Document(s) 7 de 20

The biggest shift in the intellectual property (IP) regime occurred at the end of the 20th century with the introduction of IP into the international trade regime. This de facto made IP rules global and extended the reach of IP into new countries and sectors, notably agriculture. This chapter charts that history and examines the key elements of the new regime under TRIPS, which introduced the requirement for WTO Members to have plant variety protection and extend patentability to micro-organisms. It also looks at the links between TRIPS rules, genetic resources, traditional knowledge and food security.

Background and History

From a formal legal point of view, IP was until recently unrelated to the trading system. Its formal incorporation in the Uruguay Round trade negotiations in 1986 was a controversial North–South issue and also a major novelty.¹ It also coincided with the bringing of agriculture and plant and animal health (sanitary and phytosanitary regulations) into the trade regime. All of these became incorporated into the World Trade Organization (WTO), formally established as an outcome of the Uruguay Round.

The relationship between IP protection and international trade was also controversial at the birth of the modern international IP system. When the first attempt to negotiate an international understanding on the protection of patents was made in the last quarter of the 19th century it found Europe in the middle of a major controversy between patent advocates and free traders. The free traders argued that the recognition of patents in different national jurisdictions constituted trade barriers. The compromise made in those days was around the recognition that each member country of the 1883 Paris Convention for the Protection of Industrial Property (patents, trademarks, utility models, industrial designs and unfair competi­tion) would have the freedom to subject the recognition of patents to the local exploitation of the invention. In other words, countries could decide that if you did not produce what was patented in the country where the patent was sought, then the patent could be revoked or be subject to use by third parties via a compulsory licence. It was then understood that trade and patent protection were not necessarily related.

The international governance of IP was further reinforced in the late 19th century with the adoption of another major instrument, the Berne Convention (1886) dealing with copyright. Unlike the Paris Convention, the US was not an active advocate for the Berne Convention, which responded more to the European continental tradition on the treatment of authors and the respect for their moral rights. It was not until 1989, during the Uruguay Trade Round negotiations, that the US joined the Berne Convention.

The international IP architecture grew in the 20th century to specific areas of IP, mainly in copyright and related rights, patents, trademarks, industrial designs and geographical indications, and agreements on the facilitation of IP protection in third countries, like the Patent Cooperation Treaty and the Madrid System for trademarks (see Chapter 4).

A major dislocation to the system occurred in the 1970s, when a number of developing countries, including newly independent countries in Africa and Asia, questioned the international system and its relevance in developing countries for the dissemination of knowledge, access to advanced technologies and control of abuses of intellectual property by right holders. The Berne Convention was amended to respond to some of those concerns by establishing methods for preferential arrangements in the translation of works. A group of developing countries initiated a revision process for the Paris Convention, to respond to their concerns, in the World Intellectual Property Organization (WIPO – see Chapter 4). However, the various diplomatic conferences convened for that purpose failed to achieve the objectives of the revision as proclaimed in the Declaration of Objectives of 1979.

Around that time, major changes were taking place in the US. In the mid-1970s, and more clearly during the Reagan Administration, a link was made in its Trade Act between international trade and the protection of the interests of US firms in their IP dealings in third countries. Countries that did not adequately protect intellectual property rights (IPRs) from US titleholders could be candidates for commercial sanctions. The US system of protection was later reinforced in 1982 by the creation of the US Court of Appeals for the Federal Circuit, which was supposed to bring coherence and consistency in cases dealing with IPRs.

The shortcomings of WIPO in dealing with the enforcement of IPRs and the paralysis produced in the attempt by developing countries to revise the Paris Convention, together with the active organizing by industrial groups for global IP rules, mainly related to the pharmaceutical-chemical, entertainment and software sectors, in the US, Europe and Japan offered the opportunity for the major industrialized powers to claim that the IP system should be fully integrated in the new multilateral trading system that was taking shape in the second half of the 1980s.

Another important antecedent to including IP within the WTO and in general in the pressures for patent reform was the Draft Treaty Supplementing the Paris Convention as far as Patents are Concerned. In 1983, the Director General of WIPO launched a negotiating process for a patent law treaty within an expert committee, a process that continued from 1984 to 1991. The committee gradually expanded the limited initial scope of the treaty to cover other areas of patent harmonization. This process culminated in a diplomatic conference held in The Hague by the end of 1991. It did not succeed, mainly because of the opposi­tion of developing countries that were still sustaining their own initiative for revision of the Paris Convention. However, many of the issues opposed by developing countries in The Hague Diplomatic Conference were finally accepted in the Uruguay Round negotiations on TRIPS. This became possible because the Uruguay Round, although dealing with many different areas, was conducted on the basis that the final deal would be a single undertaking – which meant that countries had to accept all elements of the packets agreed (such as agriculture, services and textiles), even if they really only wanted some of them.

Developing countries initially resisted the initiative of including IP matters in trade negotiations, claiming that WIPO was the specialized agency of the UN and solely responsible for IP matters. The concept of the single undertaking of the Uruguay Round prevailed, however, and this meant developing countries had to agree to everything in the negotiating package. And so, finally, IP matters were fully incorporated in the newly established WTO. The Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) was part of the Marrakesh Final Act of 1994. TRIPS, with different modalities of application, entered into force on 1 January 1995.

