TRIPS Flexibilities and TRIPS-plus Approach
Prof. S K Verma
ISIL, New Delhi
Conference on IP Policy
Bangkok, December 1, 2013
1
Post-TRIPS: new vistas of IP
protection
• TRIPS Agreement –a most comprehensive multilateral agreement
on intellectual property
• Provides a prescriptive regime for protection and enforcement of
IPRs.
• Provides a dispute settlement procedure, as a part of WTO
trading system.
• Post-TRIPS era saw efforts to strengthen the protection levels of
IP beyond those established under TRIPS, creating the TRIPS-plus
phenomenon.
• a remarkable upsurge in the number of regional and bilateral
free-trade agreements (FTAs) during the past decade.
• TRIPS- plus provisions of FTAs have no time limit.
2
Forms of TRIPS-plus agreements
• Three broad categories of FTAs:
1. involves South-South arrangements, usually among
neighbouring countries, and in regional groupings, such as
ASEAN, SAARC, SADC, Mercosur, CAFTA-DR;
2. involves an FTA between a developing country or a
grouping of developing countries and a developed country or
entity, such as the US-Singapore and US-Central America FTAs
and the EU-ACP Economic Partnership Agreements (EPAs).
3. involves developed countries, such as US-Australia, JapanSwitzerland.
• referred to as bilateral agreements as concluded either between
two states or two trading blocs.
• About 400 RTAs as reported to WTO till 2010.
• currently 159 effective agreements, more than three-quarters of
world trade passes through the jurisdiction of these agreements
3
Forms of TRIPS-plus agreements
• 2,573 bilateral investment treaties (2006)- with IPRs provisions.
• Trade and investment framework agreements (TIFAs), often a
precursor and pre-condition for a FTA by the US.
• Bilateral science and research and development cooperation
agreements – indirect form of TRIPS+
• Bilateral IP agreement - US–Bulgaria (1995), the US–Nicaragua
(1997) and the US–China (1995, 1996) – less popular form now.
• extensive coverage of FTAs - including trade in goods, trade in
services, labour, environment, intellectual property, electronic
commerce, competition law, human rights
• Focus here is on agreements between economically developed
countries (the US, EU, EFTA and Japan) with weaker contracting
party by using bilateral trade concessions for concessions on IPRs.4
An overview of recent IP-related
agreements
• The US has 14 FTAs in force with 20 countries.
• Partner Countries: Australia; Bahrain; Chile; Colombia; DR-CAFTA;
: Costa Rica, Dominican Republic, El Salvador, Guatemala,
Honduras, & Nicaragua; Israel; Jordon; Korea; Morocco; Oman;
NAFTA: Canada & Mexico; Oman; Panama; Peru; and Singapore.
• Negotiating regional FTAs- the Trans-Pacific Partnership(TTP) with
Australia, Brunei Darussalam, Canada, Chile, Malaysia, Mexico,
New Zealand, Peru, Singapore and Vietnam; the Transatlantic
Trade and Investment Partnership (TTIP), covering the US and EU.
• Negotiating with SAUC countries: Botswana, Lesotho, Namibia,
South Africa and Swaziland; Malaysia and UAE.
• Using BITs for IP protection (11 in number)
• Bahrain, Jordan, Morocco, Oman have AAs/FTAs with EU.
• EU has FTAs, a large number of EPAs and AAs, with more than 30
countries; concluded agreements with Singapore and Canada; 4
EPAs with ACP countries; negotiating with India, Gulf Cooperation
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Council and Morcosur.
…Contd
• US FTAs a part of its trade policy under the Trade Promotion
Authority Act, 2002.
• Act mandates IP protection in multilateral and bilateral
agreements similar to that found in the Unites States law.
• On some issues, the US legal standards are higher and stricter
than those of TRIPS –referred as TRIPS-plus standards.
• EU agreements - less specific on IPRs protection, viz., Trade,
Development and Cooperation Agreement with South Africa
(1999), and AAs with Israel (2000), Chile (2002), Jordon (2002)
and Mexico (2002).
• EU agreements till recently emphasized more on GIs protection;
now following US approach.
