TRADE RELATED INTELLECTUAL PROPERTY RIGHTS(TRIPs):

ISSUES WITH REFERENCE TO DEVELOPING COUNTRIES.

CHAPTER NO 1

1.1 INTRODUCTION

In 1993, the GATT was updated (GATT 1994) to include new obligations upon its

signatories. One of the most significant changes was the creation of the World Trade

Organization (WTO). The 75 existing GATT members and the European

Communities became the founding members of the WTO on 1 January 1995. The other 52

GATT members rejoined the WTO in the following two years. Since the founding of the

WTO, 21 new non-GATT members have joined and 29 are currently negotiating

membership. There are a total of 161 member countries in the WTO, with Laos and

Tajikistan being new members as of 2013.

The General Council of WTO, on 4 May 2010, agreed to establish a working party to

examine the request of Syria for WTO membership. The contracting parties who founded

the WTO ended official agreement of the "GATT 1947" terms on 31 December

1995. Montenegro became a member in 2012, while Serbia is in the decision stage of the

negotiations and is expected to become one of the newest members of the WTO in 2014 or

in near future.

Whilst GATT was a set of rules agreed upon by nations, the WTO is an institutional body.

Although it was designed to serve multilateral agreements, during several rounds of GATT

negotiations plurilateral agreements created selective trading and caused fragmentation

among members. WTO arrangements are generally a multilateral agreement settlement

mechanism of GATT.

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1.2 MAIN AGREEMENTS OF WTO

a) Agreement on Agriculture.

The Agreement on Agriculture includes specific and binding commitments

made by WTO Member governments in the three areas of market access, domestic

support and export subsidization for strengthening GATT disciplines and

improving agricultural trade. These commitments were implemented over a six-

year period. The Agreement also includes provisions on the implementation of

these commitments.

b) Agreement on Textiles and Clothing Textile.

Trade was governed by the Multi-Fiber Arrangement (MFA) since 1974. However,

the GATT principles had been undermined by import protection policies, etc. The

agreement provides that textile trade should be deregulated by gradually integrating

it into GATT disciplines over a 10-year transition period, which expired at the end

of 2004.

c) Agreement on Trade-Related Investment Measures (TRIMs)

In relation to cross-border investment, countries receiving foreign investment

may take various measures, including imposing requirements, conditions and Part

II Overview of the WTO Agreements 315 restrictions (investment measures) on

investing corporations. In the Uruguay Round, negotiations were initially

conducted with an eye toward expanding disciplines governing investment

measures. However, the Agreement on Trade-Related Measures, which was the

result of the negotiations, banned only those investment measures inconsistent with

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the provisions of ArticleⅢ and Article XI which have direct adverse effects on

trade in goods.

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

This agreement stipulates most-favored-nation treatment and national treatment for

intellectual properties, such as copyright, trademarks, geographical indications,

industrial designs, patents, IC layout designs and undisclosed information. In

addition, it requires Member countries to maintain high levels of intellectual

property protection and to administer a system of enforcement of such rights. It also

stipulates procedures for the settlement of disputes related to the agreement

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1.3 ORIGIN OF TRIPS

TRIPS were negotiated at the end of the Uruguay Round of the General Agreement on

Tariffs and Trade (GATT) in 1994. Its inclusion was the culmination of a program of

intense lobbying by the United States, supported by the European Union, Japan and

other developed nations. Campaigns of unilateral economic encouragement under

the Generalized System of Preferences and coercion under Section 301 of the Trade Act

played an important role in defeating competing policy positions that were favoured by

developing countries, most notably Korea and Brazil, but also including Thailand, India and

Caribbean Basin states. In turn, the United States strategy of linking trade policy to

intellectual property standards can be traced back to the entrepreneurship of senior

management at Pfizer in the early 1980s, who mobilized corporations in the United States

and made maximizing intellectual property privileges the number one priority of trade

policy in the United States.

After the Uruguay round, the GATT became the basis for the establishment of the

World Trade Organization. Because ratification of TRIPS is a compulsory requirement of

World Trade Organization membership, any country seeking to obtain easy access to the

numerous international markets opened by the World Trade Organization must enact the

strict intellectual property laws mandated by TRIPS. For this reason, TRIPS is the most

important multilateral instrument for the globalization of intellectual property laws. States

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like Russia and China that were very unlikely to join the Berne Convention have found the

prospect of WTO membership a powerful enticement.

Furthermore, unlike other agreements on intellectual property, TRIPS has a powerful

enforcement mechanism. States can be disciplined through the WTO's dispute

settlement mechanism.

