Uruguay Round Negotiations and the Adoption of TRIPS
DURING A PERIOD when the non-market economies were declining, in the late 1980s, the Uruguay Round of trade negotiations (1986–94) started. The negotiating parties held widely opposing views on the scope and standard of protection of intellectual property (IP), to be introduced within the framework of the General Agreement on Tariffs and Trade (GATT) as a common text, and later adopted as the Agreement on Trade-Related Intellectual Property Rights (TRIPS).1 This chapter describes the positions held by different countries on the controversial questions that divided the Uruguay Round negotiators, and retraces how diplomatic compromises were arrived at, thanks to the ‘constructive ambiguities’ of the text which was agreed upon.
In fact, TRIPS negotiators opted for preserving (with some updating) the level of protection provided in the existing IPR conventions, such as the Paris Convention for the Protection of Industrial Property (1967), the Berne Convention (1971), the Rome Convention and the Treaty on Intellectual Property in Respect of Integrated Circuits (1967). Novel aspects of the GATT IP agreement under negotiation included provisions on enforcement, and the improvement of dispute settlements among governments, both of which were lacking under these preceding conventions. A few new principles were also being proposed, such as transparency and most-favoured-nation treatment (MFN), which had not existed in the previous intellectual property conventions, but which are important for counteracting unilateral actions, such as the US retaliation under section 301 of its Trade Act.
The introduction within the GATT of substantive rules concerning IPR encountered opposition from Brazil, India and some other developing countries. Unclear and precarious compromise was achieved on the objectives and principles of IPR protection (Articles 7 and 8), and on certain provisions important for research-based pharmaceutical and biotechnology industries (notably Articles 27.3, 39.3, 70.8 and 70.9). The underlying opposing views concerning the role of IPRs in the economic development of developing countries remained a strong source of discord. In the historical hiatus in the early 1990s, created by the situation in which leading developing countries confronted difficulties in re-negotiating conditionality with the International Monetary Fund (IMF), and with the dissolution of the Soviet Union, which had often supported the positions of developing countries, the demands of the US and European countries were probably relatively less difficult to accept than either before or after this particular period.
I DEVELOPING COUNTRIES AND IPRS IN THE URUGUAY ROUND NEGOTIATIONS
A Mandate to Negotiate Trade-Related Aspects of IPRs
T Cottier pointed out in 1991 that ‘linking intellectual property to the GATT’ probably came about due to ‘the gradual changes in fundamental perceptions of the function and role of IPRs in many quarters of the world’,2 explaining that ‘the absence of adequate protection [contributed] considerably to an unfair competitive environment for many industries operating on highly competitive foreign markets’. The importance of the protection of intellectual property rights in international competition and cooperation in various areas of economic relations was growing, and benefits of holders of intellectual property rights should be able to enjoy the benefits of their creativity and inventiveness.
Others have explained the genesis of the TRIPS Agreement in terms of rising R&D spending, accompanied by the profitability of imitation (see chapter 1): the higher the ratio of R&D to the cost of manufacturing, the greater the incentive to short-cut the process through unauthorised copying.3 On the other hand, Cooper-Dreyfuss has argued that, ‘to the extent that the United States was a prime mover in the Uruguay Round, its intent was to ease US trade deficits by creating broader exclusive markets for intellectual products, a goal with rather a scant role for user right’.4 Some others have simply attributed the origin of the TRIPS Agreement to the rent-seeking activities of large US corporations.
Whatever the motives may have been, the TRIPS Agreement resulted from the last multilateral trade negotiations in the GATT where reciprocity and the exchange of mutual advantage in different economic sectors were important.
While the positions of the Members of the Paris Convention remained polarised, initiatives for establishing a global system of IP disciplines and standards came from a different forum – the Preparatory Committee of the Uruguay Round5 negotiations within the GATT. The United States and Japan requested that protection of IPRs be inscribed as the subject matter of the trade negotiations, but Argentina and Brazil opposed this.6
Under the GATT, provisions relating to IPRs were limited only to those on marks of origin7 and their relationship to restrictive effects on international trade and to discriminatory treatment.8 The general thrust of the GATT had been the liberalisation of international trade, where protection of IPRs could be considered merely as part of the regulations restricting free trade, as referred to in Article XX(d) of the GATT 1947.9
Article XX GATT stipulates rules for general exceptions to GATT provisions. Paragraph (d) of the Article refers to ‘the protection of patents, trademarks and copyrights, and the prevention of deceptive practices’, considered as measures not contrary to the GATT, in so far as it is ‘necessary to secure compliance with laws or regulations which are consistent with the GATT’ and ‘provided that such measures are not applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination between countries where the same conditions prevail, or a disguised restriction on international trade’, as provided by the chapeau (introductory phrase) of Article XX.
