Chapter 5

DISPUTE AaJUDlCATION IN TFUPS (1995-1999)

In our exhaustive treatment of GATTWTO dispute settlement mechanism in the

previous chapters, it is seen that the power-oriented dispute resolution was replaced by

law-oriented conflict settlement. The Understanding on Rules and Procedures Governing

the Settlement of Disputes (DSU) incorporated in WTO Agreement is responsible for

this transformation from "pragmatism" to "legalism" and it has often been referred as

"quantum leapu' in the history of international trade law. The "great debate" between the

"pragmatists" and "legalists" has already been discussed.

But no other agreement received as much resistance as the Agreement on Trade-Related

Aspects of intellectual Property Rights (TRIPS) did. The trading world was polarised

into two hostile camps during Uruguay Round negotiations - the first world led by the

United States aggressively pursuing the incorporation of TRIPS into the WTO agenda

for they were so much worried about the "free-riding" issue in the developing countries2;

and the third world led by India and Brazil opposing incorporation of TRPS in WTO

Agreement apparently because of two reasons:

(a) the developing countries were net importers of intellectual property, relying

heavily on the technology transfer from the first world for technological

development and prefered a relatively low level of protection of intellectual

property;'

' Judith H.Bello, 'Some Prachcal Obsewations about WTO Settlement of Intellectual Property Disputes', Virginia Journul of'lntemational Law, Val. 37, Winter 1997, p.358. 2 Frederick M.Abbot, "Protecting First World Assets in the Third World: Intellectual Property Negotiations m the GATT Multilateral Franlework', Vanderbilt Journal of Transnational Law, Vol. 22, 1989, pp. 689- 745; J.H.Reichman, 'Intellectual Property in International Trade: Opportunities and ksks of a GATT Connection', Vanderbiit Journal of Transnational Law, Vol. 22, 1989, pp. 747-892. ' Andrew T. Guzman, International Anti-trust and the WTO: The Lessonfrom Intellectual Property, Berkeley Law and Econonucs Working Paper Series 36, University of California, 2000-20, p.l7.(Also see layashree Watal, lnteliectual Property Rights in the WTO and Developing Counhies (Boston: Kluwer Academc Publishers, 2001); Robert P. Benko, Protecting Intellectual Property Rights: Issues and Controversir.~ (Washington D.C.: American Enterprise Institute for Public Policy Research, 1987); Dennis Campbell (ed.), World Intellectual Property Rights and Remedies (N.Y.: Ocean Publications, 1999); Keith E. Maskus, Intellectual Properly Rights in the Global Economy (Washington D.C.: Institute for International Economics, 2000), Carlos M. Correa, Abdulqawi A. Yusuff (eds.), Intellectual Pvoprrry and lnternational Trade; the TRIPS Agreement (London, Boston: Kluwer Law

(b) since most of the developing countries did not have a strong intellectual

property regime in their domestic legal systems, bringing TRIPS into the WTO

Agreement would drag them into fiequent litigation by the first world before

the WTO dispute settlement system not only for deficiencies in domestic

legislation but also for absence of strong enforcement m e a ~ u r e s . ~

But finally developing countries succumbed to pressure of the developed world and

acquiesced to incorporate the TRIPS Agreement under GATT purview.

Consequently, as explained by Article 64 of TRIPS Agreement, a complainant could

invoke WTO' s dispute settlement procedures for violation o f TRIPS provisions.

5.1 TRIPS Agreement

5.1.1 Dispute Sefflement in TRIPS

Article 645 of TRIPS Agreement says that:

1. The Provisions of Article XXU and XXIII of GATT 1994 as elaborated and applied by

the Dispute Settlement Understanding shall apply to consultations and the settlement of

disputes under thls Agreement except as otherwise specifically provided herein;

2. Subparagraphs l(b) and l(c) of Article XXIII of G A l T 1994 shall not apply to the

settlement of disputes under this Agreement for a period of five years from the date of

enhy into force of the WTO Agreement.

3. During the time period referred to in paragraph 2, the Council for TRIPS shall examine

the scope and modalities for complaints of the type provided for under subparagraphs

l(b) and I (c) of Article XXIII of GATT 1994 made pursuant to this Agreement, and

submit its recommendations to the Ministerial Conference for approval. Any decision of

International, 1998); George R. Stewart, Myra J. Tawfik and Maureen Irish (eds.), International Trade and Intellectual Properfy: The Search for a Balanced System ( Boulder: Westview Press, 1994.

Dreyfuss and Lowenfeld opine that the thrust of TRlPS initiative is to force the developing countries to move toward effective protection of intellectual property and hence much of the WTO litigation in this area will be between developed nation as complainants and developing nations as respondents. (see Rochelle Cooper Dreyfuss and Andreas F. Lowenfeld, 'Two Achevements of the Uruguay Round: Putting TRIPS and Dispute Settlement Together', Virginia Journal of International Law, Vo1.37, Winter 1997, pp.275-322.Also see Daniel J. Gewais, The TRIPS Agreement: Drafing Histoy and Analysis (London: Sweet & Maxwell, 1998); M.C.E.J.Bronckers, D.W.F. Verkade, N.M.McNelis (eds.), TRIPS Agreement. Enforcement of Intellectual Property Rights (Luxembourg: Office for Official Publications of the European Communities; Lanham Md.: Bernan Associates (distributor), 2000); Carlos Mans Correa, Intellectual Properfy Rights, the WTO and Developing Countries: The TRIPS Agrecrnent und Po1ic.v Options (New York: Zed Books, 1999).

the Mmrstenal Conference to approve such recomrnendabons or to extend the period in

paragraph 2 shall be made only by consensus, and approved recommendations shall be

effectrve, for all members wthout further fonnal acceptance process.

From this it is clear that Article 64 of TRIPS Agreement authorises the disputant to

invoke Article XXIl and Article XXlII of GATT upon which the dispute settlement

mechanism of W T O revolves. But subparagraphs l(b) and l(c) that deal with non-

violation complaint and situation complaint respectively, shall not apply to TRIPS

disputes for a period of five years from the date of entry into force of WTO Agreement.

However, during this period, the TRIPS Council could examine the scope of including

non-violation complaints and situation complaints under the purview of Article 64.

This phlegmatic approach towards non-violation and situation complaints would be

attributed to the absence o f case law that developed during the resolution of prior GATT

disputes." But this does not mean that GATT' s dispute settlement procedures were not

invoked on important cases. In fact it was invoked7 and GATT-1947 even had two

modest provisions in Ar t~c l e IX8 and Article XX (dl9 related to IPRs. Two more articles

' Article 64 m WTO, Annex 1 C, "Agreement on Trade-related Aspects of Intellecblal Properly Rights'' (hereinafter TRIPS .4greemmt) m the Results ofthe Uruguay Round of Multilateral Trade Negotiations: The Legal Tex1.s (Geneva: WTO, 1995). Dreyfuss and Lowenfeld , supra note 4, p.280.

7 The fust case was related to the US Manufacturing Clause, which prohibited the imports and distribution of certain copyrighted works in the United States and was found inconsistent with Article LX:l (US Manufacturing Clause, panel report adopted on May 15/16 GATT Doc. BISD 3 1Sn5; another one related to Japanese labelling practices on imperted wines and alcoholic beverages. However, it was held consistent with Article IX:6 of the G A T . (See Japan -Customs Duties, Taxes and Labellingpractices on Imported Wines and Alcoholic Beverages, panel report adopted on November 10, 1987 GATT Doc. BISD 34Sl84; also see David Harridge and h i n d Suhramanian, 'Intellectual Property fights: The issue in GATT', Vanderbilt Journal of Transnational Law, Vo1.22, 1989, pp.893-900. Rest of the two cases addressed Section 337 of the LIS. Tariff Act of 1930. This section enabled the U.S. International Trade Commission to accord less favourable treahnent to unported products allegedly infringing U.S. patents. The first panel ruled that the measure in questions fell under Article XX (d), that deal with intellectual property exceptions. (See U.S. Imports oflfertain Automotive Spring Assemblies, panel report adopted on May 25, 1983 GAlT Doc. BISD 30S/107. But the second panel overmled first panel's decision claiming it violated national treatment principle; see US Section 337 of the Tarif Act of 1930, panel report adopted on November 7, 1989 GATT Doc. BISD 363345. ' GATT Article IX:6 provides: The contracting parties shall cooperate with each other with a view to preventing the use of hadenames in

such manner as to misrepresent the m e origin of product ...(Q uoted in S.ICVerma, 'Resolution of Inter-state Intellectual Property Disputes', Foreign Trade Review, Vol.XXX1, No.4, January- March 1987. pp.21-39;also see Raj Bhala, International Trade Law Handbook (USA: Lexis, 2001)p.99.

GATT Article ?O((d) allows the measures by contracting parties . . .necessary to secure compliance with laws or regulations which are not inconsistent with the provisions of h s Agreement, including those relating.. . to the protection of patents, trademarks and copyrights, and the prevention of deceptive practices ... (See id. ,)

- Articles XI1 ( 3 ) an XVlII (10)" mentioned IPRs. But GATT was devoid of a strong

adjudicative or enforcement mechanism to address IPR issues. In fact, its predecessor

IT0 did have an entire chapter on restrictive business practices that included provisions

relating to rights under patents, trademarks and copyrights." But these deficiencies are

all settled m the WTO charter. In this chapter we will be discussing IPR disputes that

have come up before WTO paneuappellate body for adjudication.

Before enumerating the IPR disputes invoked under Article 64 of the TRIPS Agreement,

it would be helpful to elucidate the major articles of TRIPS Agreement first. This would

be followed by TRIF'S disputes that reached mutually agreed solutions and finally with

disputes that reached PanelIAppellate body stage.

5.1.2 General Provisions and Basic Principles

The WTO Agreement embodying the results of the Uruguay Round contains the

Agreement on Trade-related Aspects of Intellectual Property in Annex IC. The

Agreement, intending to reduce impediments to intemational trade and promote

adequate protection of intellectual property rights, emphasises the need for proper

enforcement of intellectual property rights and provides effective and expeditious

procedures for the multilateral settlement of disputes between the governments.

Part 1 of the Agreement enumerates general provisions and basic principles, especially

the obligation to provide "national treatment".12 Accordingly, each country shall accord

to the nationals of' other countries treatment no less favourable than that it accords to its

own nationals with regard to the protection of intellectual property. The most noteworthy

clause is the provision of most favoured nation treatment,13 a novelty in the history of

intemational intellectual property rights treaties. Under this provision, any advantage or

favour granted by a country to the nationals of any other country shall be accorded

immediately and unconditionally to the nationals of all other countries. The objective of

I , k c l e XII(3)(lii) and XVIII(10) require that import restrictions employed to safeguard the balance of payments and to assist economic development should not be applied in a manner that prevents compliance with patent, trademark, copyight or similar procedures. (See Karen D. Lee and Silke van Lewinski, 'The Settlement of International Disputes in the Field of Intellectual Property', in Friedrich Karl Beier and Gerhard Schricker (eds.), From GATT to TRIPS - The Agreement on Trade-related Aspects of Intellectual Property Rights (Germany: IIC Studies, 1996), pp.287-288.

' I The IT0 (Havrmu) Charier Text of the Charter for an International Trade Organisation (hereinafter Havanu Charter), Chapter V , Article 46, paragraphs 1, 2 and 3. For text of the Charter .see Raj Bhala, supra note 8, pp.134-139. " TRIPS Agreemenl, Amcle 3, .supra note 5 .

this Agreement is to promote technological innovation14 and international transfer of

technology. To achieve this objective, the Agreement categorises intellectual property

rights into seven and builds on the main existing international conventions and specifies

a number of standards of protection.

The study will deal with each of the TRIPS categories and the minimum standard of

protection as required by TRIPS ~greement."

1.Copyright und Reluted Rights

Regarding this category, the Agreement stipulates that parties should comply with the

substantive provisions of Beme Convention for the Protection of Literary and Artistic

Works signed in 1886 and as revised in 1971'~; however, they are not obliged to protect

the moral rights as provided in the convention." Copyright protection is extended to

expressions such as a literary or artistic work, and not to ideas, procedures, methods of

operation or mathematical formulae. Computer programmes would be getting protection

like literary works under the Beme b on vent ion.'^ It also lays down the conditions under

which compilations of data should be protected by copyright. The Agreement also

provides for rental rights, under which the titleholders of computer programmes and

cinematographic works are eligible to authorise or prohibit the commercial rental of their

works to the public.'"

Provisions are there to protect performers lYom unauthorised recording and broadcasting

of live performance (bootlegging) as well. The term of protection for performers and

producers of phonograms is 50 years.20 However, limitations imposed by Rome

13 Id., Article 4. ,I Id.. Amcle 7. " Id,, "Standards concerning the Availability, Scope and Use of Intellectual Property Rights", contained in Articles 9-40. 'Vd., h c l e 9. 1: Article 6bis of Beme Convention extends protection to moral rights as well. TRIPS Agreement stipulates that patties should comply with the substantive provisions of Beme Convention for the Protection of Literary and Artistic Works signed in 1886 and as revised in 1979; however, they are not obliged to protect the moral rights as provided in the Convention. (WIPO, Beme Conventionfor the Protection of Literary and Artistic Works [hereinafter Beme Convention] of September 9, 1886 as amended on September 28, 1979 (Geneva: WIPO). I R TRIPS Agreemenr. Arricle 10. supra note 5. 19 Id., Article 11 20 Id., Article 14.5

Convention of 1961 do apply.21 For the proper protection of copynight, the Agreement

also provides for "criminal procedures and penalties in cases of copyright piracy on

commercial scale" ''

2. Trademark,

The Agreement provides equal protection to trade and service marks. Any sign, or any

combination of signs, capable of distinguishing goods or services of one enterprise from

those of others will be eligible for registration as a trademark.23 For registration, signs

should be visually perceptible. Marks that are well known in a particular nation shall

enjoy additional protection. For determining whether a trademark is well known, public

knowledge of the mark in the relevant sectors is taken into account, including knowledge

resulting from promotion, i s . advertising.24 Registration of a trademark is for seven

years.2' However, the registration could be renewed indefinitely. The Agreement

prohibits the requirement that foreign marks be used in conjunction with local marks.

3. Geographical indicurions

The Agreement contains provisions that protect geographical indications. It is defined as

indications that identify a good as originating in a country, or a region or locality where a

given quality reputation or other characteristic of the good is essentially amibutahle to its

geographical origin.20 Nations are required to provide local means to prevent the use of

any indication in the designation or presentation of a good that misleads the public as to

the origin of the goods as well as to prevent any use that constitutes an act of unfair

competition. Additional protection is given for geographical indications for wines and

spirits.27 However, exceptions are given for names that have already become generic

terms, but a nation using such an exception must negotiate to protect the geographical

indication in question. TRIPS council shall hold further negotiations to establish a

multilateral system of notification and registration of geographical indications for wines.

2 I These conditions w~l l enable countries to impose reciprocity in some respects or to permit both private use and use for the purposes of teaching and scientific research with remuneration (see UNCTAD, Trade and Development Report, 1994, (UN: New York, 1995) p.191. 2 2 Id., Article 61, supru note 5 21 Id, Article 15. " Id., Amcle 16. " Id., Article 18. '" Id., Article 22. 2 - Id., Article 23 .