The TRIPS Agreement

The negotiations towards an accord on IPRs, in the context of the Uruguay Round, were led by a core group of developed countries. This group had a dominant role not only during the negotiations of the TRIPS Agreement and in the preparatory process which concluded with the Punta del Este Ministerial Declaration adopted in December 1986, launching the process of negotiations, but also in the midterm review initiated at Montreal two years later. From the outset, among that core group, the US clearly advocated a strong position on including IP issues in the GATT system. In fact, during the previous trade round (the Tokyo Round), the US had floated a proposal for an Anti-Counterfeiting Code, although it was not actively pursued. From the US perspective the improvement of IP should be a GATT objective because inadequate protection of IPRs in a number of countries posed serious and growing trade-related problems. The US views of the scope of the upcoming IP negotiations – not completely shared at the beginning by all developed countries, particularly those of the EC, which at that time did not have a community position on this matter – were ambitious, going beyond the mere establishment of rules on anti-counterfeiting goods. The US position essentially represented the interests of a number of large corporations from a few sectors, some of whose lobbyists helped draft the initial proposals (Sell, 2003). These lobbies also mobilized industry groups in the EU and Japan to support the TRIPS proposals.

This expansive approach to IP was very much opposed by developing countries, led by Brazil and India. They believed that the protection of IPRs was a non-GATT issue and that consequently it was outside the realm of trade negotiations and therefore had no place in the deliberations of the Preparatory Committee of the Ministerial Conference. This view was reflected in the proposal submitted for the Ministerial Declaration to be adopted at Punta del Este and forwarded to the Committee by Brazil jointly with nine other developing countries (Argentina, Cuba, Egypt, India, Nicaragua, Nigeria, Peru, Tanzania and Yugoslavia),² where no reference to intellectual property matters was included.

From the outset of the Uruguay Round negotiations in 1986, and until early 1989, developing countries were opposed to incorporating substantive standards of IPR protection in GATT. However, based on the Punta del Este Declaration, there was acceptance of basic protection against trademark counterfeiting and copyright piracy. The initial resistance of developing countries to broader IPR standards was overcome through a combination of concessions offered by developed countries in areas such as agriculture and textiles and by threats of trade sanctions (Box 3.1).

Main elements

The TRIPS Agreement was incorporated as Annex 1C of the Marrakesh Agreement Establishing the World Trade Organization (WTO), which was concluded on 15 April 1994, more than three years later than originally planned. TRIPS has 73 provisions organized in seven parts:

1. general provisions and basic principles;
   
2. standards concerning the availability, scope and use of IPRs;
   
3. enforcement;
   
4. acquisition and maintenance of rights and related inter partes procedures;
   
5. dispute prevention and settlement;
   
6. transitional arrangements; and
   
7. institutional arrangements and final provisions.

The TRIPS Agreement is particularly relevant in the history of IP because it breaks with the tradition of the classical conventions of the 19th century. No longer is the harmonization of standards a bottom–up approach, but it is now based on the principle of minimum standards of protection. Before TRIPS, countries could exclude some industrial or technological sectors from patentability (as the Paris Convention does not contain any obligation in this respect) and also discriminate against the patentability of process and products. The pharmaceutical and food and beverages sectors were among the most excluded among countries regarding the patentability of both products and/or processes. The German industrial property law of 1877 was the first to exclude food products from patentability, to avoid price increases associated with monopolistic protection, particularly in a country which, at that time, was suffering from food shortages. By the mid-1950s, at least Austria, Bulgaria, Canada, Chile, Colombia, Czechoslovakia, Denmark, Ecuador, Estonia, Iceland, Japan, Luxemburg, Norway, Sweden, Switzerland and Yugoslavia had the same exclusion.

The minimum standards of protection in disciplines such as copyright and related rights, trademarks, geographical indications, industrial designs, patents, layout designs of integrated circuits, protection of undisclosed information and control of anti-competitive practices in contractual licences, listed in Part II of the Agreement, are supplemented by those of the Paris and Berne Conventions, which are explicitly imported into TRIPS (with the exception of the moral rights of authors under the Berne Conventions). In addition, TRIPS also breaks with the tradition that IP matters were dealt with primarily by WIPO, which already administered the most important international treaties on different IP-related issues in force at that time (see Chapter 4).

The main features of the Agreement, compared to earlier instruments on IP, are:

• Its comprehensive coverage. One single instrument covers the major IP disciplines through the establishment of minimum standards in each of them.
  
  
• The inclusion, for the first time, of disciplines related to the enforcement of IP rights. WTO Members should not only recognize and protect those rights but set up mechanisms that would guarantee, through administrative procedures and civil and criminal procedures, including border measures, the appropriate means for the domestic enforcement of those rights.
  
