Protection on a Global Scale
Braga, Carlos A. Primo, The China Business Review
Debate on trade matters relating to intellectual property rights (IPR) in the GATT began during the 1973-79 Tokyo Round of multilateral trade negotiations. At that time, the discussions had a narrow focus on the issue of counterfeit trading. During the Uruguay Round, however, IPR emerged as a major topic for negotiation. The resulting Agreement on Trade Related Aspects of Intellectual Property Rights, including Trade in Counterfeit Goods, (TRIPs) is the most comprehensive international agreement on intellectual property rights ever negotiated.
The TRIPs Agreement follows GATT tradition in adopting the multilateral disciplines of non-discrimination (as embedded in the principles of Most Favored Nation (MFN) and national treatment) and a commitment to transparency. It provides an innovative approach by establishing minimum standards of protection and guidelines for enforcement, while leaving to the member countries the decision on how to implement these standards. The Agreement is composed of seven sections that include: a set of general provisions and basic principles that define the scope of the obligations; the relationships between the Agreement and existing IPR conventions; provisions for dispute prevention and settlement; transitional arrangements for implementation; and other institutional standards and arrangements.
Articles 3 and 4 of the Agreement establish that WTO members shall accord each other national treatment and MFN treatment. Similar to existing IPR conventions, national treatment applies at the level of persons (or legal entities) rather than goods, as was the case in the GATT. Exceptions to national treatment identified in international protocols such as the Paris and Berne conventions are recognized by the TRIPs Agreement.
Exceptions to MFN treatment are allowed in the context of the provisions that allow certain types of copyright protection to be granted on the basis of reciprocity, as outlined in the Paris and Berne conventions. Deviations from the MFN norm are also allowed if they reflect international agreements on judicial assistance or law enforcement of a general nature, rights not covered by TRIPs, or IPR-related international agreements that entered into force prior to the WTO Agreement (e.g., the IPR rules in the European Union).
Aside from national treatment and MFN, WTO members are required to publish (or to make publicly available) laws and regulations, as well as final judicial decisions and administrative rulings related to the themes of the Agreement. The negotiators' intention is to allow governments and IPR holders to become acquainted with measures that can affect their intellectual property interests.
Setting minimum standards
Part II of the Agreement establishes minimum standards concerning the availability, scope, and use of IPR. It covers copyrights and related rights, trademarks, geographical indications, industrial designs, patents, layout-designs (topographies) of integrated circuits, undisclosed information (i.e., trade secrets), as well as anti-competitive practices in contractual licenses. Some of the main points covered include:
* Copyrights and related rights The principle of copyrights covers the original expression of an idea rather than the idea itself. Copyright laws protect works as of the moment of creation. Related (or neighboring) rights, in turn, protect the work of performers, phonogram producers, and broadcasters. The TRIPs Agreement establishes that countries should comply with the disciplines of the Berne Convention with respect to copyrights, but does not require observance of moral rights (i.e., an author's inalienable right to protect the integrity of his/her work and to object to changes that would be prejudicial to his/her honor or reputation).
By bringing the minimum standards of protection of the Berne Convention to the WTO structure, the TRIPs Agreement will strengthen copyright protection on a global scale. The Agreement also expands and clarifies Berne disciplines. It states, for example, that the term of protection should not be less than 50 years in cases in which the term is "calculated on a basis other than life of a natural person." This provides clear guidance for the term of protection of works that belong to corporations. The main innovations of the TRIPs Agreement, however, are related to computer programs and compilations of data and rental rights.
The Agreement establishes that both software and data compilations are to be protected as literary works under the Berne Convention. Article 11 provides that "at least" for computer programs and cinematographic works, the title-holder should be entitled "to authorize or prohibit the commercial rental to the public of originals or copies of their copyright works." This obligation, however, only applies to cinematographic works when widespread copying linked to rental of these works is impairing the economic rights of the title-holder. But, the adoption of a 50-year minimum term of protection for performers and producers of phonograms expands the 20-year protection period required under the Rome Convention.