Although of a limited scope, rules for international trade in counterfeit goods had been discussed during the Tokyo Round (1973–79), and the decisions concerning measures against the import of counterfeit goods which infringe trade mark rights were included in the Ministerial Declaration of 29 November 1982.10
The Preparatory Committee, co-chaired by Colombia and Switzerland, attempted to reconcile opposing views. Based on the Swiss-Colombian majority text, which was not a consensus text of the Round Preparatory Committee, the Ministerial Conference at Punta del Este in Uruguay on 20 September 198611 inscribed the following items to be discussed as ‘trade-related aspects of IPRs’ with a view to elaborating rules, principles and disciplines, within the framework of the GATT Round Negotiations:
- to reduce the distortions and impediments to international trade, taking into account the need to promote effective and adequate protection of IPRs, and to ensure that measures and procedures to enforce IPRs do not themselves become barriers to legitimate trade; and
- to develop a multilateral framework dealing with international trade in counterfeit goods.12
A ‘Negotiating Group on Trade-Related Aspects of IPRs, including Trade in Counterfeit Goods’ (TRIPS Negotiating Group), which was one among a total of 14 negotiating groups, was set up under the ‘Group of Negotiation on Goods’ (GNG) to deal with the forthcoming GATT rule on the above subjects relating to IPRs. The GNG, as well as the Group of Negotiations on Services (GNS), in turn, reported to the Trade Negotiations Committee (TNC). India explained, through a statement at the concluding session of the Punta del Este Ministerial, that it understood the agenda on IPRs to include border measures only, and did not agree to discuss substantive norms and standards.
From the first meetings in February 1987 until 1989, discussions at the Negotiating Group centred around the ‘mandate’ of the Group, namely, what should be the objective, coverage and the jurisdiction of the future GATT intellectual property agreement.13 During this period, the Chairman of the Negotiating Group, Lars ER Anell from Sweden, invited expert information, including from WIPO, and suggestions from participants.14
The US considered that the objective of IPR protection within the GATT would be to ‘reduce distortions of and impediments to legitimate trade in goods and services caused by deficient levels of protection and enforcement of IPRs’ and in response submitted a proposal15 to the Negotiating Group. It urged the participants to:
- create an effective economic deterrent to international trade in goods and services which infringe IPRs through implementation of border measures;
- recognise and implement standards and norms that provide adequate means of obtaining and maintaining IPRs and provide a basis for effective enforcement of those rights;
- ensure that such measures to protect IPRs do not create barriers to legitimate trade;
- extend international notification, consultation, surveillance and dispute settlement procedures to protection of IP and enforcement of IPRs;
- encourage non-signatory governments to achieve, adopt and enforce the recognised standards for protection of IP and join the agreement.
B Communications from Brazil and India: The Place and Meaning of Public Policy
In discussing ‘standards and principles concerning the availability, scope and use of trade-related intellectual property rights’ within the Negotiating Group, India and Brazil, in particular, expressed their concern about the economic and social consequences of IPR protection. Brazil prided itself upon having longstanding experience in sophisticated IP laws, as ‘the only original Member among developing countries to the Paris Convention’.16 It raised an important question about what should be the trade and developmental aspects of IPR protection within the GATT, as distinct from more legalistic discussions in other fora such as WIPO.17 India was not yet a party to the Paris Convention.18
Both India and Brazil asserted that IPRs are essentially monopolistic and impede trade and, therefore, the objective of IP protection should be to ensure ‘public interest’ by preventing and deterring19 possible abusive behaviour and to ensure greater access to technological innovation for users.20 India said at that time, ‘it is only the restrictive and anti-competitive practices of the owners of intellectual property rights that can be considered to be trade-related because they alone distort or impede international trade’.21 Both countries advocated the necessity to exclude certain areas from IP protection and to maintain the ‘flexibility’ of the international IP system for developing countries in need of new technologies. In 1989, Brazil submitted to the Negotiating Group its second detailed document, which stated that patents should be granted ‘in a way conducive to or consistent with national development, technological objectives and public interest’,22 with exceptions made for ‘inventions that are contrary to morality, religion, public order, public health and bearing in mind public interest and technological and economic development considerations’.23
India proposed in July 1989 that:
- there should be no attempt to harmonise the patent laws of industrialised and developing countries, nor should there be any imposition on developing countries of standards and principles that may be relevant to industrialised countries, but which are inappropriate for developing countries;24
- international conventions on this subject should incorporate, as a central philosophy, the freedom of the member states to attune their IP protection system to their own economic needs and social conditions;25
- the patent system can hamper domestic research and development and technological capabilities26 and, therefore, steps should be taken to prevent and deter27 the possible abuse of monopoly rights, be it by compulsory licence for public interest, licence of right,28 exceptions from patentability, or government use of patents in the public interest.