  
• The full incorporation of IP into the international GATT-style trading system. This means that the main pillars of the system – national treatment and most favoured nation (MFN) treatment, among others (see definitions below) – should apply in the relationships among Members. Of these two core principles, MFN is an absolute novelty to IP international treaties. The second major consequence of this formal incorporation of IP in the trading system is the application of the WTO principles for effective and expeditious procedures for the multilateral prevention and settlement of disputes between governments. The application of these procedures could justify measures of commercial retaliation, including cross-retaliation (a retaliation adopted by the complaining party in another sector from that in which the infraction was made: goods, services or IPRs), in the event of non-compliance by Members of their obligations under TRIPS. The cross-sectoral, sanctions-backed dispute settlement mechanism (DSM) in the WTO is quite different from that under GATT. This DSM could be extended to violations of the Agreement or to cases described in the WTO system as non-violation complaint situations. Non-violation complaints were conceived in the GATT system to protect parties against nullification or impairment of their trade in goods expectations by possible actions by a Party that, without contravening a particular trade obligation, might nonetheless impair another Party's trade expectations or benefits (Box 3.2).

General provisions and basic principles

The first part of TRIPS outlines the general provisions, its basic principles and objectives, namely:

• The minimum standard of protection. The Agreement specifies that Members are not obliged to implement in their laws more extensive protection than is required in the Agreement, provided that such protection does not contravene the provisions of the Agreement. This means that Members could provide more extensive protection if they so wish. This is happening in the new generation of free trade agreements with special chapters on IP, characterized as TRIPS-plus agreements (see Chapter 7). The provisions of the TRIPS Agreement, however, are not always drafted in a mandatory way. The Agreement leaves space for some flexibility in the implementation of its provisions as was reiterated in the Doha Ministerial Declaration on TRIPS and public health (see below and also Chapter 9). Part II of TRIPS gives details of the minimum standards provided for the different disciplines covered by the Agreement. The Agreement, within this flexibility, provides for the freedom of implementation of its provisions, in the sense that Members are free to determine the appropriate method of translating the Agreement within their own legal system and practice.
  
  
• The national treatment principle incorporated in the classical WIPO-administered conventions sanctions the non-discrimination between nationals and foreigners. Thus foreign IP right holders should receive in other Members a treatment similar to that accorded to own nationals. But, compared to the classical conventions and influenced by a US–Korea IP-related agreement in the late 1980s, the national treatment principle in TRIPS is expressed as 'treatment no less favourable' than that accorded to own nationals.
  
  
• The most favoured nation (MFN) treatment is a major novelty compared with the classical IP conventions. The MFN requires non-discrimination among foreigners. Through this principle, which accepts very limited exceptions, countries cannot be treated differently over the protection of IP. The principle means that any advantage, favour, privilege or immunity granted by a WTO Member to a national of any other country (for example in a bilateral agreement) – whether a WTO Member or not – is immediately and unconditionally extended to the nationals of all other WTO Members.
  
  
• Finally, Part I of the Agreement spells out the guiding objectives and principles underpinning the protection and enforcement of IPRs. Article 7 states that 'intellectual property rights should contribute to the promotion of technological innovation and to the transfer and dissemination of technology, to the mutual advantage of producers and users of technological knowledge and in a manner conducive to social and economic welfare, and to a balance of rights and obligations'. While Article 8.1 provides that 'Members may, in formulating or amending their laws and regulations, adopt measures necessary to protect public health and nutrition, and to promote the public interest in sectors of vital importance to their socioeconomic and technological development, provided that such measures are consistent with the provisions of this Agreement'.

Substantive minimum standards

The fundamental principle in TRIPS of minimum standards differentiates this Agreement from the classical IP conventions. All WTO Members, without differentiation, are obliged to implement and observe these minimum standards in their national legislation. The Agreement recognizes, however, some differentiation among groups of Members in the degree and timing of this implementation, an idea that was first formally introduced in a proposal by Switzerland to the TRIPS Negotiating Group in May 1990.³ Transitional periods were recognized in several proposals and in the final text given to developing countries and countries with economies in transition. These transitional periods expired for all these countries on 1 January 2005. However, for the least developed countries, subsequent decisions of the WTO Council for TRIPS have waived the obligation of implementation until June 2013 and for pharmaceutical products until 1 January 2016.

The substantive standards are spelt out in Part II of TRIPS for all the categories of IP covered by the Agreement. Probably the most far-reaching changes brought about by TRIPS, particularly compared with the situation prevailing before the Agreement, concern patents (UNCTAD, 1997, p30) and undisclosed information, this latter area being included for the first time in a multilateral IP-related agreement. In all the other areas covered by the Agreement, TRIPS in many respects imported and expanded the main standards covered already in pre-existing WIPO-administered treaties. However, it gives to these imported standards the benefit of the enforcement provisions and the dispute settlement mechanism provided under TRIPS.

Key patent rules

For patents, the Agreement includes a number of important features; these are described in the following sections.