CHAPTER NO 2

TRADE RELATED ASPECTS OF INTELLECTUAL PROPERTY

RIGHTS

2.1 AGREEMENT

a) Article 1- Nature and Scope of Obligations

Members shall give effect to the provisions of this Agreement. Members may, but shall not

be obliged to, implement in their law more extensive protection than is required by this

Agreement, provided that such protection does not contravene the provisions of this

Agreement. Members shall be free to determine the appropriate method of implementing

the provisions of this Agreement within their own legal system and practice.

b) Article 2- Intellectual Property Conventions

1. In respect of Parts II, III and IV of this Agreement, Members shall comply with Articles

1 through 12, and Article 19, of the Paris 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 Berne Convention, the

Rome Convention and the Treaty on Intellectual Property in Respect of Integrated Circuits.

c) Article 3- National Treatment

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1.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 protection3 of intellectual

property, subject to the exceptions already provided in, respectively, the Paris Convention

(1967), the Berne Convention (1971), the Rome Convention or the Treaty on Intellectual

Property in Respect of Integrated Circuits. In respect of performers, producers of

phonograms 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 1(b) of Article 16 of the

Rome Convention shall make a notification as foreseen in those provisions to the Council

for TRIPS.

d) Article 4- Most-Favoured-Nation Treatment

With regard to the protection of intellectual 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

general nature and not particularly confined to the protection of intellectual property;

(b) granted in accordance with the provisions of the Berne Convention (1971) or the Rome

Convention authorizing that the treatment accorded be a function not of national treatment

but of the treatment accorded in another country

e) Article 5- Multilateral Agreements on Acquisition or Maintenance of Protection

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The obligations under Articles 3 and 4 do not apply to procedures provided in multilateral

agreements concluded under the auspices of WIPO relating to the acquisition or

maintenance of intellectual property rights.

f) Article 6- Exhaustion

For the purposes of dispute settlement under this Agreement, subject to the provisions of

Articles 3 and 4 nothing in this Agreement shall be used to address the issue of the

exhaustion of intellectual property rights.

g) Article 7- Objectives

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 of technological knowledge and in a manner

conducive to social and economic welfare, and to a balance of rights and obligations.

h) Article 8- Principles

1. Members may, in formulating or amending their laws and regulations, adopt measures

necessary to protect public health and nutrition, and to promote the public interest in sectors

of vital importance to their socio-economic and technological development, provided that

such measures are consistent with the provisions of this Agreement.

2. Appropriate measures, provided that they are consistent with the provisions of this

Agreement, may be needed to prevent the abuse of intellectual property rights by right

holders or the resort to practices which unreasonably restrain trade or adversely affect the

international transfer of technology.

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2.2 ASPECTS

The state of play of India`s obligations under TRIPS arising as on 1.1.2000 in respect of the

seven IPRs covered under TRIPS is briefly given below.

a) COPYRIGHTS

Copyright and related rights: i.e., rights granted to authors of literary and artistic

works, and the rights of performers, producers of phonograms and broadcasting

organizations. The main purpose of protection of copyright and related rights is to

encourage and reward creative work. The distinguishing feature of this category of

rights is that they protect only the tangible expression of an idea and not the idea itself.

Further, these rights generally come into existence the moment a work is created and

need not be registered with any central authority.

b) TRADEMARKS

A trademark is a sign or mark that is used to distinguish the goods or services of one

enterprise from those of another enterprise. It can be any distinctive word, letter,

numeral, drawing, picture, shape, colour, sound, smell, logotypes, or any

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combination of these that may be used for distinguishing goods and services, of any

given business. A trademark is used extensively by an enterprise to reach customers

by enabling customers to identify and locate the product. A trademark is issued by a

national office and is granted for a period of 10 years and may be renewed

indefinitely.

c) GEOGRAPHICAL INDICATION

Geographical Indications of goods are indications which identify a good as

originating in the territory of a country or a region or locality in that territory.

Typically, such a name conveys an assurance of quality and distinctiveness which is

essentially attributable to the fact of its origin in that defined geographical locality,

region or country. In contrast to other IPRs, a Geographical Indication is owned by

members of a community who produce the good in question.

d) DESIGN

Design is another intellectual property right and refers to external features of shape,

configuration, pattern, ornamentation or composition of lines or colours applied to

any article, whether in two or three dimensional (or both) forms. Design does not

include any mode or principle of construction or anything which is mere mechanical

device. It also does not include any trade mark or any artistic work.

e) PATENTS

Patents provide property rights to inventions. An 'invention' may be defined as a

novel idea which permits in practice the solution of a specific problem in a field of 9

technology. Patents are available for any invention, whether products or processes,

in all fields of technology, provided that they are new, involve an inventive step and

are capable of industrial application. Thus, the TRIPS Agreement stipulates that

countries shall grant patents for inventions in all fields of technology and for both:

• Products, and

• Processes, including those used in manufacturing products.

f) TRADE SECRETS

A trade secret is an IPR that is with the holder indefinitely or rather as long as he

can keep his secret as a trade secret. To enable an enterprise to keep something as a

trade secret, the holder must ensure secrecy agreements with the employees in the

business. These can be built into the service contract agreements. For information to

be treated as a trade secret, it is necessary that there should be commercial value

associated with the information, that this commercial value would be lost, damaging

the commercial interests of the holder of the trade secret and that the holder had

taken reasonable care to protect the secret so that its loss would be possible only

through an illegal access.

g) LAYOUT DESIGN OF INTEGERATED CIRCUITS

Modern age is electronic age. All the modern products are having transistors and

other circuity elements which are inseparably form on semi conductor materials and

these semi conductors are interested to perform an electronic function. Layout

design of integrated circuits is considered as intellectual property. Infringement of

these layouts designs is punishable. The protection of integrated circuits and layout 10

design was internationally recognized and the treaty on intellectual property of

integrated circuits was made at Washington DC on May 26 1989.

