WORLD TRADE WT/DS50/R
5 September 1997
ORGANIZATION
(97-3496)
Original:  English
India - Patent Protection for Pharmaceutical
and Agricultural Ch emical Products
Report of the Panel
The report of the Panel on India - Patent Protec tion for Pharmaceutical and Agricultural Chemical
Products is being circulated to all Members, pursuant to the DSU.  The report is being circulated as an
unrestricted document from 5 September 1997 pursuant to the Procedures for the Circulation and
Derestriction of WTO Documents (WT/L/160/Rev.1).  Members are reminded that in accordance with
the DSU only parties to the dispute may appeal a panel report, an appeal shall be limited to issues of law
covered in the panel report and legal interpretations developed by the panel, and that there shall be no ex
parte  communications with the panel or  Appellate Body concerning matters under consideration by the
panel or Appellate Body.
Note by the Secretariat:  This Panel Report shall be adopted by the Dispute Settlement Body (DSB) within 60 days after the date  of its circulation
unless a party to the dispute decides to appeal or the DSB decides by consensus not to adopt the report.  If the Panel Report i s appealed to the
Appellate Body, it shall not be considered for adoption by the DSB until after the completion of the appeal.  Information on th e current status of
the Panel Report is available from the WTO Secretariat.- i -
TABLE OF CONTENTS
Page
I. Introduction                                                                                                                         1
II. Factual Aspects    1
               (a) Article 70.8    2
(b) Article 70.9    4
III. Findings and Recommendations Requested by the Parties    4IV. Arguments of the Parties    6
- Article  70.8    6
(a) The United States' claim that India does not have in    6
place a mailbox system that corresponds to therequirements of Article 70.8
(b) The United States' claim that  Article 70.8 of the TRIPS   17
Agreement requires India to ensure that persons whofiled or would have filed mailbox applications had the
mailbox been in place on time and maintained can filesuch applications and receive the filing date they wouldhave received
- Article 63   18
(a) Procedural Grounds   18(b) Substantive Grounds   22
- Article 70.9   23
(a) Timing   24(b) The Scope of "Exclusive Marketing Rights"   32
- Request for a suggestion that India implement its obligations under   35
Articles 70.8 and 70.9 in a manner similar to the way in whichPakistan had implemented these obligations
V. Arguments Presented by Third Party:  European Communities and   36
Their Member States
VI. Interim Review   37
- Article 70.8   38
- Article 63   38- Article 70.9   40- Suggestions by the Panel   42- ii -
Page
VII. Findings  42
A. Claims of the Parties  42
- Introduction  42- Claims of the Complainant  43- Claims of the Respondent  43
B. Procedural Issues  44
- Transparency  45- Request for Suggestion Concerning Implementation  47
C. Interpretation of the TRIPS Agreement  47D. Article 70.8  49
- Nature of the Obligations  49- Mechanism for Implementing the Obligations  52
E. Article 63  56F. Article 70.9  58
- Textual Analysis  59- Context, Object and Purpose  60- Conclusion  62
G. Suggestions by the Panel  63
VIII. Conclusions  63ANNEX 1 India, The Patents Act, 1970, No. 39 of 1970, Sections 2(1)(j),  64
2(1)(l), 5-12 and 15
ANNEX 2 Lok Sabha, Unstarred Question No. 2601 and Answer by  70
the Minister of Industry
ANNEX 3 Letter of 2 May 1997 from Dr. Harvey E. Bale, Jr., Ph.D.,  71
Senior Vice-President International, PhRMA, PharmaceuticalResearch and Manufacturers of  America to The Honourable
Charlene Barshefsky, United States Trade RepresentativeWT/DS50/R
Page 1
I. INTRODUCTION
1.1. On 2 July 1996, the United States requested India to hold consultations pursuant to Article 4 of
the Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU) and Article 64of the Agreement on Trade-Related Aspects of In tellectual Property Rights (TRIPS) regarding the
absence in India of either patent protection fo r pharmaceutical and agricultural chemical products or
formal systems that permit the filing of patent a pplications for pharmaceutical and agricultural chemical
products and that provide exclusive marketing righ ts in such products (WT/DS50/1).  No mutually
satisfactory solution was reached in these cons ultations, held on 27 July 1996.  The United States
requested the Dispute Settlement Body (DSB), in a communication dated 7 November 1996, to establish
a panel to examine the matter (WT/DS50/4).  At its meeting of 20 November 1996, the DSB agreed toestablish a panel with standard terms of refe rence in accordance with Article 6 of the DSU.