The Agreement assures protection for independently created industrial designs that are

new or original.2x However, such protection shall not extend to designs dictated by

technical or functional considerations. The owner of a protected design would be able to

prevent third parties from the manufacture, sale or importation of articles bearing a

design, which is a copy of the protected design.29 A special provision for new designs in

the textile sector is incorporated apparently because of their short life cycle and sheer

number.'" However, the Agreement also provides for "limited exceptions" as we1L3'

5. Patents

Perhaps the most important part of this agreement are those provisions dealing with

patents covered in eight article^.'^ Accordingly, protection will be available for any

invention, whether products or processes in all fields of technology. However, the

invention should be "new" involve an "inventive step" i.e. non-obvious and "capable of

industrial application". Patent rights are enjoyable without discrimination as to the place

of invention, the field of technology and whether products are imported or locally

produced.33 But for reasons of ordrepublic or morality or for protecting human, animal

or plant life or health or to avoid serious prejudice to environment, inventions may be

excluded from patentability.34

Besides, members may also exclude from patentability:35

(a) diagnostic, therapeutic and surgical methods for the treatment of humans or animals;

(b) plants and animals other than micro-organisms, and essentially biological processes for

the production of plants or animals other than non-biological and microbiological

processes

However, members should promulgate provisions that provide for the protection of plant

varieties either by patents or by an effective sui generis system or by any combination

" Id, Arhcle 25 '' Id., Article 26. 10 See WTO Webslte Overview, the TRIPS Agreement, www.wto.org/ englishltratop-elbips-elbips-e.hhn Visited on 27 November, 2001 " TRlPSAgreemenf, Article 26.2, supra note 5 . " Id., Articles 27-34. (It also became the most litigated category in the TRIPS Agreement.) " Id., Arhcle 27. '* Id. '' Id., Article 27.3.

thereof. These provisions would be reviewed four years after the date of entry into force

of the WTO ~g-eement."

The patent confers upon the owner the right to prevent others ffom making, selling or

importing a patented product without h s consent - be it process or product patent.

However, nations could provide exceptions to patent; but these exceptions should be

"limited because they should not unreasonably conflict with a normal exploitation of

the patent or unreasonably prejudice the legitimate interests of the patent owner, and

should take into account the legitimate interests of the third parties.37

Compulsory Licensing

The provisions relating to compulsory licensing are enumerated in Article 31 entitled

"Other Use Without Authorisation of the Right ~ o l d e r " . ~ ' Accordingly, if a patent

holder fails to "work" a patent within a reasonable period of time, the concerned

government could use the patent without the authorisation of the patent holder.

However, certain conditions are attached before invoking Article 31. Thus in situations

of national emergency, public non-commercial use, anti-competitive practices, etc. this

provision could be invoked?' Public health and nutrition are some other grounds.40

However, before granting a compulsory license, efforts should be made to obtain

authorisation from the patent holder. It should include paying adequate remuneration and

giving a reasonable period of time. And if such efforts fail within a reasonable period of

time, compulsory license could be granted. But, when "the circumstances that led to it

cease to exist and are unlikely to recuru4' the license could be revoked. Besides, the

granting of compulsory license must be subjected to judicial review. The Agreement

provides for a 20-year patent protection.42

" The TRIPS Agreement regardmg the protection of plant varieties offers a choice to the members - must be protectable either by patents, a suigeneris system or by any combination of the two. This choice reflects the existing disparity between the Law in the United States and that of European comtries. In the former, plant vaneties are patentable; whereas the latter protects by a sui generis system. Negotiators also granted a transitional period regarding the intellectual property protection in the area of living matter, apparently because t h ~ s issue is still at an embryo~c stage. (See Trade and Development Report, supra note 21). "Id., Article 30. 78 Id., Amcle 3 1 . (Also see Trade and Development Report, supra note 21, p.,190). " Id. 4" Id., Article 8. I I Id., Article 31(g) "Id. , Article 33.

6.Luy-out designs oflntegrated circuits4'

Regarding the protection of topographies of integrated circuit, the Agreement relies on

Intellectual Property in Respect of Integrated Circuits (the Washington Treaty) signed in

1989 and administered by World Intellectual Property Organisation (WIPO). Thus

selling, importing or distributing for commercial purposes a protected design without the

authorisation of the right holder is treated as unlawful. However, innocent purchasers of

infringing products are not treated as infringers, but they should pay a reasonable royalty

for the remaining goods sold after receiving notice of infringement. The term of

protection 1s 10 years from first commercial exploitation.

The Agreement provides for protection of trade secrets or how-how against unfair

competition as provided in Article 10 bis of the Paris Convention (1967)."~ However,

such know-how must be secret and have a commercial value, and the person who has the

know-how must be in lawful possession of it. Thus the test data submitted by

pharmaceut~cal or agricultural chemicals to the governments for obtaining marketing

approval are also protected against unfair commercial use.

The final section of this part acknowledged the existence of anti-competitive practices in

contractual licenses that impede the 'ansfer and dissemination of technology. Under this

section, a nation could legislate to prevent such practices that constitute an abuse of

I3 Id., Articles 35-38. 44 id., h c l e 39. '' WlPO, Paris (bnvmtiun for the Protection ofIndustria1 Property [hereinafter Paris Convention ] , March 20,1883 as amended on September 28, 1979, Article lob'' [Unfair Competition] reads:

(1) The countries of the Union are bound to assure to nationals of such countries effective protection against unfair competition.

(2) Any act of competition contrary to honest practices in industrial or commercial matters constitutes an act of unfair competition.

(3) 'The following in particular shall be prohibited: 1, all acts uf such a nature as to create confusion by any means whatever with the establishment, the goods, or the industrial or commercial activities, of a competitor; 2. false allegations in the course of trade of such a nature as to discredit the establishment, the goods, or the industrial or commercial activities, of a competitor; 3, ~ndications or allegations the use of which in the course of trade is liable to mislead the public as to the nature, the manufacturing process, the characteristics, the suitability for their purpose, or the quantity, of the goods.

'6 TRIPS Agreement. Article 40, supra.note 5.

intellectual property rights. It also provided for consultations between governments on

such cases.

5.1.3 Enforcement of InteUectual Property Mghts4'

The TRlPS Agreement obliges countries to take effective action to prevent infnngernent

for the enforcement of intellectual property rights. It calls for fair and equitable

procedures, appropriate judicial mechanism, criminal and civil procedures, damages etc.

Civil and Cr~mrnrrl ~ r o c e d u r e s ~ ~

The TRIPS Agreement outlines fair and equitable procedures for the proper enforcement

of intellectual property rights.49 Aggrieved party would be allowed to be represented by

independent counsel."' If necessary, evidence presented before the judicial authorities

should be kept confidential." If an imported good involves infnngernent of an

intellectual property right, the judicial authorities could order to prevent "entry into the

channels of ~ommerce".'~ The authorities could also order the infnnger to pay adequate

damages,'j which should cover the costs of injury and litigation. If the allegation are

wrongly levelled and an abuse of enforcement procedures is proved, the court could

order that the defendant should be indem~~ified.'~

If there is a delay in imparting justice that could result in irreparable harm to the right

holder, the judicial authorities could initiate provisional measures. Here again the

defendent could be indemnified if the complaint is proved wrong.55

A right holder could request the customs authorities to suspend importation of

counterfeit trademark or pirated copyrighted goods.56 However, in such cases adequate

" Part I11 of the 7RIF'S Agreement is concerned with 'Enforcement of Intellectual Property Rights'. It is divided into five sections (each one dealing with "General Obligation", "Civil and Administrative Procedures and Remedies", "Provisional Measures", "Special Requirements Related to Border Measures" and "Criminal Procedures") and contained in twenty one articles (Articles 41-61), id.

Id., Articles 42-49. 49 Id., Article 42 Id

" Ici., Article 43. 52 Id., Article 44. " I ~ i , , Article 45. 54 Id, Article 48

1~1.. Article 50. 56 Id., Article 5 1

evidence should be provided to the competent authorities. Besides, the authorities could

also demand security from the ~orn~lainant.~'

The TRLPS Agreement provides for criminal procedures and penalties in two cases -

wilful trademark counterfeiting or copyright piracy on a commercial scale.'* In such

cases, remedies could include imprisonment andlor monetary fine sufficient to provide a

deterrent; seizure, forfeiture and destruction of the infringing goods.

5.1.4 Dispute Settlement

Article 64 of the TRIPS Agreement states that Articles XXII and XXIII of GATT 1994

as elaborated by DSU shall apply to TRIPS cases as well. However, provisions of non-

violation complaints and situation complaints could not be invoked in TRZPS cases till

the end of 2000.'" Member nations are also obliged to maintain "transparency" by

publishing and notifying all laws and regulations, and final judicial decisions and

administrative rulings to the TRIPS Council. This would enable the Council to examine

the implementation of the TRIPS ~greement.~'

5.1.5 Transitional Arrangements

Even though the TRIPS Agreement does not differentiate between countries vis-a-vis

their stage of technological development, it provides for "transitional arrangements1"'

regarding implementation. Accordingly, when the WTO Agreements took effect on 1

January 1995, developed nations were given one year to promulgate law and practices

that conforn~ with TRIPS ~greernent.~' Developing countries along with countries in the

process of transformation from a centrally-planned to a he-enterprise economy would

have a five year transition period63; and the least developed countries would get a 11

year transition period.

57 Id., Article 51. 58 However, t lus could be extended to other cases of infringement of intellectual property rights as well, if they were committed wilfully and on a commercial scale (See id, Article 61.) 59 I d , Article 64.

1~1.. Article 63. hl 1~1.. Article 65. b2 Id., para 1 63 Id., paras 2 and 3

Developing countries that do not have a product patent regime would get an additional

five years (i.e. ten years in fofo) to provide patent protection.64 However, in such cases

they should accept the filing of patent applications for pharmaceutical and agricultural

chemical products from 1 January 1995. This is popularly known as the "pipeline"

protection. Thus developing nations that do not have product patent regime should create

a "mail box" system to receive patent applications. After the expiration of the transitional

period, they should prov~de patent protection to such products for the rest of the period.65

During this period "exclusive marketing rights" should be granted to such products66 for

a period of five years.

5.1.6 The TRIPS Councilb-

The Agreement also establishes a Council for Trade-related Aspects of Intellectual

Property Rights. T h ~ s Council is supposed to monitor the operation of this Agreement. It

shall also provide a venue for the nations to discuss TRIPS matters. The Council shall

also oversee the compliance of countries with their TRIPS obligations. Under Article 63,

every country is supposed to notify its laws and regulations to TRIPS The

Council shall also provide assistance to needy nations in matters related to TRIPS

provisions in the context of dispute settlement procedures. The Council will also work

hand in hand with other organisations like World Intellectual Property Organisation

(WIPO).

5.2 TRIPS Disputes

Those cases that have reached mutually satisfactory solution and cases that have been

adjudicated by the PaneVAppellate body would be dealt in this section. This study will

focus on those TRlPS cases filed during the first five years of WTO i.e., from 1 January

1995 to 31 December 1999. There were eight cases that were solved through

consultations - two of them regarding patents; two on copyright and four on enforcement

of TRIPS provisions. Seven disputes reached the PaneVAppellate stage. The rest of the

04 Id., para 4. "'Id.. Amcle 70.8. "' Id , Article 70.9.(Both these articles (70.8 and 70.9) were dealt in the India - Patent Cases (WTDS 50 and WTDS 79) whch would be explained at a later stage (See in@a notes 106-142). 67 Id., Article 68.

/d . Article 63.

five cases did not reach the panel; neither was a mutually satisfactory solution found. A

summary of all these cases is presented in the following table.

Table 1: The TRlPS Cases (1995-1999)

SI Dispute Complainant Defendant Area of Dispute No Number

.~ -- 1. WTIDS 28 Unlted States Japan Copyrights 2. WTIDS 36 United States Pakistan Patents 3. WTIDS 37 United States Portugal Patents 4. WTIDS 42 European Communities Japan Copyrights 5. WTIDS 5 0 United States India Patents 6. WTIDS 59 United States Indonesia Trademarks 7. WTIDS 79 European Communities India Patents 8. WTIDS 82 llnited States Ireland CopynghtslEnforcement 9. WTIDS 83 Umted States Denmark Enforcement 10. WTIDS 86 Un~ted States Sweden Enforcement I I . WTIDS 1 14 European Communities Canada Patents 12. WTDS 1 15 lJnited States European Communities CopyrightsEnforcement 13. WT/DS I24 United States Greece Enforcement 14. WTIDS 125 United States European Communities Enforcement 15. WTIDS 153 Canada European Communities Patents 16. WTIDS 160 European Communities United States Copyrights 17. WTIDS 170 United States Canada Patents 18. WTIDS 171 United States Argentina Patents 19. WTIDS 174 United States European Communities TrademarkslGeographical

Indications 20. WTIDS 176 European Communities United States Trademarks

The Table shows that 20 disputes related to intellectual property were filed in the first

five years. The Table clearly demonstrates that TRIPS provisions were invoked by

developed nations alone. It also indicates that the United States is the major TRIPS

complainant - 14 times. The European communities (five times) and Canada shared

rest of the 6 disputes (once).

However, the developing nations were brought before the dispute settlement

mechanism, five times as defendants. They include India, Pakistan, Argentina and

Indonesia. The United States and the European Communities brought two disputes

against India on identical grounds respectively. Both of them related to transitional

measures relating to patents. A similar complaint was brought by the United States

against Pakistan as well. But the complaint brought against Indonesia was a non-

sensical one and was without any merit. All these complaints are dealt with

separately. The discussion begins with cases that reached mutually satisfactory

solutions.

5.2.1 Mutually Agreed Solutions

Pakistan - Putent Protection for Pharmaceutical and Agricultural Chemical Products

This case was initiated by the United States against Pakistan due to the latter's absence of

either patent protection for pharmaceutical and agricultural chemical products or a

system to permit the filing of applications for pharmaceutical and agricultural chemical

product patents and a system to grant exclusive marketing rights in such products.69

Under Article 65, certain transition arrangements are made by which a developing

country member is entitled to delay the implementation of TRIPS Agreement for a

period of five years from the date of entry into force of the WTO Agreement (January 1,

1995). However, such members are obliged to establish "a means" by which applications

for patents could be filed (70.8)" and grant exclusive marketing rights (EMRs) (70.9)."

These obligations were to be fulfilled on the date of entry into force of the WTO

Agreement.

But Pakistan's law did not provide product patent protection for pharmaceutical or

agricultural chemical inventions, or a system that conformed to Articles 70.8 and 70.9 of

the TRIPS ageement with regard to the filing and examination of application and the

09 WTO, Pakistan. Patent Protection for Pharmaceutical and Agricultural Chemical Pmducts [hereinafter Pakistan patents case]. 'Request for Consultations by the United States', WTO Doc., WTIDS3611 (IPDR), dated 30 April, 1996. 70 TRIPSAgrerment, Article 70.8, supra note 5 states that:

Where a Member does not make available as of the date of entry into force of the WTO Agreement patent protection for pharmaceutical and agricultural chemical products commensurate with its obligations under Article 27, that Member shall: (a) notwithstanding the provisions of Part VI, provide as from the date of entry into force of the WTO Agreement a means by which applications for patents for such inventions can be filed; (b) apply to these applications, as of the date of application of this Agreement, the criteria for patentability as laid down in this Agreement as if those criteria were being applied on the date of filing in that Member or, where priority is available and claimed, the priority date of the application; and (c) provide patent protection in accordance with this Agreement as from the grant of the patent and for the remainder of the patent term, counted from the filing date in accordance with Article 33 of this Agreement, for those of these applications that meet the criteria for protection referred to in subparagraph (b).

- 1 I d , Article 70.9, reads: Where a product 1s the subject of a patent application in a Member in accordance with paragraph 8(a), exclusive marketing rights shall be granted, notwithstanding the provisions of Part V1, for a period of five years after obtaining marketing approval in that Member or until a product patent is granted or rejected in that Member, whichever period is shorter, provided that, subsequent to the entry into force of the WTO Agreement, a patent application has been filed and a patent granted for that product in another Member and marketing approval obtained in such other Member.

grant of EMRs, thereby creating inconsistency vis-a-vis Articles 27:' 65 and 70 of the

TRIPS Agreement.

