the general public and design that are contrary to

morality or public order could be refused registration for protection. Thus members have an

option to provide exceptions to the protection of industrial designs, but up to a limited extent

that they do not interfere unreasonably with the normal exploitation of protected industrial

designs at the cost of interest of the owner.

TRIPS Agreement imposes an obligation of the minimum requirement of term of protection

upon the Member countries that the term of protection of industrial designs should not be less

than 10 years as stipulated in Article 26(3). This language is bit flexible as compared to that

used in protection of other IPRs viz., copyright, patents, trademarks or layout-designs. This

language was meant to accommodate different initial terms of protection, so long as the total

number of years of protection afforded does not fall below 10 years. In India a protection of

10 years is recognized which can further be renewed for 5 more years before the expiry of

period of 10 years.

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5.5 Patents:

Article 27 to 34 covered under Section 5 in Part II deal with the patents. From the very

beginning of the Uruguay Round of negotiations, patents were among the most contentious

subjects of the Round, and the differences were not limited to North-South issues. The

negotiations addressed a number of key political issues viz., patentability, exclusions, non-

discrimination, patent term, burden of proof, rights conferred, compulsory licenses, and the

problem of government use.66Negotiations on patent protection were basis to the success or

failure of the Uruguay Round. Moreover, without major commitments in the area of patents,

no package deal would have been be possible. Negotiations were strongly supported and

observed by industry, in particular the research-based pharmaceuticals industry, and decisions

based on such issues relating to the patents were taken under considerable industry pressure.

Although in the beginning, the developing countries strongly opposed the introduction of

product patents for certain fields of technology as well as a minimum patent duration, the

negotiations succeeded in establishing a comprehensive set of rules.

Article 27(1) contains one of the major achievements of the TRIPS Agreement, in terms of

exceptions of the industrialized countries, and perhaps the greatest concession made by

developing countries during the negotiations. According to the Article 27(1), patents shall be

available for both product or process inventions, in all fields of technology. The inventions

must be new, involving inventive step and capable of industrial application. Even though

these requirements can be found in many national patent laws, the negotiating parties

considered it necessary to place these provisions in the TRIPS Agreement. These three

criteria for determining patentability as provided in Article 27(1) of TRIPS, viz., novelty,

non-obviousness or inventive step and utility (industrial applicability), are universally

recognized in the patent law of both developed and developing countries. However, under

Article 27(1) no definitions of these parameters are given, thus leaving this open to

reasonable interpretation by each WTO member.

Novelty, in this context, generally means that the patentable invention should not have been

known before, or more technically, should not have been anticipated in the ‘prior art’

anywhere in the world.67 The most important standard of judging patent eligibility is that of

‘inventive step’. Thus there must be something which may be called as invention by those

having an ordinary skill in that particular field or sub-field of technology. This is technically

�� 66

Supra, Patrick F.J. Macroryet al, op. cit. 157 at 1092.�


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the most difficult criterion to be ascertained. An invention which doesn’t have any industrial

application cannot be considered for grant of patent. This criterion thus prevents the blocking

of materials or processes, though new and non-obvious, which do not have any practical use.

Thus Article 27(1) makes available the patents and their enjoyment without any

discrimination as to the place of invention and regardless of field of technology.

Article 27(2) contains the basic general exceptions. It allows exclusion from patentability of

invention, the commercial exploitation of which would affect public order or morality and it

is necessary to protect human, animal or patent life or health or to avoid serious prejudice to

the environment. This provision accepts that mere publication of invention can infringe the

public order. The exclusion of inventions which are contrary to public order or morality is

provided for in most patent laws. For example, Section 3 of the Indian Patent Law, 2005

provides for non-patentable inventions, which include public order and morality as ground

for non-patentability. The TRIPS Agreement’s exception raises, however, several issues

relevant to its implementation at the national level.

The text of the provision uses the concept of ordre public as one of the grounds for

exceptions. This concept may be interpreted as being narrower than ‘public order’ or ‘public

interest’. Under the Guidelines for Examination of European Patent Office, the term ordre

public is linked to security reasons, such as riot or public disorder, and inventions that may

lead to criminal or the generally offensive behavior.68

However, there is no generally accepted meaning of the term ordre public and the Members

often adopt a flexible approach to define which premise is covered under ordre public,

depending upon their own conception of the protection of public values. Article 27(2) itself

indicates that the concept of ordre public is not limited to security reason, but also relates to

protection of human, animal or plant life or health and may be applied to inventions that may

lead to a serious prejudice to the environment. Addressing a health epidemic, for instance,

may be deemed a matter of public order. Moreover, the concept of morality which is not

same in different cultures and countries, is an ever changing concept, and is also relative to

the values prevailing in a society.

However, the application of Article 27(2) is subjected to two restrictions:

�� 68 Carlos M. Correa, ‘Patent Rights’ in Intellectual Property and International Trade: the TRIPS Agreement,

(eds.) Carlos M. Correa and Abdulqawi A. Yusuf, at 230.�

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• Non-patentability may only be required to be established if the commercial

exploitation of the invention leads to the prevention of ordre public or morality

which has the tendency to affect human, animal or plant life or health or to avoid

serious prejudice to the environment. Thus there is a need to prevent-

commercialization of an invention which leads to the above stated results, by the

interference of the competent authority declaring the hazards of commercialization

of such inventions as patent offices have no power to prevent the

commercialization of a product.

• The general final proviso, ‘provided that such exclusion is not made merely

because the exploitation is prohibited by their law,’ invalidates exclusions which

are not essentially based on the grounds specified in Article 27(2), even if they are

prescribed by national law. This means that existence of a legal provision will not

be sufficient per se to withstand the non-patentability of any invention, as the same

must find mention under Article 27(2) of TRIPS Agreement.

Further Article 27(3) also provides exception from patentability. Article 27(3) (a) permits

members to exclude from patentability diagnostic, therapeutic (method involved in therapy to

cure or restore health) and surgical methods for treatment of humans and animals, but not

products associated with those methods or to any apparatus used for diagnostics or

treatments. Thus some products like ‘diagnostic kits’ one of the main biotechnologically

based products in the market are excluded from the provision of Article 27 (3) (a).

Further Article 27 (3) (b), expressing a transitional concession, permits Members to exclude

plant and animals from patentability and essentially the biological processes used for the

production of plants and animals. Micro-organism and non-biological and microbiological

processes are, however, the subject-matter of protection. The provision also obliges Members

to provide for the protection of plants varieties either by patents or by an effective sui generis

system or by any combination thereof. While plant varieties are patentable at present in only

a few countries, the UPOV Convention (Union Pour la Protection des Obtentions Vegetales)

is the main example of sui-generis protection. For example, being member of UPOV

Convention, 1961, the Indian law, viz., The Protection of Plant Varieties and Farmer’s Rights

Act, 2001 is an example of sui generis law in such direction to protect, not only the new plant

varieties but also the plant breeders.

Article 27(3) (b) became a subject of review under the TRIPS Council on January1, 1999.

However, substantive negotiations did not take place and the matter, thus, has to be addressed

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under the Doha Development Agenda (DDA). This is the only provision in the TRIPS

Agreement which was subject to early review, that is, four years after the entry into force of

the Agreement that established the WTO.

Though, the protection of plant varieties may be either done by patent protection or by an

effective sui-generis system or by combination of both, but all WTO Members are bound to

protect plant varieties in an effective manner.

5.5.1 Rights Conferred to Patent Owner :

Article 28 sets forth the rights that a patent should confer to its title-holder by referring to two

traditional categories of inventions: products and processes. Such rights are defined in a

negative way as they prevent certain acts relating to the invention. Article 28 confers

exclusive rights to the owner of a product or process patent.

Article 28(1) (a) confers on the owner of a product patent the exclusive right to prevent third

parties, who do not obtain their consent, from making, using, offering for sale, selling or

importing that product. While this provision expressly refers to the importation as one of the

exclusive rights to the patent holder, in a footnote to the same article a cross-reference is

made to Article 6 of the TRIPS Agreement, which allows members to provide for the

international exhaustion of intellectual property rights, subject to the national and most-

favoured-nation treatment.

On the other hand, Article 28(1) (b) describes the acts that can be prevented by the owner of a

process patent. It provides that the patent owner must have exclusive right to prevent the third

parties from using the process and from using, offering for sale, selling or importing for these

purposes the product obtained directly by that process. It provides for the extension of the

protection conferred on a process to the product obtained directly by that process. This

process implies a substantial firming up of patent rights derived from process inventions.

Process patents are generally deemed to include methods of making a product. However, the

extension of protection from the process to the product should not be applied in cases where

the final product is not patentable, such as in case of plants and animals.

Further Article 28(2) of TRIPS Agreement gives a right to patent holders to transfer their

patent and enter into licensing contracts. Thus for the purpose of proper exploitation and for

monetary gain, the owner of the product or process patent can transfer his right by succession

or assignment or enter into contracts thereby giving licenses to others. Thus a patent is an

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economic asset that may be licensed, assigned or transferred by succession. Many patent laws

explicitly refer to the said acts.

5.5.2 Disclosure of Patent:

Article 29 clarifies the conditions for the grant of a patent, requiring disclosure of the

invention in the patent application in a manner that enables a person skilled in the art to carry

out the invention. Members are permitted to require in addition, disclosure of the best mode

known to the inventor at the filing or priority date. Thus the disclosure of the patented

invention is one of the basic principles of patent law. Members must ensure that such a

disclosure is made in a manner sufficiently clear and complete for the invention to be carried

out by a person skilled in the art. This is in line with the requirement already provided in

various national legislations.

However, one of the important problems relating to the disclosure of biological materials,

that cannot be fully described, has not been explicitly mentioned in this provision of TRIPS,

but the requirement of sufficient disclosure applies. Members should implement mechanism

such as the deposit of the relevant samples, and define the rules under which third parties

may obtain access to them.

An amendment to Article 29 of the TRIPS Agreement was proposed by a group of

developing countries, in order to introduce an obligation to disclose the origin of biological

resources in patent applications.69

Further Article 29(2) authorizes the member countries to make request from applicants or

patentees regarding information concerning their corresponding foreign applications and

grants. This kind of obligation, if imposed, may facilitate the examination of applications as

well as subsequent decisions on the invalidation or revocation of patents. Access to the

information on decisions taken in other country regarding acceptance or rejection of patent

application may be of particular importance for patent offices and courts in developing

countries, which in general lack staff and resources adequately to fulfill their tasks, thereby

making their work easier to complete their search for prior art.

5.5.3 Exceptions to Exclusive Rights Conferred:

Article 30 allows Members to grant limited exceptions to the right conferred, with a view to

balancing the need for protection against the advantages of leaving the matter partly in the

�� 69

Supra, Carlos M. Correa, ‘Patent Rights” at 243.�

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public domain. However, the exception must be limited, and must not unreasonably conflict

with normal exploitation of the patent and finally not unreasonably prejudice the legitimate

interests of the patent owner, taking account of the legitimate interests of third parties.

Article 30 stipulates three conditions that must be met with while providing for exceptions to

the patent exclusive rights, to the title-holder, so as to be TRIPS consistent:

• Exceptions must be limited.

• They should not unreasonably conflict with a normal exploitation of the patent; and

• Exceptions should not unreasonably prejudice the legitimate interests of the patent

owner.

The above conditions are to be provided by the member countries, however, taking account

of the legitimate interests of third parties.

Thus under this provision, there is a considerable freedom for enacting national laws to

define the kind and extent of exceptions to be granted.

5.5.4 Government Use, Compulsory Licensing and Dependent Patents:

Article 31 deals with three major issues, viz., government use, compulsory licensing and

dependent patents. Article 31(a) explains the use of the subject -matter of patent without the

consent or authorization of the patent holder, which can be done when the government is

satisfied and allows such authorization on the basis of individual merit, without requiring the

applicant to seek authorization. Thus decision on compulsory licenses cannot be based on

general rules but on the consideration of each application on its individual merits.

Thus the National legislation of a Member should allow the other use of the subject matter of

patent without authorization of the patent holder on individual basis and not on the general

basis.

Article 31(b) obliges government officials to promptly inform the right holder on account of

issuance of compulsory license without authorization of title-holder in the patent, thereby

allowing the patentee to claim remuneration and other rights granted under Article 31.

However, prior to granting the license, the proposed licensee for the grant of compulsory

license, should have made efforts to obtain authorization for exploitation of the said patent in

question from the right holder on reasonable terms and conditions, provided such efforts have

failed on the part of the patent holder within reasonable time period.

Moreover, this requirement of making efforts to obtain authorization does not hold good in

cases of national emergency or other circumstances of extreme urgency; in those of public

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non-commercial use and where a license is granted to remedy anti-competitive practices. In

the case of national emergency or the other circumstances of extreme urgency, the patent

holder, however, should be notified as soon as reasonably practicable. In the case of

government use, the title holder of a patent should be intimated when there are demonstrative

grounds that his patent is or will be used.

Article 31 (c) clearly stipulates that the scope and duration of the authorization shall be

limited to the purpose for which it is authorized. In order to be effective, a compulsory

license should be granted for such period that gives sufficient time to the licensee to make

and recover necessary investments in productions or marketing. But sometimes for the

benefit of the general public, so that the product is easily available and at cheap prices,

license for the lifetime may be authorized. However, the Agreement does not limit the

purpose for which a compulsory license can be granted. Thus, it can be granted to import or

to produce locally a patented product. The authorization could also allow the importation of a

product directly made with a patented process. An authorization shall be non-exclusive and

others depending upon their merits and circumstances may be given license. The

authorization shall also be non- assignable. The licensee after authorization cannot further

assign this right, except to the enterprise or that part of goodwill which enjoys such use. Thus

enterprises using it can enjoy the use of it.

One of the provisions contained in Article 31(f) of TRIPS Agreement which imposed a

restriction to the countries for the exploitation of the patents, for which compulsory license

has been granted, prior to Doha Declaration 2001 and its waiver in 2003, became a great

controversial issue during Doha Round, in case of supply of medicines by the developing

countries to the least developed countries. In general the said provision requires that the

license must be authorized by the Member predominantly for the supply of the domestic

market and only be allowed while the circumstances giving rise to the license still prevail.

Further, Article 31(g) provides for the termination of a compulsory license when the

circumstances which led to it cease to exist and are unlikely to occur again. The competent

authorities shall have the power to review, upon motivated request, the circumstances that led

to issuance of compulsory license and to admit or refuse a request to terminate the license

accordingly.However, such termination of compulsory license is subject to the adequate

protection of the legitimate interests of the persons authorized to use of invention. Moreover,

if not reasonably applied, this provision may deprive the compulsory license system of all

effectiveness, as nobody would like to invest on a thing for which license could be terminated

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at any time. Thus, the legitimate interests of the licensee should be taken into consideration

where the circumstances that necessitated the issuance of such license have not ceased to

exist and also the licensee had made serious preparations to exploit the invention.

Article 31(h) contains a provision for remuneration keeping into account the economic value

of such authorization in each case. It requires sufficient remuneration to be paid to the patent

right holder, which has to be determined in each individual case, taking into account the

circumstances of the licensee and of the market where it operates, as well as the purpose of

the license. Article 31(i) contains a remedy for the patent holder in case of grant of

compulsory license. It provides right to the patent holder to file a petition for judicial review

or other independent review by a higher authority against the authorization of compulsory

license by the government. In addition to the provision for raising voice against authorization

of compulsory license, Article 31(j) gives the patent holder a right to make a petition before

the judicial body or other higher authority for independent review in case the remuneration

settled is inadequate or unreasonable.

Article 31(k) specifies that the requirements for authorization as stipulated under Article

31(b) and supply in domestic market under Article 31(f) need not be compiled with by the

members when such use is for the purpose of remedying a practice determined after judicial

or administrative process to be anti-competitive. Further it provides that for the purpose of

determining the remuneration in such cases, the need to correct anti-competitive practices

may also be taken into account. And the competent authorities in such cases may also refuse

termination of compulsory license when they are of the opinion that such circumstances are

likely to occur again.

The issue of dependent patents is addressed in Article 31(l) of the TRIPS Agreement. In some

cases, a patent is based on some prior, protected invention. It is therefore, dependent since it

cannot be exploited without recourse to the older patent, and thus requires a license to work.

Article 31(l) requires compulsory licensing in case if use of the patent cannot to be agreed.

Three additional conditions need to be met: the second patent must involve an important

technical advance of considerable economic significance, (ii) the owner of the first patent

must be allowed to receive a cross-license on reasonable terms on the second patent, and (iii)

the first patent may not be assigned except with the assignment of the second patent.

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5.5.5 Revocation or Forfeiture of a Patent:

Article 32 of the TRIPS Agreement affords an opportunity of judicial review for any decision

to revoke or forfeit a patent. The grounds for revocation or forfeiture of a patent, however,

can be determined by the national law. Article 5A of the Paris Convention provides for one of

such possible grounds, when the patent rights have been abused. Various grounds such as

lack of novelty, non- inventiveness, non- patentable invention, etc., have been invoked in

many countries to revoke the patent.

5.5.6 Term of Protection of Patents:

Article 33 of TRIPS Agreement contains a provision providing for term of protection. The

minimum term of protection of a patent under Article 33 is twenty years from the filing of the

patent application. However there is no obligation to extend the patent rights beyond this

term, even if the patent holder has failed to exploit the invention during that period after

filing the application. However, some domestic laws and Free Trade Agreements established

by the US with a number of countries, do provide for an extension of the patent term in order

to compensate for delays in examination of the patent application and in procedures for the

marketing approval of a pharmaceutical product . The Indian Patent laws provide for twenty

years protection, for both the process and product patents, from the date of filing of the

application.

5.5.7 Burden of Proof in Process Patents:

Article 34 includes a reversal of the burden of proof in the case of process patents. It

generally is very difficult for the patent owner to demonstrate that another product has been

produced using the same patented process, as it has no lawful access to the premises and

undisclosed information of the competitor.

Article 34 provides for reversal of burden of proof in civil litigation concerning patents. This

provision significantly increases the legal powers conferred by process patents. It provides

that the judicial authorities should have the power to order the defendant to prove that the

process to obtain an identical product is different from the patented process. Article 34 gives

meaning to this provision by adding a presumption that any identical product when produced

without the consent of the patent owner shall in absence of proof to the contrary, be supposed

to have been acquired by the patented process. Member countries are obliged to apply this

presumption in either of the following cases:

• When the product acquired by the patented process is new ; or

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• When there is possibility of such a nature that identical product was made by the

process and the owner of the patent could not have been in a position after applying

reasonable efforts to conclude the process actually used.

The first option limits the scope of the reversal of burden of proof to new products while the

second one would apply to any new product independently from its newness. Thus Article

34(2) reverses the burden of proof on the infringer or the defendant only when the

infringement fulfills the provisions contained in Article 34(a) or 34(b) of TRIPS Agreement.

However, when evidence contrary to the right of the patent holder is established, then the

legitimate interests of the defendant must be taken into consideration so as to protect their

manufacturing and business secrets.70 Thus the implementation and actual application of

Article 34 should be made very cautiously so as to protect the interest of patent holder in case

of infringement, or that of the defendants if proved contrary to the obligation raised by the

patent holder.

5.6 Layout-Designs (Topographies) of Integrated Circuits:

Article 35 to 38, conatined in Section 6 of Part II of the TRIPS Agreement deals with Layout-

Designs of Integrated Circuits. The making of special rights for the layout designs of

integrated circuits was in reaction to the requirements of an industry that was promptly

growing in the 1980s. Instead of protecting these products by means of existing forms, such

as patent, copyright or industrial designs, the view prevailed that a separate instrument be

created to protect the layout-designs in integrated circuits, which are highly functional and

help to reduce the sizes or increase the functions of integrated circuits incorporated in the

semi-conductor chips.71 These chips are used in computers, electric irons, washing machines,

automobiles, etc. As such, designs are the result of huge financial investment and also require

a high degree of skill, their protection was demanded separately from the existing froms of

intellectual property areas. Consequently, at the international level, this approach was merged

by Treaty on Intellectual Property in Respect of Integrated Circuits( IPIC) or the Washington

Treaty adopted on May 26, 1989. Although, the Treaty never entered into force, it was

incorporated into the TRIPS Agreement. The provisions from Article 35 to 38 implement and

support the Washington Treaty. They are of particular importance not only to the potect

topographies as such, but also for all products that include topographies.

�� 70Article 34(3) of TRIPS Agreement.�


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Article 35 defines the relation of TRIPS Agreement to the IPIC Treaty. It requires Members

countries to protect the layout-designs of integrated circuits in accorance with the provisions

of the Washington Treaty. The provisions on compulsory licenses of IPIC Treaty, as

contained in its Article 6(3) has been excluded by TRIPS Agreement from the list of

mandatory international minimum standards. Moreover, adherence to Article 2 through 7,

Article 12 and 16(3) of the IPIC Treaty has been specifically stipulated in Article 35 of

TRIPS Agreement. Article 2 of IPIC gives definitions of terms like ‘intergrated circuit’ and

‘layout-design’. Article 3 of IPIC deals with subject-matter of the Treaty. Article 4 of IPIC

leaves each contrcting party free to implement its obligations under the treaty through a

special or sui generis law or through its law on copyright, patents , utility models, industrial

designs, unfair competition or any other law or a combination thereof. Article 5 of IPIC deals

with ther scope of protection but, Article 6(3) of the same has been exempted from its

inclusion in TRIPS Agreement.

5.6.1 Scope of Protection of Layout Designs:

Article 36 defines the right and their broad applicability to products containing infringing

integrated circuits. The provision bans the import, sale, or distribution of unlawfully

produced designs or circuits, and applies to the many products incorporating such designs or

circuits. Thus the consent of right holder is necessary to perform any acts viz., importation,

sale, distribution for commercial purposes of layout-design, or the same acts in case of an

integrated-circuit in which protected layout-design is used or any article where such

integrated circuit is incorporated. This provision is thus contains a negative right of the title

holder, imposing limitations upon dealing with the layout-designs without authorization of

the owner of such designs.

On the other hand, Article 37 lays down various provisions where certain acts be performed

without requiring for authorization of the right holder. Article 37 excludes the genuine buyer

of counterfeited goods. Acts of embedding a layout-design into an integrated circuit, or

incorporating latter into any product, are not considered unlawful if the person performing

the act did not know or had no reasonable ground to discover while acquiring the product that

it contained an unlawfully produced layout-design. However, when such person receives a

notice to that regard by the title-holder, that person can perform such acts only after making

payment of a sum equivalent to a reasonable royalty to the right holder. This use can be

treated as same to that of the freely negotiated licence in respect of such layout-designs.

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Further Article 37(2) deals with non-voluntry licence of a layout-design or its use by or for

the government without authorization of the right holder. The Provision requires the

application of the conditions set out in subparagraph (a) through (k) of Article 31 mutatis

mutandis(by changing those things which need to be changed or the necessary changes

having been made) in the event of any non-voluntry licensing of a layout-design or its use by

or for the government without the authorization of patent holder or right holder. All

provisions of the said Article shall apply without any change in them to the layout-designs

for the purpose of granting compulsory licence or for government use without obtaining

consent for the same from the right holder.

5.6.2 Term of Protection of Layout Designs:

In Article 38, dealing with term of protection of layout designs, the term is extended from

eight to ten years from the date of filing or from the first commercial exploitation, wherever it

occurs. The countries which, make registration as an important pre-requisite for affording

protection to layout designs, are under an obligation to grant protection for a minimum period

of 10 years, either from the date of making an application for registration or form the first

commercial exploitation occuring anywhere in the world.

Article 38(2) provides that members are required to grant protection even if the layout design

does not require a registration. Thus, when commercial exploitation occurs in any part of the

world, the countries not requiring registration as a pre-requisite for granting protection, are

under an obligation to extend protection to layout-designs for a minimum period of 10 years

from the date of first commercial exploitation.

Finally, Article 38(3) of TRIPS Agreement may provide for 15 years time-period for

protecting the layout-designs. The provision further gives a free hand to the Member

countries that they can stipulate a period of 15 years, rather than 10 years as incorporated in

paragraph 1 and 2 of Article 38, after the creation of layout-designs.

5.7 Protection of Undisclosed Information:

Article 39 contained in Section 7 of Part II of the TRIPS Agreement deals with the protection

of undisclosed information. Due to wide-ranging levels of protection of undisclosed data in

various countries, and differences in approaches and standards of protection, and the

occassional lack of protection, required a more harmonized way of addressing this issue. The

question of trade secrets was one of the important issues to be dicussed in the Uruguay

Round. It was contended in the negotiations by many delegations that trade secrets and test

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data protection are not part of traditional body of intellectual property rights and, therefore,

should not be dealt within the TRIPS Agreement. However, due to protection rendered to

trade secrets under Article 10 bis of the Paris Convention, the provision regarding their

protection in the form of undisclosed information was incorporated in the TRIPS Agreement.

Article 39 of the TRIPS essentially consists of two parts. The first part deals with the concept

and definition of undisclosed information. The second part, contains in Article 39(3), specific

problems in handling research based data that must be submitted to governments to obtain

marketing approval for pharmaceutical and agriculture chemical products. Thus the TRIPS

Agreement is the first international convention expressely to require member countries to

protect indisclosed information.

Article 39(1) of the TRIPS imposes a positive obligation upon the members to provide

protection against undisclosed information while preventing unfair competition, as provided

in Article 10 bis of the Paris Convention. The Members should also protect the data

submitted to government or governmental agencies. Article 39(2) addresses the first concern,

that is concept and definition of undisclosed information. The language used in Article 39(2)

of the TRIPS Agreement to protect the undisclosed information resembles that of the

Uniform Trade Secrets Act, a widely adopted law at the local level in United States.72 The

Provision defines undisclosed information as an information that is secret, has commerciual

value because it is secret, and has been subject to reasonable steps by the person lawfully in

control of the information to keep it secret.

As far as secrecy is concerned, it is defined in terms of the absence of knowledge and of

availability to persons within the circles that normally deal with such kind of information in

question. It builds upon the professional environment of a business sector and not on the

approachability of the information to the public at large. This provisions is based upon

Article 10 bis of the Paris Convention which obligates members to take effective measures to

provide protection against unfair competition.

Article 39(2) significantly improves protection and in effect creates a specific intellectual

property right by providing that natural and property right shall have the possibility of

preventing undisclosed information lawfully within their control from being disclosed to,

acquired by, or used by others wothout their consent, which is contrary to honest commercial �� 72 Jerome H. Reichman, ‘Universal Minimum standards of Intellectual Property Protection under the TRIPS

Component of the WTO Agreement’ in Intellectual Property and International Trade: The TRIPS Agreement,

Carlos M.Correa and Abdulqwi A .Yusuf (eds.), (2008), op.cit 249 at 58.�

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practices. Footnote 10 in the TRIPS Agreement defines “a manner contrary to honest

commercial practices” in terms of minimal standard and provides that it shall mean atleast

practices such as breach of contract, breach of confidence and inducement to breach, and

includes the acquisition of undisclosed information by third parties who knew, or were

glossly negligent in failing to know, that such parctices were involved in acquisition.73

Further Article39(3) of the TRIPS Agreement addresses the second concern. It deals with the

protection of infromation required by members to be submitted to governmental authorities to

obtain marketing approval for pharmaceuticals and agriculural chemical products. This

provision obligates Members to secure fair competition among competitiors, by providing for

the protection of text data so as to prevent unfair commercial use by thrid parties. Therefore,

the government institutions in question are not obliged as a matter of law to keep the

information secret under all circumstances, provided that the data is protected against infair

commercial use.

5.8 Control of Anti-Competitive Practices in Contractual Licences:

Article 40 under Scetion 8 of Part II of the TRIPS Agreement provides for the control of anti-

competitive practices in contractual licences. Intellectual property rights are an important

basis of conractual arrangements. Thus IPRs allow the cooperation with business partners

domestically and internationally. Since such contracts may encroach on national competition

rules, and no such disciplines were aavailable in the GATT, the Members decided to include

a provision in the TRIPS Agreement and to assure minimum levels of cooperation in

addressing anti- competitive parctices. This was a particular concern of developing countries

and provision is closely connected to the principles and goals pronounced in Article 7 and 8

of the TRIPS Agreement

Article 40(1) of the Agreement recognises that some practices pertaining to licensing or

conditions relating to intellectual property rights, which prevent or control competition, may

prove harmful and have adverse effects on the trade and impede the transfer and

dissemination of technology. The two portions of this Provision should be read separately, as

licensing agreements may adversely affect the importation of final products or investment

and the transfer of technology.

�� 73ArunGoyal (ed.), WTO from Uruguay Round to Doha Legal Text of the Agreement (4th Edition, October 2005)

at 346.�

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Member states in accordance with Article 40(2), adopt measures to prevent or control

licensing practices or conditions that have the tendency to abuse the intellectual property

rights, which ultimately may have an adverse affect on competition in relevant market. This

provision requires that such measures to prevent licensing practices having tendency to affect

competition, must be consistent with other provisions of the Agreement. However, the

existence of intellectual property rights as such cannot be considered anti-competitive , while

the exercise of licensing practices governing IP rights may be anti-competitive, if it amounts

to an abuse of the IP right. Thus licensing practices having tendency to affect the IP rights

need to be kept under vigil and control. Limitations on such restrictions are difficult to define

theoretically. The provision is based upon the doctrine of abuse of rights, and extensive

restrictions of the ordinary exercise amounts to a violation of TRIPS Agreement.

Article 40(3) of TRIPS Agreement provides a mechanism whereby a member can enter into

connsultations with other members and exchange publicly available information in order to

facilitate action against anti-competitive practices. Thus it is obligatory upon the other

member to enter into consultations, whenever abuse of the national laws pertaining to anti-

competitive practices in the field of intellectual property by the national or domiciliary of

that member is made by the other member of the WTO. There is however, no obligation to

impose restrictions. Moreover, the members are obliged to protect undisclosed information

pertaining to private parties affected. This obligation is procedural in nature.

Finally, Article 40(3) provides similar consultation rights for a member whose companies are

involved in competition proceedings in the jurisdiction of another member. This is a

diplomatic form of protection which obligates the member undertaking proceedings upon

nationals or domicilaries of other member, to entertain the request for consultation made by

the member whose nationals are subjected to proceedings for infringing the laws of

regulations pertaining to competition of the other country.

6. ENFORCEMENT OF INTELLECTUAL PROPERTY RIGHTS:

Article 41 to 61 divided into five sections viz., general obligations, civil and administrative

procedures and remedies, provisional measures, special requirements related to border

measures, and criminal procedures, deal with enforcement of intellectual property rights. As

effective legal protection depends both on substantive norms and efficient and fair

administration of justice, protection of intellectual property rights is not an exception to this

rule. In many countries, implementation of rights and respect for rights fails due to lack of

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adequate and effective legal protection before administrative and judicail authorities. In case

of intellectual property, which is not known in great depth to the normal courts and also a

new field having little expertise in the developuing countries, led to the incorporation of

enforcement provisions in the field of intellectual property in TRIPS Agreement. Though

developing countries were not in favour of such provisions on the ground that the issue of

enforcement goes far beyond aspects of international trade. Moreover, the developing

couintries knew the improving enforcement would involve additional financial burdens,

which they never considered a priority in the process of their development. However, they

were incorporated in Part III of the TRIPS Agreement. These provisions may, well be

described as a body of common procedural standards for enforcement of IPRs at an

international level.

6.1 General Obligations Regarding Enforcement of TRIPS Agreement:

Article 41 contained in Section 1 of Part III of TRIPS Agreement deals with general

obligations of the Member States. Article 41 provides for a number of fundamental principles

which apply in general and to all the subsequent, more specialized provisions of Part III.

The provision makes it obligatory upon all members that in case of infringement of

intellectual property rights, enforcement proceedurs are made available under the TRIPS

Agreement. It shall also include the quick and expeditious remedies and remedies

determining future breaches. Moreover, in the second part of this provision, it is specified

that the application of procedures should not result in the imposition of barriers to the growth

of trade and should be enforced in such a manner so as not to be abused. Thus the Members

should make available the enforcement procedures under their law that permit effective

action against any act of infringement of intellectual property rights covered by the TRIPS

Agreement, including expeditions remedies which constitute a warning to further violations.

Article 40(2) of TRIPS speaks about the reasonableness of the enforcement provisions. It

provides the procedures to prevent infringment of intellectual property rights must be fair and

equitable. They must be very clear and not complicated or costly. Additionally, they should

not involve undue delays or must be applied within the reasonable time to be justified.

Standards or parameters to ascertain the fairness and equity flow in the entire length of the

Part III of TRIPS Agreement. In addition, they need to be defined by reference to general

principles of law. Thus the procedure can be said to be fair if it does not involve unwarranted

delays or involves unreasoable time limits besides or involving low costs in its application.

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Article 41(3) stipulates that the decisions in case shall be based on the merits of a case

supported by evidence on the basis of which the parties would be given an opportunity to be

heard. Moreover, the parties shall also be provided with the decision of the case without any

unreasonable delays.Moreover, the decision on the basis of merits must be supported by

reason to be made in writing. Thus decision on merits has to be speaking in nature. This

provision, however, does not prohibit the oral decisions, that may be applied primarily in the

field of rapid, provisional measures. Also the decisions on the merits must be based solely

upon evidence in respect of which the parties were offored an opportunity to be heard. These

important provisions apply to all judicial systems alike and represent the fundamental right to

be heard and their right to reasoned decision-making.

Article 41(4) requires the administrative decisions on the enforcement of intellectual property

shall not be considered final and the parties to the proceedings can file for a review of the

decision of such authorities before a court of law. Thus judicial review of administrative

decision is made available to the parties of proceedings as a matter of right. However, the

members shall not be under an obligation to provide an opportunity for review in case of

acquitals in criminal cases. This provision finds its way through Article X (3) (b) of the

GATT that provided for appeal mechanism as an obligation to its members. Thus in case of

final administrative decisions, further review before the judicial authorities is permissible. As

a judicial decision in civil matters, the Agreement is limited to a minimal standards.

Moreover, the members have been given a free hand to decide the jurisdictional limit for

making appeal in accordance with the importance of the case. However, there is no obligation

to provide for a second level of appeal. As to criminal cases, judicial review is required for

convictions, but not for acquitals.

Finally Article 41(5) of the TRIPS Agreement does not create a special obligation upon the

judicial bodies to enforce intellectual property rights above other rights available in a country.

Thus enforcement of IPRs by the judicial authorities is at par with the enforcement of law in

general. Moreover, enforcement of any IPRs in no way affects the capacity of a Member to

enforce the law in general. The two goes parallel and simultaneously. As far as the

distribution of resources for the batterment and development of nation is concerned, growth

of intellectual property cannot be prioritized over the other rights available in a country.

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6.2 Civil and Administrative Procedures and Remedies:

Article 42 to 49 of Section 2 in Part III deal with civil and administrative procedures and

remedies . These provisions further specify the concept of fair and equitable procedural

principles corresponding with well-established general rules of civil procedure.

6.2.1 Fair and Equitable Procedures:

Article 42 of the TRIPS require the observance of fair and equitable procedures while

dealing with any matter as to enforcement of IPRs. Footnote 11 of Article 42 defines ‘right

holders entitled to civil procedures’ to include federations and associations having legal

standing in accordance with domestic law. The MembersStates are under an obligation to

provide civil judicial procedures to the right holders, in case of infringement of such rights

and for the enforcement of the same. Thus the right holders can be federations or

associations, who shall be allowed to make representation by the lageal counsel. Serving of a

notice to the defendant containing full particulars, including the basis of claim, to be served

in reasonable time is obligatory upon the members. The requirement of the personal

appearance of the right holders and and defendant shall not be excessively burdensome. To

be fair, the procedure allows the parties to present documents and evidence in support of their

claims. There is an additional obligation upon the members, that they must protect the

confidential information, if the same is not prohibited under existing constitutional

requirements. Thus subject to the constitutional law of the members, the confidential

infromation of parties to the dispute needs to be protected, for a example,by making available

a summary of factual evidence to the other party.

Article 43 contains important rules on evidence. The provision obliges Members to require

parties to a dispute, based upon sufficiently corroborated claims, to produce evidence in

administrative and judicial proceedings, subject to the production of undisclosed information.

Thus where evidence is required to be produced by the opposing party which may further

strengthen the claim of other party, the Members may require the opposing party to produce

that evidence.

Article 43(2) of TRIPS gives certain powers to administrative and judicial authorities in the

event of failure to produce evidence. The provision empowers the judicial authorities to make

preliminary or final determinations, either affirmative or negative, when a party to proceeding

voluntarily or otherwise fails to provide necessary information within reasonable time period,

and that has the effect of hampering the procedure pertaining to enforcement action. The

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determination arrived at is necessarily based upon the complaint or the allegation made by the

party adversely affected or placed at loss due to the act of other party to the dispute.

However, the determination shall not be arrived at by the judicial or administrative authority

without affording an opportunity to be heard on the allegations leveled or evidence presented.

6.2.2 Injunctions:

Article 44 of TRIPS Agreement addresses the matter of injunctions which are of particular

importance in intellectual property litigation, especially in cases relating to counterfeiting or

unlawful parallel trade, where they provide a rapid remedy by preventing the erring party to

continue with the nuisance.

Article 44(1) requires the domestic laws to grant power to local judicial authorities to prevent

imminent infringements of intellectual property right. This power is necessary to stop a party

from making any further infringement, which has the tendency to affect the channels of

commerce in their jurisdiction. In particular, local judicial authorities should be empowered

immediately after customs clearance of such goods, to prevent the entry of such goods into

the channels of commerce of imported goods that infringe an intellectual property right and to

seize the infringing goods. However, Members need to extend such method to situations

where the importer did not know, or did not have reasonable grounds to know that dealing in

such subject matter would involve the infringement of an intellectual property right. In such

cases, the right holder would need to await the judgment on the merits.

Further Article 44(2) empowers the Members to limit the remedies against uses by the

government, or by parties authorized by government, without the authorization of the right

holder, by making necessary provisions for the payment of remuneration in accordance with

Article 31(h) of TRIPS. However, in cases other than these stipulated above, the remedies

provided under Part III shall apply. But, where the remedies are not in conformity with the

national law of a Member, the declaratory judgment and adequate compensation shall act as a

replacement to such remedies.

6.2.3 Damages:

Another remedy specified under Article 45 is awarding damages to compensate for an injury

to the right holder in the subject of intellectual property stipulated under the TRIPS

Agreement. Article 45(1) empowers the judicial authorities to ask for damages to be paid by

the infringer of intellectual property rights to the right holder who suffered because of such

infringing activity. It is important that the infringer must have the knowledge of the fact that

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the act done by him amounts to an infringement of a protected right or he had reasonable

grounds to know about such an infringement.

Further Article 45(2) provides that the infringer may be ordered by the judicial authorities to

pay the right holder expenses incurred upon litigation which may include appropriate

attorney’s fees as well. Wherever found appropriate, the Members may further authorize the

judicial authorities to order recovery of profits made by the infringer and/or for payment of

pre-established damages. This possibility is accessible also in cases where the infringers did

not knowingly, or with reasonable grounds to know, involve in violation of the owners’

rights.

6.2.4 Other Remedies for Infringement:

In addition to the remedies stipulated under Article 45, local authorities viz., the judicial

authorities shall have mandatory power under Article 46 to eliminate the infringing goods

from market. Article 46 of TRIPS Agreement provides for seizure of infringing goods and to

prevent the further delivery of infringing services. Moreover, instruments that predominantly

serve to create infringing goods, such as production facilities and machinery, molds,

computers, etc., used to create infringing goods, are also the subject of seizure. The judicial

authorities may authorize the removal of infringing goods and implements, which result into

production of such goods, from the channels of commerce without compensation. Subject to

the constitutional requirements of Members and the principle of proportionality, this may also

include destruction of the infringing goods. Authorities are obliged to engage in a process of

harmonizing the interests involved with a view to preventing further violations.

6.2.5 Right of Information:

Article 47 provides possibly a very effective tool for discovering the sources of infringement.

The provision empowers the judicial authorities to require the infringer to inform the right

holder about two important things viz., identity of third person involved in the production and

distribution of infringing goods or services and secondly, their channels of distribution, so as

to control the further infringement of such goods or services.

6.2.6 Indemnification of the Defendant:

Article 48 of TRIPS Agreement protects defendants interest against abusive claims and

measures opted by the applicant. Article 48(1) clearly mentions that anyone trying to abuse

the enforcement machinery that inflict unjustified restrictions and because of such procedures

the party has been wrongfully restrained of adequate compensation for injury suffered due to

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such abuse. Thus the provision is designed to deal with cases of so-called procedural

harassment where measures imposing unjustified restrictions were granted. Appropriate

remedies to compensate for damage must be made available. Accordingly, the judicial

authorities must have authority to order the applicant’s to pay the defendant’s expenses,

which may include appropriate attorney’s fees. According to Article 48(2), where unjustified

action has been taken in good faith while enforcing the intellectual property laws, the

Members may exempt both public authorities and officials from appropriate remedial

measures. Article 48(2) requires that in all those acts relating to protection and enforcement

of IPRs, even if the administrative action is unjustified, the same shall be protected if done in

good faith in the course of administration of that law.

6.2.7 Administrative Procedures:

The extent to which the civil remedy can be afforded has been provided under Article 49 that

stipulates very lucidly that the extent of civil remedy available by administrative action based

on merits must be proportionate to the principles laid down in Section 2 of Part III which

provide for fair and equitable procedures, besides other remedies.

6.3 Provisional Measures:

Provisional measures applied for and granted beyond the ordinary civil or administrative

remedies, amount to one of the most effective and important tools in enforcing intellectual

property rights. Most cases against violation, or those relating to unlawful importation and

distribution by way of parallel trade, are settled by such procedures and do not reach the stage

of ordinary and costly proceedings on the merits. Article 50 deals with such provisional

measures.

The powers granted in Article 50 are of particular importance for trademark and copyright

enforcement in the field of software protection, as the evidence of infringement can be easily

destroyed upon notice of impending measures. Article 50 is therefore, a fundamental

provision of the TRIPS Agreement. Article 50(1) makes a provision for prompt and effective

provisional measures to prevent further infringement of any IPR from occurring. The judicial

or administrative authorities, after the imported goods receive customs clearance, can

immediately ban their entry into channels of commerce. Further the authorities have a power

to preserve relevant evidence recovered from the scene of alleged infringement.

Article 50(2) empowers the judicial authorities to take appropriate measures before giving the

defendant an opportunity to be heard, that is, inaudita altera parte, where any delay in action

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would cause irreparable loss to the right holder or there is a demonstrable risk that the

evidence might be destroyed, if not procured by the authorities. Thus it is an instant remedy

to prevent infringement of intellectual property rights, where ex parte decision is made on an

application made by the owner of the right, subject to the fulfillment of certain conditions for

issuance of such immediate remedy.

Article 50(3) empowers the judicial authorities to require the right holder to produce evidence

supporting his title and evidence that his right is being infringed, or there is possibility of

such infringement, that is prima facie case; balance of convenience in his favour; and that

refusal to grant such remedy would cause irreparable injury to the applicant. Further the

authorities may order the applicant to deposit a security or equivalent assurance to protect the

right of defendant, in case the allegations leveled to not prove to be true. Article 50(4) of

TRIPS Agreement states that upon taking measures inaudita altera parte, the defendant must

be notified without any delay of the measures taken against him and must be allowed access

to judicial review within a reasonable period to decide upon maintenance, revocation or

modification of the measures. Article 50(5) obliges the applicant to provide information

required for the identification of goods concerned. This is necessary for the execution of

provisional measures by the authorities.

Article 50(6) of TRIPS stipulates that the provisional measures shall be revoked or otherwise

cease to have effect, when the proceedings on the merit, do not begin within a reasonable

time, upon the request of the defendant. Such period is to be determined by the judicial

authority ordering the provisional measure. Failing such determination, it shall not exceed 20

working days or 31 calendar days, whichever is longer.

Article 50(7) empowers the judicial authority to ask for the payment of compensation by the

right holder when due to his act, the defendant has suffered an injury on account of such

proceedings. The provision clarifies that the applicant or the right holder may be asked to

make the compensation when the provisional measures are revoked or where they lapse due

to any act or omission by the applicant or where no infringement is discovered subsequently.

Finally Article 50(8) requires that the administrative procedures must conform to the

principles stipulated in Section 3 of Part III.

6.4 Special Requirements Related to Border Measures:

Article 51 through 60 in Section 4 of Part III of TRIPS postulates special requirements

relating to the border measures. These obligations raise the standards of IPR enforcement in

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international law significantly from the optional provisions on trademarks and other industrial

property established in Article 9 to 10 ter of the Paris Convention.

Border measures operated by customs authorities are another means of enforcing intellectual

property rights. As the counterfeited goods can best be stopped at the point of importation, so

measures taken by the customs authority can be useful in preventing the entry of such goods

into channels of commerce. Especially, in case of importation of counterfeited trademark

goods, which do not include geographical indications and, pirated copyright goods, which

include goods protected by neighbouring rights, as defined in footnote 14 for Article 51, the

procedures may be adopted by the customs authorities at the time of importation. This

procedure starts when the right holder suspecting such importation makes an application with

the competent authorities; administrative or judicial, for suspension by the customs

authorities of release of such goods to be out of control of the authorities. There is no

obligation to apply this Section to patented products, industrial designs, layout designs, or

geographical indications. However, if border measures are extended to other forms; there

must be obedience with the procedures set forth in the Agreement. Additionally, Members

can also provide the same measures against infringing goods intended for export from their

territories.

Article 52 demands the production of necessary evidence to satisfy the judicial or

administrative authorities. The evidence must be produced by the right holder with an

establishment that under the importation laws of that country there appears a prima facie

infringement of IPRs. Moreover, the right holder must support his evidence by providing a

sufficiently detailed description of the goods, so that the same can be recognized as infringing

goods by the customs authorities. As stipulated earlier under Article 51 that a written

application complaining an infringement of his goods has to be made to the competent

authority, the said authority is, on the contrary, under an obligation to inform the applicant

within a reasonable time as to if his application has been accepted or not. And where the

application is accepted, the competent authorities would also inform the right holder the

period determined by the authorities within which the customs authorities would take action.

Article 53 deals with security or equivalent assurances. Article 53(1) allows authorities, both

administrative and judicial, to require a reasonable, non-deterrent security or an equivalent

assurance sufficient to safeguard the interests of the defendant and the authority and to

prevent any abuse of the system or defendants interests. However, the authorities shall not

prevent resort to the procedures on account of such security or equivalent assurance without

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any reasonable grounds. In accordance with Article 53(2) where goods involving industrial

designs, patents, layout-designs or undisclosed information are prevented from being released

by the customs authority on the basis of decision by the authority other than judicial or

independent authority, and the period of 10 days as specified under Article 55 has also

expired without granting any provisional relief, also all conditions for importation have been

complied with, then the owner or importer or consignee of protected goods shall be entitled to

the security. However, when such security is released, it shall not disentitle the right holder to

claim any other remedy.

In accordance with Article 54, both the applicant and the importer are promptly notified

regarding the suspension of the release of goods at stake. Article 55 determines the duration

of suspension of release and the relationship to proceedings on the merits. It provides for a

period not exceeding 10 working days, after the applicant has served notice of suspension of

release of alleged infringing goods by the customs authority, as a maximum time period for

release of the goods when the customs authorities are not informed about the proceedings.

The customs authorities are obliged to release the goods if they are not informed within ten

working days that the proceedings on the merits have been initiated by the applicant or that

competent judicial authority has taken provisional measures delaying the suspension of the

goods in accordance with Article 50. If the proceedings have been initiated, the defendant is

entitled to initiate review of the measure and to be heard. Measures may be subsequently

modified, revoked or confirmed within a reasonable period of time.

Article 56 deals with indemnification of the importer and the owner of the goods. In case the

claims of infringement turn wrong against the importer, consignee or the owner of the goods,

an obligation has been imposed upon the applicant to make appropriate compensation for the

injury suffered by any of them due to such wrongful detention of goods. Additionally, if the

goods are released pursuant to Article 55, the applicant has to make up the losses suffered by

the other party. Thus, the provision provides to the owner of goods for making good the

injury suffered due to wrongful detention of goods or though detention of goods released

pursuant to Article 55. Thus the members may require the applicant to pay compensation for

injury caused, by empowering the authorities to ask for the compensation to be paid on

account of such loss or injury. The Agreement does not set forth any standards and criteria to

this effect and members may base such compensation on the basis provided under their tort

law.

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Article 57 deals with the right of inspection to the right holder vis-a-vis the importer and right

of information to the right holder about the credentials of other party and the goods in

question. Under this provision, Members are obliged to grant the local authorities power to

allow the right holder to inspect the goods in question in order to authenticate its claims. The

importer shall also be afforded equivalent opportunity to inspect any such goods claimed to

be infringing goods by the right holder. The member are to authorize their authorities to

inform the right holder of the names and addresses of the consignor, the importer and the

consignor, the importer and the consignee, and of the quantity of the goods in question if a

positive determination has been made on the merits of a case.