1.2. In document WT/DS50/5 of 5 February 1997, the DSB was informed that the terms of
reference and the composition of the Panel were as follows:
Terms of reference
"To examine, in the light of the relevant provisions  of the covered agreements cited by the United States
in document WT/DS50/4, the matter referred to th e DSB by the United States in that document
and to make such findings as will assist the DSB in making the recommendations or in givingthe rulings provided for in those agreements."
Composition
Chairman: Mr. Thomas Cottier
Panelists: Mr. Douglas ChesterMr. Yanyong Phuangrach
1.3. The Panel heard the parties to the dispute on 15 April and 13 May 1997.   The Panel decided
to give the parties the chance to comment, after the second session, in writing on each other's arguments
related to the United States' claim based on Article 63, which claim had been made for the first time at
the first session.  The interim report was issued to the parties on 27 June 1997. Only India requested the
Panel to review parts of the interim report and no request was received to hold an additional meeting. 
II. FACTUAL ASPECTS
2.1 The questions before this Panel concern the obligations India has as a WTO Member by virtue
of certain transitional provisions of the TRIPS Agreem ent and are to be divided into questions related to
the provisions of Article 70.8 of the TRIPS Agreement and questions related to the provisions of Article
70.9 of that Agreement.  In respect of these questions , issues were also raised relating to the publication
and notification provisions of Article 63.
2.2 Obligations arising under international agreemen ts or treaties are not, by their own force,
binding in Indian domestic law.  Appropriate legisl ative or executive action has to be taken for bringing
them into force. 
2.3 On 31 December 1994, the President of India promulgated the Patents (Amendment)
Ordinance 1994, to amend the Patents Act 1970 to provid e a means in the Act for the filing and handling
of patent applications for pharmaceutical or agricu ltural chemical products (as required by subparagraph
(a) of Article 70.8 of the TRIPS Agreement) and for th e grant of exclusive mark eting rights with respectWT/DS50/R
Page 2
to the products that are the subject of such pate nt applications (as required by Article 70.9 of the
Agreement).1  This Ordinance was issued in exercise  of the powers conferred upon the President by
clause (1) of Article 123 of the Indian Constituti on, which enables the President to legislate when
Parliament (either House or both Houses) is not  in session and the President "is satisfied that
circumstances exist which render it necessary for him to take immediate action".  The Ordinance
became effective on 1 January 1995 and lapsed on 26 March 1995, since legislation of this kind ceasesto apply at the expiration of six week s from the re-assembly of Parliament. 
2.4 At the time of the promulgation of the Pa tents (Amendment) Ordinance 1994, a Press Note
was issued providing an explanation of its backgr ound and purposes.  According to paragraph 4 of this
Press Note, the Indian Government had set up an E xpert Group which had been entrusted with the task
of suggesting specific amendments necessary in Indian  laws to comply with India's obligations under the
provisions of Articles 70.8 and 70.9 of  the TRIPS Agreement and also to safeguard India's interests in
this regard;  this Expert Group had recommended a se t of measures on which decisions had been taken
by the Government.  The Ordinance was also notif ied by India to the Council for TRIPS under Article
63.2 of the TRIPS Agreement (which notification ha d been distributed as document IP/N/1/IND/1). 
During this period, 125 applicati ons had been received and filed.
2.5 A Patents (Amendment) Bill 1995, which was intended to give permanent legislative effect to
the provisions of the Ordinance, was introduced in the Lok Sabha (Lower House) of the Indian
Parliament in March 1995.  This Bill was passed by the Lok Sabha and was then introduced in the RajyaSabha (Upper House).  In the Rajya Sabha, the Bill was referred to a Select Committee of the House forexamination and report.  The Select Committee starte d its work but could not present its report before
the dissolution of the Lok Sabha on 10 May 1996.  The Patents (Amendment) Bill 1995 lapsed with thedissolution of the 10th Lok Sabha on that date. 
(a) Article 70.8
2.6 At the time that the period of validity of the Ordinance expired, the Patents (Amendment)
Bill 1995 was still being debated.  India informed the Pane l that, in the light of this situation, the Indian
executive authorities decided, in April 1995, to instruct th e patent offices in India to continue to receive
patent applications for pharmaceutical and agricultura l chemical products and to store them separately
for processing as and when the change in the Indian  patent law to make such subject matter patentable
would take effect.  No record of th is decision or of any administrative gu idelines issued to or within the
patent offices of India to this effect was made available to the Panel.