CHAPTER NO 3

A MORE DETAILED OVERVIEW OF THE TRIPS

AGREEMENT

3.1 FEATURES

The TRIPs agreement which came into effect from 1 Jan 1995 is to date the most

comprehensive multi lateral agreement on intellectual property. The areas of intellectual

property that it covers are: copyright and related property trademarks including service

marks, geographical indications including appellations of origins, industrial designs, patents

including the protection of new variety of plants, layout designs of integrated designs, and

undisclosed information including trade secrets and test data.

a) Standards-

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

agreement, the agreements sets out the minimum standards of protection to be provided

by each member. Each of the main elements of protection is defined, namely the

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subject matter to be protected, the rights to be conferred and permissible exception to

those rights and the minimum duration of protection.

b) Enforcement-

The second main set of provisions deals with domestic procedures and remedies for

the enforcement of intellectual property rights. The agreement lays down certain

general principles applicable to all IPR enforcement procedures.

c) Dispute Settlement-

The agreement make disputes between WTO members about the respect of the

TRIPs obligations subject to the WTOs dispute settlement procedures.

3.2 POLICY IMPLICATIONS OF TRIPS

Besides its significance in helping to secure agricultural trade liberalisation in the Uruguay

Round, TRIPS has important implications for domestic policy. Given the strong

international orientation of IPR protection, the analysis presented in this paper suggests that

generally, Australia’s best approach from an economic point of view seems to be to provide

IPR protection that complies with the minimum protection standards required by TRIPS,

but does not exceed those standards. Compliance with the minimum standards of TRIPS is

advisable in order to avoid political and trade retaliation and disciplinary action under the

WTO. On the other hand, providing protection beyond the minimum standards might

hamper competition in the domestic market and provide additional income to foreign IPR

holders at the expense of Australian consumers. Without reciprocal agreements with our

major trading partners, providing protection above the minimum international standards

does not help our exporters. However, in areas where IPR protection is mainly aimed to

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prevent imitation and copying by domestic (rather than overseas) competitors, the rule not

to exceed the minimum standards of TRIPS might not represent the best approach.

The fairly general rule outlined above suggests that Australia should avoid introducing

legislative changes that might bring in protection standards well beyond the minimum

requirements of TRIPS, unless other benefits can be shown to outweigh costs. There are

currently a number of reform proposals under consideration by the Government (such as a

new form of patents for low level innovations, changes to the protection of designs and

improvements to the copyright protection of databases, digital transmissions and

performers’ rights) that are examined in the light of this criterion.

3.3 THE TRIPS NEGOTIATIONS

The earlier international IPR protection system coordinated by WIPO proved less than

satisfactory in safeguarding against widespread ‘piracy’ of copyright protected items, the

misappropriation of well known marks and the imitation of some patent protected

inventions in member and non-member countries. The increasing globalisation of the world

economy has made matters worse. Consequently, in the last two decades a growing political

pressure emerged from developed IP exporting countries (particularly the United States) to

strengthen the international protection of IPRs. Since many developing countries were

reluctant to embrace stronger protection of IPRs, an agreement had to be worked out that

offered some compensating benefits to these countries, to induce them to join a binding

international IPR agreement. This was accomplished through the forum of the Uruguay

Round negotiations. Initially IPR protection entered into these multilateral trade

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negotiations as a result of complaints about exports from some East Asian and Latin

American countries of ‘pirated’ copyright protected material and ‘counterfeit’ products that

misappropriated well known marks. At a later stage, the agenda widened to include all IPR

issues and not just these items. After protracted negotiations, developing countries agreed to

join a new international IPR agreement, partly in exchange for the liberalisation of

agricultural and textile imports by developed nations. The ideological shift in many

developing countries toward faith in the market and free trade may have contributed to

accepting a larger role for IPRs in providing incentives for technological innovation and

cultural endeavours, instead of viewing these areas as public responsibilities. Last but not

least, the threat of unilateral trade retaliation by the United States and the European Union

against IPR infringing countries was another factor that convinced many developing

countries to accept a multilateral IPR agreement.

3.4 REQUIREMENT OF TRIPs

A TRIP requires member states to provide strong protection for intellectual property rights.

