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Hong Kong, China - 2005

HONG KONG WTO MINISTERIAL 2005: BRIEFING NOTES

INTELLECTUAL PROPERTY (TRIPS)
Negotiations, implementation and TRIPS Council work

The WTO’s Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) has a wide ranging work programme, including TRIPS and health, some aspects of geographical indications and the review of some TRIPS provisions. This briefing note contains an explanation of the subjects.

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Contents
> Director-General’s letter to journalists
> The Doha Development Agenda
> Agriculture
Cotton
> Services
> Market access, non-agricultural products
> Intellectual property (TRIPS)
> Trade facilitation
> Rules: ad, scm including fisheries subsidies
> Rules: regional agreements
> Dispute settlement
> Trade and environment
> Small economies
> Trade, debt and finance
> Trade and technology transfer
> Technical cooperation
> Least-developed countries
> Special and differential treatment
> Implementation issues
> Electronic commerce
> Members and accessions
> Members
> Bananas
> Statistics, Textiles and Clothing
> Statistics, Facts and Figures
> Jargon buster, Country groupings
> Jargon buster, An informal guide to ‘WTOspeak’


TRIPS and public health  back to top

Now largely settled is the question of how to ensure that patent protection for pharmaceutical products does not prevent people in poor countries from having access to medicines — while at the same time maintaining the patent system’s role in providing incentives for research and development into new medicines. The remaining task is to convert a General Council decision of 30 August 2003 into a permanent amendment of the TRIPS Agreement.

Underlying the deliberations are flexibilities written into the TRIPS Agreement, such as “compulsory licensing”. This enables governments to allow a competitor to produce a patented product or use a patented process without the permission of the patent holder, under certain conditions aimed at safeguarding the legitimate interests of the patent holder, including a right to be paid for the authorized copies of the products. Parallel importing is also possible. This is where a product sold by the patent owner more cheaply in one country is imported into another without the patent holder’s permission. Countries’ laws differ on whether they allow parallel imports. The TRIPS Agreement states that governments cannot bring legal disputes to the WTO on this issue; the Doha declaration on TRIPS and public health clarified that this means countries are free to set up their rules and procedures dealing with parallel imports.

These flexibilities do not have to be put into practice to have an effect. They are sometimes used as a means of bargaining. For example, the threat of a compulsory licence can encourage a patent holder to reduce the price.

  

The Doha mandate

Before the 2001 Doha Ministerial Conference, some governments were unsure of how these flexibilities would be interpreted, and how far their right to use them would be respected. The African Group (all the African members of the WTO) took the lead in pushing for clarification. A large part of this was settled when WTO ministers issued a special Declaration on TRIPS and Public Health at the Doha meeting in November 2001, alongside their main Doha Declaration.

In the main declaration, they stressed that it is important to implement and interpret the TRIPS Agreement in a way that supports public health — by promoting both access to existing medicines and the creation of new medicines.

In the separate declaration, they agreed that the TRIPS Agreement does not and should not prevent members from taking measures to protect public health. They underscored countries’ ability to use the flexibilities that are built into the TRIPS Agreement, in particular compulsory licensing and parallel importing. And they agreed to extend exemptions on pharmaceutical patent protection for least-developed countries until 2016. (The TRIPS Council completed the legal drafting task on this in mid-2002.)

On one remaining question, they assigned further work to the TRIPS Council — to sort out how to provide extra flexibility, so that countries unable to produce pharmaceuticals domestically can import patented drugs made under compulsory licensing. (This is sometimes called the “Paragraph 6” issue, because it comes under that paragraph in the separate Doha declaration on TRIPS and health.)

The issue arises because Article 31(f) of the TRIPS Agreement says products made under compulsory licensing must be “predominantly for the supply of the domestic market”. This applies directly to countries that can manufacture drugs — it limits the amount they can export when the drug is made under compulsory licence. And it has an indirect impact on countries unable to make medicines — they might want to import generics made in countries under compulsory licence, but find that Article 31(f) poses an obstacle to other countries supplying them.

The TRIPS Council was instructed to find a solution and report to the General Council on this by the end of 2002. However it was not until 30 August 2003, shortly before the Cancún Ministerial Conference, that consensus could be reached. The agreement takes the form of a General Council decision to waive provisions of Article 31(f) subject to certain conditions. It enables countries with production capability, to export drugs made under compulsory licence to countries that cannot manufacture them.

The waiver will last until the TRIPS Agreement is amended. It includes provisions on transparency (which give a patent-owner some opportunity to react by offering a lower price), and special packaging and other methods to avoid the medicines being diverted to other markets. An annex describes what a country needs to do in order to declare itself unable to make the pharmaceuticals domestically.

Over 30 developed countries have made a commitment within the decision not to import under this decision. And, as recorded in a statement by the General Council chairperson, a number of others stated they will only do so in emergencies or extremely urgent situations.