2.7 No public notice was given at that time of this administrative decision and no notification
concerning it was made to the Council for TRIPS.  However, on 2 August 1996, the Indian Minister of
Industry responded to a question asked by a member of the Lok Sabha concerning whether applications
for product patents in the pharmaceutical, food and ag ricultural chemical areas had been received in
anticipation of changes in the Indian Patents Act 1970 in accordance with the requirements of the World
Trade Organization;  as reflected at  Annex 2 of this report, the Mini ster responded by stating that the
patent offices had received 893 patent applications in the field of drug  or medicine from Indian as well
as foreign companies/institutions up to 15 July 1996 and that applications for patents would be taken upfor examination after 1 January 2005 as per the WTO Agreement.
                                          
     1The Patents (Amendment) Ordinance 1994 stipulated, in essen ce, that applications claiming patent protection for
pharmaceutical and agricultural chemical pr oduct inventions could be made, although such inventions were not patentable, and
that their handling would be postponed until 1 January 2005 or until an application for the grant of an exclusive marketing rig ht
for the product in question was made, if such would occur earlier;  the Ordinance also laid down the procedures for application s
for the grant of exclusive marketing rights, the scope of these rights and their enforcement.WT/DS50/R
Page 3
2.8 Under Indian patent law, patent applica tions for pharmaceutical or agricultural chemical
products made by any person entitled to apply under S ection 6 of the Patents Act 1970 are subject to the
same fee as any other patent application being recei ved and allotted a filing date and advertised in the
Official Gazette with serial number, filing date, na me of applicant and title of invention.  Under the
administrative arrangements of the Indian patent offices pursuant to the decision taken in April 1995,
such applications are, however, unlike other patent a pplications, being stored separately and not referred
by the Controller to an examiner as  specified in Section 12 of the Act.
2.9 The legal authority for these administrative a rrangements that has been cited by India is
Article 73(1)(a) of the Indian Constitution in conjunction with the Indian Patents Act 1970. Article 73(1) reads as follows: 
"Extent of executive power of the Union .  (1)  Subject to the provisions of this
Constitution, the executive power of the Union shall extend
(a)to the matters with respect to which Parliament has power to make laws;  and(b)to the exercise of such rights, authority  and jurisdiction as are exercisable by the
Government of India by virtue  of any treaty or agreement:
Provided that the executive power referred to in sub-clause (a) shall not, save as
expressly provided in this Constitution or in any law made by Parliament, extend inany State to matters with respect to which the Legislature of the State has also power
to make laws."
2.10 The full text of the provisions of the Patents Act of relevance to the case in hand can be found
at Annex 1 of this report.  For the purposes of the case in hand, the main aspects of these provisions that
are of relevance are as follows:
- Chapter III (Sections 6 through 11) deals with applications for patents.  These
provisions do not require that  applications for patents must be limited to patentable
subject matter.  In respect of the subject ma tter of the claims, they only require that such
applications should be for inventions.
- Inventions are defined in Section 2(1)(j) as, inter alia , any new and useful substance
produced by manufacture, including any ne w and useful improvement of such a
substance.
- Section 5 makes it clear that inventions clai ming substances intended for use, or capable
of being used, as a food, medicine or drug  or relating to substances prepared or
produced by chemical processes are not in  themselves patentable, but methods or
processes for their manufacture are.  Under Section 2(1)(l)(iv) the term 'medicine or
drug' includes insecticides, germicides, fung icides, weedicides and all other substances
intended to be used for the prot ection or preservation of plants.
- Chapter IV of the Patents Act concerns the examination of applications. Section 12
requires that, when the complete specification has been filed
2 in respect of an
application for a patent the application sh all be referred by the Controller General of
Patents, Designs and Trademarks to an exam iner.  The examiner shall ordinarily report
                                          
     2Pursuant to Section 9, the complete specification must normally be filed within 12 months of the date of the filing of the
application, which can be extended to 15 months, failing which the application is deemed abandoned.WT/DS50/R
Page 4
to the Controller within a period of 18 months on, inter alia , whether the application
and the specification are in accordance with the requirements of the Act and whether
there is any lawful ground for objecting to the grant of the patent under the Act.
- Paragraph 2 of Section 15 states that, if it appears to the Controlle r that the invention
claimed in the specification is not patent able under the Act, he shall refuse the
application.
2.11 India informed the Panel that, between 1 January 1995 and 15 February 1997, a total of
1,339 applications for pharmaceutical and agricultu ral chemical products had been received and
registered.  Of these applications, United St ates' companies had filed 318 applications for
pharmaceutical product patents and 45 applications for agricultural chemical product patents.  On the
day the Patents (Amendment) Ordinance 1994 had laps ed, 125 applications had been received and filed
(41 made by US companies);  prior to 15 Februa ry 1997, out of the other 1,214 applications (322 by US
companies), 605 had been received and filed prior to the day the Patents (Amendment) Bill 1995 hadlapsed.