For example, under TRIPS:

a) Copyright terms must extend at least 50 years, unless based on the life of the author.

b) Copyright must be granted automatically, and not based upon any "formality," such

as registrations, as specified in the Berne Convention.

c) Computer programs must be regarded as "literary works" under copyright law and

receive the same terms of protection.

d) National exceptions to copyright (such as "fair use" in the United States) are

constrained by the Berne three-step test

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e) Patents must be granted for "inventions" in all "fields of technology" provided they

meet all other patentability requirements (although exceptions for certain public

interests are allowed and must be enforceable for at least 20 years

f) Exceptions to exclusive rights must be limited, provided that a normal exploitation of

the work and normal exploitation of the patent is not in conflict.

g) No unreasonable prejudice to the legitimate interests of the right holders of computer

programs and patents is allowed.

h) Legitimate interests of third parties have to be taken into account by patent rights.

i) In each state, intellectual property laws may not offer any benefits to local citizens

which are not available to citizens of other TRIPS signatories under the principle

of national treatment  TRIPS also has a most favoured nation clause.

Many of the TRIPS provisions on copyright were copied from the Berne Convention for the

Protection of Literary and Artistic Works and many of its trademark and patent provisions

were modelled on the Paris Convention for the Protection of Industrial Property. It is the

case of the protection of software and database.

Computer programs, whether in source or object code, shall be protected as literary works

under the Berne Convention (1971). Compilations of data or other material, whether in

machine readable or other form, which by reason of the selection or arrangement of their

contents constitute intellectual creations shall be protected as such. Such protection, which

shall not extend to the data or material itself, shall be without prejudice to any copyright

subsisting in the data or material itself."

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3.5 CHANGES INTRODUCED BY TRIPs

TRIPS is based largely on earlier international IPR agreements, including the Paris and

Berne Conventions dating back to the last century and the more recent Rome Convention

and Washington Treaty. In addition to mandating stricter enforcement procedures, TRIPS

contains a number of additions and elaborations to the legal and institutional norms and

practices specified in earlier international IPR agreements. The most significant ones are:

a) the minimum patent term is set to 20 years, the minimum copyright protection term

for sound recordings and performances is 50 years and for broadcasts 20 years;

b) computer programs and databases must be protected with copyright;

c) countries must provide for the registration of service marks;

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d) the provisions of the Paris Convention regarding the registration of well known

marks have been strengthened;

e) no country can force the use of a foreign trade mark in combination with a local

mark;

f) the provisions of the Paris Convention regarding geographical indications have been

strengthened;

g) integrated circuit layout designs must be protected for at least ten years;

h) artificially developed new varieties of micro-organisms must be protected through

patents; · no area of technology can be excluded from patent protection, with the

exception of medical methods and new life forms above the micro-organism level;

i) countries must protect new plant varieties, either within their patent systems or with

a separate system of breeders’ rights;

j) countries must develop a legal system for protecting trade secrets from unfair

disclosure in accordance with principles of fair competition.

3.6 OUTSTANDING ISSUES IN TRIPs

TRIPS has an in-built agenda for review and further consideration of issues that were not

resolved during the original negotiations. There are currently two issues subject to review

under this in-built agenda — biological innovations is one, geographical indications is the

other.

a) IPR protection of biotechnology

A review on how to incorporate biological innovations into TRIPS has already

started, though it is not clear when negotiations as such will commence. The major

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contentious issue in this area is whether TRIPS should require mandatory protection

of bioengineering innovations above the micro-organism level. TRIPS already

requires the patentability of new micro-organisms, as well as ‘sui generis’ IPR

protection of new plant varieties. Some of the controversy is related to ethical

concerns about the development of new life forms using genetic engineering

techniques. There is also debate whether new life forms created through

bioengineering techniques represent scientific discoveries or technological

innovations. Australia already permits the patenting of new life forms.

b) Geographical indications

The protection of geographical indications formed part of the Paris Convention and

consequently the original TRIPS agreement. Current negotiations on this subject

have been at the request of the European Union, which would like to see the same

‘strong’ protection that is now applied to wine and spirit geographical indications in

TRIPS be applied to other products, including processed foods, agricultural products

and handicrafts. It wants protection for a variety of terms that are now protected

within the European Union as geographical indications.

3.7 CRITICISM

Since TRIPS came into force, it has been subject to criticism from developing

countries, academics, and non-governmental organizations. Though some of this criticism

is against the WTO generally, many advocates of trade liberalisation also regard TRIPs as

poor policy. TRIPs wealth concentration effects (moving money from people in developing

countries to copyright and patent owners in developed countries) and its imposition

of artificial scarcity on the citizens of countries that would otherwise have had weaker

intellectual property laws, are common bases for such criticisms. Other criticism has

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focused on the failure of TRIPs to accelerate investment and technology flows to low-

income countries, a benefit advanced by WTO members in the lead-up to the agreement's

formation. Statements by the World Bank indicate that TRIPs has not led to a demonstrable

acceleration of investment to low-income countries, though it may have done so for middle-

income countries. Lengthy patent periods under TRIPs have been scrutinised for unduly

slowing the entry of generic substitutes and competition to the market. In particular, the

illegality of pre-clinical trials or submission of samples for approval until a patent expires

have been blamed for driving the growth of a few multinationals, rather than developing

country producers.

Daniele Archibugi and Andrea Filippetti argue that the importance of TRIPS in the process

of generation and diffusion of knowledge and innovation has been overestimated by its

supporters. This point has been supported by United Nations findings indicating many

countries with weak protection routinely benefit from strong levels of foreign direct

investment (FDI). Analysis of OECD countries in the 1980s and 1990s showed that while

total number of products registered increased slightly, the mean innovation index remained

unchanged.

