Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS)
- The Agreement’s Key Provisions
- TRIPS-Related Developments at the WTO
- Multilateralism, Bilateralism, and the Future of TRIPS
The Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) has become the most important and far-reaching international accord in the field of intellectual property. It establishes workable global standards of protection and enforcement for virtually all of the most important intellectual property rights, such as patents, copyrights and related rights, and trademarks, in a single agreement. As such, it has major implications for knowledge-based industries seeking to trade profitably in many different countries.
Strictly speaking, TRIPS is annex 1C of the Agreement Establishing the World Trade Organization, which was the main outcome of the Uruguay Round trade negotiations held under the auspices of the General Agreement on Tariffs and Trade (GATT). It resulted from a considerable amount of lobbying by certain industries that were keen to expand their activities in emerging economies where intellectual property protection was either lacking or was weakly enforced.
The first attempt to frame intellectual property as an issue to be discussed in wider trade negotiations was made by a group of trademark-holding firms organized as the Anticounterfeiting Coalition, which lobbied for the inclusion of an anticounterfeiting code in the 1973 79 GATT Tokyo Round. Although this initial attempt was unsuccessful, the copyright, patent, and semiconductor industries decided during the early 1980s to frame the lack of effective intellectual property rights protection in overseas markets as a trade-related issue and a problemfor the U.S. economy that the government ought to respond to. By the time the contracting parties of the GATT met in Punta del Este, Uruguay, in September 1986 to launch another trade round, U.S. corporations had forged a broad cross-sectoral alliance and developed a coordinated strategy.
For those seeking high standards of intellectual property protection and enforcement throughout theworld byway of the GATT, the strategy had three advantages. First, if successful, the strategy would globalize these standards much more rapidly than could be achieved through the conventions administered by the World Intellectual Property Organization (WIPO). This is because it allowed for the possibility of including all the main rights in a single agreement,which could also incorporate by reference provisions of the major WIPO conventions. Also, once it was agreed that the Uruguay Round agreements had to be accepted as a package (i.e., a ‘‘single undertaking’’), countries could not opt out of any one of them and be a member of the new World Trade Organization (WTO). Second, the GATT already had a dispute settlementmechanism. WIPO has no enforcement or dispute settlement mechanisms except through the treaties that it administers, and these treaties do not provide much recourse for countries concerned about the noncompliance of other parties. Third, the broad agenda of the Uruguay Round provided opportunities for linkagebargain diplomacy that WIPO, with its exclusive focus on intellectual property rights, did not allow. Hard bargaining by the United States, Europe, and Japan on intellectual property could thus be linked to concessions in such areas as textiles and agriculture, where exporting countries in the developing world were eager to achieve favorable settlements.
The Punta del Este Declaration of September 1986 included ‘‘trade-related aspects of intellectual property rights, including trade in counterfeit goods’’ as a subject for negotiations in the forthcoming trade round,which became known as theUruguayRound. In full, the declaration’s provisions on intellectual property were as follows:
In order to reduce the distortions and impediments to international trade, and taking into account the need to promote effective and adequate protection of intellectual property rights, and to ensure that measures and procedures to enforce intellectual property rights do not themselves become barriers to legitimate trade, the negotiations shall aim to clarify GATT provisions and elaborate as appropriate new rules and disciplines. Negotiations shall aim to develop a multilateral framework of principles, rules and disciplines dealing with international trade in counterfeit goods, taking into account work already underway in GATT. These negotiations shall be without prejudice to other complementary initiatives that may be taken in the World Intellectual Property Organization and elsewhere to deal with these matters.
According to Susan K. Sell (2003), Trade-Related Aspects of Intellectual Property Rights is a case of 12 U.S. corporations making public law for the world. This makes sense only if one takes it to mean that the active engagement of these firms was a necessary, but not a sufficient, condition for there being a TRIPS Agreement. And actually she does not claim that the alignment of so much economic power and political influence made their victory inevitable or complete. Similarly, as John Braithwaite and Peter Drahos (2000) have noted, ‘‘It was a remarkable accomplishment to persuade 100 countrieswhowere net importers of intellectual property rights to sign an Agreement to dramatically increase the cost of intellectual property imports.’’
