RESTRICTEDWORLD TRADE
ORGANIZATIONIP/C/W/123
5 January 1999
(99-0006)
Council for Trade-Related Aspects
of Intellectual Property Rights
THE TRIPS AGREEMENT AND TRADE FACILITATION
Background Note by the Secretariat
1. At its meeting of 1-2 December 1998, the Council for TRIPS requested the Secretariat to
prepare a short background note on the relationship between the TRIPS Agreement and tradefacilitation.
1  This note has been prepared in response to that request.
2. This note considers, first, the general aims of intellectual property protection as contained in
the TRIPS Agreement, second, its provisions on enforcement of intellectual property, and finally, its
provision on international cooperation to eliminate trade in goods infringing intellectual property
rights.
1. GENERAL
3. The TRIPS Agreement aims, inter alia , "to reduce distortions and impediments to
international trade", as recognized in the first recital of its preamble.
4. Intellectual property is a form of property, generally private.  As in the case of other property,
effective legal protection is an important condition for facilitating trade in goods and services inwhich intellectual property subsists or with which it is associated, by ensuring that its value is not
diminished by other parties exploiting it without the owner's consent, particularly where the
intellectual property can be easily reproduced.  Intellectual property is an incentive for innovation,
and effective legal protection therefore further encourages the development of new goods and
services, which can be traded.  Those intellectual property rights which indicate source are also a form
of consumer protection, which encourages honest commercial practices and fosters trade.
5. Wide disparities between levels of intellectual property protection cause problems in
international trade as goods and services which may be produced and sold in one jurisdiction may be
infringing in another.  The approximation of legal standards and enforcement procedures tends to
alleviate these problems, but the TRIPS Agreement will not eliminate them because it does not
require a harmonization of standards and procedures.
6. Ineffective domestic protection of intellectual property protection in the country of source of
goods can also lead to greater use of special customs enforcement procedures.  Effective domestic
protection of intellectual property protection at the source of production can contribute to trade
facilitation through reducing reliance on enforcement at the border.
7. The TRIPS Agreement also aims "to ensure that measures and procedures to enforce
intellectual property rights do not themselves become barriers to legitimate trade", as recognized inthe first recital of its preamble;  it contains a range of provisions to this effect,  which are examined in
more detail in the next section of this note.  In the context of trade facilitation, this is particularly
important when enforcement measures are applied at the border.
                                                     
1 The minutes of this meeting will be circulated in document IP/C/M/21.IP/C/W/123
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II. ENFORCEMENT
8. One of the major features of the TRIPS Agreement is its specification, in some detail, of
procedures and remedies for the enforcement of intellectual property rights, while leaving the method
of implementation of these provisions open to each Member (Article 1.1) and taking into account
differences in national legal systems (preamble, second recital, point (c)).  While these procedures andremedies must permit effective enforcement by right holders (Article 41.1, first sentence), they must
also:
"… be applied in such a manner as to avoid the creation of barriers to legitimate trade
and to provide for safeguards against their abuse."  (Article 41.1, second sentence)
9. The emphasis in the Agreement is on internal or domestic mechanisms, namely civil or
administrative procedures and remedies, provisional measures and criminal procedures.  This is
because infringement is best combated at the source of production, and because internal mechanismsare less likely to entail a risk of discrimination against imported goods.  There are a number of
safeguards against abuse built in to these provisions, including the general requirements that all
procedures concerning the enforcement of intellectual property rights shall be fair and equitable
(Article 41.2) and that certain decisions be subjec t to judicial review (Article 41.4);  specific
requirements concerning notice, representation and presentation of evidence to ensure that civil andadministrative procedures are fair and equitable (Article 42);  and authority to order compensation for
defendants wrongfully enjoined or restrained in civil and administrative proceedings (Article 48).
Particular emphasis is placed on safeguards against abuse in the case of provisional measures, with
requirements concerning notice, evidence, review, time-limits and compensation to defendants
(Article 50.3, 50.4, 50.6 and 50.7).
10. The Agreement requires a special procedure for right holders to obtain the assistance of
customs authorities in suspending the release of goods into free circulation to be available, as there
will be cases where there has been no effective enforcement in the country of production, particularly
given that not all countries are WTO Members.  This procedure is contained in section 4 of Part III.
The Agreement contains certain additional provisions which apply to Members who choose to requiretheir competent authorities to act upon their own initiative (Article 58).
11. Unlike most other enforcement procedures in the TRIPS Agreement, these special border
measures only need apply to counterfeit trademark goods and pirated copyright goods, although
Members are free to apply them to goods involving infringements of other intellectual property rights
provided that the requirements of section 4 are met.  For this purpose, "counterfeit trademark goods"
are in essence defined as goods involving slavish copying of trademarks, and "pirated copyright
goods" as goods which violate a reproduction right under copyright or a related right (see footnote 14to Article 51 for the precise definition of these terms).  The Agreement states that Members may
apply corresponding procedures to goods destined for exportation from their territories (Article 51).