Article 58 confers power to the competent authorities to order ex officio enforcement

measures. Article 58 provides that Members may empower the customs authority suo moto,

even without acting upon motion by applicant. The authorities may order ex officio

enforcement measures, whenever they acquire a prima facie evidence of infringement of the

IPRs. Where such powers exist, a number of safeguards must be taken care of, viz., the

authorities may demand any additional information from the right holder at any time, the

importer and right holder need to be promptly informed, or notified about the suspension of

customs clearance. This implies that the appeal procedures prepared mutatis mutandis in

accordance with Article 55 must be available to the importer. Finally, liability of both public

authorities and officials for unlawful suspension must be relaxed, but can only be excluded

for acts taken or intended in good faith. The standard provides minimum protection against

willful or negligent infringement.

Article 59 provides remedies against the infringement of intellectual property rights. The

provision renders the principles and rules of Article 46 on disposal or destruction of

infringing goods applicable to ex officio measures. It provides without prejudicing the other

rights of action to the right holder and also subject to the right of judicial review to the

defendant, the competent authorities may be authorized to destroy or dispose of the infringing

goods. In addition, the counterfeited trademark goods shall be prevented from being re-

exported without any change in such goods. Thus other than in exceptional circumstances,

counterfeit trademark goods may not be released into a third country in an unaltered state,

thus somewhat limiting the flexibility available under Article 46.

Under Article 60 Members may exclude de minimus imports from the application of the

provisions in Section 4 of Part III. The goods of non-commercial nature have been exempted

from the application of provisions of Section 4 of Part III of TRIPS Agreement. Goods in

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small quantities contained in travellers’ personal luggage or those sent in small consignments,

not meant for commercial exploitation may be exempted by the Members from proceedings

for infringement.

6.5 Criminal Procedures:

Article 61 contained in Section 5 of Part III of TRIPS Agreement deal with the provisions

relating to criminal procedures. The TRIPS Agreement contains the first generation of

criminal or penal provisions in the WTO system. Nonetheless, it leaves Members a

considerable flexibility in implementing this provision.

Article 61 provides that in case of willful trademark counterfeiting or copyright piracy on a

commercial scale, the Members have been empowered to provide for criminal procedures and

penalties. Penalties must include imprisonment and/or monetary fines. Members are obliged

to set standards of punishment consistently with penalties provided for crimes of comparable

gravity. In other words, they need to show uniformity in their criminal policies, meant for

other crimes. Penalties for other infringements, including negligent trademark or copyright

violations, are permitted, but not required. The Members must make available remedies in the

nature of seizure, forfeiture and destruction of the infringing goods and those materials,

which primarily are the source of offence. The provision does allow Members to adopt wide

criminal sanctions without bothering for the risk of facing challenges under violation or non-

violation complaints, even though the threat of such sanctions may have substantial trade-

restricting effects.

7. ACQUISITION AND MAINTENANCE OF INTELLECTUAL PROPERTY

RIGHTS:

Article 62(1) specifies that the Members may require compliance with reasonable procedures

and formalities as a pre-requisite for the acquisition or maintenance of intellectual property

rights. Further the second sentence of Article 62(1) provides that such formalities as

stipulated earlier for acquiring or maintaining IPRs must be consistent with the TRIPS

provisions. For example, for acquisition of copyright under the TRIPS Agreement, a country

cannot require a registration procedure, as the same has been excluded for the enjoyment and

exercise of copyright under Article 5(2) of the Berne Convention, which is incorporated into

the TRIPS Agreement. The procedural requirements to be complied with by persons

acquiring or maintaining the IPRs may include costs, examination, publication of interest etc.

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The Members may provide for registration of patents, designs, etc., for acquiring protection

as patents or designs.

Further Article 62(2) requires Members to grant titles within a reasonable period of time.

Where the right to acquire an intellectual property does not accrue automatically after the

property comes into being as in case of copyright, and where the acquisition is subject to

registration or grant by the appropriate authorities, as in case of patents, trademarks, designs,

etc., the titles to the intellectual property must be granted within a reasonable time so that it

may not unwarrantedly affect the period of protection. Article 62(3) specifies that the

provision of Article 4 of the Paris Convention dealing with priority rights, without any

mutation be extended to the newly protected right viz., the service marks. Article 62(4) is a

key provision as it applies the basic principles of procedural fairness, as specified under

Article 41(2) and 41(3), to all procedures of acquisition, maintenance, administrative

revocation and inter partes agreement such as opposition, revocation and cancellation of

rights. Finally Article 62(5) subjects the final administrative decisions to a review either by

judicial or quasi-judicial authorities to the extent that the matter is not open to annulment

procedures before the courts of law. Thus review of determination by an independent

administrative commission meets the requirement of this provision. The second sentence of

the provision exempts the Members from its liability to allow review by giving it a free hand

as to decide whether such opportunity for review may be afforded in cases of unsuccessful

opposition or administrative revocation. In such cases the grounds are open to invalidation

procedures.

8. DISPUTE PREVENTION AND SETTLEMENT:

Articles 63 and 64 of the TRIPS Agreement deal with the prevention of disputes and their

settlement under Part-V. The TRIPS Agreement is the first to provide tools and instruments

to interpret and enforce the international standards of protection for intellectual property

between States. Up to this point, the existing channel to International Court of Justice has

never been invoked, and any effort to bring dispute settlement within the sphere of WIPO

proved unsuccessful even for matters relating to registration of patent, trademark and design

rights under the respective international cooperation agreements.74

�� 74 Fredrick M. Abbott, ‘The Future of the Multilateral Trading System in the Context of TRIPS’, 20 Hastings

International and Comparative Law Review 661 (1997).�

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Article 63(1) lays emphasis upon the transparency of the system and establishes that same is

reflected by publication of laws and regulations, and final judicial decisions and

administrative rulings of general application, which are made effective by the Member

pertaining to the subject matter contained in this Agreement. These regulations or decisions

shall be published in a national language, if the same cannot be made available publicly. The

same is required to familiarize the governments and right holders about the law enacted or

interpreted with respect to IPRs. This makes the system really transparent. Moreover, the

agreements pertaining to intellectual property rights between the government or a

governmental agency of a Member and the government or a governmental agency of another

Member shall also be published so that the persons dealing with subject should have

knowledge of the same and do not result into violation of the provisions of such agreements.

Additionally, Article 63(2) makes it obligatory upon the Members to notify the laws and

regulation to the Council of TRIPS to aid the Council in reviewing the working of this

Agreement. However, the Members may be exempted from this obligation by the Council, if

they are successful in establishing a common register with World Intellectual Property

Organization (WIPO). Moreover, it is also within the exclusive ambit of the Council to

require the Member to provide notifications made by the Member pursuant to Article 6 ter of

the Paris Convention.

Other Members of the WTO can have an access to the laws and regulations of the other

Member countries. In this regard, Article 63(3) obligates a Member to supply information

pertaining to laws and regulations and administrative or judicial decision, on a written request

to the other Member of the WTO. Moreover, if any of the above specified subjects affects the

rights of the other Member, that Member has every right to be informed of the details of the

same on making a request in writing to that Member. Article 63(4) clearly requires that the

information asked for by other Members, cannot compel the other to provide confidential

information, the disclosure of which would impede law enforcement or is against the public

interest or has a tendency to affect legitimate commercial interests of any enterprise

specifically or public or private interests.

The WTO Dispute Settlement Understanding fully applies to the TRIPS Agreement. Article

64(1) of the TRIPS Agreement contains a provision to this effect. In accordance with Article

64(1) Article XXII and XXIII of GATT 1994 as applied by the Dispute Settlement

Understanding (DSU) of the WTO shall be applied to consultations ands dispute settlements

under TRIPS Agreement, except where provided otherwise. As the substantive obligations of

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developing countries applied after 1 January 2000, thus after this many disputes arose that

involved North-North issues pertaining to the TRIPS Agreement. As of August 2003, out of

299 complaints, twenty-four (16.5 percent) were related to the TRIPS Agreement.75 As of 9

May 2011, out of 424 disputes brought before the Dispute Settlement Body, the TRIPS

Agreement was cited in 29 cases where requests for consultations were made.76

Further Article 64(2) provides that WTO DSU would settle complaints and disputes

pertaining to the TRIPS Agreement subject to initial restrictions on non-violation complaints.

Under Article 64(2) complaints may be filed not only with respect to violations of the

Agreement but also, after a period of five years from the entry into force of the Agreement,

with respect to measures that do not violate specific rights or obligations of the

Agreement,but which disturb legitimate expectations under the so-called non-violation rule of

Article XXIII (1)(b) and (c) of GATT.77

Further under Article 64(3) of the TRIPS Agreement, the five year period of non-availability

of non-violation complaints as stipulated in Article 64(2) could only be extended by a

consensus of the Ministerial Conference. As no explicit decision was taken up by the

Ministerial Conference to extend the period beyond five years to extend the suspension of

GATT provision under Article XXIII (1) (b) and (c), thus non-violation complaints appeared

to be available as of the year 2001. However, in the Decision on Implementation – related

Issues and concerns, adopted at the Doha Ministerial Conference in 2002, Members agreed

not to begin with the non-violation complaints for a further period of two years, while

instructing the Council for TRIPS to continue its examination of the scope and modalities of

such complaints.78 Hence, the status of non- violation complaints, when as such there is no

direct law enforced by the Member countries that violates the TRIPS provisions, but affects

the interests related to IPRs. The issue still remains controversial and unsettled.

�� 75

Supra, Patric F. J. Macrory et al, at 1110.�

76 World Trade Organization, Dispute Settlement: The Disputes, Available at:

http://www.wto.org/english/tratop_e/dispu_e/dispu_status_e.htm (last visited: 9 May 2011).�

77G. E. Evans, ‘A Preliminary Excursion into TRIPS and Non-Violation Complaints’, 3 Journal of World

Intellectual Property 868 (2000).�

78International Centre for Trade and Sustainable Development (ICTSD) and International Institute for

Sustainable Development (IISD), Doha Round Series – Developments since the Fourth WTO Ministerial

Conference, Vol. 1 No. 5 of 13 February 2003, at 3.

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9. TRANSITITIONAL ARRANGEMENTS FOR IMPLEMENTATION OF TRIPS

AGREEMENT:

Article 65 through 67 deals with the transitional arrangements where Members were granted

time period specified under its various provisions depending upon the status of different

economies for introducing minimum standards set forth in the TRIPS agreement into their

national laws in the field of intellectual property.

Under Article 65(1) all Members, including the developed countries, were given a general

transition period of one year to implement the provisions of the TRIPS Agreement from the

date of entry into force of the WTO Agreement, i.e., 1 January 1995. Thus no member was

under an obligation to apply the provisions of the TRIPS Agreement before the minimum

time frame of one year.

Article 65(2) of the TRIPS Agreement is an exception to the general rule of one year,

stipulated under Article 65(1). Under the provision, developing countries were given a total

period of five years from the date of entry into force of the WTO Agreement for applying the

provisions of the TRIPS Agreement, that is ,1 January 2000. But such exemption for a further

period of four years was not granted in case of the application of principles of national

treatment, most favoured nation treatment (MFN clause) and their exemption in case of

multilateral agreements concluded under the auspices of WIPO relating to acquisition or

maintenance of intellectual property rights provided under Article 3, 4 and 5 of the TRIPS

Agreement respectively.

Article 65(3) further provided an additional period of four years to the Members undergoing

the phase of transformation to market, free enterprise economy and in the stage of structural

reform to their intellectual property system and also facing troubles in the preparation and

implement IP laws and regulations.

Under Article 65(4), in addition to the period of five years as provided under Article 65(2)

until 1 January 2000, the developing countries were given more extension for a period of five

years, that is, until 1 January 2005, to provide for product patent in addition to the process

patent protection in their territories to the areas of technology not so protected before that

period. Thus, the developing countries could delay for a further period of five years

application of the obligation to make product patents available for those areas of technology

not protected by product patents in their territories on the date of general application of the

TRIPS Agreement.

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Article 65(5) very lucidly stipulates that amendments made to the national laws relating to

intellectual property, by a Member State should be fully consistent with the provisions of the

TRIPS Agreement. Thus all the Members during their transitional phase of transformation to

the IP laws were required to provide for provisions consistent to an equal degree with that of

the TRIPS Agreement.

9.1 Least Developed Countries:

For least developed countries (LDCs), Article 66 only requires the basic principles of non-

discrimination to be made applicable in these countries as of the entry into force of the

Agreement. Article 66(1) provides that the least developed countries due to their economic,

financial and administrative hurdles were accorded an additional period of 10 years from the

date of entry into force of the WTO Agreement. But the provisions of national treatment,

MFN treatment and non-extension of national treatment and MFN treatment in case of

multilateral agreements concluded under the WIPO relating to acquisition or maintenance of

IPRs under Article 3, 4 and 5 were not exempted from their incorporation into their national

legislations on IPRs. Thus until 1 January 2011, the LDCs were required to incorporate

provisions under this Agreement to their national laws relating to IPRs to make them TRIPS

complaint. However, the Council for TRIPS has been empowered to extend the period of

transition beyond the term of ten years on their request, which has further been extended up

to 2016 during the Doha Round of negotiations initiated in 2001.

Article 66(2) imposes an obligation upon the Members of Developed nations to make

arrangements for the transfer of technology to LDCs in order to enable them to establish a

sound and viable technological base, by providing incentives to enterprises and institutions in

their territories. From such enterprises flow of technology shall be made to LDCs so that they

become technological strong and viable to participate in the level playing field, that is, the

WTO.

Thus under Article 66, which pertains to transitional period for LDCs, the general deadline

for implementation of the TRIPS Agreement originally, was scheduled for 1 January 2006.

However, it was extended for pharmaceuticals by the Doha Ministerial Declaration for the

group of least developed countries until the year 201679 whereby, the implementation may be

further delayed. Article 67 contains provision regarding the technical cooperation to be

provided by the developed countries. The provision explains the concept of technical and

�� 79

Supra, Declaration on the TRIPS Agreement and Public Health, at paragraph 7.�

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financial assistance that the developed countries, on request, would provide to developing and

least developed countries, in order to facilitate the implementation of this Agreement. The

technical cooperation anticipates help in preparation of laws and regulations needed to protect

and enforce the IPRs as well as to prevent their abuse. Additionally, the developed Member

countries were also required to provide support to establish or strengthen domestic offices

and agencies relevant to the subject and would also provide training to personnel for effective

enforcement and implementation of laws and regulations.

10. INSTITUTIONAL ARRANGEMENTS:

Article 68 through 73 of Part-VII of the TRIPS Agreement addresses the miscellaneous

issues.

Article 68 of the TRIPS Agreement establishes the TRIPS Council in parallel to the Councils

on Goods and Services. The Council of Trade-Related Aspects of Intellectual Property

Rights, that is, TRIPS Council has been established under the Agreement to act as a

monitoring body to look into the proper operation of the TRIPS Agreement. It shall see that

all the Members conform to the provisions of this Agreement. Further it also acts as a

consulting body for all the matters relating to trade-related aspects of intellectual property

rights. Any other added responsibility can also be imposed upon the TRIPS Council by the

Members of the WTO, especially, to provide assistance and support so for as the dispute

settlement procedures are concerned. While working, the TRIPS Council can seek

information and consult any source or organization including the WIPO.

The TRIPS Council consists of Delegates of Members, generally on the level of diplomatic

counselors and specialists, and is chaired by one of the ambassadors accredited to the WTO.

Further Article 69 incorporates the principle of international cooperation to fight with the

international trade practices in goods encroach on intellectual property rights. For the purpose

of dealing with such an infringement of the subject matter covered by the Agreement, the

Members shall establish and notify administrative authorities competent to deal with the

subject and shall provide information on trade in case of such infringements. The customs

authorities shall also be provided with information desired by them pertaining to trade in

counterfeiting trademark goods and pirated copyright goods, and the Members shall fully

cooperate with them while dealing with such goods.

Article 70 extends protection to the existing subject matter and does not extend its application

retrospectively. The provision speaks about the time of application of the Agreement and

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provides that the obligation of the Members shall begin from the date on which the

Agreement comes into force and the prior acts shall not be covered by the Agreement. Thus

subject matter which came into being on 1 January 1995 or subsequently would fall within

the ambit of the TRIPS Agreement.

The obligation under Article 70(2) of the TRIPS Agreement arises for a Member for all the

subject matters existing at the date of its application. The obligation to safeguard the subject

matter protected by the Member in its territory, has also been extended from that period of

application of the Agreement. The future subject matters, not protected under, if met the

requisites for protection under the Agreement are also subjects of protection. However the

copyright obligation with respect to the existing works shall be entirely determined under

Article 18 of the Berne Convention. Also the subject matter dealt in under the title ‘related’

or ‘neighbouring rights’, that is, rights of producers of phonograms and performers in

existing phonograms shall also be determined entirely by Article 18 of the Berne Convention,

the related rights dealt in under Article 14(6) of the TRIPS Agreement.

Article 70(3) of TRIPS Agreement explains that the subject matter which has fallen into the

public domain, that is, where the protection period has expired before coming into force of

the Agreement or was not protected under the national laws of the Member countries,

consequently, cannot be protected under the TRIPS Agreement.

Article 70(4) stipulates that when the specific objects which embody the protected subject

matter, due to certain acts lead to infringement before the country has accepted the WTO

Agreement, the other Members may provide for limitation of remedies for such infringement,

as its continued infringement would affect the rights of the title or right holder. In such cases,

at least equitable remuneration should be paid.

Article 70(5) lay down that the provisions contained in Articles 11 and 14(4) of the TRIPS

Agreement, relating to rental rights in respect of computer programs and cinematographic

works and equitable remuneration of right holders in respect of rental of phonograms, shall

not be applied to the originals or copies of the same purchased before the date of application

of this Agreement. Thus the Members are not under an obligation to apply the provisions of

Articles 11 and 14(4) of the TRIPS so as to protect the existing originals of copies of

aforesaid work.

Article 70(6) further explains that Members were not under an obligation to apply provisions

of Article 31 or Article 27(1), dealing with use of patent without authorization by the patent

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holder or enjoyment of the patent right by the holder of that right or the assignee or the

licensee without discrimination as to the field of technology. They were free not to comply

with the provisions of Article 27(1) or 31 of TRIPS before the date of application of this

Agreement.

Under Article 70(7) the Members were allowed to avail of any enhanced protection granted

under this Agreement, in case the application for protection requiring registration were

pending at the date of application of the Agreement. However, it is only the extended

protection that can be claimed in respect of same matter for which application had been

made, and not in case of any new matter.

Article 70(8) obliged the developing country Members who were having no provision in

their national laws protecting product patent for pharmaceuticals and agricultural chemical

products at the date of entry into force of the WTO, to provide for “mail-box” provisions for

the purpose of filing up of applications for patent protection for such products, that is, they

were required to entertain the applications for the product patents till the incorporation of the

product patent provision for the grant of patents. Thus, the provisions making transitional

arrangements for the amendment and implementation of IP laws in their territories would not

be limitation in the process of filing of such application under Article 70(8) (a) of the TRIPS

Agreement. Further Article 70(8) (b) obliged the Member to apply the criteria for

patentability as stipulated under this Agreement, and also allow the claim of priority for such

applications made under mail-box provision. Finally, Article 70(8) (c) obliged the Members

to provide patent protection from the date of grant of patent and for the existing patents from

the date of filing of application for grant of patent in accordance with Article 33 of the TRIPS

Agreement, provided those applications met the criteria for protection under Article 70(8) (b).

Provision contained under Article 70(8) (a) had been invoked against India before the

Dispute Settlement Body by the US and European Union.

Finally Article 70(9) of the TRIPS Agreement obliged the Member to provide exclusive

marketing rights (EMRs) for a period of five years after obtaining marketing approval in that

country, where the application was made under mail-box provisions. However the period of

five years was to come to an end when product patent was granted or rejected, whichever

period was shorter. However, the EMR provision for mail-box applications could be invoked

only if after the entry into force of the WTO Agreement, an application for such product

patent had been made and such product had been granted patent and marketing approach

sought in another Member of the World Trade Organization (WTO).This provision was also

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contested against India by the EU prior to 2005, when India introduced the product patent in

its national laws.

10.1 Review and Amendment:

Article 71 deals with review and amendments. Beyond its administrative works, the TRIPS

Council plays an important role in negotiations taking place in the WTO on intellectual

property.

Article 71(1) implies powers to negotiate in the light of new developments which might

warrant modification or amendment of this Agreement. Thus after the expiry of transition

period of 5 years in total, stipulated under Article 65(2), the TRIPS Council became

competent to review the implementation of the TRIPS Agreement. Further review was

required to be held after every two years from the date of first review. However, if any new

development takes place in the field of intellectual property, which requires certain

modifications or amendment to the TRIPS Agreement, the review may be held earlier than

the period of two years, as stipulated above. To the extent that modification, stipulated under

Article 71(1) consist of merely adjusting to the higher levels of protection achieved in other

multilateral agreements in force and accepted by all Members, Article 71(2) of the TRIPS

Agreement allows for facilitated adoption in accordance with Article X(6) of the WTO

Agreement based upon a consensus proposal by the TRIPS Council.

Article 72 stipulates that the TRIPS Agreement cannot be accompanied by unilateral

reservations unless the consent for such reservations in respect of any provision in the TRIPS

Agreement is given by the other Members of WTO.

Finally, Article 73 of the TRIPS dealt with security exceptions. The TRIPS Agreement does

not impose any kind of obligation upon the Members to disclose any information against their

security interests or to initiate any action necessary for protection of their security interests

relating to fissionable materials or the materials from which they are derived, that is, they

cannot be prevented to take any measure in their security interest if the same is threatened or

there is an imminent danger to it from atomic energy materials. Again Members, in order to

protect their security interest relating to traffic in arms, ammunition or implements of war

shall not be required to furnish any information, or not be prevented from taking any action

which it considers appropriate. Further it can also take action during the war or emergency in

international relations. Finally, the TRIPS Agreement cannot prevent a Member to take action

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for the maintenance of peace and security, one of the purposes of the United Nations, which it

is obliged to uphold.

During the first ten years after the adoption of the TRIPS Agreement, intellectual property

protection has emerged as one of the fields on which other matters of the multilateral trading

system have rested. It proved to be an important link between industrialized countries, and

has made stronger the potential for protection and enforcement of defined rights. It has

worked well and strengthened the global system of intellectual property protection. Though,

the TRIPS Agreement remains a major uncertain block for many developing countries.

Despite the fact that most developing countries had fairly well-developed copyright and

trademark laws and lucid patent laws prior to the adoption of the TRIPS Agreement and are

supported technically, the implementation and enforcement of intellectual property still

remains a major problem for such countries. The patent rights, primarily remain, the interest

of industrialized countries where they demand for more protection. However, a proper

application of all its provisions, including those relating to social and developmental goals,

could serve the long-term interest of developing countries in fostering intellectual property

protection.

Due to the controversial nature of the patents, especially the protection to the product patents

to be extended by the developing countries till 1 January 2005, which anticipated huge

economic loss and also danger of the aggravation of health problems due to expected rise in

the price of life saving drugs, needs a special analysis. Also the introduction of new field,

viz., Geographical Indications (GIs), which was altogether a new field for most of the

developing countries and the debate of extension of GI protection to other goods, other that

wines and spirits, requires a further insight in to the issue so as to find if the GI protection

was really beneficial for the developing countries. The role played by the Dispute Settlement

Body in applying the provisions of TRIPS Agreement in a very transparent manner and its

easy accessibility by the Member countries, especially the developing countries, who had to

succumb to the pressures exerted by the developed countries under the GATT regime or due

to the lack of teeth for effective enforcement by the WIPO, also needs a special reference.

These three areas, viz., Patents, GIs and Dispute settlement have been discussed in the

subsequent chapters.

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CHAPTER- III

PATENTS AND TRIPS

The TRIPS Agreement provides minimum standards for the protection of IPRs within all

WTO members. However, such standards are considerably very detailed in the patent field.

The aim of TRIPS is not harmonization, but fixing minimum standards. The TRIPS do not

create a uniform law, but preserves a certain degree of freedom to legislate at the national

level. The way in which the agreement is implemented has important implications for

developing countries, regarding the conditions and access to technology and their economic

and social development.

Patents are a part of intellectual property, which is a legal way to protect all creations of the

human mind. The word ‘patent’ has originated from the Latin word ‘patente’, which means

‘to open’. In some European languages the word ‘patent’ has been used in two senses1: one

is to mean a ‘document’ which is called ‘patent’, the other is the ‘letters of patent’ which

means the content of the protection which is provided by the patent to confer on the

concerned person or individual private or corporate body. Patent may be defined as an

exclusive right granted by the State for an invention that is either a new product or process,

involving inventive step and capable of industrial application.2 Patent, therefore, gives its

owner the exclusive right to prevent others from making, using, selling or importing a

product or a process based on the patented invention, without the owner’s prior permission.3

A patent is a territorial right, which is restricted to the geographical limits of a specific

country or region. It is granted by a national patent office of a country or a regional patent

office for a group of countries, generallyfor 20 years from the date of the filing of the patent

application, and requires payment of maintenance fees or renewal fees at specified intervals

under the rules specified by the concerned country.

In the course of multilateral negotiations to revise the Paris Convention that preceded the

Uruguay Round, the developed countries wanted to raise standards concerning patentable

inventions, while the developing countries desired for certain preferential measures to be

adopted. The TRIPS Agreement breaks this deadlock and fills many of the gaps in the

�� 1R. K. Nagaranjan, Intellectual Property Law, (2007, 3rd Edition); at 140.�

2Article 27(1) of TRIPS Agreement.�

3 M.M.S. Karki, Intellectual Property Rights: Basic Concepts, (2009) at 109. �

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internal patent system with uniform minimum standards of protection that reflect the

practices of the developed countries.4

1. ORIGIN OF PATENTS:

The exact origin of the patent system is not well known. Originally, the term ‘patent’ was

used to designate the document known as ‘letters patent’, by which a sovereign conferred a

privilege or right on someone. There are reports that the patent system was introduced around

fifteenth century in Italy. However, the first known patent, as suggested by some evidence

that something like patents were used among some Greek cities, granted by a State to an

inventor, FiloppoBrunelleschu, is reported to have taken place in the Republic of Florence in

1421 and an ordinance relating to patents was enacted in Venice in 1474.5 The fashion of

granting protection to inventions in the form of patents progressively came into practice in

many other European countries. In USA, the first patent enactment was made in 1790 and in

France in 1791.6 However, in Great Britain there was no general statute until 1852.7

Since its founding in 1790, the United States Patent and Trademark Office (USPTO) have

issued over 7 million patents up to 2009.8 The USPTO issued 219,614 utility patents in 2010,

that is, about 31% of 2009.9 In USA, the first patent was granted to Samuel Hopkins, born in

Vermont and living in Philadelphia, on 31 July 1790 for an improved method of making pot

and pearl ashes, which was registered under the American Patent Act, 1790.10

In France, in 1699, a decree of the king of France provided a patent application examination

procedure for novelty and utility of inventions by trained examiners under the auspices of the

Royal Academy of Science, and required the deposit of model of the patent, which was to be

�� 4 Jerome H. Reichman, ‘Universal Minimum standards of Intellectual Property Protection under the TRIPS

Component of the WTO Agreement’ in Intellectual Property and International Trade: The TRIPS

Agreement, (Eds.) Carlos M. Correa and Abdulqawi A. Yusuf, (2008) at 30. �

5Supra, M.M.S Karki, at 110�

6Id.�

7Id.�

8Id.�

9 Peter Zura, The 271 Patent Blog: 2010 Sees Record Jump for Patents Issued in the USPTO, 10 January 2010,

available at: http://271patent.blogspot.com/2011/01/2010-sees-record-jump-in-patents-issued.html (last

visited: 10 May 2011).�

10Id.�

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granted exclusive right.11 Thus in France, that was the first system of protecting inventions,

until the French Patent Act of 1791 was adopted.

2. PATENT PROTECTION:

Inventions are the result of human intellect and thus involve a lot of hard work to manifest

that idea into a reality. It takes a lot of research and experimentation to turn the idea into a

useful and working invention. Thus, such persons deserve a reward for the amount of time

they spend developing their ideas. Inventors also need the security for the fact that if they

share the invention with the rest of the world, it would not be made, used, copied, and

distributed without their prior authorization. Thus, such protection is afforded by the grant of

patents for their inventions, that is, monopoly right to deal with their invention at the

exclusion of rest of the world, except for certain limitations where the monopoly right can be

interfered with without the authorization of the title holder.

By patent protection, therefore, we mean that the invention cannot be commercially

manufactured, used, distributed or sold without the patent owner’s consent. A patent is a

monopoly over the possible use and exploitation of an invention for a fixed period of time. A

patent is, therefore, a negative right, which excludes the rest of the world from exploiting the

inventor’s accomplishment. On their infringement, the remedy is generally available in the

national law that is enforced by municipal courts, which issues injunction order to

immediately prevent such infringement besides, providing for other remedies, wherever

required. Conversely, a court can also revoke the patent by declaring it invalid upon a

successful challenge by a third party. The patent protection though, territorial in nature and

are afforded protection domestically, can also be enjoyed internationally, whether for a

product or process, by filing a single application, allowed under the provisions of Patent

Cooperation Treaty (PCT), 1970. Single application can also be filed in the country of origin,

which refers such application to International Searching Authorities (ISA); patent offices

appointed to carry out patent search on global basis. Moreover the patent application can also

be sent for examination to the International Patent Examination Authority(IPEA) and the

report prepared after examination is then sent to the countries where application has been

made, which makes the work of such countries, as far as the search for that patent is

concerned. However, it is at the discretion of all such countries to grant patent. Though there

�� 11William H. Frensic& Robert C. Collins, Cases and Materials on Patent Law, 5th Edition, at 75.�

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is nothing like global patent, yet by filing an application in the member country, such

protection may be afforded if the criterion for patentability is fulfilled.

Procedures and steps involved in acquiring this right may vary from country to country, but

the basic principle followed universally is that the inventor publicly discloses the invention in

sufficient details, accompanied by drawings if necessary, so that any one skilled in the

pertinent art may be able to reproduce the invention after its period of protection is over. In

lieu of that, the invention is granted for a limited period of time, a legally enforceable right to

exclude others from exploiting it. Besides that, the patent protection has great economic

importance to a number of industries that depend upon technological innovation to remain

competitive, such as the chemical, pharmaceutical and computer industries. Patent law grants

patents for machines, compositions of matter, such as new chemical compounds to be used in

industry, manufactured items; and industrial processes, provided they meet a number of strict

legal tests. Patents are also available on significant improvements on previously invented

items, for example, in case of India, provided they are not in contravention of Section 3(d) of

the Patents Act, 2005.12

Several international agreements exist in the field of patents. The earliest one to provide

protection to the patents was Paris Convention for the Protection of Industrial Property, 1883.

With the advent of technology and growth of international trade many nations felt that

exclusive nation patent’s legislations were insufficient to prevent people from imitating those

inventions in other countries, as the same were protected in their own country only.

Moreover, bilateral efforts by the States could not prevent wide range of infringements

occurring worldwide. Thus, the most industrialized and developed countries, which were

most prone to such patent law violation at international level, realized and emphasized upon

the fact that a mechanism should be devised at an international level to guard the interests of

patent holders, as the patents contributed a lot to their national economy. The lack of

adequate protection for foreign inventions became evident when Austria-Hungary

government in 1873 invited a number of other countries to participate in an international

exhibition on inventions to be displayed at Vienna. However, participation got affected due to

the lack of protection mechanism failing to afford protection to the inventions of foreign

nations. Nonetheless, that led to two important developments:

�� 12

See, Indian Patent (Amendment) Act, 2005, that is, Third Patent Amendment to the Patent Act, 1970.�

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• A special Austrian law offered temporary protection to all foreign inventions,

trademarks and industrial designs; and

• Congress of Vienna was convened for the patent protection.

Following that session of Congress, the French government convened an international

conference in order to formulate uniform provisions in the field of industrial property, which

led to the adoption of Paris Convention for the Protection of Industrial Property, 1883

(hereinafter, Paris Convention).13 To sign the draft document prepared at 1880 conference,

nineteen delegations convened in Paris in 1883. The text was signed by fourteen States. Paris

Convention is an important development in the field of protection of industrial property,

which comprises of:

a. Protection of distinctive signs, trademarks in particular and geographical

indications; and

b. Protection primarily to stimulate innovation, design and the creation of

technology. This sub-category thus includes inventions protected by patents,

industrial designs and trade secrets.

The Paris Convention has been revised six times at Brussels in 1900, Washington in 1911,

The Hague in 1925, London in 1934, and Lisbon in 1958, and revised in Stockholm in 1967

and further amended in 1979, but none of the revisions has the effect of altering the initial

principle stipulated in 1883 Convention. The Paris Convention has been described as a series

of conventions embodied in the successive text established at the revision conference.

3. INTERNATIONAL PROTECTION OF PATENTS:

For substantive issues, the most important are the Paris Convention for the Protection of

Industrial Property (1883) and the WTO Agreement on Trade- Related Aspects of Intellectual

Property Rights (TRIPS), 1994, while the main patent treaties for procedural issues are the

Patent Cooperation Treaty (1970) and the Patent Law Treaty (2000). However, the TRIPS

Agreement has strengthened legal protection for patents throughout the world, where

reference has been made to the Paris Convention (1967), which requires compliance to

Articles 1-12 and 19 of said Paris Convention. The same has been mandatory as far as the

Parts II, III and IV of the TRIPS Agreement are concerned.

�� 13 WIPO, Intellectual Property Handbook, WIPO (Publication No. 489). The text of Paris Convention is also

available at: http//WIPO.in/treaties/en/index/html.(last visited: 10 February, 2011).�

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3.1 Patent Laws under Pre-TRIPS and Post-TRIPS Era:

The laws protecting patents were already in existence in the developing as well as developed

countries, even before the introduction of intellectual property regime within the WTO in the

form of TRIPS Agreement. Moreover, various provisions which find reference in the TRIPS

Agreement, especially those relating to patents were largely implemented in the developing

countries. The international agreements to which many developing countries had agreed to

comply with, provided wide the TRIPS agreement include:

3.1.1 Paris Convention for the Protection of Industrial Property:

Under Article 1 of the Paris Convention, all the countries to which this Convention applied

constituted a Union for the Protection of Industrial Property, which included patents as well.

Further patents were required to include various kinds of industrial patents recognized by the

laws of the countries of the Union, such as patents of importation, patents of improvement,

patents and certificates of addition, etc.

Article 2 dealt with a very important principle viz., National Treatment (NT) for nationals of

the member countries of the Union, which postulated that nationals of any country of the

Union, as regards the protection of industrial property, had a privilege to enjoy in all the other

countries of the Union the advantages that their respective laws granted, or to be granted in

future; all without prejudice to the rights specially provided for by this Convention.

Consequently, they were having access to the same legal remedy against any infringement of

their rights, provided that the conditions and formalities imposed upon the nationals were

complied with.14

Article 3 stipulated same kind of treatment for certain categories of persons viz. nationals of

countries outside the Union but domiciled or having real and effective industrial or

commercial establishments in the territory of one of the countries of the Union, as was

provided to the nationals of countries of the Union.

Further Article 4, A to I dealt with various kinds of industrial property including patents and

provision G dealt with right to priority.

Article 4 bis dealt with patents and provided for the independence of patents obtained for the

same invention in different categories. Article 4 (1) bis provided: “Patents applied for in the

�� 14Article 2(1), Paris Convention.�

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various countries of the Union shall be independent of patents obtained for the same

invention in other countries, whether members of the Union or not.”

Further Article 4 ter required the mention of the inventor in the patent as a matter of his right

for having invented that article.

Article 4 quarter contained the provision relating to retention of patent even though some

restrictions had been placed on their sale, by the domestic law. It provided: “The grant of

patent shall not be refused and a patent shall not be invalidated on the ground that the sale of

the patented product or of a product obtained by means of a patented process is subject to

restrictions or limitations resulting from the domestic law.”

Article 5-A of the Convention contained provisions with respect to importation of articles,

failure to work or insufficient working, and grant of compulsory licenses after lapse of a

period of three years for non-working.

Article 5 bis contained a provision regarding restoration of patents which lapsed by reason of

non-payment of fees.15

Article 5 quarter dealt with importation of products manufactured by a process patented in

the importing country. It states: “when a product is imported into a country of the Union

where there exists a patent protecting a process of manufacture of the said product, the

patentee shall have all the rights, with regard to the imported product, that are accorded to

him by the legislation of the country of importation, on the basis of the process patent, with

respect to products manufactured in that country.”

Article 12 contains a provision for the ‘Special National Industrial Property Services’, which

provided communication to the public of the patents, utility models, industrial designs and

trademarks. It also had a duty to publish an official periodical journal containing information

regarding the names of the properties of patent granted, with a brief designation of the

inventions patented etc.

However Article 19 of the Paris Convention contained provision pertaining to ‘Special

Agreements’, whereby the countries of the Union could reserve the right to make separately

between themselves special agreements for the protection of industrial property, in so far as

those agreements do not contravene the provision of the Paris Convention.

�� 15 Article 5 bis(2), Paris Convention.�

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3.1.2 TRIPS Agreement and Paris Convention:

Article 2(1) of TRIPS requires the WTO members to comply with Article 1 to 12 and Article

19 of the Paris Convention. As has been mentioned earlier the Paris Convention apart from

containing general requirements such as national treatment, which applies equally to patents,

contains two substantive Articles viz., Article 4 & 5, which has important obligations on

countries in the area of patents.

Article 4 sets out important principles related to the grant of patents. Article 4A requires that

a right of priority be instituted for industrial property applications, which includes patent

applications as well. Article 4G establishes the period of priority of twelve months for all

patent applications from other Paris Convention Members.

At the time of the incorporation of TRIPS Agreement, most developing countries were

members of the Paris Convention and were largely in compliance with the fundamental

obligations contained in the TRIPS. There were some non-members like India, Indonesia, the

Andean Group and Singapore, but even these countries did not show any substantive

disagreement. As in case of India, when it became member of the Paris Convention in 1998,

it did not require any amendment to its industrial property laws. Nonetheless, TRIPS

Agreement has made the compliance to the substantive provisions of the Paris Convention

mandatory and any dispute pertaining to their interpretation with regards to provision of Paris

Convention can be subjected to the WTO dispute settlement procedures. Though the TRIPS

Agreement does not require its members to accede to the Paris Convention, yet from 1991 to

2000, at least 47 developing countries ratified this Convention in its latest version of 1967

and as amended on September 28, 1979. Those countries include the Andean Group

countries, Brazil, Chile, India, Indonesia, Jamaica, Singapore and Turkey.16

The Convention has now 173 contracting member countries which make it one of the most

widely adopted treaties worldwide.17Notably, Taiwan and Kuwait are not parties to the

Convention. However, according to Article 27 of its Patent Act, Taiwan recognized

priorityclaims from contracting members. The Paris Convention entered into force in

�� 16

See www.wipo.org. Also see Appendix 4 for the list of WTO members that are also members of the Paris

Convention up to 2000. �

17 World Intellectual Property Organization, www.wipo.org, contracting Parties>Paris Convention (Total

Contracting Parties: 173) (last visited: 13 January 2011).�

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Thailand on August 2, 2008, bringing the total number of Nation States party to the

Convention to 173.18

4. INNOVATION AND PATENTABILITY:

Although the patentability criteria differ from country to country depending on the law of the

land, there exists some harmony between them. That harmony is provided under Article 27(1)

of the TRIPS Agreement. It requires every invention; whether process or product, to fulfill

the requirements of novelty, non-obviousness (or inventive step) and utility (industrial

application). These minimum standards are universally recognized in the patent laws of both

developed and developing countries. These standard requirements exist in one or the other

form in the member countries, which are given different shapes by the legislative and judicial

systems of different countries. Article 27(1) of the TRIPS Agreement do not define these

standards, consequently, every WTO member is free to interpret these standards reasonably

in compliance with the TRIPS Agreement. The main purpose for not defining or harmonizing

these standards or attempting to do so was that, the standards for defining or interpreting

these parameters differed among the developed nations, thus the member countries were

given an ample space to interpret these standards but with the reasonable bounds.

4.1 Patentability Criteria in Europe:

The Convention on the Grant of the European Patents of 5 October 1973, commonly known

as European Patent Convention (EPC),19 is a multilateral treaty, providing a legal system

according to which European patents are granted. It puts forth four criteria of patentability.

An invention is patentable if,

a. it is novel (Article 54);

b. involves an inventive step (Article 56);

c. is capable of industrial application (Article 57); and

d. is not covered under Article 52(2) and (3) of European Patent Convention (EPC),

which deal with exclusions from patentability.

The minimum criteria stipulated under EPC are summarized hereunder:

a. Novelty: Novelty, in the context of European Patent Convention requires that the

invention must not be found at a previous date in any matter, whether a product or a

�� 18 Paris Convention, Accession by Thailand, PCT Newsletter, May 2008, No. 05/2008, page 3.�

19Convention on Grant of European Patent, 5 October 1973, 1065 U.N.T.S. 255.�

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process. Any information pertaining to it must not have been made available to the

public anywhere in the world, including any European country.

b. Inventiveness: This standard provides that and invention must involve and inventive

step in order to be patentable. If any person skilled in the pertinent art can anticipate

such invention or the claims made in that invention, it is devoid of inventiveness and

cannot be granted a patent protection. This criterion is very similar to that of non-

obviousness stipulated in the US patentability laws.

c. Industrial application: Besides novelty and inventiveness, an invention must have an

industrial application in order to be patented. Section 4 of EPC states that an invention

shall be considered to be capable of industrial application if it can be made or used in

any kind of industry including agriculture. This criterion is similar to the US criteria of

utility.

d. Exceptions to patentability: Article 52(2) and (3) of European Patent Convention

exclude certain inventions from the list of the patentable inventions. For example,

discoveries, scientific theories, mathematical methods, aesthetic creations, schemes,

rules, and methods for performing mental acts etc., are not regarded as inventions, and

hence not patentable. An invention having no technical character is not patentable. The

technical considerations may lie in the underlying problem solved in the technical efforts

achieved; a method claim failing to mention any implementing technology will not be

considered as invention; an invention which is offensive, immoral or anti-social or

against public order is not patentable.

4.2 Patentability Criteria in United States:

In the United States, in order to meet the litmus test of patentability, an idea must fulfill a

three branched test of patentability, viz., novelty, non-obviousness and utility. Also, the

invention must not have been in public use or sale in the US for more than one year prior to

the date of filing the patent application. In defining the novelty of a patentable invention, the

US patent office permits the written prior art to be explored anywhere in the world, including

foreign patent applications, but limits the search for the oral prior art within US territory

only.20

�� 20 See JayashreeWatal, ‘Intellectual Property Rights in the WTO and Developing Countries, (2003), op. cit. 7 at

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Theoretically, in the U.S, novelty is determined from the date of invention whereas in all

other jurisdictions it is from the date of the filing of the patent application. Thus to avoid

subjectivity, as has been mentioned earlier, one year limit prior to the filing date has been

fixed as the criterion for defining novelty. This grace period is not generally granted in any of

the member country. However, this grace period should not be confused with requirements of

the right to priority specified under Article 4 of the Paris Convention, which is now and

obligation under Article 2(1) of the TRIPS Agreement for all the member countries. This

grace period actually means that all countries must allow a period of twelve months from the

date of filing of patent application in the country of nationality to file on application

internationally i.e., in other countries for the grant of patent.

These variances follow from the ‘first-to-invent’ system of the US and the ‘first-to-file’

system everywhere else. The Philippines was the only other country that followed the ‘first-

to-invent’ system but has now altered its law to ‘first-to-file’:21

The issue of ‘first-to-invent’ was raised by the European Union and other in the TRIPS

negotiations but was dropped towards the end of 1990 because the US was rigid on this issue.

Instead Article 27(1) of the TRIPS now contains an obligation on non-discrimination as to the

place of invention which was aimed at the same concern. The US also has to provide national

treatment to the nationals of other countries. Thus it is apparent that attempts to harmonize

patent procedures have been unsuccessful not because of the interference of the developing

countries, but mainly due to the developed countries. Efforts to do so, failed in Seattle

meeting, held at the end of 1999, which depicts lack of standards in procedure for

determining novelty or other standards of patentability.

The standards of determining non-obviousness in the US is subjective, and in many cases it is

decided by the national courts. In patent litigation on the question of non-obviousness, the

accused infringer claims the existence of high-level of skill in the subject-matter of the

invention while the patent owner seeks to prove the opposite. Thus non-obviousness requires

that the invention must not be obvious to a person of an ordinary skill in that particular field

or sub-field of technology.

The ‘utility’ requirement is perhaps the easiest measures to be met with as practically any

usefulness is considered to fulfill the utility requirement. The ‘utility’ element of patentability

�� 21

Id at 91.�

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in the United States is broader than the standard of ‘industrial applicability’, as applied in

Europe, although the two terms are considered synonymous under the TRIPS Agreement.22

The patent laws in the US were very liberal in the beginning like the Indian patent law on the

patentability condition of non-obviousness, but now the patent law in the United States has

become stricter after the coming up of the two landmark cases viz., KSR International Co v.

Teleflex Inc. et al.23and Pfizer, Inc. v. Apotex, Inc. (formerly known as Tor Pharm, Inc.)24

The KSR v. Teleflex case involved the usage of electronic sensor based on adjustable gas

pedals. Teleflex alleged KSR International of using a gas pedal technology claimed in one of

Teleflex’s patents. However, the KSR argued that Teleflex should not have been granted a

patent for that pedal in the first place, as the combination of an electronic sensor and gas

pedal technology was obvious based on prior art. The US Supreme Court reversing the

decision of a lower court held that the sensor based gas technology was obvious from the

teachings of other patents and invalidated Teleflex’s patent. In his opinion Justice Anthony

Kennedy held, “The results of ordinary innovation are not the subject of exclusive rights

under the patent laws. Were it otherwise, patents might stifle rather than promoting the

progress of useful arts”.25

In second case, the Pfizer instituted proceedings against generic manufacturer Apotex for

infringing its patent right in the salt amlodipine besylate, obtained under U.S. Patent No.

4,879,303, known as Norvasc (Patent ‘303’), prescribed for the treatment of hypertension and

angina, for filing an application for seeking approval to sell generic amlodipine besylate

tablets.

Amlodipine besylate (Patent granted to this salt, marketed by the trade name NORVASC)

�� 22

See footnote 5 of the TRIPS Agreement.�

23 550 US. 398.�

24 United States Court of Appeals of Federal Circuit 2006-1261, decided on 22 March 2007.�

25Rishab Jain, ‘Patentability Criteria of an Invention and when it is not granted’, available at:

www.legalservicesindia.com (visited on 22 February, 2011). �

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Apotex certified before the appropriate authority granting permission for marketing and

selling that the patent ‘303 was invalid and unenforceable, and sought approval from the

authorities to market and sell its amlodipine besylate tablets. Moreover, Apotex asserted that

‘303 Patent was obvious in view of earlier issued patent in 1977. However, the District Court

concluded that the salt was non-obvious. On appeal the decision was reversed by the Federal

Circuit Court, which held, “a(t) most……Pfizer engaged in routine, verification testing to

optimize selection of one of several known and clearly suggested pharmaceutically-accepted

salts to ease its commercial manufacturing and marketing of the tablet form of the therapeutic

amlodipine.”26

4.3 Patentability in India:

In India every invention has to pass through the triple requirement of newness (novelty), non-

obviousness and usefulness for patentability as provided under Section 2(j) of Patent

(Amendment) Act, 2005.

Indian Patent Act, 1970, as amended in 2005, defines invention as, “invention means a new

product or process involving an inventive step and capable of industrial application.”27 It

further states that; inventive step means a feature of invention that involves technical advance

as compared to the existing knowledge or having economic significance or both and that

makes the invention not obvious to a person skilled in the art.28

The definition of invention stipulates three attributes of patentability of a new product or

process invention. These are novelty, non-obviousness and industrial application.

Novelty is of fundamental importance. Patent (Amendment) Act, 2005 defines a new

invention as any invention or technology which has not been anticipated by publication in

any document or used in the country or elsewhere in the world before the date of filing of

patent application with complete specification, which the subject matter has not fallen in

public domain or that it does not form part of the state of the art.29

�� 26The Nath Law Group, Pfizer, Inc. v. Apotex, Inc., Case Brief, Available at:

http://www.nathlaw.com/news/publications/2006-1261.pdf (last visited: 11 May 2011).�

27Section 2(j) of Indian Patent (Amendment) Act, 2005.�

28Id. Section 2(ja).�

29 Patent (Amendment) Act, 2005, Section 2(1) (a).Also see M. K. Bhandari, Law Relating to Intellectual

Property Rights, (2nd Edition, 2010) at 92. �

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For novelty, the so claimed invention should not be known to the persons having an ordinary

skill in the pertinent art, which means absence of prior knowledge. The novelty is thus,

dependent upon the state of prior art, i.e. the existing knowledge and similar inventions

already known in the particular field. There would be no novelty if there has been prior

publication and prior use of an identical invention.

The term ‘capable of industrial application’ can be used synonymously with ‘usefulness’. The

latter concept is somewhat broader, as it would allow even the patentability of purely

experimental inventions.30 Thus the patent protection is not available to purely immaterial or

intellectual creations. The use may not be for profit and hence it includes agricultural use

also. However, usefulness does not require proof of actual use. Moreover, the possibility to

be used or made in industry is sufficient evidence for proof of industrial application. The

inventions which are not so useful are protected in some countries as ‘utility model’, but this

concept is not recognized in India.