Accepting the complaint, Pakistan reached a mutually agreed solution with the United

states7'

President Farooq Ahmed Khan Leghari issued an 0rdinanceY4 which provided that all

applications filed after I January 1995 shall be considered validly filed. Accordingly, the

Government of Pakistan would issue regulations implementing the Ordinance providing

that any person who would first file an application for patent protection for

pharmaceutical or agricultural chemical product in another WTO member after the date

of Ordinance was issued would be able to file an application with Pakistan's patent

authorities and,

(i) until 1 January 2000, have as their filing date the date of application as received

by such authorities, or

(ii) after 1 January 2000, have the right to claim priority under the rules laid down in

Article 4 of the Paris convention7' for the Protection of Industrial Property.

-. 72 Id. Article 27 stales that:

1. Subject to the prov~sions of paragraphs 2 and 3, patents shall be available for any inventions, whether products or processes, in all fields of technology, provided that they are new, lnvolve an inventive step and are capable of industrial application. Subject to paragraph 4 of Artlcle 65, paragraph 8 of Article 70 and paragraph 3 of this Article, patents shall be available and patent rights enjoyable without discrimination as to the place of invention, the field of technology and whether products are imported or locally produced. 2. Members may exclude from patentability inventions, the prevention within their territory of the commercial exploitation of which is necessary to protect ordre public or morality, including to protect human, animal or plant life or health or to avoid serious prejudice to the environment. provided that such exclusion is not made merely because the exploitation is prohibited by their law. 3. Members may also exclude frompatentability: (a) diagnost~c, therapeutic and surgical methods for the treatment of humans or animals; (b) plants and animals other than micro-organisms, and essentially biological processes for

the production of plants or animals other than non-biological and microbiological processes. However, Members shall provide for the protection of plant varieties either by patents or by an effective sui generis system or by any combination thereof. The provisions of this subparagraph shall be reviewed four years after the date of entry into force of the WTO Agreement.

73 WTO, Pakistan: Patent Protection for Pharmaceutical and Agricultural Products, 'Notification of a Mutually Agreed Solution', WTO Doc., WTDS 3612 dated 28 February 1997. 74 Ordinance KoXXVI of 1997, dated 4 February 1997 cited in id. 75 Paris Cunvmtro,~, Anicle 4 , supra note 45 states that: -

(1) Any person who has duly filed an application for a patent, or for the registration of a utility model, or of an Industrial design, or of a trademark, in one of the countries of the Union, or his successor in title, shall enjoy, for the purpose of filing in the other counbies, a right of priority during the periods hereinafter fixed.

The Ordinance also stipulated measures to implement obligations in Article 70.9 that

provides E m s . Thus EMRs will be granted where:

(i) the applicant is granted a patent and marketing approval on the product that is the

subject of application in another WTO member; and

(ii) the applicant is granted marketing approval in Pakistan.

The period of EMRs, shall be for a period of five years after these conditions are met or

until a product patent is granted or rejected in Pakistan, whichever term is shorter. Under

no circumstances will the EMRs be subject to any limitation or exception, including the

imposition of a compulsory license. Thus no party will be granted marketing approval

for a product that is the subject of EMRs without the express consent of the holder of

such EMRs. Based on this Ordinance, the U.S. withdrew the complaint.

Portugal - Patent Protectzon under the Industrial Property Act

This complaint was filed by the United States against Portugal. The measure in dispute

related to the term of patent protection in Portugal, which was lesser than that which was

provided under TRIPS Agreement. Article 3376 of the TRIPS Agreement states that the

term of patent protection is twenty years from the filing date. The U.S. contended that

the term granted to existing patents under the Portuguese Industrial Property Act

appeared to be inconsistent with Portugal's obligations under the TRIPS Agreement and

Portugal being a developed country had to implement the law from 1 January 1996

onwards."

Accepting the content~ons of the United States, Portugal issued a Decree Law whch

provides that all patents granted after this date based on applications that were pending

on 1 January 1996, would receive a term of protection that lasted either 15 years from

the date of grant of the patent or 20 years from the effective filing date of the patent,

whichever term is longer." The dispute thus reached a mutually agreed solution.

'' TRIPS Agrrrmmr, Article 33, supra note 5 reads: The term of protection available shall not end before the expiration of a period of twenty years counted from the fil~ng date

'' WTO, Portup1 paten^ Protection Under Industrial Properg Act, 'Request for Consultations', WTO Doc., WTIDS 3 7 1 dated 30 April, 1996. 7% Decree Law 141196, quoted in WTO, Portugal: Patent Protechon Under Industrial Properg Act, 'Notification of a Mutually Agreed Solution', WTO Doc., WTDS 3712 dated 3 October 1996.

Japan - Meustires C 'owcerning Sound Recordings

This complaint was filed by the United States against ~ a ~ a n . ' ~ As per the TRIPS

Agreement, all WTO members should provide certain civil rights and remedies in sound

recordings originating in other WTO members; grant national and most favoured nation

treatment to such sound recordings and also provide criminal procedures and penalties

for the commercial piracy of sound recordings. Developed nations like Japan should

comply with these provisions from 1 January 1996. But the Japanese legal regime for the

protection of sound recordings in Japan was inconsistent with TRIPS provisions.80 The

U.S. also cited the absence of sufficient protection to past performances.8'

The European Community filed a similar complaint as well. The complaint sought Japan

to implement legislation relating to its TRIPS obligation (in particular Law No.112 of

1 9 9 4 ) . ~ ~ The EC contended that Japan, by virtue of Articles 14.6~' and 7 0 . 2 ~ ~ of TRIPS

79 WTO, Japan. Measures Concerning Sound Recordings, 'Request for Consultations' by the United States, WTO Doc.. WTIDS 281 dated 14 February 1996. 80 Id. 81 WTO, Jupun. Meusure~ (bncerning Sound Recordings, 'Notification of Mutually Agreed Solution', WTO Doc.. WTUS 2814 dated 5 February 1997. 82 WTO, J a p m Merrsurrs Concerning Sound Recordings, 'Request for Consultation' by the European Communities, WTO Dw.. WTiDS 4211 dated 17 November, 1997. 83 TRIPS Agreement, Article 14, supra note 5 reads:

1. In respect of a fixation of their perfonnance on a phonogram performers shall have the possibil& of preventing the following acts when undertaken without their authorization: the fixation of their unfixed perfonnance and the reproduction of such fixation. Performers shall also have the possibility of preventing the following acts when undertaken without their authorization: the broadcasting by wireless means and the communication to the public of their live perfommnce. 2. Producers of phonograms shall enjoy the right to authorize or prohibit the direct or indirect reproduction of their phonograms. 3. Broadcast~ng organizations shall have the right to prohibit the following acts when undertaken without their authorization: the fixation, the reproduction of fixations, and the rebroadcasting by wireless means of broadcasts, as well as the communication to the public of television broadcasts of the same. Where Members do not grant such rights to broadcasting organizations, they shall provide owners of copyright in the subject matter of broadcasts with the possibility of preventing the above acts, subject to the provisions of the Beme Convention (1971). 4. The provisions of Article 1 I in respect of computer programs shall apply mutatis mutandis to producers of phonograms and any other right holders in phonograms as determined in a Member's law. If on 15 April 1994 a Member has in force a system of equitable remuneration of right holders in respect of the rental of phonograms, it may maintain such system provided that the commercial rental of phonograms is not giving rise to the material impairment of the exclus~ve rights of reproduction of right holders. 5. The term of the protection available under this Agreement to performers and producers of phonograms shall last at least until the end of a period of 50 years computed from the end of the calendar year in which the fixation was made or the performance tookplace. The term of protection granted pursuant to paragraph 3 shall last for at least 20 years from the end of the calendar year in which the broadcast tookplace.

Agreement in conjunction with Article 18 of the Beme Convention (1971),'~ was

required to grant copyright protection to producers and performers of sound recordings

for a period of 50 years from the end of the year in which the fixation was made or the

performance took place and which had not yet fallen into public domain.

T h ~ s implied that those works which had come into existence since 1 January 1946 had

to be given TRIPS level protection for the remainder of the 50 year period. This is

because the TRLPS Agreement became effective for the developed country members of

the WTO on I January 1996. However, the Japanese Legislation of 1994 (Law No. 112)

only provided for protection of those sound recordings produced after 1 January 1971.

As a consequence to these complaints Japan reached a mutually agreed solution and had

initiated amendments to the Japanese Copyright Law on 26 December 1996. This law

(Law No.117) which entered into force on 25 March 1997, provided protection to

performers and producers of sound recordings in accordance with the provisions of

TRIPS ~ c t . ' "

6. Any Member may, in relation to the rights conferred under paragraphs 1, 2 and 3, provide for conditions, limitations, exceptions and reservations to the extent permitted by the Rome Convention. However, the provisions of Article 18 of the Beme Convention (1971) shall also apply, mututis mutandis, to the rights of performers and producers of phonograms in phonograms.

1'1. Article 70.2 states that: Except as otherwise provided for in this Agreement, this Agreement gives rise to obligations in respect of all subject matter existing at the date of application of this Agreement for the Member in question, and which is protected in that Member on the said date, or which meets or comes subsequently to meet the criteria for protection under the terms of this Agreement. In respect of this paragraph and paragraphs 3 and 4, copyright obligations with respect to existing works shall be solely determined under Article 18 of the Beme Convention (1971), and ob?,gations with respectio the rights of producers of phonograms and performers in existing phonograms shall be determined solely under Article 18 of the Berne Convention (1971)Bs mad'applicable under paragraph 6 of Article 14 of this Agreement.

85 Berne Convention. Article 18, supra note 17 states that: (1) This Convention shall apply to all works which, at the moment of its coming into force, have not yet fallen into the public domain in the country of origin through the expiry of the term of protection. (2) If however, through the expiry of the term of protection which was previously granted, a work has fallen into the public domain of the country where protection is claimed, that work shall not be protected anew. (3) The application of this principle shall be subject to any provisions contained in special conventions to that effect existing or to be concluded between counhies of the Union. In the absence of such provisions, the respective countries shall determine, each in so far as it is concerned, the conditions of application of this principle.

86 WTO, Japan: Measurm Concerning Sound Recordings, 'Notdcation of a Mutually Agreed Solution', WTO Doc., WTDS 4214 dated 17 November 1997.

Denmark - Meusurrs Affecting the Enforcement of Intellectual Property ~ i ~ h t s "

This case initiated by the United States against Denmark was related to the enforcement

aspects of intellectual Property Rights. The complainant in thls case contended that

Denmark has failed to make "provisional measures" available in the context of civil

proceedings involving intellectual property rights. This was violative of Article sog8 of

the TRIPS.

Consequently, the Denmark Parliament passed amendments to the Administration of

Justice Act on March 20,2001. The Act granted the relevant judicial authorities power to

order provisional measures in the context of intellectual property rights. Henceforth, the

judicial authorities were bestowed with the power to decide that an investigation could

be carried out at the place of the defendant to secure evidence. This could be done

'' WTO, Denmurk Measures Affecting the Enforcement of Intellectual Property Rights, 'Request for Consultations by the United States', WTO Doc., WT DS 8311 dated 14 May 1997. 88 TRIPS Agreement, Article 50, supra note 5 says:

1. The judicial authorities shall have the authority to order prompt and effective provisional measures: (a) to prevent an infringement of any intellectual property right from occurring, and in particular to prevent the entry into the channels of commerce in their jurisdiction of goods, including imprted goods immediately after customs clearance; (b) to preserve relevant evidence in regard to the alleged infringement. 2. The judicial authorities shall have the authority to adopt provisional measures inaudita alteru parte where appropriate, in particular where any delay is likely to cause irreparable harm to the right holder, or where there is a demonstrable risk of evidence being deshoyed. 3. The judicial authorities shall have the authority to require the applicant to provide any reasonably available evidence in order to satisfy themselves with a sufficient degree of certainty that the applicant is the right holder and that the applicant's right is being infringed or that such infringement is imminent, and to order the applicant to provide a security or equivalent assurance sufficient to protect the defendant and to prevent abuse. 4. Where provisional measures have been adopted inaudita alfera parte, the parties affected shall be given notice, without delay after the execution of the measures at the latest. A review, including a right to be heard, shall take place upon request of the defendant with a view to deciding, within a reasonable period after the notification of the measures, whether these measures shall be modified, revoked or confirmed. 5. The applicant may be required to supply other information necessary for the identification of the goods concerned by the authority that will execute the provisional measures. 6 . Without prejudice to paragraph 4, provisional measures taken on the basis of paragraphs 1 and 2 shall, upon request by the defendant, be revoked or otherwise cease to have effect, if proceedings leading to a decision on the merits of the case are not initiated within a reasonable period, to be detemuned by the judicial authority ordering the measures where a Member's law so permits or, in the absence of such a determination, not to exceed 20 working days or 3 1 calendar days, whchever is the longer. 7 . Where the provisional measures are revoked or where they lapse due to any act or omission by the applicant, or where it is subsequently found that there has been no infringement or threat of infringement of an intellechlal property right, the judicial authorities shall have the authority to order the applicant, upon request of the defendant, to provide the defendant appropriate compensation for any injury caused by these measures.

without prior notification, for th~s would cause a risk of removal, desbvction or

modification of objects, documents, information in computer systems etc.

These amendments were signed into law as Act No.216 - Act on Amendment of the

Administration of Justice Act and Act on Court Fees (Securing of Evidence in Cases of

lnfnngement of intellectual Property kghts, etc.) on March 28,2001 .89

Ireland - Meusures AJgcting the Grant of Copyright and Neighbouring Rights

In this case, the Un~ted States alleged that Ireland's copyright law obligations under

the TRIPS Agreement were inconsistent, i.e., with Section 1 of Part 11, and Article 70

of the TRIPS ~~reement. 'O~owever in a communication dated 6 November 2000, the

United States, Ireland and the European Communities notified the Dispute Settlement

Body that a mutually agreed solution was reached. Accordingly, Ireland would first

pass a bill to address these issues and would then amend its copyright law in

conformity with TRIPS. Ireland complied with this by way of the Intellectual

Property (Miscellaneous Provisions) Act 1998 (28 of 1998), and by passing the

Copyright and Related Act 2000 (28 of 2 0 0 0 ) . ~ ~

Sweden - Meusures Afecting Enforcement of Intellectual Property Rights

This complaint was initiated by the United States. The context of the complaint was

similar to that of the previous one, i.e., absence of enforcement measures in Sweden

under Article 50 of TNPS.~'

Based on this complaint, the Swedish Parliament has passed legislation on 25

November, 1998 amending Sweden's Copyright Act, Trademarks Act, Patents Act,

Design Protection Act, Trade Names Act, Act on Protection of Semiconductor Products

8. 'To the extent that any provisional measure can be ordered as a result of administrative procedures, such procedures shall conform to principles equivalent in substance to those set forth in this Section.

89 WTO, Denmurk. Measures Affecting the Enforcement of lntellechral Property Rights, 'Notification of Mutually Agreed Solution', WTO Doc., WTiDS 8312 dated 7 June 2001. 90 WTO, Irelund. Meusures Affecting the Grant of Copyright and Neighbouring Rights, WTO Doc., WTiDS82il dated 22 May, 1997.(Also see European Communities: Measures Affecting the Grant of Copyright and Neighbouring Rights, WTO Doc., WT/DS115/1 dated 12 June 1998) 9' WTO, Ireland: Measures Affecting the Grant of Copyright and Neighbouring Rights, WTO Doc., WTiDS8213 and European Communities: Measures Affecting the Grant of Copyright and Neighbouring Rlghu, WTO Doc., WTlDS11513 dated 13 September 2002. 92 WTO, Sweden Meusurr.~ Affecting the Enforcement of lntellectunl ProperQ Rights, 'Request for Consultations by the United States', WTO Doc., WTiDS 8611 dated 2 June 1997.

and Plant Breeders Protection Act, thereby fulfilling its obligation under TRIPS

~greement."' Accordingly judicial authorities were empowered to order provisional

measures in the context of civil proceedings involving intellectual property rights. The

court could order a search for infringing materials, documents or other relevant evidence,

if it believed that a person has taken or is about to take action to infringe intellectual

property rights. If there is a risk that materials or documents could be removed,

destroyed or altered, the search may be ordered inaudita altera parte. This legislation

came into effect on 1 January 1999.