India wished to exclude from patentable subject matter a broad range of technical fields, particularly where the ‘public interest’ would be involved, including ‘national security, food production, poverty alleviation, nutrition, health care or the development of other vital sectors of the national economy’. For inventions in these fields, India argued that the host country government or any third person designated by it should be ‘free to work and use the patented invention in the country, including the importation of the patented product if necessary, without the consent of the patent owner on such terms and conditions as the host country government may decide.’29
Later in September 1989, India submitted another paper on enforcement30 to emphasise that enforcement only at the border (as opposed to internal enforcement) should be treated within the General Agreement on Tariffs and Trade (GATT). India argued that:
- border measures can easily become arbitrary or unjustifiable barriers to legitimate trade;
- each country’s laws differ, which makes it difficult to establish a common procedure for identifying counterfeit goods under an international trade regime;
- enforcement is possible only through normal administrative and judicial systems, and international agreements should stay at the level of general principles; and
- developing countries should not allocate additional resources establishing separate machinery for this purpose.
Other developing countries also submitted written statements. Mexico, for example, strongly supported measures within the GATT rules to strengthen action against trade in counterfeit goods, but expressed its concern that the improved IP protection should not become a barrier to access by developing countries to technologies produced in developed countries.31 Thailand opposed the establishment of international norms and standards of IPR protection and proposed that the negotiations be confined to issues relating to the enforcement of IPRs at the border, on the condition that they lead to further liberalisation, so that IPRs do not ‘become barriers of harassment to legitimate trade or lead to excessive protection that obstructs technology transfer’.32
At this time, the issue of access to medicines was not prominent in these written submissions. India, however, warned about the possible increase in the cost of healthcare systems as a result of IP protection.33
In April 1989, Ministers adopted a Mid-Term Review34of the Uruguay Round negotiations. Concerning the ‘Trade-Related Aspects of Intellectual Property Rights (TRIPS), Including Trade in Counterfeit Goods’, they urged negotiations to encompass the following issues:
(a) the applicability of the basic principles of the GATT 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, including the applicability of GATT procedures;
(e) transitional arrangements aiming at the fullest participation in the results of the negotiations.
Ministers also agreed that consideration would be given to concerns related to the underlying public policy objectives of their national systems for the protection of intellectual property, including ‘developmental and technological objectives’.35 They particularly emphasised the importance of reducing tensions through multilateral resolution of disputes in this area and through multilateral procedures, which the European Communities and Japan expected would counter unilateral actions.36
Despite its scepticism and its opposition to the creation of substantive norms and standards concerning IPR protection within the GATT context, India agreed, at the mid-term meeting in 1989, to include IP issues in the Uruguay Round negotiations.37
In attempting to explain this change, some attributed Indian interest in copyright protection for its film industry. AV Ganesan, India’s negotiator during the Uruguay Round Negotiations, explained that the shift of fora from the WIPO to the GATT changed the focus of attention and negotiating perspectives of developing countries. Furthermore, during the early 1990s, many developing countries adopted new IPR legislation under US pressure. China introduced product patent protection in 1993, as did Malaysia and Thailand. In light of changes in national laws, there were no longer substantial reasons to oppose a certain degree of harmonisation of IP protection rules, provided that the level of protection was the same as under the Paris or the Berne Conventions. For Ganesan, one of the advantages of introducing provisions concerning the dispute settlement procedures of the WTO into the IP agreement was that it would limit the scope and effect of the unilateral measures based on section 301 of the US Trade Act.38 For developing countries in particular, US retaliation in sectors not related to IPRs, such as agriculture or textiles, for IPR infringements by developing countries, was a matter of concern that had to be dealt with seriously.39
C Earlier Drafts (Anell and Brussels Texts)
In 1990, Chairman Anell elaborated upon a synthesis of various proposals,40 which was distributed in June of that year, and which, in July, became a formal document called the ‘Chairman’s report to the GNG on the status of work in the TRIPS Negotiating Group’ (the Anell text).41 Conflicting opinions arose not only between developed and developing countries, but probably more intensely among developed countries, on such questions as the first-to-file and the first-to-invent systems,42 the protection of neighbouring rights and rental rights on sound recordings.43
Opposing views and proposals from participants were consolidated under the articles numbered with a letter A from developed countries, and with a letter B from developing countries. Options within an approach, A or B, were indicated by the use of square brackets. The Chairman’s introductory note explains that Approach A envisaged a single TRIPS agreement encompassing all the areas of negotiation, covering seven categories of intellectual property; whereas Approach B provided two parts, one on trade in counterfeit and pirated goods, and the other on standards and principles concerning the availability, scope and use of IPRs. In the Annex to the Anell text, those proposals on preambular provisions and objectives, dispute prevention and settlement, transitional arrangements, institutional arrangements and final provisions, which had not been the subject of detailed consultations, were attached.
In the Anell text, proposals made earlier by India and Brazil concerning the principles of IP protection are found in Article 8B, 1-3 of Part II concerning ‘General Provisions, Basic Principles’, as follows:
8B.1 PARTIES recognize that IPRs are granted not only in acknowledgement of the contributions of inventors and creators, but also to assist in the diffusion of technological knowledge and its dissemination to those who could benefit from it in a manner conducive to social and economic welfare and agree that this balance of rights and obligations inherent in all systems of IPRs should be observed.