The 2002 Doha Declaration affirmed that the TRIPs agreement should not prevent members

from taking measures necessary to protect public health. Despite this recognition, less-

developed countries have argued that TRIPs flexible provisions, such as compulsory

licensing, are near-on impossible to exercise. In particular, less developed countries have

cited their infant domestic manufacturing and technology industries as evidence of the

policy's bluntness.

TRIPS-plus conditions mandating standards beyond TRIPs have also been the subject of

scrutiny. These FTA agreements contain conditions that limit the ability of governments to

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introduce competition for generic producers. In particular, the United States has been

criticised for advancing protection well beyond the standards mandated by TRIPs. The

United States Free Trade Agreements with Australia, Morocco and Bahrain have extended

patentability by requiring patents be available for new uses of known products. The TRIPs

agreement allows the grant of compulsory licenses at a nation’s discretion. TRIPS-plus

conditions in the United States FTA’s with Australia, Jordan, Singapore and Vietnam have

restricted the application of compulsory licenses to emergency situations, antitrust

remedies, and cases of public non-commercial use.

3.8 TRIPs IN DEVELOPING COUNTRIES

Effective developing country decision making concerning TRIPs and international

intellectual property rule making more generally, is hampered by a no. of factors. The first

is an inevitable consequence of these nations enormous diversity in terms of economic

circumstances. This diversity translates into quite desperate interest with respect to TRIPs.

So while congruent negotiating positions across the developing world are possible, widely

one’s can arise too.

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The second difficulty is that intellectual property rights are designed with certain

assumptions as to what a protectable intellectual production should look like and this

categories are abundant in developed world but less so in most developing countries. In the

latter nations, creativity may be common but cannot easily be described or communicated

in ways that lend it to IP production. Of course, India cannot become a rich, oil based

economy where there is no oil to base its economy on. But most Indians work on the land

and the diffusion of state of the art knowledge and technologies is the only one part of the

whole solution to the problem of how to eke a decent income from agriculture.

Creativity is not the sole preserve of suited knowledge workers in gassy office blocks,

professional artist and musicians and laborarty scientist. If necessity really is the mother of

invention you would surely expect to see most innovations where the needs are greatest.

And no needs are greater than those of desperately poor people getting themselves and their

families through each day alive and well.

3.9 THE IMPACT OF TRIPS ON DEVELOPING COUNTRIES

The main purpose of the TRIPS agreement was to improve IPR enforcement in developing

countries. IPR related legal and enforcement practices in the developing world are a very

wide subject that will not be reviewed here. The interested reader can find relevant

descriptive material in USITC (1988), Primo Braga (1995), Maskus and Penubarti (1996)

and Subramanian (1997).

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The purpose of the discussion in this section is to outline in broad terms the directions for

reform in developing countries and to analyse certain developments that could be of

relevance to Australia.

a) The main problem areas

Exports from countries in East Asia and Latin America of pirated and counterfeit

products were one of the prime motives for formulating the TRIPS agreement.

These infringing exports were concentrated mainly in copyright material, in

particular sound and video recordings, books and software. The misappropriation of

trade marks of high class fashion goods was another major problem area.

b) Income transfers from developing to industrialised countries:

In regard to the first issue, on income distributional grounds one would like to see

the transfer of income from rich to poor nations and not the other way around, as is

claimed to have happened as a result of TRIPS (Frischtak 1993). However,

excluding the income transfer resulting from the decrease in the production and

exports of IPR infringing goods from developing countries, there have not been

many TRIPS-related income transfers from poorer to richer countries in connection

with legitimate business transactions.

c) Technology transfer and direct foreign investment

In regard to the transfer of technologies, tighter IPR protection disciplines are not

entirely unfavourable for developing countries. The majority of recently patented

inventions are largely irrelevant to the needs of developing countries, which are

unable to imitate on a wide scale even technologies that are many decades old, due

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to shortages of capital, skilled labour and manufacturing experience. Addressing

these problems is more crucial to their development needs than facing fewer

restrictions on the imitation of the most recent inventions, apart from a few cases of

easy free-riding.

d) Implications for Australia

There are a number of implications for Australia from the TRIPS driven IPR

reforms currently under way in the developing world, particularly in South and East

Asia. While it is not clear to what extent IP piracy has diminished, there has been

some improvement in the international cooperation to combat it. This weakens the

TRADE-RELATED ASPECTS OF IPRS case for maintaining the prohibition on

parallel imports, which is partly aimed at reducing the risk of importing pirated

products. At the present stage, this seems to be the most important policy

implication from the on-going IPR reforms in developing countries.