So how was such a difficult feat achieved? Certain individuals played a decisive part in mobilizing support for the inclusion of trade-related intellectual property rights as a major Uruguay Round agenda item with the aim of formulating a legal instrument that would bind allmembers of what would become theWTO. These included chief executive officers of major corporations, lawyers, and a private consultant, all of whom were instrumental in conceptualizing intellectual property as a trade-related issue and then developing the political strategy that would ultimately result in TRIPS.
The interest groups succeeded in influencing the development of trade law and policy by incorporating their demands in the relevant legislation and by working closely with the key government agencies engaged in trade policy, especially the Office of the United States Trade Representative (USTR). Once the USTR had been persuaded that it was in the interests of the country to pursue the intellectual property demands coming fromthese groups, at least for the time being, at GATT rather than at WIPO, the next task was to form an international alliance including the businesses and governments of Western Europe and Japan while neutralizing resistance from opposing countries.
Initially, the Group of Ten developing countries within the GATT India, Brazil, Argentina, Cuba, Egypt, Nicaragua, Nigeria, Peru, Tanzania, and Yugoslavia took a determined stand against the use of GATT as a forum for negotiating global intellectual property standards. But from 1985 and especially 1989 onward, the United States used its own trade rules to publicly criticize, threaten, and punish individual countries whose intellectual property standards were lower than its own and therefore ‘‘inadequate.’’ Section 301 (Actions by U.S. Trade Representative) of the U.S. Trade Act was amended in 1984. The amended section 301 specifically included failure to protect intellectual property as one of the ‘‘unfair trade practices’’ that could result in a USTR investigation and possible sanctions, and authorized the USTR to initiate its own cases so as to protect U.S. firms from retaliatory action by foreign governments.
The 1988 Omnibus Trade and Competitiveness Act in its special 301 provision further strengthened the authority of the USTR in order to insulate decision- making on trade retaliation from foreign policy or national security considerations, and required the USTR annually to ‘‘identify those foreign countries that deny adequate and effective protection of intellectual property rights, or deny fair and equitable market access to United States persons that rely upon intellectual property protection.’’ It is largely due to the mandate of the USTR to actively pursue the complaints of U.S. firms and business associations that the developing countries eventually accepted Trade-Related Aspects of Intellectual Property Rights.
Nonetheless, representatives of the United States, Europe, and Japan did not just sit down together and write the TRIPS Agreement themselves. Not only did divisions emerge between Europe and theUnited States that required compromises, but developing countries were much more involved in the drafting than they are often given credit for. As Jayashree Watal (2001) explains, they achieved favorable language in10 of the 73articles, albeitwiththe necessary support of a fewdeveloped countries.The 10 include those dealing with the objectives and principles of TRIPS, limitations and exceptions to copyright, exceptions to patents and compulsory licensing, and control of anticompetitive practices in contractual licensing.
The Agreement’s Key Provisions
The preamble affirms the desire of member states ‘‘to take into account the need to promote effective and adequate protection of intellectual property rights,’’ while ‘‘recognizing the underlying public policy objectives of national systems for the protection of intellectual property, including developmental and technological objectives.’’ Dealing with counterfeiting is clearly considered as important. Its main importance lies in the fact that the trade in counterfeit goods is what makes intellectual property most clearly trade related. The preamble indicates that members recognize ‘‘the need for a multilateral framework of principles, rules and disciplines dealing with international trade in counterfeit goods.’’ Yet the objectives as stated in Article 7 make no reference to the eradication of counterfeiting. Rather, TRIPS is explicitly aimed at promoting public policy objectives, the nature of such objectives presumably being left to national governments, though technological development is given priority.