European Chmmunrtres - Enforcement of Intellectual Proper@ Rights for Motion

Pictures and Telev~sion Programmes

This complaint made by the United States against the European ~ o m m u n i t i e s ~ ~ was

regarding Part I11 of the TRIPS Agreement that dealt with enforcement of Intellectual

Property Rights. The complaint was addressed to Greece, a member of the European

Community.The United States alleged that television stations in Greece regularly

broadcast copyrighted motion pictures and television programmes without the

authorisation of copyright owners. Despite efforts by US right holders to prevent such

infringements and to pursue their rights in Greece, copyrights owned by US nationals

were infringed continuously. The United States contended that this was violative of

Article 41" and 61 of the TRIPS Agreement.

This matter raised by the United States in WTDS 12411 and WTDS 12511 dated 7 May

1998 reached a mutually satisfactory solution, when Greece passed legislation on 13

October 1998 (Law 2644198)." Article 17 of this Law authorised enforcement

authorities to close down television stations that infringe the rights of copyright

holders." To ensure an effective deterrent against piracy, Greece would continue to

93 WTO, Sweden. Me~su~-es Affecting Enforcement of Intellectual Property Rights, 'Notification of mutually Agreed Solution', WTO Doc., WTDS 8612, dated 11 December 1998. 9' WTO, European Communities: Enforcement of Intellectual Property Rights for Motion Pictures and Television Programmes, 'Request for Consultations by the United States', WTO Doc., WTIDS 12411, IPIDI13 dated 7 May 1998.(Also see WTO, Greece: Enforcement of Intellectual Property Rights for Motion Plcturec und Television Programmes, 'Request for Consultations by the United States', WTO Docs, WTDS 12411 and WTIDS 1251 1 dated 26 March, 2001.) 95 TRIPS Agrermmr, Article 50, supra note 5.(Also see supra note 88 for texhlal treatment of Article 50). 96 WTO, Greece. Enjbrcemenz of Intellectual Property Rights, 'Notification of Mutually Agreed Solution.' WTDS 12512 (Also see WTDS 12412 dated 26 March, 2001). 97 Greece noted that it had taken action under Article 17 to close down four television stations that were proven to have broadcasted illegally copyrighted works (see id.)

enforce Article 17 of Law 2644198, Article 4 of Law 2328195, the Copyright Law and

the relevant provisions of Greek legislation. Greece also assured the US that for the

effective administrative supervision of television stations vis-a-vis their compliance with

copyright laws, it would employ its best endeavour^.^^

Putent Protectron rn Argentina '9

Argentina provided ten-year term of protection against unfair commercial use for

undisclosed test data or other data submitted to Argentinean authorities in support of

application for marketing approval for agricultural chemical products. However, on

August 1998, the Government of Argentina issued a regulation (Regulation 440.98).

This regulation inter uliu revoked all earlier regulations. But it did not contain any

provision that provide effective protection for test data submitted in support of

application for getting exclusive marketing rights (EMRs) under 7 0 . 9 . ' ~ ~

Hence, the United States alleged that Argentinean legal system did not provide a

system that conformed to Article 70.9 of the TRIPS. Hence it was violative of Article

39.3"' of the TRLPS Agreement. The United States also alleged that this change in

law resulted in "lesser degree of consistency with the provisions of Article 65.5". In a

subsequent complaint,'02 the United States contended that Argentinean patent law was

inconsistent with TRIPS provisions regarding compulsory licenses (Article 31(k),

exclusive marketing rights (Article 70.8 and 70.9), import restrictions (Articles 6 and

28.1), product by process patent protection (Article 28.2(b)), burden of proof in

process infringement cases (Article 34), injunctions (Article 50), patentability of

micro-organisms (Article 27.3(b) and transitional patents (Article 70.4 and 70.7).

Consequently, both parties reached a mutually agreed solution when Argentina agreed

98 Id. 99 WTO, Argenlinu: Putenr Protection for Pharmaceutical Products, 'Request for Consultations' by the United States, WTO Doc., WTDS 17111 dated 10 May 1999. Ion TRIPSAgreement. Article 70.9, supra note 5. In' Id., Article 39.3 reads:

Members, when requiring, as a conditions of approving the marketing of pharmaceutical or of agricultural chemical products which utilise new chemical entitities, the submission of undisclosed test or other data, the origination of which involves considerable effort, shall protect such data against unfair commercial use. In addition, members shall protect such data agalnst disclosure. except where necessary to protect the public, or unless steps are taken to ensure that the data are protected against unfair commercial use.

' 0 2 WTO, Argentina: Crrtuin Measures on the Protection ofPatents and Test Data, 'Request for Consultations by the United States', WTO Doc., WTDS 19611 dated 30 May 2000.

to change its law accordingly. Argentina agreed that the Argentinean National

Congress would pass a bill to this effect.lo3

Regarding protection of test data against unfair commercial use (Article 39.3) they

agreed to sort out differences under the DSU rules. Accordingly, if the Dispute

Settlement Body adopt recommendations and rulings saying that Argentinean law was

inconsistent with Article 39.3 of TRIPS, Argentina would submit an amendment to

Argentinean law within one year in its parliament.

5.2.2 Inactive cases

European Communities - Patent Protection for Pharmaceutical and Agricultural and

Chemical Products

In this dispute Canada challenged the protection of inventions in the area of

pharmaceutical and agricultural chemical products that comes under the European

Communities Legislation - Council Regulation (EEC) No.1768192 and European

Parliament and Council Regulation (EC) No.1610196 vis-6-vis EU' s obligations

under the TRIPS ~ ~ r e e m e n t . " ~ Canada alleged that the patent term extension

scheme limited to pharmaceutical and agricultural chemical products were

inconsistent with Article 27.1 of the TRIPS Agreement. This was because the Council

Regulations were applicable to pharmaceutical and agricultural and chemical products

and hence discriminated on the basis of technology. But Article 27.1 says ". . . patents

shall be available and patent rights enjoyable without discrimination as to the field of

technology". "''

European Cornmunitles- Protection of Trademarks and Geographical Indications for

Agricultural Products and Foodstuffs

This case was filed by the United States against the European Communities. The

measure in dispute in this litigation was the European Communities' Regulation

1113 WTO, Argerrtina: ('errurn Measures on the Protection ofPatents and Test Data, 'Notification of Mutually Agreed Solution', WTO Docs., WTiDS 17113 and WTIDS 19614 dated 20 June 2002. IM WTO, European Communities: Patent Protection for Pharmaceutical and Agricultural and (,'hemica1 Products. 'Request for Consultations by Canada', WTO Doc., WTBS 15311, dated 7 December 1998 1115 TRlPSAgreement. Article 27, supra note 5 . (For textual treatment of Article 27 see supra note 72.)

2 0 8 1 / 9 2 . ' ~ ~ ~ h e United States claimed that this Regulation, as amended, was

inconsistent with Article 3 (national treatment) vis-a-vis geographical indications and

did not provide sufficient protection to pre-existing trademarks that were similar or

identical to a geographical indications. Hence, it was inconsistent with Articles 3, 16,

24,63 and 65 of the TRIPS Agreement.

5.2.3 Disputes that reached PaneVAppellate Body Stage

We will begin our discussion with disputes related to patents

PATENT DISPUTES

1. lndia Patent Protection for Pharmaceutical and Agricultural Chemical Prod~cts '~ '

This was one of the most sensitive cases in the WTO dispute settlement history vis-a-

vis TRIPS Agreement because of the following reasons:

(i) It was the first case related to TRIPS issue that reached paneVAB stage for

adjudication.

(ii) It involved the United States, a developed nation and a net exporter of

IPRs and, lndia a developing nation and a net importer of IPRs.

(iii) United States also lodged a similar complaint against Pakistan invoking

the same provisions but Pakistan settled the matter at the consultation

svage itself (DS 36).

(iv) The subject matter of the case was fought again, with the defendant being

India, albeit the complainant was different - European Communities (DS

79). This was because of the failure of the defendant to implement DSB

decision in the previous case.

(v) The issue related to transitional arrangements, which a developing nation

has to take before the complete implementation of TRIPS Agreement on or

before 1 January 2005.

106 WTO, Europron Communities: Protection of Trademarkr and Geographical Indications for .4griculturul Products and Foodstufls, 'Request for Consultation by the United States', WTO Doc., WTIDS 17411 dated 7 June 1999. 107 WTO, Panel, lndia. Patent Protection for Pharmaceutical and Agricultural Products [hereinafter Indiu-Patents (L'S)]. WTO Doc., WTDS 50iR dated 5 September 1997.

This was also the case, in which India was brought before the WTO' s dispute

settlement mechanism for the first time. Now the case would be discussed in detail.

Factual Aspects

Following the failure to yield a mutually satisfactory solution, the United States

requested to DSB to establish a panel to examine the following sections of TRIPS

Agreement:

(a) Article 70.8 of the TRIPS Agreement, which necessitates a developing

country to establish a "means"'08 to receive patent applications during the

transitional period.

(b) Article 70.9 that provides "exclusive marketing rights" for a period of five

years

(c) Article 63"'" that insist on "transparency" by notifying all laws and

regulations to the Council for TRIPS.

108 Also termed as "mailbox system" created for the filing and handling of patent applications for pharmaceutical and agriculhual products as required by Article 70.8.See TRIPS Agreement, Article 70.8, supra note 5. (For textual treatment of Article 70.8 and 70.9 see supra notes 70 and 71).

Id., Article 63 on "Transparency" states that: 1. Laws and regulations, and final judicial decisions and administrative rulings of general application, made effective by a Member pertaining to the subject matter of this Agreement (the availability, scope, acquisition, enforcement and prevention of the abuse of intellectual property rights) shall be published, or where such publication is not practicable made publicly available, in a national language, in such a manner as to enable governments and right holders to become acquainted with them. Agreements concerning the subject matter of this Agreement which are in force between the government or a governmental agency of a Member and the government or a governmental agency of another Member shall also be published. 2. Members shall notify the laws and regulations referred to in paragraph 1 to the Council for TRIPS in order to assist that Council in its review of the operation of this Agreement. The Council shall attempt to minimize the burden on Members in carrying out this obligation and may decide to waive the obligation to notify such laws and regulations directly to the Council if consultat~ons with WIPO on the establishment of a common register containing these laws and regulations are successful. The Council shall also consider in this connection any action required regarding notifications pursuant to the obligations under this Agreement stemming from the provisions of Article 6ter of the Paris Convention (1967). 3. Each Member shall be prepared to supply, in response to a written request from another Member, information of the sort referred to in paragraph 1. A Member, having reason to believe that a specific judicial decision or administrative ruling or bilateral agreement in the area of intellectual property rights affects its rights under this Agreement, may also request in writing to be given access to or be donned in sufficient detail of such specific judicial decisions or administrative rulings or bilateral agreements. 4. Nothing in paragraphs 1 , 2 and 3 shall require Members to disclose confidential information which would impede law enforcement or otherwise be contrary to the public interest or would prejudice the legitimate commercial interests of particular enterprises, public or private.

As a develop~ng nat~on, lndia was expected to implement the TRIPS provision of

WTO Agreement only before 1 January 2005. This privilege is granted under Article

65' l o of TRIPS Agreement as a "transitional arrangement". However, India will have

to comply w~th Arttcle 70.8 and 70.9 contained in "Protection of Existing Subject

Matters" of the TRIPS Agreement. (For textual treatment of the Article 70.8 and 70.9

see supra notes 70 and 71 .)

In order to comply with these TRIPS provisions the President of India promulgated

the Patent (Amendment) 0rdinancel1' of 1994 to provide a "mail box" system and the

grant of exclusive marketing rights (EMRS),"' as required by 70.8 and 70.9 of TRIPS

respectively. But the ordinance, which became effective on 1 January 1995 lapsed on

27 March 1995. The attempts to give permanent legislative effect to the provisions of

the Ordinance by passing the Patent (Amendment) Bill 1995 could not materialise

because of the then political inability. But India informed the panel that patent offices

were instructed to receive patent applications.

Failure to bring a new legislation after the constitution of Eleventh Lok Sabha forced

the Untied States to initiate this litigation before the dispute settlement mechanism of

110 I d , Article 65 reads: 1. Subject to the prov~sions of paragraphs 2 , 3 and 4, no Member shall be obliged to apply the provisions of th~s Agreement before the expiry of a general period of one year following the date of entry into force of the WTO Agreement. 2. A developmg country Member is entitled to delay for a further period of four years the date of application, as defined in paragraph 1, of the provisions of this Agreement other than Articles 3, 4 and 5 . 3. Any other Member which is in the process of transfonnation from a centrally-planned into a market, free-enterprise economy and which is undertaking structural reform of its intellectual property system and facing special problems in the preparation and implementation of intellectual property laws and regulations, may also benefit from a period of delay as foreseen in paragraph 2. 4. To the extent that a developing country Member is obliged by this Agreement to extend product patent protection to areas of technology not so protectable in its territory on the general date of application of tlus Agreement for that Member, as defined in paragraph 2, it may delay the application of the provisions on product patents of Section 5 of Part I1 to such areas of technology for an additional period of five years. 5. A Member availing itself of a transitional period under paragraphs 1,2, 3 or 4 shall ensure that any changes in its laws, regulations and practice made during that period do not result in a lesser degree of consistency with the provisions of this Agreement.

1 1 1 According to clause (1) of Article 123 of the Indian Constitution, the President could legislate when Parliament is not in session by issuing an ordinance. However, the ordinance shall cease to apply at the expiration of SIX seeks from the re-assembly of Parliament. (Also see India-Patents (US), supra note 106 paras, 2.2 and 2.5). ' I 2 he Bill was passed by the Lok Sabha and was introduced in the Rajya Sabha. While it was pending before the Select Committee of the House, Lok Sabha was dissolved on 10 May 1996. With the dissolution of l.ok Sabha, the Bill lapsed.

WTO. The United States contended that since India was not providing product"3

patents to pharmaceutical and agricultural-chemical products and was availing the

transitional benefits under Article 65, India was expected to implement Article 70.8

and 70.9 of the TRIPS Agreement. It also requested the Panel to ask India to

implement these obligations in a manner similar to the way in which Pakistan

indicated. I l 4

The United States also contended that if the Panel found that the India has a valid

mailbox system, lndia has failed to comply with its transparency obligations under

Article 63 of the TRIPS ~ ~ r e e m e n t . " '

India claimed that even after the lapse of Ordinance, patent applications for

pharmaceutical or agricultural chemical products were being received, and allotted a

filing date and advertised in the official Gazette with serial number, filing date, name

of applicant and title of invention^,"^ because administrative instructions had been

given by the executive to this effect. India claimed that such an administrative

decision was permissible under Article 73 (1) (a) of the Indian ~onstitutionl" and the

Supreme Court of lndia in two of its rulings, J. R. Raghupathy vs. State of Andhra

Pradesh and Union of India vs. H. R. Patankar and Others, had opined that

administrative action was an available method for the executive. India had thus

complied with the requirements of Article 70.8 of TRIPS Agreement.

' I 3 See Section 5 , in Chapter I1 'Inventions not patentable' of the Patents Act, 1970. According to Section 5 :

In the case of lnventlons (a) claiming substances intended for use, or capable of being used, as food or as medicine or drug

or (b) relating to substances prepared or produced by chemical processes (including alloys, optical

glass, semi-conductors and inter-metallic compounds); no patent shall he granted in respect for the substances themselves, but claims for the methods or

processes or manufacture shall be patentable. I I 4 Pakistan -Patent case, supra note 73. ' I 5 India-Patents / l /S) . supra note 107, para 3.1. 118 Id., para 2.8. ' I 7 Article 73(1 )(a) of the Indian Constitution states that

..the executive power of the Union shall extend to the matters to which Parliament has the power to make law.