Scope and duration

In a major departure from the Paris Convention, TRIPS provides that patents shall be available for products and process, and patents rights enjoyable without discrimination as to the place of inven-

tion, the field of technology and whether products are imported or locally produced. This major feature of the Agreement was not free of controversy (Box 3.3), nor is there agreement on the obligations it imposes. Some argue that this means that countries are no longer free to grant patent protection in some sectors while excluding others – which was normal for pharmaceuticals, chemicals and food products before TRIPS. For example, at the time of the negotiations of the Uruguay Round almost half of the known patent laws excluded pharmaceutical products from protection. In some cases – in Brazil, for example – exclusion from patentability included the entire sector. One third of those laws excluded inventions on food products. Others assert that this TRIPS provision does not require patents for all sectors. For example, even though business methods and software are not specifically excepted from this provision, at the time the TRIPS Agreement was negotiated even proponents of this provision did not believe that patents should generally be issued for them.⁴ In addition, the WTO in one of its dispute panels held that 'discrimination' under this provision means unjustified differentiation, and thus differential treatment may be normatively justified.⁵

The principle of non-discrimination not only means that patents are available for any inventions, whether products or processes, in all fields of technology, but also that the granting period was standardized to no less than 20 years (see below). Note too the intrusive nature of the Agreement compared to the prevailing situation before TRIPS. The bottom–up approach to harmonization that characterized the international regimes under the classical conventions left each country with the freedom to determine the patentability criteria to be applied and the term of the patent protection. The TRIPS Agreement, however, reflects the broad parameters of patentability applied in major developed countries, namely that patents are available for inventions, whether products or processes, provided that they are new, involve an inventive step and are capable of industrial application.

Exclusions

Before TRIPS, countries could exclude from patentability any inventions, but according to the new minimum standard of non-discrimination under TRIPS, Members may only exclude from patentability certain inventions, '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 their law' (Article 27.2).

One of the most controversial provisions of the Agreement, and of great importance for agriculture, biodiversity and the future of food, concerns whether or not living organisms are patentable. Article 27.3(b) states:

Members may also exclude from patentability: plants and animals other than micro-organisms, and essentially biological processes for the production of plants or animals other than non-biological and microbiological processes. However, Members shall provide for the protection of plant varieties either by patents or by an effective sui generis system or by any combination thereof.

It also says its provisions will be reviewed four years after entry into force of the Agreement.

Rights of patent holders

In another major departure from the prevailing system before TRIPS, the Agreement provides an exhaustive definition of the exclusive rights conferred by a patent on its owner. These include the right to prevent third parties not having the owner's consent from the acts of making, using, offering for sale, selling, or importing for these purposes the product, in the case of a product patent, or the product obtained directly by that process, in the case where the subject matter of a patent is a process. Also important in TRIPS is the definition of the term of protection that shall not end before the expiration of a period of 20 years counted from the filing date. The practice prior to TRIPS varied between countries, with some recognizing the 20 years and others discriminating according to sectors. In India, for example, the general rule was a patent duration of 14 years, while for pharmaceutical and food products the duration was only 7 years.

As explained, patents confer an exclusive right to prevent others from using the invention without the authorization of the patent holder. However, the conferred rights are not absolute. Under most patent laws, such rights may not be exercised with regard to certain acts by third parties. Thus, under certain specified circumstances, there may be exceptions to the exclusive rights. However, the Agreement limits the establishment of exceptions to those exceptions that 'do not unreasonably conflict with a normal exploitation of the patent and do not unreasonably prejudice the legitimate interests of the patent owner, taking account of the legitimate interests of third parties' (Article 30). The purpose of the exceptions, as well as their scope, may vary significantly among national laws, depending on the policy objectives pursued in each country. Such exceptions may apply to non-commercial acts (for example private use or scientific research) or to commercial acts. In some cases, they aim at increasing static efficiency by speeding up competition (for example the early working exception), while in others the main concern is enhancing dynamic efficiency by avoiding barriers to future research (for example experimental exception) (UNCTAD-ICTSD, 2005, p430).

Compulsory licensing

On the granting of compulsory licensing, the Agreement sets up 14 conditions or modalities in cases where the law of a WTO Member allows for other use of the subject matter of a patent without the authorization of the right holder, including use by the government or third parties authorized by the government. These conditions are:

• the need for the proposed user to negotiate beforehand with the right holder on reasonable commercial terms and conditions for a licence to use the invention. This requirement may be waived in the case of a national emergency or other circumstances of extreme urgency or in cases of public non-commercial use;
  
  
• the scope and duration of such use shall be limited to the purpose for which it was authorized;
  
  
• such use shall be non-exclusive;
  
  
• any such use shall be authorized predominantly for the supply of the domestic market of the Member authorizing such use;
  
  
• authorization for such use shall be terminated if and when the circumstances which led to it cease to exist and are unlikely to recur;
  
  
• the right holder shall be paid adequate remuneration in the circumstances of each case, taking into account the economic value of the authorization; and
  
  
• the legal validity of any decision relating to the authorization of such use shall be subject to judicial review or other independent review by a distinct higher authority in that Member.

The Agreement, as confirmed by the Doha Declaration on TRIPS and Public Health of 2001, does not interfere with the right of Members to define the grounds for the granting of compulsory licences.