8B.2 In formulating or amending their national laws and regulations on IPRs, PARTIES have the right to adopt appropriate measures to protect public morality, national security, public health and nutrition, or to promote public interest in sectors of vital importance to their socio-economic and technological development.
8B.3 PARTIES agree that the protection and enforcement of IPRs should contribute to the promotion of technological innovation and enhance the international transfer of technology to the mutual advantage of producers and users of technological knowledge.
In the Annex to the Anell text, the following proposals from participating countries were noted as part of ‘Notes on the composite text’:
‘1.4 Recognizing that adequate protection of IPRs is an essential condition to foster international investment and transfer of technology;
1.5 Recognizing the importance of protection of IRPs for promoting innovation and creativity;’
The Anell text was subsequently updated44 and made into one composite text (instead of A and B), called ‘Trade-Related Aspects of Intellectual Property Rights, including Trade in Counterfeit Goods’ (this title was in brackets), for the Ministerial Conference in Brussels in 1990.45 The Brussels text46 already resembled the future TRIPS Agreement, including substantive regulations concerning the availability, scope and use of IPRs, enforcement, dispute prevention and settlement and transitional arrangements.
The preamble to the TRIPS part of the Brussels text incorporated what was decided at the 1986 Ministerial Conference at Punta del Este, as well as the Mid-Term Review Decision47 of TNC in April 1989 and all important points advanced by developing countries in the negotiations (chapter 5). While calling for the effective and adequate protection of IPRs, the preamble recognised that protection of IPRs that was either insufficient or excessive would lead to distortions of trade, and that differences in national legal systems should be taken into account. It also drew attention to public policy objectives of national systems for IP protection, including developmental and technological objectives.
The important proposal from Brazil and India concerning the objectives and principles of IP protection, drafted as Article 8B above, was rearranged in Articles 7 and 8 of the Brussels text, taking into account not only the user’s rights, dissemination and transfer of technology, but also the creator’s and inventor’s rights, as well as the promotion of technological innovation.
It seems that the legal status of Articles 7 and 8 was not explicitly discussed in the elaboration of the Brussels text. Gorlin’s commentary on the TRIPS Agreement from the pharmaceutical industry’s point of view states:
The issue of whether Article 7 has any operational significance was not raised in the course of the negotiations out of fear that the LDCs would insist on changing the language to explicitly make it operational. As a result, and EC efforts, during the course of the negotiations on the Article, which were described by one negotiator as more UNCTAD48 than GATT-like, were aimed at making the language sound ‘preambular’ while letting ‘sleeping dogs lie’. Adrian Otten of the WTO agrees that the language is hortatory. He, however, referred to the 1969 Vienna Convention on the Law of Treaties in pointing out that, as a matter of practice, the legal effect of these Articles is only relevant when the literal interpretation of the other TRIPS provisions is inadequate. He thought that Article 7 (as well as Article 8) might only have relevance in a ‘nullification and impairment’ case. . . . In addition, he cited the reliance by India on Articles 7 and 8 in its submissions to the WTO Committee on Trade and Environment as an indication of the future direction that some countries may want the WTO to take with respect to IP protection.49
On points of substance, the Brussels text indicated that the following major outstanding issues remained unresolved:50
Part I: Article 4 concerning the exemption to the Most-Favoured-Nation Treatment, in particular regarding ‘TRIPS-plus obligations’;51 Part II: Protection of computer programs (Articles 10.1 and 12), rental rights (Articles 11 and 16.4), the rights of performers and broadcasters (Article 16), the term of protection of phonograms (Article 16.5), moral rights (Article 9), limitations and exemptions (Article 13.2) and the definition of ‘public’ (Article 14), geographical indications (Articles 25, 26 and 27), criteria for industrial design protection (Article 28.1), the complex issues concerning patentable subject matter and exclusions therefrom (Article 30), the term of protection (Article 36) and non-voluntary licensing and government use (sub-paragraphs (g), (k), (h), (n) and (o) of Article 34 and related provisions of Article 32), non-discrimination as to the place of invention (Article 30.1), rights conferred by process patents (Article 31) and reversal of the burden of proof (Article 37), the appropriateness of so-called ‘plus elements’ concerning layout-designs of integrated circuits, protection of undisclosed information, the control of abusive or anti-competitive practices in contractual licences; Part VI: the length of transition periods and on the extent of obligations to be assumed during that period and details of a dispute prevention system in respect of the transfer of technologies.
Interestingly, bracketed draft Article 14 of the Brussels text referred to the definition of ‘public’ that regulated exceptions of copyright in domestic laws. The draft Article 14 provided that: ‘The term “public” shall not be defined in the domestic law of PARTIES in a manner that conflicts with a normal commercial exploitation of a work and unreasonably prejudices the legitimate interests of right holders.’
