The TRIPS Agreement de Lege Lata: the Outline

Recital 1 of the Preamble of the TRIPS Agreement, reflecting both developed and developing countries’ perspectives, states that:

[d]esiring to reduce 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.

Recitals 2 and 3 further state that the TRIPS Agreement was agreed upon, recognising the need for new rules and disciplines concerning:

(a) the applicability of the basic principles of GATT 1994 and of relevant international intellectual property agreements or conventions;

(b) the provision of adequate standards and principles concerning the availability, scope and use of trade-related intellectual property rights;

(c) the provision of effective and appropriate means for the enforcement of trade-related intellectual property rights, taking into account differences in national legal systems;

(d) the provision of effective and expeditious procedures for the multilateral prevention and settlement of disputes between governments; and

(e) transitional arrangements aiming at the fullest participation in the results of the negotiations (Recital 2);

and the need for a multilateral framework of principles, rules and disciplines dealing with international trade in counterfeit goods (Recital 3).

Recital 4 of the Preamble recognises that IPRs are private rights, and Recital 5 refers to the ‘underlying public policy objectives of national systems for the protection of intellectual property, including developmental and technological objectives’. In Recital 6, the Preamble reproduces the statement concerning LDCs proposed by a number of developing countries⁵ and recognises ‘the special needs of the least-developed country Members in respect of maximum flexibility in the domestic implementation of laws and regulations in order to enable them to create a sound and viable technological base’. Importantly, the Preamble emphasises resolution of IP-related disputes through multilateral procedures (Recital 7). It then calls for a mutually supportive relationship between the WTO and the World Intellectual Property Organization (WIPO – see chapter 2), as well as other relevant international organisations (Recital 8).

PART I: GENERAL PROVISIONS AND BASIC PRINCIPLES (ARTICLES 1–8)

Nature and Scope of Obligations

The first sentence of Article 1.1 sets out the basic obligation of WTO Members to ‘give effect’ to the provisions of this Agreement. Members must, therefore, implement, in their domestic law, the protection required by the TRIPS Agreement. The Panel in China–Intellectual Property Rights confirmed that Article 1.1 does not offer Members freedom to implement a lower standard, but that Members are free to determine the appropriate method of implementation of TRIPS provisions to which they are required to give effect.⁶ The second sentence, ‘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’, clarifies that the provisions of the Agreement are minimum standards only, in that they give Members the freedom to implement higher standards, subject to conditions. This sentence makes it clear that the Agreement is not intended to be a harmonisation agreement.⁷ The third sentence stipulates that ‘Members shall be free to determine the appropriate method of implementing the provisions of this Agreement within their own legal system and practice’. In Canada–Patent Term, the Panel noted that the discretion of Members under Article 1.1 to determine the appropriate method of implementing their obligations under the TRIPS Agreement did not extend to choosing which obligation to comply with.⁸ Similarly, in China–Intellectual Property Protection, the Panel emphasised that the third sentence of Article 1.1 does not permit differences in domestic legal systems and practices to justify any derogation from the basic obligation to give effect to the provisions on enforcement.

Intellectual Property Conventions

Article 2 obliges all WTO Members, even those that are not parties to the Paris Convention, to comply with Articles 1–12 and Article 19 of the Paris Convention (1967) as far as Part II (standards concerning the availability, scope and use of IPRs), Part III (enforcement) and Part IV (acquisition and maintenance of IPRs and related inter-partes procedures) are concerned.¹²

National Treatment

Intellectual property rights (IPRs) are held by persons (whether natural or juridical), and, as in the pre-existing IP Conventions, the basic obligation of each Member is to accord the treatment in regard to the protection of intellectual property provided for under the Agreement to the persons of other Members. The national treatment principle prohibits discrimination between a Member’s own nationals and the nationals of other Members. In the first sentence of Article 3.1 TRIPS, the principle of national treatment is delineated as follows:

Each Member shall accord to the nationals¹³ 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 Berne Convention (1971), the Rome Convention¹⁴ or the Treaty on Intellectual Property in Respect of Integrated Circuits. . . .

two elements must be satisfied to establish an inconsistency with this obligation: (1) the measure at issue must apply with regard to the protection of intellectual property; and (2) the nationals of other Members must be accorded ‘less favourable’ treatment than the Member’s own nationals.¹⁸

The second sentence of Article 3.1 TRIPS stipulates that: ‘In respect of performers, producers of phonograms and broadcasting organisations, this obligation only applies in respect of the rights provided under this Agreement.’ This clause was inserted so that those WTO Members not parties to the Rome Convention cannot claim that their nationals be accorded the rights that are not guaranteed in their own territory.