Consensus was achieved with the aid of a Chairman’s statement, made at the time the waiver was adopted, which sets out a number of shared understandings about the waiver. The decision refers to drugs needed to address the public health problems recognized in Paragraph 1 of the original declaration that ministers issued in Doha. This says: “We recognize the gravity of the public health problems afflicting many developing and least-developed countries, especially those resulting from HIV/AIDS, tuberculosis, malaria and other epidemics.”

  

Since then …

The final step is to convert the waiver into a permanent amendment of the TRIPS Agreement. The decision said members would complete this by the end of June 2004, but consensus has not yet been reached on how to achieve this. Part of the discussion is about the best way to handle the text, for example how much to put in Article 31 itself and how much in an annex to the TRIPS Agreement.

But members also differ on how closely the amendment should follow the waiver and how to handle the separate chairperson’s statement made at the time the General Council adopted the decision. Some developing countries want to drop provisions that they consider to be unnecessary for an amendment. Some developed and other countries say the waiver was so difficult to negotiate that it should be translated directly into an amendment in order to avoid further delays.

Although the waiver is temporary, so long as there is no agreement on a permanent amendment the waiver will continue to be in force.

See also: frequently asked questions

  

Geographical indications in general  back to top

> More on: Geographical indications

A product’s quality, reputation or other characteristics can be determined by where it comes from. Geographical indications are place names (in some countries also words associated with a place) used to identify products that come from these places and have these characteristics (for example, “Champagne”, “Tequila” or “Roquefort”). Protection required under the TRIPS Agreement is defined in two articles.

All products are covered by Article 22, which defines a standard level of protection. This says geographical indications have to be protected in order to avoid misleading the public and to prevent unfair competition.

Article 23 provides a higher or enhanced level of protection for geographical indications for wines and spirits: subject to a number of exceptions, they have to be protected even if misuse would not cause the public to be misled.

Exceptions (Article 24). In some cases, geographical indications do not have to be protected or the protection can be limited. Among the exceptions that the agreement allows are: when a name has become the common (or “generic”) term (for example, “cheddar” now refers to a particular type of cheese not necessarily made in Cheddar, in the UK), and when a term has already been registered as a trademark.

Information that members have supplied during a fact-finding exercise shows that countries employ a wide variety of legal means to protect geographical indications: ranging from specific geographical indications laws to trademark law, consumer protection law, and common law. The TRIPS Agreement and current TRIPS work in the WTO takes account of that diversity.

Two issues are debated under the Doha mandate, both related in different ways to the higher (Article 23) level of protection: creating a multilateral register for wines and spirits; and extending the higher (Article 23) level of protection beyond wines and spirits. Both are as contentious as any other subject on the Doha agenda. Although they are discussed separately, some delegations see a relation between the two.

  

Geographical indications 1: the multilateral register for wines and spirits  back to top

This negotiation is the only issue to take place in dedicated “special sessions” (i.e. negotiating sessions) of the TRIPS Council. It is about creating a multilateral system for notifying and registering geographical indications for wines and spirits. These are given a level of protection that is higher than for other geographical indications.

The work began in 1997 under Article 23.4 of the TRIPS Agreement and now also comes under the Doha Agenda (the Doha Declaration’s paragraph 18).

  

The Doha mandate

The Doha Declaration’s deadline for completing the negotiations was the Fifth Ministerial Conference in Cancún in 2003. Since this was not achieved, the negotiations are now taking place within the overall timetable for the round.

  

Since then …

Three sets of proposals have been submitted over the years, representing the two main lines of argument in the negotiations and some proposed compromises. The latest are:

  • The EU’s detailed paper, circulated in June 2005, proposes that registering a geographical indication would establish a “rebuttable presumption” that the term is to be protected in other WTO members — except in a country that has lodged a reservation on permitted grounds within a specified period (for example, 18 months).
      
  • Another paper from a group of countries (Argentina, Australia, Canada, Chile, Costa Rica, Dominican Republic, Ecuador, El Salvador, Honduras, Japan, Mexico, New Zealand, Chinese Taipei and the US) proposes a decision by the TRIPS Council to set up a voluntary system where notified geographical indications would be registered in a database. Those governments choosing to participate in the system would have to consult the database when taking decisions on protection in their own countries. Non-participating members would be “encouraged” but “not obliged” to consult the database.

Hong Kong, China has proposed a compromise (document TN/IP/W/8). Here, a registered term would enjoy a more limited “presumption” than under the EU proposal, and only in those countries choosing to participate in the system.

  

Geographical indications 2: extending the “higher level of protection” beyond wines and spirits  back to top

Geographical indications for all products are currently covered by Article 22 of the TRIPS Agreement. The issue here is whether to expand the higher level of protection (Article 23) — currently given to wines and spirits — to other products.