Thus, for one group of countries, public interest is a matter outside of IPR protection which should be pursued by policy instruments such as social security, education and welfare measures. For another, IPR protection should be ‘balanced’ by public interest objectives. India’s conception of ‘public interest objectives’, as Ganesan explains, includes: the goal of medicines being available in sufficient quantities at affordable prices; technological objectives realised by the working of patents, for example through compulsory licensing; and developmental objectives.52
As a corollary to what would later become Article 8 of the TRIPS Agreement, some developing countries insisted that abuse of intellectual property or anticompetitive abuse be dealt with in the future Agreement as a matter of public interest.53The provision was to be included in Article 40 of section 8 concerning control of anti-competitive practices in contractual licences. Throughout the drafting process, not much discussion seems to have been undertaken as to the meaning of such terms as ‘abuse’ of IPRs, ‘anticompetitive practices’ or ‘restrictions’ in licensing contracts.54 Both India and Brazil asserted that IPRs are essentially monopolistic and impede trade and, therefore, the objectives of IP protection should be to ensure ‘public interest’ by preventing and deterring possible abusive behaviour and to ensure greater access to technological innovation for users.55 Peru stated in its proposal that ‘[i]n order to limit the impact of restrictive business practices on trade, a patent or trademark owner should be prohibited from imposing conditions on the licensee.’56
Gervais57 explains that, when attempts were made to define the scope of contractual practices to be dealt with during the Uruguay Round negotiations, there was a possibility of separating the following practices: (a) those which constitute an abuse of IPRs, and/or (b) those which have an adverse effect on competition. Abuses of intellectual property rights do not cover the same types of conduct as anti-competitive abuse. In the end, both were retained, leaving vast ambiguities in the scope of Article 40. The criteria for judging (b) differs from those for judging (a), which should be based on general competition law principles, while (a) may be only one of the means for achieving anti-competitive objectives. For example, fraudulent patent procurement or the litigation to enforce those patents which are known to be invalid could constitute patent abuse under the Patent Law. However, in order to establish these types of conduct as violating competition law, there are further conditions to be met. For example, under section 2 of the Sherman Act58 in the US, the moving party must show that: the patentee knowingly and wilfully misrepresented facts to the patent office; the patent would not have been issued ‘but for’ the patentee’s fraud; and the patentee has monopoly power or the dangerous probability of achieving it, depending on the nature of the claim.59
Draft Article 8B.4 under Part II (General Provisions and Basic Principles) of the Anell text recognised that: ‘. . . appropriate measures [. . .] may be needed to prevent the abuse of intellectual property rights by right holders or the resort to practices which unreasonably restrain trade or affect the international transfer of technology’. Part III (Standards Concerning the Availability, Scope and Use of Intellectual Property Rights), section 9, entitled ‘Control of Abusive or Anti-Competitive Practices in Contractual Licences’, referred to appropriate national legislative measures to prevent or control abusive or anti-competitive practices in licensing contracts deemed to constitute an abuse of intellectual property rights or to have an adverse effect on competition in the relevant market. On the other hand, the fear that abuse of IPRs might restrain international trade was expressed in draft Article 6B (Control of Anti-competitive and Trade-distorting Practices) in Part IX (Trade in Counterfeit and Pirated Goods), under section 2 (Guiding Principles and Norms), which said that ‘PARTIES shall co-operate with each other to ensure the free flow of goods and prevent that intellectual property rights are used, through arrangements among enterprises, to create restrictions or distortions to international trade or to engage in anti-competitive practices having adverse effects on their trade . . .’
Draft Article 8.2 in Part I (General Provisions and Basic Principles) of the Brussels text added to the previous text the phrase, ‘provided that they do not derogate from the obligations arising under this Agreement’. It was in the Brussels text that control of abusive or anti-competitive practices in contractual licences was placed in the context of section 8, Part II (Standards Concerning the Availability, Scope and Use of Intellectual Property Rights). Its Article 43.1 stated that ‘PARTIES agree that some licensing practices or conditions pertaining to intellectual property rights which restrain competition may have adverse effects on trade and may impede the transfer and dissemination of technology.’ Article 43.2B added that: ‘PARTIES may specify in their national legislation licensing practices or conditions that may be deemed to constitute an abuse of intellectual property rights or to have an adverse ‘effect on competition in the relevant market’, and may adopt appropriate measures to prevent or control such practices and conditions, including non-voluntary licensing in accordance with the provisions of Article 34 and the annulment of the contract or of those clauses of the contract deemed contrary to the laws and regulations governing competition and/or transfer of technology.’ This text enumerated the following ‘practices and conditions [which] may be subject to such measures where they are deemed to be abusive or anti-competitive: (i) grant-back provisions; (ii) challenges to validity; (iii) exclusive dealing; (iv) restrictions on research; (v) restrictions on use of personnel; (vi) price fixing; (vii) restrictions on adaptations; (viii) exclusive sales or representation agreements; (ix) tying arrangements; (x) export restrictions; (xi) patent pooling or cross-licensing agreements and other arrangements; (xii) restrictions on publicity; (xiii) payments and other obligations after expiration of industrial property rights; (xiv) restrictions after expiration of an arrangement.’ No explanation is given in any of the Uruguay Round documents as to why, among the above 14 practices which have radically different competitive/anticompetitive effects, ‘challenges to exclusive grantback conditions’, ‘conditions preventing challenges to validity’ and ‘coercive package licensing’ were retained as examples of abuses or anticompetitive practices in Article 40 of the TRIPS Agreement. The Dunkel text of 20 December 199160 reiterated the phrase ‘consistently with the other provisions of this Agreement’, which made the draft close to Article 40 of the TRIPS Agreement (see chapters 5 and 9).