Article 3.2 provides for exceptions to national treatment obligation with regard to ‘judicial and administrative procedures, including the designation of an address for service or the appointment of an agent within the jurisdiction of a Member’. Article 2(3) of the Paris Convention also exempts from national treatment obligation, ‘laws on judicial and administrative procedure’. However, the TRIPS Agreement adds further conditions in which such exceptions are allowed. In language similar to Article XX GATT, Article 3.2 TRIPS requires that the measure in question must be ‘necessary’ to secure compliance with laws and regulations which are not inconsistent with the provisions of the Agreement and that ‘such practices are not applied in a manner which would constitute a disguised restriction on trade’.¹⁹

Most-Favoured-Nation Treatment

The MFN principle should be helpful for scrutinising certain unilateral or regional arrangements, but certain concepts in Article 4 are not entirely clear. It is difficult to say what constitutes ‘advantage, favour, privilege’ in IP protection, and which advantages merit being granted to other country nationals based on the MFN principle without the country’s consent. For example, a hypothetical requirement that patent filings should be made not only in the language of the country but also in English would offer advantages to English-speaking nationals. However, this measure does not seem to deserve MFN treatment.

The second sentence of Article 4 TRIPS states that the application of the MFN principle is exempted from 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 authorising that the treatment accorded be a function not of national treatment but of the treatment accorded in another country;

(c) in respect of the rights of performers, producers of phonograms and broadcasting organisations not provided for under the TRIPS Agreement;

(d) deriving from international agreements related to the protection of intellectual property which came to effect 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. Article (b) and (c) mirror the exceptions to national treatment contained in Article 3. The exception in Article 4 (d) seems to be of limited utility since it only applies to past agreements.

According to Article 5 of the TRIPS Agreement, national treatment and MFN treatment 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’. This provision excludes the automatic extension to WTO Members of rights under WIPO treaties relating to the acquisition or maintenance of IPRs, such as the Madrid Agreement Concerning the International Registration of Marks and its Protocol, the Hague Agreement Concerning the International Deposit of Industrial Designs, the Patent Cooperation Treaty, the Patent Law Treaty and the Budapest Treaty on the International Recognition of the Deposit of Microorganisms for the Purposes of Patent Procedure (on these agreements, see chapter 2).

Exhaustion

‘Exhaustion’ refers to the lapse of the exclusive right of distribution of the right holder who loses or ‘exhausts’ certain rights with regard to one specific product after the first use of the subject matter, once the product has entered the market with the consent of the right holder. For example, the ability of a trademark owner to control further sales of a product bearing its mark is generally considered ‘exhausted’ after the sale of that product. However, there is no consensus on the question of whether or not and under what conditions the right holder loses or ‘exhausts’ his rights. Legitimacy of parallel imports depends on the exhaustion regime (eg, national, regional or international) of a country and, therefore, the subject of ‘exhaustion’ of intellectual property rights has been controversial. The Uruguay Round negotiations did not reach an agreement on any particular exhaustion regime.

Article 6 stipulates that ‘[f]or 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.’ In other words, this provision excludes the question of the exhaustion of rights from dispute settlement, except provisions of Articles 3 and 4. Therefore, there is some scope for bilateral disputes over the exhaustion of rights.²² Paragraph 5 d) of the Doha Declaration on the TRIPS Agreement and Public Health²³ states that:

Possible differences between what this paragraph states and what is provided in Article 6 of the TRIPS Agreement are discussed in chapter 9.

Lawfulness of parallel imports, defined as imports without authorisation from the right holder of patented goods from the third country, depends on the exhaustion regime of a country, ie, whether the country adopts policies of national, regional or international exhaustion. Depending on the policies that a country adopts, right holders may be unable to enforce particular rights in another jurisdiction.

Objectives and Principles

Article 7 is entitled ‘Objectives’ and provides that: ‘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.’ The Article, however, does not define the objectives of the TRIPS Agreement, but states the objectives of the protection and enforcement of IPRs.