Above all, patents are not granted for new, useful and non-oblivious advances that are merely

obvious extension or modifications of prior designs that could be achieved without the

attraction of patent rights. A patent may not be identically disclosed or described, if the

differences between the subject matter sought to be patented and the prior art are such that the

subject matter as a whole would have been obvious at the time the invention was made to a

person having ordinary skill in the art to which the said subject matter pertains, the same shall

not be patentable. In addition to novelty, utility, the patentability depends upon the non-

obvious nature of the subject-matter sought to be patented.

Hence, the invention should not be a mere mechanical advance or the result of the exercise of

the creative faculty amounting to a meritorious invention. As in case of Bajaj Auto Ltd. v.

TVS Motor Company Ltd.,31 the Madras High Court observed that the term ‘obvious’ is a

condition where a person of skill in the pertinent field, on investigating the specifications of

the said invention would complete the product. Therefore, even if any of the two ingredients,

viz., technical advance or economic significance or both are available, if such invention

enables a person of skill in that field to anticipate or come across same results, such invention

can never be treated as an ‘inventive step’ and consequently no patent can be validly issued.

�� 30 K. D. Raju, Intellectual Property Law: WTO and India, (2005) at 87. �

31(2008) ILLJ 726 Mad; MIPR 2008 (1) 217.�

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This comparison of criteria of patentability clearly demonstrates that even though different

interpretations of the concept are made, the basic idea of granting patent remains the similar.

The parameters used by different countries may vary, but TRIPS provides some uniform

criteria for determining the patentability. Even the developing countries have their own

interpretations while complying with TRIPS. Thus using different interpretations on the

criteria of patentability would be in the interests of developing countries to use this to ensure

that excessively broad patents are not granted. However, the three criteria set by the TRIPS

are absolute requirements. As novelty should be interpreted as an absolute level of worldwide

novelty where the invention is not anticipated in the prior art, either in written or verbal form.

The element of industrial applicability should also be defined specifically and worthily. The

technical character of an invention is, thus, a basic requirement for patentability. The

members significantly differ in their treatment of industrial applicability.

The standards mentioned above identify as to which scientific and technological advances are

‘inventions’ and further, which inventions are patentable.32 In addition to using a general

requirement for industrial applicability of the invention, some countries precisely identify

categories of subject matter that are not inventions, and which type of inventions the

government will not patent.33 Other countries define eligibility in broad terms, without per se

exclusions, as in case of the U.S patent system, where any new and useful process, machine,

manufacture or composition of matter, or any new and useful improvement can qualify the

test of patentability, as to include anything under the sun that is made by man, where the

Supreme Court of United States allowed grant of patent to a genetically modified micro-

organism (pseudomonas), which could eat oil spills, after the application for the grant of

patent was rejected by the United States Patent and Trademark Office (USPTO) on the

ground that the invention dealt with living organism that was not subject matter of

patentability The court in its landmark decision held that there was nothing in the US patent

laws that prohibited patenting of life forms.34

The industrial application requirement of most countries is inclusive of virtually any type of

commercial or industrial enterprise. TRIPS Agreement limits the authority of WTO members

�� 32Rajnish Kumar Rai, ‘Patentable Subject Matter Requirements: An Evaluation of proposed Exclusions to

India’s Patent Law in Light of India’s Obligations under the TRIPS Agreement and Options for India’, 2008,

Chicago Kent Journal of Intellectual Property, 49.�

33See, e.g., Indian Patent Act, 2005, Ss. 3 and 4.�

34Diamond v. Chakrabarty, 447 U.S. 303, 308-09 (1980).�

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to define patent eligibility, and requires a showing of industrial application of usefulness as a

condition for granting a patent.35

Inventive step or non-obviousness, like novelty, must be measured at the time the inventor

files the patent application, rather than after the inventor files the application and has gained

additional perspective and knowledge. Moreover Article 27(1) of the TRIPS Agreement

grants WTO members the authority to require a showing of inventive step or non-

obviousness as a condition of granting a patent. Lack of this element may even lead to

revocation of patent which has been granted earlier. As in case of Glaxo Group Ltd. v.

Patents Act,36 following a review of appropriate legal approach towards establishing lack of

inventive step, Glaxo’s Irish patent for a product sold as Seretide and Advair was invalidated

by the Irish High Court.37

Thus all the three elements have a bearing on determining patentability.

5. EXCEPTIONS TO PATENTABILITY:

Paragraphs 2 and 3 of Article 27 of TRIPS provide freedom of choice to the Members to

exclude certain categories of subject matter from patentability. Moreover, certain categories

of inventions, even if claimed to be inventions on one or the other pretext, have been

excluded from patentability, and the same are treated as non-patentable inventions. Pre-

TRIPS patent laws of most of the developed and developing countries excluded the following

categories of inventions from patentability:

• Inventions the exploitation of which is contrary to law, morality, public health and

to public order;

• Scientific principles, mathematical formulae, algorithms, methods of playing

games, methods of doing business or literary works; and

• Methods of treatment of humans or animals.

Article 27(2) of the TRIPS Agreement contains provisions covering these common

exceptions on inventions contrary to law, morality, public health and public order. It also

excludes the inventions harming animal and plant life or health and also those that are

�� 35 TRIPS Agreement, Article 27. �

36[2009], IEHC 277.�

37 See, Tara Jennings, ‘Current Intelligence’, Journal of Intellectual Property Law & Practice, 2010, Vol. 5 No.

2 at 71-72.�

��

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prejudicial to the environment. The TRIPS Agreement, however, makes these exceptions

subject to following conditions:

• That there should be prevention of commercial exploitation of such non-patentable

inventions within the territory of the member countries in order to protect ordre

public or morality;

• That these inventions should be opposing to ordre public or morality; and

• Inventions, whose exploitation or commercialization is forbidden by domestic law,

cannot be excluded on these grounds alone. For that they must be contrary to

morality or ordre public.

Thus the inventions that are contrary to ordre public or morality have been excluded from the

ambit of patentability under Article 27(2) of the TRIPS Agreement. However the terms

‘necessary’ and ‘human, animal, plant life or health’ are drawn from Article XX of GATT

and would therefore, be subject to strict and narrow interpretation made in the past by

GATT/WTO panels that have dealt with disputes on trade in goods. The TRIPS Agreement

also provides for exclusion of diagnostic methods used for treatment of human beings and

animals. Biotechnological methods have been excluded from patentability on the grounds of

morality or public order. Developing countries and others can only exclude such inventions

from patentability, if they disallow the commercial exploitation of those harmful inventions

by others.

Thus, morality must be defined in every country so as to declare an invention as non-

patentable on the grounds of morality. During the TRIPS negotiations the EU insisted for

using the term, ordre public, though the interpretation of the term is not so definite and

succinct.38 TRIPS use the concept of ordre pubic where it uses this concept beyond narrow

concepts such as rioting, affray or pubic disorder, covering harm to animals, plants and the

environment. However the WTO members have discretion to define the term under their

national laws.

The proviso which declares that such exclusion should not be made merely because

exploitation is prohibited by law is similar to Article 4 quarter of the Paris Convention.

Article 4 quarter may be interpreted that refusal to grant a patent is not allowed merely

because the exploitation of the invention is prohibited or restricted by law or regulation, but

only when it is contrary to the basic legal or social concepts of the country concerned. Thus,

�� 38


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prevention of exploitation by a domestic law would not be sufficient condition for non-

prevention of exploitation by a domestic law would not be a sufficient condition for non-

patentability. TRIPS and the Paris Convention seem to narrow the existing exceptions in

many patent laws on inventions contrary to law.

Besides morality or public order, the patent laws of many countries exclude certain

inventions having no industrial application from patentability. Some of such inventions

pertain to scientific principles, mathematic formulae, algorithms, and methods of playing

games, methods of doing business and literary, dramatic, artistic works or aesthetic creations

etc. The reason to exclude the scientific principles or mathematical formulae or the like, is

that any development in such fields must remain in public domain for the use of all and

cannot be commercialized unlike their specific technological and functional uses appear. The

Indian Patent Act, 2005 excludes scientific principles or the formulation of/or discovery of

any living thing or non-living substance occurring in nature.39 Further a mathematical or

business method or a computer program per se or algorithms have been declared as non-

patentable inventions.40 Also specifically literary, dramatic, musical or artistic works or any

other aesthetic creation, whatsoever including cinematographic works and television

productions have been categorically excluded from patentability.41

Additionally, the UK patent law excludes discoveries, scientific theories, mathematical

methods, and aesthetic creations such as literary, dramatic or artistic works, schemes or

methods for performing a mental act, playing a game or doing business, presentations of

information or computer programs.42 Moreover, inventions contrary to physical laws are

considered non-patentable as they lack industrial application.

The computer programs have been excluded from patentability under TRIPS Agreement.

Many developed and developing countries have excluded computer programs from their

patent laws. Article 10(1) of TRIPS Agreement provides for the protection of computer

programs as literary works. Artistic and literary works are excluded from patent protection in

all patent laws. Thus, as long as copyright protection is available to computer programs, it

can be implied that there would not be any patent protection available to them under the

TRIPS Agreement. Indian patent laws exclude computer programs from patentability and

�� 39Patent (Amendment) Act, 2005, Section 3.�

40Id. �

41Id.�


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since 1983; they are protection under the copyright law.43 China excludes computer programs

from patenting and treats them as rules and methods for mental activities.44 Brazil and

Argentina exclude computer programs per se under their new patent laws.45 However, the

protection afforded to the computer programs is considered to be inadequate by the creators

of software in the United States and in other countries for the reason that the copyright only

protects the expression and not the underlying idea.

Article 27(3) (a) excludes diagnostic, therapeutic and surgical methods for treatment of

humans or animals from patentability. This exception, however, cannot be used to exclude

products, instruments or other such means used for diagnosis, therapy or surgery from

patentability. In India, the patent laws exclude any process for the medicinal, surgical,

curative, prophylactic (diagnostic, therapeutic) or other treatment of human beings or any

other process from patentability.46 Patent laws of most of the commonwealth countries;

specifically exclude diagnostic, therapeutic and surgical methods for the treatment of humans

and animals from patentability. As far as this provision is concerned, it can be construed in a

way so as to except only methods of treatment for entire human or animal body and not of

parts thereof such as blood tests or other specific diagnostic or treatment methods.47 Thus this

kind of interpretation may be adopted by any country in its law but cannot be imposed as a

TRIPS obligation.

Under Article 73 of the TRIPS Agreement, the members are excluded from disclosing any

information against their security interests. Certain inventions relating to substances obtained

by means of nuclear transformation have also been excluded from patentability. Indian patent

laws contain a provision where inventions relating to atomic energy falling within sub-section

(1) of Section 20 of the Atomic Energy Act, 1962, have been excluded from patentability.48

Thus for security reasons such kind of inventions have been excluded from the patent system.

Countries like Brazil, China, Cuba, Japan, India, Mexico, Korea, and the US etc., have

provisions excluding the application of patent laws on the nuclear inventions.

�� 43Section 3 of Patents (Amendment) Act, 2005.�

44 The Patent Law of People’s Republic of China, 2000, Article 25(2).�

45Article 10(IV) and 10(V) of New Brazilian Patent Law, 1997 and Article 6(b) 6(c) of new Argentine Patent

Law, 1995.�

46Supra, Section 3 of Indian Patent Act, 2005.�

47Supra, JayashreeWatal, op. cit. 46 at 103�

48Supra, Section 4 Indian Patents Act, 2005.�

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6. ADEQUATE DESCRIPTION OF COMPLETE SPECIFICATION:

Both the developed and developing counties agreed while negotiating on the TRIPS

Agreement in the field of patents to impose conditions on patent applicants for making a

sufficient disclosure of their invention in their application for the grant of patent. As a result

the final draft of Article 29 of TRIPS was universally accepted. It requires the disclosure of

the patented invention. Article 29(1) stipulates that the members must ensure that disclosure

of the technical information about the invention must be made in a manner sufficiently clear

and complete so that the persons skilled in the specified art are able to reproduce the full

scope of what the inventor claims in his or her patent application. The provision contained in

Article 29(1) of the TRIPS is in line with the requirements that are already contained in

legislations of various countries. In case of biological materials, where full disclosure is not

possible, the requirement of sufficient disclosure applies, despite the fact that the disclosure

of biological materials has not been explicitly mentioned in the TRIPS Agreement. But the

general provision in Article 29(1) imposing disclosure requirement is impliedly applicable to

the biological materials as well. Budapest Treaty on International Recognition of Deposit of

Micro-organism for the Purposes of Patent Procedure, 1980, has resolved the problem

resulting from lack of uniformity in national requirement for micro-organism deposit.

Through this treaty a series of International Depository Authorities (IDA) have been

established for the purpose of depositing of samples for fulfilling the requirement of

disclosure. India is also a member to this treaty. Further Article 29(2) authorizes the members

to request from applicants or patentees information concerning the corresponding foreign

applicants and grants of patents. A corresponding provision is also found under Section 8 of

the Indian Patent (Amendment) Act, 2005.

Indian patent laws require the patent applicants to file complete specification within a period

of twelve months from the date of filing of the application.49 The complete specification

implies.50

i. Title adequately demonstrating the subject matter to which the invention relates;

ii. A full and specific description of the invention and its operation or use and the

method by which it is to be accomplished;

iii. A disclosure of the best method of executing the invention which is known to the

applicant and for which he is eligible to claim protection;

�� 49Section 9, Indian Patents Act, 2005.�

50Id., Section 10. �

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iv. Claim defining the range of invention. The claim(s) must relate to one invention

only. Claim(s) should be distinct and to the point and should be fairly based on the

matter revealed in the specification; and

v. Under section 10(2), controller may require drawings to be supplied, which shall

form part of the specification.

Thus Indian patent law requires disclosure of the invention. The patent applicant has to

disclose only what he considers to be the best mode, if any, at the time of the filing.

Article 29(2) of the TRIPS was based on a text submitted by 14 developing countries.51

Moreover, many developing countries take advantage of the provision of Article 29 and

dictate the full disclosure of the best mode of carrying out the invention so that the same

could be carried out by the person skilled in pertinent art once the protection period is over.

Those countries can also ask for the supply of pertinent information on foreign applications.

7. TRIPS AGREEMENT AND NEW USES OF KNOWN SUBSTANCES:

The TRIPS Agreement is silent about patentability of new uses of the known substances.

Most patent laws that allow patentability of such substances, contain a separate provision for

it. There are more than 30 countries that grant patents for new use either explicitly in their

patent laws or through court decisions. Countries that are the members of European Patent

Convention, US, Japan, South Africa, Switzerland, Hong Kong, Korea, Australia and Israel

grant patents for new use. Thus the TRIPS Agreement is also silent about the new use of the

pharmaceutical products as use of cancer drugs for treating HIV/AIDS. As the TRIPS

Agreement only refers to the patentability of new product or process and not of the new uses

of the known substances, thus same can be patentable, as they have not been categorically

excluded from patentability, provided they pass the test of patentability.52

7.1 New Use of Known Substances in India:

India’s new Patent Act prohibits patents on derivates of known substances, unless such

derivates of known substances display significantly enhanced efficacy. Section 3(d) of Patent

(Amendment) Act, 2005 provides: “The mere discovery of a new form of a known substance

which does not result in the enhancement of the known efficacy of that substance or the mere

discovery of any new property or new use for a known substance or the mere use of a known

�� 51


52 Article 27(a) of the TRIPS Agreement.�

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process, machine or apparatus unless such known process results in a new product or

employs at least one new reactant.”

Further an explanation to Section 3(d) elaborates that salts, esters, polymorphs, metabolites,

pure form, particle size, isomers, mixtures of isomers, complexes, combinations and other

derivatives of known substances shall be considered as the same substance unless they differ

significantly in properties with regard to efficacy.

Thus Section 3(d) makes it mandatory that unless some increased level of efficiency is

proven, only New Chemical Entities (NCEs) can be patented under this section. This

provision was incorporated in response to ever-greening of pharmaceutical patents,53 which

refers to attempts by owners of pharmaceutical patents to prolong the effective life of a patent

by obtaining related patents on different formulations, new uses of the drug, delivery systems,

and the like.54 However, many pharmaceutical companies those invest in research, including

Indian companies like Ranbaxy debated that this provision would mostly harm Indian

companies, because Indian companies were more likely to produce so-called ‘incremental’

innovations, rather than NCEs, due to high-cost of developing NCEs.55

The provision under Section 3(d) of the Patents (Amendment) Act, 2005 was challenged, as

unconstitutional and in breach of TRIPS Agreement by a Swiss pharmaceutical company -

Novartis AG in the case of Novartis AG & Anr. v. Union of India.56 Novartis drug, Gleevac,

containing the imatinib mesylate, which is a white to off-white to brownish or yellowish

tinged crystalline powder.

Imatinib mesylate (Patent granted to the salt, marketed by trade name GLEEVAC)

�� 53 Janice M. Mueller, “The Tiger Awakens: The Tumultuous Transformation of India’s Patent System and the

Rise of Indian Pharmaceutical Innovation,” 32 University of Pittsburgh, School of Law, Working Paper

Series, Working Paper No.43,2006 at 72. �

54Id.�

55Erin Marie Daly, India’s Patent Laws Fall Short, Report Claims, IP Law 360, January 25, 2007.�

56(2007) 4 MLJ 1153.�

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Gleevac is used mainly in the treatment of blood cancer. Having granted exclusive marketing

rights in India in 2003, was examined for grant of patent protection in 2005 and the patent

was denied by the Chennai Patent Office on the ground that the application claimed only a

new form of known substance without demonstrating any added efficacy under Section 3(d).

Novartis, consequently, filed writ petition before the Madras High Court, claiming that the

Patent Controller went wrong in rejecting its patent application, and further claimed that

Section 3(d) was, among other things, vague, ambiguous, and contrary to the requirements of

the TRIPS Agreement. It also argued that Section 3(d) was in violation with government’s

constitutional duty to harmonize its domestic laws with international obligations. The Madras

High Court ruled against Novartis holding that Section 3(d) was not unconstitutional and also

that the court had no jurisdiction over the TRIPS issue and that the WTO would have to

decide whether Section 3(d) was TRIPS compliant. As Novartis did not appeal to the

Supreme Court, the patentability and TRIPS compliancy issues remain unresolved.

8. DEVELOPING COUNTRIES AND PATENT LAWS PRIOR TO TRIPS

AGREEMENT:

As discussed earlier, that various provisions contained in the TRIPS Agreement found their

presence in the national laws of both the developed and developing countries, however, there

were certain areas in the field of patents which showed disagreement in North-South laws.

These areas became the thrust of the controversies not only in the field of patents, but of the

entire TRIPS Agreement. Those areas of conflict were:

8.1 Inventions relating to pharmaceuticals;

8.2 Rights of patentees;

8.3 Burden of proof; and

8.4 Term of patent

8.1 Inventions Relating to Pharmaceuticals:

Of all the areas of divergence, the most controversial and significant to the exporters of

technology were the exclusions allowed for certain sectors of industry. The pharmaceutical

industry was one the controversial industry between the developing and developed countries

in the pre-TRIPS negotiations on patents. The pharmaceutical industry is known for its

remarkable capacity to absorb the scientific advances. It enjoyed greater socio-economic

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importance as compared to other industries. Patents play a key role in regulating prices of

drugs and promoting welfare of a developing economy.

In some developing countries, especially those in Latin America and South and East Asia,

product or even process patents were excluded for inventions relating to food, agricultural,

chemical, and pharmaceutical products. For example, as of 1988 WIPO had listed about 31

developing countries that excluded pharmaceutical processes, 19 that excluded food products,

12 that excluded chemical products, 2 that excluded fertilizers and 1 that excluded

agricultural machines.57Even some developed countries up to 1988 excluded pharmaceutical

products from patentability. Those include Finland, Greece, Iceland, Monaco and Norway.58

However, under the TRIPS Agreement, the WTO members are required to enforce product

patents for pharmaceuticals. This requirement was the most debated issue in the Multilateral

Trade Negotiation (MTNs) on TRIPS. The debate about the merits of this requirement was

extremely contentious. As many low-income economies claimed that patent protection for

pharmaceuticals would result in substantially higher prices for medicines, leading to very

adverse influence upon the health and well-being of their citizens. On the other hand, the

developed or the research-based global pharmaceutical companies contended that prices were

unlikely to rise significantly as most patented products had therapeutic substitutes.

In order to find out the basis of such claims in both the developing and developed countries,

an analytical approach based upon the historical development of this industry and comparison

with the post-TRIPS pharmaceutical drug prices is warranted. It requires the study of data of

pre- and post-TRIPS period.

Under the TRIPS Agreement, the member counties of the World Trade Organization (WTO)

are required to recognize and enforce product patents in all fields of technology, including

pharmaceuticals.

When the WTO came into force in 1995, the developing and least developed countries were

granted a transitional period of 10 and 15 years respectively for the implementation of the

provisions pertaining to process patenting in the field of technology. Initially under Article

65(1) all the members of the WTO were given a general period of one year to implement

TRIPS provisions from the date of entry into force of the WTO Agreement. Articles 65(2)and

(3) granted an additional period of four years and to the developing countries, which were

�� 57GATT (1998): MTN. GNG/NG11/W/24/Rev.1 ;dated 15 September, 1988.�

58Id. �

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undergoing the phase of transformation to market, free enterprise economy, undergoing the

stage of structural reform to their intellectual property system and also facing troubles in the

preparation and implementation of IP laws and regulations. Thus this period of exemption

extended up to 1 January 2000. Further, Article 65(4) extended exemption to the product

patent implementation in the developing countries, for an additional period of 5 years, that is,

until 1 January 2005. Hence, the TRIPS provision for recognizing and enforcing in the all the

fields of technology were to become operative on 1 January 2005, even when they recognized

product patents in other areas, as low-cost access to life-saving drugs and essential medicines

was considered to be dominant public policy priority. To meet their obligations under TRIPS,

however, these countries had to introduce or amend their patent legislation to include

pharmaceutical product patents in addition to the existing process patents until 1 January

2005.

The negotiations up to the conclusion of TRIPS Agreement, and in particular the provisions

relating to pharmaceuticals, were highly contentious. The key point of contention made by

governments of many poor developing countries was that the unqualified patent protection

for pharmaceuticals would result in significantly higher prices for medicines, leaving adverse

effects upon the health of their citizens. Contradicting this assertion, developed country’s

pharmaceutical industries contended that they had lost billions of dollars due to patent

infringement by the Third World firms that have reverse engineered their pharmaceutical

products, and that the introduction of product patents was unlikely to raise prices of the

drugs, as most patented products have many therapeutic substitutes. Moreover, they claimed

that the absence of product patenting has worked as a disincentive to engage in research on

disease that disproportionately affect the world’s poor people, indicating that patent

protection for pharmaceuticals would actually benefit developing countries by inspiring

innovation and transfer of technology.

8.1.1 Position of International Pharmaceutical Industry:

In order to see the implications of product patenting on pharmaceuticals, it is pertinent to

study the position of drug industry prior to TRIPS Agreement. For that purpose the types of

drugs, their production, marketing, export, import profit, price and R&D need to be analyzed.

The impact of global pharmaceutical industry on the developing countries and problems of

the industry after the TRIPS Agreement became effective also have been discussed.

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8.1.1.1 Discovery of Drugs (Medicines):

The products of the pharmaceutical industry are not identical like the products of other

industries.59 The nature of the products produced in the pharmaceuticals industry is unrelated

and heterogeneous according to their physical forms and their method of use. For oral

administration, the drugs may be classified as solids, which include syrups, suspensions and

emulsions. For typical application, they may be categorized as ointments, creams, lotions,

plasters, bandages and sutures. For inhalation, they consist of anesthetics and other inhalants.

For parental administration, they include injections in ampules or vials and infusions in

bottles or bags. They may be ophthalmic and optic preparations as well.60 Due to discovery of

many wonder drugs, the pharmaceutical industry witnessed a great progress during the past

war era.61

Thus the early 50s witnessed as move in drug therapy from the state of treating the symptoms

to that of treating the disease itself.62 This shift from symptom treatment to disease treatment

occurred mainly due to the discovery of sulpha drugs in late 1930s.63 Then discovery of

antibiotics lead the way in the drug market from 50s to late 70s.64 The late 70s witnessed the

discovery of another type of drugs based on the developments in the research in the field of

physiological chemistry.65 Bio-medical drugs, which were the outcome of these studies, can

be termed as the blockbusters of 90s.

8.1.1.2 Drug Production:

The manufacturing capacity of a country depends upon its technological and industrial

capability. A country with a strong chemical industrial base can meet the expense of the

production of the chemicals intermediaries required by pharmaceutical industry and

production of raw materials. It all depends upon their scientific and technological capacity.

On the basis of manufacturing, drugs may be classified as: bulk drugs and formulations. Bulk

drugs are the basic elements, which have the therapeutic value. But they cannot be used �� 59UNCTAD, Guideline on Technology Issues in Pharmaceutical sector in Developing Countries, Chapter II,

Para 47 (UN Publication, New York, 1982).�

60 P. L. Narayana, The Indian Pharmaceutical Industry: Problems and Prospects, (1985) at 87.�

61Id. at 1.�

62Id.�

63Id.�

64 Norm Alster, A Dry Period, Forbes, 24 April 1995 at 88.�

65Ahmad Mohamed Lawal and Izzatullah, ‘Legal Protection for Pharmaceutical Technology’, 19 Indian Bar

Review 101 (No. 3&4, 1992).�

��

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directly for therapy. Bulk drugs are changed into various formulations based on the dosage.

These formulations are the final products of the pharmaceuticals industry. The world

productions of pharmaceutical have achieved a rapid growth due to the progress in the

process technology, the high rate of discovery and introduction of new drugs etc.66

The ‘production’67 means the worth added at each stage of manufacturing process, whether it

is the manufacturing of active constituents in bulk from basic chemicals, the preparations of

finished new medical entities, or the repacking of imported generic materials to make

finished branded or unbranded generic products. The global production of pharmaceutical is,

however, concentrated up to mainly in few high-income developed countries and their

relative market share has been fairly stable over the past few decades. Two-thirds of the value

of medicines produced globally is accounted for by firms located in five countries viz. the

USA, Japan, Germany, France and the U.K. On the other hand, large quantities of traditional

and generic medicines are manufactured and consumed, particularly, in low-income

(developing) countries. As a developing economy, India accounts for about 1% of the world’s

production by value, but 8% by volume. It ranked thirteenth in the world production by value

of pharmaceuticals produced.68

The total value of global pharmaceutical production in 1999 was just over 320 billion US

dollars.69 This estimate supports the data produced by the European Federation of

Pharmaceutical Industries and Associations (EFPIA) which found a value of US$350 billion

in 2000.70Table-I shows trends in global production for the period of 1971-1999. The growth

in the pharmaceutical industry during this period was not balanced. The aggregate growth

rate of pharmaceutical production from 1971-1994 was 13.4% per annum. However from

1985-1999, it was just fewer than 10.5% per annum.

�� 66

Supra, P.L Narayanan, at 25.�

67 World Health Organization, The World Medicine Situation(2004), at 3.�

68 R. Balance, J. Pogany, H. Forster, The World’s Pharmaceutical Industries: An International Perspective on

Innovation, Competition and Policy. Report prepared by the United Nations Industrial Development

Organization. Aldershoot, UK, Edward Elgar, 1992. �

69Supra World Health Organization, (2004) at 4.�

70Id. �

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Table – I

Estimated International Value of Pharmaceutical Production, 1971-1999

(in US$ billion)

Year Production

1971 21

1973 29,5

1978 76,01

1981 76,278

1985 82,1

1990 175,9

1994 204

1999 327,2

Source: WHO estimates from database of UNIDO, OECD Health Data, World Development

Indicators 1987, 1992, 2001, International Financial Statistics Yearbook, 2002; P.L. Narayanan, Indian Pharmaceutical Industry Problems and Prospects”, New Delhi (1984) at 25.

In terms of value, the world production of the pharmaceutical production, however, is

controlled by the high-income or the developed countries, as is evident from Figure I. These

countries’ share of production increased from 89.1% in 1985 to 92.9% in 1999. On the other

hand, the combined share of middle and low-income countries decreased from 410.9% to

7.1% over the same period.71

�� 71

Id. at 5.�

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Figure I

Source: WHO estimates based on data reported by UNIDO, OEDC.

However, in 1980, the developing countries share, excluding China went up to 11%.72 This

data itself is not sufficient to assess the extent of pharmaceutical production in the developing

countries. Only a few developing countries such as Argentina, Brazil, Egypt, India and

Mexico possess the advanced production capabilities for manufacturing basic materials

essential for the pharmaceutical production.73 Other developing countries limited their

manufacturing activities to the formulations and packing from the imported raw materials.74

Table II shows the share of total pharmaceutical production in the five top producing

countries from 1985 to 1999. The combined share of these countries fell from 78% of total

pharmaceutical production in 1985 to about 67% in 1999, while both Switzerland and Italy

increased their output to about 4.5% each, just behind Germany and UK, and just outside the

top five. Since 1985, the top 10 medicines producing countries have accounted for 84%-88%

�� 72 William H. Frenic& Robert C. Collins, Cases and Materials on Patent Law, 5th Edition, at 73, paragraph 42.�

73Id. paragraph 43.�

74Id. �

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of the total world production. The USA remains the biggest single producer by value,

accounting for almost one-third of the total production and Japan the second biggest.

Together, these two countries produced 57% of the world’s pharmaceuticals in 1985 and 47%

in 1999. The USA lost some of its market share to Japan and Germany between 1985 and

1990. During the period of 1995 to 1999, the market share of the UK was 6% - 7%, while that

of France remained at 7% to 8%.75

Table-II

Share of Top Five Countries in World Pharmaceutical Production (by Value)

Share % in year Country

1985 1990 1999

USA 38 31 31

Japan 19 20 16

Germany 8 10 6

France 7 8 8

UK 6 7 6

Source: WHO estimates based on data reported by UNIDO, OECD.

The top 10 companies by value of sales accounted for almost half of the estimated world

sales for 2001, which was US $ 175.3 billion out of US $ 364 billion.76

8.1.1.3 Research and Development (R&D):

The development of medicines has undergone a major change from chemistry-based R&D

process to molecular biology-based processes. Developments in the exploration of DNA have

opened up the opportunity of understanding the genetic causes of diseases. As a result, many

new genomics -based companies have emerged.

Innovation is an essential part of the research based industry in contrast to the manufactures

of generic medicines. Innovative capability identifies scientific standing which is a

competitive advantage over other manufacturers, and a new production or process is very

important for which the companies mandate exclusive rights for a defined period in the form

�� 75

Supra, World Health Organization (2004) at 6-7. �

76Supra, World Health Organization (2004) op. cit. 5 at 8.�

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of patent protection, so that it remains sheltered against unfair competition. Patent protection

allows the manufacturers to fix prices according to what the market will bear, which is most

likely to be well above production cost for break-through medicines that are effective in

dealing with widespread and severe illness in high income markets. Thus, it is necessary that

some kind of monopoly in the form of patents must be provided so as to protect their

innovations and also such efforts done by an individual or by the firms must be rewarded for

taking expensive risks in developing new medicines.

The role of medicine patents in an era of increasingly global trade rules is a key issue in

arguments over access to essential medicines, as in case of anti-retroviral medicines

developed for people suffering from HIV/AIDS, most of who are found in developing and

low-income countries low.

The world pharmaceutical industry spent 25 billion US$ in 1995 on R&D.77 Private in house

R&D public institutions and universities are the main centers of undertakings relating to

pharmaceuticals R&D. However, the biggest contributions are from the private sector i.e.,

transnational pharmaceutical companies. Following several years of innovation from 1980 to

the mid-1990s, there is increasing evidence of a recent fall in the output of global R &D into

new medicines.78 While R & D spending tripled between 1990 and 2000, the annual number

of new medicines approved fell from its peak of over 50 in 1996 to 32 in 2000, the lowest

output for over 20 years. Only one in about 5000 early drug candidates survive to reach

market approval.79 This necessitates the protection of the fruits produced by hard work

besides involvement of money.

After the marketing costs, R&D is the second biggest item in spending profile of large

pharmaceutical companies. Companies like Pharmacia, AstraZeneca, Aventis and Pfizer all

spend at least 15% of their sales revenue on R&D, whereas Merck spends about 5%, though

the actual R&D budgets of these 10 big companies vary less than these percentage

differences. The R&D spending of top 10 pharmaceutical companies for the year 2001 has

been shown in Table III and IV respectively.

�� 77Maria Burke, Getting in the Bed with Biotech, Chemistry and Industry (18 March 1996).�

78 A. Pollack, Drug Research yields a Decreasing Return, New York Times, 19 April 2002; Taylor D. Fewer,

‘New Drugs From the Pharmaceutical Industry’, British Medical Journal 326 (7386)408, 26 February 2003. �

79Supra, World Health Organization (2004) at 16.�

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Table-III

R&D spending of 10 major pharmaceutical companies, 2001

Rank Company Percentage of spending

out of sales on R&D

1 AstraZeneca (Sweden/UK) <15

2 Pharmacia (USA) <15

3 Aventis (France/Germany) <15

4 Pfizer (USA) 15

5 Roche (Switzerland) 12.5

6 Novartis (Switzerland) <12.5

7 Galaxo Smith Kline (UK/USA) 12.5

8 Bristol Myers Squibb (USA) <11

9 Johnson & Johnson (USA) 11

10 Merck (USA) 5

Source: Moses Z. The Pharmaceutical Industry Paradox .Reuters Business Insight, 2002

Table – IV

R&D Expenditures on 10 Major Pharmaceutical Companies, 2001

Rank Company Percentage spending in

US $ billion

1 Pfizer >5

2 GSK >4

3 Johnson & Johnson >4

4 Aventis >4

5 Astra Zeneca >4

6 Novartis <2.5

7 Merck <2.5

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8 Roche >2.5

9 Pharmacia >2.5

10 Bristol Myers Squibb

Source: Moses Z. The pharmaceutical Industry Paradox. Reuters Business Insight, 2002

Table III and IV show that R&D activities were concentrated in the hands of few

transnational pharmaceutical companies. Further Table V supports the above claim that the

developed countries own top 16 pharmaceutical companies whose value of sales and

expenditure on R&D was more than the total market capital of many developing countries.

Table V

World’s Top 16 Pharmaceutical Companies, by Assessment of Sales (1977-2001)

Company (200/rank order) Country Rank

1977

Rank

1985

Rank

1998

Rank

2001

Pfizer (incl. Warner Lambert) USA 8 6 5 1

Glaxo Smith Kline (GSK) UK/USA - 12 12 2

Merck USA 2 1 1 3

Astra/Zeneca Sweden/UK - - 4 4

Aventis (incl. Hoechst) France/Germany - - 2 5

Bristol Myers Squibb USA 14-13 10 6 6

Johnson & Johnson USA - - 9 7

Novartis (incl. Ciba Giegy) Switzerland - - 7 8

Upjohn/Pharmacia USA 11 13 - 9

Wyeth/American Home products USA 6 2 11 10

Eli Lilly USA 10 9 8 11

Roche Switzerland 5 15 10 12

Bayer Germany 3 5 3 13

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Schering-Plough USA - - 14 14

Abbott USA - 8 13 15

Takeda Japan 15 - - 16

Source: World Drug Situation 1988, SCRIP 2000, Company Reports.

The pharmaceutical industries spend a huge amount for marketing of their medicines. The

market expenditure is estimated to be 30-35% of the turnover.80 These companies also spend

a huge amount for establishing brand names in order to capture and maintain the market.

More than 40 percent of the trademarks used throughout the world are related to

pharmaceutical industries.81 Brand name promotion alone accounts for 20-30 percent of the

gross expenditure of the pharmaceutical firms.82 This gives a choice to the consumers in the

product selection. This way of promotion of products facilitates their competition instead of

price competition in the pharmaceutical market. Thus it is the brand name that dominates in

the pharmaceutical sector.

All the above figures in the tables clearly indicate that the R&D spending in case of the

developing countries is very less due to allocation of public funds in other fields. In case of

India, most of the Five- Year Plans, public funds are allocated in the field of defense,

agriculture, education, health etc. There is a great need to develop the innovation in the field

of developing drugs to protect public health, which can be possible by increasing the public

funds for research and development in the field of pharmaceuticals and by providing more

incentives for the development of such industries.

8.1.1.4 International Trade in Pharmaceuticals:

International trade grew rapidly in medicines between 1980 and 1999, from around US $ 5

billion in 1980 to almost US$ 120 billion in constant price terms.83 Again international trade

in pharmaceuticals is dominated by high-income industrialized countries. In 1999, they

�� 80CasadioCaludioTarabusi, “Globalization in the Pharmaceutical Industry, Technology Change and Completion

in a Triad Perspective” in Ghayur Alam, Impact of proposed changes in IPR in India’s Pharmaceutical

Industry. Prepared for Indian Council for Research on International Economic Relations and UN

Development Programme (December 1996) at 2. �

81Supra ,William H. Frensic& Robert C. Collins, Paragraph 49 at 74.�

82Id. �

83Supra, World Health Organization, (2004) at 21.�

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accounted for 93% of global exports and 80% of global imports, by value. However, between

1980 and 1999 middle-income countries’ share of world exports fell, and the shares of both

low and middle income countries in the world imports tumbled considerably.

Figure II shows the shares of countries by income level in the world pharmaceutical exports

from 1980 to 1999. The share of the high-income developed countries rose form 90.5% to

92.9% of the world total while that of middle-income developing countries dropped from

8.3% to 4.2%. The export share of some low-income countries like India, Pakistan and

Indonesia doubled or more than that from 1.1% to 2.92%.

Figure – II

Source: WHO estimates based on data from Commodity Trade Statistics Section, ITSB, United Nations Statistics Division, New York.

The low-income countries produce predominantly for their local markets. Even in India, with

over 20,000 pharmaceutical manufacturers, where export share of local producers tripled in

1985, less than 20% of the total production enters the international trade. China is the only

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country in the group of developing countries, which exports most of its pharmaceuticals to

industrialized countries, whereas all the other exporters in the group supply mainly to the

developing country markets. Table VI shows an analysis of major pharmaceutical exports

from low and middle income countries in 1998.

Table VI

Pharmaceutical Exports from Developing Countries, 1998

(In US $ million)

Exporter

Exports to

industrialized

Countries

Exports to

developing

countries

Exports to

developing countries

as % of total

China 1079 592 35.4

India 288 576 66.7

Mexico 304 410 57.4

Argentina 25 277 91.4

Republic of Korea 85 204 70.4

Brazil 64 183 74.1

Columbia 10 173 94.5

Source: Adopted from H. Bale: Consumption and trade in off-patented medicines. Commission on Macroeconomics and Health, Working Paper WG4:3, May2001. Available at: http://www.chhealth.org/cmh_papers&reports.htm #Working Group4.

The share of high-income countries rose form 69.9% of total imports to 79.3%. However the

share of both low and middle income countries fell over the same period from1980 to 1999

from a combined 30.1% of the world market to 20.7%. Figure III shows the shares of

countries by income level, in the world pharmaceutical imports from 1980 to 1999.

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Figure-III

Source: WHO estimates based on database from Commodity Trade Statistics Section, ITSB, United Nations Statistics Division, New York.

Further Table VIIshow pharmaceutical imports from low or middle income countries that

account for minority share in each of these countries.

Table-VII

Pharmaceutical imports of low- and middle- income countries, 1998

(in US $ million)

Importers Industrialized

Country sources

Developing

Country Sources

Imports from

developing countries

as % of total

Brazil 1325 263 16.6

Mexico 955 109 10.2

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Argentina 638 139 17.9

Republic of Korea 463 92 16.6

China 423 103 19.6

Columbia 294 202 40.7

Source: H. Bela, op. cit.

Many countries are both importers and exporters. In 1999, Switzerland and Germany were

the biggest net exporters, and India and China both appeared in the top 10 net exporter group

in the descending order as: Switzerland, Germany, Ireland, UK, Sweden, France, Denmark,

Belgium, China and India. The USA and Japan, the world’s two biggest producers, were also

the biggest net importers in 1999.

8.1.1.5 Consumption of Medicines:

In 1999, the 15% of the world’s population who live in high-income countries purchased and

consumed about 90% of total medicines, by value. This pattern of global sales and

consumption has increased over the past 15 years, with the share of low-income countries

growing.84 In low-income countries, the share of pharmaceuticals consumed fell from 3.9%

of the total in 1985 to 2.9% in 1999.85

It is evident the international trade in pharmaceuticals means that many medicines are not

consumed in the country where they are produced. Thus they have to be exported in the

international markets. The medicines consumed depend upon the production plus the value of

its imports and minus the value of its exports. Thus consumption is measured by using the

production and trade data presented previously. Table VIII shows the world pharmaceutical

consumption from available data according to countries; level of income for the years 1985,

1990 and 1999.

�� 84

Supra, World Health Organization (2004) at 31.�

85Id.�

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Table-VIII

Global pharmaceutical consumption by countries’ level of income, 1985-1999

(in US $ billion)

1985 1990 1999 Country

Income

Level No. Value % No. Value % No. Value %

Low 8 3,512 3.9 8 4,675 2.7 8 9,222 2.9

Middle 14 5,884 6.6 19 13,121 7.5 18 18,614 5.9

High 22 79,006 88.9 20 156,578 89.8 22 289,822 91.2

Total 44 88,402 100 47 174,374 100 48 317,658 100

Source: WHO, the World Medicines Situation, 2004 at 32.

In 1999, 15% of the world’s population lived in high-income countries, 495 in the middle-

income and 36% in low- income countries. Approximately 15% of the world’s population

bought almost 90% of the world’s medicines; at over one-third of the world’s population

bought less than 1% of the world’s pharmaceuticals. For the half of the world’s population

who live in middle income countries, their share in total sales accounted for a little over 10%

in 2000.86

The pharmaceutical market consists of innovative pharmaceutical products with patent

protection, they are often called original brands, which are protected from competition in the

jurisdiction of the patent for the life of the patent, that is period of protection afforded by the

country granting protection in compliance with the TRIPS Agreement. Legal competition in

the sub-market is limited to competition by ‘therapeutic equivalent’ medicines with either a

different composition or manufacturing process for the original brand. At the other end, are

some generic pharmaceuticals known as ‘commodity generics’. Generics in general are

pharmaceutical products usually intended to be interchangeable with the originator product,

marketed after the expiry of patent or other exclusivity rights and usually manufactured

without a license from the innovators company. This large category includes pharmaceuticals

that were formerly patent protected, but whose patent has expired. It also included

pharmaceuticals that have never been patented, as well as copies of patented pharmaceuticals

in countries with such a patent. Production of generic medicines has been a very common

�� 86

Supra, World Health Organization (2004) at 32.�

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phenomenon in most the developing countries having the well-developed generic companies.

The medicines produced by such companies often cater the health needs of not only of their

country, but also of the needs of other developing countries, as has been mentioned earlier. It

is also very important to ascertain if, before the expiry of patents copies of the medicines

produced and marketed are legal or illegal. It depends on the patent jurisdiction in which such

pharmaceuticals are manufactured, as explained diagrammatically in Figure IV.

Figure IV

Major Constituents of the Medicine Market

Changes in the international trade law under the TRIPS Agreement to strengthen the

protection of intellectual property rights, especially, patents have consequently brought

changes in the national legislations on intellectual property of the WTO members to promote

opportunities for competitive pricing of generic medicines. In 2005, patent rights on new

medicines granted as a result of product patenting were required to be respected and

implemented in WTO member countries except those classified as ‘least developed’ that have

��

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been given more transition period as compared to developing economies under the TRIPS

Agreement, which has been extended up to 2016.

The generic market shares for 52 high-, middle- and low-income markets, for which

comparable data are available for 1990 and 2000 which is shown in Figure V. ‘Other brands’

include branded generics and other copy drugs, both legal and pirated. These other brands in

addition to unbranded generics contributed about US $ 87 billion in 2000, that is, about 30%

of value of total world sales.87

Figure V

Source: IMS Health, IMS MIDAS Customized Insights (October 2001).

The rate of growth of ‘originator’ and licensed medicines in some of the countries in

transition to mixed economies has been greater than the averages. For example in the Czech

Republic, originator brand and licensed medicines grew from 15.5% the total market to

�� 87

Id., at 35.�

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nearly 45% from 1990 to 2000.88 Hungry, the Slovak Republic and the Republic of Korea

also experienced faster than average growth in this category of medicines. In contrast

Pakistan’s market showed the largest recorded shift away from originator and licensed

medicines, and towards ‘other brands’ from 1990 to 2000. In addition markets, both branded

and unbranded, were all in high-income countries viz., USA, Germany, France, UK, Italy,

Brazil, Spain, Argentina, Mexico, and Canada. This is mainly due to the different health

financing arrangements. As in the USA, about 64.5 million people, that is, almost a quarter of

the total population lacks any insurance cover for medicine costs.89 However, in contrast,

Germany and Japan, people have been covered by social insurance for a long time. For

unbranded generics, the USA and the UK represent the major markets where generics are

traded at very low prices as commodity items. In USA, the average price of an unbranded

generic prescription medicine in 2002 was US $ 14.70 in contrast to price of brand name

drugs both patent and branded generics, which was US $ 77.02.90

The expiry of patents also creates opportunities for more competition in manufacture of

commercially successful medicines. Table IX shows patent expiry dates for 16 products,

together worth US $ 27 billion in sales (1999) and due to off-patent before 2005.

Table IX

Expiry of Patents of Pharmaceutical Products up to 2005

Product Manufacturer Patent Expiry 1999 Sales

US $ billion

Clarithromycin

Lisinopril

Omeprazole

Ciprofloxacin

Pravastatin

Cefuroxime

axetil

Abbott

Astra Zeneca

Astra Zeneca

Bayer

Bristol-Myers

Squibb

Glaxo Smith Kline

2002

2001

2001

2003/4

2005

2000/3

2002

1.25

1.22

5.91

1.69

1.8

0.42

0.45

�� 88

Id., at 36.�

89 D H Kreling et al., Prescription Drug Trends: A Chart Book, 2002. �

90Milt Freudenheim, ‘As drug patents end, costs for generic drugs surge’, New York Times, 27 December 2002.�

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Nabumetone

Ondansetron

Fluoxetine

Nizatidine

Lisinopril

Simvastatin

Azithromycin

Fluconazole

Loratidine

Lovastatin

Glaxo Smith Kline

Glaxo Smith Kline

Eli Lily

Eli Lily

Merck

Merck

Pfizer

Pfizer

Schering-Plough

Merck

2005

2001/3

2002

2001

2005

2002/5

2004

2002/4

2001

0.42

2.61

0.35

0.81

4.49

1.3

1.0

2.7

0.6

Source: Global Generic Pharmaceuticals, SCRIP Report BS1140, 2002.

In the area of generics, the developed countries especially, the US companies largely

predominate among the world’s leading generic medicine producers. In 1997, almost half of

the top 15 generic medicine manufacturers were from the USA, the biggest generic market, as

shown in Table X.

Table X

World’s Leading Generic Companies, 1997

Rank Company Country (US $ million)

Sales

1

2

3

4

5

6

7

8

9

10

11

12

Novartis

Teva

ICN

Merck

Ivax (IVX Bioscience)

Mylan

Apotex

Schein

Ranbaxy

Ratio pharm

Hexal

Novo pharm

Switzerland

Isreal

USA

USA

USA

USA

Canada

Germany

India

Germany

Germany

Denmark

981

875

752

651

602

555*

500**

490

433***

430**

420**

400**

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13

14

15

Barr

Alpharma

Watson

USA

USA

USA

377***

329

324

Note: * year ending 31 March 1998; **estimated; *** year ending 30 June 1998. Source: Hay and Atkinson: SCRIP’S Complete Guide to the World Generic Drugs Market, vol. 2, 1999.

8.1.1.6 Access to Essential Medicines:

Access to essential medicines remains a major objective of people everywhere. In 1975, less

than half of the world’s population was estimated to have regular access to essential

medicines.91 In 1999, in about 45 African countries 267 million people had no access to

medicines, whereas, in 35 American countries it was 179 million, in 46 European countries it

was 114 million, in India 649 million and China 191 million people were without access to

essential medicines. Thus about 30% of the world’s population, or between 1.3 and 2.1

billion people, were estimated to be without access to essential medicines. In India, 50 to

65% of the population had no regular access to essential medicines.92 Availability of the

essential medicines is lacking due to one of most important factors, that is, unaffordable

prices.

For example, when a course of treatment for peptic ulcer costs twice the monthly wage of a

government employee as in Cameroon,93 people prefer to buy generic medicines, particularly

unbranded generics, which are usually less expensive than newer patented medicines. In both

high- and low-income countries many governments encourage their use to control overall

costs.

About half of all medicines are inappropriately prescribed, either dispensed or solid. On one

hand, it is also true that the sale of about two-thirds of global antibiotics occur without

prescription, and at the other, consumption of the antibiotics is excessive, as in case of

Indonesia, Pakistan and India, where about 70% of patients are prescribed antibiotics.94 This

inappropriate use of medicines is not only widespread, but costly and extremely harmful both

to the individual and the population as a whole.

