This is a guest post by Matthew Kennedy, a professor in the Faculty of Law at the University of International Business and Economics, Beijing. He was formerly a senior lawyer in the WTO Secretariat and Secretary of the WTO Council for TRIPS.
Intellectual Property Cases in a Trade Law Tribunal: From separation anxiety to fusion fallacies
Twenty years of TRIPS disputes in the WTO show that many controversies spring from collisions between intellectual property and trade law. Whether the issue is the role of non-trade policy objectives, the relationships between agreements, access to cross-retaliation or the scope for non-violation, the key is to establish where TRIPS fits in the WTO framework.
The current dispute in Australia – Tobacco Plain Packaging shows that even today the WTO has yet to decide whether TRIPS can exclude a goods agreement, which is surprising considering that the relationship between intellectual property and GATT was the single biggest issue facing the TRIPS negotiators almost 30 years ago.
TRIPS complements GATT 1994, mostly
TRIPS was concluded as a precondition to fair trade, not an exception to free trade. The opening clause of the TRIPS preamble indicates that the new agreement was designed to complement trade rules, so they apply concurrently. TRIPS’ minimum standards prescribe domestic regulation, even when they are enforced at the border. GATT 1994 also applies to domestic regulation but does not prescribe standards. As for the general exception in Article XX(d), it is doubly qualified and does not contain a general carve-out for IP laws.
It follows that non-violation complaints are no more available under TRIPS itself than they are under GATT rules, or the TBT Agreement for that matter. The separate annex that houses TRIPS divides administration and sanctions but does not isolate TRIPS rules from scheduled concessions under GATT 1994. Non-violation complaints are available regarding IP-protected goods just like any others - on the basis of tariff concessions. All those ministerial decisions on TRIPS and non-violation are chiefly political.
Some conflict with GATT 1994 is inevitable. The ‘no export’ and ‘low export’ clauses buried in TRIPS’ compulsory licensing conditions for copyright and patents are not domestic regulation. They provide for export restrictions inconsistent with Article XI that are not covered by Article XX. The WTO Agreement contains no applicable precedence clause because TRIPS is not an Annex 1A agreement. Lex specialis might solve this particular conflict but that does not make TRIPS a self-contained regime.
Curiously, export restrictions are multiplying as time goes on. The TRIPS Amending Protocol adds one (necessary to protect health). Arbitrators on cross-retaliation have embraced them too, without authorization under GATT 1994, TRIPS or the DSU.
The DSU can suit TRIPS disputes, with a proviso
The DSU is flexible enough to deal with intellectual property standards provided they are not squeezed into the corset of GATT trade rules. At the most basic level, the DSU’s focus on “measures” does not suit cases about positive obligations to implement minimum standards. In fact, the TRIPS test case on India – Patents (US) never cited a measure at issue. The “as such/as applied” distinction does not assist when minimum standards only concern measures “as such”, which has implications for evidence. The “mandatory/discretionary” distinction makes sense when TRIPS applies GATT principles but not when TRIPS provides for discretionary authority, which is often. Private rights have caused difficulties at every stage of TRIPS disputes, notably when “exceptions” to private rights are compared to “exceptions” to GATT obligations, reversing the burden of proof.
Although the DSU imports rules of treaty interpretation from public international law, specific challenges arise from TRIPS’ overlap with the intellectual property framework outside the WTO. Interpretation must reflect the subject matter of TRIPS as a specialized agreement and should take into account at least some developments in WIPO. GATT/WTO jurisprudence on the reduction of trade barriers is easy to find but no substitute for proper analysis of an IP agreement.
The DSU’s greatest attraction – trade sanctions – turned out to be something of a damp squib. The prospect of retaliation probably spurred adoption of TRIPS-implementing legislation but it has never been authorized in a TRIPS dispute. Non-compliance with detailed minimum standards does not necessarily produce large trade effects. The flipside – IP sanctions in goods and services disputes – has been hindered more by arbitrators than by the DSU.
The integrated nature of the DSU means that problems in TRIPS disputes can spread to disputes under other covered agreements. The scope of appellate review regarding the meaning of municipal law, including in trade remedy cases, can be traced to TRIPS appeals.
The DSU is much better than the old way of dealing with IP disputes
Overall the DSU has delivered major improvements in intergovernmental dispute settlement compared to the days before TRIPS. It created a functioning forum for IP disputes, which the International Court of Justice has never been. And DSU procedures are multilateral, unlike the investigations conducted under Section 301 of the US Trade Act of 1974 and its European analogue. TRIPS channelled US and EU complaints through the DSU’s multilateral procedures, as it was intended to do, carrying forward the campaign for higher IP standards but subjecting trade sanctions to multilateral control. The goal was not the generation of disputes; if anything, just the opposite.
The DSU has proved largely effective in obtaining changes to IP legislation with or without a panel report – a significant achievement. However, the system counts two notable failures where DSB recommendations have not been implemented. TRIPS provisions for on-the-ground IP enforcement have not really been tested. The DSU has not proven entirely effective in preventing unilateral investigations either. GSP country practices reviews in the US keep alive threats to market access for intellectual property reasons, which raise questions of consistency not so much with TRIPS or the DSU as with the Enabling Clause.
The WTO’s dispute settlement mechanism continues to hold its attractions for other new issues. TRIPS shows that fresh thinking on the single undertaking, relationships to new agreements and flexibility in DSU practice should precede any expansion of the WTO tent.
WTO Dispute Settlement and the TRIPS Agreement: Applying intellectual property standards in a trade law framework is published by Cambridge University Press. For further information click here.