In this case the relevant legislative power would be Entry 49 of List I or List I11 of the Seventh Schedule to the Constitution which reads "Patents inventions, and designs; copyright; trade marks and merchandise marks". In the subsequent case filed by EC, India contended that an international tribunal could not interpret municipal law. (See WTO Panel, India: Patent Protection for Pharmaceutical and Agricultural Products [hereinafter India-Patents (ELI], WTO Doc., WTiDS 79/R dated 24 August, 1998.

Regarding Article 70.9, India claimed that it did not receive any requests, for granting

EMRs, so there was no question of denial so far. Moreover, the events"' that

triggered the obligation of granting EMRs were beyond its control and EMRs could

be granted in lndia only for a product that has satisfied the first four procedures."9

Besides, granting EMRs by a developing country like India would frustrate the very

purpose of transitional arrangements.

Rejecting India's contentions, the United States noted that the administrativeiz0

instructions lost their validity once the Ordinance lapsed. India failed to accord legal

sanctity to the Patent Bill afterwards, as a result of which there did not exist any

proper mechanism to preserve the "novelty" and "priority" in respect of applications

for product patents regarding pharmaceutical and agricultural chemical inventions

during the transitional period. Consequently, the legal situation in India regarding ,. 121 70.8 was "erroneous and largely speculative .

India also rejected the U.S. suggestion to change Indian law in a manner similar to the

way in which pakistanLz2 had done saying that it would be inappropriate to transpose

the legal system adopted by Pakistan to 1ndia.12'

Regarding Article 70.9 the United States argued that the quid pro quo for taking

advantage of the transition period was the grant of EMRs. If India did not want to

grant product patents, then it must grant EMRs; conversely if it did not want to grant

EMRs, then i t must grant product patents. The United States also attributed the non-

receipt of request for EMRs to the absence of sufficient mechanism. It claimed that

Eli Lilly Corporation that had been granted patent protection and marketing approval

was in the process of determining how to apply for EMRs in India. This in effect had

""ndia-~utents ((IS), supra note 107. ' I 9 Thus for a product to receive EMR, in India, it must meet the following conditions.

(a) A mailbox application has been filed in India in respect of a pharmaceutical or agricultural chem~cal product:

(b) A patent application has been filed in respect of that product in another WTO member after 1 January 1995;

(c) The other member has granted the patent; (d) The other member has approved the marketing for the product; and (e) lndia has approved the marketing of the product.

In India-Parentv (ELI), the Panel noted that the administrative instructions India relied upon were "unwritten and unpublished (See supra note 117, para 7.56.) "I India-Patenrs(i!S), supra note 107, para 6.3 I22 Pakistan-Patmts, supru note 7 3 123 India-Patents ([IS), supra note 107, paragraph 4.38.

destroyed the "legitimate expectations"'24 which were central for the creation of

"security and predictability" in the multilateral trading system elaborated by the

superfund panel. "j

Pane l ' s Ruling

The panel upheld the U.S. contentions. Regarding Article 70.8, the panel held that

Section 15 ( 2 ) of the Indian Patents Act authorised the controller to reject patent

applications for pharmaceutical and agricultural products. This makes the

administrative instructions given by the Indian executive redundant and makes the

legal situation insecure. The Panel cited Malt Beverages case that dealt with a similar

issue. It stated:

Even if Massachusetts may not currently be using its police power to enforce this

mandatory legislation, the measure continues to be mandatory legislation, which may

influence the decisions of economic operators. Hence, a non-enforcement of a

mandatory law in respect of imported products does not ensure that imported beer and

wine are not treated less favourably than like domestic products to which the law

does not apply. ""

The panel noted that in this case legal insecurity is compounded further by lapse of

the Patents (Amendment) Ordinance.

The Panel also supported the United States view vis-a-vis Article 70.9 stating that the

executive authority of Indian Government is not bestowed with the authority to grant

EMRs so far. This is inconsistent with Article 70.9 of the TRIPS Agreement, which is

meant for developing countries availing the transitional benefits under Article 6s.I2'

The Panel also held that India has violated Article 63 of the TRIPS Agreement,

because it has not informed the public about the existence of a new system'28 for the

filing of mailbox applications.

'" Id., para 4.10 '" Panel Report, Unrted States: Taxes on Petroleum and Certain Imported Substances (adopted on 17 June 1987), G A l T Doc., BISD 34S1136, para 5.2.2, cited in id. 126 Panel Report United Stutes: Measures Affecting Alcoholic and Malt Beverages (adopted on 19 June 1992), GATT Doc., BISD 39 S.206, para 5.60 cited in id. "'India Patents (US). supra note 107, para 7.53 '" Id., para 7 . 4 4 .

Consequently, the Panel recommended that the DSB request India to bring its

transitional regime ~ n t o conformity with TRIPS Agreement. Pursuant to its power to

appeal India notified the DSB of its intention to appeal certain issues of law and legal

interpretations developed by the

The Auuellare Report

The Appellate Body upheld the Panel's ruling on Article 70.8 and 70.9 but reversed

the Panel's findings regarding Article 63.

Why AB reversed Panel's ruling on Article 63?

India contended that Panel exceeded its authority, for the terms of reference upon

which the panel was established did not contain a claim under Article 6 3 . In United

States shirts und blouses case,"' it was held that

[a] panel need only address those claims which must be addressed in order to resolve

the matter in Issue ~n the dispute.

And all claims must be included in the request for establishment of a panel,i3' because

a panel is bound by its terms of reference.'32 In this case, by including Article 63 that

was not mentioned in terms of reference, the panel exceeded its authority.

One of the unique peculiarities of this case is that the subject matter raised and settled

in this dispute constitutes the subject matter of another case. And only the

complainant changed. This is discussed below.

European ~ommuni t ies"~ Vs. India (DS 79)i34

The European Communities brought a similar complaint against India regarding

patent protection for pharmaceutical and agricultural chemical products in India.

Interestingly, the Articles invoked remained the same: Article 70.8 and Article 70.9 of

12' Appellate Body, India: Pafent Protection far Pharmaceutical and Agricultural Chemical Products WTO Doc., WTIDS 50IABIR dated 19 December 1997. 130 Appellate Body. Llnited States: Measures Affecting imports of textile and clothing products, WTO Doc., WT'DS 33:AB/R, dated April 25, 1997, p.19. 131 Appellate Body, Brazil-Des~ccated Coconut, WTO Doc., WTIDS 27IABIR adopted 25 September 1997 para 145. "'Appellate Body, suprrr note 129, para99. "' In the Indiu-Patenrr (OS). EU was the third party.

the TRIPS Agreement. And in this case, the EC and their member states, which had

been a third party in the previous case (DS 50), requested the Panel to extend its

finding in the earlier dispute as modified by the AB to this dispute.'35 And the panel's

decision on Articles 70.8 and 70.9 remained the same; still the dispute had raised

some procedural issues related to the "Understanding" on dispute settlement.

India requested the Panel to reject the complaints of the EC because it was

inconsistent with the rules of the DSU on multiple complaints, in particular Articles

9.1'~' and 10.4.'" Accordingly, multiple complaints should be submitted to a single

panel. India contended that EC should have brought the complaint jointly with the

earlier case initiated by the United States. To substantiate its stand, India advanced

the following points:

Successive complaints bused on the same facts and legal claims

India noted that whenever members of the WTO brought complaints on same facts, a

single panel was established. The European Community itself had objected to the

formation of a panel whose terms of reference remained the same, when Panama

requested consultations on its regime for the importation, sale and distribution of

bananas in October 1997."'

An unmitigated rlght to bring successive complaints on same facts would jeopardise