�� 91

The World Drug Situation, Geneva, World Health Organization 1988. �


93 Are Medicine Prices a Problem? Essential Drugs Monitor, No. 033, Geneva, World Health Organization,

2003. �


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Thus, in order to make medicines available at affordable prices, the medicines regulatory

authorities most function effectively.

8.1.1.7 Pharmaceuticals and Post-TRIPS Period in India:

In 2004, more than 60,000 preparations in nearly 60 categories of drugs were available in the

Indian market. The prices of drugs over a period of ten years from 1996-2005 are shown in

Table XI.

Table XI

Price Comparison for Selected Categories of Widely Prescribed Medicines in India

from 1996-2005

S.

No.

Medicine & Dosage

(Pack) 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

Antibiotic Average Price in (INR) rounded to whole rupee

1. Ofloxacin 200mg

(4 tab) 94 97 96 97 94 68 39 22 20 19

2. Ciprofloxacin

500 mg (10 tab) 66 69 69 63 60 60 59 58 58 57

3. Norfloxacin

400 mg (10 tab) 42 38 34 30 29 29 26 24 25 22

4. Pefloxacin

400 mg (4 tab) 18 18 17 17 17 17 18 18 18 18

Anti-Ulcer

5. Ranitidine

300 mg (10 tab) 25 19 18 16 16 13 13 12 13 13

6. Famotidine

400 mg (10 tab) 31 27 22 15 8 8 7 7 4 5

7. Omperazole 20 mg

(10 tab/capsule) 34 35 35 35 37 36 36 33 36 36

Cardiac Care

8. Lisinopril

5 mg (10 tab) 31 32 32 32 30 31 33 32 32 35

9. Enalapril Maleate

5mg (10 tab) 15 16 16 15 16 16 16 17 17 17

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Anti-Histamine

10. Astemizole

10 mg (10 tab) 15 15 16 16 16 16 17 16 15 15

11. Ondanesteron HCL

4 mg (10 tab) 74 73 84 84 74 78 80 75 66 58

Anti –

Tuberculosis(TB)

12. Combination Drug A

(1 kit) 15 17 17 17 17 18 17 16 15 17

Anti-Malaria

13. Chloroquine

(10 tab. 250 mg) 7 9 9 9 9 9 8 7 7 11

Anti-Viral

(Anti -AIDS)

14. Acyclovir

(10 tab. 200 mg) 192 149 130 69 69 57 58 56 54 58

Cholera Treatment

15. Tetracycline

( 4 Cap, 500 mg) 8 8 8 8 8 8 8 8 5 5

Anti – Fungal

16. Fluconazole

(4 Cap, 50 mg) 42 42 41 41 41 41 42 42 42 42

17. Ketoconazole

200 mg (10 tab) 112 109 122 115 132 138 148 150 155 152

Source: IDR (Indian Drug Review), Jan-Feb issue each year, Mediworld Publication Group, New Delhi. Data Compilation: National Institute of Pharmaceutical Education and Research (NIPER), Mohali, India, 2005.

The TRIPS Agreement was the result of insistence by the industrialized countries like the

USA and European Union against the wishes of developing countries, including India. TRIPS

provided for 10 years transition period to the developing countries for induction of patents in

drugs, chemicals, food products and seeds. Many suspicions were raised and there were

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oppositions against the amendment in the patent laws to make them TRIPS complaint. Many

developing countries expressed their resentment against the product patenting for

pharmaceuticals. Reactions from various factions in India are worth mentioning, which are as

under:

• According to A.V. Ganesan,95 protection of technology meant for the industrialized

world, protection of their market power and prevention of competition from entering the

market. Thus, it was claimed that lack of intellectual property protection and distorted

international trade should, therefore, be addressed by the GATT disciplines. Further it

was argued that of the areas covered by TRIPS, it was only in the area of patents that the

norms and standards of protection envisaged in the TRIPS Agreement were significantly

different from their own polices, laws and regulations. He asserted that it was, therefore,

somewhat unfortunate that Indians have created an impression in the world that India did

not believe in or respect intellectual property rights. Further that India claimed to possess

the second largest reservoir in the world of scientists, engineers and skilled technical

manpower.

• Balraj Mehta 96(1995), felt that India had taken a hurried step through the extraordinary

provision of promulgation of an ordinance for amending the Indian Patent Act of 1970.He

suggested that India should not succumb to the pressure of USA and other industrialised

countries.

• JaideepLahiri97 said that pharmaceutical companies were in a fix with the Drug Controller

of India, attaching rigid preconditions on patents before registering a new drug. He

expressed that during the last couple of months; the Drug Controller had sent back a

number of registration applications by Indian companies and had sought specific

information on patents. However, Schedule V referred to data on clinical tests and

toxicity of drugs, and has nothing to do with the patents. There was no doubt that the

Drug Controller’s office’s action was at the behest of the multinational lobby, as alleged

by a spokesman of the Indian Drug Manufacturers Association (IDMA).

�� 95 P. K. Vasudeva, India and World Trade Organization: Planning and Development, (2000) at 43. �

96Balraj Mehta, “GATT Whip: Supine Response” The Tribune, June 20, 1995. �

97JaideepLahiri, “Information on patent sought for registration of drugs’ Economic Times, April 24, 1995. �

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• Devinder Sharma98 said that the time was running out for India. Scrambling for patenting

India’s rich bio-diversity and indigenous knowledge on the use and conservation of plants

and animals, foreign companies were desperately scouting the countryside before the

borders were sealed. Bureaucratic wrangling has so far held up the setting up of the DNA

finger-printing center. With little hope of scientific priorities being demarcated in the

future, what is more important is to set up a mission mode on patent protection. Allowing

the foreign companies to have a free play in intellectual property rights without first

creating an adequate mechanism to safeguard the national interests will only lead to an

economic disaster”.

• Chindu Sreedharan (1996)99 said that they have done with neem. Now they have done it

with turmeric. Yet the Government of India refuses to do anything about protecting our

right to the country’s genetic wealth and received wisdom. The patent granted in the US

on the wound-healing properties of turmeric has caused much dismay among scientists,

but the Indian government is calm. Sreedharan reveals how this complacency could rob

us of our genetic wealth and traditional knowledge. The implications are as grave as they

are in the case of neem. These people are taking advantage of the age-old Indian

knowledge to gain monopolistic control on our own natural resources. Patent examiner

Shep K. Rose’s analysis of the application was that though the methods of healing by

turmeric in ointment and some other forms were public knowledge – at least three other

patents on turmeric’s different properties have already been granted in the US-the usage

of turmeric in the powder form was not known. As of now, the patent may have any

effect here. But once we revise our patent laws as provided by the TRIPS, the trans-

nationals are going to have the upper hand.

• Manmohan Singh100, the then Finance Minister of India put to rest the fear that drug

(medicine) prices would go up after the implementation of the accord. About 90% of the

drugs used in India were not covered by the patents laws in the GATT. Even in the case

of balance 10-15% drugs, the prices would not go up.

�� 98Devinder Sharma, “Patent or perish”, The Pioneer, April 10, 1996. �

99Chindu Sreedharan, “Government sleeps while patents pirates steal our wealth”, Sunday Observer, July 14-20,

1996.�

100Manmohan Singh, “India Ready to Participate at WTO,” Economic Times, January 18, 1995.�

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• According to “The Hindu” (1996)101 the national working group on patent laws had

appealed to members of Parliament to prevent the passage of amendments to Indian

Patent Act and opposed moves to legislate a global regime on investment in the World

Trade Organization. It had suggested organizing an international conference of

representatives of like-minded countries to strengthen those initiatives.

• Watal (2000)102 predicted the likely increase in pharmaceutical prices in India, after

product patenting of 22 existing pharmacy products. The increase could be between 26

per cent and 42 percent.

• Subramaniam (1994)103 predicted an increase of 67% for India following product patents.

Fink (2000)104 had predicted an even higher range – 182 to 225 percent.

This suggests that in general it had been accepted that the introduction of product patents was

likely to bring an increase in the drug prices.

Finally, India’s ambassador in Geneva deposited with the GATT, an instrument of ratification

of the final accord of the Uruguay Round (UR) and confirmed India’s formal joining with the

WTO. In order to meet its obligations under the WTO, India amended its Patents Act, 1970 in

1999, 2002 and 2005 respectively, thereby ultimately introducing product patenting in India.

Initially two Ordinances were passed by the President amending the Patents Act that provided

for filing applications for products patenting in the fields of agriculture, chemicals and

pharmaceuticals. It also provided for grant of exclusive marketing rights (EMRs) to the

applicants after satisfying certain specified conditions. After that multinational companies got

an opportunity to apply for products in agricultural, chemical and pharmaceutical sectors.

�� 101

The Hindu, “Anger and despair” June 13, 1996.�

102See Final Report of the study on Impact of TRIPS on Pharmaceutical Prices with specific focus on Generics

in India National Institute of Pharmaceutical Prices with Specific focus on Generics in India. National

Institute of Pharmaceutical Education & Research (NIPER),India, April 2006 at 83 Available at:

www.niper.gov.in (visited on 19th Jan, 2011); Also seeJayshreeWatal; “Introducing Product Patents in the

Indian Pharmaceutical Sector, Implications for Prices and Welfare”, World Competition: Law and

Economics Review, December, 20(2), (1996) at 5-21. �

103Id. Also see A. Subramaniam, “Putting some Numbers on the TRIPS Pharmaceutical Debate’, International

Journal of Technology Management, Vol. 10, No. 10, (1995), at 252-68.�

104Carsten Fink, ‘How Stronger Patent Protection in India Might Affect the Behavior of Transnational

Pharmaceutical Industries.’ (2000), at 1-46.�

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They were also allowed to avail of exclusive marketing rights for five years after fulfilling

certain conditions, till grant or rejection of patent application, whichever was earlier.

However, the data obtained after the market analysis through various studies reveals that

fears pertaining to TRIPS related increase in drug prices in India are unfounded. As analysis

of data on prices of selected drugs produced by generic pharmaceuticals companies,

following the TRIPS Agreement shows that prices of drugs in India have been by and large

stable as shown in Table XI. No sudden changes in prices have occurred even after

implementation of TRIPS and were unlikely to occur even after introduction of the product

patents, which were introduced in 2005, as majority of drugs marketed in India were

Generics. Moreover, the Patent Act of 2005 discourages ever-greening by not allowing

patents for new use of existing drugs under Section 3(d) of the Act. Besides, there is nothing

in the TRIPS Agreement which prevents India from continuing to use price regulation to

protect consumers against patented drugs being sold at high prices. Additionally, it is not the

patent which alone affects the price of medicines as the same could also be controlled by the

improving manufacturing capability and expertise for bringing about technical improvements.

In 2005, the top ten pharmaceutical companies in India, as reported by the German Chemicals

Association, are shown in Table XII.

Table XII

Top 10 Pharmaceutical Companies in India in 2005

Rank Pharmaceutical Company

1 Ranbaxy

2 Cipla

3 Dr. Reddy’s Laboratories

4 Lupin

5 Nicolas Piramal

6 Aurobindo Pharma

7 Cadila Pharmaceuticals

8 Sun Pharma

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9 Wockhardt Ltd.

10 Aventis Pharma

Source: Indian Pharmaceutical Industry and Intellectual Property Laws: Attempt to Strike a Balance, February 2010. Available at: www.foxmandallittle.com

As reported in an article in February 2010,105 Indian Pharmaceutical industry ranked fourth

in terms of volume by contributing around 8% of the global pharmaceutical production and in

terms of sale accounted for around 1.5% of the world’s total production.

The Provision incorporated under Section 107A(a), often known as ‘Bolar Provision’,

inserted by 2003 Amendment to the Patent Act of 1970, allows any drug manufacturer to

experiment with any patented drug with a view to produce data regarding that drug to be

submitted to the Drug Control Authority of India, so as to finally seek permission to produce

and market the generic drugs after expiry or invalidation of the patent. Thus, a generic

company may apply for marketing approval of a generic drug even before the expiry of the

patent on that drug by making an application to the Drug Controller General of India (DCGI)

under the Bolar Provisions in the Patents Act.

Grant of compulsory licenses by amendment of Section 84 and introduction of Section 92(A)

into the Act and parallel imports are also important parameters to check the increasing drug

prices so as to make available the medicines to the public at affordable prices.

After 2005 Amendment in the patent laws in India, there has been a rapid increase in the

number of patent applications filed and patents granted in the area of chemicals and drugs.

Up to 2008, the figures show that pharmaceutical industry has boomed up, as shown in Table

XIII.

Table XIII

Patent Applications filed and granted, 2002-08

Year Patent Applications Patents Granted

2002-03 1742 711

2003-04 5477 1028

�� 105Indian Pharmaceutical Industry and Intellectual Property Laws: Attempt to Strike a Balance, February 2010.

Available at: www.foxmandallittle.com.�

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2004-05 6232 765

2005-06 8021 1597

2006-07 9593 2787

2007-08 10642 5540

Source: Id., Fox Mandal Little

8.2 Rights of Patentees:

Article 28 of the TRIPS Agreement protects the rights of product patentee against third party

from making, using and selling the patented product. It has been inflated to include the

associated rights of offering for sale and importing. These additional rights would be helpful

in making the proof of infringement easier in patent litigation. As without the right to exclude

third parties from importing, and excluding them only from selling, would give license to

third parties to import patented inventions from infringing sources and distributing them free

of cost. The rights of a process patentee are explicitly extended from merely the use of

patented process to rights identical to that of a patented product.

Article 28(1) (a) of the TRIPS Agreement specifies that if a WTO member issues a patent ,

that patent must confer on its owner the exclusive right to prevent the unauthorized making,

using, selling, offering for sale , or importing of the patented invention. In addition, Article

28(1) (b) of the TRIPS requires that patents confer the right to prevent the unauthorized use

of a product that results from a patented process invention, including importation of that

product into the country where the process patent originated. Thus patent enables its owner to

prevent the unauthorized use of the patented technology through legal interventions by

affording an opportunity to initiate proceedings for infringement. This provision under the

TRIPS goes beyond the rights conferred by the Paris Convention. Article 5 quarter of the

Paris Convention allows such rights to a process patentee with respect to an imported

product, only if such rights are accorded to him by the legislation of the country of

importation and not otherwise. During the TRIPS negotiations, the developed countries

contended that without extension of such protection beyond the borders, it would be easy for

an infringer to use the patented process in a country where the process is not protected and

violate the rights of the patentee. Though, protection is now required to be provided by every

member country of the WTO-TRIPS under the compliance to its minimum norms of the

TRIPS Agreement to both the process and product patents.

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8.3 Burden of Proof:

Normally, the petitioner is under an obligation to prove that there is an infringement of his

patent by the defendant. However, in case of process patents, Article 34 of the TRIPS has

reversed the burden of proof on the defendant who is required to prove that the process used

by him to obtain an identical product manufactured by him is different from the patented

process of the petitioner. Members have been given the choice of one of two circumstances

under which any identical product produced by the defendant without the authorization of the

patent owner shall, in the absence of proof to the contrary, be deemed to have infringed the

patented process:

• If the product obtained by the patented process is new; or

• If there is considerable likelihood that the identical product was made by the

patented process and the patent owner has been unable through reasonable efforts

to determine the process used.

In case product obtained by the patented process is new, than the national judicial authorities,

in the absence of proof to the contrary, have to deem the identical product to be different

from the product obtained by the patented process, if such product is new. Here the petitioner

have to produce the evidence that the patented product is new and identical to that put out by

the defendant in order to reverse the burden of proof.

However in case of second option, the petitioner first has to provide evidence that there is

substantial likelihood that his patented process was used and that he has made reasonable

efforts to actually find out the actual process used by the defendant. The national courts

would decide if this is indeed the case, then the courts would reverse the burden of proof.

Similar provision is found in the national legislations of WTO countries. For example,

Section104-A of the Indian Patent (Amendment) Act, 2005 contains a provision where, in

case of suit for infringement of process patent used for obtaining product is in question, the

court may direct the defendant to prove that the process used by him to obtain the product,

identical to the product of patented process is different from the patented process.

8.4 Term of Patent:

The laws of many developing countries before the TRIPS Agreement, provided for protection

for the periods of 5, 7, 10 or 14 years depending upon the nature or subject-matter of the

invention. Indian patent laws provided for the protection ranging from 5 and 14 years from

the date of sealing of the patents, prior to Patent (Amendment) Act, 2002, depending upon the

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categories of invention. However, the TRIPS Agreement mandates for a minimum of 20

years of protection, irrespective of the nature of the invention and also whether it is a process

or product patent.106 The period of 20 years shall be reckoned from the date on which the

application for patent is filed. As compared to the developing countries, many developed

countries provided protection to the patents for a period of 14 to 16 years. At the initial stages

of the TRIPS negotiations, Japan proposed a term of 15 years from the date of grant, on the

basis of provision contained in its national laws. Australia and New Zealand were in favour

of adopting a term of 16 years from the date of the filing a complete specification, as

prevalent in their laws. Though the US provided for a protection of 17 years in its national

laws, it along with the European community put forward a proposal of protection for a period

of 20 years from the date of filing of the patent application. This provisions was introduced

not only to facilitate protection to new inventions but also to the existing inventions as on 1

January 2000, where under Article 70(2) of TRIPS, the developing countries were obliged to

apply the term of 20 years from the date of filing of patent application in respect of the pre-

existing patents so as to afford the patentees an opportunity to enjoy monopoly right over

their patents for a complete term of 20 years instead of lesser terms, as was stipulated in the

pre-TRIPS provisions of the national legislations of such countries. Consequently, many

countries extended the term of protection and those failing to do so were asked to extend such

protection, For example, on account of Portugal’s failure to comply with the minimum

protection term to be afforded to the patents from the date of filing of the patent application,

the US filed a WTO dispute against it in 1996 for not extending such protection for the 20-

years to the patents filed before 1 June 1995. Consequently, Portugal modified its Patent law

to extend the protection to patents for a term of 20 years.107

In addition, Article 70(4) of the TRIPS Agreement provides that where due to a new

obligation in respect of patents or other IPRs accepted under TRIPS, any prior use involving

significant investment in the exploitation of the patent by other person, other than the owner,

becomes infringing at the time of acceptance of the TRIPS Agreement by the member

country, such use may, at best, be permitted to be continued only upon the payment of

equitable remuneration to the right holder. Thus in the context of patents, this provision

would apply to investments undertaken by domestic entities anticipating patent expiry but

�� 106Article 33, TRIPS Agreement.�

107JayashreeWatal, ‘Intellectual Property Rights in the WTO and Developing Countries’, (2001) at 115. �

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where patent term has been extended to 20 years from the date of filing of the application on

account of change introduced by the TRIPS Agreement.

9. PATENTS AND DOHA DECLARATION:

Despite the fact, that the WTO claims to provide level playing field to all the players in the

field of international trade, it was observed that significant gaps exited in the Agreement with

respect to patent protection and access to life-saving medicines in developing and least-

developed countries. Therefore, many developing countries and NGOs demanded an

improvement in the situation of medicinal access to the poor people in such countries, who

could not afford drugs (medicines) at higher prices especially to fight against public health

epidemics such as tuberculosis, malaria and HIV/AIDS. Thus they campaigned for both

structural and operational changes within the WTO.108 Those groups were successful in

getting public health issues on the agenda at the Third Ministerial Conference, held in Seattle

in 1999. However, several key issues relating to health could not mature. Then it was in the

Fourth Ministerial Conference, held in Doha, Qatar in 2001( Doha Round) that a Declaration

on the TRIPS and Public Health, often known as Doha Declaration, restating and affirming

the right of the Member States to take measures to public health was adopted.109 The Doha

Declaration also clarified certain controversial textual ambiguities contained in TRIPS. It also

asked the developed member countries to provide assistance to developing as well as least

developed countries to tackle with the public health crises.110

Though Doha Declaration was successful to a greater extent to settle many contentious issues

relating to TRIPS, it did no completely resolve the debate over patent protection in the

developing world. A very important and highly contentious issue relating to grant of

compulsory licenses for export of drugs (medicines) to the countries suffering from public

health problems, with insufficient or no manufacturing capabilities, was left unsettled. The

issue could not be resolved as the U.S wanted the list of epidemics eligible for compulsory

�� 108

See WTO, Non-Governmental Organization: Working Papers, available at:

http://www.wto.org/english/forums_e/ngo_e/posp21_e.htm (last visited 22 Feb, 2011). �

109 WTO Ministerial Conference, Declaration on the TRIPS and Public Health, WT/MTN(01)/DEC/2

(Nov.20,2001).�

110Bryan C. Mercurio, ‘TRIPS, Patents, and Access to Life-Saving Drugs in the Developing World’, 212

Marquette Intellectual Property Law Review, VOL 8:2(2004).�

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licenses to be limited and specific.111 Article 31(f) of the TRIPS stipulates a condition that

issuance of compulsory licenses must be ‘predominantly for the supply of the domestic

market of the member authorizing such use’. In order to deal with the problem created by the

implementation of Article 31(f) by the developing countries, thereby limiting the supply of

medicines produced in lieu of compulsory license for exploiting the patented medicines, to be

supplied in the domestic markets, the Doha Declaration fixed 31 December 2002 as deadline

to address the difficulties faced by the WTO members with insufficient or no manufacturing

capacities, as addressed in Para 6 of the Doha Declaration. Para 6 of Doha Declaration

provides: “We recognize the WTO Members with insufficient or no manufacturing capacities

in the pharmaceutical sector could face difficulties in making effective use of compulsory

licensing under the TRIPS Agreement. We instruct the Council for TRIPS to find an

expeditious solution to this problem and to report to the General Council before the end of

2002.”

The U.S in the end, backed down from this position and on 30 August 2003, the WTO

announced its decision to implement Paragraph 6 of the Doha Declaration, essentially

establishing waiver on Article 31(f) of the TRIPS Agreement that imposed domestic market

restriction, which effectively limited the ability of countries that could not make

pharmaceutical products for importing cheaper generics from countries where

pharmaceuticals are patented. Thus, the decision allows any member country to export

pharmaceuticals made under compulsory licenses as long as the export to an eligible

importing member satisfies the requirements of Paragraph 2 of the Decision.112 Paragraph

2(a) of the Decision provides that the obligations of an exporting member under Article 31(f)

of the TRIPS Agreement shall be waived with respect to the grant by it of a compulsory

license to the extent necessary for the purpose of production of pharmaceutical product(s) and

its export to an eligible importing member(s) in accordance with the terms set out as under:

a. The eligible importing member(s) has/have to make a notification to the Council for

TRIPS:

�� 111Datuck Seri Rafidah Aziz, Cancun Conference: The Malaysian Perspective, Ministry of International Trade

and Industry of Malaysia, available at: http://www.miti.gov.my/wto_cancun.html (last visited 22 Feb,

2011).�

112ArunGoyal (ed.), WTO from Uruguay Round to Doha: Legal Texts of the Agreements. See, Official Texts of

General Council Decision-Implementation of Paragraph 6 of the Doha Declaration on the TRIPS Agreement

and Public Health, 56-58 at 56.�

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i. specifying the name and expected quantities of the products needed;

ii. confirming that the eligible importing member in question, other than a least

developed country member, has established that it has insufficient or no

manufacturing capacities in the pharmaceutical sector for the product(s) in

question in one of the ways set out in the Annex to this decision; and

iii. Confirming that where a pharmaceutical product is patented in its territory, it has

granted or intends to grant a compulsory license in accordance with Article 31 of

the TRIPS Agreement and the provisions of this Decision.

Further the Decision under paragraph 2(b) provides for fulfillment of certain conditions by

exporting member issuing compulsory license. Such conditions instruct that only such

quantity of the medicines, as demanded by the importing country to meet its need, may be

manufactured under the compulsory license and such production should entirely be exported

to the members(s) which has/have notified its needs to the TRIPS Council. Moreover, the

products produced for exporting to such countries must bear specific labeling or marking so

that such distinction is feasible and does not have a significant impact on price and before the

shipment begins, the licensee shall post on his own website or the WTO website dedicated to

the decision mentioning the quantity of such medicines supplied to each destination along

with the distinguishing features of such product(s). Further the Member State exporting

medicines under compulsory license are also required to notify the TRIPS Council regarding

the grant of license along with the conditions attached to it and other credentials of the

licensee besides the websites details.

While the Decision allows all member States to take advantage of the waiver from obligation

mentioned under Article 31(f) of the TRIPS Agreement, 23 countries expressed their desire

and stated in the Decision that they will not import pharmaceuticals under the Decision and

another group of 11 countries specified that they would only use the waiver provision only in

case of any emergency or extremely urgency. Those 23 countries include Australia, Austria,

Belgium, Canada, Denmark, Finland, France, Germany, Greece, Iceland, Ireland, Italy,

Japan, Luxembourg, Netherlands, New Zealand, Norway, Portugal, Spain, Sweden,

Switzerland, United Kingdom and United States of America. The other group of 11 countries

includes Hong Kong China, Israel, Korea, Kuwait, Macao China, Mexico, Qatar, Singapore,

Chinese Taipei, Turkey and United Arab Emirates.113 However, for implementation of

�� 113 See, Chairperson’s Statement on Clarification to Prevent Misuse of Parallel Import of Generic Drugs under

Compulsory License, Supra, Arun Goyal, at 59. �

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Decision, a very cumbersome procedure is to be followed by both least developed and

developing countries, involving about 10 possible steps to be undertaken before importing or

exporting medicines produced in compliance with Paragraph 6 of the Doha Declaration

respectively.114

Initially, at the time of TRIPS negotiations, there was a clear North-South divide in the area

of patents. As both developed and developing countries followed standards and procedures

set up by the Paris Convention, had similar criteria for patentability and excluded inventions

contrary to morality, pubic order etc., yet there were certain disagreements from the

provisions contained in the TRIPS. Such differences in approach were required to be brought

in conformity with the TRIPS Agreement by amending their national legislations. Especially,

in case of product patents in the field of pharmaceuticals, agro-chemicals, etc., the developing

countries were given a transition period to bring their patent laws in conformity with the

TRIPS Agreement up to 1 January 2005. India brought product patenting in case of

pharmaceutical drugs by its third Patent (Amendment) Act, 2005. Although, the difference of

opinion regarding the TRIPS and Public Health was resolved to some extent by the adoption

of Doha Declaration on 20 November 2001 at the Fourth Ministerial Conference held in

Doha, but, the matter pertaining to the enforcement of Paragraph 6 of Doha Declaration

became effective only on 30 August 2003 when the TRIPS Council approved the waiver of

Article 31(f) of TRIPS Agreement, thereby granting permission for supply of medicines to

the least-developed countries by the issuance of the compulsory license under the supervision

of the WTO.

Moreover , fear in the developing countries regarding the increase of prices due to the

introduction does not hold any ground especially in case of generic pharmaceuticals, whether

branded or unbranded generics, which are available in the domestic markets of the developed

and developing countries at affordable prices and the patent protection to the originator of the

new pharmaceuticals would not affect the entire population which may be available to the

entire population which may be available at higher prices, due to the high costs involved in

their R&D and marketing. But generic industry could well cater the needs of the poorer

sections of the society in the developing countries, as is evident from the practice adopted in

many developing countries having the production skills. It is further substantiated by the

analysis of data available regarding prescription, use and supply of generic drugs in many

�� 114 Anthony P. Valach, ‘TRIPS: Protecting the Rights of Patent Holders and Addressing Public Health Issues in

Developing Countries, 4 Chicago Kent Journal of Intellectual Property (2005) 156-185, at 167.�

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such countries, including India and China. Moreover, the provision of compulsory license for

exploitation of patented drugs, subject to fulfillment of certain conditions, affords the

opportunity to make, use and sell such drugs (medicines), which serves as a check on price of

such drugs.

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CHAPTER-IV

GEOGRAPHICAL INDICATIONS AND TRIPS

1. CONCEPT OF GEOGRAPHICAL INDICATIONS:

The Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement)

is the most comprehensive multilateral agreement on intellectual property. It is the treaty

which protects Geographical Indications (GIs) through substantive provisions and provides

an enforcement mechanism through the WTO. In the TRIPS Agreement, however, a clear

division is made between the level of protection provided to the wines and spirits and that

provided to the other products. Apart from wines and spirits, it is very easy to misuse GIs.

Although number of countries have developed effective legislation to protect GIs for all the

products, national regulations that apply only in one country are not sufficient in a global

economy. Being influenced of the economic advantage and great trade potential inherent in

GIs, many countries around the world are actively working within the WTO to have the

existing protection granted by the agreement to GIs for wines and spirits extended to cover

GIs for all products.1

Geographical indications of origin (GI), their meaning, and basic standard for their protection

have been the subject of strong discussions in the international community.2 There had been

differences between the nations for a very long time about the extent of protection of their

GIs, i.e., the name they used to identify their products grown or manufactured on their soil.

The strong defenders of GI protection, the European countries, have usually suggested that

GIs should not be used by unconnected parties because GI identifies the unique qualities,

characteristics, and reputation of the products to which they are attached. Thus, if GIs are

improperly used by others, consumers would be confused as to the origin of the products.3

However, the United States and other ‘new world’ countries (New Zealand, Chile, South

Africa, Australia, etc., that have formed alliance of wine producing countries, except UK, to

�� 1 Sergio Escudero, International Protection of Geographical Indications and Developing Countries, Trade –

Related Agenda Development & Equity (T.R.A.D.E.) Working Paper 10, 2001. (Geneva, South Centre).

Available at: http:// www.south centre.org/publication /geoindication//geoindications. Pdf (last visited 15

Dec2010).�

2MichealBlakeney, ‘Proposals for the International Regulation of Geographical Indications’, 4 Journal of World

Intellectual Property629 (2001).�

3Supra, Sergio Escudero, at 629-30.�

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fight off competition against European Union wine producing rivals) have generally

responded to this claim by contending that many GI’s are generic terms on their soil, such as

“Champagne” or “Chablis”, and thus consumers could not be confused as to the origin of the

products branded by these terms.4Accordingly, they have traditionally defended the right of

their nations to use foreign generic GI in their countries as they deem fit.5

Due to technological development, it is well known that one can reproduce almost any

product anywhere, including its qualities and characteristics. Protection against making a GI

as generic, against its misuse, imitation etc., exists to protect the GI itself.

Marketing of goods under geographical names has always been common. Efforts to stop

misuse have given rise to separate forms of legal protection for Geographical Indications

(GIs), both nationally and internationally. Geographical indications are intellectual property

rights (IPRs), which identify goods as originating in a certain territory or a region where a

given quality, reputation or other characteristic is essentially attributable to its geographical

origin.6It means that a specific product originates in a specific geographical area. They are a

special kind of distinct signs used in business. The use of a GI may act as a guarantee that a

particular product possesses certain qualities, or enjoys a certain reputation, due to its

geographical origin. It is thus, a name or sign used on certain products which correspond to a

specific geographical location or origin e.g. town, region or a country.

GI creates goodwill among consumers, which further can contribute product distribution and

sale. Most commonly, a geographical indication consists of the name of the place of the

origin of the goods. ‘SWISS chocolates’ are a good example of a geographical indication of

source, i.e., Switzerland. The taste and the quality of chocolates manufactured in Switzerland

are expected to meet a certain standard due to characteristics specific to Switzerland. Some

other examples of GIs include CHAMPAGNE sparkling wine, FLORIDA oranges,

ROQUEFORT cheese, NEW ZEALAND lamb, DARJEELING tea, CHIANATI red wine,

HAVANA cigar, etc. All these products have particular characteristics closely identified with

their geographical place of origin. Names such as ‘CHAMPAGNE’, ‘FLORIDA’,

�� 4Leigh Ann Lindquist,‘Champagne or Champagne?An Examination of U.S. Failure to Comply with the

Geographical Provisions of the TRIPS Agreement’, 27 Georgia Journal of International & Comparative

Law309, 309-10(1999).�

5Id.�

6K. D. Raju, Intellectual Property Law: WTO & India, (1st Edition, 2005) at 347.

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‘ROQUEFORT’, ‘NEW ZEALAND’, ‘DARJEELING’, ‘CHIANATI’ and ‘HAVANA’ are

not just the names of place but are also geographical indications of source applied to a

particular product as suffixed with them earlier. As these names and the products related with

them often attain a valuable reputation for a particular quality or characteristics, they are

protected by various laws and agreements. For this reason, for example, the sparkling wine

from Champagne region of France is called champagne, and other similar products are simply

identified as sparkling wine.

Agricultural products typically have qualities that derive from their place of production and

are identified by specific local factors, such as climate and soil. Geographical indications may

be used for variety of agricultural products such as ‘TUSCANY’ for olive oil produced in

specific area of Italy, or ‘ROQUEFORT’ for cheese produced in France. However, the use of

geographical indications is not limited to agricultural products. They may also highlight

specific qualities of a product, which are produced due to human factors that can be found in

the place of the origin of the products, such as specific manufacturing skills and traditions,

that place of origin may be a village or town, a region or a country. An example for the latter

is ‘SWITZERLAND’ or ‘SWISS’, which is perceived as a geographical indication in many

countries for products that are made in Switzerland and, in particular, for watches, or

‘KASHMIRI’ handicrafts, etc.

Geographical indications are of significant importance for developing countries. For example,

India is richly endowed with natural and agricultural products, products of handicraft and

industry. DARJEELING tea, BASMATI rice, ALPHONSO mangoes, MALABAR paper,

KASHMIRI handicrafts, etc., are a few examples of products which enjoy reputation for

higher inherent quality and are known in the world market by reference to the geographical

indications traditionally applied to them.

Indications of geographical origins are amongst the oldest category of distinctive signs. They

are a type of collective monopoly rights, enjoyed by many persons collectively. The concern

shown by World Intellectual Property Organization (WIPO) and World Trade Organization

(WTO) gave new impetus to protection of geographical indications. In the middle of

international deliberations on significance of GIs, the approval of the Agreement on the

Trade-Related Aspects of Intellectual Property Rights (TRIPS) in 1994 indicated a triumph

for the developed nations, especially, the European attitude because it established general

minimum standards for GI protection for all of its signatories. Several European Union

members’ states and Switzerland showed their eagerness to create an agreement protecting

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geographical indications. Differentiating it from any earlier international agreement adopted

by the international community at large, TRIPS required all signatories to establish minimal

protections for GIs through their national laws.7 In addition to this minimal protection,

TRIPS also called for Member countries to provide extra protection for GIs that identify

wines and spirits.8 Last, but not the least, member countries also had to agree to TRIPS’

“built-in-agenda” to take part in future negotiations that would expand this enhanced

protection for wines and spirits to other products.9 To accommodate “non-GI concerned

countries”, TRIPS permitted for certain exceptions, particularly with respect to the ‘words’

that were considered ‘generic’ on their soil. Still, the global tone of TRIPS on the subject of

GIs was the outcome of the diplomatic movement of European representatives who preferred

strong, expanding GI protection. Expectedly, the adoption of TRIPS and its imposition of GI

protection have not been applauded in all the member countries, due to their little knowledge

on the subject and also due to the special protection extended only to wines and spirits.10 The

departures that characterized the pre-TRIPS dialogue on GIs have sustained to continue in the

post-TRIPS consultations, particularly with respect to the implementation of the enlarged GI

protection supported for by TRIPS.11 As a result, discussions to enhance GI protection for

other products, other than wines and spirits, have not yet made the expected results, and

diplomatic efforts seem to be at a dead end.12

However, it is also true that in the recent years, geographical indication has emerged as one

of the most important instrument of protecting the quality, reputation or other characteristics

of goods, essentially attributable to their geographical origin. Like trademark, the

Geographical indication is valuable to prudence. It is a source identifier and indicator of

quality. It helps to promote goods of particular region or country and eligible for relief from

acts of infringement and / or unfair competition. Geographical indications have much wider

�� 7 Jose Manuel Cortes Martin, ‘TRIPS Agreement: Towards a Better Protection for Geographical Indication?’, 30

Brooklyn Journal of International Law117 (2004).�

8 Irene Calboli, ‘Expanding the Protection of Geographical Indications of Origin under TRIPS: “Old” Debate or

“New” Opportunity?’ 183 Marquette Intellectual Property Law Review(VOL.10:2) (2006).�

9Id.�

10Kevin M. Murphy, ‘Conflict, Confusion, and Bias under TRIPS Article 22-24’, 19 American University

International Law Review 1181 (2004).�

11Supra, Irene Calboli at 183.�

12 Molly Torsen, ‘Apples and Oranges (and Wine): Why the International Conversation Regarding Geographic

Indications is at a Standstill’, 87 Journal of Patent & Trademark Office Society 31(2005).�

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application and far some countries constitute one of the most important categories of

intellectual property. This is reflected in the TRIPS Agreement.

The terminology traditionally applied in treaties in the field of geographical indications

administered by World Intellectual Property Organization (WIPO) that distinguishes between

‘indications of source’ and ‘appellations of origin.’ The geographical indication owes its

origin from the Paris Convention, 1883. Even though the Convention did not use the said

expressions, Article 1(2) of the Convention used the expressions ‘appellations of origin’ and

‘indications of source.’ The scope of the above said expression has been defined in the

Lisbon and Madrid Agreements. The appellation of the origin, a special form of GIs, has been

defined as, “Geographical name of a country, region or locality, which serves to designate a

product originating therein, the quality and characteristics of which are due exclusively or

essentially to the geographic environment, including natural and human factors.”13 Whereas,

the country of origin is the “country whose name, or the country in which is situated the

region or locality whose name constitutes the appellations of origin which has given the

product its reputation.”14

An appellation of origin, thus, is a special kind of geographical indication, used on products

that have a specific quality, which is exclusively or essentially due to the geographical

location in which the products are produced. The concept of geographical indications

incorporates appellations of origin. Examples of appellations of origin, which are protected in

states that are partly due to the Lisbon Agreement for the Protection of Appellations of Origin

and their International Registrations are ‘BORDEAUX’ for wine produced in the Bordeaux

region of France, ‘HAVANA’ for tobacco grown in Havana region of Cuba or ‘TEQUILA’

for spirits produced in particular areas of Mexico. The Lisbon Agreement defines the

expression ‘indications of source’ to mean: “Goods bearing a false or deceptive indications

by which one of the countries to which this agreement applies, or a place situated therein,

directly or indirectly indicated as being the country or place of origin”.

GIs are supposed to offer a wide range of prospects that go beyond the economic interest and

beyond the interests of their producers at origin. Like trade standards, GIs provide certain

evidence and offer a guarantee. From a consumer’s point of view, GIs point out important

characteristics that may not be obvious or evident by simply inspecting the product. For

�� 13 Paris Convention, Article 1(2).�

14Id.�

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example, the consumer cannot easily determine the qualities of a wine, or its production

process, or whether a Cheese is made accordingly to a traditional method. A GI confirms a

link not only between a product and a specific geographic region, but usually also with

unique production methods, characteristics or qualities that are known to exist in the region.

GIs can reduce the unevenness of information between producers and consumer and thereby

provide a public benefit by improving market transparency and reducing information costs.

For producers, GIs convey unique characteristics that allow them to distinguish their products

from the other similar and undistinguishable products trading primarily on price. GIs may

also provide a measure of protection for the intellectual or cultural property of a particular

group or place and as such, can add to competitive gain. They also tend to have positive

effects in terms of improving the reputation of a region, prompting other products in the

region, and stimulating tourism industry.

Certain regions and countries have been successful in boosting the incomes of their farmers,

processors and suppliers by take advantage of having been associated with a particular

geographic location. Such distinctive and world famous products as Parmigiano-Reggiano

cheese, Jamaica Blue Mountain coffee, Darjeeling Tea, Scotch whisky, Florida citrus, etc.,

bear the distinctive stamp of their region or place of origin. They are recognized in many

consumer markets and in regulations as GI. These regions or places, and their participants

have gained a lot from significant economic growth by increasing the proceeds obtained from

exploiting their natural resources. Many GIs have come to be specifically valued in the global

marketplace. While a total of 167 countries are now protecting GIs as a form of intellectual

property, and a substantial number have registration processes in place, such Intellectual

Property (IP) systems are relatively new to many developing countries and may differ from

one to another.15

2. GEOGRAPHICAL INDICATIONS AND TRADEMARKS:

While considering GIs as a special kind of distinctive sign used in trade and thus a particular

category of intellectual property, it is important to distinguish them from trademarks.

Although both perform somewhat similar function of building reputation and good will, there

are important differences between them. A trademark is a distinctive sign which may be used

by an individual, a business organization or any other legal entity to uniquely identify the

�� 15 Daniele, Giovannucci, Tim Josling et al, Guide to Geographical Indications: Linking Products and their

Origins, (2009) at 8.�

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source of its goods and or/ services to consumer and to distinguish them from goods, and not

services of other entities. A trademark provides its owner the exclusive or monopoly right to

the use of the mark in relation to the goods or services in respect of which the trademark is

registered and to obtain relief in respect of its infringement. On the other hand, GIs are

designated to identify goods, and not services, originating in a particular geographical

location with certain quality, characteristic or reputation, essentially attributable to their

respective geographical origins. Unlike trademarks, GIs are not limited to any particular

enterprise; they are rather enjoyed by all enterprises within the demarcated geographical area

that qualify for use of the indication. Hence, GI is a collective monopoly right rather than an

individual monopoly right. The use of GI may be combined with a trademark, which

identifies a specific producer within the demarcated geographical area. The link with the

geographical origin, in case of trademarks, is not an essential condition as in case with the

GIs. Thus in trademarks, delocalization is possible. For example, “Chiquita Banana”, a

trademark, can be used on bananas of whatever geographical origin they might be.

Nonetheless, GIs require a link between the product and its geographical origin. Moreover,

no delocalization of production is allowed or possible, as in an example of ‘Honduran

Bananas’ as a GI can be used on bananas from Honduras. The holders of GI do not have the

right to assign the indication, which otherwise, is provided to the holders of trademarks as

stipulated under Article 21 of TRIPS Agreement which states: “The owner of a registered

trademark shall have the right to assign the trademark with or without the transfer of the

business to which the trademarks belongs.”

Many countries like China, USA, etc., protect the GIs under the Trade Mark Law. Moreover,

protecting GIs under Trademark Law is not incompatible with the TRIPS Agreement,

provided the minimum standards stipulated in the TRIPS Agreement are complied with. The

Trademark laws provide two types of protection to GI viz., protection after the registration

and use of GIs as trademarks and protections as collective marks or certification or guarantee

marks against any unauthorized used by third parties.

3. PRE-TRIPS PROTECTION OF GIs AT INTERNATIONAL LEVEL:

Prior to TRIPS, the most relevant sources for international protection of GI could be found in

three different agreements viz., the Paris Convention for Protection of Industrial

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Property16(Paris Convention), Madrid Agreement for the Repression of False and Deceptive

Indications of Source of Goods17 (Madrid Agreement), and Lisbon Agreement for the

Protection of Appellations of Origin and their International Registration18 (Lisbon

Agreement). These treaties are administered by WIPO.

3.1 Paris Convention for the Protection of Industrial Property and GIs:

The Paris Convention was originally enacted in 1883, and subsequently revised in Brussels in

1900, Washington in 1911, The Hague in 1925, London in 1934, Lisbon in 1958, and

Stockholm in 1967. The 1883 version of the Paris Convention provided that ‘indications of

source’ or ‘appellations of origin’ are protectable subject matter. This protection, however,

was limited to guaranteeing certain protective measures at the border and was extended only

to false or misleading uses of GI in general. In addition, the Paris Convention neither defined

‘indications of source’ or ‘appellations of origin’ nor introduced an international standard for

their protection.

Under Articles 1(2) and 10 of the Paris Convention, the geographical indications were

covered as an element of IPRs. It mentioned about appellations of origin and indications of

source as elements of industrial property.19 Some of the examples of well- known

geographical indications include Champagne sparkling wine, Florida oranges and New

Zealand lamb. While most often used on food products, geographical indications can be used

to identify any product (e.g., Murano glass, Swiss watches, and Bukhara carpets) that may be

associated with a specific geographic place. Article 10 deals with the protection of indications

of source; Article 9 provides for certain sanctions which are applicable, inter alia, in cases of

direct or indirect use of false indications of source, and Article 10 ter support the provisions

of Article 9 and 10.

Article 10(1) is the basic provision of the Paris Convention on ‘indications of source’. It

provides that the sanctions prescribed by Article 9 in respect of goods unlawfully bearing a

trademark or trade name apply to use of a false indications of source of a product. This meant

�� 16 Paris Convention for the Protection of Industrial Property, March 20, 1883, 2 U.S.T. 1583, 828 U.N.T.S. 305,

available at: http://www.wipo.int/treaties/en [hereinafter, Paris Convention].�

17 Madrid Agreement for the Repression of False and Deceptive Indications of Source on Goods, April 14, 1891,

828 U.N.T.S. 168, available at: http:// www.wipo.int/treaties/en[hereinafter, Madrid Agreement].�

18 Lisbon Agreement for the Protection of Appellations of Origin and their International Registration, October

31, 1958, 923 U.N.T.S. 205 available at: http:// www.wipo.int/treaties/en [hereinafter, Lisbon Agreement].�

19Article 1(2) of the Paris Convention.�

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that no indications of the source maybe used to refer to a geographical area which the

products in question do not originate. For the provision to be applicable there was no need for

the false indications to appear on the product, since any direct or indirect use, for example in

advertising, was sanction able. However, Article 10(1) does not apply to indications which,

without being false may mislead the public, or at least the public of a certain country: for

example, in case of homonymous products, where certain geographical areas in different

countries have the same name of a product, but only one of those areas is internationally

known for particular products, the use of that name in connection with products originating

from another area may be misleading, but not sanctionable.

As regards the sanctions in the case of the use of a false indication of source, Article 9

establishes the principle the seizure upon importation must be provided for, or at least

prohibition of importation or seizure inside the country but, if those sanctions do not exist in

a particular country, the actions and remedies available in such cases are to be applied.

Article 9(3) and Article 10(2) determine who may request seizure on importation or the

imposition of other sanctions; the public prosecutor, any other competent authority, any

interested party. Article 10(2) of the Paris Convention defines what is meant by’ interested

party’, stipulating that ‘any producer, manufacturer, or merchant, whether a natural person or

a legal entity, engaged in the production or manufacture of or trade in such goods and

established either in the locality falsely indicated as the source, or in the region where such

locality is situated, or in the country falsely indicated, or in the country where the false

indication of source is used, shall in any case be deemed an interested party.’

The birth of this ‘appellations of origin’ type of intellectual property provision has been

attributed to the international co-operation in this field, which is beneficial domestically to

countries. This sentiment was crystallized in Article 10 of the Paris Convention. London

Conference in 1934 dealt with the possibility of amending the Paris Convention’s provisions

in order to remedying the insufficiencies of Article 10. Finally, in Lisbon (1958), Paragraph

3(3) 10 bis was added, which was directed at unfair competition. This provision, as proposed,

dealt with misleading indications of origin; but again, one vote prevented the scope of the

paragraph from extending that far. This amendment eliminated the need for both a false

designation of origin to be coupled with a fictitious name in order to activate the protection

provisions of the Article. Article 10 ter is also relevant in as much as it obliges countries of

the Union to provide, on the one hand, appropriate legal remedies and to permit, on the other

hand, federations and associations representing interested industrialists, producers or traders

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to take action, under certain conditions, with a view to the repressions of false indications of

source.

Thus, Paris Convention does not deal with appellations of origin, but it covers cases of direct

or indirect use of false indications of source on the goods or the identity of producer,

manufacturer or merchant.20 Infringement of this provision results into the seizure upon

importation or the measures in accordance with the local laws can be applied. This

Convention was signed by 135 countries.

The advantages of the protection afforded by the Paris Convention to the indication of the

source lies in the extent of the territorial area covered by the member countries of the Paris

Union. On the other hand, the question of indications which, in countries other than the

country of origin, are generic names of a product in other countries is not dealt within the

Paris Convention, so that member states of the Paris Union can be entirely free in that

respect. Finally, sanctions, although specifically mentioned in the Paris Convention, are not

in all cases mandatory and apply only to false but not to misleading indications of source.

3.2 Madrid Agreement for the Repression of False Indications of Origin:

The Madrid Agreement is a special agreement within the framework of the Paris Union. It

was adopted in 1891, which offered a slightly higher level of protection.21 Similar to Paris

Convention, however, the Madrid Agreement only concentrated on ensuring protection at the

borders and providing specific rules for the repression of false and deceptive indications of

source. Article 1(1) of Madrid Agreement provides: “All goods bearing a false or deceptive

indication by which one of the countries to which this agreement applies, or a place situated

therein, is directly or indirectly indicated as being the country or place of origin shall be

seized on importation into any of the said countries.”22 Thus Article 1(1) prohibited the use of

an indication that could deceive or mislead the public and further authorized the seizure of

goods bearing such indications.23 Like the Paris Convention, Article 1(1) of the Madrid

Agreement did not define ‘indications of source’. The other paragraphs of Articles 1 and 2

specify the cases and the manner in which seizure or similar measures may be requested and

�� 20Article 10 of the Paris Convention.�

21 Felix Addor and Alexandra Graziolo, ‘Geographical Indications Beyond Wines and Spirits: A Roadmap for

Better Protection for Geographical Indications in the WTO/ TRIPS Agreement’, 5 Journal of World

Intellectual Property, 876- 877 (2002).�

22Supra, Madrid Agreement.�

23Id.�

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carried out. There was no express provision to the effect that private individuals may request

seizure directly. Thus member states are free to provide that such persons have to apply

through the public prosecutor or any other competent authority.