Article 8.1 allows member states implementing their intellectual property laws and regulations to ‘‘adopt measures necessary to protect human health and nutrition, and to promote the public interest in sectors of vital importance to their socio-economic and technological development.’’Thesemeasures are not obligatory but, again, they highlight the socioeconomic welfare implications of intellectual property. On the other hand, the proviso that such measures be consistent with the provisions of Trade-Related Aspects of Intellectual Property Rights appears to narrow their possible scope quite considerably.
By virtue of Article 3, members accept the principle of national treatment, that is, that each country must treat nationals of othermembers at least as well as it treats its own nationals. In other words, intellectual property protection and enforcementmust be nondiscriminatory as to the nationality of rights holders.
Article 4 upholds the principle of most-favorednation. This means that any concession granted by onemember to anothermust be accorded to all other members ‘‘immediately and unconditionally.’’ So if country A agrees to take special measures to prevent the copying of the products of a company from countryB, but turns a blind eyewhen the company is from country C, D, or E, such inconsistency of treatment will violate this principle. Although this principle of international law dates back in history, TRIPS is the first multilateral intellectual property treaty that refers to it.
Part II of TRIPS deals with the actual rights. These are very comprehensive, comprising the following:
- 1. Copyright and related rights
- 2. Trademarks
- 3. Geographical indications
- 4. Industrial designs
- 5. Patents
- 6. Layout-designs (topographies) of integrated circuits
- 7. Protection of undisclosed information
- 8. Control of anticompetitive practices in contractual licenses
To some extent the provisions are based on existing agreements.ThusWTOmembers are required to implement substantial parts of the Paris Convention on the Protection of Industrial Property and the Berne Convention of Literary and ArtisticWorks whether or not they are signatories to them. Nonetheless, while most developed countries were required only to make cosmetic changes to their intellectual property laws, most developing countries needed to reform their laws quite drastically. This is not surprising since the intellectual property standards provided in TRIPS tend to bemodeled on the laws of the United States, Europe, or are a hybrid of the rules of the two jurisdictions.
All countries had to apply Article 3, on national treatment and on most-favored-nation status, and Article 5, concerning multilateral agreements on acquisition ormaintenance of protection,within one year of the entry into force of the WTO Agreement. But the developing countries and the former centrally planned socialist stateswere allowed a period of five years from the date of entry into force of the WTO Agreement, that is, until January 1, 2000, to apply the full provisions of Trade-Related Aspects of Intellectual Property Rights. Developing countrymembers thatwere required to extend patent protection to areas of technology not hitherto covered in their laws were permitted to delay such extension until January 1, 2005. The least-developed countries (LDCs) were allowed until January 1, 2006, to apply TRIPS in full. Countries that have joined the WTO since then are required also to comply with these deadlines.
However, the LDCs have managed to secure two extensions. The 2001 Doha Declaration on the TRIPS Agreement and Public Health allowed them to delay implementation of patent protection for pharmaceutical products and legal protection of undisclosed test data submitted as a condition of approving the marketing of pharmaceuticals until January 1, 2016. In November 2005, the Trade-Related Aspects of Intellectual Property Rights Council extended the deadline to LDCs for fully implementing the rest of TRIPS by a further seven and a half years to July 1, 2013.
Trade-Related Aspects of Intellectual Property Rights places much emphasis on enforcement. With respect to the general enforcement obligations, procedures must be fair, equitable, and not unnecessarily complicated, costly, or time consuming. The judicial authorities must be granted the power to require infringers to pay damages adequate to compensate the right holder for the injury suffered due to the infringement. Members are required to provide for criminal procedures and penalties ‘‘at least in cases of willful trademark counterfeiting or copyright piracy on a commercial scale.’’
The agreement sets out the role of the Council for Trade-Related Aspects of Intellectual Property Rights (TRIPS Council). Accordingly, the council is responsible for:
- Monitoring the operation of TRIPS, and in particular members’ compliance;
- Affordingmembers the opportunity to consult on matters relating to trade-related intellectual property rights;
- Assisting members in the context of dispute settlement procedures; and
- Carrying out other duties assigned to it by the members.