Some of the outstanding issues during the Uruguay Round were later resolved, while others developed into controversies and eventually found a precarious compromise. Some other issues were simply left out. Definition(s) of ‘public’ and the relationship of ‘public policies’ to IPR protection were not discussed further during the Uruguay Round negotiations.
The TRIPS draft was submitted to the Brussels Ministerial Conference, and would have been adopted, ‘had other parts of the Round package been sufficiently advanced.’61 However, negotiations on agriculture, services and other problematic issues stalled.62 On the IPR agreement, the GNG continued its progress at the Brussels meeting. Gervais explains that it was at this occasion that the following difficult substantive issues split the participants: ‘the protection of pharmaceutical products by patents; dispute settlement; the nature and duration of transitional arrangements for developing nations; and finally, the protection of geographical indications’. In addition, there were divisions in relation to the following copyright fields: exclusion of ‘moral rights’, protection of computer programs, data bases and sound recordings, and protection of the rights of music performers and broadcasters (neighbouring rights).63
The Uruguay Round negotiations collapsed over the issue of agricultural subsidies at the Brussels meeting in December 1990. During this time, the then Director-General of the GATT, A Dunkel, established an informal working group to review draft texts. The Round negotiations resumed in September 1991. In December 1991, Dunkel, in an attempt to reconcile opposing interests by making fields such as agriculture and textiles more attractive to developing countries, proposed a comprehensive draft in a single package for all negotiated fields (the Dunkel Text).64 The negotiations proceeded on the following four tracks: 1) market access (tariffs and non-tariff measures, natural resource-based products, tropical products, and textiles); 2) new areas of services, trade-related IPRs, and trade-related investment measures; 3) agriculture; and 4) GATT rules (dispute settlement, safeguards, balance-of-payments reform, and the non-tariff measure codes, including subsidies and anti-dumping). The Dunkel text (which would later become the TRIPS Agreement) did not go through substantial changes at the last stage of negotiations,65 although important changes were made on the provisions concerning the following controversial subjects of discussion during the final stages.
i Patentable Subject Matter
Scope and standards of patentability (Article 27 TRIPS)
When the Uruguay Round negotiations started in 1986, of the 82 Member States of the Paris Convention for the Protection of Industrial Property, 49 excluded pharmaceutical products from the scope of patentable subject matter. Ten Members excluded pharmaceutical processes; 35, foods; 42, animal and plant varieties; 32, computer programs and 9 excluded microorganisms.66 Legislative formulations and examination guidelines of patentability criteria (novelty, inventive step (non-obviousness in the US) and industrial applicability (utility in the US)) differed considerably, particularly in the new technological fields (see chapter 3). The question of patentable subject matter constituted one of the most controversial subjects of negotiation during the Uruguay Round.
Article 5.1 of Chairman Anell’s composite text of 23 July 1990 dealt with ‘patentable subject matter’. Following the suggestions by Canada and developing countries,67 Article 5.1.1 proposed non-agreed proposals in brackets that ‘patents shall be [available] [granted] for [any inventions, whether products or processes, in all fields of technology,] [all products and processes] which are new, which are unobvious or involve an inventive step and which are useful or industrially applicable.’
The reference to ‘whether products or processes’, was significant for the US, Switzerland, the EU and Japan. For these countries, one of the important objectives in negotiating TRIPS during the Uruguay Round was to not have ‘medicines’ excluded from patentable subject matter. If, however, the term ‘medicines’ was used in the text of the Agreement, then agricultural chemicals and foods would be left out of patentability.68 Instead of singling out ‘medicines’, therefore, the term ‘in all fields of technology’ was suggested.69 By contrast, Article 5,1, paragraph 1B, proposed by developing countries, stated that ‘PARTIES may exclude from patentability certain kinds of products, or processes for the manufacture of those products on grounds of public interest, national security, public health or nutrition.’ Article 5.1.4 also proposed a long list of exclusions from patentability.70
These exclusions opposed patentability of a wide range of biotechnological inventions. It excluded discoveries and substances found in nature (‘1.4.2 scientific theories, mathematical methods, discoveries and materials or substances [already existing] [in the same form found] in nature’), and allowed the ineligibility of genetically modified animal and plant varieties (‘1.4.4 [Any] plant or animal [including microorganisms] [varieties] or [essentially biological] processes for the production of plants or animals’).71 From the Brussels Draft, paragraph 1.4.2 of the Anell text regarding the exclusion of ‘scientific theories, mathematical methods, discoveries and materials or substances [already existing] [in the same form found] in nature’ was eliminated.