Article 3 authorized a seller to indicate his name or address on goods coming from a country

other than that in which the sale took place, but obliged him, if he does so, to have his name

or address accompanied by an exact indication in clear characters of the country or place of

manufacture or production, or by some other indication sufficient to avoid any error as to the

true source of the products.

Article 3 bis obliged the states’ party to the Madrid Agreement to prohibit the use, in

connection with the sale or display or offering for sale of any goods, of all indications

capable of deceiving the public as to the source of the goods.

Yet,the Madrid Agreement introduced an addition level of protection for GIs that related to

wines and provided that member countries could not be exempted from the application of its

provision relating to wines ,but could be exempted for indications of origin relating to other

goods as stipulated in Article 4 that provided : “The courts of each country shall decide what

appellations , on account of their generic character, do not fall within the provisions of this

agreement applies, or a place situated therein, is directly or indirectly indicated as being the

country or place of origin shall be seized on importation into any of the said countries.”24

In spite of this slightly higher level of protection, only limited number of countries signed the

agreement, resulting into downfall of this agreement throughout the past century. As of

February28, 2011, only 35 Countries were members of this Agreement.25

3.3 Lisbon Agreement for the Protection of Appellations of Origin and their

International Registration:

The limited geographical scope of the Lisbon Agreement for the Protection of Appellations

of Origin and their International Registration is due to specific characteristics of the

substantive provision of the Agreement.

The Lisbon Agreement of 1958 was the most serious attempt to realize effective and

enforceable international protection for the geographical indications provided for effective

�� 24

Id.�

25World Intellectual Property Organization, Contracting Parties, available at http://

www.wipo.int/treaties/en/documents/pdf/g-mdrd-m.pdf.�

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safeguard to appellation of origin, thus providing for much stricter level of protection

extending to all indications of origin, thereby expanding the protection beyond false or

deceptive uses of those indications.26It provided for registration of GIs.27 The subject matter

protected under the agreement were “appellations of origin” defined in Article 2(1) as

“Geographical names of a country, region , or locality, which serve(s) to designate as product

originating therein, the quality of characteristics of which are due exclusively or essentially to

geographic environment indicating natural and human factors.”28 Human factors denote the

unique traditions of the produce of that area. It follows that only names conforming to the

definition were protected by virtue of the Lisbon Agreement. Simple indications of the

source, which could be used for products whose characteristics did not result from the

geographical environment, were excluded from its purview. This limitation has barred the

agreement of countries which do not know concept of appellations of origin. To qualify to be

a G1, appellations of origin should have a link between the quality and the Geographical area.

Under this Agreement, the signatories were also obliged to protect appellations of origin

against “imitations or usurpation” including their use supplemented by terms such as “like”

“types” or “styles.”29 The first element of the definition was that the appellations must be the

geographical name of the country, region or locality. The second element of the definition

was that the appellations of origin must serve to designate a product originating in the

country, region or locality referred to. The third element of the definition was that there must

be a qualitative link between the product and the geographical area: the ‘quality and

characteristics’ must be due to exclusively or essentially to the geographical environment; if

the qualitative link was insufficient, that is, if the characteristic qualities were not due

essentially, but only to small extent, to the geographical environment, the name was not an

appellation of origin but merely an indication of source; as for the geographical environment;

it included natural factors, such as soil or climate, and human factors, such as the special

professional traditions of the producers established in the geographical area concerned.

�� 26

Supra,Addor&Graziols, at 877.�

27 Article 5 of Lisbon Agreement.�


29 A. Bowers, ‘Location, Location, Location: The Case Against Extending Geographical Indication Protection

Under The TRIPS Agreement’, 31The American Intellectual Property Law (AIPLA) Quarterly Journal,

142(2003).

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Even if interpreted broadly, the definition of appellations of the origin in Article 2(1) has a

serious drawback for countries whose denominations typically did not apply to agricultural

products or products of handicraft but to products of industry. The difficulty arose from the

fact that Article 2(1) required the existence of a qualitative link between the geographical

environment and the product, even though the presence of purely human factors would be

considered sufficient. This link, which might have existed at the start of the manufacture of

an industrial product, might subsequently have been pushed to the point that its existence was

difficult to prove. Moreover, traditions in manufacture and skilled staff could be shifted from

one geographical area to another, in particular in view if the increasing mobility of human

resources in all parts of the world.

Article 1(2) provided that the countries party to the Lisbon Agreement undertook to protect

on their territories, in accordance with the terms of the Agreement, the appellations of origin

of products of the other countries party to the Lisbon Agreement, recognized and protected as

much in the country of origin and registered at the international Bureau of WIPO. Therefore,

in order to be protected under the Lisbon Agreement, the appellations of the origin must

fulfill two conditions. The first condition was that the appellations of origin must be

recognized and protected as such in the country of origin; the latter being defined in Article 2

(2).This condition meant that it was not sufficient for the country in question to protect its

appellations in a general way. Each appellation required express protection, deriving from a

specific official act; a legislative or administrative provision or a financial decision, or a

registration. Such an official act was required because the specific elements of the object of

protection; the geographical area, the lawful users of the appellations of the origin, the nature

of the product; were required to be determined. Those elements had to be indicated in the

application for international registration in accordance with the Rule 1 of the Regulations

under the Lisbon Agreement.

The second condition laid down by Article 1(2) was that the appellations of origin had to be

registered with the International Bureau of WIPO.

Article 2(2) defines the country of origin as being “the country whose name or the country in

which is situated the region or locality whose name constitutes the appellations of origin

which has given the products its reputation.” Moreover, the Agreement provided that no

appellations of the origin could be considered as generic terms in any member country. As

Article 2 provides that “protection shall be ensured against any usurpation or imitation, even

if the true origin of the product is indicated or if the appellations is used in translated form or

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a company by term such as coin, type, make, imitation or the like.”30 Article 5 and 7 of the

Agreement itself and the Regulations set out the procedure for international registration.

Article 5(1) and the corresponding provisions of the regulations issued under the Lisbon

agreement defined the procedure for international registration. International registration had

to be applied by the competent office of the country of the origin, and therefore interested

parties had no competence to apply directly. The national office, however, could not apply in

its own name for international registration, but had to do so in the name of natural persons or

legal entities, public or private, having a right to use the appellations, according to applicable

national legislation. The international bureau of WIPO had no competence to examine the

application with respect to substance; it might only make an examination as to form. Under

Article 5(2) of the Lisbon Agreement, the International Bureau notified the registration

without delay to the Offices of countries party to the Lisbon Agreement.

In accordance with Article 5(3) to (5), the office of any State party to the Lisbon Agreement

might, within a period of one year from the receipt of the notification of registration, declare

that it cannot ensure the protection of a given appellations. Apart from time period

mentioned, the right of refusal was subject to only one condition: the grounds for refusal had

to be indicated. The grounds which might be indicated were not restricted by the Lisbon

Agreement; that in fact gave each country the discretionary power to protect or refuse to

protect registered appellations of origin. In all countries that made no declaration of refusal,

the registered appellations enjoyed protection. However, if third parties using the appellations

in a given country prior to the notification of the registration, the Office of that country, under

Article 5(6) of the Lisbon Agreement, could grant them a maximum of two years in which

use of such appellations had to be terminated.

The protection conferred by international registration was unlimited in time. Article 6

provided that appellations, which were granted protection, couldn’t be deem to have become

generic, as long as they were protected as appellations of origin in the country of origin.

Article 7 provided that the registration was not required to be renewed and subject to

payment of a single fee. An international registration ceased to have effect only in two cases:

either the registered appellations had become a generic name in the country of origin, or the

�� 30

Supra, Madrid Agreement.

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international registration had been cancelled by International Bureau at the request of the

Office of the country of origin.

The content of the protection afforded to an appellation of origin registered under the Lisbon

Agreement, according to Article 3 of the Agreement is very extensive. Any usurpation or

imitation of the appellation is forbidden, even if the true origin of the product is indicated or

if the appellation is used in translated form or qualified by terms such as ‘kind’, ‘type’,

‘make’, ‘imitation’, or the like.

With regard to the enforcement of the protection of an appellation of origin registered under

the Lisbon Agreement, Article 8 refers to national legislation. It specifies that the right to take

action belongs to the competent office and the public prosecutor on one hand, and to any

interested party, whether a natural person or a legal entity, whether public or private, on the

other. In addition to any sanctions applicable pursuant to the Paris Convention and the

Madrid Agreement (Article 4), all the sanctions provided for in national legislation, whether

civil (injunctions restraining or prohibiting unlawful acts, actions for damages etc.), penal or

administrative, are to be applied. However, the Lisbon Agreement does not establish a

standard with respect to the sanctions to be provided for by the States party to it.

Finally, the Lisbon Agreement created a system of international registration for appellations

of origin based upon the trade mark registration system, which would work as notice and

prevent illegitimate appropriations of GI in the third world countries. Because such a strict

level of protection would require major changes in laws of most member countries, related

with the fact that some appellations of origin were considered generic terms in many member

countries. The Lisbon Agreement, like Madrid Agreement, had few signatories. As of

February 28, 2011, only 27 countries were parties to it.31

4. BASIS FOR PROTECTION OF GEOGRAPHICAL INDICATION:

Until recently, GIs have been used to identify primarily agricultural products or products that

derive their qualities from their place of production and are influenced by specific local

factors, such as climate and soil. ‘Idaho’ potatoes, ‘Chianti’, or ‘Bordeaux’ wines and

‘Roquefort’ or ‘Parmigiano-Reggiano’ cheeses are examples of famous GI for agricultural

products. Agricultural products, however, are not the only products that can be or are

�� 31World Intellectual Property Organization, Contracting Parties, available

athttp://www.wipo.int/treaties/en/documents/pdf/j-Lisbon.pdf.�

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identified by GI.32 Unique qualities, due to the materials and labour associated with the place

where they are manufactured, are also characterized products, ‘Waterford’ crystal, or

‘Sheffield’ sterling, etc.33These non-agricultural GIs are, nonetheless, common and their

protection is even more controversial than the more traditional agricultural GIs.

GIs are understood by consumers to denote the origin and the quality of products. Many of

them have acquired valuable reputations, which, if not adequately protected, may be

misrepresented by dishonest commercial operators. The basic economic function of

geographical indication is to protect the goodwill of products to which they relate. There is no

agreed definition of goodwill, at least in international trademark. It can be conveniently

defined as the ‘tendency or likelihood of a purchaser to repurchase goods and services.’34

False use of geographical indications by unauthorized parties is detrimental to consumers and

legitimate producers. Although, the geographical indications relate to a group of enterprises

rather than a single enterprise, it can also be said that the geographical indications play the

same role as citizenship.35 Market identity significantly encourages inventive and other

creative activity. After all, a product on a highly valuable invention can succeed on the

market only if the product itself is recognized to be innovative, but this recognition can be

achieved only with the assistance of branding, that is, with trademarks and / or geographical

indications.

GIs serve to protect resources such as market differences, reputation and quality standards.

They facilitate the linking of a specific product to the territory from which it originates. GIs

convey to cultural identity of a nation, region or a locality and add human dimensions to

goods that are increasingly subject to standardized production for mass consumption. GIs are

understood by customers to denote the origin and the quality of products. GIs are increasingly

recognized as a tool for securing consumers loyalty by establishing the link between product

qualities and the geographical origin.

�� 32

Supra, Bowers, at 134.�

33Id. at 134 - 135.�

34 World Intellectual property Organization- International Bureau (2003), Economic Importance of Trademarks

and Geographical Indications and their use in Commerce, background document, available at

www.wipo.int/meetings/es/html.jsp?url=http://www.wipo.int/arab/en/meetings/2003/tm_bey/doc/wipo_tm_be

y_03_3.doc(last visited: 21 December 2010).�

35Surbhi Jain, ‘Effects of the Extension of Geographical Indications: A South Asian Perspective’, 16:2 Asia

Pacific Development Journal 69(2009).

�

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Thus the reputation acquired by many of GIs, may lead to their false use by unauthorized

parties and acquire the nature of deceiving and falsely believing the consumers that they are

buying a genuine product with specific qualities and characteristics, while they in fact get a

worthless imitation. Due to the act of imitation, the commercial producers or workers suffer

damage because valuable business is taken away from them and the recognized reputation for

their products also gets damaged after the consumer uses the imitated GI and finds it

worthless and sub-standard.36

Due to the link of GIs with particular geographical areas, unlike other intellectual property

rights, cannot, in fact be owned one or a few owners, as it is a collective right. Thus, GIs

cannot be licensed because their use strictly depends on their connection with the

geographical place they identify. GIs are traditionally owned and exercised collectively by all

those individuals that are living and producing goods in those geographical areas. Despite this

relative impersonality of the right, however, GI still operate similarly to most other

intellectual property rights insofar as they also grant to their legitimate users “the exclusive

rights to use this distinctive designation, which grants it additional economic value.”37

In addition to identifying products as coming from a certain geographical origin, GI has

historically served as indicators of the commercial quality of the goods that they identify. In

other words, GIs guarantee the products’ qualities and characteristics by informing

consumers that the products to which they are attached come from an area where a given

quality, reputation or other characteristic of the products, is essentially attributable to their

geographic origin.38 Accordingly, no other wines can have, for example, the same quality or

characteristic of the Brunello di Montalcino except the wines produced in Montalcino region

of Tuscany and that are identified by the GI ‘Brunello di Montalcino.’

Finally, one of the most controversial, but still very important functions of GI is to promote

goods of a particular area, be that Bordeaux for wines, or Roquefort for cheeses. However, GI

opponents have often defined this function as nothing more than indirect protective measures

for national products that could undermine competition and undesirably affect trade. To this

criticism, GI supporters have emphasized the role of GI in promotion of products’ quality

�� 36

Supra, K.D Raju, at 354.�

37Supra, Irene Calboli, at 185.�

38U.S. Patent & Trademark Office, Geographical Indications, available at:

http://www.uspto.gov/web/offices/dcom/olia/globalip/geographical indication. htm (last visited Dec 21, 2010)�

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worldwide while avoiding consumer confusion by preventing inappropriate use of GI by

unauthorized parties.

5. TRIPS & GEOGRAPHICAL INDICATIONS OF ORIGIN:

With respect to geographical indications, the TRIPS Agreement reflects a very sensitive

compromise in an area that was one of the most difficult to negotiate in the Uruguay Round

(UR) of multilateral trade negotiations, which took place between 1986 and 1994 among

trading partners under the auspices of the GATT (General Agreement on Tariffs and Trade)

and which resulted in the establishment of the World Trade Organization (WTO). The rules

were included in the TRIPS Agreement, which led to better protection of GIs in the

multilateral framework. But at the same time, the fact that certain issues concerning GIs

required further work once the negotiations were concluded and, as a result, the TRIPS

Agreement contain a number of provisions requiring such further work within the framework

of the WTO.

The history of the deliberations on GI protection at the international level dates back to 19th

century, and it is sometimes revealing to see how that history has determined the issue in this

area that present them today in the international arena. Especially, the developments towards

sui generis system for GI protection, as in France , the debate resulting in the incorporation

of a number of provisions on the subject of GIs into the Paris Convention for the Protection

of Industrial Property in 1983, the conclusion of the Madrid Agreement on the Repression of

False Indications of the Source in 1891, the debate at, for example, The Paris Convention

Revision Conference in 1911 in Washington; the conclusion of the Lisbon Agreement for the

Protection of Appellations of the Origin and their International Registration in 1958; and

subsequent attempts to arrive at, for example, a new international registration treaty, indicate

the results of such discussions and growing importance of GIs.39 Many of the questions that

were on the negotiating table in the past continue to be issues dividing governments on

geographical indications under the built in agenda items in the WTO’s TRIPS Council, in

discussions at WIPO’s Standing Committee on the Law of Trademarks, Industrial Designs

and Geographical Indications and in the negotiations under the WTO’s Doha Development

Agenda.40

�� 39 WIPO document SCT/84.�

40MatthijsGeuze, ‘The Provisions on Geographical Indications in the TRIPS Agreement’, 10:1 The Estey Centre

Journal of International Law and Trade Policy 2009 at 51.�

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Due to its conclusion in the TRIPS one big difference from the pre-WTO position is that

geographical indications are now embedded in the WTO system, as they comprise one of the

categories of intellectual property that are the subject of the TRIPS Agreement, which itself is

an integral part of WTO Agreement. Consequently, non-compliance with TRIPS obligations

on geographical indications can be challenged under the WTO dispute settlement mechanism

and if a country fails to implement a ruling, that is, it is not in compliance, it could sooner or

later be faced with sanctions on areas of international trade governed by the other parts of the

WTO Agreement and loose benefits that accrue to it under that agreement for as long as it

does not remedy the position by implementing the provisions.

However, what has not changed after the conclusion of the WTO Agreement is the

widespread diversity in the means of protection for GIs available from country to country.

This was another aspect recognized by the Uruguay Round negotiators when they

incorporated a number of built-in agenda items on GIs in the Agreement. This diversity not

only was confirmed in the peer group review of national implementing legislation in the

WTO’s TRIPS Council, but also is illustrated by the summary paper,41 the WTO Secretariat

prepared of information on national systems for the protection of geographical indications by

individual WTO members in the context of the TRIPS Council’s review of the application of

the TRIPS agreement’s provisions on geographical indications under the built in agenda item

stipulated in Article 24(2) of the Agreement.

The fact remains still there that the geographical indications have not lost their controversial

character even after the entry into force of WTO Agreement. In this regard in the Uruguay

Round, a link was made by some delegations between the negotiation s of obligations with

respect to trade in agricultural products and the negotiations of obligations to provide

protection for geographical indications in the context of the TRIPS Agreement. This link has

obviously not been forgotten by delegations at work since 1995. The WTO system is planned

to establish conditions of competitive environment of their markets and at liberalizing trade

in goods, building upon about half a century of experience in the GATT. When as a result of

negotiations in the Uruguay Round, trade in the agricultural products came under the

discipline of a rule-based system; it came to be believed that this might boost moves towards

added value in agricultural production and exports. Consequently, investment for the

development of quality products like high value, consumer-ready food preparations and

�� 41 WTO Document IP/C/W/253 and IP/C/W/253 Rev.1�

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otherfood and drink items increased. At the same time, however, the demands for protection

against misappropriations of geographical indications and other forms of intellectual property

became stronger.42

6. SCRUTINY OF GIs UNDER TRIPS AGREEMENT OF WTO:

The WTO’s Agreement on Trade-Related Aspects of Intellectual Property (TRIPS) provides

the basic international regulatory framework for GIs. It serves not only to define GIs but also

to bring into line the standards of protection as well as providing access to an international

dispute settlement mechanism. Three Articles relating to the GIs occurs in Part II, Section 3


The Agreement contains a clear triple distinction in the level of protection for geographical

indications related to:-

a. all products;

b. wines and spirits; and

c. wines only

The Agreement, at the time of its adoption, represented the particular interest of the European

wine-producing countries, which supported stronger and special protection to this kind of

product, as compared to the standard protection granted to other products.

6.1 Definition and General Protection of GIs:

Article 22 of the TRIPS provides a general definition of GI and its sets forth the general

standards for GI protection under the Agreement. Under Article 22, the subjects matters

protected are the “indications which identify a good as originating in the territory of a

Member, or a region or locality in that territory where a given quality, reputation or other

characteristics of the good is essentially attributable to its geographical origin.”43 Although

drafted on the basis of Article 2 of the Lisbon Agreement, the TRIPS definition is broader in

the scope and encompasses indications that confer only “reputation”, but not essentially

“quality and characteristics” to the goods to which they are affixed. Likewise, the definition

of Article 22 not only applies to the indications that take their names from existing places,

such as Chianti or Napa Valley, but also to those geographical area, like the case of Indian

�� 42MatthijsGeuze, Protection of Geographical Indications under the TRIPS Agreement and Related Work of the

World Trade Organization, WIPO Symposium on the International Protection of Geographical Indications in

the Worldwide Context, Eger, Hungary, 24-25 October 1977.WIPO Publications NO.760.�

43 TRIPS Agreement, Article 22(1).�

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subcontinent, but are not necessarily the name of a geographical area themselves, as in case

of Basmati rice widely grown in India and Pakistan, though no GI has been obtained for the

Basmati rice.

In line with Paris Convention and the Madrid Agreement, Article 22 prohibits the use of the

false GI in the territory of member countries. According to Article 22 (2), members countries

must “provide the legal mean to prevent the use of GI in a manner which misleads the public

as to the geographical origin of the good or which constitute an act of unfair competition

within the meaning of Article 10 bis of the Paris Convention.”44 In contrast with previous

agreements, Article 22 not only provides for broader measures for GI protection but also sets

minimum standards to be implemented into the laws of the WTO member countries.45

Furthermore, Article 22(3) prohibits the registration of trademark to the goods which contains

or consists of a geographical indication with respect to goods not originating in the territory

indicated, if use of the GI is of such a nature to mislead the public as to the true place of

origin.46

Considering the major differences among member countries, Article 22 leaves the individual

members free to decide how to implement the legal means to protect GI. Article 22(2) of the

TRIPS simply requires that Member countries must provide the legal means for interested

parties to prevent GI infringement, thus leaving member countries free to choose those legal

means according to their convenience, without violating provisions of the TRIPS Agreement.

In spite of this freedom in the modalities of implementing GI protection, TRIPS explicitly

states that member countries should provide, without hesitation, enforcement mechanisms for

GI protection. In particular, under Article 41 of the TRIPS, member countries must ensure

that enforcement procedure are available under their law so as to permit effective action

against any act of infringements covered by TRIPS, including the protection of GI, at the

right to seek remedy against infringement would only arise when the right has been

protected .

Thus, Article 22(1) of TRIPS identifies three elements as conditions for granting protection

as a GI. They are:

�� 44

Id. Article 22 (2)�

45Supra, Sergio Esculdero, at 27-28.�

46 TRIPS Agreement, Article 22(3).

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a. The Indication must Essentially Identify a Good:

The identification may or may not directly denote the geographical name, but at the same

time it must necessarily indicate certain good as originating in certain geographical limits. It

may take the form of a word, phrase, icon or an emblem. Such iconic symbols like pyramids

can be used to identify Egyptian goods or TajMahal for Indian goods etc. Further the term

‘goods’ has been used instead of ‘products’ specifically to exclude services from its ambit.

Thus, TRIPS don’t define the nature of “indications” that may qualify as a GI. Hence,

‘indication’ may take the form of words, phrases, iconic symbols, emblems, scripts and

pictorial images etc.

b. Indication must Suggest the Geographical Origin of the Good:

Given quality, reputation or other characteristics must be essentially attributable to the goods

of the designated geographical area of origin. Thus, each one of these qualifiers on its own is

an adequate condition for the grant of protection. Hence, implicit in the TRIPS definition is

the idea that the indication must suggest the geographical origin of the good. However, it may

not ne necessarily a geographical name to suggest the origin e.g., ‘FETA’ (cheese),

‘BASMATI (rice).

c. GIs must have Link to Goods:

It is essential for the designated geographical area to be identified in some manner through

the indication-good relation. This requires a level of homogeneity so far as the goods of

designated geographical area and their quality, reputation or characteristics are concerned.

Thus, the TRIPS definition categorically refers to ‘goods’ thereby leaving out services from

the scope of the GI protection.

6.2 Added Protection of Wines and Spirits:

Article 22 covers geographical indications for products other than wines and spirits. In

contrast to Article 23, Article 22 limits the protection of geographical indications to case

where the public is misled by the use of a geographical indication as to the true geographical

origin of the product, or where such use constitute an act of unfair competition.

Contrary to that Article 23 provides for additional protection of geographical indications in

the category of wines and spirits. It enforces protection for GI for wines and spirits similar to

the protection that was provided by the Madrid Agreement. Article 23 provides that GI which

refers to wines and spirits are protected regardless of whether their use misleads the public

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and represents an act of unfair competition under Article 10 bis of the Paris Convention.47 In

addition, building upon the general provisions of Article 22, Article 23also provides that

member countries shall refuse or invalidate trademark registrations containing or consisting

of GI identifying wines or spirits.48

Under Article 23, there is no need to prove that the public is misled or that using a certain GI

constitutes unfair competition. The use of associated expressions such as “style”, “type”,

“kind”, and imitation” are prohibited and protection is also provided when the indication is

used in translated form. The burden of proof does not rest on the plaintiff.49 Under Article

23, competitors not producing within the geographical area are simply prevented from using

the corresponding denomination, and they may not use trademarks containing or consisting of

geographical indications used to identify wines or spirits, subject to the exceptions provided

under Article 24.

It is well known that in certain cases the wine regions present worldwide have homonymous

names because immigrants from the “old” world often named their new places after their

motherlands. Article 23(3) provides for specific arrangements for homonymous GIs such as

“Rioja” from Spain and “Rioja” from Argentina.50 Thus in order to ensure the co- existence

of both names, Article 23(3) provides protection for homonymous GI and states that

protection shall be accorded to each indication.51 Yet the provision calls on member countries

to determine how to differentiate between homonymous GI, “taking into account the need to

ensure equitable treatment of the producers concerned and that consumers are not misled.52

Finally, to enable GI enforcement and prevent their illegal use, Article 23(4) provides for

future negotiations to establish a multilateral system of notification and registration of GI for

wines and spirits. Article 23(4) provide that in order to facilitate the protection of

geographical indications for wines, negotiations shall be undertaken in the Council for TRIPS

concerning the establishment of a multilateral system of notification and registration for �� 47

Supra, Addor&Grazioli, at 879.�


49 World Intellectual Property Organization- International Bureau (WIPO) (2001), Geographically Indications:

Historical background, nature of rights, existing systems for protection and obtaining effective protection in

other countries, prepared for the Standing Committee on the Law of Trademarks, Industrial Designs and

Geographical Indications, sixth session, Geneva, 12-16 March,2001 (SCT/6/3).�

50Supra,Addor&Grazioli, at 879.�


52Id.�

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geographical indications for wines eligible for protection in those members participating in

the system. However, such a system of notification and registration still needs to be created

by the international community. Moreover, the lack of a system has proven to be one of most

controversial issues of the current negotiations on GI protection within TRIPS.

6.3 Exemptions to GI Protection:

Article 24 contains a number of exceptions regarding the protection of geographical

indications. There are three main exceptions that are of particular relevance with respect to

the additional protection of geographical indications for wines and spirits.

a. The first main exception provides that a member country is not obliged to protect

a geographical indication in cases where a geographical indication has become the

generic name in a country for the products in question or for a grape variety.53

b. The second main exception deals with the situation where geographical

indications may conflict with pre-existing trademark rights acquired in good faith,

which should be protected in accordance with the TRIPS provisions on

trademarks, as contained in section 2 of Part II of the TRIPS Agreement.

Additionally, the agreement specifies that measures adopted to implement the

TRIPS provisions on GIs shall not prejudice the eligibility for or the right to use a

trademark on the basis that such trademark is, identical with or similar to a

geographical indication.54

c. The third main exception allows, under certain circumstances, continued use of a

GIs that has been used in a WTO Member prior to the conclusion of the Uruguay

Round, where the indication in question has not become generic and a pre-existing

trademark right does not exist. It only applies to Geographical Indications which

identify a wine or those which identify a spirit. It can only benefit those nationals

or domiciliary of the WTO Member using the exception who had previously used

continuously the Geographical Indications in good faith or at least 10 years prior

to the conclusion of the Uruguay Round. Moreover, use of Geographical

Indications under the exception must be ‘similar’ to the previous use. ‘Similar’

�� 53 TRIPS Agreement, Article 24(6).�

54Id.�

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use has been taken to mean that the successive use must be analogous in scale and

nature.55

The Agreement also provides that the exceptions cannot be used to reduce the protection of

geographical indications that existed immediately prior to the entry into force of the TRIPS

Agreement.56

Further Article 24 of TRIPS stresses on the fact that future negotiations are a fundamental

part of TRIPS Member countries’ commitment under the Agreement.57 Precisely, according

to Article 24(1), “Member countries agree to enter into negotiations aimed at increasing the

protection of individual geographical indications under Article 23.” To prevent possible

excuses based on a broad interpretation of the exceptions to GI protection granted to member

countries, Article 24 provides that member countries shall not refuse to conduct such

negotiations. Especially, they should not use any of the limitations or exceptions indicated in

Article 24(4) to Article 24(8) as an excuse to avoid or delay such negotiations.

More over the TRIPS Council has been given a role to supervise GI protection

internationally. Article 24(2) of TRIPS provides that the Council for TRIPS shall keep under

review the application of the provisions dealing with GIs and made it obligatory that the first

such review shall take place within two years of the entry into force of all the WTO

Agreement. Any matter affecting the compliance to the obligations under these provisions

may be drawn to the attention of the Council, which at request of a member, shall consult

with any Member or Members in respect of such matter in respect of which it has not been

possible to find a satisfactory solution through. There shall be no obligation under the

Agreement to protect GIs which are not or cease to be protected in their country of origin, or

which have been fallen into disuse in that country. Thus TRIPS Council has duty to monitor

the application of Article 22 and 23 and take such action as may be agreed to facilitate the

operation and further the objectives of GI protection envisaged under TRIPS.

Nonetheless, Article 24(9) of TRIPS relives member from any obligation to protect a GI

which:

• is not protected in its country of origin; or

�� 55 TRIPS Agreement, Article 24(4).�

56Id, Article 24(3).�

57Supra, Sergio Escudero, at 31-32.

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• ceases to be protected in that country; or

• has fallen into disuse in that country

The first point underscores the need of ensuring appropriate GI protection at the national

level of a WTO Member, in the absence of which other WTO Members would have no

obligation whatsoever to protect the GIs of the former country within their respective

territories. Article24 (9) states that members have no obligation to protect a GI, which has

ceased to be protected in its country of origin. It can, however, be argued that protection

would cease to exist only when the indication has gone back into the public domain as a

result of becoming generic. To the extent that this argument holds, it may be noted that

TRIPS leaves it exclusively to the discretion of the country of the origin to decide whether a

particular geographical name should be protected under their laws. Thus Article 24(9) has

become generic.

Finally, Article 24(6) also provides another exception to protection of GI with respect to

goods or services for which the relevant indication is identical with the term customary in

common language as the common name for such goods or services. The first sentence of this

sub-article merely protects certain customary names in local languages, which connote

particular goods in particular localities, from future challenge as a result of the emergence of

TRIPS as a new law on GIs. For instance, if a word is in the use in the vernacular dialect in a

locality in India to indicate particular good, its use cannot be denied merely because the

word indicates a geographical appellation in another country of WTO membership.

7. POLICIES AND APPROACHES OF DEVELOPING COUNTRIES TO PROTECT

GEOGRAPHICAL INDICATIONS:

Geographical indications are protected in accordance with national laws as well. A significant

number of developing countries have also enacted national legislations for their protection.

So far as the various forms of protection of GIs at the national level are concerned, three main

categories can be distinguished.58 The first category comprises all possibilities of protection

which are not based on a decision taken by the competent authority establishing protection

with respect to particular geographical indications, but which results from the direct

application of legislative provisions or principles established by jurisprudence.59 The second

category covers the protection of geographical indications through registration of collective

�� 58 M.M.S. Karki, Intellectual Property Rights: Basic Concepts, (2009) at 211.�

59Id.�

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marks including agricultural labels or certification marks or guarantee marks.60 Finally, the

third category includes all special titles of protection of geographical indications which are

the result of decisions made by the competent governmental authority establishing the

protection. This category includes, in particular, protection of appellations of origin, whether

they result from a registration with the industrial property office or from the adoption of the

decrees.

Thus, we see that GIs are protectable in several different ways that include certifications

marks, denominations of origin, collective membership marks, trademarks and formal sui

generis system, as well as administrative rulings, registers, or even under different laws on

unfair competition, truth in labeling or consumer protection. Different countries provide

different types of protection and may even apply differently to certain products such as wine

and spirits as opposed to foods or handicrafts. Multiple forms of protection may also apply in

the same country, such as trademarks and a sui generis system, thereby giving rise to many

conflicting or confusing opportunities.61

With regards to regulation and registration of a GI, they protect only the indication or name

and its relationship to the specific product, but not necessarily the product itself. The

individual product, independent of its origin, or the actual ingredients and the formulation of

the product may be protected with different IP tools such as patents. Since there is no single

or common way to protect GIs, various methods have been developed in different countries.

These typically include combination of laws, jurisprudence, regulations and administrative

acts such as marks, certifications, denominations and appellations are used in intellectual

property law to distinguish protected product-origin relationships. However, because some

apply only to certain classes of products, or only in certain parts of the world, and others are

interchangeable, the terms often cause confusion. For instance, certain writers and researchers

use the term “trademark” for trademark system, which also comprises of certification marks

and collective marks, whereas, other use the term “trademark” to mean only trademark as

distinct from certification and collective marks.62

By protecting GIs domestically, it may be beneficial for their international protection in other

countries. However in many developing countries, the system of protection is mostly at a

budding stage of the development and the governments have a very limited capacity either to �� 60

Id., at 212.�

61Supra, Daniele Giovannucci, Tim Josling, et al, at 49.�

62Id., at 51.�

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facilitate their own GIs or to protect those of the other countries. In some other countries such

as sub-Saharan Africa, the GI system exists but, is not being utilized due to some reasons,

such as confusing regulations, costs or inaccessible bureaucracy. Despite the existence of GI

system in some countries like Argentina and Cuba, it is applicable only to a limited range of

products like wines, spirits and tobacco. On the other hand, certain other developing countries

like Chile, India and Turkey, are taking a great advantage of the possibility of GI

development in a number of areas. China has a dual system of protection in the form of

certification marks or trademarks, similar to the United States approach or that of the

European Union.

At an international level, the majority of the world’s GIs are for wines and spirits, as is also

evident from the protection afforded to them in the WTO’s TRIPS Agreement under its

Article 24 (4) to Article 24(8). On the other hand, food and other GI products are not

protected in the same manner. Many of the GIs acquire recognition and protection via

national, bilateral or multilateral agreements with other countries or regions on reciprocal

basis. Such agreements serve as a useful means to achieve a reasonable measure of

international recognition and protection. In some cases, countries draw up lists of specific GIs

for which full legal protection may be provided by entering into regional or bilateral

agreements. These Agreements usually require reciprocity in protection, meaning that

countries including the developing countries must have a system to protect GIs of other

countries. This is one of the approaches required to be adopted by the developing countries,

who wish the recognition of their GIs in other countries.

However, it is also true that if such methodology is to be adopted by the developing

countries, they would require considerable resources to negotiate, which may sometimes

become very cumbersome for them. Nevertheless, it is likely that regional or bilateral

agreements will remain important in this area since they may facilitate more effective

protection against such claims as names considered as generic; trademark misappropriation;

and unauthorized use of listed GIs.

Nonetheless, such bilateral protection cannot be the only technique to provide protection to

the foreign GIs, as there could be national treatment violation against those whose

governments or national legislations do not protect those GIs in the same manner as that of

bilateral reciprocating nation. Thus, the countries must also provide the same level of

protection for foreign GIs it registers or accepts as it does for its domestic GIs. It is also

possible to have a GI recognized in some other countries using those countries’ domestic

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registration procedures. For protecting GIs at national level, such policies should be

formulated that aim at public and private benefits of a GI and their likely costs.

8. INDIA AND GEOGRAPHICAL INDICATIONS:

As the national policies and legislations play an important role in protecting GIs not only at

domestic level but also internationally, it becomes pertinent to understand and study

legislations enacted at national levels, especially that of India as a developing countries.

India, like China is in the early stages of fully developing and exercising its GI regime. In

1999, in compliance to its obligation under the TRIPS Agreement, India enacted

Geographical Indications of Goods (Registration and Protection) Act, 1999 along with

Geographical Indications of Goods (Registration and Protection) Rules, 2002. The new Act

came into force with effect from 15 September 2003. Prior to this, the courts in India, in

absence of any legislation, applied the principle of passing-off to protect geographical

indications. Passing-off means “an actionable wrong for the defendant to represent, for

trading purposes, that his goods are those or that his business is that of the plaintiffs….”63

However, with the enactment of GI Act, 1999 the protection now is provided under the same.

The Act is administered by the Controller General of Patents, Designs and Trademarks, who

is also the Registrar of Geographical Indications. GIs registration and protection is afforded

to goods such as natural, agricultural and manufactured goods like handicrafts, stuffs,

manufactured goods, so long as the production, processing and/ or preparation takes place in

the territory stated in the registry of such goods. There is a provision in the GI Act for

broadly extending a higher level of protection envisaged under Article 23(1) of the TRIPS

Agreement for wines and spirits. The GI Act makes registration of the goods mandatory for

affording protection to them. Thus registration provides legal protection, facilitates an action

for infringement and gives exclusive right to use. Products that qualify for GI protection in

India include it’s given qualities as provided in the registration, its reputation and other listed

characteristics attributable to its geographical origin. However, a GI in India does not

necessarily include the name of a geographic location, although in practice, most do. As the

law provides that any name, even if it is not in use, the name of a country, region or locality

of that country, can be considered as the geographical indication if it relates to a specific

�� 63 Suresh C Srivastava, ‘Geographical Indications under TRIPS Agreement and Legal Framework in India: Part

II’, 9 Journal of Intellectual Property Rights, 2004 at 106.�

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geographical area and is used upon or in relation to particular goods originating from that

country, region or locality.

India is gifted with natural and agricultural products having renowned geographical names

such as ‘DARJEELING’ (tea), ‘ALPHONSO’ (mango), ‘BASMATI’ (rice) etc. It is well

known that many GIs from India have often been passed-off around the world. As

‘Darjeeling tea’ which originally denotes the fine aromatic produce of the high altitude areas

of North- Bengal, from where it derives its name, is often passed off around the world as

‘Darjeeling tea’ from Kenya, Sri Lanka etc. Moreover, in France and USA, where certain

corporations have been producing rice based on ‘Basmati’ varieties in those countries, and

registering trademarks that refers to ‘Basmati’, thereby seeking to gain from this renowned

geographical name, the US-patent on ‘Basmati Rice Lines and Grains’ granted to Texas

based Rice Tech Inc., which triggered a lot of controversy in the recent past, is a glaring

example of wrongful exploitation of renowned GI from India. As a result of patent issued to

Rice Tech Inc. vide number 5663484 on basmati rice line and grains on September 2, 1997,

India and Pakistan had to face serious repercussions as both had to face loss in the US import

market.64

The ‘Geographical Indications Registry’ has been established at Chennai, with its

jurisdictions throughout India. GI can be registered by any person claiming to be the producer

of the good, to become an authorized user. Moreover, a number of NGOs are also working

for the upliftment of the farmers and spreading awareness among the public about the better

use of geographical indications.

In this context multilateral trade agreements are playing vital role in determining the

economic prosperity of a country. It not only acts as an indicator for sustainable development

but also makes member countries obligatory to comply with minimum standards agreed

upon. TRIPS as a part of agreement signed under the framework of WTO have been

implemented to serve the purpose. IPRs confer legal recognition of ownership to new ideas

and brands. It legitimately allows the producer or innovator to stop others from exploiting

their products without their permission. Geographical Indication is the newest addition to

IPRs. It acts as indication of source and protects the intangible assets in goods such as market

differentiation, status and quality standards. When a GI acquires reputation over a time,

attempts may be made by the others not having right to use that GI, to utilize it for their

�� 64

Supra, K. D. Raju, at 364.�

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advantage. Such attempts will harm producers, manufactures and consumers of the product.

The original producer shall loose a part of the market and at the same time, the consumer

would not be able to get the original product due to the presence of similar type of deceptive

goods without original quality and uniqueness. Keeping these aspects in mind, GIs are

included as an important part of TRIPS Agreement.

India being a signatory to WTO & TRIPS also required the protection of its products

originated with specific quality and geographical origin under GI, so that the producers of

other countries do not capture the benefits arising out of their unique product. The products

like Darjeeling tea, Chanderisarees, Solapurchaddar, Kotpad handloom fabric, Mysore silk,

Basmati rice, Kohlapurichappal, Nagpur oranges and likewise so many other products need

immediate protection as that quality and originality of these products could be well

safeguarded when afforded reasonable protection under GI legal regime. Thus the indigenous

producers of these goods can get real benefit for their production.

8.1 GIs Registered in India:

Since the effective implementation of India’s GI Act in 2003, there has been an abrupt

increase in the number of applications, with most of the total registering since then. By 2006,

two states accounted for more than 27 registered GIs (Karnataka and Tamil Nadu), showing

both the differing levels of local institutional capability to activate the process and the

considerable time needed to agree locally on the parameters of the proposed GI. However,

lack of awareness and local institutional capacity would be great challenge faced by the

producers who tend to protect their product through GI registration. From 2003 onwards the

available data, however, narrates a different story thereby indicating a steep growth in the

level of awareness for getting the goods registered for protection against misuse.65

There is an increasing interest in protecting the names of local agricultural products, as well

as handicrafts and even manufactured goods. By October 2010, the Indian Government had

successfully registered 146 GIs66 out of 223 applications for GIs received up to 23 September

2010.67

�� 65Geographical Indications Registry, Registered GIs, available at: http//www.ipindia.nic.in/girinda/treasures-

protected/registration_GI_27 October, 2010.�

66 Id.�

67 Government of India, Geographical Indications Journal No.36, September 23, 2010/Ashwin 30, Saka 1932,

Chennai; Geographical Indications Registry, at 5-10.�

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Many other well-known GIs yet remain unregistered. These include: Alphonso mangoes;

Basmati rice, Bengal cotton, Hyderabad pearls, Kashmir carpets, Nendran Bananas, and

Nagpur oranges. Others such as Agra petha, Bangalore rose onions, Cheriyal paintings etc.,

are also going through the registration process.68

Interestingly, some famous GIs such as Alphonso mangoes are still not in the pipeline,

whereas applications were being processed in 2010 for some lesser- known GIs as has been

mentioned earlier.69 Moreover, achieving the necessary agreements, particularly for GIs that

have great economic value such as Alphonso mangoes, can be a time taking process. Basmati

rice, perhapsdue to the unique challenge surrounding a common GI between India and

Pakistan, is also not registered.70

A number of lesser-known products with modest production and local markets as Mysore

Jasmine and PochampallyIkat have quickly been granted protection, indicating interest in GI

protection not only for exports, but for the domestic market as well. In order to prevent the

extinction of Indian traditional crafts, GIs pave a way for their revival. Nevertheless, it is also

true that GI registration alone would be insufficient and these sectors also need other

complementary forms of development.

In agricultural sectors, GIs are also considered as one means to revive traditional heirloom

varieties or those known through generations, such as Coorg oranges, that had suffered

downslope.

8.2 Geographical Indications Act, 1999:

The GI Act was passed to protect various industrial and agricultural resources existing in

India. This Act is significant because the TRIPS Agreement provides that if geographical

indication is not protected in country of its origin, then it will not be protected in the

international field.71

The registration of GI confers the right of exclusive use coupled with the right to obtain relief

in respect of infringement. An association of persons, producers; or any organization or

authority established by or under any law representing the interest of the producers of the

�� 68

Id.�

69Id.�

70 An application for registration of Basmati rice was made vide Application No. 14 dated 19 September, 2004.�

71TRIPS Agreement, Article 24 (9).�

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concerned goods, can make an application for the registration of GIs.72 The GI is then

available to producers of the product, who must apply in writing to became authorized users

of the GI. The GI registration is available for a period of 10 years to an authorized user and

thereafter it can be renewed for a further period of another ten years. If there is a lapse in

renewing the registration it will be removed from the Register. The Registration of GIs is not

compulsory but affords better legal protection to facilitate an action for infringement.

The GI Act is very detailed and provides for the contents of applications for registration.

a. Every application must contain a statement as to how the geographical

indication serves to designate the goods as originating from the concerned

territory of the country or region or locality in the country, as the case may

be, in respect of specific quality, reputation or other characteristics which are

due exclusively or essentially to the geographical environment, with its

inherent natural and human factors, and the production, processing or

preparation of which takes place in such territory, region or locality as the

case may be;

b. Every application must contain the class of goods to which the geographical

indications shall apply;

c. The geographical map of the country, region or locality in the country in

which the goods originate or are being manufactured;

d. The particulars regarding the appearance of the geographical indications as

to whether it is comprised of the words or figurative elements or both;

e. A statement containing such particulars of the producers of the concerned

goods, if any, proposed to be initially registered with the registration of the

geographical indications as may be prescribed.73For example,

�� 72 Geographical Indications of Goods (Registration and Protection) Act, 1999, Section 11(1).�

73Id, Section 11(2).�

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GI Application Number-12974

If the application is technically approved after examination, the proposed GI is then published

for a period of objection within 3 months of date of advertisement.75 The process requires

about 12 months in completion. Foreign applicants who wish to register their GI in India

must follow a similar registration procedure, as is depicted in case of GI Application No.

15176 made in India for the registration of ‘The Scotch Whisky’ as shown:

�� 74

Supra, GI JournalNo.36, at 12-23.�

75Supra GI Act, 1999, Section 14.�

76Supra, GI Journal No.36, at 24-38.�

G.I. APPLICATION NUMBER - 129

Application is made by Spices Board,Ministry of Commerce and Industry,

SugandhaBhavan, N.H. By-pass, P.B.No.2277, Palarivattom P.O., Cochin – 682 025,

India, forRegistration in Part-A of the Register of ByadagiChilliunder Application

No.129 inrespect of Chillies being Spices falling in Class - 30 is hereby advertised as

acceptedunder Sub-section (1) of Section 13 of Geographical Indications of

Goods(Registration and Protection) Act, 1999.

Applicant: Spices Board

Geographical Indication:BYADAGICHILLI

Class: 30

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GI Application No. 151

They have to apply through an India-based representative, and have to give an address for

services in India. Protection to GI, thus, is granted only after the registration. Foreign and

domestic GIs are granted the same rights on the basis of the principle of national treatment.

The Act, however, prohibits licensing transmission assignments or pledge in respect of

GIs.77An action for infringement as well as passing-off can be brought under the Act.78

Infringement includes unfair competition.

Even after the registration of GI, the producers that are members of a group of products

owing to registered GI do not automatically get the right to use the GI. For that, they must be

�� 77

Supra, GI Act1999, Section 24.�

78Id., Sections 57 and 66.

�

G.I. APPLICATION NUMBER – 151 Application is made by The Scotch Whisky Association, 20 Atholl Crescent,

Edinburgh,EH3 8HF, Scotland, United Kingdom, for registration in Part-A of the

Register of Scotch Whisky under Application No.151 in respect of Whisky falling in

Class - 33 is hereby advertised as accepted under Sub-section (1) of Section 13 of

Geographical Indications of Goods (Registration and Protection) Act, 1999.

Applicant: The Scotch Whisky Association Address: The Scotch Whisky Association, 20 Atholl Crescent,

Edinburgh, EH3 8HF, Scotland, United Kingdom,

Address of Service in India: Anand and Anand, B-41,

Nizamuddin East,New Delhi – 110 013, India

Geographical Indication: SCOTCH WHISKY Class: 33 Goods: Class – 33 – Whisky

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registered as ‘authorized users’ that involves a registration procedure, payment of application

fees, and approval from the registered proprietor of the GI. However, lack of awareness,

capacity or resources may preclude legitimate producers of the GI product from registering.

Though, the applicant for the GI is required to be legitimately representative of all the

producers in the GI region, which may be difficult to prove in practice.

While the GI system in India is based upon quality, reputation and characteristics, there are

no provisions in the Act to ensure that such traits, as described in the initial registration, are

maintained even after the registration is granted to them. There is a considerable passion for

GIs, and the pace of registration is increasing as both State and Central Government are

active in the process, which indicates an increase in the awareness among GI producers for

better protection.

As the geographical reputation of a product is carefully built and maintained by the

producers or developers by combining the best of nature and manpower and handed over

from generation to generation for centuries, they need to be protected. In the post

liberalization era, the world economy is increasingly assimilated, so also are the different

brands and products. Regional specialization has flourished in a disintegrated world without

any risk. But after integration of the world economy, the risk of losing regional identity is

growing day by day as it happened in case of Basmati rice. Now the need of the hour is to

protect the brand of a particular region along with its expertise and uniqueness through GI

registration. Thus all related departments, organizations and NGOs need to educate people

about the importance of GIs in building the nation and to protect our traditional heritage for

sustainable developments.

9. GI DEVELOPMENTS AFTER TRIPS:

The question of amendment of Section 3 of Part II of the TRIPS Agreement with a view to

extending the regime of protection currently available for GIs on wines and spirits to GIs on

all products, has been raised by the developing countries. The proposed amendment in the

TRIPS Council after Doha, seek to Article 23 of TRIPS agreement to extend their scope to

GIs on all products. In support of extension, a number of developing countries have identified

GIs as a category of intellectual property from which they might profit. Prior to the Seattle

Ministerial, a submission by Turkey of 9 July 1999 proposed the extension of GIs in TRIPS

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beyond wines and spirits.79 Certain African countries like Kenya, Nigeria and South Africa

further requested that the protection for GIs should be extended to other products

recognizable by their geographical origins, such as agricultural, food and handicraft

products.80 The proposal was also adopted by Cuba, Czech Republic, Dominican Republic,

Honduras, India, Indonesia, Nicaragua, Pakistan, Sri Lanka and Venezuela.81 These

developing countries intend extended GI protection for food products in order to facilitate

market differentiation for a variety of common commodities such as tea, coffee, and rice.