3.10 EMERGING STRATEGIES TO REACH THE POOR:

Assessing the implications of TRIPS for the development of new products to treat

diseases of poverty is difficult. Technology transfer and innovation, in general, are

strongly viewed as ways to strengthen an economy; clearly, however, emerging

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pharmaceutical industries can do more than generate new knowledge, skilled labour,

and markets. These industries can address social objectives by developing health-

related products to meet local needs. But will the emerging pharmaceutical

industries in Brazil, China, India, and elsewhere become sources of new medicines

for diseases that disproportionately affect low-and middle-income nations? Early

evidence suggests the answer is no. Pharmaceutical firms in India are focusing

globally, exploiting their strengths to develop or improve therapeutic drugs for well-

characterized medical conditions that exist in robust global markets. For example,

based on projected sales growth, Ranbaxy Laboratories aspires to increase its

percentage of revenue from sales to member countries of the Organisation for

Economic Cooperation and Development (OECD) from 20% in 2000 to 70% in

2007 (presentation at investors conference in Mumbai, September 2004).

The public sector predominantly remains responsible for promoting the

development of new technologies to meet local needs. For example, the government

of India is addressing this task by promoting investment in drug development

through several innovative schemes, such as increased R&D tax benefits and

subsidies to support industry–university partnerships. The New Millennium Indian

Technology Leadership Initiative, for example, supports local technology

partnerships between publicly supported R&D institutes and industrial companies.

Among health-related activities, the program supports the development of new

targets, drug delivery systems, bio enhancers, and therapeutics for latent

mycobacterium tuberculosis to better manage India’s high disease-burden of

tuberculosis. Researchers are also working to identify gene based drug targets for

prevalent cancers in India. The program may serve as a model for supporting local

public–private partnerships in other regions, especially as firms seek academic ties 24

to enhance their R&D base in drug discovery. Importantly, when the public sector

invests in product development, it can control the intellectual property to help

benefit the poor

Equally important, the new global IP standards have emerged just as public–

private product-development partnerships (PDPs) are pioneering creative forms of

IP management. PDPs use intellectual property as a negotiating tool for developing

high-quality, affordable therapeutics and vaccines for diseases of the poor. For

example, the Medicines for Malaria Venture (MMV) has formed technology

partnerships to develop an artemisinin-derived lead compound for malaria. In

explaining the success of the partnership, MMV points to its pragmatic approach to

collaboration with the private sector, an approach made possible by the effective

identification and management of intellectual property. Indeed, each PDP must adapt

its IP strategies to the contributions of its public sector and industrial partners.

Nonetheless, PDPs share the common goal of constructing deals that both provide

incentives to the private sector and meet the social objectives of the public sector.

These deals are achieved through negotiated agreements on territorial markets,

pricing structures for public and private markets, or field of use, among other areas.

.

3.11 TRIPS AND PUBLIC HEALTH SAFEGUARDS:

TRIPS also raises issues related to compulsory licensing and parallel trade.These

public-health safeguards are provided under the TRIPS agreement and were reinforced

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by the Doha Ministerial Conference. In December 2005, the WTO Council permanently

adopted a key policy on compulsory licenses that had existed as a waiver since 2003.

The waiver has significantly improved the ability of developing countries without

manufacturing capabilities to import patented drugs from sources other than the

originator company. The waiver will become a formal part of the agreement after WTO

members ratify it.

Production under compulsory licenses, however, presents some operational

challenges. First, companies need to secure adequate know-how from the original

manufacturer, or from elsewhere, to recreate products. Second, the products must reach

markets that are large enough to enable compulsory licensees to recoup development

and production costs. While compulsory licenses are potentially beneficial tools,

developing countries can use other ways to help ensure that intellectual property does

not create barriers to access. These include both conventional licensing arrangements

and, notably, the enactment of laws to permit and regulate the government’s use of

patented inventions. Other options include the actions of patent courts to protect the

public interest, the thoughtful management of genetic resources and traditional

knowledge, and the judicious framing of competition law and policy.

In sum, the international IP standards mandated by TRIPS allow member nations

considerable discretion to enact laws and provisions that both meet treaty obligations

and support national innovation policies and development priorities.

CHAPTER NO 4

CASE STUDY

26

Basmati Rice Patent:

Basmati which means the “perfumed one” is a high-quality, long-grain, semidwarf rice that

has been grown in the foothills of the Himalayas for thousands of years. Basmati rice

requires deep fertile soil, cool climate and a short photoperiod. Therefore it is difficult to

grow Basmati rice for commercial purposes in other areas. Nonetheles, a Texas rice

development company, RiceTec, began producing and exporting a Basmatitype rice it

called “Texmati” in 1985, long before TRIPS. After TRIPS came about, RiceTec sought to

obtain a patent on its rice. On September 2, 1997, RiceTec did obtain a patent titled

“Basmati rice lines and grains” on the basis of 20 claims made by the company in its patent

application to the United States Patent and Trademark Office (USPTO). The patent was for

novel rice lines, methods used to make the different varieties and determine the rice

quality.1 RiceTec’s claims, nonetheless, were in fact typical characteristics of Basmati rice.

