Intellectual property and innovation: inclusive innovation and MSME trade

Following up on past items on IP and innovation regularly added to the Council's agenda since 2012, the co-sponsors (Australia, the European Union, Japan, Switzerland, Chinese Taipei and the United States) invited members to share domestic experiences and examples of successful measures promoting inclusive innovation and MSME trade — in particular, how IP frameworks and innovation policy or programmes have helped MSMEs to integrate into global value chains.

They highlighted how intellectual property rights (IPRs) can increase and enhance international trade opportunities of MSMEs by helping to ensure that creators benefit from the fruits of their labours, securing a competitive advantage on the global market by providing exclusive right protection in the competition with much larger companies, and allowing differentiation from competitors through trademarks and geographical indicators (GIs).

A variety of different strategies and support measures in order to encourage and help MSMEs benefit from trade opportunities in the use of the IP-system were discussed, such as awareness creation of commercial relevance of IP for export-oriented creative and innovative enterprises, and the support of MSMEs in developing international IP-protection strategies.

Several examples were provided to showcase that businesses using IPRs in innovative and creative industries perform better than those not using them. Co-sponsors underlined this is particularly important taking into account that globally MSMEs account for more than 90% of business, while in low and middle-income countries they account for approximately 99% of business, from agriculture and textile manufacturing to development of hi-tech goods and services. See here.

One delegation said that there was no evidence that patent monopolies foster innovative activity. On the contrary, exclusive rights could also become a barrier to innovation by MSMEs. It was also noted that low quality patents needed to be avoided.

Intellectual property and the public interest

The debate under this agenda item considered the relationship between the protection of IPRs and the public interest. Most delegations concurred in the call for a balanced regime which protects IPRs while also providing for the grant of compulsory licences where necessary.

Following up on the discussion initiated at the Council's last meeting in June, the co-sponsors (Brazil, China, India and South Africa) noted that there had been important developments since then which justified the continuation of the debate, including the recent grant of compulsory licences in Germany and Malaysia.

They noted that the protection of IPRs had to be seen in the context of the underlying public policy objectives, as confirmed by Article 8 of the TRIPS Agreement. There was a need for a balanced regime that is supportive of innovative activity while also advancing the public interest of access to new innovations. The co-sponsors cautioned against patents and related monopoly rights in test data which, without sufficient use of balancing exceptions and limitations to protect the public interest, would allow companies to maintain high prices and exacerbate crises of access around the world, where many patients cannot afford medicines, and force governments with scarce health budgets to ration care.

These countries said there is a need for discussion in the TRIPS Council on the relationship between IP and the public interest and to broaden the understanding of how the IP system can be more responsive to public interest considerations. They invited WTO members to exchange views and experiences on measures within the IP system that they have adopted to promote the public interest, including compulsory licensing, patentability criteria, and IP and competition. See here.

Others held the view that the public interest considerations were too narrowly focused on the need to implement and apply exceptions and limitations to IPRs, rather than taking into account their positive contribution to innovation which was also in the public interest. They called for a more comprehensive approach to address challenges in the health sector, noting that the lack of access to medicines had many causes, including high taxes, tariffs and mark-ups, and that the importance of IPRs in this context was often overstated. They rejected any assumption that IPRs would contradict the public interest. On the contrary, there was a growing recognition of the importance of patent rights and the confirmation of a compulsory licence by Germany's Federal Court in July only confirmed that the system was balanced and was working.

TRIPS amendment

WTO members agreed to submit, for the WTO General Council's adoption, a decision to extend until 31 December 2019 the period for the acceptance of the Protocol Amending the TRIPS Agreement.  

The Protocol Amending the TRIPS Agreement is currently open for acceptance by members until 31 December 2017 – however, 46 members have not yet accepted it, and it is unlikely that all of them can do so before the end of the year.

Since the last TRIPS Council in June, two additional members had deposited their instruments of acceptance with the WTO Director-General: Malawi (24 July) and the Russian Federation (22 September). In total, the TRIPS Amendment applies now to 118 members. The remaining 46 members are still operating under the 2003 waiver Decision and are expected to complete their domestic acceptance procedures and to submit their instruments of acceptance in due course.

The amendment, which entered into force on 23 January 2017, empowers importing developing and least-developed countries facing public health problems and lacking the capacity to produce drugs generically to seek such medicines from third-country producers under compulsory licensing arrangements.

The up-to-date list and map of members that have accepted the protocol are available here.

More information on the issue of TRIPS and public health is available here.

Non-violation and situation complaints

Members decided to keep open the consultations on what kind of recommendation the Council should make on the application under the TRIPS Agreement of non-violation and situation (NVS) complaints - whether a member can bring cases against another member if it considers that the other member's action or a specific situation has deprived it of an expected benefit, even if no obligation has been violated — to the Buenos Aires 11th Ministerial Conference (MC11) in December.

In previous consultations, the chair of the TRIPS Council, Ms Irene Young (Hong Kong, China), had been asked to make available an informal text that would show what the Council's recommendation to MC11 would look like if it were to be modelled on the earlier MC10 extension, on the understanding that it was meant only to facilitate discussion and was without prejudice to members' positions.

Two members were not in favour of another extension of the moratorium and said that NVS complaints are inherent to the Dispute Settlement Understanding (DSU) and an essential element in order to ensure the balance of rights and obligations within the TRIPS Agreement, while helping to secure that legitimate obligations are not circumvented or avoided.

Most other delegations, while preferring a complete ban of NVS complaints under TRIPS, said that, in the absence of an agreement on this issue, they could join consensus in support of a recommendation to MC11 to extend the moratorium for two additional years.

This agenda item therefore remains open while the chair continues consultations. She urged members to take a look at this issue again and see if they can exercise more flexibility. Once members are in a position to reach consensus on this issue, the Council would be reconvened at short notice, so that a recommendation could be made to the General Council and through it to the Ministerial Conference in Buenos Aires.

Notifications

The Council heard a number of members introducing recent legislative changes in their IP legislation. As such notifications increasingly become routine, they also open the floor for a constructive discussion among members. Thus, as a follow-up to the European Union's presentation of its new trademark law at the Council's meeting in June 2016, India submitted a series of questions to the European Union on the handling of "in transit" goods by customs authorities under Regulation (EU) No 608/2013.

The European Union said it was not in a position to provide concrete replies because it had received the request only shortly before the Council. Noting that there had not been a single case of detention of medicines in transit recently, it remained, however, committed to the ongoing bilateral consultation process with India.

New observers

In what can be considered as a significant development for African members and for the TRIPS Council itself, members agreed to grant permanent observer status to the African Regional Intellectual Property Organization (ARIPO) and the African Intellectual Property Organization (OAPI). The Council also agreed to renew invitations to attend the Council's next meeting as ad hoc observers to the Cooperation Council for the Arab States of the Gulf (GCC) and the European Free Trade Association (EFTA).

e-TRIPS online platform

Members were updated by the Secretariat on the e-TRIPS online platform for filing and consulting notifications and submissions of review materials relating to the work of the Council. The Secretariat said that the project is coming close to practical completion.

The Secretariat underlined the main objectives of the project: to make it significantly easier to file and consult a notification, which has become increasingly important as the Council has moved into 22 years of accumulated notifications, and to enable delegates to survey notification and review materials across the full sweep of agenda items and the work of the Council.

After the Council's formal meeting, the Secretariat offered members a brief demonstration of the tool and asked them for further guidance and feedback to improve it.

Next meetings

Members agreed on the following dates for meetings of the TRIPS Council in 2018: 27-28 February, 5-6 June and 8-9 November.