Burden of proof in process patent infringement cases

The TRIPS Agreement includes a special provision about civil proceedings in process patents where the judicial authorities shall have the authority to order the defendant to prove that the process to obtain an identical product is different from the patented process. Process patents are a weak form of protection because of the difficulties involved in proving infringement. This provision reverses the burden of proof and facilitates proceedings in cases, particularly of pharmaceuticals and food products, that in most cases prior to TRIPS could only be protected as processes and not as products as now allowed by the Agreement. The effect was that for practical purposes pharmaceutical products were not fully protected, because the key feature of a pharmaceutical product is usually its molecule, and in practice the composition of this is fairly easy to analyse, though the same molecule must be manufactured by an alternative method in order not to infringe the process patent. The Agreement attempts to deal with this perceived weakness by reversing the obligation of the holder of the patent process to prove that there is an infringement, so that if the defendant has produced an identical product to that produced by the process patent, the onus shifts to the defendant to show that the product was produced without use of the process covered by the patent (UNCTAD-ICTSD, 2005, p503).

Data protection for pharmaceuticals and agrochemicals

Finally, related to patent protection particularly of pharmaceutical and chemical entities, the Agreement prescribed that Members, 'when requiring, as a condition of approving the marketing of pharmaceutical or of agricultural chemical products which utilize new chemical entities, the submission of undisclosed test or other data, the origination of which involves a considerable effort, shall protect such data against unfair commercial use' (Article 39.3). The scope of this requirement is subject to dispute. The same article continues: 'In addition, Members shall protect such data against disclosure, except where necessary to protect the public or unless steps are taken to ensure that the data are protected against unfair commercial use.'

The powerful pharmaceutical 'research-based industry' considers the protection of data submitted for the registration of medicines to be of considerable economic importance. The reasoning is that the manufacturer has invested, often heavily, in the research necessary to develop the relevant data, and where patent law fails to provide protection (for example because the active component was shortly to be out of patent, or because the drug was based on a combination of known substances used in novel manner), the secrecy of the testing work would provide the only barrier to a competitor rapidly producing and registering an exact copy of the drug. From a public health perspective, however, the early entry of generic competition is also seen as an important policy objective, whose realization is facilitated by regulations that allow health authorities to rely on existing test data to approve subsequent applications for generic products (see UNCTAD-ICTSD, 2005, p538). This important provision of TRIPS did not fully capture a requirement specifically to provide exclusive protection of test data for a number of years, although it was arguably the intention of some of the promoters of the provision.⁶ The Agreement recognized that undisclosed information should be protected against unfair competition, thus against dishonest industrial or commercial practices. Under traditional treaty interpretation principles, countries may choose how to implement a provision having no clearly specified meaning.⁷However, recognition of exclusive protection of the data for a number of years (for example for at least five years from the date of approval of the pharmaceutical product) has been achieved in recent free trade agreements signed by European Free Trade Association (EFTA) countries and the US with a number of developing countries (see Chapter 7).

TRIPS and Genetic Resources, Traditional Knowledge and Food Security

As already pointed out, the Agreement deals with all the major IP disciplines, incorporating and expanding the coverage of protection to all areas and industrial sectors. With patents this is made explicit in the Agreement because a number of sectors, including food products, were, prior to the advent of TRIPS, not required to be under patent protection. As also described above, the exceptions to patentability are limited to particular cases and 'exclusion is not made merely because the exploitation is prohibited' by domestic law. Given the far-reaching nature of the changes, their full impact, especially since developing countries only had to become fully compliant in 2005 (least developed countries have until 2013), will take some time to emerge.

Under the principles of the Agreement (Article 8), Members may, in formulating or amending their laws and regulations, adopt measures necessary to protect nutrition, provided that such measures are consistent with the provisions of TRIPS. Article 8 of the Agreement refers to nutrition as well as to health. This provision, in the case of health, was reaffirmed by WTO Members in the Doha Ministerial Declaration on Health and TRIPS in emphatic terms:

We agree that the TRIPS Agreement does not and should not prevent Members from taking measures to protect public health. Accordingly, while reiterating our commitment to the TRIPS Agreement, we affirm that the Agreement can and should be interpreted and implemented in a manner supportive of WTO Members' right to protect public health and, in particular, to promote access to medicines to all. In this connection we reaffirm the right of WTO Members to use, to the full, the provisions in the TRIPS Agreement, which provide flexibility for this purpose.

The reasons provided in the case of health could be extended to nutrition. However, this principle could not be interpreted in a loose way, simply authorizing Members to override patent protection. In both the TRIPS Agreement and the Doha Declaration the language is qualified. Such measures should be consistent with the Agreement. However, a sound interpretation of these provisions should reaffirm the notion that 'discretion to adopt measures is built into the Agreement. Challengers should bear the burden of establishing that discretion has been abused' (UNCTAD-ICTSD, 2005, p127).

Article 27.3(b)

Article 27.3(b) of TRIPS deals with one of the most controversial issues covered by the Agreement. Sometimes called the 'biotechnology clause', it describes inventions that Members may exclude from patentability while, at the same time, specifically obliging them to protect micro-organisms and certain biotechnological processes.

The final drafting of this clause reflected, on the one hand, the strong interests of some developed countries in ensuring protection of biotechnological innovations and, on the other, the differences existing among such countries over the scope of protection, as well as the concerns expressed by a number of developing countries about the patentability of life forms. The ambiguous terminology of Article 27.3(b) (see also Table 3.1) is not easy to grasp:

Table 3.1 WTO Members' obligations under Article 27.3(b) of TRIPS

Members may also exclude from patentability … plants and animals other than micro-organisms, and essentially biological processes for the production of plants or animals other than non-biological and microbiological processes. However, Members shall provide for the protection of plant varieties either by patents or by an effective sui generis system or by any combination thereof. The provisions of this subparagraph shall be reviewed four years after the date of entry into force of the WTO Agreement.