In fact, the 2-acetyl-1-pyrroline content compound is what gives Basmati rice its distinct

aromatic scent. Based on the patent granted to RiceTec by the USPTO, RiceTec applied for

the registration of the trademark “Texmati” with the U.K Trademark Registry in 1997. In

April 2000, officials of the Indian Agricultural and Processed Food Products Export

Development Authority (APEDA), a body established for development of agricultural

commodities and furthering their exports, filed an application with the USPTSO to

reexamine the Basmati patent, specifically claims 15 through 17. It took APEDA over two

years to gather the data to challenge the claim due to the intricacies of RiceTec’s claims.

Another complication is 1 6 that under U.S. patent law, a patent can be challenged only

after it is granted. Further, challenging an entire patent is complex because if one loses on

even one count of the claims in the patent the entire patent can be upheld. Soon after

APEDA’s challenge, RiceTec gave up the right to claim 4 and claims 15 through 17. Even

27

with this concession, however, the USPTO found that the 16 remainder claims were also

questionable. Subsequently, RiceTec was issued notice by USPTO on March 27, 2001 that

its patent was in jeopardy. RiceTec then withdrew the remainder claims except claims 8, 9,

11, 12 and 13 which pertained to new cross bred lines developed by RiceTec that are not

similar to any of the varieties grown in India, although Rice Tec claims that the new rice

varieties produce grains “similar or superior to those of good quality Basmati rice”. Thus

RiceTec now has a narrow patent on three specific rice varieties developed through the

company’s own research. However, because it no longer has a patent on Basmati lines, it is

now prohibited from used the term “Basmati” in marketing its rice. Nevertheless, the

revised patent does not prohibit RiceTec from marketing its rice as similar to Basmati .

RiceTec markets “Texmati”, “Kasmati” and “Jasmati”. Though India was successful in

winning the legal battle against RiceTec in the US, it still faces legal battles in about 25

countries for 40 different cases since TRIPS places the onus on the importing nation, not

the exporting nation, of deciding whether another nation’s geographical indication of its

traditional goods is valid. 7 According to APEDA of India, these cases are varied and the

battle ranges over obtaining exclusive control over the Basmati trademark in each country

to breach of the geographical indication of Basmati. Countries where legal battles are

currently waged are Brazil, Chile, Greece, Britain, South Africa, Jordan, United Arab

Emirates, Spain, Turkey, Kuwait and Taiwan. In order to cover the legal costs to fight the

cases, the All India Rice Exporters’ Association has established a Basmati Development

Fund which has been collecting Rs 50/tonne for Basmati rice exported from India. India has

also obtained the aid of the Trademark Watch Agency to keep a watch on any new

trademark applications for Basmati rice or its misleading variations that are filed overseas.

Of 40 cases filed, India has been successful in winning 15 cases against countries like

Britain, Australia, France, Spain, Chile and UAE. In Spain, APEDA has been successful in 28

obtaining a registered trademark for Basmati rice as aromatic rice produced in the sub-

continent, thus deterring non-Indian or Pakistani food companies from using the Basmati

brand name. In Brazil, India has been able to overturn an application for using Basmati as a

trademark for sweets and condiments. India has also been successful in two other cases

against RiceTec in Greece and UK (Nilacharal, 2001). In France a food company

“Establissments Haudecoeur La Courneuve” was given two trademarks by the French

government to use the name “Basmati”, specifically, “Riz Long Basmati” and “Riz Long

Basmati Riz du Monde” (The Economic Times, 1998). The Indian government has opposed

the trademarks and is awaiting a decision from the French Trademark Office. In Greece,

RiceTec filed an application to register “Texmati”, “Jasmati” and “Kasmati” as trademarks

while in the UK an application was filed to 8 register “Texmati” as a trademark. India was

able to overturn both applications on the grounds that the names were very similar to

Basmati rice and therefore very misleading . India could have avoided the legal battle and

strengthened Basmati’s position in the global market if it had registered Basmati as a

geographical indication earlier, however, this would have required updating its intellectual

property laws, a process which has been slow in country without a long history of

trademark and patent law. It eventually did so, but by then it came at a cost. Further, a

revamped TRIPS agreement that extended article 23 to cover traditional goods, not just

wines and spirits, would also have prevented RiceTec from marketing its Kasmati brand

rice as “traditional Basmati style” or the Texmati brand as “American Basmati”. In part

because of stories like this, India, Switzerland, EU, Czech Republic, Morocco and others

are advocating for stronger and wider protection for agricultural products under

Geographical Indications. However the United States, Australia, and New Zealand, who

were initially in favor of intellectual property rights and WTO and geographical indications

for wines and spirits, are opposed to the widening of Article 23 of the geographical 29

indications to cover other agricultural products that they see as mostly generic (RAFI,

2000). Whether or not to allow imports of products that are labeled in a manner misleading

to the general public is a discretion exercised by the individual importing country. For

example the UK Grain and Feed Trade Association which is the largest importer of Basmati

rice in Europe, specifically states that only long grain rice from India and Pakistan can be

labeled as Basmati rice. Saudi Arabia which is the largest importer of Indian Basmati

allows only Basmati rice grown in the Indian sub- 9 continent to be labeled as Basmati rice.