• EFTA (Iceland, Liechtenstein, Norway and Switzerland) concluded
16 agreements- emphasizing more on ‘data exclusivity’.
6
…Contd
• Japan: has signed several bilateral FTAs with Asian and
Latin American countries as EPAs: Singapore (2000),
Malaysia (2005), Philippines (2006), Thailand (2007)
and Chile (2007) – extensive provisions on IPRs.
• Recent agreements with Brunei, Australia, India,
Indonesia and Switzerland- only one provision on IP –
to join IP conventions and to improve IP protection.
• India has signed free trade pacts with about 20
countries including Japan, Korea, ASEAN nations (IndoASEAN Trade in Goods Agreement 2009), Sri Lanka and
Nepal, negotiating market opening pacts with Australia,
Canada, New Zealand and the EU.
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Interaction between bilateral FTAs and
TRIPS/WTO
• WTO/TRIPS work on MFN principle – Art. I:1 GATT and Art. 4
TRIPS
• Bilateral agreements may be notified to the WTO as ‘regional
agreements’ under Art. XXV:5 GATT – exempting them from the
MFNs clause.
• often referred to as “preferential” in nature, are in fact exceptions
to the general rule of MFN, not exempted from Art. 4 TRIPS.
• If TRIPS plus standards incorporated in national laws, will be a
factor in dispute settlement.
• A tactic to put pressure on the non-signatories of FTAs, denying
access to markets of developed nations.
• Leads to a ‘multilateralization’ of bilateral concessions.
• LDCs most effected- no strong demand of IP goods in their
markets, but need developed markets for their exports.
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TRIPS flexibilities
• Four broad categories of flexibility available under
TRIPS that countries may use:
1. flexibilities related to implementation; (Art. 1:1)
2. flexibilities related to substantive standards of
protection;
3. flexibilities related to enforcement;
4. flexibilities of areas outside the scope of TRIPS.
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TRIPS flexibilities in the area of public
health
• In health, flexibilities are in-built:
 The preamble to TRIPS;
 Article 7 of TRIPS – “The protection and enforcement of
intellectual property rights should [be] … in a manner
conducive to social and economic welfare”,
 Article 8 of TRIPS – “Members may, in formulating or
amending their laws and regulations, adopt measures
necessary to protect public health and nutrition….”
 Article 66 of TRIPS- extended period and technology transfer
for LDCs.
• Some health-related flexibilities in the TRIPS include:
Longer transitional periods for developing countries;
Compulsory licensing;
Government use exceptions;
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…Contd
Parallel importation;
Exceptions to patents rights (Article 30 of TRIPS) - Examples
of these exceptions include the Bolar exception and the
research and experimental use exception.
Early working exceptions (Bolar exception) in the field of
pharmaceutical drugs, is frequently used in a number of
developed countries such as Canada - the Canada—patent
protection of pharmaceutical products case (2000);
Standards of patentability – no definition of ‘invention’ ‘new’,
‘inventive step/non-obviousness’(most difficult to define) and
‘industrially applicable’ for an invention to be patentable;
• Doha Declaration of Public Health and the TRIPS
Council Decision 2003 endorse these flexibilities.
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FTAs: Salient features
• no fixed definition for the term TRIPS-plus
• is an evolving concept and has proven to be caseand country-specific.
• Negotiated mainly on the basis of “reciprocity”, i.e.
that both sides take on similar levels of obligations.
• Significant lack of “development track” for
developing countries.
• often contain additional demands/ protection
levels on these countries beyond that required
under the TRIPS/WTO.
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Salient components of TRIPS-plus
• provisions in FTAs include the elimination and reduction of:
 transitional periods,
 data exclusivity protection,
 extension of patent protection terms,
 restrictions on parallel importation,
 patentability of new use of known medical substances,
 restrictions on compulsory licensing,
 patenting of life forms,
 limitations on patentability criteria and
 accession to a number of international TRIPS-plus agreements.
• often resulting in the strengthening of the levels of IP
protection, which erode the flexibilities available under the
TRIPS.
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…contd
• extending periods of protection beyond the
requirements of TRIPS, in addition to forgoing the
transitional periods (shorter period of transition for
patents – EU-Jordon AA).