Many developing countries have reiterated their discomfort with the implications of this provision, particularly on the need to reconcile TRIPS with the relevant provisions of the Convention on Biological Diversity and on prior informed consent and benefit sharing (see Chapter 5). The African Group in the WTO has consistently raised concerns about the implications of this provision of the Agreement on life forms. In their view there should not be a possibility, within the framework of the TRIPS Agreement, of granting patents on micro-organisms as well as on non-biological and microbiological processes for the production of plants and animals (Box 3.4).

TRIPS leaves flexibility for Members to adopt different approaches on the patentability of inventions relating to plants and animals, but unambiguously requires the protection of micro-organisms although, as with other terms in TRIPS, the meaning of micro-organism is not defined, leaving space for flexibility. In addition, this article obliges Members to provide protection for 'plant varieties':

While the Agreement is flexible about the form of protection of plant varieties, it is definite on the introduction of protection in an area in which most developing countries had none before the adoption of the Agreement. This obligation has raised concerns in some of those countries about the impact of IPR protection on farming practices (particularly the reuse and exchange of seed by farmers), genetic diversity and food security. (UNCTAD-ICTSD, 2005, p390)

TRIPS allows for the exclusion from patentability of 'plants and animals' in general. Consequently, Members may exclude plants as such (including transgenic plants), plant varieties (including hybrids), as well as plant cells, seeds and other plant materials. They may also exclude animals (including transgenic) and animal breeds.

On the other hand, the Agreement states that Members 'shall provide for the protection of plant varieties either by patents or by an effective sui generis system or by any combination thereof.'

The reference to patents is straightforward, due to the detailed treatment of them in TRIPS. The reference to an 'effective sui generis system' is not so obvious. It might suggest the breeders' rights regime, as established in the UPOV Convention, but the text very deliberately did not refer to UPOV. The possibility is open to combine the patent system with a breeders' rights regime, or to develop other 'effective sui generis' forms of protection.

In recent bilateral free trade agreements (FTAs) concluded between on one side the US, EU and EFTA and on the other a number of developing countries, the UPOV Convention has been listed as one of the international IP treaties that the parties should subscribe to in the near future. In these cases protection of plant varieties will follow the breeders' rights model. Moreover, in FTAs where the US is a party, countries undertake further commitments to make efforts to introduce legislation concerning the patenting of plants. For example, although Chile is a member of the 1978 UPOV Convention, the FTA with this country provides for a 'best effort' clause in order for each party to undertake reasonable efforts, through a transparent and participatory process, to develop and propose legislation, within four years from the entry into force of the agreement, to make available patent protection for plants which are new, involve an inventive step and are capable of industrial application. In other FTAs, such as that between the US and Morocco, there is a straightforward obligation for the parties to grant patents to inventions on animals and plants (see Chapter 7).

On this specific issue, the report of the UK Commission on Intellectual Property Rights (IPRs Commission, 2002, p66) concluded that developing countries should explore all the flexibilities provided by TRIPS. It favours different forms of sui generis systems for plant varieties. It recommended that:

Developing countries should generally not provide patent protection for plants and animals, as is allowed under Article 27.3(b) of TRIPS, because of the restrictions patents may place on use of seed by farmers and researchers. Rather they should consider different forms of sui generis systems for plant varieties.

Those developing countries with limited technological capacity should restrict the application of patenting in agricultural biotechnology consistent with TRIPS, and they should adopt a restrictive definition of the term 'micro-organism.'

Countries that have, or wish to develop, biotechnology-related industries may wish to provide certain types of patent protection in this area. If they do so, specific exceptions to the exclusive rights, for plant breeding and research, should be established. The extent to which patent rights extend to the progeny or multiplied product of the patented invention should also be examined and a clear exception provided for farmers to reuse seeds.

The continuing review of Article 27.3(b) of TRIPS should also preserve the right of countries not to grant patents for plants and animals, including genes and genetically modified plants and animals, as well as to develop sui generis regimes for the protection of plant varieties that suit their agricultural systems. Such regimes should permit access to the protected varieties for further research and breeding, and provide at least for the right of farmers to save and plant-back seed, including the possibility of informal sale and exchange.

The WTO review process of Article 27.3(b)

Article 27.3(b) provides for a review process. This built-in review started in the TRIPS Council in December 1998 (Box 3.5). At that time the Council invited Members that were already under the obligation to fully implement the Agreement to provide information on how the obligations under Article 27.3(b) had been addressed in their domestic legislation. Pursuant to the Doha Ministerial Declaration of 2001, two new related issues were incorporated into the agenda of the TRIPS Council, namely the relationship between the TRIPS Agreement and the Convention on Biological Diversity (CBD) and the protection of traditional knowledge and folklore. Further discussions on the same issues have also taken place within the WTO Committee on Trade and Environment and the WTO General Council.