the multilaterul trade order

- ~~~ ~~

I34 India Patentr (EO), supru note 117. 135 Id.,para 3.1

"' WTO , Annex 2. 'Understanding on Rules and Procedures Governing the Settlement of Disputes' [hereinafter DSbl, m the Results of the Uruguay Round of Multilateral Trade Negotiations: The Legal Texts (Geneva: WTO, 1995). DSU, Article 9.1 which states that:

where more than one member requests the establishment of a panel related to the same matter, a single panel may be established to examine these complaints taking into account the rights of all members concerned. A single panel should be established to examine such complaints - . whenever feasible.

117 Id., Article 10.4 which states that: If a third party considers that a measure already the subject to a panel proceeding nullifies or impairs benefits occurring to it under any covered agreement that member may have recourse to normal dispute settlement Procedures under this Understanding. Such a dispute shall be referred to the original panel wherever possible.

138 Panel, European Communities: Regime for the importation sale and distribution of bananas (11) WTO Doc., WTIDS 158lR dated 19, January 1999; also see WTIDS 27 ;complaint brought by Ecuador, Guatemala, Mexico and US on 12 February 1996.

113

Quoting Henry H.Herman (1886) , '~~ India noted:

Inter-rst republicue ut sitfinis litium, is an old maxim deeply fixed in the law of

fundamentals; that it concerns the state there be an end to litigation.

lndia also requested that the principles of res j ~ d i c a t a ' ~ ~ and stare decisisI4' be

followed even though the principle of res judicata did not apply if the parties to

dispute are different and the principles of stare decisis is not followed much in the

WTO jurisprudence.'" India contended that this complaint in all aspects was

identical w~th the previous complaint brought by the United States. But the EC

rejected Indian contentions on the following grounds:

Article 9.314' dealt with complaints related to the same matter. This makes it clear

that there is no obligation to constitute a single panel. Besides, the complaint that the

EU filed was at a different point of time. Similarly, absence of factual circumstances

clearly demonstrated that despite issuing a panel and an AB report India failed to

bring forth changes in its domestic law consistent with TRIPS provisions.

The European Communities also argued that the principles of res judicata did not

apply to this case; and the question of stare decisis did not arise in WTO

jurisprudence. The Panel upheld EU's position and proceeded with the case. It

endorsed the rulings of the Panel in the previous case. India's enforcement of

PanelIAppellate Body rulings in DS 50 and 79 is treated separately in the next chapter

as a case study.

2. Canada Patent Protection of Pharmaceutical ~roducts '"

13' lndia Patents (EUJ, supra note 117, para 4.2. I4O The term 'res judicata' means "a matter adjudged" or a matter settled by judgemnet'. 'Res judicata' is " a rule that final judgement or decree on merits by court of jurisdiction is conclusive of rights of parties or their pnvies in all later suits on points and matteIs determined in former suit." (See Black' s Law Dictionary (St. Paul' s. Minn.: West Publishing Co., 1968) p1470. "' Stare decisi.5 means 'to abide by or adhere to decided cases'. To Black's Law Dictionary, it is the "Policy of courts to stand by precedent and not to disturb settled point". (See id., p 1577)

Raj Bhala. 'The Myth About Stare Decisis', American Universiry International Law Review, vo1.14, 1999.

"' DSU, Article 9 . 3 , supra note 136 states that: if more than one panel is established to examine the complaints related to the same matter to the greatest extent possible the same persons shall serve as panels on each of the separate panels and the time table for the panel process in such disputes shall be harmonised.

I44 Panel, Cunudu: Patent Protection of Pharmaceutical h d u c t s [hereinafter Canada-Patents], WTO Doc., WTDS 114'R dated 17 March 2000.

Before the TRIPS Agreement, Canada was a member of Paris Convention on the

Protection of lndustrtal Property (London Act, 1934). However, the substantive

standards requlred for patent protection under this Convention were not significant

and hence Canadian law was consistent with the provision of the onv vent ion.'^^

Throughout the history of its public health care system, Canada had relied on

compulsory licensing as a policy tool for cost containment. But in December 1991,

the Dunkel text of the TRIPS Agreement was released and Canada realised the need

to amend its patent law to conform to international obligations. Consequently, Canada

introduced the Patent Act Amendment Act, 1992 (Bill C-91). The Bill repealed the

compulsory licensing provisions; but introduced two exceptions, subsection 55.2(1)

and subsection 55.2(3) as tools to contain rising cost in the health care system. In this

case, these two exceptions became the measures in dispute. These provisions are

reproduced below:'""

Patent Act Section 55.2(1): It is not an infringement of a patent for any person to

make, construct. use or sell the patented invention solely for uses reasonably related

to the development and submission of information required under any law of Canada,

a provmce or a counhy other than Canada that regulates the manufacture,

construction, use or sale of any product.

Patent Act, Section 55.2(21: It is not an infringement of a patent for any person who

makes constructs, uses or sells a patented invention in accordance with subsection (I)

to make, construct or use the invention, during the applicable period provided for by

the regulat~ons, for the manufacture and storage of articles intended for sale after the

date on whlch the term of the patent expires.

Manufacturlnr and Storage of Patented Medicines Re~ulations: By virtue of these

Regulations, the applicable period of referred to in subsection 55.2(2) of the Paten1

ACI IS the SIX month period immediately preceding the date on which the term of the 147 patent rxplres.

The EU alleged that these were inconsistent with Articles 27,28 and 33 of the TRIPS

Agreement. The arguments will be examined in detail.

143 Id. para 4 2 1 146 Patent Act. Section 55 2(1) c~ted in Canada -Patents, supra note 144, para 2.1. Id ' Id.

Arauments ofEuro~eun Communities and their member states.

Section 55 .2 (2 ) und 55.2(3) together with Manufacturing and Storage ~ e ~ u l a t i o n s ' ~ ~

The EU argued that the new provisions together with the Regulations were violative

of Articles 28. land 33 of the TRIPS Agreement. Under these provisions, Canada

provided patent protections only for 19 years and six months; whereas TRIPS

Agreement mandated 20 years protection. This implied that anybody in Canada was

allowed to make, construct and use the invention during the last six months of the

patent term without the authorisation of the patent holder.

The EU also alleged that these measures were intended to apply exclusively to

pharmaceutical products alone. Hence patent holders in the field of pharmaceutical

inventions were treated less favourably than inventions in all other fields of

technology, which was violative of Articles 2 7 . 1 ' ~ ~ as well.

Section 55 .2(1) ofthe Patent ActL5'

Regarding Section 55.2(1), the EU alleged that it curtailed all the rights of a patent

owner, i.e. making, constructing, using and selling in the name of development and

submission of information required for obtaining marketing approval anywhere in the

world. It did not specify any quantitative limits for these activities; neither were the

permissible activities limited in time, i.e. these activities could be performed at any

time without the consent of the right holder. Hence, this section was incompatible

with the provisions of Article 28.l(a) and (b) of the TRIPS ~ ~ r e e m e n t . ' " This section

was incompatible with Article 27.1 too, for the measures treated holders of

pharmaceutical patents less favourably than those in other fields of technology.'52

Ids Id., paras 4.2 and 4.3. "9 TRIPSAgreernmi. Article 27, supra note 5. I50 Canada Purent~, supru.note 138. 151 TRIPS Agreement, Article 28, supra note 5 reads:

(a) where the subject matter of a patent is a product, to prevent third parties not having the owner's consent from the acts of: making, using, offering for sale, selling, or importing for these purposes that product; (b) where the subject matter of a patent is a process, to prevent thud parties not having the owner's consent from the act of using the process, and from the acts of: using, offering for sale. srlllng, or ~rnporting for these purposes at least the product obtained directly by that proccbs 2. Patent owners shall also have the right to assign, or transfer by succession, the patent and to conclude hcenslng contracts.

152 Canada- Patents, supra note 144.

The ELI relying on the analysis of the European research-based pharmaceutical

industry (EFPIA) stated that it suffered losses that exceeded C$100 million per year

between 1995 and1997.

Cunada 's Res~onse

Canada requested the Panel to reject EU's claim stating that the measures Canada

initiated fell under "limited exceptions" within the meaning of Article 30 of the

TRIPS Agreement. Under Article 30 '~ ' exceptions to exclusive rights could be

provided if such exceptions do not unreasonably conflict with normal exploitation of

the work or prejudice the legitimate interests of the patent owner.

The patentees despite the limited exceptions created by subsection 55.2(1) and 55.2(2)

retained unfettered and exclusive right to exploit their rights throughout the full term

of patent protection. Neither subsections reduced the minimum term of protection as

required by Article 33.'54 Canada admitted that the disputed provisions currently

applied to patents for pharmaceuticals alone; but in future they could apply to other

fields of technology. Hence they were not violative of Article 27.1.

Canada also contended that the measures in question were conducive to social

welfare15' and strove to achieve a proper balance between rights and obligations

which constitute the "objectives" in Article 7 of the TRIPS ~ ~ r e e m e n t . ' ~ ~ The

measures intended to protect the consumer interests by ensuring access to less costly

generic drugs in the post-expiry market. The World Health Organisation (WHO) also

endorsed measures to promote the use of generic drug products to protect public

health."' Canada also cited the existence of such exceptions in other countries like

Germany, Italy, Portugal, Argentina, Australia, Japan and Israel - all allowing

" j TRJPS Agreement, Article 30, supra note 5. According to Article 30: Members may provide limited exceptions to the exclusive rights conferred by a patent, provided that such exceptions do not weasonably conflict with a normal exploitation of the patent and do not unreasonably prejudice the legitimate interests of the patent owner, taking account of the legitimate interests of third parties.

154 Canuda- Patenu. supru note 144, paragraph 4.24 I 5 5 Id., para 410 156 TRIPS Ayrermmt, Article 7 , supra note 5 reads:

The protection and enforcement of intellectual property rights should contribute to the promotion of technological innovation and to the transfer and dissemination of technology, to the mutual advantage of producers and users oftechnological knowledge and in a manner conducive to social and economic welfare, and to a balance of rights and obligations.

IS7 Canada- Patenrs, supra note 144, paragraph 4.14

experimentation related to generic drugs. It specifically cited out the "Bolar

e~em~tion"'~"ranted in the Untied States.

Panel j. Recommendutions

The panel first anaiysed whether Section 55.2(2) of the Patent Act was consistent with

the TRIPS Agreement. This section allowed competitors to manufacture and stockpile

patented goods for six months before the patent expired even though they could not be

sold until the expiry of the patent. It did not either specify a limit to the quantity that

could be stockpiled and six months constituted a commercially significant period of

time. Hence, the panel agreed with the EU that this section was inconsistent with the

TRIPS Agreement.

However, regarding subsection 55.2(1), the Panel found that it satisfied all the three

requirements of Article 30 i.e., "limited exception" did not "unreasonably conflict

with a normal exploitation of the patent" or "unreasonably prejudice the legitimate

interests of the patent owner". Hence, subsection 55.2(1) was consistent with TRIPS

Agreement and it took account of the legitimate interests of the third parties.

3. Canada - Term of Patent ~ r o t e c t i o n ' ~ ~

As per TRIPS Agreement all developed nations were expected to abide by the TRIPS

provisions on 1 January 1996.I6O Accordingly, every developed nation was expected

to provide patent protection for a period of not less than 20 years from the date of

filing.16' This case was concerned with a developed nation's failure to comply with

TRIPS obligations.

Factual Informut~on

158 The "Bolar examption" IS added in the US patent law in 1984 after the court's ruling in Roche Products h c . I / Bolur Pharmaceuticals Co. Inc. Under this exemption, "it shall not be an act of infringement to make, use, offer to sell, or sell within the United States or import into the United States, a patented invention . . . solely for uses reasonably related to the development and submission of information under a Federal Law which regulates the manufacture, use, or sale of drugs or veterinary biological products". Quoted m Id. is9 Panel Report, Canudu : Term ofpatent Protection [hereinafter Canada- Patent Term], WTO Doc., WT/DS 170R dated 5 May, 2000. (Also see, Raj Bhala and David Gantz, 'WTO Case Review', Arizona Journal of International and Comparative Law, Vo1.18, No.1, Spring 2001, pp.94-101). 160 TRIPS Agreement. Article 65 .1 , supra note 5 . 16' Id.: Article 33.

To comply with TRIPS obligations Canada amended its patent act in a "bifurcated"

manner.'62 Thus patent applications filed after October 1, 1989 would be getting a 20-

year term as required by TRIPS obligations; but applications filed before October 1,

1989 would be eligible to get only 17-year term. The relevant sections, Sections 44

and 45,'" are reproduced here:

44. Subject to section 46, where an application for a patent is filed under this Act on

or after October 1, 1989, the term limited for the duration of the patent is twenty years

from the filing date.

45. Subject to sectlon 46, the tenn limited for the duration of every patent issued

under this Act on the basis of an application filed before October 1, 1989 is seventeen

years tiom the date on wh~ch the patent is issued.

The Law of applicable to patents granted under Section 44 is generally referred as

"New Act".'" Patent applications under Section 45 are referred as "Old Act Patents".

Consequently as of 1 January 2000, 66,936 Old Act patents would expire soon for

they were able to get only 17 years of patent protection. And the United States, being

the major trading partner of Canada held 50% of patent applications. Over 33,000

U.S. patent holders would be getting a term less than that required under the TRIPS

Agreement.'"' Hence, the complaint was lodged by the US.

Armments by the Purrles

The United States argued that Section 45, i.e. the Old Patents Act of Canada was

inconsistent with Articles 33'" and 70.2 of the TRIPS Agreement.

Article 70 o f the TRIPS Agreement and Old Patent Act

Article 70.1 states:

This agreement does not give rise to obligations in respect of acts which occurred

before the date of application of the Agreement for the member in question.

16' Bhala and Gantz . supro note 159, p.95. 16' Sections 44 and 45 reproduced in Canada- Patent Term, supra note 158, para 11.9 h 4 Id., wara 11.13 165 Iri , para \'I 82 166 TRIPS Agreement, Art~cle 33, supra note 5. (Also see supra note 76 for textual treahnent of Article 33)

But Article 70.2 says:

Except as otherw~se provided for in this Agreement, this Agreement gives rise to

obl~gations In respect of all subject matter existing at the date of application of this

Agreement for the member in question, and which is protected in that member on the

said date, or whlch meets or comes subsequently to meet the criteria for protection

under the terms of this Agreement

Consequently, Canada relied on Article 70.1 to support its Old Patents Act; and the

United States depended on Article 70.2 to refute Canadian arguments. The United

States contended that under Article 70.2, Canada was obliged to provide patent to all

inventions existing on 1 January 1996. Hence Canada was obligated to apply the

provisions of Article 33 to all patented inventions that existed on 1 January 1996.

Canada claimed that Article 70.2 was "trumped by Article 70.1, which stated that the

TRIPS Agreement did not give rise to obligations in respect of acts which occurred

before the date of application of the Agreement for the member in question.'67 Canada

also claimed that Article 28 of the Vienna Convention introduced a presumption

against retroactivity "unless a different intention appears from the treaty or is

otherwise established".

Article 33 ofthe TRIPS Agreement and Old Patents Act

The United States also argued that the Old Patents Act was in violation of Article 33

of the TRIPS Agreement that required Canada to provide patent protection for an

invention at least for 20 years after the filing date.16' Section 45 of Canadian Patents

Act ended before a 20 years term, because the protection term was 17 years.

Canada argued that under Article 33 a patent was to be granted for 20 years kom the

filing date. But since there was a time period between the filing date and issuance of

patent, the "effective" period of patent protection was normally less. Thus in Canada

the time-period between filing date and the issuance of patent was on average, five

years. This meant that the patent right holder would receive only 15 years of

exclusive "privilege and property rights". But Section 45 p~ovided a successful patent

l"7 Canadu- Purmr R v m , \upra note 159, para VI.45. 168 I d , para VI 80

120

applicant with 17 years of constant protection for exclusive privilege and property

rights. I"'

Recommendations o f the Panel

The Panel rejected Canada's arguments vis-a-vis Articles 70 and 33. Regarding

Article 70.2. the panel held that acceptance of Canada's contentions would make

paragraph 0 of Article 70"' also redundant. Besides, the panel noted that

interpretation of treaty language that reduces certain provisions to redundancy or

inutility was contrary to the principle of effective interpretation. The panel cited the

Appellate Body report in United States - Gasoline case:

[one] of the corollaries of the general rule of interpretation in the Vienna Convention

is that interpretation must give meaning and effect to all the terms of the keaty. An

interpreter 1s not free to adopt a reading that would result in reducing whole clauses

or paragraphs of a treaty to redundancy or inutility."'

Regarding Canada's interpretation of Article 33, the Panel noted that there was no

textual or contextual support to claim that Article 33 is intended to provide "effective

protection". The panel quoted the rule developed by the Appellate Body in Japan -

Alcoholic Beverages case that stipulated that "interpretation must be based above all ,, 172 upon the text of the treaty .

The Panel thus held that Section 45 of Canada's Patent Act was violative of Articles

70.2 and 33 of the TRIPS Agreement. The Appellate Body upheld the Panel's

rulings. ''

COPYRIGHT CASE

United States - Section 110(5) of the Copyright ~ c t " '

ibP Id., para VI.1 I2 170 TRlPSAyreemml, Art~cle 70.6, supra note 5 states that:

Members shall not be required to apply Article 31, or the requirement in paragraph 1 of Article 27 that patent rights shall be enjoyable without discrimination as to the field of technology, to use without the authorization of the right holder where authorization for such use was granted by the government before the date h s Agreement became known.

"' Quoted in Id.. para VI.71. I72 Id.,para V1.l 14. "' Appellate Body Report, ('unudu : Term of Patent Protection, WTO Doc., WTIDS I70lABlR dated 18 September 2000.

Regarding the area of copyright, it is the Beme Convention and the TRIPS Agreement

that form the overall framework for multilateral protection. And the parties involved

in this dispute, the EC - the complainant and the United States, the defendant - are

both signatories to the Beme Convention. The dispute is concerned with the

amendment made to the Section 1 lO(5) of the US Copyright Act of 1976.

Factual Infbrrnullot~

This was a case dealing with the rights of a copyright holder, which were contained in

Article 11 his( 1 ) (iii)"5 of the Beme Convention. In modem times these types of eases

related to broadcasting are lodged frequently. This is due to the proliferation of

commercial establishments like cafes, restaurants, tea-rooms, hotels, large shops,

trains, aircrafts etc. and their practice to attract people by providing broadcast

programmes. Thus apart from direct audience, an additional section of public is

created, often for profit, in such establishments. This article enables the author to

control this new public performance of his work. Article 1 lbis(l)(iii) is a specific

rule conferring exclus~ve rights regarding public communication through loud

speakers or such other i n s t r ~ m e n t s . ] ~ ~

Consequently, holders of copyright in musical works normally authorise the collective

management organisations (CMOs or performing rights organisations) to collect

license fees from such commercial establishments and distribute royalties to the