• obliging member countries to extend the protection of
pharmaceutical and plant protection products
(agrochemicals) beyond the protection period of 20
years provided under TRIPS to 25 years.
• Providing protection for plant and animal patents,
taking away the flexibility provided under Art. 27.3(b)
of the TRIPS.
• Restricting the use of compulsory licensing and
government use (Art. 31).
14
…contd
• May oblige countries to join a specific international
agreement/ treaty on IP, not a part of TRIPS – WIPO
Internet treaties, UPOV convention, PCT, Budapest
treaty;
• Modifying the enforcement provisions and adding to
measures above TRIPS;
• To put in place a system for complying with the IP
obligations, restricting options regarding
implementation of these agreements.
• New dispute settlement mechanism, other than that of
the WTO, being proposed, i.e., ICSID, ICC, UNCITRAL.
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Patenting of life, biodiversity, genetic
resources, agriculture
• As against Art. 27.3(b), some US FTAs (e.g. Chile) oblige the
country to make available “patent protection for plants that
are new, involve an inventive step and are capable of
industrial application.”
• On microorganisms/microbiological processes, FTAs require
countries to sign Budapest Treaty, which increases patenting
of microorganisms.
• On plant varieties, countries to sign UPOV 1991- will affect
the farmers’ rights.
• On agro-chemicals, a 10-year period of data exclusivity was
introduced as part of the US-Australia FTA.
• Under TRIPS, countries may decide not to give patents on
plants, animals or diagnostic, therapeutic and surgical
methods (Art. 27.3(a), US FTAs require countries to allow
patents on some or all of these items.
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Health-related TRIPS-plus
provisions
• The flexibilities available under TRIPS significant to
promote accessibility and affordability of medicines by
poor countries.
• The significance of FTAs is more pronounced in the area
of pharmaceuticals and agro-chemical products.
• They restrict the grounds of resorting to such
flexibilities- impacting negatively public health and
access to medicines.
• Examples include the following:
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Health-related TRIPS-plus provisions:
‘Data exclusivity’
• Obligation to protect confidential information -‘test data’
submitted for getting market approval for pharmaceutical and
agro-chemical products.
• Results of clinical studies constitute the ‘test data’.
• Protected under Art. 39.3 of TRIPS (against ‘unfair commercial
use’).
• Important for health and environmental purposes- allow national
authorities and users to evaluate the new drugs and
agrochemicals.
• ‘test data’ represents more than 60% of the R&D costs of new
drugs.
• Being scientific data, based on standard protocols, is outside
patent protection.
• Drug companies seek a period of exclusive use of the data after
marketing approval.
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…continue
• During this period national authorities are prevented
on relying the data for approving the generic version,
even if no patent protection exists on the product.
• ‘Data exclusivity’ extends the originator company’s
market monopoly
• acts as a de facto patent, preventing competition, likely
to result in significant price increases for medicines.
• A public health justification should be required for data
protection beyond TRIPS.
• Against Para 4 of the Doha Declaration on TRIPS
Agreement and Public Health (2001).
• TRIPS does not specify a minimum period of data
exclusivity.
19
…continue
• part of many US FTAs : with Australia and many developing
countries – Chile; CAFTA-DR; Peru; Colombia; Bahrain,
Morocco
• Most US FTAs have five years exclusivity, counted from the
date of the approval in the party- might lead to 10 years
exclusivity.
• agreements with Peru and Panama have, however,
introduced the concept of ‘concurrent protection’, i.e., ‘date
exclusivity’ protection to be counted from the date of
marketing approval in the USA and not in the Party where
protection is sought
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Obligation not to grant marketing approval to
third parties prior to the expiration of the term
of pharmaceutical patents
• The drug regulatory authority (DRA) does not normally
have jurisdiction over patents or the patent status of
the drug – confirm only the safety and benefits of the
drug.
• Some FTAs require that the DRA “shall not grant
marketing approval to any third party prior to the
expiration of the patent term unless by consent of the
patent owner” – not required by TRIPS.
• Effectively prevents generics from being available
through the whole patent term
• Philippines and EU have refused to have such a clause.