The council is supposed to review the implementation of TRIPS at two-year intervals from January 2000. Article 71.1 states in addition that ‘‘the Council may also undertake reviews in the light of any relevant newdevelopmentswhichmightwarrant modification or amendment of this Agreement.’’
TRIPS-Related Developments at the WTO
TRIPS was, and continues to be, highly controversial. Indeed, for both developing and developed countries, it represents unfinished business. Developing country representatives continue to express concerns that TRIPS raises prices of drugs and educational materials in poor countries, legitimizes the ‘‘biopiracy’’ of genetic resources and traditional knowledge, and blocks transfers of much-needed technologies. They have successfully resisted the further tightening of Trade-Related Aspects of Intellectual Property Rights rules and have had some small victories along the way. They have enhanced their capacity to put forward substantial counterproposals relating to such matters as public health, least-developed countries, traditional knowledge, and the compatibility between TRIPS and the Convention on Biological Diversity’s provisions concerning benefit sharing, protection of traditional knowledge, and technology transfer. As for the developed countries and international business, which are constantly seeking ever higher levels of intellectual property protection and enforcement, TRIPS has to some extent been a disappointment.
It is in fact far from clear that making the intellectual property rules more or less identical whether you are a very rich country with enormous balance of payments surpluses in intellectual property protected goods, services, and technologies, or a poor country with highly burdensome trade deficits, is beneficial for the latter type of nation.While it is impossible to reliably calculate the long-termeconomic impacts of TRIPS on developing countries and their populations, we can be certain that they will incur shortterm costs in such forms as rent transfers and administration and enforcement outlays, and that these will outweigh the initial benefits. The cost-benefit balancewill varywidely fromone country to another, but in many cases the costs will be extremely burdensome.
At the November 2001 Doha Ministerial Conference of the WTO,members agreed on the texts of two very significant documents with provisions concerning intellectual property: the Ministerial Declaration, and the Declaration on the TRIPS Agreement on Public Health. The former declaration’s TRIPS-related matters concerned geographical indications, the relationship between Trade-Related Aspects of Intellectual Property Rights and the Convention on Biological Diversity (CBD) and the protection of traditional knowledge and folklore, and technology transfer. The latter declaration dealt exclusively with TRIPS, primarily its public health provisions relating to compulsory licensing and parallel importation.
TRIPS Article 27.3(b) concerns exceptions to patentability in the area of biotechnology. It permits WTO members to exclude from patentability ‘‘plants and animals other thanmicro-organisms, and essentially biological processes for the production of plants or animals other than non-biological and microbiological processes.’’ At Doha, ministers representing WTO members clarified their commitment to opening up negotiations on issues relating to Article 27.3(b) to include the relationship between the TRIPS Agreement and the CBD, and the protection of traditional knowledge and folklore.
The key challenge for developing countries is that many of them remain unclear about how to tailor their patent regulations to promote their interests in the acquisition, development, and application of biotechnology, and therefore how best to exploit the flexible language of Article 27.3(b).Understandably, though, much of the discussion has focused not specifically on this issue, but on how best to address a wide range of moral, political, and economic concerns about ‘‘patenting life’’ and ‘‘biopiracy.’’
The CBD-TRIPS relationship and the protection of traditional knowledge and folklore have proved to be quite controversial. One key developing country demand that has been pushed quite strongly is that of disclosure of origin. Disclosure of origin would require inventors to disclose the source of genetic resources and/or traditional knowledge relevant to an invention being patented. In May 2006, Brazil, India, Pakistan, Peru, Thailand, and Tanzania proposed in theWTOGeneral Council that new text be incorporated into the Trade-Related Aspects of Intellectual Property Rights Agreement under Article 29, which deals with conditions on patent applicants, to require such disclosure.