respective rlght h01ders.I~~ And Article Il(l)(ii) states that the authors enjoy the

exclusive right of authorising the public performance of their works.'78

"' Panel, Unitni States. Section 11 O(5) of the Copyright Act [hereinafter United States- Section I10(5)] WTO Doc., WT DS 160lR dated 15 June 2000, para 2.1. I75 Berne Conventrorr, Art~cle 1 lbis (l)(ii), supra note 17 states that:

(1) Authors of literary and artistic works shall enjoy the exclusive right of authorizing: (i) the broadcasting of their works or the communication thereof to the public by any other means of wireless diffusion of signs, sounds or images; (ii) any communication to the public by wire or by rebroadcasting of the hroadcast of the work, when this communication is made by an organization other than the original one; (iii) the public communication by loudspeaker or any other analogous instrument transmitting, by signs, sounds or images, the hroadcast of the work.

"" For a slmple explanation of this article see WIPO, Guide to the Berne Convention (Geneva: WIPO 1978), pp.68-69. 117 For example, the three main CMOs in the United States functioning in this area are ASCAP, The Broadcast Music, Inc. (BMI) and SESAC, Inc. United Nations Section 110(5) Case (see supra note 176, paragraph 2.17. "' Berne Convention, Article 11 , supra note 17, reads:

EU claimed that the new provisions, resulting from the amendment made to Section

1 lO(5) of US Copyr~ght Act of 1976, placing limitations on the exclusive rights of

copyright owners were inconsistent with llbis(l)(iii) and ll(l)(ii). The new

provisions stated that the following are not infringements of copyright."9

(a) Communication of transmission of performance using "a single receiving

apparatus" commonly used in private homes, to the public.

(b) Communication of audiovisual programmes (originated by a radio or

television broadcast station) to the public by commercial establishments.

They should be used by commercial establishments, which included restaurants

having less than 3750 gross sq.A. and other establishments having less than 2000

gross sq.ft. The instrument specifications they used to communicate should be:

(i) for audio, not more than 6 loud speakers, of which not more than 4 loud

speakers are located in any one room.

(ii) for audio-visual, not more than 4 audiovisual devices of which not more than

one located in any one room. However, they could use up to 6 loud speakers

of which not more than 4 loud speakers should be in a single room.

The types of transmissions covered original broadcasts over the air or by satellite

rebroadcasts by terrestrial means or by satellite, cable transmissions of original

broadcasts and original cable transmissions or other transmissions by wire."'

These amendments were largely based on the facts of a case decided by the United

States Supreme Court. In Twentieth Century Music Corporation vs. Aiken (1975) the

Court held that an owner of a small fast food restaurant was not liable for playlng

music by means of a radio with outlets to four speakers in the ceiling; the size of the

(1) Authors of dramats, dramatico-musical and musical works shall enjoy the exclusive right of authorizing: (i) the public performance of their works. including such public performance by any means or process; (ii) any commun~cation to the public of the performance of their works. (2) Authors of dramatic or dramatico-musical works shall enjoy, during the full term of their rights in the original works. the same rights with respect to translations thereof.

179 See Section 110(5)(A) and B of the United States Copyright Act of 1976, cited in United States- Section /1015), supra note 174, para 2.3

shop was 1,055 square feet. This exemption came to be known a "homestyle

exempt~on" . '~~ The 1998 Amendment added a new exemption that is termed a

"business exemption". The business exemption broadened the scope by expanding the

size of establishments.

Armments of the Parties

One of the major issues in this dispute is the interpretation and application of Article

13 of the TRIPS Agreement to the facts of this case. Article 13 entitled "Limitations

and exceptions" provides:

Members shall confine limitations or exemptions to exclusive rights to certain special

cases. which do not conflict with a normal exploitation of the work and do not

unreasonably prejudice the legitimate interests of the right holder.'82

The United States claimed that these exceptions contained in Article 13 were

applicable to the art~cles of the Beme Convention (1971) incorporated into TRIPS

Agreement. These include Articles 11 bis(l)(iii) and 1 l(l)(ii) and they came under

the scope of "minor exceptions" doctrine, that applied to the exclusive rights provided

under Article 13 of TRLPS Agreement.

The EU claimed that the scope of amendment was too wide. A study conducted by the

Congessional Research Service (CRS) regarding the percentage of the US eating and

drinking retail establishments that would have fallen in 1995 below the size limits of

3,500 sq.A and 1,500 sq.ft. respectively found that:

(a) 65.2 per cent of all eating establishments;

(b) 71.8 per cent of all drinking establishments;

(c) 27 per cent of all retail establishments would have fallen below these size

limits.'x"

Besides, minor exceptions doctrine was limited to public performance of works for

religious ceremonies, military bands and the needs of child and adult education - all of

them having non-commercial character. Consequently, an exception to exclusive

180 Id., para 2 . 1 5 . 8 1 Id., para 2.6. 182 TRIPS Agreetnmf. Article 1 3 , supra note 5 . 123 United State - Section 1 iO(5) , supra note 174, para 6.1 18

rights must provide minimum equitable remuneration to right holder. Besides, it

should also satisfy the three conditions of Article 13:

(a) exception to be confined to certain special cases;

(b) should not conflict with a normal exploitation of the work;

(c) should not unreasonably prejudice the legitimate interests of the right holder.

Interpretation by the Panel

The Panel observed that preparatory works and negotiating history of an agreement

would be relevant to Interpret a treaty. Besides, the reports of successive revision

conferences of a Convention needed to be taken into account. Accordingly, it should

be noted that sub paragraphs (i) and (ii) of Article 11 of Beme Convention originated

in the Brussels Act of 1948. This wording remained the same in the Stockholm Act

(1967) and the Parls Act (1971). The proposal to introduce a general provision

permitting states to retain various exceptions that were already in their national laws

was turned down at the Brussels Conference (1948) . '~~ But still the conference

"entrusted" the Rapporteur - General to provide minor exceptions in national law to be

included in the General Report. This made it possible to reach the conclusion that they

were intended to apply l~mitations to Articles 1 lbis (l)(iii) and 1 l(l)(ii).

Consequently, it could be concluded that the incorporation of these articles of Berne

Convention (1971) into the TRIPS Agreement included the entire acquis of these

provided articles i.e. the possibility of providing minor exceptions too. Besides,

recourse to supplementary means of interpretation, which included the preparatory

works of the treaty and the circumstances of its conclusion, provided for

exceptions.'x5 Accordingly, it could be inferred that there were minor exceptions

doctrine in the GATT Uruguay Round documents as well. Based on this the panel

held that it was possible to provide "minor exceptions" to the exclusive right in

question.

The panel then examined the three criteria test of Article 13 of the TRIPS Agreement.

Crrterzon ( I ) "Cerram specla1 case"

I84 I(I , , para 6.52 185 Article 3 of Vienna Convention, cited in id., para 6.64.

125

For the United States both subparagraphs (A) and (B) of section llO(5) met the

standard of being confined to "certain special cases". But the EU claimed that such an

exception should be well-defined and narrow in scope.

The panel after making perusal of factual information observed that a substantial

majority of eating and dnnking establishments were covered by the exemptions

provided in subparagraphs 105(5) of the US copyright. This means that scope was not

narrow.lx6 However, the exemption provided in subparagraph A was well defined,

and its scope was narrow. 187

Criterion (2) "Normu1 Exploitation of the Work":

The exemption provided in subparagraph (B) of section 1 lO(5) differentiate between

broadcast and recorded music. Thus communication to the public through

broadcasting was exempted; while playing of musical works from CDs and tapes was

not covered by it. This would create a disincentive for recorded music and hence

conflict with the normal exploitation of the work within the meaning of second

condition of Article I3

Criterion (3) "Unreasonably prejudice the legitimate interests ofthe right holder":'88

The Panel noted that the exemption provided by subparagraph (B) of Section 1 lO(5)

was substantially large. Besides, the ultimate burden of proof to prove otherwise,

rested with the United States as the member invoking exception. The United States

failed to demonstrate that the business exemption granted under subparagraph (B) did

not unreasonably prejudice the legitimate interests of the right holder.'89

Regarding subparagraph (A), the Panel noted that playing music by the small

establishments covered by this exemption had never been a significant source of

revenue collection for CMOS. Hence this section is consistent with Article 13.

Recornmendurions'""

Id., para 6.133. 187 Id., para 6.159. I n 8 Id., para 6.2 19. Ia9 Id., para 6.265. I9O id . , para 7.1

Based on this interpretation, the Panel held that

(a) Subparagraph (A) of section 110(5) of the US Copyright Act met the

requirement of' Article 13 of the TRIPS Agreement and was thus consistent

with Articles I ibis (l)(iii) and 1 l(l)(ii) of the Beme Convention.

(b) Subparagraph (B) of Section 1 lO(5) of the US Copyright Act did not meet the

requirements of Article 13 of the TRIPS Agreement and hence violative of

Articles 1 1 bis(l))(iii) and 1 l(l)(ii) of the Berne Convention (1971).

TRADEMARKS DISPUTES

1. Indonesia - Certain Measures affecting the Automobile ~ n d u s t r ~ l ~ ~

This case was related to the National Car Programmes (1993 and 1996) of Indonesia.

Against these programmes four complaints'92 were filed - one each by the EC and the

United States and two by Japan. The complainants invoked innumerable provisions

that involved issues under TRIMS, SCM, MFN discrimination, TRIPS and even the

participation of private lawyers in panel meetings. But since the subject involved in

the complaints remained the same - Indonesian National Car Programmes - the DSB

established a joint panel to review all the four complaints. Here, TRIPS issues that

were raised by the United States alone would be isolated.

Claims raised under the TRIPS Ameement b y the United States

One of the conditions set forth in the Indonesian National Motor Vehicle Programme

was the requirement that the "national motor vehicle" must bear a unique Indonesian

trademark owned by an Indonesian national to receive benefits of that programme.

The United States claimed that this was discriminatory for these benefits resulted in a

significant "commercial disadvantage" to owners of foreign-owned trademarks

against those of Indonesian trademarks.

Hence, United States argued the practice was inconsistent with Articles 3, 20 and 65

of the TRPS Agreement.

1 9 ' WTO Panel. In~ionesiu: Certain Measures Affecting the Automobile Industiy [hereinafter Indonesia- Automobile.~], WTO Doc., WTDS 59lR dated 2 July, 1998.. Iq2 On October 3, 1996, the European Communities requested consultations with Indonesia (WTDS 54); on October 4. 1996 Japan requested consultations with Indonesia (WTDS 55). (Japan also requested

Article 3 obliges "national treatment" in the protection of intellectual property rights.

It requires each country to accord the nationals of other countries no less favourable

treatment that i t accords to its own nationals. The United States contended that under

the National Car Programme, only Indonesian companies were eligible, and only

Indonesian companies could obtain a "national car" trademark.'94 Secondly, the

condition to use a "new" Indonesian trademark as a national car discriminated against

owners of existing marks regarding the maintenance of the mark. This might

eventually result in the cancellation of global mark for non-use in 1nd0nesia.I~~

Article 20:""'

This article prohibits the imposition of special requirements on the use of a trademark.

The United states"' contended that the National Motor Vehicles Programmes

additional consultations with Indonesia (WTDS 64); on October 8, 1996 the United States requested consultations with Indonesia (WTDS 59).

19' TRIPS Agreement, Article 3, supra note 5 states that: I . Each Member shall accord to the nationals of other Members treatment no less favourable than that it accords to its own nationals with regard to the protection of intellectual property, subject to the exceptions already provided in, respectively, the Paris Convention (1967), the Beme Convention (1971), the Rome Convention or the Treaty on Intellectual Property in Respect of Integrated Circuits. In respect of performers, producers ofphonograms and broadcasting organizations, this obligation only applies in respect of the rights provided under this Agreement. Any Member availing itself of the possibilities provided in Article 6 of the Berne Convention (1971) or paragraph l(b) of Article 16 of the Rome Convention shall make a notification as foreseen in those provisions to the Council for TRIPS. 2. Members m y avail themselves of the exceptions permitted under paragraph 1 in relation to judicial and adrmnistrative procedures, including the designation of an address for service or the appointment of an agent within the jurisdiction of a Member, only where such exceptions are necessary to secure compliance with laws and regulations which are not inconsistent with the provisions of this Agreement and where such practices are not applied in a manner which would constitute a disguised restriction on trade.

IV4 lndonesia-Aufomohiles, mpra note 191, para 11.25 lyS Id. para 1 1.28 lV6 TRlPSAgreemmt, Article 20, supra note 5 states that:

The use of a trademark in the course of trade shall not be unjustifiably encumbered by special requirements, such as use with another trademark, use in a special form or use in a manner detrimental to its capability to distinguish the goods or services of one undertaking from those of other undertakings. This will not preclude a requirement prescribing the use of the trademark Identifying the undertaking producing the goods or services along with, but without Imnking it to. the trademark distinguishing the specific goods or services in question of that undertaking.

19' The United States says that the TRIPS negotiators tried to stop h s practice of linking two trademarks to be used on a single product. It cites out the examples of "Lahali-Peps? and "Modi- Xerox", a prior practlce of India that required such linkages. (See Indonesia-Automobiles Case, supra note 191, para 11.38).

requiring producers of a "national motor vehicle" bearing a unique Indonesian trade

mark to receive benefits was violative of Article 20 because:

(i) these benefits resulted in a significant commercial &sadvantage to foreign

trade owners:

(ii) ineligibility for benefits using an established foreign owned trademark

constituted a special requirement on the use of a trademark.

Article 65"'

The United States also invoked Article 65 that dealt with transitional arrangements.

The United States conceded that under Article 65.2 a developing nation could delay

the implementation of TRIPS provisions for a period of five years; but this

transitional benefits was not applicable to Articles 3, 4 and 5. Consequently,

Indonesia violated Article 65.2 as well, due to its measure inconsistent with Article 3.

Besides, the United States also argued that as the restrictions of the National Motor

Vehicle Programme came into force after 1 January 1995, they were violative of

Article 65.5 of the TRIPS Agreement too.

Response oflndonesiu to the claims raised

Indonesia rejected the contentions levelled by the United States and argued that the

trademark usage provision of the National Car Programme was consistent with

Articles 3, 20 and 65 of the TRIPS Agreement.

Indonesia claimed that the brand name requirement required under the National Car

Programme applied to all parties in precisely the same fashion - b e it an Indonesian

company or a foreign company. Neither may use a pre-existing pre-registered name

for a national car.19" Regarding Article 20, Indonesia argued that it is not relevant to

brand-name requirement. Requiring a new trademark to claim subsides under the

national car programme would not confuse the people or encumber the existing

trademark with specific requirements. Moreover, as Indonesia is availing a grace

period under Article 65.2, it cannot now be found to have violated Article 20.~"

198 TRIPS Agrrrmenl, Article 65, supra note 5 . 199 Indonala-Automoblle~ ( h ~ e , supra note 191, para 11.15 and 11.16. 200 Id., para 11 22

Recommendations uf'the Panel

The Panel rejected all the arguments of the United States and upheld Indonesian

measures vis-a-vis trademark. The Panel accepted the U.S. apprehension that the

scope for using trademarks owned by US car companies to claim subsidies under

National Car Programme is restricted; albeit, the programme did not pose any

problems for the acquisition of trademark rights.''' And if a foreign company

participated in the National Car Programme it would do so voluntarily and was aware

of the consequent implications of its inability to maintain pre-existing trademark

rights. Because of these reasons, Indonesian measures were not violative of Articles

3,20 and 65 of the TRIPS Agreement.

2. United States - Section 211 Omnibus Appropriations Act of 1998202

This was a case that not only dealt with the trademark provisions of TRIPS

Agreement, but also extended to similar provisions of Paris Convention (1967).

Section 2 of the TRlPS Agreement that dealt with "Trademarks", for its interpretation

has relied on innumerable provisions of Paris Convention (1967) and in this case an

interpretation of trademarks provisions in conjunction with Paris Convention was

sought. This case, filed by the EU was concerned with Section 21 1 of the Omnibus

Appropriations Act of 1998 (the "OAA") of the United States. Canada, Japan and

Nicaragua reserved their rights to participate as third parties.

The subject matter pertained to the non-recognition of trademarks, tradenames or

commercial names confiscated by the Cuban Government on or after 1 January 1959.

On July 1999, the EU requested consultations with the United States regarding

Section 21 1 of OAA.~'" The EC alleged that:

"' id., para 14.268. '"2 Panel Report, L'nireti States : Section 211 Omnibus Appropriations Act of 1998 [hereinafter US Omnibus case] WTO Doc.. WTDS 176iR, dated 6 August 2001. '03 Id.. Section 21 1 reads: . (a) (1) Notwithstanding any other provision of law, M transaction or payment shall be authorised or

approved pursuant to section 515.527 of title 31, Code of Federal Regulations as in effect on September 9, 1998, with respect to a mark, mde name, or commercial name that is the same as or substantially similar to a mark, trade name, or commercial name that was used in connection with a busines; or assets that were confiscated unless the original owner of the mark, trade name, or commerc~al name, of the bonafide successor-in-interest has expressly consented.

(2) No U.S. c o w shall recognise, enforce or otherwise validate any assertion of rights by a designated national based on common law rights or registration obtained under such section 515.527 of such a confiscated mark, trade name, or commercial name.

(a) Section 21 1 (a) (1) of the OAA was inconsistent with Article 2.1 of the

TRIPS Agreement in conjunction with Article 6 quinquies A(l) of the

Paris Convention (1967) and Article 15.1 of the TRIPS Agreement;

(b) Section 2 11 (a) (2) of the OAA was inconsistent with Article 2.1 of the

TRLPS Agreement in conjunction with Articles 2(1) 6 bis (1) and 8 of the

Paris Convention (1967) and Articles 3.1, 4, 16.1 and 42 of the TRIPS

Agreement; and

(c) Section 2 I I (b) of the OAA was inconsistent with Article 2.1 of the TRIPS

Agreement in conjunction with Articles 2.1, 6 bis (1) and 42 of the TRIPS

Agreement.

Section 21 l (u)( l ) of the OAA violative of Article 15.1 of the TRIPS Agreement and

Article 6quinquies A ( 1 ) of the Paris Convention (1967)'04

The EU claimed that Art~cle 15.1205 of the TRIPS Agreement created an obligation on

WTO Members to make any distinguishable sign or signs eligible for registration as

trademarks. Consequently, trademarks targeted by Section 21 l(a)(l) of the OAA were

violative of article 15.1 of the TRPS Agreement. EU also contended that there was

(b) No U.S. Court should recognize enforce otherwise validate any assertion of treaty rights by a designated national or its successor-in-interest under sections 44@) or (e) of the Trademark Act of 1946 (IS U.S.C. 1126@) or (e) for a mark, trade name, or commercial name that is the same as or substantially similar to mark, trade name, or commercial name that was used in connection with a business or assets that were confiscated unless the original owner of such mark, trade name, or commercial name, or the bonafide successor-in-interest has expressly consented.