Article 8 is entitled ‘principles’. According to this provision, 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 (Article 8.1). Conditions attached to ‘necessary to’ in the GATT dispute settlement tradition evolved in the new WTO framework (see chapter 4). Article 8.2 refers to the ‘appropriate measures which may be needed to prevent the abuse of IPRs by right holders’ that Members may adopt, or the resort to ‘practices which unreasonably restrain trade or adversely affect the international transfer of technology’. Articles 8.1 and 8.2 are both accompanied by a clause which states: ‘provided that such measures are consistent with the provisions of this Agreement’. This, in turn, depends on how the exceptions to the rights conferred provided under the TRIPS Agreement are interpreted within the fundamental balance between the rights and obligations of the TRIPS Agreement. Articles 7 and 8 and their relation to Article 30 concerning ‘exceptions to rights conferred’ were discussed in Canada–Patent Protection of Pharmaceutical Products.²⁴ The Panel in EC–Geographical Indications noted that ‘Article 8 of the TRIPS Agreement sets out the principles of that agreement’, and stated that:

PART II: STANDARDS CONCERNING THE AVAILABILITY, SCOPE AND USE OF INTELLECTUAL PROPERTY RIGHTS (ARTICLES 9–40)

In Part II, the TRIPS Agreement sets out the minimum standards of protection to be provided by each Member. The subject matter to be protected, the minimum duration of protection, the rights to be conferred and permissible exceptions to those rights are defined with respect to each of the main areas of intellectual property rights covered by the TRIPS Agreement. During the Uruguay Round negotiations, important provisions contained in pre-existing treaties on IPRs were incorporated and served as a basis for further elaboration in TRIPS. For copyright and ‘neighbouring rights’, the existing level of protection under the latest Act of the Berne Convention was largely maintained with, however, substantial additions and clarifications. The TRIPS Agreement offers the following clarifications concerning copyright protection given to certain new technologies: computer programs, whether in source or in object code, shall be protected as literary works under the Berne Convention (Article 10.1); and database or other compilation of data or other material shall be protected under copyrights (Article 10.2 TRIPS). Where the level of protection under the previous IPR treaties is higher than the TRIPS Agreement, TRIPS under Parts I to IV do not allow derogations 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 (Article 2.2 TRIPS). In the area of patents, the TRIPS Agreement incorporates Articles 1 to 12 and Article 19 of the Paris Convention (1967). It adds substantive rules of protection to set the level of protection considerably higher than the Paris Convention in a number of instances, for example, protection of products.

Copyright and Related Rights (Articles 9–14)

The TRIPS Agreement provides copyright protection to the following works:

• works covered by the Berne Convention, excluding moral rights (Article 9.1);
  
• computer programs as literary works under the Berne Convention (Article 10.1 TRIPS);
  
• compilations of data or other material, whether in machine, readable or other form, which by reason of the selection or arrangement of their contents as such that constitutes intellectual creations;²⁷ however ‘the data or material itself’ is not protected (Article 10.2 TRIPS);²⁸

The TRIPS Agreement recognises rental rights of authors and their successors in title, to authorise or to prohibit the commercial rental to the public of originals or copies of their copyright works, except when rental has not led to widespread copying that impairs the reproduction right²⁹ (Article 11). It also recognises (as ‘related rights’) rights of performers, producers of phonograms and broadcasting organisations (Article 14).

In the TRIPS Agreement, internet-related issues such as making available technical protection measures, the liability of internet service providers (ISPs) and others included in the 1996 WIPO Internet Treaties are not covered.

Article 12 of the TRIPS Agreement refers to the minimum term of copyright protection for works of legal persons, such as sound recordings and films under the US law. The term of protection for this category of authors (except for photographic works or works of applied art) is not calculated on the basis of the life of a natural person. Such a term must be ‘no less than 50 years from the end of the calendar year of authorised publication, or, failing such authorized publication, within 50 years from the making of the work, 50 years from the end of the calendar year of making.’

Certain limitations or exceptions to the copyrights related to protected work are necessary for the purpose of advancing science and art or other socio-economic and cultural needs, respecting adequately at the same time the rights of the author. Exceptions and limitations could be in the form, for example, of private use, teaching or research. Continental law has provided case-specific limitations or exceptions, whereas the common law tradition has followed the concept of ‘fair use’ or ‘fair dealing’.