Some countries have said that progress in this aspect of geographical indications would make it easier for them to agree to a significant deal in agriculture. Others reject the view that the Doha Declaration makes this part of the balance of the negotiations. At the same time, the European Union has also proposed negotiating the protection of specific names of specific agricultural products as part of the agriculture negotiations.

  

The Doha mandate

The Doha Declaration notes in its paragraph 18 that the TRIPS Council will handle work on extension under the declaration’s paragraph 12 (which deals with implementation issues). Paragraph 12 says “negotiations on outstanding implementation issues shall be an integral part” of the Doha work programme, and that these issues “shall be addressed as a matter of priority by the relevant WTO bodies, which shall report to the Trade Negotiations Committee [TNC] … by the end of 2002 for appropriate action.”

Delegations interpret Paragraph 12 differently. Many developing and European countries argue that the so-called outstanding implementation issues are already part of the negotiation and its package of results (the “single undertaking”). Others argue that these issues can only become negotiating subjects if the Trade Negotiations Committee decides to include them in the talks — and so far it has not done so.

  

Since then …

At first they continued in the TRIPS Council. More recently, they have been the subject of informal consultations now chaired by WTO deputy director-general Rufus Yerxa. Members remain deeply divided, with no agreement in sight, although they are ready to continue discussing the issue.

Those advocating extension include Bulgaria, the EU, Guinea, India, Jamaica, Kenya, Madagascar, Mauritius, Morocco, Pakistan, Romania, Sri Lanka, Switzerland, Thailand, Tunisia and Turkey. They see the higher level of protection as a way to improve marketing their products by differentiating them more effectively from their competitors. The latest EU proposal calls for the TRIPS Agreement to be amended so that all products would be eligible for the higher level of protection in Article 23, and the exceptions in Article 24, together with the multilateral registration system currently being negotiated for wines and spirits.

Opposing extension are Argentina, Australia, Canada, Chile, Colombia, the Dominican Republic, Ecuador, El Salvador, Guatemala, Honduras, New Zealand, Panama, Paraguay, Philippines, Chinese Taipei, US, etc. They argue that the existing (Article 22) level of protection is adequate. They caution that providing enhanced protection would be a burden and would disrupt existing legitimate marketing practices.

  

Patents and plants, animals, biodiversity and traditional knowledge  back to top

> More on: This group of issues

Originally this was about reviewing Article 27.3(b), which deals with whether plant and animal inventions should be covered by patents, and how to protect new plant varieties. The discussion has expanded to include biodiversity and traditional knowledge. It takes place in the regular TRIPS Council and special consultations under Deputy Director-General Rufus Yerxa, and not in the negotiating “special sessions”.

A wide range of issues have been raised over the years. One question that is a focus of the latest discussions is on “disclosure” — whether patent applicants should be required to disclose the country of origin of genetic resources and traditional knowledge used in the inventions, to provide show that they received “prior informed consent” to use the resources and knowledge, and to provide evidence of “fair and equitable” benefit sharing. The ideas put forward include:

  • Disclosure as a TRIPS obligation: A group of developing countries represented by Brazil and India wants to amend the TRIPS Agreement so that patent applicants are required to disclose the country of origin, to show evidence that they received “prior informed consent”, and evidence of “fair and equitable” benefit sharing.
      
  • Disclosure through WIPO: Switzerland has proposed instead an amendment to the regulations of WIPO’s patent treaties so that domestic laws may ask inventors to disclose the source of genetic resources and traditional knowledge when they apply for patents, or face penalties.
      
  • Disclosure, but outside patent law: The EU suggests examining a requirement for all patent applicants to disclose the origin of genetic material, or face legal consequences, but outside patent law.
      
  • Use of national legislation, including contracts rather than a disclosure obligation: The US has argued that the relevant objectives could best be achieved through national legislation, and contractual arrangements based on the legislation, that could include commitments on disclosure.

  

Non-violation complaints (Article 64.2)  back to top

> More on: Non-violation complaints and TRIPS

In some situations a government can complain to the Dispute Settlement Body even when an agreement has not been violated. These “non-violation complaints” are allowed if one government can show that it has been deprived of an expected benefit because of another government’s action, or because of any other situation that exists even if an agreement or specific commitment has not been violated.

Non-violation complaints are possible for goods and services (under GATT and GATS, but in the case of services only for market-opening commitments). However, for the time being, members have agreed not to use them under the TRIPS Agreement. The latest extension to the moratorium, included in the 1 August 2004 General Council decision (the “July 2004 package”), expires at the Hong Kong Ministerial Conference.

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Other material:
> Intellectual property
> Doha declaration
> Doha declaration explained
  
More on: TRIPS and public health