The designated national shall mean Cuba and any national thereof. Confiscated refers to the nationalisation, expropriation or the seizure of ownership or control of property by the Cuban government, without paying adequate compensation to the owner. (See id., para 11.10 to U.22)

'O' All the charges the EC levelled against were in conjunction with Article 2 of TRIPS Agreement that dealt with International Intellectual Property Convention. TRIPS Agreement, Article 2 , supra note 5 states that:

1. In respect of Parts 11,111 and N of this Agreement, members shall comply with Articles 1-12 and 19 of the Pans Convention (1967).

2. Nothing in Parts I to IV of this Agreement shall derogate from existing obligations that members may have to each other under the Paris Convention, the Beme Convention, the Rome Convention and the Treaty in Respect of Integrated Circuits.

"" Id. , Article 15.1 states that: Any sign, or any combination of signs, capable of distinguishing the goods or services of one undertaking from those of other undertakings, shall be capable of constituting a trademark. Such signs, in particular words including personal names, letters, numerals, figurative elements and combinations of colours as well as any combination of such signs, shall be eligible for registration as trademarks. Where signs are not inherently capable of distinguishing the relevant goods or services, Members may make registrability depend on distinctiveness acquired through use. Members may require, as a condition of registration, that signs be visually perceptible.

nothing in TRIPS that specified that former owners' consent was necessary for

registration.

The EU also argued that Article 6quinquies (A) (1) of the Paris Convention imposed

an obligation on other countries of the Union, whenever a trademark is duly registered

in the country of origin. The United States rejected the EC's contention by claiming

that the scope of Article 15.1 of TRIPS and Article 6quinquies (A) (1) of the Paris

Convention was llrnited by Article 15.2"~ of TRIPS and Article 6quinquies (B)~" of

the Paris Convention, which provided for exception to the obligation. Section 21 1 (a)

( I ) was concerned with the trademarks that were confiscated without paying adequate

compensation or being registered without the original owner's permission.208 Since

the Paris Convention did not dictate national laws on the ownership of trademarks,

any denial of a trademark registration on grounds of lack of ownership did not

derogate from the provisions of the Paris Convention.

Section 2111a)(2) of the OAA vrolative of Articles 2(1), 6bis (I) and 8 of the Paris

ConventLon and Artrcles 3.1, 4, 16.1 and 42 of the TRIPS Agreement.

The EC contended that section 211(a)(2) prevented the owner of a registered US

trademark or the owner of a trade name from enforcing his rights using US Courts.

Hence it was violative of Articles 16.1209 and 42210 of the TRIPS Agreement. Since

'06 See Id., Article 15.2 whlch states that: Paragraph I above shall not be understood to prevent a Member from denying registration of a trademark on other grounds, provided that they do not derogate from the provisions of the Paris Convention (1967).

'07 Paris Cbnvention . Article 6quinquies 5,supra note 45 reads as follows: 1 . when they are of such a nature as to infringe rights acquired by third parties in the country where protection is claimed; 2, when they are devoid of any distinctive character, or consist exclusively of signs or indicat~ons which may serve, in trade, to designate the kind, quality, quantity, intended purpose, value, place of origin, of the goods, or the time of production, or have become customary in the current language or in the hona tide and established practices of the trade of the country where protection is claimed; 3. when they are contrary to morality or public order and, in particular, of such a nature as to deceive the public. It is understood that a mark may not he considered contriuy to public order for the sole reason that it does not conform to a provision of the legislation on marks, except if such provision itself relates to public order

108 US Omnibus case, supra note 202, para IV.53. 209 TRlPSAgrrrmenr, Article 16.1, supra note 5 , states that:

The owner of a registered trademark shall have the exclusive right to prevent all third parties not having the owner's consent from using in the course of trade identical or similar signs for goods or services which are identical or similar to those in respect of which the trademark is registered where such use would result in a likelihood of confusion. In case of the use of an identical slgn for identical goods or services, a likelihood of confusion shall he presumed. The

the entire TRIPS Agreement was based on the principles of national treatment (Article

3 . 1 ) ~ " and most favoured nation treatment (Article 4l2I2, by specifically denying

rights described above shall not prejudice any existing prior rights, nor shall they affect the possibility of Members making rights available on the basis of use.

210 I r l , Article 42 reads as follows: Members shall make available to right holders civil judicial procedures concerning the enforcement of any intellectual property right covered by this Agreement. Defendants shall have the right to written notice which is timely and contains sufficient detail, including the basis of the claims. Parties shall be allowed to be represented by independent legal counsel, and procedures shall not impose overly burdensome requirements concerning mandatory personal appearances. All parties to such procedures shall he duly entitled to substantiate their claims and to present all relevant evidence. The procedure shall provide a means to identify and protect confidential information, unless this would be contrary to existing constitutional requirements.

' 'I Id., Article 3.1 states that: Where the law of a Member allows for other use of the subject matter of a patent without the authorization of the right holder, including use by the government or third parties authorized by the govemment, the following provisions shall he respected: (a) authorization of such use shall be considered on its individual merits; (b) such use may only be permitted if, prior to such use, the proposed user has made efforts

to obtain authorization from the right holder on reasonable commercial terms and conditions and that such efforts have not been successful within a reasonable period of tlme. This requirement may be waived by a Member in the case of a national emergency or other circumstances of extreme urgency or in cases of public non- commercial use. in situations of national emergency or other circumstances of extreme urgency, the right holder shall, nevertheless, be notified as soon as reasonably practicable. In the case of public non-commercial use, where the government or contractor, without making a patent search, knows or has demonstrable grounds to know that a valid patent is or will be used by or for the govemment, the right holder shall be informed promptly; (c)the scope and duration of such use shall be limited to the purpose for which it was authorized, and in the case of semi-conductor technology shall only be for public non- commercial use or to remedy a practice determined after judicial or administrative process to be anti-competitive; (d)such use shall be non-exclusive; (e)such use shall be non-assignable, except with that part of the enterprise or goodwill which enjoys such use; (f)any such use shall be authorized predominantly for the supply of the domestic market of the Member authorizing such use; (g)authorizatiou for such use shall be liable, subject to adequate protection of the legitimate interests of the persons so authorized, to be terminated if and when the circumstances which led to it cease to exist and are unlikely to recur. The competent authority shall have the authority to review, upon motivated request, the continued existence of these circumstances; (h)the right holder shall be paid adequate remuneration in the circumstances of each case, taking into account the economic value of the authorization; (i)the legal validity of any decision relating to the authorization of such use shall be subject to judicial review or other independent review by a distinct higher authority in that Member: (j)any dec~sion relating to the remuneration provided in respect of such use shall be subject to judicial review or other independent review by a distinct higher authority in that Member; (k)Members are not obliged to apply the conditions set forth in subparagraphs (b) and (0 where such use is permitted to remedy a practice determined after judicial or administrative process to be anti-competitive. The need to correct anti-competitive practices may be taken into account in determining the amount of remuneration in such cases. Competent authorities shall have the authority to refuse termination of

protection of the US intellectual property rights to Cuban nationals, Section 21 1(a)(2)

was violative of Articles 3.1 and 4 of TRIPS Agreement. The EC also claimed that by

creating a dejure discrimination between Cuban right holders and US right holders,

Section 21 1(a)(2) was violative of Article 2(1) of the Paris Convention, that also

called for the principle of national treatment.'I3

The EC contended that Article 6bis (1) of the Paris Convention (1967) asserted the

protection of well-known trademarks2I4 like the "Havana Club" trademark and Article

8 of the Paris Convention that extended protection to trade names would also be

jeopardised, for the language of Section 21 l(a)(2) was of such a sweeping nature.215

authorization if and when the conditions which led to such authorization are likely to recur; (!)where such use is authorized to permit the exploitation of a patent ("the second patent") which cannot he exploited without infringing another patent ("the fust patent"), the following additional conditions shall apply: ( I ) the invention claimed in the second patent shall involve an important technical

advance of considerable economic significance in relation to the invention claimed in the fust patent;

(11)the owner of the first patent shall be entitled to a cross-licence on reasonable terms to use the Invention claimed in the second patent; and

(iii)the use authorized in respect of the fust patent shall be non-assignable except with the assignment of the second patent.

' I 2 Id.. Artlcle 4 says: With regard to the protection of intellechlal property, any advantage, favour, privilege or immunity granted by a Member to the nationals of any other country shall be accorded immediately and unconditionally to the nationals of all other Members. Exempted from this obligation are any advantage, favour, privilege or immunity accorded by a Member: (a) deriving from international agreements on judicial assistance or law enforcement of a gcner~l nJli1rc JnJ nu1 pan~sularly confined lo the prolccuon of ~ntellc;tual property. ( h ) granted 111 aczc~rdance w~th the provlslons of the Berne Con\,enrlon (1971) or the Rome Convention authorizing that the treatment accorded be a function not of national treatment hut of the treatment accorded in another country; (c) in respect of the rights of performers, producers of phonograms and broadcasting organizations not provided under this Agreement; (d) deriving from ~nternational agreements related to the protection of intellectual property which entered Into force prior to the entry into force of the WTO Agreement, provided that such agreements are notified to the Council for TRIPS and do not constitute an arbitrary or unjustifiable discrimination against nationals of other Members.

Paris Convention ,Article 2(1), supra note 45. 214 Id., 6 bis ( I ) reads:

The countries of the Union undertake, ex officio if their legislation so permits, or at the request of an interested party, to refuse or to cancel the registration, and to prohibit the use, of a trademark which constitutes a reproduction, an imitation, or a translation, liable to create confusion, of a mark considered by the competent authority of the country of registration or use to he well known in that country as being already the mark of a person entitled to the benefits of this Convention and used for identical or similar goods. These provisions shall also apply when the essential part of the mark constitutes a reproduction of any such well-known mark or an mit tat ion liable to create confusion therewith.

21s Id., Article 8.

The United States in response argued that only the "owner of trademark"216 could

claim exclusive rights to prevent third party use. The United States claimed that

Article 42 is related to intellectual property rights' enforcement; and if a person holds

no rights in a mark, he cannot enforce that mark. Regarding 6bis (1) and Article 8 of

Paris Convention, the United States argued that a confiscator cannot claim any rights

of ownership in the trademark, whether well known or otherwise.

The United States claimed that it had neither violated Article 3.1 or Article 4 of

TRIPS, for it had not discriminated between Cubans and US nationals or provided any

favourable treatment to US nationals; but only asserted that alleged trademark rights

on a foreign confiscation were not the true owners under the US law, and hence they

had no ownership rights to assert under the TRIPS Agreement as well.

Section 211(u)(2) of the OAA violative of Article 2(1) 6bis ( I ) and 8 of the Paris

Convention und Articles 3.1. 4, 16.1 and 42 of the TRWS

By claiming that the precise scope of section 21 1(b) was "largely obscure", the EU

argued that this section's coverage was "parallel" to the coverage of Section

21 1(a)(2).~" This obscurity was compounded by the absence of legislative history.

However, in the only case related to this Article, the US District Court with the

subsequent approval of the Court of Appeals had given this section a very wide scope.

This in effect necessitated bringing the same arguments as it used under Section

21 l(a)(2) - mututis mutandis - to section 211(b) as well. Thus EC claimed that

Section 21 l(b) of the OAA was inconsistent with Article 2.1 of the TRIPS Agreement

in conjunction with Articles 2(1), 6bis (1) and 8 of the P a i s Convention (1967) and

Articles 3.1, 4, 16.1 and 42 of the TRIPS.~''

Presenting the same arguments which it developed vis-a-vis section 21 1(a)(2) of the

OAA, the Unlted States claimed that Section 21 l(b) of OAA Act was not inconsistent

with any of the provision as alleged by the EC.

To conclude, the edifice of the US arguments was based on the principle of non-

recognition of foreign confiscation. Citing the established rule of customary

216 US Omnibus clrsr, supru note 202, para IV.lOO. 217 Id., para IV.169.

Id., para IV.172.

international law, the United States argued that a state should not expropriate private

assets of nationals of other states in its territory unless such a confiscation

(1) for a public purpose;

(2) on a non discriminatory basis based on the principle of due process of law;

(3) subject to prompt, adequate and effective compensation.

The United States claimed that European jurisprudence followed the same principle

when it involved in litigation that arose out of the confiscation of the Koh-I-Noor

trademarks by the Communist Revolutionary Government in Czechoslovakia. But the

EU questioned the logic of promulgating legislation in 1998 for events that occurred

around 1960.

Recommendations ofthe Panel

The panel first examined whether trade names were covered by the TRIPS Agreement

and concluded that they are not. Regarding the consistency of Section 21 l(a)(l) with

Article 15.1 of the TRIPS Agreement, the panel held that Section 211(a)(l) was a

domestic legislation that denied trademark registration on the basis that the applicant

was not the proper owner under the U.S. law and hence came within the purview of

other grounds and hence consistent.220 Since 21 1(a)(l) was a measure that regulated

ownership and did not deal with the form of the signs of which trademark was

composed, it was consistent with Article 6quinquies A(l) of the Paris Convention

(1967) too.221

The panel then analyzing Section 21 1(a)(2) with other articles found that:

(a) it was inconsistent with Article 42 of the TRIPS Agreement, because rights

holders' access to the availability ofjudicial procedures were denied;

(b) it was not proved that Section 211(a)(2) was inconsistent with Article 16.1 of

the TRIPS Agreement.

(c) it was not inconsistent with Article 2.1 of the TRIPS Agreement in

conjunction with Article 6bis of the Paris Convention (1967);

:I9 Id., para IV.177. " O Id., para V111.415. "' Id., para VI11.446.

(d) it was not inconsistent with Article 3.1 of the TRIPS Agreement in

conjunction with Article 8 of the Paris Convention (1967) because Members

did not have an obligation to provide protection to trade names under the

TRIPS ~ ~ i - e e r n e n t . ~ * ~

(e) it was not inconsistent with Article 3.1 of the TRIPS Agreement and Article

2.1 of the TRIPS Agreement in conjunction with Article 2(1) of the Paris

convention ( 1967), because the US nationals were unable to obtain licenses so

as to become a successor in interest and it did not accord a treatment less

favourable to foreign original owner.223

(0 Sect~on 21 1(a)(2) was not inconsistent with Article 4 of the TRIPS

Agreement, because it did not deny Cuban nationals any advantage or

privilege that it accorded to other foreign nationals.

Regarding Section 2 1 i(h) of the OAA, the Panel held that it was not inconsistent with

the articles as alleged by the EC.

The Ap~ellute Body 's ~ecommendat ions~~~

Based on the request for appeal of the EU and the United States, an Appellate Body

was constituted. Upholding many of the rulings of the Panel the AB reversed Panels'

recommendations on the following and held that:

(1) Neither Section 21 1(a)(2) nor 21 l(b) was inconsistent with Article 42 of

the TRIPS Agreement.

(2) Section 211(a)(2) was inconsistent with Article 2.1 of the TRIPS

Agreement in conjunction with Article 2(1) of the Paris Convention (1967)

and Article 3.1 of the TRIPS Agreement regarding successors-in-interest;

regarding original owners both Section 211(a)(2) and section 21 1(b) were

inconsistent with the afore-mentioned articles.

(3) Regarding original interests, the AB held that both Section 211(a)(2) and

(b) are inconsistent with Article 4 of the TRIPS Agreement.

(4) The trade names were covered under the TRIPS Agreement

"'Id., para V111.479 '" Id., para VI11.497. 1 1 Appellate Body, Unitnl States: Section 211 Omnibus Appropriations Act of 1998, WTO Doc., dated 2 January 2002.

The AB also noted that this ruling was not a judgement on confiscation of validity or

the expropriation of intellectual property without compensation;225 but an assertion

that if the confiscation affected other WTO member, then the WTO member must

comply with TRIPS provision. A WTO member shall not discriminate and shall not

derogate the obligation of national treatment or most favoured nation treatment that

are basic to the TRIPS Agreement.

5.3 Conclusion

It was already noted that 20 cases relating to TRIPS were filed during the first five

years before WTO' s dispute settlement mechanism. Of these 20 disputes, eight cases

related to patents, five on copyrights and four on enforcement of intellectual property

rights. There were cases that related to protection of trademarks and geographical

indicators as well. However, only seven disputes reached the final stage - four

disputes on patent protection, one on copyright protection and the other one on

trademark protection.

A perusal of these cases demonstrates that it is primarily a rich nation's affair. Only

the developed nations - the United States, European Communities and Canada - used

WTO's judicial mechanism to settle TRlPS disputes. The developing nations were

involved in five TRIPS disputes. They included India, Pakistan, Indonesia and

Argentina - but every time as respondent. Except the case of Indonesia, complainants

against the developing nations were on expected lines, i.e., litigating with them on

their failure to implement Article 70.8 and 70.9.

This was because a developing country member was exempted from implementing

the rest of TRIPS prov~sions for a period of ten years i.e., till December 31, 2004

under the transitional arrangements. But the TRIPS Agreement insisted they create a

"mail-box system" and grant exclusive marketing rights, if they decide to avail of this

grace period. It 1s equally expected that after the lapse of this grace period, TRIPS

disputes would be between developed countries as complainants and developing

countries as respondents. This is because the thrust of the TRIPS initiative was to

- 2251d., para XI11 165

compel the developing nations to enforce effective protection of intellectual

property.2z"

The concerned member, whose laws were found inconsistent with TRIPS Agreement

should implement2*' the recommendations of the PanelIAB. Accordingly, the parties

to these disputes to which the panel1AB recommendations were directed implemented

them by making necessary alterations in their municipal intellectual property rights

laws. The ~mplementation of paneVAB recommendations is provided in the next

chapter. Ind~an Government's initiatives to change its patent laws in accordance with

WTO panelIAB rul~ngs on India Patents casesz2' is provided as a case study.

' 26 Dreyfuss and Lowenfeld . supra note 4, p.282. 127 DSU, Art~cle 19.1. .$upr.a note 5 reads:

Where a panel or Appellate Body concludes that a measure is inconsistent with a covered agreement, it shall recommend that the member concerned bring the measure into conformity with that agreement. In addition to its recommendations, the panel or Appellate Body may suggest ways in which member concerned could implement the recommendations.

WTIDS 50IABIR and WTDS 79R, supra notes 107, 117 and 129.