Proposed Article 30 of the Brussels text (Article 27 of the TRIPS Agreement) used a structure and content similar to that of the current Article 27 TRIPS concerning ‘patentable subject matter’. Article 30.1 of the Brussels text stated the general principle of patentability for all inventions, whether products or processes, in all fields of technology, provided that they were new, involved an inventive step and were capable of industrial application.72 The bracketed phrase ‘patents shall be available without discrimination as to where the inventions were made’ was inserted into Article 30.1 of the Brussels text. Article 30.2 allowed the conditions of exclusion concerning individual cases, namely, ‘to protect public morality or order, including to secure compliance with laws or regulations which are not inconsistent with the provisions of this Agreement, or to protect human, animal or plant life or health’. Article 30.3 allowed for the exclusion from patentability of certain categories of inventions: (a) diagnostic, therapeutic and surgical methods for the treatment of humans or animals; and (b) animal or plant-related biotechnology inventions73, subject to a review after the entry into force of the Agreement.
According to Gervais, the principles of non-discrimination in the drafting of paragraph 1 of the Brussels draft Article 30 (Article 27.1 TRIPS) were made against the background of: (i) conflicting applications arising from the differences between the first-to-invent system and the first-to-file system; (ii) the controversial question of whether the invention is locally produced or imported (with concomitant issues of working requirements, the failure of which could possibly justify compulsory licensing); and, (iii) the issues of compulsory licences which, in certain countries, specifically target pharmaceutical patents.74 The prohibition of discrimination ‘as to the place of invention’ originated from those countries critical of the discriminatory practices of the US, based on section 104 of its Patent Law. Section 104 of the US Patent Act 35 USC § 104 prohibited proof of knowledge, use or other activity in any country outside the US for the purpose of establishing a date of invention. This was one of the practices deriving from the ‘first-to-invent’ system in the US, as opposed to the ‘first-to-file’ system.75 This provision was amended to permit an applicant for a patent to establish a date of invention in any WTO country.
The Brussels text merely mentioned that ‘patents shall be available’ without discrimination as to ‘the place of invention’. The sentence concerning the ‘enjoyment’ of patents was added in the Dunkel text,76 as was the phrase ‘without discrimination as to the field of technology and whether products are imported or locally produced’. This was because many countries at that time had special provisions relating to medicines, such as shorter terms of patent protection or less stringent rules for the granting of compulsory licensing than in other technological fields. The clause, ‘whether products are imported or locally produced’ was a compromise between the longstanding demand of developed countries that imports be regarded as the ‘working’ of patents, and developing countries which insisted on limiting the meaning of ‘working’ to local manufacturing (on compulsory licensing and local working, see below p 127).
Public Morality or Order (Article 27.2 TRIPS)
The Anell text referred to the exclusion of inventions, ‘the publication or use of which’ would be contrary to public order, law, generally accepted standards of morality’77 to permit Members to prohibit the patenting of certain inventions to protect public morality or order. Thus the patentability of inventions may not be prevented merely because their exploitation is prohibited by domestic law. To ‘protect public morality or order’, the Brussels text added ‘including to secure compliance with laws or regulations which are not inconsistent with the provisions of this Agreement; or to protect human, animal or plant life or health.’
Toward the end of the 1991 negotiations, the reference to ‘environment’ was added, making this provision unique among TRIPS provisions.78 The Dunkel text provided the following for Article 27.2:
PARTIES may exclude from patentability inventions, the prevention within their territory of the commercial exploitation of which is necessary to protect ordre public or morality, including to protect human, animal or plant life or health or to avoid serious prejudice to the environment, provided that such exclusion is not made merely because the exploitation is prohibited by domestic law.