Within the TRIPS Council the review of Article 27.3(b) has focused on three main issues:

1. patents;
   
2. sui generis protection of plant varieties; and
   
3. transfer of technology.

Patent issues

A major contentious issue is the case for and against providing patent protection for plant and animal inventions, particularly from a development perspective. Australia, China, Japan, Singapore, Switzerland and the US have put forward arguments in favour. India and Kenya, generally expressing the views of the African Group, have been the main exponents of the case against (Table 3.2). Singapore and the US maintain that exceptions to patentability authorized by these provisions are unnecessary and that patent protection should be extended to all patentable inventions for plants and animals.

The deliberations in the Council for TRIPS about Article 27.3(b) have focused on four different approaches:

1. Exceptions to Article 27.3(b) are unnecessary and patent protection should be extended to all patentable inventions of plants and animals (US, Singapore).
   
   
2. Article 27.3(b) should be maintained as it permits countries to exclude plants and animals from patentability (Australia, Canada, China, Korea, the EC, Japan, Switzerland, Brazil).
   
   
3. Exceptions to Article 27.3(b) must be retained but subject to clarification or definition of certain terms, including the difference between plants, animals and micro-organisms (Brazil, India, Peru, Thailand, Zimbabwe).
   
   

4. Article 27.3(b) should be amended or clarified to prohibit the patenting of all life forms (Bangladesh, India, African Group (see Box 3.4)).

Table 3.2 Main arguments in the TRIPS Council for and against patent protection for plants and animals

In order to finalize the review of Article 27.3(b) it has been proposed that some areas of possible agreement need to be identified, including:

• freedom to adopt appropriate regimes to protect plant varieties;
  
• TRIPS and the CBD should be implemented in a mutually supportive manner;
  
• TRIPS does not prevent the protection of traditional knowledge; and
  
• recognition of the importance of genetic resources and traditional knowledge documentation to help patent examination.

Where it seems that a common understanding does not exist is in relation to:

• eliminating the patentability of life forms;
  
• the need to clarify certain terms of Article 27.3(b);
  
• the protection of traditional knowledge; and
  
• the way TRIPS and the CBD should be mutually supportive.

Other issues raised during the review of Article 27.3(b) concern the:

• scope of exceptions to patentability in Article 27.3(b);
  
• ethical exceptions to patentability under this provision; and
  
• conditions of patentability for plant and animal inventions.

In fact, discoveries of naturally occurring organisms, and isolated and purified naturally occurring materials (including genetic resources), have a long history of exclusions based on religious grounds, and ethical concerns remain about such patents and patents on non-technological inventions.

At the time of writing, the deliberations in the Council for TRIPS continue with no major changes in the positions adopted by Member countries.

Sui generis protection

Various arguments in favour of and against the sui generis protection of plant and animal varieties have been raised during the discussions. Some suggest that a reference to the UPOV Convention could be included under Article 27.3(b) while others suggest that the minimum protection provided should be by any 'effective' sui generis system. Other issues include the relationship between the TRIPS requirement to have an effective sui generis protection system and the UPOV Convention and the relationship between the sui generis protection of plant varieties and traditional knowledge and farmers' rights.

Transfer of technology

The TRIPS Council has also focused on the implications of patent protection for life forms and sui generis plant varieties protection for access to and transfer of technology. This latter point is seen as one of the basic objectives of the protection of IPRs in TRIPS:

The protection and enforcement of intellectual property rights should contribute to the promotion of technological innovation and to the transfer and dissemination of technology, to the mutual advantage of producers and users of technological knowledge and in a manner conducive to social and economic welfare, and to a balance of rights and obligations. (Article 7)

The relationship between TRIPS and the CBD

The built-in review of Article 27.3(b) of TRIPS clearly has not yet generated consensus and is one of the outstanding negotiating issues of the Doha Round, which includes 'the relationship between the TRIPS Agreement and the Convention on Biological Diversity (CBD), the protection of traditional knowledge and folklore'.

The CBD requires each Contracting Party to implement several measures in order to ensure the in-situ and ex-situ conservation of genetic resources. It recognizes the authority of national governments to determine access to genetic resources, subject to national legislation. Under the CBD, access, where granted, shall be on mutually agreed terms and subject to prior informed consent of the Contracting Party providing genetic resources and on the basis of benefit sharing. (The CBD is discussed in detail in Chapter 5.)

The relationship between the provisions of TRIPS and the CBD has given rise to different opinions as to their compatibility or inconsistency. The latter have been associated with the possible granting of IPRs, based on or consisting of genetic resources, without observing the prior informed consent and benefit sharing obligations established by the CBD. Since the adoption of the WTO Doha Ministerial Declaration the issue has been included in the agenda of the TRIPS Council and is the subject of parallel 'dedicated consultations' under the responsibility of the Director General of the WTO.

Different views on the TRIPS–CBD relationship have been expressed at the WTO in relation to the review of Article 27.3(b). While a number of developed countries have found no inconsistencies between the two treaties, several developing countries have indicated the need to reconcile them, possibly by means of a revision of TRIPS.