Geographical indications (GIs) are defined in the TRIPS Agreement as ‘‘indications which identify a good as originating in the territory of aMember, or a region or locality in that territory, where a given quality, reputation, or other characteristic of the good is essentially attributable to its geographical origin.’’ In November 2001, the WTO members attending the Doha Ministerial Conference agreed ‘‘to negotiate the establishment of a multilateral system of notification and registration of geographical indications for wines and spirits by the Fifth Session of the Ministerial Conference.’’ With respect to the possible extension of the enhanced protection of geographical indications to products other than wines and spirits, it was agreed that issues related to this matter would be addressed in the Council for TRIPS, an indication of the lack of consensus.
Despite the fact they are in Trade-Related Aspects of Intellectual Property Rights largely at the instigation of the European Commission, GIs have for several years been promoted as a concession to developing countries that they ought to take advantage of. Supposedly, they provide themeans bywhich developing countries can use intellectual property to protect categories of local rural knowledge that they possess in abundance. In particular, the European Union and the Swiss government are very keen to promote GIs worldwide by arguing that this part of TRIPS can potentially provide substantial gains for developing countries.This seems plausiblewhen one considers that GIs are especially appropriate for the produce of small-scale producers and cultivators, and, it should be underlined here, not just for foods and beverages but also handicrafts and other handmade items.
Many developing countries are rich in traditional knowledge having applications in agriculture, food production, and small-scale manufacturing. So GIs would appear to have real potential in terms of developing and exploiting lucrativemarkets for natural product based goods, including thosemanufactured by resource-poor farming communities. Such countries tend to favor the extension of the additional protection to cover all products, not just beverages. Are they right to be so pro-GI with respect to products they wish to export? Possibly they are, but caution should be exercised. GIs are useless without good standards of quality control andmarketing, and up-to-date informationonmarkets including foreign ones if the products are to be exported. At present the potential of geographical indications for developing countries is somewhat speculativebecause this type of intellectual property right has been used only in a few countries outside Europe.Moreover,manyGIs have quite small markets, and a relatively small number are traded internationally.
Other developing countries do not have an abundance of traditional knowledge and are key exporters of products that compete with well-established GI-protected goods coming fromEurope. For those countries,GIsmay bemore of a threat than an opportunity.
Multilateralism, Bilateralism, and the Future of TRIPS
Developing country WTO members have been very reluctant to engage in negotiations to raise levels of intellectual property protection at the WTO. In order to hold these countries tomore rigid and higher standards of intellectual property protection than TRIPS compliance requires, the United States and the European Union have gone outside the multilateral WTO forum. One of the most effective strategies being employed is that of bilateral and regional free trade agreements, which generally contain so-called ‘‘TRIPS plus’’ intellectual property right provisions, which place obligations on governments to provide more extensive protection than Trade-Related Aspects of Intellectual Property Rights actually requires. A growing number of developing countries seeking to enhance access to developed world markets for goods produced in their nations have proved willing to overcome their reservations about strengthened intellectual property rights through such deals in order to achieve this.
As a WTO agreement, and one which deals with arguably the most valuable assets of modern corporations, intangible ones, the importance of TRIPS to the world economy is immense and will remain so for several years. However, there are early signs that it is outliving its purpose for those corporations that successfully lobbied for an intellectual property agreement in the Uruguay Round and the governments that took up their demands. There are three reasons for this. First, the WTO system of trade governance currently does not make it easy to achieve radical revision of existing agreements or, for that matter, consensus on the need for new ones. Second, developing countries have tended not to implement Trade-Related Aspects of Intellectual Property Rights with much enthusiasm, and enforcement measures continue to be inadequate from the view of the intellectual property owners. Third, for the developed countries and transnational industry, other forms of trade diplomacy including those presented above seem to further their interests more effectively. Thus one may reasonably question whether TRIPS in the coming years will continue to be such an important agreement as it is today.
See also access to medicines; intellectual property rights; nondiscrimination; parallel imports; World Intellectual Property Organization; World Trade Organization