The TRIPs Agreement confirms and clarifies the disciplines of the Paris Convention, stating that procedures for registration should be transparent and not related to the nature of the goods or services to which the trademark is applied for. Article 16 clarifies the scope of the rights conferred and strengthens the protection of well-known trademarks. By determining that owners of well-known trademarks should be allowed to challenge confusingly similar marks (including those used for goods and services that are not similar to the ones covered by the well-known trademark), the TRIPs Agreement should help deter "speculative" registration, a common practice in many developing countries.
The term of protection between registration and its renewal should be no less than seven years under TRIPs, and indefinite renewals are allowed. A registered trademark may be canceled after at least three uninterrupted years of non-use, but circumstances beyond the owner's control "shall be recognized as valid reasons for non-use." Companies cannot be required to display domestic marks in combination with foreign marks. Article 21 permits WTO members to regulate the licensing and assignment of trademarks, but prohibits the use of compulsory licensing.
* Industrial designs The Agreement allows for protection of industrial designs under either copyright law or industrial design law. Industrial designs protect the ornamental features such as the shape, lines, designs, and colors of a product. The TRIPs Agreement establishes a minimum 10-year protection term for designs that are "novel" or "original."
* Patents The negotiations over patent protection were at the very core of the North-South conflict over IPR during the Uruguay Round. The main problem areas for developed countries included limited coverage in terms of products or processes, short terms of protection, broad scope for compulsory licensing, and ineffective enforcement in developing counties. The Agreement addresses all of these areas, introducing higher standards of patent protection than available under the Paris Convention.
TRIPs Article 27 defines patentable subject matter in broad terms, stipulating that patents "shall be available for any inventions, whether products or processes, in all fields of technology" for a period of 20 years from the filing date. Exclusions are allowed to protect mortality; the environment; and human, animal, or plant life. These broad exceptions, however, are constrained by the requirement that the non-patentable invention be barred from commercial exploitation in the member country.
Exemptions from patentability are also permitted for "diagnostic, therapeutic, and surgical methods," an approach consistent with the patent laws of most countries. However, the Agreement adopts a conservative approach toward biotechnology, citing non-patentability of plants and animals. This exclusion, however, does not apply to micro-organisms, microbiological processes, and plant varieties.
The implication of these distinctions is that countries are required to provide protection for biotechnological inventions--both "frontier" innovations (e.g., cell and gene manipulations) and more conventional ones (e.g., fermentation processes)--but may exclude from patentability traditional breeding methods and "higher-life" organisms. With respect to plant varieties, however, members are required to provide protection "either by patents or by an effective sui generis system or by any combination thereof." Accordingly, many developing countries will have to expand the coverage of their patent systems or introduce additional protection (e.g., plant breeders' rights) for plant varieties.
* Trade secrets Article 39 of the Agreement makes explicit reference to the protection of "undisclosed information," or trade secrets. This was another area of heated North-South debate, with developing countries opposed to treating trade secrets as an intellectual property right. In the end, TRIPs treats undisclosed information as a category of IPR, but only the acquisition of undisclosed information "in a manner contrary to honest commercial practices" can lead to action against an infringer. The Agreement also requires that trade secrets submitted to governments in order to gain approval for pharmaceutical or agricultural chemical products be protected against unfair commercial use and unnecessary disclosure.
* Anti-competitive practices The last section of Part II addresses one of the main concerns of developing countries: the use of IPR to impose abusive contract terms hampering the transfer and diffusion of technology. Article 40 recognizes the possibility that licensing practices and the exercise of IPR may have anti-competitive effects. It leaves to member countries, however, the implementation of measures to counter such practices, with the condition that the measures not conflict with the other provisions of the Agreement. It also provides for a system of bilateral consultations to avoid arbitrary enforcement of remedies against anti-competitive practices.
Article 40 establishes a link between the multilateral trade regime and national competition laws, perhaps reflecting the long-standing efforts of developing countries to negotiate an international code of conduct on transfer of technology under the auspices of the United Nations. The language of Article 40, however, is essentially prescriptive and no precise definition of anti-competitive practices is provided. These vague prescriptions are more likely to generate friction among trading partners than to deter anti-competitive practices effectively.