However, the opponents of the proposal, led by the United States, warned that the extension

of Article 23(1) would oblige the member countries to protect the GIs of all other members at

an enhanced level of protection and that it would cause an additional burden especially, to

European countries that have over 70,000 domestic GIs.82

However, the debate in the TRIPS Council regarding questions of extension of protection

involves certain procedural difficulties among which is the question of requisite negotiating

mandate, since it is part of the “built-in agenda” concerning implementation issues and that

such mandate is lacking. This has further resulted into the question of interpretation of Article

24 of the TRIPS which aims at increasing the protection of individual geographical

indications under Article 23, while at the same time making sure that there is no reduction in

the protection of geographical indications that existed in that member immediately prior to

the date of entry into force of the WTO Agreement.83 As evidence to this effect, Clause 39 of

the Hong Kong Ministerial Declaration urged WTO members to redouble their efforts to find

appropriate solutions to ‘outstanding implementation-related issues’ including the extension

of the protection of GI provided for in Article 23 of the TRIPS Agreement to products other

than wines and spirits.

Hopefully, a solution to the problem would be found out depending upon the importance

gained by any GI other than wines and spirits and the developed countries would find a

middle way to deal with the situation raised by the developing countries.

�

�� 79 G.E Evans and MichealBlakeney, ‘The Protection of Geographical Indications After Doha: Quo

Vadis?’Journal of International Economic Law (JIEL), July 2006 at 30.�

80Id.�

81Id.�

82 WTO Document, IP/C/W/289.�


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CHAPTER – V

DISPUTE SETTLEMENT UNDER TRIPS

Dispute settlement is a significant component in the smooth working of various multilateral

agreements entered into as a result of the Uruguay Round of trade negotiations, as it gives

confidence to the members of the WTO that their complaints on the notifications as well as

infringement of rights under the agreements would be dealt in by an impartial tribunal. The

lack of practical enforcement mechanism under the GATT led to the enactment of the

Dispute Settlement Understanding (DSU) during the Uruguay Round Agreements. Ratified

under Annex 2 of the WTO Agreement, the DSU applies to disputes brought pursuant to any

provisions of the WTO agreement. Any claimed violation of TRIPS are adjudicated in

accordance with the DSU’s guidelines and procedures, which further aims at removing the

resistance created in the actual working of the multilateral trade agreements, that in turn aims

at free flow of trade and commerce amongst countries leading to the raising of standards of

living, ensuring full employment, expanding production and trade in goods and services. It

seeks the finest use of the world resources with the objective of justifiable development

consistent with the needs and concerns at different stages of economic development of

member states.

The dispute settlement begins with consultations among the disputant parties. When they fail

to arrive at any decision, the complainant files a request for the constitution of a panel to

obtain a ruling on its complaint. If it is not satisfied with the panel ruling, a right to file an

appeal before the Appellate Body is provided, ending with the adoption or rejection of

Appellate Body report by the Dispute Settlement Body pursuant to the consensus view of its

members, seeking a resolution of the dispute in question.

The provision for dispute prevention and settlement is contained in Articles 63 and 64

respectively of the TRIPS Agreement. They speak of transparency in the matters relating to

the availability, scope, acquisition, enforcement and prevention of abuse of intellectual

property rights. For that the Agreement requires publication of the laws and regulations, and

final judicial decisions and administrative rulings of general application in the national

language in order to assist the governments and right holders to become acquainted with

them. Additionally, the Member States are required to notify the laws and regulations to the

Council for Trade Related Aspects of Intellectual Property Rights, so as to assist the Council

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to review of operation of this Agreement. Article 64 clearly refers to Articles XXII and XXIII

of the GATT, 1994 to be applied in consultations and dispute settlement under the TRIPS

Agreement, except as otherwise specifically provided. In the matters of dispute settlement

under the TRIPS Agreement, however, sub-paragraphs 1(b) and 1(c) of Article XXIII of the

GATT were exempted to be applied for an initial period of five years from the entry into

force of the WTO, and the TRIPS Council was, for that period of exemption, was required to

examine the scope and modalities of a Articles XXIII(b) and (c) of the GATT in the of

complaints made pursuant to TRIPS Agreement and submit its recommendations to the

Ministerial Conference for approval. However, the provisions of the TRIPS Agreement, in

general, in case of any conflict or violation have to be settled in a very transparent manner by

the Dispute Settlement Body, operating under the Dispute Settlement Understanding (DSU).

The Dispute Settlement Understanding (DSU) is a codification of the practice created under

GATT 1947, with a few changes considered necessary to improve the dispute settlement

process. The adoption of the panel reports have been changed from positive consensus under

the GATT to negative consensus, unless objected to it is deemed to have been accepted. The

new Understanding under the WTO contains the enforcement provisions, provides for time

period to dispose of the disputes, which is an improvement over GATT procedures.

Thus it pertinent to study dispute settlement rules and procedures under GATT and working

of the Dispute Settlement System. Further, how far GATT had been successful in dissolving

the disputes and as to what necessitated the incorporation of Dispute Settlement

Understanding (DSU) under the WTO agreements. Also how for the DSU has been

successful in settling the disputes relating the implementation of TRIPS provisions, including

their interpretation so as to bring the deviant member of the WTO to work in conformity with


1. GATT AND DISPUTE SETTLEMENT:

The General Agreement on Tariffs and Trade (GATT), signed by twenty- three participants in

the preparatory committee, came into effect on 1 January, 1948. Since it was not an

organization, the signatories of GATT came to be known as contracting parties. Though a

provisional arrangement, as International Trade Organization (ITO) could not come into

being due to the refusal of the US Congress in 1950 to ratify the treaty establishing the ITO,

the GATT stayed the only multilateral instrument governing international trade from 1948

until the World Trade Organization (WTO) was established in 1995. GATT was efficacious

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in generating a friendly environment for trading between the nations by introducing the

concept of trade bargaining. It resulted into reduction of trade tariffs and also into evolution

of rules to govern international trade through its eight rounds of trade negotiations. All the

rounds viz Geneva, Annecy, Torquay and Dillon Round dealt with the reduction in tariffs or

the tariff cuts. However, in Kennedy Round, an attempt was made to deal with non-tariff

barriers, though the same was unsuccessful. During the Tokyo Round of negotiations, six

agreements dealing with non-tariff issues and three sectorial arrangements emerged. In most

of the cases only a small number of GATT members, mostly the industrialized nations,

subscribed to these agreements and arrangements. As they were not accepted by all the

members of GATT or by the full membership, they were often informally called ‘codes’, they

were1:

(i) Agreement on Government Procurement;

(ii) Agreement on Implementation of Article VI of the GATT (Anti-dumping Code);

(iii) Agreement on Implementation of Article VII of the GATT(Customs Valuation

Code);

(iv) Agreement on Import Licensing Procedures;

(v) Agreement on Interpretation and Application of Articles VI, XVI and XXIII of the

GATT (Subsides Code);

(vi) Agreement on Technical Barriers to Trade (Standards Code);

(vii) Agreement on Trade in Civil Aircraft;

(viii) International Dairy Agreement; and

(ix) International Bovine Meat Agreement;

The Tokyo Round was the most comprehensive round held till then. It also evolved a dispute

settlement mechanism under GATT. Several codes which were evolved till Uruguay Round

were amended in UR and changed into multilateral commitments accepted by all WTO

members. The Uruguay Round was the most protracted and extensive round that concluded

in Geneva in December 1993, aimed at revising, updating and expanding the agreements or

codes accepted under the GATT. The UR resulted into establishment of a permanent structure

in place of provisional arrangement i.e., GATT, which replaced the GATT as an international

organization i.e., the World Trade Organization (WTO), which came into force on 1 January

1995.

�� 1M.B. Rao and Manula Guru, WTO Dispute Settlement and Developing Countries, (2004) at 2.�

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2. GATT DISPUTE SETTLEMENT RULES AND PROCEDURES:

Dispute settlement, under the GATT, was originally based upon Articles XXII and XXIII of

the GATT, though neither of these two articles contained procedures. Consultations between

GATT contracting parties was the first stage of dispute settlement in the GATT. The first

GATT provision on the settlement of disputes through consultations was Articles XXII of the

GATT 1947. It provided that the contracting parties regarding operation of customs

regulations and formalities, anti-dumping and countervailing duties, quantitative and

exchange regulations, subsides, state-trading operations, sanitary laws and regulations for the

protection of human, animal or plant life or heath, and generally all matters affecting the

operation of the GATT, must provide a sympathetic consideration and also afford adequate

opportunity for consultation regarding the above mentioned issues. When the General

Agreement was amended in 1955, besides other amendments, Paragraph 2 was added to

Article XXII, which provided that the party to consultations may request to the Contracting

Parties, ‘CPs’, to interfere on matters where no satisfactory solution could be reached

between the original parties to consultations.2

In 1958 procedures were introduced allowing the participation by third parties in Article

XXII consultations,3 whereby the interested members were required to notify their interest to

join the consultations.4 The rules required the contracting party seeking consultations to

notify the GATT Executive Secretary for providing information to all contracting parties.

Further, any other contracting party having substantial trade interest in the matter under

consultations was required to notify the executive secretary of its desire to join consultations.

The third party to which request was made to participate in the consultations, if agreed that

there was a substantial trade interest, could submit its joinder to the consultations. When the

request of third party desiring to join the consultations was rejected by the contracting party,

then the third party could make referral of its claim. The contracting parties were required to

be informed about the outcome of consultations and finally if contracting parties requested

�� 2 GATT, Protocol Amending the Preamble and Parts II and III of the General Agreement in Final Act Adopted

at the Ninth Session of the Contracting Parties, 278 U.N.T.S 200 (1957).�

3 Procedures under Article XXII on Questions Affecting the Interests of a Number of Contracting Parties,

BISD, 7thSupplement 24 (1959) (adopted on Nov. 10, 1958) (“1958 Procedures on Article XXII”).�

4 Now Article 4 (11) of Dispute Settlement Understanding (DSU) under WTO.�

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for assistance then the rules for consultations also contained the provision of assistance by the

Executive Secretary.5

Article XXIII (1) provided for written representation to the other party in a case where the

contracting party considers that any benefit was being ‘nullified or impaired’ by the other

contracting party. However, if the written representation does not result into any agreeable

adjustment, then the matter could be referred to other contracting parties of the General

Agreement, to act collectively and investigate, and make recommendations thereon. This

Article envisages three types of complaints viz., the violation complaints, non-violation

complaints and situation complaints.

Article XXIII (2) contained three kinds of actions that contracting parties could take. They

were recommendations, rulings and authorization to suspend obligations. In 1966, procedure

was introduced in Article XIII that established specific provisions for the resolution of

disputes between developed and less developed country contracting parties.6 However, if

bilateral consultations had failed, the less-developed country complainant could refer the

matter to the Director-General for his good offices under the new provisions. In 1979, the

Understanding Regarding Notification, Consultation, Dispute Settlement and Surveillance

were adopted as a result of the Tokyo Round of Multilateral Trade Negotiations (MTNs).7

The 1979 Understanding codified for the first time a framework of procedural rules for the

GATT dispute settlement process as a whole. The principal aim was to establish rules for the

panel process and to improve functioning of the GATT. More elaborate requirements for the

consultations process were also included. Moreover, the requirements as to respond promptly

to requests for consultations and attempt to conclude consultations expeditiously were also

included. However, no specific deadlines or guidance regarding the length of consultations

were specified.

On the whole both these Articles did not use the term ‘dispute settlement’. Rather the term

consultation was used to settle the differences or disputes between the contracting parties to

�� 5 Christiane Schuchhardt, “Consultations,” in ‘The World Trade Organization :Legal, Economic and Political

Analysis, Patrick F.J Macrory, Arthur E. Appleton and Michael G. Plummer (Eds.), Volume I, (2005) at 1200

– 1201.�

6 Procedures under Article XXIII, Decision by the Contracting Parties of April 5, 1996, BISD, 14th Supp. 18

(1966) (“1966 Procedures”).�

7 Understanding Regarding Notification, Consultation, Dispute Settlement and Surveillance, BISD, 26th Supp.

210-1 (1980) (adopted on 28 Nov 1979) (“1979 Understanding”).�

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the GATT. The consultations were initially to be bilateral i.e., between the contracting parties

with differences on the operation of GATT agreement. However, when bilateral consultations

failed, provision for multilateral consultations was also incorporated under Article XII,

whereby the matter would be referred to the other contracting parties to act as a body, who

after investigation would make recommendations or give a ruling on the matter. Thus Article

XIII (1) required to undertake consultations first, before referring the matter to the

contracting parties i.e., before recourse to a panel. When the contracting party failed to act on

the recommendations or ruling of the contracting parties, if such parties found the matter

serious enough, they could authorize suspension of any concession or other obligation under

the agreement.

In 1990, four years after the launch of Uruguay Round (UR) of multilateral trade

negotiations, the contracting parties adopted the Improvements to the GATT Dispute

Settlement Rules and Procedures.8 The rules framed under the mid-term agreement were

applied until the establishment of Dispute Settlement Understanding (DSU) under the WTO.

The mid-term agreement specified the time frame for consultations. A party had to respond

within ten days to a request to consult, and consultations had to be entered into within thirty

days from the date of the request. In case of failure to respond, the party that requested

consultations could then request the establishment of a panel. However, if the consultations

failed, the complaining party could request the establishment of a panel within sixty days of

the request for consultations. Earlier under 1979 Understanding, the consultation request had

to be made in writing stating the grounds for the request and also the GATT Council had to

be notified earlier. But in 1990, for the first time a specific provision with deadlines in case of

urgency, including cases of ‘perishable goods en route’, was introduced. In such cases of

perishable goods, the parties had to enter into consultations within ten days of the

consultations’ request and failure to engage into consultations of panel could be requested

within a period of thirty days.9 The ‘urgency’ as mentioned, however, remained undefined

and open for interpretation by panels.

3. OBJECTIVES OF CONSULTATION:

Consultations are a necessary element of every dispute, free from third party influence which

may provide good offices, conciliation or mediation. Thus settlement of dispute by way of �� 8Improvements to the GATT Dispute Settlement Rules and Procedures, BISD, 36th Supp. 61 (1990) (“The Mid-

term Agreement’).�

9Id.�

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satisfactory adjustment in order to achieve the intended results or to find out other kind of

agreement is an important method to settle the differences. Moreover, poorer countries prefer

consultations as the best method to settle the dispute, due to the fact that they try to avoid

going through the lengthy and costly panel processes because of financial reasons. Likewise

they would also go for consultations in order to avoid publicity involved in a panel

proceeding.

Another purpose of consultations was to gather information and clarify fact and to identify in

more detailed manner the legal issues involved in a dispute. During the consultations a party

might present written questions concerning specific facts to the other side in order to obtain

particular information. That might help in furthering that party’s goal to reach settlement of

the dispute during consultations.

Consultations could also shape the substance of a case. In that parties might decide, after

uncovering more facts during consultations, to drop claims that they considered likely to be

rejected by the panel.

At present, besides the Dispute Settlement Understanding, Articles XXII and XXIII of GATT

1994 provide right to ask for consultations, and duty to consult results, first of all, from

Article XXII (1) and Article XXIII (1) of GATT 1947 as was stipulated earlier before its

amendment into GATT1994.

4. CONSULTATIONS AND SETTLEMENT OF GATT DISPUTES:

During the first decade of its working, the GATT Dispute Settlement Procedures were

applied to resolve about forty-four cases from 1959-78.10 Though the system appeared to

have functioned well, yet the reality was that the number of cases instituted declined almost

to one case per year.11 The reason for such plunge in the number of disputes referred to

GATT could necessarily be a belief that trade disputes could be settled by negotiations and

that GATT provisions which involved strict enforcement should not be referred, as the same

could be done by way of negotiations which might not necessarily be the outcome of GATT

negotiations or consultations.

In the last phase of working of GATT, the GATT dispute settlement resembled a quasi-

judicial system in important aspects, whereby neutral decision makers determined the

questions as to, if any party to the dispute had violated the agreement. Though the decision

�� 10The WTO Dispute Settlement Body, (hereinafter DSB).�

11Id.�

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was neutral, but the recommendation was generally to terminate the violation and revive the

impugned law in accordance with the GATT provisions.

Thus the GATT dispute system during its first decade was more legalistic, while in the

second phase of its working, it resembled the consensus/negotiation model due to pressure

from the US, the formation of European Economic Community and the emergence of Japan

as an economic force.12 The third phase was quasi-judicial, which gave rise to rule oriented

decisions as against power oriented decisions of GATT.

The GATT dispute settlement system was criticized due to following reasons.13

(i) Delays in processing complaints, like formation of panels was often delayed;

(ii) Implementation of decisions was improper due to blockage of Panel Reports by

exercise of veto ; and

(iii)Feeling by the developing countries that the system was designed mainly for

looking into the interests of the developed countries as GATT was unable to

respond to their interests and complaints.

This shift in the GATT dispute settlement proceedings from power oriented diplomacy to rule

oriented diplomacy with the passage of time in the last phase of GATT was due to the fact

that parties wanted to get rule oriented, binding decisions in conformity with their mutually

agreed long term obligations and interests and preferred avoiding the various risks involved

in diplomatic means of dispute settlement. Further the GATT system grew due to the

formation of panels resulting from the establishment of working parties and consisting of

independent experts, use of customary law methods of treaty interpretation by the panels,

increased recourse to lawyers as compared to diplomats, and the quasi-automatic adoption of

most panel reports. The system was further strengthened and shifted towards quasi-judicial

functioning by codification and improvement of rules and procedures adopted in 1958,

1966,1979, 1982, 1984,1989 and finally in 1994 at the time of the formation of the WTO.

Institution of deadlines system for various phases of the dispute settlement further

strengthened the system. Introduction of arbitration as an alternative mode to settle the

dispute within the GATT system in the year 1989 further contributed in the improvement of

the working of the system. All these developments from 1947 onwards that strengthened the

�� 12 William Davey, ‘Dispute Settlement in GATT’,Fordham International Law Journal, Vol. II, at 64.�

13Supra, M. B. Rao and Manjula Guru, at 9.�

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GATT system contributed towards juridical-pattern of the system and legalization of the

Understanding on Dispute Settlement (DSU) under the WTO regime.

The dispute settlement system under the GATT was not free from criticism. The same was

criticized on feeling that rules were having many loopholes, split and there were many

procedural shortcomings. The system was criticized mainly due to the reasons that the US

and EC, which were the two major players in GATT, did not respect the oppositional reports

against them. Also the losing contracting parties due to lack of consensus while making

decisions often blocked the adoption of Panel Reports. This caused considerable delay and

prevented the very aim of dispute settlement procedure.14

5. DEVELOPING COUNTRIES AND GATT DISPUTE SETTLEMENT:

The GATT system for dispute settlement was not considered as an effective tool by the

developing countries, which considered it as a defective system meant to serve the comforts

of the developed countries. At the time when GATT was formed in 1947 most of the present

developing countries were under the colonial rule and lacked experienced personnel to tackle

with GATT 1947 matters or conduct disputes. Moreover, the cost of bringing dispute to the

GATT was high and the time to form the panels and initiation of proceedings was not fixed,

and as such took very long time to settle the dispute. Till the time dispute could be settled, the

violations continued. Additionally, the end results could not be anticipated. However, the

developing countries could face adverse action, in case they made any claim against the

developed country, as the same would result into reduction of benefits either under the

Generalized System of Preferences (GSP) or through any retaliatory action by the developed

country.15 If the finding results went against the developed country, it could effectively

obstruct Panel proceedings in between and also block the findings of the Panel.16The

developing country could never find an opportunity to retaliate against the developed country

and also there was no guarantee of any real success through litigation.17 There was division of

interests between the developing countries, which are prevalent even today. Due to their

�� 14 Robert E. Hudec, ‘Dispute Settlement’ in Completing the Uruguay Round: A Result Oriented Approach to

the GATT Trade Negotiations, Schott J Jeffrey (ed.), September 1990, at 180.�

15 Supra,MBRao and ManjulaRao, at 11.�

16 Kofi Deng Kufinor, “GATT and the WTO: The Developing countries and the Reform of the Procedures for

the Settlement of International Trade Dispute”, Journal of World TradeVol. 31. October 1997, at 117 – 145.�

17Report of US International Trade Commission, Review of the Effectiveness of Trade Dispute Settlement under

the GATT and Tokyo Round Agreements, 1985.�

��

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subjection to the foreign rule, during the colonization, they had a fear in their minds and

never wanted themselves to be subjected again under foreign dominance, thus closed off their

economies to foreign trading interests. For example, India after its freedom from the British

rule adopted socialistic philosophy, and thus discouraged foreign direct investment and

import of technology, prior to the liberalization of its economy in 1990.

The developing countries were not satisfied with power- oriented diplomacy, thus made

certain proposals for adoption of legalized system for making the system more transparent.

In 1965, Brazil and Uruguay put forward proposals for reforming Article XXIII procedures.

Consequently, in 1966 and 1979 certain amendments were made to Article XXIII. The

procedures introduced in 1966 were not put into use so broadly by the developing countries.

Also the developed countries preferred negotiations to resolve their differences. But it was in

1979, the Rules were framed that recognized special attention during consultations to be

given to the developing countries. These Rules tried to reduce the fear of the developing

countries that on calling for consultations under the GATT, they would face hostile reactions

by the developed nations. The interest of developing countries was further protected by 1982

Decision, 1984 Decision and 1989 Decision by making provisions for expeditious formation

of Panels, findings of Panels, third party interventions etc., thereby avoiding delay in the

process of dispute settlement.18

The interests of developing countries were discussed during the Uruguay Round that

concluded in the establishment of WTO containing provision for dispute settlement under

WTO Understanding, that is, Dispute Settlement Understanding (DSU).

6. CONCEPT OF DISPUTE SETTLEMENT UNDER GATT:

6.1 Locus Standi under GATT Dispute Settlement System:

Under the GATT system, only member states had the standing to resort to the process of

dispute settlement. The dispute settlement procedures dealt with the claims against the

members, including actions by all branches of member states, regions and sub-regions in the

member States.

�� 18

Supra, MB Rao and Manjula Guru, at 11.�

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6.2 Specific Measures and Dispute Settlement:

The GATT procedures allowed only measures to be challenged, which included legislations,

regulations, administrative guidelines and administrative behavior,19 and was not limited to

measures of general application. Thus, it was only specific provisions that were brought

before the General System for decision against the violation or the adoption of those

provisions, which though did not have the effect of damaging the interests of the contracting

party directly, but affected their interests otherwise.

6.3 Discretionary Powers:

When legislations passed by any contracting party confer discretionary power to act

inconsistent with the agreement, the same would not by itself be inconsistent with the GATT

and declared as void, but if the legislation mandatorily requires action to be inconsistent with

the General Agreement, even if the same was not used, it could be challenged before the

GATT dispute settlement system. Thus giving discretion to act against the General

Agreement would not be offensive, but if the same provision to act inconsistent with

Agreement might become the subject matter of dispute, than the same would be treated as a

measure challengeable before the dispute settlement system. As in case of US-Taxes on

petroleum and certain imported substances,20 Superfund Act that contained provisions to

impose tax inconsistent with the national treatment principle stipulated in GATT and also

gave them the possibility to avoid imposition of tax by issuing regulations, the panel

constituted under GATT provisions, held that existence of the penalty provisions as such does

not constitute a violation of the US obligation to observe the provisions of General

Agreement.

6.4 Effect of Modification of Measures During Proceedings:

The measure which was challenged as violative of the General Agreement, if changed during

the subsistence of proceedings, that is, after the establishment of the panel, than question

arose as to what would be the course of action of the panel? Whether in such a situation, was

the panel bound to consider the measures existing at the time of request or could it consider

the amendment provisions? The practice of the panel, generally, had been not to examine the

new measure. However, if the measure came to an end and could not be reapplied, a panel

would generally choose not to rule on it. As in case of Argentine-Footwear, a panel chose not

�� 19

Id. at 14.�

20BISD 345/136, Adopted on 17 June, 1987.�

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to proceed in relation to a repealed measure.21 However, it was not always that the panel

chose not to rule on it, as happened in the case of US measures affecting the imports of

woven wool shirts and blouses from India, where import restrictions that were the object of

dispute were withdrawn after the panel submitted its interim report to the parties. But the

panel decided to continue the matter.22

6.5 Scope of Dispute Settlement Process:

The GATT dispute settlement system was limited in its scope and extended only to the

conflicts or disputes arising out of GATT or any other multilateral agreement invoking

GATT dispute settlement. During the Tokyo round of negotiations, various side agreements,

after known as covered agreements, dealing with non-tariff issues were entered into. Only

such agreements and disputes relating to GATT could be invoked before such dispute

settlement system.

6.6 Withdrawal of Inconsistent Provisions:

The GATT dispute settlement system served a main objective that was, to secure withdrawal

of provisions in the measures challenged to be inconsistent with the General Agreement. The

panel in all such cases of inconsistency had either tried to find out if there is any nullification

or impairment of any benefits accruing to the affected party or whether any of the objectives

of the covered agreement had been obstructed. In all the cases of inconsistency, the GATT

Council consisting of the contracting parties had requested the defendant to bring its

inconsistency measures, as complained of, in compliance with the GATT law by appropriate

means of the country’s own choice.

6.7 Non-Violation or Situation Complaints:

There was a separate cause of action even if another member’s measure was not violative of

GATT laws when the complaining member considered that the measure otherwise would

nullify or impair benefits accruing to it directly or indirectly under the covered agreements,23

which might be for effectiveness of the concession, reciprocity and bona fide protection of

reasonable measures.24Thus the rationale underlying non-violation complaints was that the

�� 21

Supra, M. B. Rao and Manjula Guru, op.cit., at 15.�

22Id.�

23 Article XXII (1) (b) of the GATT 1994; Petersmann, ‘Violation complaints and Non-violation complaints in

Public International Trade Law’, 34 German Yearbook of International Law, 175,225 (1991). �

24Id.�

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improved competitive opportunities that could legitimately be expected from a tariff

concession could be frustrated, not only by the measures prescribed by the GATT, but also by

measures consistent with that Agreement. Consequently, the right to redress when any

reciprocal concession was impaired by another contracting party as a result of the application

of any measure, whether or not it conflicted with the GATT, was desired by the contracting

parties so that they might offer tariff concessions.25 This remedy however was an exceptional

instrument of dispute settlement, as was evident from the fact that out of a total or more than

250 dispute settlement proceedings since 1948, less than 20 were the non-violation

complaints.26 Out of these 20, only 14 directly related to non-violation and others were raised

as subsidiary alternate claims.27

Another cause of action was the existence of any other situation that could nullify or impair

benefits which a member considered to accrue to it directly or indirectly under the covered

agreements.28 Thus existence of any other situation could attract cause of action against other

contracting party of the GATT.

GATT Article XXIII did not depend upon the occurrence of actual damage, though damage

was taken into consideration while deciding the compensation or suspension of obligations.

Thus it was the inconsistency of measures, and nullification or impairment in terms of GATT

Article XXIII, which were taken into account while settling the disputes under the GATT

dispute settlement system. Chile complained against Australia29 for withdrawing a subsidy on

imported sodium nitrate and continuing the same on domestic ammonium sulphate, thereby

nullifying or impairing of the tariff concession granted to Chile. The report of the working

party specified that though there was no violation of obligation on part of Australia, but it

agreed that the injury suffered by Chile signified nullification or impairment of benefit

ensuing to Chile, directly or indirectly in terms of Article XXIII. The working party in

coming to its conclusion, referred to the conditions prevailing at the time of negotiations

which led Chile to assume that the wartime subsidy would not be removed from sodium

nitrate before it was removed from domestically produced ammonium sulphate and

�� 25 GATT Panel Report, EEC-Oilseeds I, adopted 25 January 1990, BISD 37S/86, t 128-129 Paragraphs 144 and

148, quoted in Appellate Body Report, EC- Asbestos, Para 185.�

26Supra, M. B. Roa and Manjula Guru, at 27.�

27Id.�

28 Article XXIII (1) (c) of the GATT 1994.�

29BISD II / 188-96.�

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concluded that the Australian action should be considered as relating to benefit accruing to

Chile under the agreement and therefore, was subject to the provisions of Article XXIII. The

working party observed that the value of a concession granted to Chile had been impaired as

a result of withdrawal measure, which however, did not conflict with the provisions of the

General Agreement. In other words, withdrawal of subsidy on imported sodium nitrate by

Australia resulted into non-violation complaint by Chile.30

Thus it can be concluded that nullification or impairment may take place by discontinuance

of a subsidy in one of the two competitive products, which may not be violative of Article

XXIII, but may become cause of action, thereby must be remedied. The decisions under the

auspices of GATT have become source of interpreting the corresponding WTO provisions.

The GATT dispute settlement also provides background to the underlying rationale behind

the dispute settlement principles and procedures under the new understanding of the WTO.

Therefore, GATT as an institution has established customary ways of dealing with disputes

arising out of an agreement. The General Agreement did not contain any provision for

referring the disputes or questions of interpretation to any court of law or International Court

of Justice (ICJ). Rather the contracting parties, acting jointly under Article XXV (1)

exercised the function of a tribunal. Thus GATT as a whole was a system of reciprocal rights

and obligations to be maintained in balance. Article XXIII (2) established procedures of the

last resort in the event of nullification or impairment of GATT obligations, whereas provision

for retaliatory actions were found in Article XII (4)(c) and XVIII (12)(c). There were various

other provisions in the GATT for resolution of dispute before the Article XXIII stage was

reached, that is, before the panel was constituted to resolve the disputes as consultation

provisions under Article XXII. Thus Article XXII was a key provision for settlement of

disputes under the GATT as it provided remedy to the affected party to withdraw concessions

or other obligations as were considered by the contracting parties to be appropriate in the

circumstances.

Since the 1950s, the GATT practice had been to refer dispute to an adhoc arbitration panel of

three or occasionally five neutral individuals agreed to by the parties. The panel report was

then referred to the GATT Council and in due course, the Council adopted the report, thereby

making it an official ruling of GATT. This system of dispute settlement which appeared in

the General Agreement also appeared in side agreements or codes adopted in 1979.

�� 30

Supra, M. B. Rao and Manjula Guru, at 28.�

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7. URUGUAY ROUND AND DISPUTE SETTLEMENT UNDERSTANDING (DSU):

At the outset of the Uruguay Round (UR), every contracting party to the GATT supported the

view that the dispute settlement system under the GATT needs to be improved. This

improvement was demanded due to the fact that the dispute settlement system under GATT

was weak, as most of powerful nations exercised pressure and often blocked the rulings by

the GATT, thereby diminishing the effectiveness of the GATT. The blocking by the deviant

party took place from every stage that is from refusal to proceed on complaint to adaptation

of panel rulings by the GATT Council.

So the contracting parties wanted the introduction of such procedures as would make the

exercise of the blocking powers more difficult, especially the US pressed for greater

restrictions on the veto power, which was most often used to block the enforcement of rulings

of the panel made by the GATT’s Council. During the mid-term meeting in December 1988,

contracting parties removed a number of potential blocking or delaying by agreeing to

automatic, non-consensual answers that would keep the process moving. Consequently, in

1990, the contracting parties adopted the improvements to the GATT Dispute Settlement

Rules and Procedures. It was for the first time that specific time frame was fixed for the

consultations. The party had to respond within ten days to a request to consult, and

consultation had to be entered into within thirty days from the date of request. And a period

of 60 day time limit was set on the initial process of bilateral consultations, after which the

plaintiff was allowed to request for creation of a panel. Another time limit of about two

months was set for the Council’s decision to create a panel. Similar automatic steps applied

when a panel was appointed. The panel’s terms of reference were to be standard unless

otherwise agreed. In case selection of panel faced deadlock, so far as the appointment of

members were concerned, on request by one of the party to dispute, the Director General of

GATT would suggest the name of panelists. Further, the mid-term agreement of 1990

reaffirmed the consensus principle. It provided that the practice of adopting panel reports by

consensus were to continue without prejudice to the GATT provisions on decision making

which remained applicable. Also, the delaying of the process of dispute settlement was to be

avoided.31

Thus during Uruguay Round binding dispute settlement procedure was evolved and adopted

due to the unilateral action that demanded reduction of veto power. As a result of such

�� 31

Supra, Robert E Hudec, at 186.�

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deliberations, the panel would be created automatically, either directly upon being issued, or

if the losing party wished to appeal, upon review and affirmation by an Appellate tribunal of

legal experts.

8. UNDERSTANDING ON THE RULES AND PROCEDURES GOVERNING

SETTLEMENT OF DISPUTES UNDER WTO32:

The dispute settlement forms an integral part of the WTO Agreements. It consists of 27

Articles and four Appendices. The Dispute Settlement Understanding (DSU) can be divided

into four parts for convenience.

8.1 Nature and scope [Article 1-3];

8.2 Procedure for dispute settlement [Article 4-16];

8.3 Appellate Review Provisions [Articles 17-20]; and

8.4 Enforcement Procedures.

The Understanding is intended to be a wide-ranging framework for settlement of disputes in

the field of international trade under the WTO. It is a unified system, having very broad

jurisdiction with a very little scope for choosing any other forum for adjudication of disputes

pertaining to the WTO Agreements, including interpretation of provisions and disputes

pertaining to TRIPS Agreement, which was included into the thread of WTO Agreements

after protracted negotiations. Unlike GATT, the WTO-DSU does not provide option for

settlement of disputes at the option of the members. As under the General Agreement, the

contracting parties could choose resolution of disputes through the general GATT or special

Tokyo Round dispute settlement mechanisms.33

8.1 Nature and Scope of Understanding:

The Understanding consists of rules and procedures for the settlement of disputes, which

under Article 1 would be applicable to disputes in respect of all agreements, called the

covered agreements, listed in Appendix I to the Understanding. The Appendix I contains a

list of following Agreements34:

a. Agreement Establishing the World Trade Organization;

�� 32 For Text of the Agreement, see, ArunGoyal (ed.), WTO From Uruguay Round to Doha: Legal Texts of the

Agreements, (4th Ed; October 2005), 348-364.�

33Supra, M.B. Rao and Manjula Guru, at 38.�

34Supra, ArunGoyal, at 361.�

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b. Multilateral Trade Agreements viz., covered under Annex 1A, that is, multilateral

agreements on Trade in Goods; covered under Annex 1B, that is General

Agreement on Trade in Services (GATS); covered under Annex IC, that is

Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) and

covered under Annex 2, that is, Understanding on Rules and Procedures

Governing the Settlement of Disputes; and

c. Plurilateral Trade Agreements viz., Agreement on Trade in Civil Aircraft,

Agreement on Government Procurement, International Dairy Agreement and

International Bovine Meat Agreement. The applicability to the Plurilateral

Agreements, however, is subject to the adoption of a decision by the parties to

each agreement setting out the terms for the application of the understanding to

the individual agreement, including any special or additional rules or procedures

for inclusion in Appendix 2, as notified to the DSB.

However, when dispute arises in context of more than one agreement covered by the

understanding regarding special or additional rules and procedures of such agreements under

review, and also where parties have failed to agree on rules and procedures within 20 days of

the establishment of the panel, the chairman of the Dispute Settlement Body (DSB), in

consultation to the parties to the dispute, would determine the rules and procedures to be

followed within 10 days after a request by either member.35

The Dispute Settlement Body (DSB) is established under Article 2 of DSU to administer

rules and procedures, the consultations and dispute settlement provisions of the covered

agreements. Thus the authority to constitute panels, adopt panel and appellate body reports,

maintain surveillance of implementation of rulings and recommendations, and authorize

suspension of concessions and other obligations under the covered agreements vests with the

DSB.36 Additionally, in case of plurilateral trade agreements referred to in Appendix I, the

members refers to only those countries which are the parties to such agreements and only

those members can be party to such dispute and can participate in decisions or actions taken

by the DSB with respect to that dispute. It is the duty of the DSB to keep the relevant WTO

�� 35Article 1 (2) of DSU.�

36Article 2 (1) of DSU.�

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Councils and Commissions informed about any developments regarding the status of disputes

covered under the agreements.37

Article 3 sets forth a series of objectives for the WTO Dispute Settlement System. The most

important objectives find mention under Article 3(2) of the Understanding which stipulates

that the dispute settlement system of the WTO is a central element in providing security and

predictability to the multilateral trading system and the same would be effective when the

disputes referred to it are settled on time.38 Article 3 thus provides for the rule oriented

function and the legal primacy of the WTO dispute settlement system. Article 3(1) further

obliges the members to adhere to the principles of dispute settlement as applied under Article

XXII and XXIII of GATT 1947, that is, consultation and reference of dispute to the panel in

case of failure of consultations under Art XXIII. The same shall be applicable to the parties to

dispute in accordance with the rules so elaborated and modified in the understanding.

Article 3 (7) inter alia states that the aim of the DSU is to secure a positive solution to a

dispute. It refers to a mutually acceptable solution as the clearly preferred option. Further it

indicates that this solution must be consistent with the covered agreements under the

understanding. This requirement is further supported by Articles 3(5) and 3 (6) of the

Understanding, which requires that all solutions, whether by way of consultation or dispute

settlement system including arbitration awards, must be consistent with the agreements

covered under the Understanding and shall not nullify or impair benefits accruing to any

member under those agreements. Also the solutions reached should be notified to the Dispute

Settlement Body and the relevant WTO Councils and Committees respectively, where any

member may be free to raise any point relating to them.

The provisions contained in the Understanding do not intend to affect the rights of the

members to seek interpretation of the provisions covered through decision-making under the

WTO Agreement or Plurilateral Agreements covered by the Understanding. Infringement of

the obligations would be considered as a prima facie evidence of nullification or impairment

of the obligations under the relevant agreements. So far as the jurisdiction of the

Understanding is concerned, in addition to the agreements specified under Appendix I to it,

only new requests for consultations under the consultation provisions of the covered

agreements made on or after the date of entry into force of the WTO Agreement are dealt in.


38Article 3(3) of DSU.�

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Where consultations under GATT 1947 have been referred to, the rules and procedures as

applicable prior to entry into force of the WTO agreements would continue to apply.39 It

shall be equally applicable to the disputes on which panel reports have been adopted or fully

implemented.40 However, the provision contained in Article 3 (11) of the Understanding

shall not be applicable in case a complaint is brought by the developing countries, on the

matters referred under Appendix I to the Understanding, against the developed country

member as an alternative to various provisions of Article 4, 5, 6 and 12 of this

Understanding, which pertain to consultations, good offices, conciliation and mediation,

establishment of panels and panels procedures, except where panel is of the opinion that

time-frame under the understanding rules is inadequate to provide its report and with the

agreement of the complaining party that the time frame may be extended.41

8.2 Procedure for Dispute Settlement up to Panel Proceedings:

Procedure for the dispute settlement to the stage of Panel proceedings is covered under

Article 4 through 16 of the Understanding. The procedure, for the sake of convenience, can

be divided under following heads:

8.2.1 Consultations before formal request (Article 4);

8.2.2 Good offices, conciliation and mediation (Article 5);

8.2.3 Panel and complaints (Articles 6-11); and

8.2.4 Panel procedures (Article 12-16).

8.2.1 Consultations before Formal Request:

Article 4 of the Understanding contains provision pertaining to consultations amongst the

members to series of WTO Agreements covered under the Understanding. The members of

the WTO are enjoined to enter into consultations with each other in order to give sympathetic

consideration to and afford adequate opportunity concerning measures affecting the operation

of any covered agreement taken within the territory of the former member.42 The duty to

consult the other member, whose rights are affected, is an unqualified or absolute and the

members cannot refuse on the ground that other parties should also have been challenged or

included.43

�� 39Article 3(11) of DSU.�

40See Footnote 2 to Article 3 (11) of DSU.�

41Article 3 (12) of the DSU.�

42Article 4 (2) of DSU.�

43 Panel Report, Turkey- Textiles, WT/DS 34/R, Paragraphs 9 (20)-9 (24).�

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Paragraph 3 of Article 4 provides for strict time periods for the consultation process, unless

otherwise mutually agreed to between the members. It provides that when request for

consultation is made to the member, that member is bound to reply to the request within 10

days of such request and also under an obligation to enter into consultation within a period of

30 days from the receipt of request in good faith, so as to reach mutually satisfactory solution.

On failure to respond to the request and holding of consultations within the specified period

or the mutually agreed period, the requesting member gets a right to proceed directly to

request the establishment of a panel. Thus the consultations are private in nature, without

involvement of other members, the secretariat or the public. The formal request, in writing

with a copy to the Dispute Settlement Body (DSB), is made only after the complaining

member concludes that the informal consultations had not been productive or the other

member has failed to accede to its request for consultation. Article 4 (4) in addition to

notification of consultations to the DSB and relevant Councils and Committees by the

requesting member, shall also give reasons for request, including identification of measure

under question for consultation along with the indication of the legal basis for the complaint.

For the success of consultation, it is necessary to obtain satisfactory adjustment of the matter

and failure to do so would entitle the complaining party to resort to other means specified

under the Understanding. The consultations must be confidential without affecting the rights

of any member in any further proceedings and should be mutually agreeable, but in

conformity with agreements of the World Trade Organization (WTO).

Though the deadline for requesting the establishment of panel has been fixed at the expiry of

60 days from the date of receipt of the request by the other member under Article 4 (3), but

the period of 60 days for referring to the panel could be waived of by the parties when the

consulting parties jointly consider that consultations have failed to settle the dispute before

completion of 60 days period from the date of receipt of the request for consultation by the

other party to the dispute.44

Paragraphs 8 and 9 of the DSU, deal with cases of urgency and those relating to the

perishable goods. Here the maximum period for concluding the consultations has been fixed

to 20 days instead of 60 days as mentioned earlier. However, the response to request for

consultation has to be made within a period of 10 days from the receipt of request by the

other member. Failure to resolve the conflict within the specified period would entail

�� 44Article 4(7) of the DSU.�

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establishment of panel by the complaining party. The obligation to accelerate, in case of

perishable goods, lies not only with the members to the dispute, but also on the Panel and the

Appellate Body.

One of the goals that members had for the newly established WTO dispute settlement process

was the increased use of the system by developing countries. This goal has been achieved.

Developing countries are filing complaints in the WTO more frequently than under GATT

1947.45 Among the total of 305 complaints filed in the WTO up to 2003, developing

countries were in the role of complainants in 71 instances as compared to 44 complaints

brought by the developing countries between 1948 and 1990.46 Thus the number of

complaints filed under the DSU over a period of 8 years is substantially higher than the

number of complaints brought during almost the entire existence of the GATT 1947.47

Statistical data of WTO Dispute Settlement from 1995-2007 is shown in Table I as under:

Table-I

Year 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Complaints 25 39 50 41 30 34 23 37 26 19 12 20 13

Source: Kara Leitner and Simson Lester, ‘WTO Dispute Settlement.’1995-2007 – A Statistical

Analysis, JOURNAL OF INTERNATIONAL ECONOMIC LAW, (2008) II (I): 179-192.

When a complaint is made, each complainant is assigned an individual settlement ‘DS’

number. As of 1 January 2008, 369 WTO complaints were filed under the DSU. The Table

shows the number of complaints filed to the DSU each year for a period of 12 years from

1995-2007. From the table it is evident that there was large increase in the number of

complaints filed over the first three years of WTO, though the number substantially decreased

from 2004-2007.

Article 4 (11) allows any member having substantial interest in any consultations being held

pursuant to Article XXII (1) of the GATT 1994, Article XXII (1) of the GATS Agreement or

�� 45Article 4(10) of DSU.�

46Supra, Christiane Schuchhardt, at 1229.�

47Id.�

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the corresponding provisions in other covered agreements, to notify the consulting parties,

that is, the disputant party, and inform the DSB. If the request of joining consultations is

turned down, then such member shall be free to invoke Article XXII (1) or XXIII (1) of

GATT 1994 or Article XXII (1) or Article XXIII(1) of GATS Agreement or the

corresponding provisions in other covered agreements, as the case may be.

Taking into account the consultation phase, member practice shows that since the

introduction of the DSU, a significant number of parties have formally settled their disputes

during consultations. The settlement rate justifies the claim that consultations are not merely

a mandatory step, but a useful and necessary phase of the WTO dispute settlement process.

Whether consultations will remain a meaningful phase will depend mostly on whether parties

are willing to make a good faith effort to solve their conflicts at their early stage of settlement

of dispute as stipulated under Article 4 of the Understanding.

8.2.2 Good Offices, Conciliation and Mediation:

Article 5 of the Understanding contains provision for the good offices, conciliation and

mediation as additional procedures that are available on voluntary basis. The dispute

settlement process must begin with consultations. Consultations are more informal as they

take place between parties to dispute and their confidentiality is required to be maintained.

Thus, they may begin at any time as specified under Article 4 and end at any time before the

deadline under Article 4 of DSU. Thereupon the complaining partly can request for the

establishment of a Panel. However, if the parties to the dispute so agree, mediation may be

sought while the panel process proceeds. Such proceedings should be confidential and should

not affect the interest of the parties in further proceedings made in accordance with the

Understanding.48 While good offices, conciliation and mediation are similar in nature, there

are certain differences between them. Good offices means act of bringing the parties together

by the other country acting as mediator by bringing the disputant parties to settle their

disputes by providing good offices , while mediation and conciliation are concerned, the

mediator in these cases attempts to assist the parties to reach a position of mutual self-

interest. In mediation, the mediator facilitates the parities and does not take active part in the

dispute resolution. No suggestions can be made by the mediator but he is simply required to

provide healthy and friendly environment to the parties to reach a common ground. However,

in conciliation, the conciliator may present proposals and take an active part by giving


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opinions and suggestions to the parties helping them to reach a common ground. Thus the

conciliator may point out the strengths and weaknesses of various legal arguments.

Thus dispute settlement begins with a formal request for consultations. Formal request for

consultations is generally made after informal methods of consultation fail under Article 5.

The Director General may in his ex-office capacity offer his good offices, consultation or

mediation and assist the members to settle a dispute.

Provisions for consultation, conciliation and mediation under Article 5 can be invoked in

cases of violation complaints or non-violation complaints or situation complaints as discussed

earlier under Article XXIII (1) of GATT 1947 and the procedure for good offices,

conciliation or mediation may continue while the panel procedure continues.

8.2.3 Panels and Complaints:

Article 6 through 11 of the Dispute Settlement Understanding deal with the establishment,

terms of reference, composition of panels and procedure for filing multiple complaints, and

interest of third parties to the dispute respectively.

If the consultations are not fruitful within a period of sixty days, the complainant my start the

argumentative phase of a WTO dispute settlement proceedings by requesting the

establishment of a Panel by the Dispute Settlement Body (DSB). At the second DSB meeting

discussing the panel request, the DSB quasi-automatically establishes the panel by negative

consensus. Except in the unlikely situation that the complainant would join in the consensus

to reject its own request, the decision to establish the panel will always be taken at that

second DSB meeting.49

Article 6(2) obliges complaining parties to indicate whether consultations were held prior to

requesting the establishment of a panel. This requirement may be satisfied by inclusion of a

statement as to whether consultations happened or not. Further Article 6(2) requires a brief

summary of the legal basis of the complaint sufficiently to present the problem clearly, or in

other words, the sufficient identification as to the claims raised. In case, the applicant request

the establishment of a panel with other than standard terms of reference, the written request

shall include the proposed text of special terms of reference.

The panel request and the terms of reference serve two objectives which are very important

for the effective working of the WTO dispute settlement system. They are the sources or

�� 49Article 6 (1) of the DSU.�

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means from which the dispute settlement proceedings flow. The major element for defining

the panel’s term of reference is the identification by the complainant of the ‘specific measures

at issue’ in the dispute. The specific measure can be a measure of general application

provided that its application to certain products is of a mandatory nature, or the specific

application of the general measure to particular countries, traders, or products. Thus under

Article 6(2) identification of specific measures at issue, means not only the specific measures

but also includes the claims relating to them, both of which must be properly identified. A

claim cannot consist of a particular article. So an article cannot alone constitute a summary

of the legal basis sufficient to present the problem clearly or define with accuracy the

jurisdiction of a panel.

The Panel constituted under Article 6 shall have power to examine the matter referred to the

DSB and to make such findings which assist the DSB to make the recommendations or which

assist the DSB to give rulings provided under the agreements in question. While establishing

a panel, the DSB may authorize its Chairman to determine the terms of reference of the panel

in consultation with the parties to the dispute. The terms of reference are then circulated

among the members.50 Thus the terms of reference would be in accordance to Article 7,

unless the parties to the dispute agree otherwise within a period of 20 days from the date of

establishment of the panel,51 as normally the terms of reference are to fixed after consultation

with the parties to the dispute who would sometimes prefer any other terms of reference other

than standard terms of reference.