The main concern of developing countries is that TRIPS does not require patent applicants whose inventions incorporate or use genetic material or associated knowledge to comply with the obligations of the CBD. As pointed out, the CBD makes access to genetic material subject to prior informed consent of and equitable benefit sharing with the Contracting Party providing the genetic resources. Developing countries have repeatedly voiced concern about possible misappropriation of their genetic resources by developed country patent applicants.

During the negotiations of the WIPO Patent Law Treaty this issue was raised by Colombia and supported by a number of developing countries. It was not finally included in the Treaty largely because developed countries argued that this would imply adding a new basic requirement to patentability, in addition to novelty, inventive step and industrial applicability. It has been suggested that an unintended outcome of the Colombian proposal has been the establishment of WIPO's Intergovernmental Committee on Intellectual Property and Genetic Resources, Traditional Knowledge and Folklore (IGC) (see Chapter 4).

To address these concerns, developing countries have proposed in the WTO⁸ to amend TRIPS so as to require an applicant for a patent relating to biological materials or traditional knowledge to provide, as a condition for obtaining the patent:

• disclosure of the source and country of origin of the biological resource and of the traditional knowledge used in the invention (see Chapter 7);
  
  
• evidence of prior informed consent through approval by authorities under the relevant national regime; and
  
  
• evidence of fair and equitable benefit sharing under the relevant national regime.

The approach to enforce CBD obligations through the TRIPS patent system is gaining support among developing countries but is opposed by a number of developed countries that see no conflict between the TRIPS Agreement and the CBD. For example, in the view of the US, the proposed disclosure requirement is not an appropriate solution; rather Members should focus on remedies such as the use of organized databases, information material to patentability, and the use of post-grant opposition or re-examination systems as an alternative to litigation.⁹ Norway, on the other hand, supports an amendment to the Agreement by introducing a mandatory obligation to disclose the origin of genetic resources and traditional knowledge in patent applications. In the view of Norway, this amendment should provide that patent applications should not be processed unless the required information has been submitted. However, conversely to the approach of developing countries, non-compliance with the disclosure obligation discovered post-grant should not affect the validity of the patent.¹⁰ The US and most developed countries support efforts in WIPO to ensure that prior art related to traditional knowledge is better integrated into the international patent system (see Chapter 4).

The protection of traditional knowledge (TK) and folklore

Discussions in the WTO have mainly focused on the questions of the right forum or fora for TK protection and the real need for international action on this matter. Developing countries support the creation of international rules and TK protection being principally negotiated in the WTO. In these countries' view, any other forum, including WIPO, would not provide the appropriate means for the enforcement of rights. The argument being used here is the same that developed countries used when deciding to introduce IP issues in the multilateral system in view of the lack of effective enforcement obligations in WIPO.

Developed Members are not yet convinced that the issue is ripe for international action and mainly oppose treating TK in the WTO and insist that the matter should be dealt with under WIPO auspices (in the Intergovernmental Committee on Genetic Resources, Traditional Knowledge and Folklore – IGCGRTKF or, more commonly, IGC). Some of the arguments relate to the expertise of WIPO as well as to the need to explore further the many complexities of the issue.

Table 3.3 summarizes the main arguments advocated in favour of or against the protection of TK in the Council for TRIPS. Other issues that have been discussed in the TRIPS Council on the protection of TK include the granting of patents to TK and prior and informed consent and benefit sharing.

National implementation of the TRIPS obligations

Considerable differences exist in national laws about the patentability of biotechnological inventions and life forms. For most developing countries, Article 27.3(b) called for a substantial change in national law, since the majority did not protect plant varieties and life forms such as micro-organisms at the time of negotiation and adoption of the Agreement.

Bilateral free trade agreements signed in recent years, as outlined earlier, have adopted certain models for the implementation of Article 27.3(b), including the subscription to and ratification of UPOV and the protection of life forms via patents (see Chapter 7).

Table 3.3 Arguments in the TRIPS Council for or against international rules on the protection of TK

Thus many developing countries have joined or are in the process of joining UPOV. Other countries have explored the development of non-UPOV modes of protection such as the Indian Plant Variety Protection and Farmers' Rights Act passed in 2001 (Chapter 2, Box 2.1).

Peru has established a legal system for the protection of TK associated with biodiversity, including the setting up of a National Anti-Biopiracy Commission. The law reflects the CBD requirements of prior informed consent and benefit sharing. It enables indigenous and local communities to assert their rights over collectively held knowledge. For this purpose, the law obliges interested parties to obtain the prior informed consent of those communities providing the biodiversity-related knowledge.

Conclusion

TRIPS impinges on many other areas of activity, not least food and agriculture. It also deals with issues under negotiation and covered by agreements in other places, the interactions between which are discussed further in Chapter 7. The next chapter discusses the UN body devoted solely to IP, which was initially eclipsed by TRIPS.

Resources

Four organizations with a wealth of web-based resources to tap are the International Centre for Trade and Sustainable Development (ICTSD), The United Nations Conference on Trade and Development (UNCTAD), WIPO and WTO.

A great resource is also found on both the ICTSD website and www.iprsonline.org, where all the papers on IP and development from the UNCTAD-ICTSD TRIPS and Development Capacity Building Project and the full content of the Resource Book on TRIPS and Development are available.

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