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Extension of the patent term to compensate for
unreasonable delays at the patent office/due to
the marketing approval process
• Argument: drug companies need to be “compensated” for
any “unreasonable” time a national drug authority or patent
office takes to examine or approve an application. The life
of the patent would be extended by the “unreasonable
time” taken.
• This extension measure is in all the US FTAs since NAFTA.
• Longer patent protection means longer market monopoly,
• Clauses in the FTAs are also for extension of the patent term
due to the unreasonable delays in marketing approval
process.
• Includes obligation to disclose to the patent owner the
identity of third party seeking marketing approval during the
term of the patent
22
Patentability of new uses or methods of using
known products/substances: “Evergreening”
the patent.
• Under TRIPS, members are not obliged to grant
patents on new uses of existing substances.
• Several US FTAs: Agreements with Australia,
Bahrain, Morocco – require patents to be granted
for each “new use” of a product, thus allowing the
patent protection beyond the expiry of the patent.
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Limitation to conditions for compulsory
licensing
• TRIPS allow countries to issue CLs under certain conditions.
• The Doha Declaration on TRIPS and Public Health confirms
that countries have “the freedom to determine the grounds
upon which such licences are granted.”
• FTAs seek to limit the circumstances for CLs on drugs.
• the US-Singapore FTA : CLs to remedy anti-competitive
practices by the patent holder; for public non-commercial
use; and in cases of national emergency or circumstances of
extreme urgency
• FTAs concluded after 2004 or those concluded earlier have
now appended with ‘Understanding regarding certain public
health measures’, e.g. US-Peru agreement (2006); CAFTADR-USA agreement (2004)to take necessary measures to
protect public health.
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Exhaustion of patent rights
• Art. 6 of the TRIPS- each State is free to adopt its
own regime on exhaustion, also part of the Doha
Declaration
• EU and US advocates for national exhaustion in
FTAs
• US agreements with Australia and Morocco have
national exhaustion system.
• Recent agreements by the US do not have any
provision on parallel imports (US Congress
decision)
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CIPIH Report 2006
• Views have been expressed that the IP provisions in
FTAs would make medicines more expensive
• 2006 Report of WHO’s Commission on Intellectual
Property Rights, Innovation and Public Health
warns against the TRIPS-plus measures in bilateral
trade agreements “in ways that may reduce access
to medicines in developing countries”.
• urges developing countries to enhance their
national regimes of checks and balances through
legislative and institutional tools, viz., competition
laws and regulations
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Copyright
• Copyright term extensions: most US FTAs have 70 years
+ author’s life term except for Oman’s - requires 70, 95
or 120 years protection depending on which
measurement system is used.
• Have Anti-circumvention provisions: A technological
protection measure (TPM) prevents even legal copying
after the term has ended –leading to infinite monopoly.
• Circumvention devices are allowed under TRIPS. The
WCT has an anti-circumvention provision, but allows
national copyright exceptions.
• US FTAs go beyond the WCT.
• FTAs oblige countries to join Internet treaties
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Why FTAs?
• Difficulty in achieving uniformity and consensus in
procedural and substantive patent law in multilateral
instruments, reason behind the conclusion of FTAs (e.g. PLT
and FTAA).
• Developed countries seek the forum of the FTA to:
• (a) remove or reduce the flexibilities in the TRIPS
Agreement and
• (b) establish even higher standards of IPRs in developing
countries.
• The FTAs threaten the use of TRIPS flexibilities in relation to
• (a) patents and access to medicines;
• (b) IP protection of plant varieties with respect to the sui
generis system, and the rights of farmers; biodiversity;
• (c) the ability to ban patenting of some lifeforms.
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What is at stake?
• Multilateral system of the WTO/TRIPS is at stake.
• FTAs in fact discouraging countries from reaching
multilateral trade agreements, hence slowing down the
pace of multilateral trade negotiations.
• Suggested that bilateral agreements between geographically
distant countries should not be considered regional and
hence not eligible for exemption from the GATT MFN
principle.
• On flip side, bilateralism may eventually lead to
international/regional uniformity or harmonization that
neither regional or multilateral approaches have achieved.
• the economic and legal impact of the interaction of bilateral
agreements with each other and with the multilateral
system of the WTO has yet to be fully evaluated.
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