Composition of the panels is provided in Article 8, which stipulates that the panel shall

comprise of well-qualified governmental or non-governmental individuals, including such

persons who have an experience before a panel or served as representative of a member or a

contracting party to GATT 1947 or Councils or Committee’s representative and has dealt

with any covered agreement or its predecessor agreement, or has a teaching experience at the

secretariat in the subject of international trade law or policy or has publications in the same

field or has served as a senior trade policy official of a members.52 Panels shall normally be

composed of three members, unless the parties agree otherwise, in which case the panel will

consist of five members.53The list of panelists possessing qualifications specified under





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Article 8(1) shall be maintained by the secretariat, from amongst whom the Panelists may be

selected by the parties to dispute. The panelists are independent and neutral and do not serve

as representatives of governments or any organizations.54 If the parties do not arrive at any

consensus regarding the Panelists within 20 days of establishment of the panel, then the

Director General may be requested by either party to name the Panelists, who may do so in

consultation with the Chairman of the DSB and the Chairman of the relevant Committee or

Council.55 Nationals of members to the dispute are not to serve on the Panel, unless it is

otherwise agreed. However, in case parties to the dispute are developed and developing

country, then on a request made by the developing country, a panelist from the developing

country is to be included in the Panel.56 The expenses, including travel and subsistence

allowance are to be borne out of the WTO budget.57

Article 9 of the DSU deals with two different situations:

(i) Panel proceedings involving multiple complaints; and

(ii) Multiple panels dealing with the same matter.

Regarding multiple complaints, where more than one member requests the establishment of a

panel relating to the same matter, a single panel may be constituted to examine such

complaints58. While a single panel should be established to examine such complaints

whenever feasible, any one of the complainants or defendants has the right to insist on

separate panels. This rule takes into account the right of all members concerned as well as

the need to use resources efficiently. Where a single panel is established, its work has to be

organized and its findings have to be presented so as to avoid the impairment of rights that

parties would have enjoyed, had separate panels examined the complaints. To that end, the

submission of each complainant has to be made available to all other complainants and each

has the right to receive the pleadings of any other complainant. If one of the parties to the

dispute so requests, the panel shall submit separate reports on the dispute concerned.

However, this right is not unqualified. A panel enjoys a certain margin of discretion on

whether to accede to a request for a separate panel report in order to ensure that the rights of

all the parties to dispute are respected.

�� 54 Article 8(9) ofthe DSU.�

55 Article 8(7) of the DSU.�




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Where more than a single panel is established to examine complaints relating to the same

matter, to the greatest possible extent the same persons shall be selected to serve on all those

panels.59 However, this is a guideline and not an absolute requirement. Any party to those

panel proceedings process has the right to reject a panelist for compelling reasons, even if

that person is retained to serve on another panel dealing with the same matter. However,

such multiple panels dealing with the same matter are required to harmonize their timetable

and work in other respects.

Article 10 deals with third parties whose substantial trade interests have been affected. They

shall be afforded an opportunity to be heard by the panel and to make written submissions to

the panel provided in the ongoing panel proceedings, such third party gets permission of the

DSB to participate after notifying to the DSB of its interest.60If a third party considers that a

measure already under submissions to a Panel proceeding, nullifies and impairs benefits

accruing to it, it may have recourse to normal dispute settlement procedure. Such a dispute

shall be then referred to the original Panel wherever possible.61Third parties are also entitled

to receive the submissions made by the parties to the dispute during the first meeting of the

panel. However, no provision occurs in the understanding regarding third party’s right to

receive the second or any subsequent submissions.

The provisions regarding multiple complaints, under Article 9 and intervention by third party,

under Article 10 have codified the existing GATT practices and add a few improvements

such as right of third parties to receive submissions at the first meeting of the Panel from the

parties to the dispute.

Panel has a function to assist the DSB, by making an objective assessment of the facts of the

case.62 In the EC Measures concerning Meat and Meat Products (Hormones),63 often known

as EC-Hormones, the Appellate Body held that an objective assessment by a Panel under

Article 11 or the appropriate standard of review of national law authorities’ action as to

factual issues includes an objective assessment of facts of the case. Hence, the Panel is

required to make an objective assessment of the matter and of the facts of the case including

�� 59Article 9(3) of the DSU.�

60Article 10(2) of the DSU.�


62 Article 11 of the DSU.�

63 The DSU Appellate Body Report, WT/DS26/AB/R, WT/DS 48/AB/R, adopted 13 February 1998, DSR 1998:

I, 135.�

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the applicability of and conformity with the relevant covered agreements. According to such

assessment, it is required to make findings which shall be helpful to the DSB in making its

recommendations or to give rulings provided under the covered agreements. Besides that,

panels must afford adequate chance to the parties in dispute to develop a mutually agreeable

solution.

8.2.4 Panel Procedure:

When a consensus has reached between the parties to the dispute regarding the persons who

would serve as panelist, or when the Director General has appointed them upon request, the

panel’s composition is completed and the panelists can begin their work.

First the panel is required to draw up a calendar for its work and decide, in consultation with

the parties, on its working procedures. This should be done as soon as practicable and

whenever possible, within one week after the composition of the panel.64 Panel working

procedures should provide sufficient flexibility so as to ensure higher quality panel reports,

while not unduly delaying the panel process.65 Suggested time periods for the calendar and

tentative working procedures are set out in Article 12 and Appendix 3 to the DSU, unless the

panel decides otherwise after consulting the parties to the dispute.66

Paragraph 12 of Appendix 3 titled ‘Working Procedures’ provides proposed Timetable for

panel work as67:

STAGE OF DISPUTE TIME

ALLOWED

(a) Receipt of first written submissions of the parties

(1) Complaining Party 3 – 6 weeks

(2) Party complained against 2 – 3 weeks

(b) Date, time and place of first substantive meeting with the parties; third

party session

1 – 2 weeks

(c) Receipt of written rebuttals of the parties 2 – 3 weeks

(d) Date, time and place of second substantive meeting with the parties 1 – 2 weeks

(e) Issuance of the descriptive part of the report to the parties 2 – 4 weeks

�� 64 Article 12 (3) of the DSU.�



67Supra, ArunGoyal (Ed.), at 362.�

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(f) Receipt of comment by the parties on the descriptive part of the report 2 weeks

(g) Issuance of the interim report, including the findings and conclusions, to

the parties

2 – 4 weeks

(h) Deadline for party to request review of part (s) of report 1 weeks

(i) Period of review by panel, including possible additional meeting with

parties

2 weeks

(j) Issuance of final report to parties to dispute 2 weeks

(k) Circulation of the final report to the Members 3 weeks

The above calendar may be changed in the light of unforeseen developments. Additional

meetings with the parties may be scheduled if required. Thus panels may deviate from the

proposed time periods and adopt different working procedures after making consultations

with the parties.68 Usually, panels hold a so-called organizational meeting to consult with the

parties before deciding on the working schedule and procedures.

The maximum time period to issue final report to the parties, as a general rule, should not be

more than 6 months. However, in cases of urgency, including those relating to perishable

goods, the panel should issue its report within 3 months. However, when the panel feels that

it is not possible to issue reports within 6 months or 3 months, as the case may be, it should

inform the DSB in writing of the reasons for the delay. But, in no case, the period from

establishment of the panel to circulation of report to the members, should go beyond 9

months.69

In case of a developing country, if consultations involve a measure taken by developing

country member, the parties may agree to extend time for consultations, then the Chairman of

DSB after consultations with the parties, may extend the time. However, if a complaint is

made against a developing country member, then the panel would provide it sufficient time to

prepare and present its arguments.70 In case of India-Quantitative Restrictions on Imports of

Agricultural, Textile and Industrial Products,71 in spite of opposition from the US, the Panel

granted additional time to India, though not all the requested time, for presenting the written

�� 68Article 12 (1) of DSU and Paragraphs 1 and 11 of Appendix 3.�



71 WT/DS90/AB/R, adopted 22 September 1999, DSR 1999: IV, 163.�

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submission on the ground of changes in government and the post of Attorney General not yet

having been filled.

Article 12(11) provides that if one or more of the parties is a developing country member, the

Panel’s report shall explicitly indicate the form in which an account has been taken of

relevant provisions on differential and more favourable treatment for developing country

members that form part of the covered agreement and which have been raised by the

developing country member in the course of dispute settlement procedures. Thus under this

provision, the Panel has to be very vigilant and proactive in its deliberations, since it must

take into account all the circumstances and considerations relating to the application of the

measures complained of and their impact on trade and economic development of affected

contracting parties.

Referring to the doubts expressed by the developing countries at the Dispute Settlement

Understanding review meeting about the effective access of developing countries to dispute

settlement system and lack of accuracy relating to implementation of special and differential

treatment provisions in the DSU, Secretariat Note 2000 suggested that some specific

guidelines must be issued so as to ensure rigorous and effective implementation of such

provisions.72

The DSU provides the panels with different means or instruments for complying with

mandate under Article 11 of the DSU. Among these is the right to seek information and

technical advice from any individual or body which it deems appropriate.73 Paragraph 2 of

Article 13 entitles a panel to seek information from any relevant source and to consult experts

to obtain their opinions on certain facets of the matter in dispute. However, before seeking

such information from any individual or body, the panel is under an obligation to inform the

authorities of that Member State, who in turn are required to act very promptly and fully to

provide such information. In case of confidential information, the same should not be

revealed by the authorities without authorization of the body of a member providing

information. When the dispute is pertaining to any scientific or technical matter, for such

factual issues, the panel may ask expert review group to give its advisory report in writing.

For the establishment of such group, Appendix 4 to the DSU provides rules and procedures to

be followed by them. Expert review groups work under the authority of the panel and

�� 72

Supra, MB Rao and Manjula Guru, at 75.�


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participation in expert review groups shall be restricted to persons of professional standing

and experience in the field in question.74 Citizens of the members’ party to dispute shall not

serve in the expert review group, except when the panel considers that the need for

specialized scientific expertise cannot be fulfilled otherwise.75

Article 13 provides for discretionary authority. A panel is not duty bound to seek information

in each and every case or to consult particular experts under this provision, as has been held

in the case of Argentina-Measures Affecting Imports of Footwear, Textiles, Apparel and other

items.76 Thus panels enjoy discretion as to whether or not to seek information from external

sources. Also the authority of a panel to seek information and technical advice from any

individual or body, as it may consider appropriate, or from any relevant source, includes the

authority to decide not to seek such information or advice at all. The question as to when the

panel needs information to resolve a dispute and what information it needs, a panel is vested

with ample and extensive discretionary authority to determine the same.

WTO dispute settlement proceedings are confidential.77 The panel meets in a closed session.

The parties to the dispute, and interested parties, shall be present at the meetings only when

invited by the panel to appear before it.78 So far as the drafting of the report of the panel is

concerned, it shall be made without the presence of the parties to the dispute.79 Opinions, if

any, expressed by the individual panelists, must be kept anonymous.80

Following the consideration of rebuttal submissions and oral arguments, at the second

substantive meeting of the panel with the parties, the panel issues the descriptive section,

including the parties’ factual and legal arguments of the draft report, to the parties in dispute.

Within a time-frame fixed by the panel, usually between one and two weeks, parties submit

their comments in writing.81 As a next procedural step, the panel issues an interim report to

the parties, including both the descriptive sections and the panel’s findings and conclusions.

The interim report remains confidential. The third parties, however, are not entitled to receive �� 74 Paragraphs 1 and 2, Appendix 4 of the DSU.�

75 Paragraph 2 of Appendix to the DSU.�

76Appellate Body Report, WT/DS 56/AB/R and Corr.1, adopted 22 April 1998, DSR 1998: III, 1003, Paragraph

84.�

77Article 14 of the DSU.�

78Paragraph 2 of Appendix 3 to the DSU.�




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the interim report. Within a time-period set by the panel, a party may submit a written

request for the panel to review precise aspects of the interim report prior to circulation to the

final report to members.82

Article 15 (3) requires that the final report prepared by the panel should include a discussion

of the arguments the parties made at the interim review stage. In EC Measures Concerning

Meat and Meat Products ( also known as EC Hormones)83, it was observed that the main

purpose of raising the issues by parties is to provide the other party with adequate notice of

the issue so that it can prepare for the rebuttal. The panel is equipped with power to take into

account in its full interim report all issues, even those which have not been commented to by

the parties.

Article 16 deals with the adoption of Panel Reports. The Final Report of the Panel is then to

be adopted by the DSB. But before adoption of the report, the same is to be provided to the

members to dispute for consideration and the DSB shall not consider the adoption of report

before a period of 20 days from the date they have been circulated to the members for

consideration84 and if they have any objections to that, they must submit written reasons at

least 10 days before the time afforded to the DSB to discuss the report for consideration.85

When the DSB considers the panel report, parties have a right to participate and give their

views which are recorded by the DSB.86 The DSB is under an obligation to adopt the report

within a period of 60 days from the date of circulation of panel report to the members, unless

a party shows its intention to appeal or the DSB decides by consensus not to adopt the report.

When intention for making an appeal has been expressed, the DSB does not adopt the report

until completion of the appeal. Thus, the panel proceedings come to an end at this stage and if

appeal is made by the party to dispute, then the Appellate Body reviews’ the panel findings

and the conclusions reached by such appeal are finally adopted by the Dispute Settlement

Body. In 2009, three appeals were filed to the Appellate Body against reports of various

panels.87


83Supra, EC – Hormones.�




87 Improvements to the GATT Dispute Settlement Rules and Procedures, GATT Doc. No. L/6489, BISD 36

S/61.�

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8.3 Appellate Review Provisions :

The idea of appellate review stage was given for the first time at a relatively later stage of the

Uruguay Round of negotiations. Appellate Review did not appear in the December 1988

mid-term review, nor did it find mention in the Contracting Parties’ Decision on 12 April

1989, to implement certain procedural reforms of the dispute settlement system on a trial

basis as from 1 May 1989.88

In December 1991, Chairman Arthur Dunkel released the “Draft Final Act Embodying the

Results of the Uruguay Round of Multilateral Trade Negotiations.” Sections S and T of the

draft contained dispute settlement provisions.89 Draft Article 15 of Section S dealt with

appellate review, and its provisions resemble very closely to the current text of Article 17 of

the Dispute Settlement Understanding. When WTO was established, very little was added to

this text and later it became Article 17 of the DSU. Thus DSU provides some innovations

over the GATT Dispute Settlement System. One was in the form of quasi-automatic

adoption of panel reports as contracting parties of the GATT held different views on the

reasons why panel reports had been blocked. For some, it was due to the poor quality of

particular panel reports. Others blamed ‘losing’ parties for abusing the consensus decision-

making process by which reports were adopted. Thus some of them felt introduction of

appellate review provisions as a necessity.

Article 17 through 20 of the Dispute Settlement Understanding deals with appellate review

provisions. The rules relating to the establishment, constitution and operation of the

Appellate Body are contained in the DSU, in particular in Articles 17 and 18. The Dispute

Settlement Body has established a standing Appellate Body to hear appeals from panel cases.

It consists of seven persons, three of whom can serve in any one case collectively. Persons

appointed to the Appellate Body serve on rotation basis. The DSB appointed the original

seven Appellate Body members at its meeting on November 1 and 29, 1995.90 In 2000, it

replaced two of its original Appellate Body members who chose not to seek reappointment.91

In 2000, following the death of one of its original Appellate Body member, it made an adhoc

�� 88 MTN/TNC/W/FA, December 20, 1991.�

89 World Trade Organization, Annual Report 2010, at 102, Available at: www.wto.org/english/res-

e/bookspe/anrep-e/anrep10_e.pdf. (Last visited: 1 March, 2011.)�

90 WT/DSB/M/9.�

91 Minutes of the DSB meeting of April 7, 2000, WT/DSB/M/78, at 16 – 22.�

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appointment for the remainder term of that a member.92 In 2001, three original members

were replaced, by three new appointments, who had reached the end of their second and final

term.93 Thus the rotation is determined in the working procedures of the Appellate Body.

The DSB appoints a person as a member of Appellate Body for a period of four-year term

and each person can be reappointed only once.94 The procedure discussed earlier is in

compliance with Article 17(2) of the DSU, which further provides that the term of three of

the original seven members shall expire at the end of two years after the entry into force of

the WTO, and a provision for filling up of the vacancies has also been provided and the

person appointed to fill up the vacancy created on any account shall be appointed for the

remainder term of office of that member whose term could not be completed due to any

reason.

The members of Appellate Body are the persons of international repute with expertise in the

subject of law, international trade and the subject matter of the covered under the agreements

generally.95 With respect to conditions for the engagement of members of Appellate Body,

the DSU simply establishes the length of the terms, as well as requirement that Appellate

Body members are to be available at all times on a short notice. However, additional details

on conditions of employment were laid down in DSB’s 1995 Decision.96 Further the

members of Appellate Body cannot participate in consideration of any dispute so as to avoid

direct or indirect conflict of interest.

Article 17(4) inter-alia provides that only parties to dispute have a right to appeal against the

panel decision and the third party which has been allowed to participate in the panel

proceedings due to its substantial interest in the dispute, does not possess any such right to

make any appeal. However, the third party who has notified the DSB of its substantial

interest in the matter can make a written submission to the Appellate Body, and thereafter

may be afforded an opportunity to be heard. The party making an appeal is under an

obligation to file all the documents in support of its claim to the Appellate Body within the

�� 92Minutes of the DSB meeting of May 25, 2000, WT/DSB/M/82, at 2-4.�

93Minutes of the DSB meeting of September 25, 2001, WT/DSB/M/110, at 6-9.�



96 Decision on Establishment of Appellate Body, WT/DSB/1, Paras 10-12. Also see, Victoria Donaldson,

‘Appellate Body: Institutional and Procedural Aspects’ in Patrick F.J Macrory et al., (eds.) ‘The World Trade

Organization: Legal, Economic and Political Analysis, Vol. I, (2005) at 1288.�

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time limit set out in the Appellate Procedure Rules and copies of the same are required to be

served on all other parties, including third parties in the appeal.

Article 17(5) of the DSU states that, as a general rule, appellate proceedings shall not exceed

sixty days from the date of the filing of the appeal to the date on which the Report is

circulated and that, in no case the proceedings should go beyond 90 days. In its early years,

when its workload was not much, the Appellate Body often circulated its reports before the

90 days deadline. Since 1997, in majority of cases, Appellate Body Reports have been

circulated 90 days after the filing of the Notice of Appeal. This time limit, however, has been

exceeded four times, three times due to substantial amount of work, combined with the fact

that the appeals ran over the Christmas/New Year holiday period in EC–Hormones, EC–

Asbestos and Thailand–H–Beams cases, and due to death of the member of the division

during the course of hearing the appeal in case of US-Lead and Bismuth II.97

Article 17(6) limits the power of the Appellate Body only to the issues of law and those

related to legal interpretation developed by the Panel, while Article 17(13) gives power to the

Appellate Body to uphold, modify or reverse the legal findings, and the conclusions of the

Panel. So these two provisions cover the subject-matter jurisdiction of the Appellate Body to

deal with the appeals. Consequently the factual findings and conclusions of the Panel cannot

be appealed.

Article 17(7) contains a provision for helping the Appellate Body in its working and

stipulates that appropriate administrative and legal support as required by the Appellate Body

shall be provided.

The Appellate Body is funded by the contributions from WTO members. Its budget is

equivalent to about two percent of the overall WTO secretariat budget. The Appellate Body

budget is separate from the WTO secretariat budget.98Article 17(8) provides that expenses of

members of Appellate Body including travel and subsistence allowance have to be borne by

the WTO in accordance with the criteria fixed by General Council, based on

recommendations of the committee on Budget, Finance and Administration.

Procedure for the Appellate Review is contained in Paragraphs 9, 10, 11, 12 and 13 of Article

17. Article 17(9) inter-alia provides that the Appellate Body is empowered to make its rules

�� 97

Supra, Victoria Donaldson, at 1328.�

98Id. at 1289.�

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of procedure, in consultation with the chairman of the DSB and the Director General.

Accordingly, the rules were framed in 1996.99

All the appellate proceedings are required to be confidential under Article 17(10), and Article

18(2) provides that written submission to the Appellate Body has to be treated as

confidential. These obligations apply to all the WTO members. In case of Canada-Measures

Affecting the Export of Civilian Aircraft,100 the Appellate Body held that each member of

WTO has a responsibility to ensure respect for the duties performed by its officials under

Articles 17(10) and 18(2) of the DSU, and also by any person that the member selects as its

representative, counsel or consultant. The Appellate Body shall address only those issues

which are in accordance with Article 17(6) of the DSU, during its proceedings.101 Further, it

has power to uphold, modify or reverse the legal findings or conclusions of the Panel.102

Finally, the report of the Appellate Body is adopted by the DSB, which has to be accepted

unconditionally by the parties, unless DSB takes a contrary view by consensus. This decision

of the DSB, not to adopt the Appellate Body must be taken within a period of 30 days from

date of circulation of the Appellate Body report to the members to dispute.103

Article 18(1) prohibits ex parte communication concerning matters related to appeals being

considered by the Appellate Body. Thus, the Appellate Body or the panel are prohibited from

division hearing an appeal and also prohibits each of its members from meeting with or

contacting a participant or third participant in the absence of the other participants and third

participants, and also forbids any discussion between a member of the division and a

participant or the third participant in the absence of the full division, as well as discussions

between an Appellate Body member not serving on the division and any participant or third

participants in the appeal. The prohibition on ex parte communication extends as well to

communications involving the staff of the Appellate Body Secretariat.

Article 19 deals with Panel and Appellate Body recommendations. Article 21 provides for

surveillance of implementation of the recommendations and rulings made under Article 19,

and the same is to be done by the DSB. Article 22 deals with the award of compensation to

the affected party in the dispute and the suspension of concessions by that party. These

�� 99

Supra, M.B.Rao and Manjula Guru, at 88.�

100 Appellate Body Report, WT/DS 70/AB/R, adopted August 20, 1999, DSR 1999: III, 1377.�




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provisions are very important in settling disputes and the suspensions of concessions by that

party. Article 19(1) empowers the panel or Appellate Body to decide if the measure

complained of is inconsistent with covered agreements, and if it is so, it can recommend the

concerned member to bring that measure in conformity with that agreement. Further the

Appellate Body has power to suggest ways in which the member could implement the

recommendations. The Appellate Body observed in United States-Measures Affecting

Imports of Woven Wool Shirts and Blouses from India,104 that dispute settlement is not about

creating law, but rather about addressing the claims which must be dealt in by in order to

decide the matter in issue in the dispute. Where the rules are not specific, it is the duty of the

adjudicators to march across those superficial rules to make normative rules. But the panel or

Appellate Body making recommendations or passing rulings; cannot add or diminish the

rights and obligations provided under the covered agreements.105

Under a general rule, the DSB adopts the panel report, if not appealed, within a period of 9

months, beginning from the date of establishment of the panel by DSB. But when the panel

report is appealed, the DSB can adopt the recommendations the Appellate Body within 12

months from the date of establishment of panel.106

8.4 Enforcement Procedures:

It is important that the Agreements forming part of the World Trade Organization must be

implemented and enforced with full spirit by all the members, so as to provide level playing

field to every member, irrespective of their status-economic or level of development or

otherwise. If there is proper implementation, then only the WTO system can be said to be

impartial and fair. As the developing countries always contend that they are playing in a field,

created by the GATT/WTO, under pressure of developed countries, who were the contracting

parties to the GATT. Even similar kind of apprehensions were raised during the Uruguay

Round of Multilateral Trade Negotiations by the developing countries, who contended that

due to different levels of development in the field of science and technology, both the

developed and developing countries can never be equal while playing on the field to be

established by the GATT/WTO. But it is not true as has been proved in the earlier chapters

where the developing countries have grown economically and technologically after

participating at the international trading system. Though differences still remain there, yet the �� 104

Appellate Body Report, WT/DS33/AB/R and Corr. 1 adopted May 23, 1997, DSR 1997: I, 323.�


106Article 20.�

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developing countries have gained from the system, and wherever the developed countries

have made breach of their obligations, the Dispute Settlement Body has come to their rescue.

The implementation and enforcement mechanisms of the WTO Agreements are unexampled,

new and unprecedented in the field of multilateral treaty regimes with a large membership of

153, as of 31 December 2009.107In the field of international treaty law, the Dispute

Settlement Understanding (DSU) of the WTO provides the most detailed and rules-based

system. From the WTO headquarters in Geneva, Switzerland, panelists and the Appellate

Body are rendering judicial decisions in the areas such as intellectual property protection,

service, the environment, and health and safety that extend far beyond the traditional role of

its predecessor, the General Agreement on Tariffs and Trade (GATT) 1947. For the most

part, members of the WTO have complied with the rulings of panels and the Appellate Body,

which proves the success of the system.108

It is a matter of debate, as to what extent the WTO dispute settlement system has established

an enforcement mechanism with teeth. But, in the context of international treaty regimes, the

WTO is unique in its ability to make a violation transparent, and then to sanction retribution

against the violator. But due to the limitations on the enforcement powers of the WTO, the

final conclusion of any dispute requires negotiations by the members to dispute. Though due

to retaliation action which might be taken by the WTO and also due to concerns for their

reputation, members often bring their measures in compliance with the WTO Agreements,

however, the WTO dispute resolution mechanism has no remedy beyond the authorization of

retaliation to force a government to change its domestic law. Ultimately, the offending

measure will be changed only if the violative member agrees to change it.109

Various dispute such as EC-Regime for the Importation, Sale and Distribution of Bananas

(EC-Bananas) and EC-Measures concerning Meat and Meat Products (EC-Hormones), took

years to conclude and result in authorization of trade retaliation, have verified the stability

and reputation of the WTO. On 15 December 2009, the European Union concluded

agreements with the United Stated and Latin American banana-producing nations intended to

�� 107World Trade Organization, Annual Report 2010; available at: www.wto.org/members at 6 (Last visited: 1

March, 2011).�

108Andrew W. Shoyer, Eric M. Solovy and Alexander W. Koff, “Implementation and enforcement of Dispute

Settlement Decisions”, in The World Trade Organization: Legal, Economic and Political Analysis (Eds.)

Patric F.J. Macrory et al., Vol. I, (2005) at 1342.�

109Supra, Andrew W. Shoyer et al., at 1343.�

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bring an end to the longest running dispute in the WTO. The dispute concerned the

preferential treatment that the European Union gave to the import of bananas from African,

Caribbean and Pacific countries.110

With the end of the adjudication process and the panel report, as modified by the Appellate

Body report, if any, is adopted by the DSB, a member is asked to make changes into those

measures which have been challenged, to bring them in compliance with the relevant WTO

Agreements that the report concluded to have been violated. Under Article 21(1) the DSU

states that “prompt compliance with recommendations or rulings of the DSB is essential in

order to ensure effective resolution of dispute to the benefit of all members.” Although

Article 19(1) of the DSU provides that panel or Appellate Body reports may suggest the ways

in which compliance may be brought, but they do not generally recommend or suggest

specific ways in which the WTO member may bring its measures into compliance. In some

cases the remedy may be very clear as removal of unfair tax or the take down of a tariff. But

in difficult cases, it is very challenging to suggest such ways. Matters affecting the interests

of developing country members with respect to measures, subject of dispute, are required to

be paid particular attention.111

Once the DSB has adopted the recommendations or rulings, then the party must state its

intentions to implement the recommendations or the ruling at a DSB meeting held within 30

days after adoption of the report.112 In pursuance of Article 21(3) of the DSU, the reasonable

time period in which the recommendation or ruling must be implemented may be decided by:

a. the member concerned, subject to the approval of the DSB;113 or

b. agreement between the parties within 45 days of adoption of the report;114 or

c. a binding arbitration within 90 days after the adoption of the respect by the

DSB.115

The DSB monitors and keeps under surveillance the implementation of the adopted rulings,

and any member may raise the issue of improper implementation of the recommendations or

�� 110

Supra, WTO Annual Report 2010, at 82.�


112 Article 21 (3) of the DSU .�

113Article 21 (3) (a) of the DSU.�

114Article 21 (3) (b) of the DSU.�

115Article 21 (3) (c) of the DSU.�

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rulings at any time before the DSB.116 The infringing member, who has violated the

measures, is under an obligation to submit a regular status report to the DSB, from six months

after the establishment of the reasonable period of time.117 The Dispute Settlement Body is

directed under Articles 21(7) and 21(8) to give special consideration to developing countries,

both as infringing country members and injured country members.

On failure of the infringing member to bring violative measure in compliance with the

concerned agreements, the other party has several alternatives118:

i. Compensation; and

ii. Suspension of concessions; or

iii. Suspension of other obligations.

These are temporary measures available to the injured member, which it can take when the

recommendations and rulings are not implemented within a reasonable time period. Before

the expiry of the reasonable time, when requested, the injured party can enter into negotiation

with other party to dispute in order to agree on mutually acceptable compensation for the

delay in implementation.119 However, if within a period of 20 days after the expiry of

reasonable period, no such acceptable compensation is agreed to between the parties, than the

claimant may request authorization from the DSB to suspend concessions, or other

obligations under the WTO Agreements granted to the infringing member.120 The DSU then

sets out guidelines to determine retaliation measures and also to ensure that the level of

retaliation is appropriate to the level of harm resulting from the infringing member’s

violation.121 The general rule for suspension of concessions or obligations is that the injured

party should first suspend concessions or obligations only in those areas where the infringing

member has been found to be at fault or found in violation.122 However, if the infringing

member is of the opinion that the proposed retaliation is excessive, the issue is referred to

arbitration,123and such arbitration is carried out by the original panel, if members are


117Id.�



120Article 22 (3) – 22 (8) of the DSU.�

121Id.�

122Article 22 (3) (a) of the DSU.�

123Article 22 (6) and (7) of the DSU.�

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available, or by an arbitrator appointed by the Director-General.124 Consequently, the

arbitration has to be conducted within 60 days after the expiry of the reasonable period of

time.125 The concessions shall not be suspended during the course of the arbitration.126 The

arbitration or the panel decides whether or not the level of the suspension is proportionate to

the level of nullification or impairment caused by the violation of the infringing member, and

this ruling is not subject to appeal, that is, arbitrator’s decision is final and no second

arbitration can be sought.127 The DSB shall accordingly, grant authorization to suspend

concessions or other obligations as ruled at arbitration, unless, by consensus the DSB

disagrees with the ruling.128 And the temporary remedy by way of arbitration may remain in

effect until the infringing member complies with the rulings, or until a mutually satisfactory

solution is reached.129The DSB monitors the matter until successful implementation is

made.130

In order to strengthen the Multilateral System, the DSU directs to the members seeking the

redress of violation of obligations etc., to have recourse to131:

a. Dispute settlement in accordance with the rules and procedures of this

Understanding and not to make any determination to the effect that a violation has

happened etc.,

b. Follow the procedures set under Article 21 of the DSU to determine the

reasonable period of time for implementing the recommendations and ruling; and

c. Observe the procedures under Article 22 to determine level of suspension of

concessions and obtain DSB authorization before imposing such suspensions.

Further Article 25 of the DSU states that arbitration within the WTO can serve better results

to resolve the disputes. The parties can resort to this means of settlement of dispute by a

mutual agreement regarding procedures to be followed and those agreements shall be notified

to all members, who later on wish to join the arbitration, and they can do so by entering into

�� 124Article 22 (6).�

125Id.�

126Id.�


128Id.�


130Id.�

131Article 23 (1), (2) (a), (2) (b) and (2) (c) of the DSU.�

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agreement with parties which have agreed to have recourse to arbitration. The arbitration

award shall be binding on the parties to the proceedings.132

Under Article 27, the Secretariat is under an obligation to provide assistance to panels,

provide legal advice and assistance to developing country members. Further it shall conduct

training courses for interested members concerning these dispute settlement procedures and

practices so as to assist member’s experts.133

In spite of the unique framework established by the DSU, achieving a settlement between

disputing country members’ remains a key force in successful implementation. For the most

part consultations are very common and the countries comply with the WTO Agreements, as

interpreted by panel and Appellate Body decisions.

9. TRIPS AND DISPUTE SETTLEMENT UNDERSTANDING :

Under the Dispute Settlement Understanding (DSU), a member State can request

consultations with another member State to discuss alleged violations of the TRIPS

Agreement. If these consultations fail to provide adequate remedy, the injured Member-State

may either seek mediation within the WTO or alternatively request the DSB to administer the

DSU, to constitute a panel for hearing its claim.

The panel in an IP-related matter then makes an objective assessment of the facts in relation

to the parties to the TRIPS obligations.134 Each party may offer written submissions and have

two opportunities for oral arguments. They also have right to present rebuttal arguments.135

Thereafter, Panel issues its’ report to the DSB. The DSB adopts the decision, unless preferred

for an appeal before the Appellate Body, who shall issue its report which is submitted to the

DSB, which may either automatically adopt the report or reject it via consensus vote. If the

DSB ratifies the Appellate Body’s report, the parties to the dispute must adopt the ruling.

The party making breach of the rules under covered agreements, is given a reasonable period

of time within which it is required to implement the DSB’s recommendations or rulings. If

they fail to meet these objectives, the injured party has alternative remedies, whereby it may

ask for compensation through negotiations and may request the DSB to grant the suspension



134 William J. Aceves, ‘Lost Sovereignty: The Implications of the Uruguay Round Agreements’, 19 Fordham

International Law Journal439, (1995).�

135Id. at 440�

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of its obligations under the TRIPS Agreement against that erring member country. For

example, if the US is found to have infringed any Indian Patent, which has also been

registered in the US from illegal manufacturing, selling, distributing etc., and refuses to take

certain steps to ensure such protection, the DSB could authorize the Indian government to

forgo its obligations under TRIPS in protecting imported American patents. Or cross-

sectional retaliation may also be permitted, as non-protection of subject-matter under TRIPS

may not provide sufficient economic concessions. Thus injured country may be allowed to

institute a punitive tariff on erring member wholly unrelated to IP works.

The Articles of the DSU clearly prefer an amicable resolution to a dispute without resorting

to the establishment of a panel, giving the member countries several opportunities to resolve

their disputes without having recourse to the panel and certainly prior to a suspension of

treaty obligation, which is always considered a last resort.

10. CASE STUDY UNDER TRIPS :

The Dispute Settlement Understanding of the WTO contains a common procedure for dealing

with the disputes arising out when a member country fails to meet its obligations under any

agreement contained in the WTO Agreements including the Agreement on Trade Related

Aspects of Intellectual Property Rights (TRIPS). Under the above heading two similar kinds

of cases were filed by the United States of America and the European Union to the Dispute

Settlement Body against India for its failure to provide patent protection for pharmaceutical

and agricultural chemical products.

The decision in case filed by the US is important to the trade community because it embodies

the first dispute resolution centering on the TRIPS Agreement. As intellectual property rights

protected by the TRIPS have become an integral part of cross-border trade in goods and

services. The findings issued by the Appellate Body in the US case lay an important

foundation for future treatment and interpretation of the TRIPS Agreement.

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10.1 Case I: India-Patent Protection for Pharmaceutical and Agricultural Chemical

Products136:

Dispute No: DS50

Short title : India-Patents (US)

Complainant : United States of America

Respondent : India

Third Parties : European Union

Agreements cited : TRIPS: Arts. 27, 65, 70

Request for Consultations received : 2 July 1996

Panel report circulated : 5 September 1997

Appellate Body report circulated : 19 December 1997

10.2 Case II: India – Patent Protection for Pharmaceutical and Agricultural Chemical

Products137:

Dispute No: DS79

Short title : India-Patents(EC)

Complainant : European Communities

Respondent : India

Third Parties :United States of America

Agreements cited : Intellectual Property (TRIPS) Arts. 27, 65, 70, 70(8), 70(9)

Request for consultations received : 28 April 1997

Panel report circulated : 5 September 1997

Appellate Body report circulated : 24 August 1998

The United States and European Communities in two complaints against India before Dispute

Settlement Body (DSB) of the DSU raised the question of violation of various provisions of

�� 136WT/DS 50/AB/R.�

137WT/DS 79/R.�

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the TRIPS Agreement contending the absence of either patent protection for pharmaceuticals

and agricultural chemical products or formal systems that permit the filing of patent

applications for pharmaceuticals and agricultural chemical products and that provide

exclusive marketing rights in such products.

The United States on 2 July 1996, and the European Communities and their member States

on 28 April 1997, requested India to hold consultations in pursuance of Article 4 of the

Understanding of Rules and Procedure Governing the Settlement of Disputes (DSU) and

Article 64 of the Agreement on Trade-Related Aspects of Intellectual Property Rights

(TRIPS) regarding absence of patent protection to pharmaceutical and agro-chemical

products, or formal system of filing patent applications and lack of EMRs in such products.

However, in both the cases no satisfactory solution could be arrived at those consultations

held on 27 July1996 with the US and 14 May 1997 with the EC respectively.138

Consequently, the US and EC requested the Dispute Settlement Body (DSB), in a

communication dated 7 November 1996 and 9 September 1997 respectively,139 to establish a

panel in order to examine the matter regarding the violation of the measures under the TRIPS

Agreement. At its meeting of 20 November 1996 and 16 October 1997, the DSB agreed to

establish a panel with standard terms of reference in accordance with Article 6 of the DSU for

the US and EU respectively.140 The DSB was informed about the terms of reference and

composition of Panelists by the US. However, the EU could not arrive at any agreement

relating to the composition of the Panel, which was later on determined by the Director-

General vide his power under Article 8(7) of the DSU.

In dispute with the US, the panel heard the parties to the dispute on 15 April and 13 May

1997 and decided to afford the parties the chance to comment, after the second session. On

the US claim based on Article 63 of the TRIPS Agreement, the interim report was issued on

27 June 1997, there upon; India made a request to the Panel to review its interim report but

did not request to hold an additional meeting.

In case of EU, the Panel heard the parties on 24 March and 29 April 1998 and issued its

interim report to the parties on 19 June 1998. Here again, only India requested the Panel to

�� 138World Trade Organization, Report of Panel, WT/DS 50R, 5 September 1997, at 1; World Trade

Organization, complaint by the European communities and their member States, Report of the Panel,

WT/DS79/R, 29 August 1998, at 1.�

139Id.�

140Id.�

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review parts of the interim report. However, the Panel did not receive any request for holding

an additional meeting.

In case of the US, the questions before the Panel were the implementation of transitional

provisions contained in Articles 70(8) and 70(9) pertaining to ‘mail-box’ provision and

‘Exclusive Marketing Rights’ (EMRs). Issues were also raised relating to publication and

notification provisions under Article 63. It was contended that obligations under

international agreements or treaties do not become automatically enforceable, but some

legislative measures have to be taken to be binding under domestic law and to be enforceable.

Consequently on 31 December 1994, an ordinance amending the Patents Act of 1970 was

promulgated by the President of India, in order to make the provisions continued under

Articles 70 (8) (a) and 70(9) of the TRIPS Agreement. The ordinance became effective on 1

January 1995 and lapsed on 26 March 1995, as it ceased to operate at the expiry of six weeks

from the re-assembly of Parliament.141

Patent (Amendment) Ordinance after its promulgation was notified to the Council for TRIPS

under mail-box provisions. Later Patent (Amendment) Bill 1995 was introduced in the Lok

Sabha of the Indian Parliament in 1995 and was passed. However, due to failure of the select

committee appointed by the Rajya Sabha of Indian Parliament to present its report before the

dissolution of the Lok Sabha on 10 May 1956, the bill lapsed.

Though the Indian authorities decided in April 1995 that till the time Patent (Amendment)

Bill 1995 passed, their patent offices would receive patent applications for pharmaceutical

and agricultural chemical products and store them separately to be dealt in accordance with

amended patent law after they qualify the criteria of patentable subject-matter. But no record

of this decision was forwarded to the Panel nor was any notification concerning that issued to

the Council for TRIPS. However, the Indian Ministry of Industry, on 2 Aug 1996, while

answering a question in the Lok Sabha, clarified that the Patent Offices in India had received

893 patent applications in the field of pharmaceuticals (medicines) from the Indian as well as

foreign companies up to 15 July 1996, which were received in anticipation of changes in

Indian Patent Law to bring them in compliance with TRIPS Agreement. But he clarified that

such applications for patent would be taken up for examination after 1 January 2005 as per

the WTO Agreement.

Following provisions of Indian Patent Act, 1970 were claimed as relevant in this case.

�� 141Article 123(1) of the Constitution of India. �

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• Inventions defined under section 2 (1) (j) as, inter alia, any new and useful

substance produced by manufacture, including any new and useful improvement

of such a substance.

• Section 5 specifying that inventions claiming substances intended for use, or

capable of being used, as a food, medicine or drug or relating to substances

prepared or produced by chemical processes are not in themselves patentable, but

methods or processes for their manufacture are. Under Section 2 (1) (l) (iv) the

term ‘medicine’ or ‘drug’ included insecticides, germicides, fungicides,

weedicides and all other substances intended to be used for the protection or

preservation of plants.

• Section 6 through 11 deals with applications for patents. These provisions did not

require that applications of patents must be limited to patentable subject matter. In

respect of the subject matter of the claims, they only required that such

applications should be for inventions.

• Chapter IV of the Patents Act was concerned with the examination of

applications. Section 12 required that, when the complete specification has been

filed in respect of an application for a patent, the application shall be referred by

the Controller General of Patents, Designs and Trademarks to an examiner. The

examiner shall ordinarily report to the Controller within a period of 18 months,

inter alia, whether the application and the specifications are in accordance with

the requirements of the Act and whether there is any lawful ground for objecting

to the grant of the patent under the act.

• Paragraph 2 of Section 15 stated that it appeared to the controller that the

invention claimed in the specification was not patentable under the Act, he shall

refuse the application.

However, despite these measures claimed to be violative of Article 70(8) of the TRIPS

Agreement, the Indian authorities informed the Panel that out of total of 1,339 applications

relating to pharmaceuticals and agricultural chemical products, received between 1 January

1995 and 15 February 1997, 318 applications for pharmaceutical product patents and 45

applications for agricultural chemical product patents were from the US companies.142 When

1995 Ordinance relating to patents lapsed, 125 applications had been received and filed, out

�� 142Complaint by United States, Report of the Panel 1997, at 4.�

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of which 41 were made by the US companies. Prior to 15 February, out of total 1,214

applications, 322 were from US Companies.143

However, the US contended that the Indian Patent laws lacked a provision as stipulated under

Article 70(9) of the TRIPS Agreement. Hence no request for the grant of exclusive

marketing rights could be made as the same had no basis and couldn’t be enforced.

Consequently the US demanded incorporation of the similar provision in the Indian patent

laws for entertaining applications for the grant of EMRs for a period of 5 years, before

introducing the product patenting in the field of pharmaceuticals and agricultural chemical

products besides the general transition period allowed to the developing countries under the

TRIPS Agreement.

As a result, the United States requested the following remedies in the form of rulings,

findings and recommendations to be made by the DSB:

i. India had failed to implement transition period obligations required under TRIPS by

not recognizing the novelty of applications for pharmaceutical and agricultural

chemical product- patents, as required under Article 70(8).Under Article 70(8),

India was required to ensure mail- box provisions;

ii. The US further demanded that if India was found by the panel to have mail-box

provisions, it had failed to comply with its transparency obligations under Article 63

of the TRIPS Agreement;

iii. India had failed to comply with exclusive marketing rights (EMRs) system under

Article 70(9) of the TRIPS Agreement, as it was under an obligation to provide for

the same on 1 January, 1995. Hence, it is out of compliance with this obligation

under the TRIPS Agreement;

Under the above claims, the US requested the Panel to recommend that India should bring its

measures into conformity with the TRIPS Agreement. It also requested the Panel to suggest

that India should implement its obligations under Article 70(8) and 70(9) in a manner similar

to the way in which Pakistan had indicated implementation of such provisions.144

On the other hand, India requested the Panel to reject the US complaints on the following

basis:-

�� 143

Id.�

144Id., at 4 and 5.�

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i. that it is capable of achieving the objectives of Article 70(8) of the TRIPS, as it is

providing a means for filing patent applications for the referred subject matter ;

ii. that the US request to the Panel to make ruling on the fact as to how the mail-box

provisions could be announced was against the spirit of Article 19(1) of the DSU

which does not give power to make ruling on how India could remove the

consequences of so-called violation of Article 70(8) of the TRIPS Agreement;

iii. that the US request for findings based on Article 63 should not be considered as the

Panel’s term of reference, do not cover the US Article 63 claim. Moreover, the

scope of claims, whether factual or legal cannot be expanded after the first written

submission;

iv. that even if the Panel considers the US claim to be appropriate, Article 63 does not

apply to developing countries until 1 January 2000;

v. that if the Panel considers that Article 63 already applies to India, India has

published the elements of its means of filing that are subject to the transparency

requirements of Article 63(1);

vi. that India has not failed to abide by its obligation under Article 70(9) of the TRIPS

Agreement, as no request for EMRs had been so far made by the US;

vii. that as the issue of scope of exclusive marketing rights was not relating to the

existing measures in India, the US request amounted to a demand for a declaratory

judgment, which was out of the powers of the panel as only complaints on actual

measures taken fall under the jurisdiction of Panels; and

viii. that the United States request as to India should implement its obligation in a way

Pakistan had indicated, was procedurally and legally unsuitable, and thus must be

rejected by the Panel.

On the basis of interim report circulated by the Panel, India requested the Panel to review it in

accordance with Article 15(2) of the DSU. However, the US did not request a review; rather

it reserved its right to comment on any changes suggested by India. But, the US did not

submit any comments. Also neither India nor the US requested for an additional meeting.

The Panel reviewed all the arguments made by India and finalized its findings.

The panel in its findings observed that India had not complied with its obligations under

Article 70 (8) (a) or Article 63 (1) and (2) of the TRIPS Agreement by failing to establish a

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mechanism that adequately preserved novelty and priority in respect of applications for

product patents for pharmaceutical and agricultural chemical inventions, and was not in

compliance with Article 70(9) of the TRIPS Agreement by failing to establish a system for

the grant of exclusive marketing rights.

Under Article 16(4) of the DSU, on 15 October 1997, India notified its intention to the DSB

to appeal certain issues of law and legal interpretations developed by the Panel. The report of

the Appellate Body was circulated to members on 19 December 1997 in which the Appellate

Body upheld, with certain modifications, the Panel’s findings on Articles 70(8) and 70(9) of

the TRIPS, but ruled that Article 63(1) was not within the Panels term of reference.

Finally, the Appellate Body report and the Panel Report, as modified by the Appellate Body,

were adopted by the DSB on 16 January 1998. Accordingly, the parties to dispute agreed that

the reports shall be implemented within 15 months from the date of adoption of the reports,

i.e., up to 16 April 1999. India undertook to comply with the recommendations of the DSB

within the implementation period. On 14 January 1999, the US expressed its desire to enter

into consultations with India in accordance with Article 21(5) of the DSU regarding the

Patents (Amendment) Ordinance 1999, promulgated by the President of India in accordance

with Article 123 of the Constitution to give effect to India’s obligation to implement the

rulings and recommendations of the DSB. On 29 January 1999, the European Communities

requested the DSB to join the consultations as third parties due to their substantial interest in

the matter. At the DSB meeting on 28 April 1999, India presented its final status report on

implementation of the mater relating to Articles 70(8) and 70(9), which disclosed that Patent

(Amendment) Act, 1999 had been legislated to implement the recommendations and rulings

of the Dispute Settlement Body.

Thus implementation of the transitional provisions by India in the form of first amendment to

Patent Act of 1970 shows that Dispute Settlement Understanding is effective in resolving the

disputes relating to the WTO Agreements in general, as well as the TRIPS Agreement in

particular.

The EC in its dispute with India on the same matter, where it contended that Articles 70(8)

and (9) of the TRIPS Agreement had not been complied with by India as its obligation to

implement the measures provided under the TRIPS Agreement. This complaint was similar

to the one filed by the US.

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When EC requested the DSB for establishment of Panel on 9 September 1997, the same was

delayed by the DSB in its meeting on 25 September 1997. Thereupon, the EC made a second

request to the DSB, which was acceded to by the DSB at its meeting on 16 October 1997.145

In that panel, the US requested for the third party rights and got the same reserved. The

report of Panel was circulated to the members on 24 August 1998. The Panel observed that

India had not complied with its obligation under Article 70(8) (a) of the TRIPS Agreement by

failing to legislate laws so as to effectively preserve novelty and priority in respect of

applications for product patents for pharmaceuticals and agro-chemical inventions, and also

that Indian patent laws were not in compliance with Article 70(9) of the TRIPS Agreement.

At its meeting on 22 September 1998, the DSB adopted the Panel Report.

India expressed its desire to fix the reasonable period of time for effective implementation of

its obligations under TRIPS Agreement. For that it agreed with the EC that the

implementation period in this dispute would correspond to the implementation period in a

similar dispute brought by the US and it read its joint statement made with the EC before the

DSB.

As mentioned earlier, on 28 April 1999, India declared in its final status report, the

implementation of the obligation against the US and EC by disclosing the fact that Patent

(Amendment) Act, 1999 had been enacted to implement the recommendations of the DSB.

Thus the dispute on the issue of India’s patent protection for pharmaceuticals and agricultural

chemical products came to an end by the implementation notification by the respondent state,

that is, India on 28 April 1999 by the enactment of Patents (1st Amendment) Act, 1999.