12. Members may exclude from special border measures parallel imports and goods in transit (see
footnote 13 to Article 51) and de minimis  imports, i.e. small quantities of goods of a non-commercial
nature contained in travellers' personal luggage or sent in small consignments (Article 60).
13. The basic mechanism of special border measures required by the Agreement is that each
Member must designate a "competent authority", which could be administrative or judicial in nature,
to which applications by right holders for customs action shall be lodged (Article 51).  The right
holder lodging an application with the competent authority shall be required to provide adequate
evidence of a prima facie  infringement of its intellectual property right and to supply a sufficiently
detailed description of the goods to make them r eadily recognizable by the customs authorities.  The
competent authorities shall then inform the applic ant whether the application has been accepted and, if
so, for what period, and give the necessary directions to customs officers (Article 52).IP/C/W/123
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14. Certain of the requirements which must apply to special border measures have as their aim
prevention of their abuse as barriers to legitimate trade.  One such requirement is that the competent
authority shall have the authority to require the appl icant to provide a security or equivalent assurance
sufficient to protect the defendant and the competent authorities and to prevent abuse through
dissuading right holders from making groundless applications.  However, such security or equivalentassurance may not be such as to unreasonably deter recourse to these procedures (Article 53.1).
15. A second important safeguard is the short initial time-limit for suspension of release of goods.
The importer and the applicant (i.e. the right holder) must be promptly notified of the detention of
goods (Article 54).  If the customs authorities have  not been informed that proceedings leading to a
decision on the merits of the case have been initiated by a party other than the defendant, or that the
duly empowered authority has taken provisional measures prolonging the suspension, within ten, or in
appropriate cases twenty, working days, thereafter the goods shall be released, provided that all otherconditions for importation or exportation have been complied with (Article 55).  Where goods involve
the alleged infringement of industrial designs, patent s, layout-designs or undisclosed information, the
importer must be entitled to obtain their release on the posting of a security sufficient to protect the
right holder from any infringement, even if proceedings leading to a decision on the merits have been
initiated (Article 53.2).  If suspension of the release of goods is based on a provisional judicialmeasure.  In that case, the provisions on provisional measures in Article 50 shall be applied.
16. Another safeguard is the requirement that the re levant authorities shall have the authority to
order the applicant to pay appropriate compensation to the importer, the consignee and the owner of
the goods who suffer any injury caused through the wrongful detention of goods or through detention
of goods released pursuant to the failure of the applicant to initiate in time proceedings leading to adecision on the merits of the case (Article 56).
17. Section 4 contains other requirements for special border measures which are also intended to
provide procedural balance.  The competent aut horities, in giving the right holder sufficient
opportunity to have any goods detained by the customs authorities inspected in order to substantiate
its claims, must give the importer an equivalent opportunity to have any such goods inspected(Article 57).  As far as remedies are concerned, the competent authorities must have the power to
order the destruction or disposal outside the channels of commerce of infringing goods in such a
manner as to avoid any harm to the right holder, without prejudice to any other civil remedies
available to the right holder, taking into account the need for proportionality between the seriousness
of the infringement and the remedies ordered as well as the interests of third parties (Articles 46
and 59).  The authorities may not allow the re-export of counterfeit trademark goods in an unaltered
state or subject them to a different customs procedure, other than in exceptional circumstances(Article 59).
III. INTERNATIONAL COOPERATION
18. Cooperation between customs authorities can assi st them in detecting infringing goods and
thereby ensure the protection of intellectual pr operty rights and minimize disruption to trade in
legitimate goods.  Cooperation between other authorities responsible for domestic procedures toenforce intellectual property rights can have a similar effect.
19. In this regard, Article 69 of the TRIPS Agreement provides as follows:
"Members agree to cooperate with each other with a view to eliminating international
trade in goods infringing intellectual property rights.  For this purpose, they shall
establish and notify contact points in their administrations and be ready to exchangeinformation on trade in infringing goods.  They shall, in particular, promote the
exchange of information and cooperation between customs authorities with regard to
trade in counterfeit trademark goods and pirated copyright goods."IP/C/W/123
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20. At its meeting of 21 September 1995, the Council for TRIPS agreed to invite each Member to
notify, by 1 January 1996, information relating to the contact point, or each of the contact points,
established for the purposes of Article 69 of the Agreement, in particular the name(s), address(es),
telephone and telefax number(s) and, where appropriate, E-mail reference(s), of the authorit(y)(ies) in
question, including, where appropriate, the contact official at each contact point.
21. Eight-seven Members to date have notified such information, which is compiled in
document IP/N/3/Rev.3 and an addendum.  In many cases, Members have notified a specific contact
point for issues related to special border measures.  Further updates will be circulated through
addenda and corrigenda or further revisions.  In each case where a Member has not supplied
information on its contact point(s), this is reflected in the compilation as well.
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