Therefore, the Indian Basmati is offered protection in these countries . The United States,

however, merely considers Basmati to be a generic name like durum wheat. The USA Rice

Federation (1998) advocates that “the terms basmati and jasmine refer to types or generic

classes of aromatic rice and that these terms cover many varieties and broad range of

qualities. Additionally, these terms are not restricted to products or varieties produced in

any specific country or groups of countries.” So far, India cannot obtain a trademark for

Basmati in the US . A point to note here is that RiceTec applied for a patent after TRIPS

came into force. Prior to TRIPS member countries were not required to provide adopt

common global levels of protection for intellectual property. Therefore, there was little

India could to obtain GI for Basmati rice in the United Sates. Another problem relates to the

fact that Basmati is not literally associated with a place. For example “Champagne” is

named after the champagne region of France where the wine is produced. Also, Basmati

exporters and producers do not label the rice so as to link the geographical origin with the

product. Most Basmati rice packages usually print only the country of origin on the label.

As stated in article 24, in order for GIs to be protected in other member countries,they must

be protected under national law in their country of origin, something which India has been

very slow to accomplish. Though the Indian government passed the Geographical

Indication of Goods (Registration and Protection) Bill in 1999, currently, only Darjeeling 30

tea is protected under this Act. Further, a national registry of the goods offered protection

under this Act still needs to be established and the manner in which 10 protection and

registration will be offered is still to be determined. Two key points that we wish to analyze

from the patent granted to RiceTec, are whether India suffered any losses in its key export

market as results of not providing adequate protection to Basmati rice and also to determine

whether the extension of article 23 would benefit India in the many legal cases it currently

faces worldwide.

CHAPTER NO 5

31

A. RECOMMENDATIONS

Firstly do consult law firm familiar with intellectual property law. The law firm

will help you to identify those elements of your intellectual property that you

should protect and advise you on the process you apply for registration.

Secondly do register your intellectual property rights in own countries.

Trademark and patent regimes operate on a “first to file” registration system,

rather than a “first to use” or “first to invent” basis. The safest action is to

register your IP as soon as possible.

Third, do carry out due diligence on your partners, agents and/or distributors.

Unfortunately, associates or former employees are a frequent source of IPR

violations. Make sure that you have clear contractual protection for all aspects of

IP, including clauses on your ownership rights and use limitations on your

partner, distributor, licensee or employees. When hiring employees, it is

important to have them sign an agreement that contains clauses on

confidentiality, non-concurrence and the use and ownership of IP.

Fourth, do include clear contractual protection for all IP. Contractual problems

are also a frequent source of IPR infringements. Ensure that you have your own

legal counsel (do not rely on the legal advice from your Chinese partner) before

you enter into an agreement and be prudent in conducting negotiations.

Remember that the best contracts are those that do not have to be enforced.

B. CONCLUSIONS

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The proper role of IPRs in light of a globalizing economy remains contested. “The

difficulty stems from divergent concepts of property and ownership. Different legal

principles exist from country to country, stemming from the particular social,

political and ideological experiences of each.”  Prior to the TRIPS Agreement, IPRs

protection ranged from totally open regimes that did not protect private IPRs to

highly protectionist regimes in which both products and processes could be

protected. While views both for and against extensive IPRs protection, as evidenced

by the TRIPS Agreement, are strong, there is little concrete evidence that it is the

only incentive for innovation or that it will lead to socio-economic and

technological development.

Ultimately, the TRIPS Agreement is the type of global protection of IPRs that

developed countries have been seeking. “However, the TRIPS Agreement

simultaneously narrows the developing countries’ access to technology,

discouraging the rapid diffusion of new technology needed for economic

growth.” Some headway was made at Doha on addressing issues faced by

developing countries and LDCs in relation to the TRIPS Agreement, but the balance

between creating private incentives and fostering technology transfers and

development for the public benefit has not yet been achieved. After Doha, it is clear

that the TRIPS Agreement should not prevent developing countries from addressing

public health needs.

C. BIBLIOGRAPHY

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Akpan, G. (2008). Developing Countries and the Reform of the WTO

Dispute Settlement System: Expectations and Realities. In Samson, G.P.

& Chambers B. (Eds.), Developing Countries and the WTO (pp. 255-

279). New Delhi, India: United Nations University Press, Bookwell.

Srivastava, V (2003). India’s Accession to the Government Procurement

Agreement: Identifying Costs and Benefits. In Matoo, A. and Stern R.M.

(Eds.), India and the WTO (198-234). Washington D.C., U.S.A.: World

Bank and Oxford University Press.

Sampson, G.P. (2008). Trade in Services and Policy Priorities for

Developing Countries. In Samson, G.P. & Chambers B. (Eds.),

Developing Countries and the WTO (pp. 86-106). New Delhi, India:

United Nations University Press, Bookwell.

Saqib, M. (2014). Tachnical Barriers to Trade and the Role of Indian

Standard SettingInstitutions.In Rout, T.K. & Majhi, B. (Eds.) WTO,

TRIPS and Geographical Indications (GIs). New Delhi, India: New

Century Publications.

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