Tackling enforcement problems
Enforcement of IPR measures should get a boost under the TRIPs Agreement. WTO members are required to provide "expeditious remedies to prevent infringement and remedies which constitute a deterrent to further infringements." These measures should be fair and equitable, create no barriers to legitimate trade, be available both to foreign and domestic right holders, be open to judicial review, and should not be too costly or complicated. However, there is no obligation for countries to put in place a dedicated judicial system for IPR.
The TRIPs Agreement requires that right holders have access to civil and administrative procedures, and includes provisions on evidence of proof, injunctive relief, payments for damages, and indemnification of parties wrongfully enjoined or restrained. Provisional measures for expeditious action--e.g., when there is the risk of evidence being destroyed--should also be available Under the Agreement, Customs officials should also be allowed to seize counterfeit goods. Moreover, WTO members should employ criminal procedures "in cases of willful trademark counterfeiting or copyright piracy on a commercial scale."
Overall, these disciplines will demand a significant overhaul of enforcement practices in most developing countries. As implementation of the TRIPs Agreement proceeds, however, disputes about compliance are bound to occur, given the limited administrative resources and capabilities of the judicial systems in many developing countries.
These disputes, when they occur, will be handled by the WTO Dispute Settlement Body. The possibility of cross-sectoral retaliation is expected to play an important role in strengthening IPR protection on a global basis. There is, however, a five-year moratorium (equal to the standard transitional period for developing countries) in the use of the WTO dispute settlement procedures for indirect IPR violations. In other words, measures that may nullify or impair the benefits of the Agreement without being a direct violation of its obligations (e.g., the application of an unusually high creativity threshold for acquiring copyright protection) cannot be brought to the WTO's attention in the next five years. The decision on how to treat these kinds of complaints will be examined further by WTO members during the moratorium period.
A short transition...
The Agreement gives countries one year from the date they enter the WTO to apply the TRIPs provisions. Developing countries and economies in transition undertaking structural reforms of their IPR regimes are entitled to an additional four-year exemption period from the date of application--except for the obligations concerning national treatment and MFN treatment. These countries, however, are also entitled to an additional five-year transition period with respect to product patents in areas of technology that were not protected at the date of application of the TRIPs Agreement. Least-developed country members must abide by national treatment and MFN guidelines, but are entitled to a 10-year phase-in period from the date of application, and may request an extension of this period.
The long transition periods allowed for developing countries are tantamount to special treatment, although they do not involve permanent derogations of TRIPs obligations. WTO members are not required to provide "pipeline-protection"--retroactive protection of a subject matter already patented in another member country and not yet marketed in the country that will be assuming new obligations under TRIPs. TRIPs obligations apply from the date of application of the agreement for each member, but WTO members may also limit the remedies available to right holders with respect to products that become infringing as a consequence of the application of the agreement.
...for long-term IPR projection
The TRIPs Agreement will require significant changes to the IPR regimes of many developing countries, including China, which has yet to join the WTO. Compliance with TRIPs disciplines--particularly with respect to enforcement of IPR--is a must for the United States to support China's accession to the WTO. In this context, the resolution of the Special 301 investigation of China's IPR regime should help China meet many of the criteria set forth in TRIPs (see p.6).
As WTO members introduce the minimum standards of protection required under TRIPs, IPR should gradually be strengthened on a global scale. However, the achievements of the TRIPs Agreement fall short of the expectations of knowledge-intensive industries in many developed countries. As a result, some of these industries will continue to support unilateral actions to promote further change in IPR protection and enforcement. It is too early to tell how successful the WTO will be in diffusing trade-related IPR frictions and in preventing unilateral actions by major trading nations, but the question of enforcement, in particular, is likely to become a major area of contention in the years to come.
Carlos A. Primo Braga is a senior economist in the international trade division at the World Bank. This article is based on a paper presented at a January 1995 World Bank conference on "The Uruguay Round and the Developing Economies." The ideas expressed in this article are his own and do not represent those of the World Bank.…
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Publication information: Article title: Protection on a Global Scale. Contributors: Braga, Carlos A. Primo - Author. Magazine title: The China Business Review. Volume: 22. Issue: 2 Publication date: March/April 1995. Page number: 25+. © U.S.-China Business Council Mar/Apr 2009. Provided by ProQuest LLC. All Rights Reserved.
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