Article 13 TRIPS provides that: ‘Members shall confine limitations or exceptions 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.’

Article 9(2) of the Berne Convention concerns ‘possible exceptions’ to the exclusive right of reproduction conferred to authors of literary and artistic works, and stipulates that: ‘It shall be a matter for legislation in the countries of the Union to permit the reproduction of such works in certain special cases, provided that such reproduction does not conflict with a normal exploitation of the work and does not unreasonably prejudice the legitimate interests of the author.’³⁰ The exceptions in the Berne Convention are incorporated into TRIPS by way of reference under Article 9.1. However, interpretation and application of Article 13 determines the scope of the specific exceptions in domestic law. In US–Section 110(5) Copyright Act³¹, the relationship of Article 13 TRIPS to Article 9(2) of the Berne Convention (1971) was discussed (chapter 7).

Trademarks (Articles 15–21)

According to Article 15.1 TRIPS, any ‘sign, or any combination of signs’, ‘capable of distinguishing the goods or services’ of one undertaking from those of other undertakings, is protectable, and eligible for registration as a trademark. Alternatively, if signs are not inherently capable of distinguishing the relevant goods or services, Members ‘may make registrability depend on distinctiveness acquired through use’.

Article 15.2 states the principle that Members are not prevented from denying registration of a trademark on grounds not indicated in Article 15.1, provided that the conditions do not violate the Paris Convention. In the US–Section 211 Appropriation Act case, the Appellate Body recognised a Member’s right to impose conditions other than those in Article 15.1. The Appellate Body in this case found that Article 6 quinquies of the Paris Convention, obliges Members to accept marks for registration in the same form (ie, ‘as is’, or ‘telle quelle’) as registered in the country of origin.

Article 15.3 TRIPS responded to local requirements which make registrability depend on actual use.³³ Without negating the possibility that Members require actual use of trademarks for registration, Article 15.3 TRIPS stipulates that Members shall not refuse an application for registration ‘solely on the ground that intended use has not taken place before the expiry of a period of three years from the date of application.’

Article 16 (exclusive rights), Article 17 (exceptions), Article 18 (term of protection) and Article 21 (licensing and assignment) of the TRIPS Agreement specify a minimum level of protection that Members must guarantee in their domestic legislation. The owner of a registered trademark shall have the exclusive right ‘to prevent all third parties without the owner’s consent from using 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.’ The second sentence of Article 16.1 refers to the presumption of the likelihood of confusion when an identical sign for identical goods or services is used. Limited exceptions to the exclusive rights, such as fair use of descriptive terms, are allowed, provided that such exceptions take account of ‘the legitimate interests of the owner of the trademark and of third parties’. Members may determine conditions on the licensing and assignment of trademarks, it being understood that the compulsory licensing of trademarks shall not be permitted. The owner of a registered trademark shall have the right to assign the trademark with or without the transfer of the business to which the trademark belongs.

Article 16.2 deals with well-known marks. Although there is no commonly agreed detailed definition of what constitutes a well-known mark,³⁶ those marks with respect to goods and services which have gained reputation, irrespective of whether they are registered or not, have been protected in the Paris Union countries under Article 6 bis of the Paris Convention (1967). The authorities protect well-known marks whose reproduction, imitation, or translation is liable to create confusion, by refusing or by cancelling the registration, and by prohibiting the use thereof. In many countries, well-known marks are also protected even against use for dissimilar goods and services. In developed countries, courts tend to rely on business realities to determine whether a mark is ‘well-known’. Developing countries, by contrast, tend to underplay well-known marks and think that trademark registration is sufficient to prevent free-riding of well-known marks in foreign countries.

