Intellectual Property Rights & TRIPS: An Overview

One of the 13 subjects for negotiation in Part I of the declaration dealing with trade in goods was the mandate on Trade Related Intellectual Property Rights (TRIPS). The essence of the mandate was to develop an effective and adequate standard of protection of intellectual property rights and a multilateral framework of principles, rules and disciplines dealing with international trade in counterfeit goods. The agreement laid the architecture for a uniform global treatment of IPR by providing for minimum standards of IP protection, national enforcement mechanisms and dispute settlement mechanisms.

GATT and IPR

Article IX: 6 was the only provision in the GATT that specifically dealt with the protection and promotion of IP. The Article dealt with distinctive regional or geographical names and did not lay down any standards of protection but rather called on States to corporate with each other on its protection. The first attempt at addressing questions of IPR within the GATT framework was made by the United States in 1978 towards the end of the Tokyo Round of multilateral trade negotiations. The focus at this point of time was to develop a plurilateral agreement on trade in counterfeit goods. No progress was made on this front due to lack of support from any country/bloc apart from the EC.The matter was raised again in the 1982 Ministerial meeting and the Ministerial Declaration included an instruction to the GATT council to look into the question of counterfeit goods and the appropriateness and modalities of joint action within the GATT framework to counter the same. The expert group constituted pursuant to the Ministerial Declaration called for enhanced international action to tackle the problem of trade in counterfeit goods but stopped short of agreeing that GATT was the right forum for this. The preparations for the Uruguay Round in 1986 arrested any further progress by the expert group, even as active efforts were made to include IP in the Round.

IPR in the Uruguay Round

The United States was the major force behind the inclusion of IP in the Uruguay Round. Ineffective protection of US IP abroad was thought to be undermining the competitiveness of the US industry by both the US Government and industry. The objective was to evolve substantial standards of protection of IP in other countries along with effective enforcement mechanisms. This objective had earlier found expression in the US Trade and Tariff Act of 1984 which states explicitly that adequate foreign IP protection is a major US objective in trade negotiations.

In the initial stages of the Uruguay Round it was only US and Japan that were at the forefront for the inclusion of IPR’s in the mandate of negotiations. As a consequence of this, the first two years of the TRIPS Negotiating Group was an effort towards clarifying its negotiating mandate. The United States wanted the mandate to extend to substantive standards of protection of IP and internal enforcement; other developed countries were measured in their response. In particular, EC had an ambivalent stand at the beginning due to the added complication of distribution of competences between member states as EC institutions now had exclusive competence in GATT related matters. However as negotiations proceeded industrialized countries including Australia, Canada, Switzerland, New Zealand and the Nordic countries joined the pro IP bandwagon recognizing their shared interests in the deal. Even as industrialized countries were on one page in relation to the need for substantial IP protection to be part of multilateral trade rules there were still differences among them on the scope of protection of certain IPRs and with respect to special measures for developing countries such as transition periods , ‘pipeline protection’ and compulsory licensing. The underlying consensus on the need for IP protection within the GATT framework among these countries ensured that differences as noted above did not end up derailing the agreement.

Developing countries on the other hand were apprehensive about the inclusion of IPR within the GATT framework. The reasons for such a stand include, the belief that the mandate of GATT should not extend beyond ‘goods’, that such an inclusion will intrude into the domestic policy space of these countries and adversely affect their sovereignty in pursuing socio-economic policies according to their own needs and finally that there was nothing to be gained from undertaking obligations when 99% of the global patents and other forms of IP are owned by industrialized countries. However in the midterm review meeting held at Montreal in 1988 it started to appear that some of these developing countries shifted their stand in favour of inclusion of IPR in the GATT framework. This change in stand was not due to any new found clarity on the need for stricter and stronger IP protection at a global level. The future of multilateral trading system and the market access it secured came to be linked with the success of the Uruguay Round and a successful completion of TRIPS agreement was increasingly seen as a prerequisite for such an outcome. This belief was buttressed by the fact that the WTO agreement created new trade rights and did not incorporate pre-existing rights of the GATT with the result that any Government not joining it would lose the rights they enjoyed prior to the agreement.  There was growing acceptance that refusing to deal with IP within the GATT will lead to a situation where developing countries will have to address it through bilateral agreements where the balance of power is further skewed in favour of developed countries. Further the potential benefits the agreement could bring in, in the fields of agriculture and textile was becoming clearer. Most importantly developing countries believed that using their collective bargaining power they could build into the agreement adequate flexibilities which will achieve a better balance of the interests of the developed and developing world.

Inherent Flexibilities in TRIPS

Although the mandate of TRIPS was to evolve a uniform global IP system with minimum standards of protection and effective enforcement mechanisms it does include a number of flexibilities that facilitate development and protection of public interest. In 1990 even as negotiations were in full swing to iron out differences between developed and developing countries , a draft TRIPS agreement was tabled by industrialized countries the focus of which was minimum protection , enforcement mechanisms and dispute settlement measures. In response to this draft, developing countries proposed their own draft legal text which aimed to maintain some flexibility in the agreement to allow countries to implement economic and social development objectives. The idea that was being emphasized was that intellectual property is not an end in itself and its objective should be the overall benefit of society as opposed to mere private benefit. These concerns of the developing countries found expression in Article 7 and 8 of the TRIPS of the agreement.

Article 7 and 8 of the agreement explicitly provide the important objectives and principals that need to be considered in the interpretation of the Agreement. Article 7 sets out the objective of the agreement to be promotion of technological innovation, transfer and dissemination of technology, production and use of technological knowledge while giving due attention to social and economic welfare. Article 8 gives countries the freedom to amend their laws to protect public health, nutrition and to promote public interest. Further, the preamble of the agreement recognizes underlying public policy objectives of countries in the protection of intellectual property rights which include developmental and technological objectives. A combined reading of Article 7, 8 and the Preamble of the agreement ‘in good faith in accordance with the ordinary meaning given to the terms of the treaty’ reveals that the agreement shows due deference to the domestic policy considerations of member countries. Thus even though TRIPS had its genesis in the strategic interests of the developed world , by the time the agreement was agreed and entered into , the developing world by virtue of its collective bargaining power had managed to incorporate certain flexibilities to make the agreement a more balanced framework for the protection and promotion of intellectual property.