Under the auspices of the GATT, the developing countries were trading with the developed

countries under a fear of losing of the General System of Preferences or suffering loss of

concessions in trade. However, under the WTO Dispute Settlement Understanding, the

developing countries interests’ are sought to be well taken care of, by introduction of certain

improvements over the GATT system in the form of putting an end to the veto power used

for blocking the reports and by incorporating certain provisions in the DSU, especially to

protect the interest of developing countries. It can thus, be concluded that the system of

dispute settlement, despite some weaknesses has been successful to serve the interests of the

developing countries to a greater extent and also to keep the developed countries on track not

to impose more than the observance of the minimum standards, which they cannot impose on

�� 145

Panel Report on India-Patents (EC), WT/DS79/R, Paragraph 1 at 1.�

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account of their better economic position, as the developing countries under the ubiquitous

banner of the ‘developing countries’ are competent enough to show their might, a fact which

such countries simply need to understand, and also that the impartial and transparent dispute

settlement system could further support their cause.

CH A PTE RCH A PTE RCH A PTE RCH A PTE R ----V IV IV IV I

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CHAPTER – VI

CONCLUSION AND SUGGESTIONS

The philosophy of the World Trade Organization (WTO) Agreements is to establish a liberal

world regime on trade. This aim goes beyond the national frontiers and has various effects

on the legal system established by the Agreement on Trade Related Aspects of Intellectual

Property Rights (TRIPS), especially concerning the Intellectual Property Rights (IPRs)

territorial principle. Of all the agreements administered by the World Trade Organization,

the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) is

undoubtedly the most controversial with respect to its development- related aspects. The

Agreement requires all WTO Member States to establish minimum standards of legal

protection and enforcement for a number of different forms of intellectual property.

The growth of technology has a great impact upon the development of a nation. In such an

age, even thinking processes are being commercialized and converted into intellectual

property. The demand for the protection of such property was pushed by the developed

countries that have immense resources at their disposal, as they found vast possibilities of

appropriation of profits from such a property. Thus, an idea too began to be patented and

protected. This gave rise to a competition between the Multinational Corporations (MNCs)

to increase the scope of their R&D activities and invent new products. Developed countries

such as the U.S.A., where most of the MNC’s are located, tried to develop an international

policy which would enable these companies to expand their markets globally and to find out

ways of creating a monopoly market by way of protection given by the intellectual property

rights. Thus, developed countries started their efforts to strengthen & protect the intellectual

property rights. This led to various conventions like Paris Convention for the Protection of

Industrial Property, 1883; Berne Convention for Protection of Literary and Artistic Works,

1886; Madrid Agreement 1891; Patent Co-operation Treaty 1970; etc., and finally

materialized in the Trade-Related Aspects of Intellectual Property Rights. As no system is

free from criticism, certainly, in the field of intellectual property, there are strong advocates

and critics of a global intellectual property regime, that is, TRIPS. Those supporting the

system anticipate growth of innovative activity in developing countries and also becoming

stronger supports for international technology markets. Critics see higher prices for patented

medicines and the potential for monopolistic and abusive technology licensing practices.

Generally, the critics far outnumber the advocates. But in reality, TRIPS Agreement is not

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monstrous as it was projected to be. The implementation of the provisions of TRIPS

Agreement may be difficult, in actual practice, but not impossible. The availability of

resources, legal know-how, level of economic development, capability to involve into

Research & Development in the field of science and technology, though are not same in the

developed, developing or least developed countries, but the growth on these parameters

cannot be blocked. It is a time taking process, but at the same time it is the need of hour that

flow of technology must be there, as it is the fastest and shortest possible mode to develop.

Thus by protecting innovations for some minimum term as stipulated under TRIPS, serves as

an impetus and way to new innovations. Regarding the question of public interest, so far as

the availability of medicines, food items etc., are concerned, the WTO is a flexible system,

which can be altered or amended by way of entering into negotiations and happening of

seven Ministerial Conferences is a proof to that, where many conflicting interests of both

developed and developing countries have been resolved or are in the process of settlement.

Although, protection to innovations has led to the creation of monopoly markets and has also

led to increase in price of such products, especially patented pharmaceuticals, making the

patented goods almost impossible to fit into consumption basket of the common man, the

huge amount of benefits it is conferring on the developing countries cannot be overlooked. If

we weigh its pros against its cons, then definitely former will prevail. Moreover, by only

criticizing this Agreement and discussing its negative impact, its very purpose would be

defeated.

As we know that, after Second World War, the world economy tumbled and it became

necessary to enter into international multilateral co-operation to build up the world economy

and establish trade links to cater their needs in the age of interdependence, due to scattered

resources. In this backdrop, the General Agreement on Tariffs and Trade (GATT) was

negotiated. GATT was not an international organization, but was a legal entity in its own. It

was a ‘child of necessity’ which came into being in order to support the sinking developed

country economies. On the other hand, most of today’s developing countries were emerging

out of state of colonialism to make their existence as independent and sovereign nations. In

order to reach up to that level of development, such developing economies were dependent

upon international aid. In such a phase they were also interdependent for one or the other

thing. Thus, by entering into the arena of intentional trade, they could grow and also meet

their needs. Consequently, in order to fulfill the desire of most of the economies, an attempt

was made at the Bretton Woods Conference, 1944 to establish International Bank for

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Reconstruction and Development (IBRD), that is, World Bank; International Monetary Fund

(IMF); and International Trade Organization (ITO). The World Bank and IMF were

established in 1946, but ITO could not be established. Nonetheless, General Agreement on

Tariffs and Trade (GATT) was entered into as a temporary measure, till a permanent

organization would be established. About 128 countries signed GATT up to 1994, which

included most of the developing countries like India, Brazil, Pakistan, Sri Lanka, Morocco,

etc. Thus, GATT was the result of an international conference held at Geneva in 1947 to

consider a draft Charter of ITO. GATT was considered as a provisional agreement that

would be replaced once the ITO became operational to take over its functions. GATT began

its provisional existence on 1 January1948, with 23 contracting parties as it original

members. China was one of its original founding members, which became its contracting

party on 21 May 1948. As in 1950, the US Congress refused to ratify the treaty establishing

the ITO, the plan to establish a permanent organization came to an end and instead, GATT in

the form of multilateral treaty began its journey to deal the problems related to international

trade. The GATT contained non-discriminatory provisions in the form of MFN treatment,

which didn’t mean free trade or national treatment, rather they meant imports from

contracting parties were to be subjected to tariffs or quotas. MFN treatment meant that no

other countries with some exceptions would receive better treatment or lower tariffs.

Regarding the developing countries, special provisions entitled ‘Trade and Development’

were added to GATT in 1965, whereby the developed economies were required to provide

high priority to reduction or elimination of tariffs on products of developing or least-develop

countries. The developed member countries were also required not to impose internal taxes to

discourage consumption of products from developing or least developed countries and also

was required not to expect reciprocal commitments from such countries. Thus GATT

inhibited contracting members from imposing measures that restrain international trade,

according to the theory that the liberalized trade promotes efficient allocation of production

and consumption among States. However, the developing countries were suspicious about

the role of the GATT and in order to meet their demands seven rounds of negotiations were

made. Eighth round, that is, Uruguay Round was the most controversial of all the Rounds, as

certain new issues, like Trade Related Aspects of Intellectual Property Rights (TRIPS) was

introduced, which faced a lot of opposition from the developing countries who were of the

opinion that the World Intellectual Property Organization (WIPO) was the appropriate forum

to administer Intellectual Property Conventions and Agreements. However, the developed

countries insisted upon its induction in the series of the new agreements to be administered

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by a permanent organization, the World Trade Organization (WTO), on the pretext that

WIPO lacked teeth to enforce the intellectual property rights effectively. The WTO is a legal

and institutional framework of multilateral trading system as redefined and extended by the

Uruguay Round of trade negotiations. As GATT failed to liberalize trade in agricultural

products to any significant degree, it became one of the major goals of the Uruguay Round

(UR) to be achieved. The UR transformed the GATT into WTO in 1 January 1995.

A country is presumed to have full sovereignty over its citizens within its territory. Any

foreign government or nation uttering negative things on domestic regulations have been

criticized for interfering with internal or domestic politics of other nation on the basis of

provision contained in the UN Charter, providing for non- interference into the domestic

jurisdiction of other member nation under Article 2(7) of the UN Charter, often called as

‘domestic jurisdiction’ clause. This was so at least until GATT was formed in 1948, when

trade negotiations started at a wider range, till the same culminated into the establishment of

the WTO. The members of the WTO have agreed to abide by the rules of the WTO, and

hence allow it to monitor domestic laws that may be in conflict with trade rules set by it.

Thus, increase in trade happens only when national sovereignty is reduced and frontiers made

easily accessible. Gains from trade often forces member countries to sacrifice some national

sovereignty. For example, before 1999 Amendment in the Patent Act, 1970, India’s patent

laws allowed reverse engineered, or in other words, counterfeit copies of drugs to be

produced at large scale without requiring license fees, as there was no provision for the

protection of product patents in the field of pharmaceuticals, which made Indian drugs

available at low cost to the people at large. Now India overturned its patent laws for all

medicines invented since 1995, by amending the Patent Act, 1970 for three times, that is , in

1999, 2002 and finally in 2005, so as to bring it in conformity with the TRIPS Agreement.

The WTO is an impartial organization where the decisions are made by consensus among the

member countries, irrespective of their status or size. But where a decision cannot be taken

by consensus, the matter is decided by majority of votes cast, in an election in which each

member of the WTO has one vote. Under the previous GATT consensus system, decisions

were made rarely as the panels’ decisions could be blocked before their adoption, thus one

country could hold up the entire system. Under the WTO Agreement [Article IX (2)], the

WTO Ministerial Conference, which is the highest decision making authority, and General

Council exclusively interpret the WTO Agreement and the GATT-1994, as well.

Interpretations are based on the recommendation of the Council overseeing the functioning of

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the Agreement in question. The decision to adopt an interpretation is subject to 3/4th vote by

the members. Upon request by a member, the WTO’s Ministerial Conference has the

authority to make decisions on all matters under any of the Multilateral Trade Agreements,

including GATT 1994. Moreover, under the WTO, decisions are backed by sanctions. If a

member fails to follow the WTO’s recommendation to stop from involving in wrongful trade

practices, within a reasons able time, compensation and suspension of concessions or other

obligations may be imposed. However compensation is voluntary as per Article 22(1) of

Dispute Settlement Understanding (DSU).

The WTO system, including the Agreements under it is a flexible body, as any member can

initiate proposal to amend the WTO Agreement or the GATT 1994 by submitting a proposal

to the Ministerial Conference. Amendments which affects the rights and obligations of the

members’ become effective for the members that have accepted them upon the 2/3rd vote, and

become effective thereafter for each other member upon acceptance by it. Provision for the

withdrawal from the membership of the WTO, and thus also from the GATT 1994, after six

months from the date the Director-General of the WTO received written notice of

withdrawal, is also available under this system, whereby any member can voluntarily leave

its membership, which shows that its membership is not obligatory on any nation, including

the developing countries who may join or withdraw from the WTO at any point of time. But,

its membership has become a necessity for every country desirous of development and

having intention to access new technology.

The flexibility of the system is further supported by the fact that it contains provisions in the

form of adjustments; waiver etc., from the provisions of the WTO in order to meet the

extraordinary needs of the members. In the GATT system, the waiver was often criticized as

an easy track amendment process. However, the WTO has strict rules on waiver but has made

the amendments easy. The waiver is temporary, which may be terminated by the WTO and is

subject to 3/4th vote, stricter than amendment votes. Thus rules under WTO are not very rigid

and can be changed by the General Council of the WTO.

The WTO is a body which deals with the rules of trade between nations at a global or near-

global level. It is a place where member governments go to try or sort out the trade problems

they face with each other. Thus the first step is to resolve the trade issues is to initiate

negotiations. The WTO was born out of negotiations, and everything the WTO does is the

negotiation. At its heart are the WTO Agreements which have been negotiated and signed by

the bulk of the world’s trading nations. Now it has 153 members which explain its

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importance and success story. All such documents agreed to between the trading nations

provide the legal ground-rules for international commerce. They are essentially contracts,

binding the governments to keep their trade policies within agreed limits.

Thus immediately after the second world war, countries whose production units were

destroyed due to war and where there was lot of suffering, came together to try and prevent

such wars taking place in future. It was believed that one of the causes of the war was the

constant battles, which the countries were into in order to protect and expand their foreign

trade. Consequently, nations competed with each other to raise trade barriers in order to

protect domestic producers, and to retaliate against other country’s trade barriers. These

barriers worsened the great depression of the 1930’s which was one of the factors that led to

the Second World War. Hence in order to resolve trade problems GATT, from 1948 to 1994,

provided the rules for much of world trade and presided over periods that saw some the

highest growth rates in international trade. It seemed well-established but throughout those 47

years, it remained a provisional agreement and organization.

Till 1994, GATT was the forum for negotiating lower customs duty rates and reducing other

trade barriers. These multilateral negotiations were known as trade rounds. The longest

GATT series of negotiations is known as the Uruguay Round, which took place from 1986 to

1994. This Round finally, lead to the creation of the World Trade Organization, which

replaced the unofficial created General Agreement, viz., GATT.

The WTO agreement in nutshell fits within its ambit, a thread of the six main areas viz., the

WTO series of agreements; about 29 agreements, goods, services, intellectual property,

disputes and trade policy reviews. The WTO is quite unique in the family of international

organizations not because of the wide scope of contractual obligations, but because of the fact

that it is binding and enforceable through its integrated dispute settlement process.

There are three pillars of the WTO-the first is the revamped version of GATT 1947, the

second is the new agreement on Trade in services (GATS) and the third pillar being TRIPS

Agreement.

As the study is concentrated on the Trade Related Aspects of Intellectual Property Rights

(TRIPS) and its impact upon the developing countries, the reasons for its inclusions under the

WTO, an analytical study of various provisions of the TRIPS agreements was warranted.

From that study, certain conclusions are drawn which makes it pertinent to recommend

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certain suggestions to improve the system, which may be beneficial to the developing

countries, in particular.

The purpose of the TRIPS Agreement, in the broad sense is to stimulate research and

development by granting owners of intellectual property exclusive rights for a limited period

of time, depending upon the nature of intellectual property to be protected.

Inclusion of TRIPS Agreement under Annex 1C of the WTO, though opposed by the

developing countries initially at the time of negotiations under the Uruguay Round (UR), was

mainly due to significant increase in the international trade in goods during the period of

eighties. A number of industrialized countries felt threatened as a consequence of weak

protection extended to intellectual property rights (IPRs) and also that it was adversely

affecting their rights. Hence they raised a voice in the UR to protect their IPRs.

The international conventions relating to IPRs point out the demand of extending, stronger

protection to IPRs, which is evident from the fact that in 1970 developing countries sought to

obtain more flexibility in the application of the provisions of the Paris and Berne Conventions

administered by the World Intellectual Property Organization (WIPO), in order to secure

greater access to foreign technologies with a view to promoting their economic and social

development. These efforts lead to the revision of Paris Convention in 1967. The developing

countries also demanded revision of Berne Convention to get benefit in the fields covered by

the Convention. This along with other factors such as growing competitiveness of newly

industrialized developing countries in the manufacturing sector, the increasing globalization

of the market place and the growing awareness of intellectual property by the enterprises of

the developed countries as a strategic asset contributed to the successful culmination of the

TRIPS Agreement.

TRIPS was the result of number of negotiations from Punta Del Este to Marrakesh, and the

idea of TRIPS was first suggested at the GATT meeting of trade ministers at Punta Del Este

in Uruguay in 1986 and was formally concluded in April 1994 at Marrakesh, Morocco along

with other negotiations of Uruguay Round. The draft of this agreement, popularity known as

“Dunkel Draft” was heavily criticized by India as it led to the elimination all options,

especially in the field of pharmaceuticals, agro-chemicals, etc.

Due to complexity and relative novelty in international law of several of the provisions of the

TRIPS under the Dunkel Draft, all members were given one year after the entry into force of

the WTO and TRIPS, to implement its provisions. It was also agreed that all other provisions

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of the TRIPS could be delayed by the developing countries up to January 2000. Product

patent protection for areas of technology, not so protected by January 1995, were further

granted an additional period for their implementation, which could be made effective by

January 2005, that is, the same could be delayed for a further period of five years.

It is by far the most wide-reaching international treaty on the subject of intellectual property

to date and marks the most important milestone in the development of law in this area. Apart

from being the first international intellectual property agreement to drastically increase the

level of minimum standards of such law, TRIPS is also the first international intellectual

property law agreement that obliges, in a single undertaking, new standards on as many as

seven type of IPRs to be included as a part of rules governing the multilateral trading system.

Thus marrying trade law with intellectual property law, particularly making applicable the

WTO dispute settlement system, can impose trade penalties on members violating the

agreement. The TRIPS agreement includes fairly detailed standards for domestic enforcement

of IPRs, both internally and externally. TRIPS cover new subject matters under existing types

of intellectual property, at least for some developing countries such as, product patents for

food, pharmaceuticals, chemicals etc., for which they showed their much concern to see them

not to include under the TRIPS regime, and also criticized them. Thus the problems relating

to its implementation were unavoidable.

The developing countries, since the inception of TRIPS agreement, were hesitant in adopting

this Agreement due to the fact that compliance with it required amendments and

modifications in their existing laws, where most of them lacked expertise due to the fact that

some areas were totally new to them. This Agreement insists upon the protection that

countries must not give to the intellectual property of its own, but also that of the others. It is

however, not immune from criticism. On one hand, the developed countries question its

effectiveness in providing adequate protection to their intellectual property rights, and on the

other, the developing countries find compliance with the TRIPS Agreement as an attack on

their sovereignty. They feel discriminated against and have an opinion that the rewards of this

Agreement are being enjoyed by the developed countries, whereas the ‘left-overs’ are being

thrown to them.

The question that, if the developing countries were so dissatisfied with the TRIPS

Agreement, than they should not have accepted such obligation by accepting the membership

of the WTO and consequently, TRIPS Agreement. One major reason for this muted

acceptance is their interest & financial involvement, which led to the successful conclusion of

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the Uruguay Round as a whole. They had an interest in the survival of the multilateral trading

system and its reinforcement. This survival depended upon a successful culmination of the

Uruguay Round, for which it was accepted that a major outcome regarding the intellectual

property laws was essential. Thus, in return of trading benefits the developing countries

agreed to transformation their intellectual property laws and to further strengthen the

protection given to IPRs.

By the adoption of the TRIPS Agreements, protection of intellectual property has emerged as

one of the backbone of the multilateral trading system. It has strengthened the potential for

protection and enforcement of defined rights. It has worked well after its adoption, and

strengthened the global system of intellectual property protection.

Despite the fact that most of the developing countries had fairly well-developed copyright

and trademark laws and clear patents laws prior to the adoption of the TRIPS Agreements,

and were supported by technical cooperation; implementation and enforcement of intellectual

property rights has always remained a major problem for such countries. Though the

developing countries were given a period of four years in addition to general one year period

afforded to all members for implementation, and an addition five years transition period in

respect of introducing product patents to certain areas of technology, including the

pharmaceutical sector, which came to an end on 1 January 2005, their enforcement still

remains a problems, though most of the developing countries, including India and China have

amended their intellectual property laws to bring them in conformity to the TRIPS

Agreement. The least developed countries have been further granted a period up to 2016 to

make changes into their IP laws.

However, the implementation and enforcement subsequently, demands considerable skill,

training in those fields which are new to such countries. Thus, it is a long-term process. But

the fact that such internationalization of legal concepts with which many societies around the

world are neither sufficiently familiar with nor convinced, would serve their long-term

interest. A proper application of all the provisions of TRIPS, including those relating to social

and development goals, could serve long standing interests of the developing countries in

fostering intellectual property protection. Certain provisions in the TRIPS Agreement are

open to more liberal interpretations and may prove to be beneficial for the developing

countries. Those are:-

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1. Article 1, which gives freedom to the members to determine the appropriate

method of implementing the provisions of TRIPS Agreement within their own

legal system and practice.

2. Article 6, dealing with the exhaustion of the intellectual property rights affords

opportunity for parallel imports. Parallel imports occur when patented medicines

produced or sold abroad, with the consent of the patent owner, are subsequently

imported into the domestic market at cheaper prices without the consent of the

owner. Parallel importation works on the principle that the patent owner’s rights

have been exhausted through the first sale. Thus the patent owner cannot legally

prevent the importation of patented products from another country. Thus, the

parallel imports are subject to Article 6 of TRIPS on law of exhaustion, which

requires exhaustion of rights to be made part of national legislation.

3. Article 7 dealing with the objectives, is another provision that can be interpreted

broadly. It maintains that the protection and enforcement of IPRs should

contribute to promotion of technological innovation and to the transfer and

propagation of technology. It would be of mutual benefit to the producers and

users of technological knowledge and also favorable to social and economic

welfare. It would further contribute in establishing equilibrium of rights and

obligations.

4. Article 8 stipulates the principles to be followed while formulating and amending

their national laws and regulations. Appropriate measures protecting public health

and nutrition and to promote the public interest in the sectors of vital importance

to their socio-economic and technological development, provided they are

consistent with the TRIPS Agreement, can be taken to prevent the abuse of IPR’s

of monopoly rights by the holders or to prevent such practices which unreasonably

restrain trade or adversely affect transfer of technology.

5. Article 27(2) affords an opportunity to the Member nations to take such measures

so as to protect the interest of the general public by limiting the patentability

options to those fulfilling the criteria of patentability and denying patent

protection to the inventions where the commercial exploitation of which would

affect public order or morality. Accordingly, Members have an option to disregard

from patentability inventions, the exploitation of which affect order public or

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morality, including to protect human, animal or plant life or health, or to avoid

serious prejudice to the environment.

6. Article 27(3) can also be interpreted broadly so as to exclude some inventions

from patentability. This provision grants liberty to the Member States to exclude

from patentability:

a. Diagnostic, therapeutic and surgical methods; and

b.Plants and animals, other than micro-organisms.

7. Article 30 allows certain exceptions to the exclusive rights conferred by a patent.

But they should not unreasonably prejudice the normal exploitation of the patent

or legitimate rights of the patent owner. For example, innocent infringement, or

doing anything to patented invention during the period anything patent has lapsed

etc. Thus, reasonable limitations can be included in the national legislations of the

Member States so as to protect the interest of the persons other than the title-

holder.

8. Article 31 is of great socio-economic significance, as it affords chance to exploit

the invention of the patent holder, even during the period of protection of such

patent. It allows other uses of patent without authorization of the right holder. For

example, Indian Patent laws contains a provision where the patented invention

may be used, manufactured for the governmental purposes, or manufactured or

imported by or on behalf of the government to be distributed or used for research

purposes etc., or the Bolar provisions under section 107-A of the Indian

Patent(Amendment) Act, 2005.

9. Para 6 of the Doha Declaration dealing with public health interest or provisions

for compulsory licenses in public interest in certain emergencies pertaining to

health is a crucial weapon in the hands of the developing to manufacture and

export the patented drugs produced under compulsory license to be supplied to the

least developed countries having very less manufacturing skills or lacking them

completely.

The developing countries can be benefited by the above mentioned provisions by

incorporating such provisions in an appropriate manner into their national legislations and by

making proper use of them. It is worth emphasizing that the introduction of patent protection

for pharmaceutical products as spelled-out in TRIPS Agreement does not extend to drugs

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which are already in the market, that is, there is no obligation for ‘pipeline’ protection of

pharmaceutical products. Moreover, in all such cases the TRIPS Agreement will lead neither

to actual price increases nor to the direct displacement of Indian imitators. Thus, it is for any

newly developed entity that protection will apply from the first day of its launch in the

market. In all such cases of stronger protections, the governments may be induced to impose

price controls or grant compulsory licenses.

Moreover, future negotiations should be sought to identify those areas that are of particular

interests for the developing countries proportionate to the level of development.

Doha Declaration is an example to such needs of the developing countries. Designed to

respond to concerns about the negative impact of the TRIPS Agreement on access to

medicines, the Declaration on the TRIPS Agreement and Public Health (Doha Declaration),

adopted at the Doha Ministerial Conference, explicitly clarified for the first time as to what

flexibilities inherent in the TRIPS Agreement can be used by WTO members to combat a

public health crises. The Agreement came under attack for severely curtailing the availability

of inexpensive copies of potential medicines, raising the price of new medicines in

developing countries as a result of patented monopolies, and diminishing public access to

essential medicines as a consequence. Most drastically, the cost of patented drugs has been a

significant obstacle to increasing the availability of AIDS/HIV treatment in the developing

countries. In Africa; in particular, millions of people have died due to lack of access to

affordable treatment. This led to an unprecedented public outcry against the WTO, and has

done much to de-legitimize the organization in the eyes of general public.

On 14 November 2001, the Ministers at Doha Conference adopted the final Declaration by

consensus. It recognized the gravity of public health problems afflicting many developing

and least-developed countries, especially those resulting from HIV/AIDS, tuberculosis,

malaria and other epidemics. The Declaration recognized the complexities of drug patent

protection, by stating that intellectual property protection is important for the development of

new medicines, but also recognized concerns about its effect on prices. It was affirmed by the

ministers that the TRIPS Agreement, in no way would prevent member States from taking

measures to protect public health, especially access to medicines for all should be promoted.

The Doha Declaration further explained that the flexibilities available in TRIPS Agreement

include granting of compulsory license by the member on the grounds to be determined at its

free will [Paragraph 5(b) of Doha Declaration].Under Article 31 of TRIPS, the Doha

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Declaration clarified that such conditions do not limit the grounds on which compulsory

licensees can be granted. Therefore, members can grant such licenses on the grounds of

protecting public health beyond the three illustrations explicitly included in Article 31, which

are national emergency [Article 31(b)]; public non-commercial use[Article 31 (b)]; and anti-

competitive practices[Article 31(k) of TRIPS]. Moreover, the members are free to determine

as to what constitutes a national emergency. The Declaration specified that public health

crisis, including those relating to HIV/AIDS, tuberculosis, malaria and other epidemics, can

represent a national emergency or other circumstances of extreme urgency. Further, under

Article 3 and 4 of TRIPS, the members were free to adopt their own policies concerning the

exhaustion of intellectual property rights, and to establish their own parallel importation

system with the chosen policy. This had been a disputed point of interpretation under the

TRIPS Agreement. By making that member countries may adopt legislation to allow parallel

imports without the consent of the patent holder, the Declaration has greatly advanced the

interests of developing countries in obtaining low-cost access to pharmaceutical supplies.

Thus, paragraph 6 of the Doha Declaration recognized that the developing countries could

face difficulties to effectively use compulsory license under Article 31(f) where a compulsory

license must be predominantly for the supply of pharmaceuticals in the domestic market of

Member authorizing such compulsory license. Due to absence of the definition of the term

‘predominantly’, it could be assumed that major production under compulsory license must

be for the domestic market and rest of it can be even exported.

Earlier under Article 31(f) of the TRIPS, countries like India were not allowed to export

drugs under compulsory licensing to the poor countries of Africa. However, on 30 August

2003, the deadlock over the issue of pharmaceutical patents and public health broke and the

poor countries that could not manufacture the medicines themselves were allowed to import

cheap generics made under compulsory licensing from cheap producers like India. It was

further made clear that the supplies of cheap generics under the compulsory licensing system

would not be diverted to the rich consumers in the developed world and spoils the market

holders in the rich counties. This waiver from Article 31(f) of the TRIPS Agreement has

been allowed until the WTO’s intellectual property agreement is amended.

Geographical Indications (GIs) are an extraordinary competition tool, as long as a lawful

competition is allowed at the service of the producers and traders from a specific region.

They also contribute in a decisive way to safeguard interest of consumers by assuring them

quality products. In fact geographical indications (GIs) are means of consumer protection, of

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quality assurance, of conservation of the environment and support of fair competition.

Geographical indications, and specially appellations of origin, assure the consumer that the

product holds a certain number of qualities and characteristics, that is, the product is in

accordance with a specific regulation and complies with a certain number of specifications

whose fulfillment is ensured by a body responsible for its control. Thus the quality can be

assured only when imitation and usurpation are properly prohibited. In this way, the

consumer will be protected and will not see his preference for quality products with a specific

geographical origin defrauded. GIs and appellation of origin, unlike trademarks, are common

property of the producers and traders of a specific and determined region. They are

distinctive signs, are industrial property rights, but they are not property of one single person

or association or public institution. The use and fruition of the appellation belongs to the

whole collectivity, that is, to all producers and traders of the demarcated region whose

products comply with the established rules.

In order to obtain fair trade, to prevent imitations, counterfeiting of products, and to protect

the interest of consumer in a world of free trade and communication, we must achieve a level

of protection and enforcement to GIs similar to what is established for the other intellectual

property rights. Thus the protection of GIs is necessary as their protection serves economic

policies and fosters national development, particularly in the agricultural or food industry.

In order to get protection internationally, under Article 22 of the TRIPS Agreement, there is

no obligation on the other countries to extend reciprocal protection, unless a GI is protected

in the country of its origin. Thus registration not only affords reciprocal protection by other

members, but it prevents unauthorized use of such GI goods by third parties. It boosts

exports, promotes economic prosperity of producers and grants an exclusive right to use the

GI, in relation to goods in respect of which it is registered, only to the authorized user, which

is a producer or group of producers of goods.

The Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS) is widely

recognized as having set new standards for the international protection of GIs, having

succeeded at one stroke in recognizing GIs as a major category of intellectual property

alongside patents, copyrights and trademarks.

Article 22 covers geographical indications for products other than wines and spirits. In

contrast to Article 23, Article 22 of the TRIPS limits the protection of geographical

indications to cases where the public is misled by the use of a geographical indication as to

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the true geographical origin of the product, or where such use constitutes on act of unfair

competition.

On the other hand, Article 23 of TRIPS provides for additional protection of geographical

indications in the category of wines and spirits. Article 23 does not need a proof of the fact

that the public is misled or that using a certain geographical indication constitutes unfair

competition. The use of accompanying expressions such as ‘style’, ‘type’, ‘kind’ and

‘imitation’ are prohibited and protection is also provided when the indication is used in

translated form. The burden of proof does not rest with the plaintiff. Under Article 23,

competitors who do not produce within the geographical area have been prevented from

using the corresponding denomination, and they may not use trademarks containing or

consisting of geographical indications used to identify wines and spirits, with some

exceptions like domestically used or domestically unprotected GIs. Thus the TRIPS

Agreement provides a basic standard of protection, and a higher standard specifically for

wines and spirits. The inclusion of the higher standard does not refer to unique characteristics

of wines and sprites, but was a rather a compromise reached in negotiations. This imbalance

in protection has led to demands for additional protection from a number of countries like

India, Pakistan, Kenya, Mauritius etc. Other countries such as Argentina, Chile and

Guatemala argue that extending the additional protection to other products would impose

extra financial and administrative burdens on all WTO members and that these would

outweigh any trade benefit. They believe that such burdens would fall most heavily on the


In the absence of a reliable economic assessment, it is difficult to evaluate the merits of both

sets of arguments.

The TRIPS Agreement requires that in furtherance of increased protection for GIs on wines

and spirits, a multilateral register of GIs for wines should be established. The Doha

Ministerial Conference extended this mandate to negotiate the establishment of a system that

includes spirits as well. The purpose of the register has an effect on all WTO members

irrespective of whether or not they have any geographical indications included on the register.

TRIPS Agreement has incorporated some critical changes to the protection of GIs, viz., it

provides enforcement provisions in the case of violations and it provides periodic review and

negotiation aimed at increasing the GI protection. Also, since all the WTO members are

under an obligation to comply with the provisions of the TRIPS Agreement, it also has

substantial number of countries as its signatories, which had helped to establish its status as a

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quantum leap in the field of international protection of GIs. The TRIPS Agreement prohibits

grant of trademarks that contain or consists of GIs recognizing wines or spirits (Article 23).

Article 23(3) of TRIPS is concerned with homonymous GIs and is restricted exclusively to

wine. It envisages bonafide use of the indication by producers in each of the different

countries.

In view of the apprehensions of some of the members that protection of GIs would adversely

affect the acquired rights, Articles 24(4) to (9) envisages exceptions and concessions with a

view to balance the interests of GI holders with those of the consumers and other users of

GIs. These advantages have significantly lessened the advantages to owners of GIs, thus

making it pertinent for demandeurs of GIs extension to appreciate its implications.

However, the division between the members over the issue of extension of Article 23

protection to products other than wines and sprites continues to remain extremely intense and

acute. The demandeurs of GI extension do not find any genuine reason for two levels of

protections to GIs. They contend that because of definition of GIs does not differentiate

between product types, providing different levels of GI protection to different kinds of goods,

are both vocational and unwarranted.

In cases of Basmati rice, the neem tree and turmeric, though the patents granted were

challenged and subsequently withdrawn, these did not qualify for the protection sanctioned

by the GI provisions of TRIPS Agreement, because they were not rendered any kind of GI

protection within India and Article 24(9) exempts Members States from rendering protection

for GIs not recognized in their own country of origin.

In case of dispute on any measure or provision contained in any Agreement forming part of

WTO Agreement including Agreements in various Annexes to the WTO Agreement, the

Dispute Settlement Body (DSB) established under Article IV(3) of the Marrakesh

Declaration Establishing WTO, Morocco 1994, is empowered to settle all the disputes,

including agreements covered under Dispute Settlement Understanding (DSU). The objective

of this system is to resolve issues multilaterally rather than unilaterally by one member

against another. The method of working of the DSB has been defined very clearly in the

DSU and like WTO’s term of operations, decisions are taken through a consensus approach.

If any member adopts a policy or violates any of the WTO rules, which affect another

member(s), the matter is referred to the DSB, which appoints the panel with consultation of

members to dispute, to consider all factual and legal issues involved and accordingly makes a

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recommendation to the DSB. The recommendations may be further appealed before the

Appellate Body which further recommends to the DSB, who further adopts the

recommendations or rulings of the panel or the Appellate Body, as the case may be. The

DSB entertains disputes pertaining to violation of the TRIPS Agreement as well. It entertains

three types of complaints viz., violation complaints, non-violation complaints and situation

complaints. Moreover, the report of the Appellate Body is binding upon the parties, and there

is no provision for subsequent appeal. In case the party violating any provision does not

change its measures in accordance with the TRIPS Agreement, compensation or retaliation

measures in the form of suspension of concessions, may be prescribed.

The dispute settlement mechanism of the WTO does not rely upon highly coercive economic

sanctions to force the erring member to comply with the desired measures. It does not

depend entirely upon the extra-legal pressures for the implementation of the similar kind of

treaty provisions. Instead, the DSU combines both legal sanctions and extra -legal pressures

to motivate the members to comply with the provisions of the Agreement(s) in question. The

member countries mostly settle their dispute at a very early stage and agree to comply with

the provisions of the WTO Agreements. Though the system appears to be equitable and fair,

but due to lack of resources and skills required to recognize violations of rights under the

WTO rules and failure to take timely action due to lack of knowledge, the developing

countries need effective support and training so that they do not bear unnecessary costs

involved in the dispute. The world Dispute Settlement Body, by itself does not bring in the

issue of violation or non-compliance of any of the WTO provisions by any member and

initiate action. It is only the Governments of the member states who are eligible to have an

access to the system. Neither individuals nor corporations have the right to file disputes with

the WTO. It is for these reasons that in spite of the fact that there are so many Agreements

under the WTO and there are 153 Member States to it, there have been around 400 disputes

registered until 2009, as specified in the WTO Report of 2010. It is also found from various

WTO Reports that not more than 30 members have been party to a dispute either as a

complainant or the defendant. Though the dispute settlement system has performed well and

in a transparent manner, it needs certain modifications to become more effective. Despite the

fact that the DSU contains various provisions for the benefit of the developing countries,

there is still a scope for its improvement.

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SUGGESTIONS:

In addition to the suggestions and recommendations given throughout the present study, some

recommendations should be given priority so as to control the drug price, or to put an end to

the GI-extension debate. And to increase the effectiveness of the enforcement body, various

improvements are required to be made. The recommendations are as under:

1. Public funding for undergoing research on health problems should be increased

for the developing countries so that attention in research of the infectious diseases

prevalent in such countries may be created. This funding should exclusively be

used to exploit and develop existing capacities for research and to promote new

capacity, both in public and private sectors.

2. Sufficient economic incentives should be given to the developing countries to

develop low-cost generic drugs by the companies located in the developing

countries.

3. Global efforts to find a workable, cost-effective and transparent way should be

continued till some solid solution to access drugs at affordable prices is reached.

Number of ways has been adopted to improve public access to essential drugs for

people in poor countries, for example, the initiative of the Global Fund to fights

against AIDS, Tuberculosis and Malaria.

4. International partnership should be strengthened to combat disease crises. Based

upon the principle of transparency, the WTO should co-operate with other

relevant international organizations and non-governmental organizations.

5. The pharmaceutical industry should perform its corporate social responsibility and

respond to growing public concern about the accountability and the social and

economic, impact of its comparatively high-priced drugs and corporate polices.

6. Grant of compulsory license should be made easier in case of supply of life saving

drugs to the poor countries lacking or having little manufacturing capacity so as to

make available such drugs at cheaper prices. The conditions of obtaining

compulsory license involve authorization or notification from the LDCs so that

drugs could be exported under a license if so notified or permitted by the recipient

country. Thus in case of emergency, or public health crises, the compulsory

license should be granted and the minimum period stipulated in domestic laws of

the developing countries should be waived. Moreover, if the reasonable

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requirements of the public are not met, or medicines are not available at an

affordable price or the patent is not exploited within the territory of the country

granting the patent after some reasonable time for achieving such ends has

reached, compulsory license may be granted.

7. Parallel imports should be encouraged. If a country finds that a patented drug is

being sold at high prices in that country, but is available at cheaper prices in other

country, such countries should import such drugs at a parallel level, to control the

prices and bring them down.

8. Extending of the patent protection by applying for secondary patents on subject

matter related to original patent should be discouraged by implementing provision

contained in Article 27 of the TRIPS Agreement, which mandates that ‘the patents

shall be available for any invention whether products or processes in all fields of

technology provided they are new, involve inventive step and are capable of

industrial application and shall be available and patent rights enjoyable without

discrimination as to the place of invention, field of technology or whether

products are imported or locally produced. Thus only new invention which

satisfies the basic requirements of novelty, inventiveness and industrial

application would qualify for grant of patent, except provided exceptionally. Thus

‘ever greening’ of patents should be discouraged by not granting patent protection.

9. National competitive and anti-trust policies can be formulated to prevent

excessive monopoly power of certain enterprises to unreasonably restrain trade or

adversely affect the international transfer of technology. Thus such policies can

be used to deal with the possible abuse of monopoly power emanating from patent

protection. In such cases, compulsory licenses can be issued to tackle with anti-

trust practices.

10. Incorporation of “Bolar” provision is allowed under Article 30 of TRIPS

Agreement. This would allow a generic drug manufacturer to produce or import

patented drug for the purpose of development and submission of information for

regulatory trials before patent expire. Similar provision containing Bolar

exception has been incorporated under Article 107-A of Indian Patents

(Amendment) Act, 2005 which provides that ‘any act of making, constructing,

using, selling or importing a patented invention solely for uses reasonably related

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to development and submission of information required under any law for the time

being in force, in India, or in a country other than India, that regulates the

manufacture, construction, use, sale or import of any product’. Thus this provision

would allow Indian generic manufacturers to compete among themselves,

ensuring the continued availability of medicines at low costs for domestic, as well

as international consumers.

11. The generic pharmaceutical industries should be promoted in the developing

countries, as the cost involved in producing the generic versions, either branded or

unbranded, is comparatively very less as compared to cost involved in the

research and development of a new drug. The more the number of generic

industries, the cheaper would be the drug, as has been analyzed earlier. Moreover,

the use of generic drugs (medicines) should also be promoted. They can very

effectively cater the health needs of common people.

12. In case of GIs in order to put an end to the debate on GI-extension to other goods,

other than wines and spirits, an in-depth economic study and statistical analysis is

warranted at the country level as well as cross-country level to help in analyzing,

whether extension to other goods be beneficial or not.

13. More and more of GIs should be registered so that they get protection in other

member countries, as the only condition for protection of GI is that, it should be

domestically protected to claim protection in the other member countries.

14. As the DSU is currently framed, a party can violate a settlement agreement with

no fear of direct legal consequences, requiring the complaining party to initiate the

dispute settlement process from the beginning. In the meantime, the violation

may continue without any penalty, until retaliation is authorized at the end of the

process. Thus the DSU should impose implementation of settlement agreements

like it facilitates the implementation of the rulings and recommendations of the

DSB. Accordingly in order to bring implementation of settlement agreements

within the ambit of the DSU, Article 1 of the DSU should be amended to

explicitly include within the scopes of covered agreements, the mutually agreed

solutions notified to the DSB and the relevant councils and committees. This

change would make settlement agreements in the WTO system like settlement

agreements under the domestic laws, where breach of settlement agreement is

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treated as a breach of contract, subject to damages to be determined by a court or

through arbitration.

15. Though it is presumed that the member countries would apply the provision in

good faith, but in case of dispute till its settlement, the States are allowed to

continue with the alleged breach, it would cause great harm to the injured party.

Thus the WTO panels should be authorized by the DSU to grant interim relief as

in the form of withdrawing a measure pending adjudication of its WTO

consistency, similar to the power enjoyed by the courts in granting preliminary

injunctions. Although interim relief would not completely solve the problem, it

would secure the underlying commercial interests of the complaining member

while respecting the sovereignty of the defending member.

16. Introduction of ex post facto or retroactive remedies to comply with DSB

recommendations should be made. It can be used as an effective tool to motivate

the parties to dispute to come to an early settlement and implement WTO

obligation. Retroactive remedies do not suggest punitive retroactive remedies as

the same would not be acceptable to the WTO members, rather it would create an

element of coercion and punishment, which could be harmful than helpful to

implement the WTO obligations.

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1. Agreement on Trade-Related Aspects of Intellectual Property Rights, Apr.15,1994,

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Instruments-Results of the Uruguay Round, 33 I.L.M 1125,1197(1994).

2. Berne Convention for the Protection Literary and Artistic Works, Paris Act of 24 July

1971, WIPO, Geneva (1984).

3. Doha Declaration on TRIPS Agreement and Public Health, 30 August 2003.

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4. GATT, Protocol Amending the Preamble and Parts II and III of the General

Agreement in Final Act Adopted at the Ninth Session of the CONTRACTING

PARTIES, 278 U.N.T.S 200 (1957).

5. Lisbon Agreement for the Protection of Appellations of Origin and their International

Registration, October 31, 1958, 923 U.N.T.S. 205 available at: http://

www.wipo.int/treaties/en.

6. Madrid Agreement for the Repression of False and Deceptive Indications of Source

on Goods, April 14, 1891, 828 U.N.T.S. 168, available at: http://

www.wipo.int/treaties/en.

7. Paris Convention for the Protection of Industrial Property, 20 March 1883, WIPO

Database of Intellectual Property Legislative Texts.

8. The Madrid Agreement for Repression of False or Deceptive Indications of sources

on Goods, 1891, Article1.

9. WIPO, ‘Basic Proposals for the Diplomatic Conference on the Revision of the Paris

Convention’ (November 1979) Industrial Property.

STATUTES:

1. Argentine Patent Law, 1995.

2. Chinese Trademark Law, 1993.

3. Constitution of India.

4. The Patent Law of People’s Republic of China, 1984.



7. Geographical Indications of Goods (Registration and Protection) Act, 1999.

8. Indian Patent Act, 1970.

9. Indian Patent (Amendment) Act, 1999.



12. New Brazilian Patent Law, 1997.

13. Uruguay Round Agreement Act (URAA), 1994, available at:

http://en.wikipedia.org/wiki/Uruguay_Round_Agreements_Act.

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MAGAZINES AND NEWSPAPERS:

1. A. Pollack: Drug Research yields a Decreasing Return, New York Times, 19 April

2002.

2. Alster, Norm: A Dry Period, Forbes, 24April 1995.

3. Burke, Maria: Getting in the Bed with Biotech, Chemistry and Industry, 18 March

1996.

4. Freudenheim, Milt: As drug patents end, costs for generic drugs surge, New York

Times, 27 December 2002.

5. IMS Health: IMS MIDAS Customized Insights (October 2001).

6. Lahiri, Jaideep: Information on patent sought for registration of drugs Economic

Times, 24 April 1995.

7. Mehta, Balraj: GATT Whip: Supine Response. The Tribune, June 20, 1995.

8. Sharma, Devinder: Patent or perish, The Pioneer, April 10, 1996.

9. Singh, Manmohan: India Ready to participate at WTO, Economic Times, 18January

1995.

10. Sreedharan, Chindu: Government sleeps while patents pirates steal our wealth,

Sunday Observer, July 14-20, 1996.

11. Moses Z. The pharmaceutical Industry Paradox. Reuters Business Insight, 2002.

REPORTS/ DOCUMENTS/ MINISTERIALCONFERENCES/ DECLARATIONS:

1. Cancun Ministerial Declaration, 2003.

2. Checklist of Issues, Prepared by the Secretariat, 26 January 1990, Negotiating Group

on Trade-Related Aspects of Intellectual Property Rights, including Trade in

Counterfeit Goods, Nr.163.

3. Communications from Argentina, Brazil, Chile, China, Colombia, Cuba, Egypt, India,

Nigeria, Peru, Tanzania and Uruguay, (later joined by Pakistan and Zimbabwe),

MTN. GNG/ NG11/W/ 71(14 May 1990).

4. Doha Ministerial Declaration 2001.

5. Draft Agreement on Trade Related Aspects of Intellectual Property Rights:

Communication by the United States. MTN, GNG /NG11/W/70(11 May, 1990); Draft

Amended to the General Agreement on the Tariffs and Trade on the Protection of

Trade- Related Intellectual Property Rights: Communication from Switzerland

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MTN.GNG/NG11/ W/73 (14 May 1990); Main Elements of a Legal Text for TRIPS,

Communication from Japan MTN. GNG/NG11/W /74 (15 May 1990).

6. Draft Agreement on Trade-Related Aspects of Intellectual Property Rights, MTN,

GNG/NGII/W/68(29 March 1990).

7. Draft Final Act Embodying the Result of the Uruguay Round of Multilateral Trade

Negotiations, MTN.TNG/W/35 (26November 1990).

8. Escudero, Sergio, International Protection of Geographical Indications and

Developing Countries, Trade – Related Agenda Development & Equity (T.R.A.D.E.)

Working Paper 10, 2001. (Geneva, South Centre). Available at: http:// www.south

centre.org/publication /geoindication//geoindications. pdf.

9. GATT, Agreement on Measures to Discourage the Importation of Counterfeit Goods,

Doc. L/4817 (31 July 1979).

10. GATT, Final Act Embodying the result of the Uruguay Round of Multilateral Trade

Negotiations, Doc. MTN/FA/Add .I (15 December 1993).

11. Geneva Ministerial Declaration, 1998.

12. Geneva Ministerial Conference, 2009.

13. Hong Kong Ministerial Conference, 2005.

14. League of Nations, Committee on Intellectual Cooperation, Minutes of the First

Session, Geneva, August 1st-5th, 1922.

15. League of Nations, the Records of the First Assembly, Meetings of the Committees, I

Geneva 1920.

16. Proposal by Switzerland, MTN. GNG/NG11/W/23(29 June 1988).

17. Report of the sub-Committee’s First Meeting on December 18th to 19th, 1922 in Paris

(United Nations Organization Geneva Archives).

18. Singapore Ministerial Declaration, 1996.

19. Seattle Ministerial Conference, 1999.

20. United Nations Conference on Trade and Development, “The Developing Countries

in GATT”, UNCTAD Document No. E/Conf.46/36, Geneva, March 1964.

21. United Nations; The Report of The First Session of the Preparatory Committee of the

United Nations conference on Trade Development ‘London,1946.

22. WIPO Document SCT/8/4, Standing Committee on Trademarks, Industrial Designs

and Geographical Indications, Eighth Session, Geneva, May 27-31, 2002, available

at: http://www.wipo.int/edocs/mdocs/sct/en/sct_8/sct_8_4.pdf .

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23. World Intellectual Property Organization- International Bureau (WIPO) (2001),

Geographically Indications: Historical background, nature of rights, existing systems

for protection and obtaining effective protection in other countries, prepared for the

Standing Committee on the Law of Trademarks, Industrial Designs and Geographical

Indications, sixth session, Geneva, 12-16 March,2001 (SCT/6/3).

24. World Drug Situation 1988, SCRIP 2000, Company Reports.

25. World Trade Organization, WTO Document IP/C/W/253,Council for Trade Related

Aspects Of Intellectual Property Rights, 22 October 2009 and IP/C/W/253 Rev.1,

available at:www.wto.org/english/tratop_e/trips_e/ipcw543_e.doc

26. WTO Document, IP/C/W/289, 29 June 2001, available at:

http://commerce.nic.in/trade/international_trade_matters_agreement_trips_submission

s_11. asp.

27. WTO Ministerial Conference, Declaration on the TRIPS and Public Health,

WT/MTN(01)/DEC/2 (Nov.20,2001)

28. World Trade Organization, Annual Report 2010; available at:

www.wto.org/members.

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