Gervais explains that the concept in French civil law of ‘ordre public’ is typically applied to mean that the freedom of private persons to contract in or out of their obligation is limited by ordre public, ie the interest of society, or ‘public policy’.79 Article 53(a) of the EPC also employs the French term,80 but the European Patent Office (EPO) Guidelines for Examination on this provision do not infer any specifically French civil law issue: ‘the purpose of this is to deny protection to inventions likely to induce riot or public disorder, or to lead to criminal or other generally offensive behaviour. Anti-personnel mines are an obvious example.’81 In Europe, patenting of certain biotechnology inventions gave rise to heated discussions on morality and ethical standards. In examining the patentability of Harvard’s ‘OncoMouse’, the EPO Board, in 1991, carefully weighed the suffering of animals and possible risks to the environment on the one hand and the invention’s usefulness to mankind on the other. Ethical questions arose in Europe, particularly when patent claims came to include technologies relating to germ lines or the use of stem cells relating to humans. The scope to be given to patents related to sequences or partial sequences of genes isolated from the human body. In this regard, patenting human stem cells and cell lines obtained from them became the subject of public discussion.82 Later, in 2000, the European patent covering the ‘isolation, selection and propagation of animal transgenic stem cells’83 for generating transgenic animals from stem cells provoked controversy.84 This patent was considered to violate common standards of ethics, because the claims did not explicitly exclude the application of these techniques to humans. The interpretation of one granted claim could extend to a method for genetically altering humans and the claims were subsequently modified.
Later, in US–Gambling,85 the WTO dispute case involving the General Agreement on Trade in Services (GATS), the US as a defendant invoked the clause of protecting ‘public morals and to maintain public order’ provided for in Article XIV(a) GATS86 to justify the prohibition of internet gambling. In this services industry case, the Panel Report stated that the term ‘public order’ refers to the familiar civil-law concept denoted in French by the expression ‘ordre public’ and its functional counterpart in common-law systems, the concept of ‘public policy’ (although the latter term is also used in other contexts with a broader meaning).87 The Report mentions that ‘public morals’ refers to standards of right and wrong that can be described as ‘belonging to, affecting, or concerning the community or nation’, and ‘moral’ means ‘of or pertaining to human character or behavior considered as good or bad; of or pertaining to the distinction between right and wrong . . .’
Probably underlying the mention of morality and ordre public, is the idea that no branch of law should defeat the fundamental purpose of a legal order. This seems to be the reason why an invention may not be patentable, if its commercialisation goes against what is commonly believed to be morality or public order, even though not granting a patent will not prevent its commercial exploitation.88
. . . the concern was clearly directed at exclusions of biotechnological inventions on grounds of morality or public order. Developing countries and others can only exclude such an invention from patent grant if they also disallow the commercial exploitation of these harmful inventions by others. This is a guiding principle for patent examiners and courts. However, few countries have added such a caveat in the post-TRIPS period to their laws, a notable exception being Argentina.89
In the TRIPS negotiations, the consideration may also derive from industrial policy grounds as some developing countries are today important suppliers of biotechnology products (see chapters 3, 10 and 11).
This provision is likely to be invoked only in rare and extreme cases. A fair test to apply is to consider whether it is probable that the public in general would regard the invention as so abhorrent that the grant of patent rights would be inconceivable. If it is clear that this is the case, objection should be raised under Article 53(a); otherwise they should not be raised.90 Gorlin explains the meaning of ‘commercial exploitation’ as excluding research, marketing of the product by government, and free marketing.91
The wording, ‘necessary to’ in this paragraph is also found in Articles XX(a) and (d) of the GATT 1947 and 1994, and in Article XIV(a), (b), (c) of the GATS, both concerning general exceptions. Traditionally, GATT Panels have generally interpreted this expression as meaning that a measure is justified only when there is no alternative GATT-inconsistent or less inconsistent measure, which a country could reasonably be expected to take.92 Later in the WTO dispute cases, however, in US–Gambling93 and Brazil–Retreaded Tyres, for example, these restrictive conditions were loosened. The Appellate Body in Brazil–Retreaded Tyres case stated that:94
- ‘necessary’ is not limited to that which is ‘indispensable’; whether or not the measure is ‘necessary’ involves a ‘weighing and balancing process’ which begins with an assessment of the ‘relative importance’ of the interests or values furthered by the challenged measure (such as ‘human, animal or plant life or health’ in Article XX(b)) and other factors contributing to the realisation of the ends pursued and ‘the restrictive impact of the measure on international commerce’;
- a qualitative analysis (instead of quantitative analysis) is within the bounds of the methodology for the analysis of the contribution of the measure in question to its objectives;
- when the measure is accepted as necessary, it does not have to show, in the first instance, that there are no ‘reasonably available alternatives’ to achieve its objectives.
‘Animals and Plants other than Microorganisms . . .’(Article 27.3 (b)TRIPS)
Canada and some developing countries were proposing a broad range of exclusions, in opposition to the US, Japan and Switzerland, to which biotechnological and pharmaceutical product patent protections mattered. As a result of a compromise, draft Article 30, paragraphs 2 and 3 of the Brussels text came to resemble articles 53(a) and 53(b) of the European Patent Convention (EPC) (see chapter 3).95
Paragraph 3 of the Brussels draft Article 30 (later adopted as TRIPS 27.3)96 allows specific categories of inventions to be excluded from patentability. Paragraph 3(a) followed Article 53(b) of the EPC, to which the US had been objecting.97 Paragraph 3(b) (later adopted as TRIPS 27.3(b)),98