Article 17 concerning exceptions, such as Articles 26.2 for design rights and Article 30 for patents, provides that Members may provide ‘limited’ exceptions to the rights conferred by a trademark, including fair use of descriptive terms, provided that such exceptions ‘take account of the legitimate interests’ of ‘the owner of the trademark and of third parties’. However, Article 21 of the TRIPS Agreement concerning licensing and assignment prohibits compulsory licensing of trademarks. This prohibition is due to the different function that exclusive trademark rights have, in comparison to designs or patents. The purpose of trademarks is to distinguish the goods or services of a particular company from those of others, and, therefore, the use or assignment of the mark by the owner fulfils this purpose.³⁷

Geographical Indications (Articles 22–4)

Article 22 of the TRIPS Agreement explains that, for the purpose of the TRIPS Agreement, geographical indications (GIs) are ‘indications which identify a good as originating in the territory of a Member, or a region or locality in that territory, where a given quality, reputation or other characteristic of the good is essentially attributable to its geographical origin.’ Members have the obligation, first, to refuse or invalidate the registration of a trademark which contains or consists of a GI with respect to goods not originating in the territory indicated, so that it would not ‘mislead the public as to the true place’.³⁸ Secondly, Members must provide legal means for the interested party to prevent acts of misrepresentation as well as unfair competition against the third person using the mark. The above means of protection had already been made available in many countries under Article 10 bis of the Paris Convention.

Article 23 provides for ‘additional protection’ concerning GIs for wines and spirits. The term ‘additional’ is used because the protection provided for wines or spirits covers not only the origin but also: (i) the indication in translation, and expressions such as ‘kind’, ‘type’, ‘style’, ‘imitation’ etc.; (ii) indications which contain or consist of a GI with respect to such wines or spirits not having this origin must be refused or invalidated, ex officio if a Member’s legislation so permits or at the request of an interested party; and, (iii) the use of GIs for wine and spirits, even when there is no risk of misleading consumers.

Article 24.5 exonerates protection for trademarks which had been applied for or registered in good faith, or where rights to a trademark have been acquired through use in good faith either before the date of application of TRIPS provisions in that Member as defined in Part VI (transitional arrangements), or before the GIs were protected in their countries of origin. Article 24.6 also allows the continued use of GIs of any other Member with respect to goods or services for which the relevant indication is identical with the term customary, in common language, as the common name for such goods or services in the territory of that Member.

Thus, the TRIPS Agreement introduces significant exceptions to GI protection in Article 24. Under its ‘built-in agenda’ it provides that negotiations shall be undertaken in the Council for TRIPS concerning the establishment of a multilateral system of notification and registration of GIs for wines eligible for protection in those Members participating in the system. (Article 23.4). In addition, Members agree to enter into negotiations aimed at increasing the protection of individual GIs under Article 23 (Article 24.1). It also provides that the Council for Trade-Related Aspects of Intellectual Property Rights (TRIPS Council – see below under Article 68 of the TRIPS Agreement) shall keep under review the application of the provisions under Section III relating to GIs (Article 24.2).

Industrial Designs (Articles 25–6)

According to Article 25, Members must protect industrial designs that are ‘independently created’ and ‘new or original’, for at least 10 years. Under the industrial designs protection, the owner has the right to prevent third parties not having the owner’s consent from making, selling or importing Articles bearing or embodying a design which is a copy, or substantially a copy, of the protected design, when such acts are undertaken for commercial purposes (Article 26).

Special considerations are given to textile designs for Members to ensure that the cost, examination or publication for securing industrial design protection does not unreasonably impair the opportunity to seek and obtain such protection. The wording ‘examination’ includes the time it takes for examination, and ‘publication’ implies the period allowed for keeping it secret for a certain period of time (Article 25.2).

Patents (Articles 27–34)

The Paris Convention (1967) contains few substantive provisions concerning patents (see chapter 2). Significantly, the TRIPS Agreement dealt with substantive provisions in relation to patentable subject matter, the scope and effects of patent protection, non-voluntary licensing and government use of patented technologies, and the term of protection.

Availability of patents based on the same patentability criteria for all fields of technology

Article 27 of the TRIPS Agreement establishes patentable subject matter based on the following principles. The first sentence of Article 27.1 provides that patents shall be ‘available for any inventions, whether products or processes, in all fields of technology’, provided that they are ‘new, involve an inventive step and are capable of industrial application’.⁴⁰ Members therefore must protect not only processes but also ‘products’, including pharmaceutical products, and apply the same criteria of patentability for all fields of technology.

Principles of non-discrimination

Possible exclusions from patentable subject matter

Article 27.2 provides for possible exclusions from patentability concerning individual cases. Members may exclude from patentability ‘inventions, the prevention within their territory of the commercial exploitation of which is necessary to protect ordre public