(b)Article 70.9
2.12 The Indian executive authorities do not have the legal powers under present Indian law to
accord exclusive marketing rights in  accordance with the provisions of Article 70.9.  No request for the
grant of exclusive marketing rights has so far been submitted to the Indian authorities.
III.FINDINGS AND RECOMMENDATIONS REQUESTED BY THE PARTIES
3.1 The United States requested the Panel to make the following rulings, findings and
recommendations:
Article 70.8
(a) India has failed to implement the obligati on in Article 70.8 to establish a mechanism
that preserves the novelty of applications  for pharmaceutical and agricultural chemical
product patents during the TRIPS trans ition period, regardless of when those
applications are filed during that period.
(b) Article 70.8 of the TRIPS Agreement requires India to ensure that persons who filed or
would have filed "mailbox"3 applications had the "mailbox" been in place on time and
maintained can file such applications a nd receive the filing date they would have
received.
Article 63
(c) In the alternative, if the Panel finds that India has had a valid mailbox system4 in place,
India has failed to comply with its transp arency obligations under Article 63 of the
TRIPS Agreement.
                                          
     3For an explanation of the term "mailbox system", see footnote 4 below
     4The term "mailbox system" is used as shorthand for provis ions to be put in place which allow for the filing of patent
applications for pharmaceutical and agricultural chemical pr oducts as required by Article 70.8.WT/DS50/R
Page 5
Article 70.9
(d) The obligation to establish an exclusive marketing rights system arose on
1 January 1995, based on the text of Article 70.9.  Because India has failed toimplement an exclusive marketing rights sy stem legislatively, it is currently out of
compliance with this obligation under the TRIPS Agreement.
(e) India has failed to implement the obligati on in Article 70.9 that marketing rights be
granted so that competitors of the owner of such right will not be permitted on the
market absent the owner's consent.
Article 70.8 and 70.9
(f) That the Panel recommend that India brin g its measures into conformity with its
obligations under the TRIPS Agreement.
(g) That the Panel suggest that India implement its obligations under Article 70.8 and 70.9
in a manner similar to the way in which Paki stan has indicated it is implementing these
obligations.
3.2 India requested the Panel to reject the United States complaints on the basis of the following
findings:
Article 70.8
(a) India is providing a means for filing pa tent applications for pharmaceutical and
agricultural chemical products consistently with Article 70.8 of the TRIPS Agreement. 
This means is capable of attaining the objectives of Article 70.8 of the TRIPSAgreement.
(b) The United States' request, referred to under 3.1(b) above, is a request for a ruling on
how India should eliminate the consequences of an alleged violation of Article 70.8 of
the TRIPS Agreement.  Article 19.1 of the DSU does not permit the Panel to make aruling on how India should eliminate the consequences of the alleged violation ofArticle 70.8 of the TRIPS Agreement.
Article 63
(c) The United States' request for findings ba sed on Article 63 should not be considered by
the Panel, since the Panel's terms of reference do not cover the United States' Article 63claim and the scope of factual and legal clai ms cannot be expanded after the first written
submission. 
(d) In the alternative, if the Panel were to consider that it can examine the United States'
claim:
(i) Article 63 does not apply to deve loping countries until 1 January 2000;
(ii) if the Panel were to consider that Ar ticle 63 already applies to India, India has
published the elements of its means of f iling that are subject to the transparency
requirements of Article 63.1.WT/DS50/R
Page 6
Article 70.9
(e) Since there has not been any request for excl usive marketing rights in India, India has
not failed to accord exclusive marketing ri ghts to any product entitled to such rights
under Article 70.9 of the TRIPS Agreement.
(f) Since the issue of the scope of exclusive ma rketing rights was not an issue relating to an
existing measure, the United States' request, referred to under 3.1(e) above, amounts to a
request for a declaratory judgement, which type of finding does not fall within the
competence of  panels because Article XX III of GATT 1994 and the DSU permit only
complaints on measures actually taken.
Article 70.8 and 70.9
(g) The United States' request that the Panel suggest that India implement its obligations
under Article 70.8 and 70.9 in a manner similar to the way in which Pakistan hasindicated it is implementing these obligations  should be rejected as procedurally and
legally inappropriate.
IV. ARGUMENTS OF THE PARTIES
Article 70.8
(a) The United States' claim that  India does not have in place a mailbox system that corresponds
to the requirements of Article 70.8
4.1 In its first written submission, the United States  argued that, since the Patents (Amendment)
Ordinance 1994 ceased to have effect in early 1995, no formal mailbox system existed today in India
and that India, therefore, had failed to comply with its obligations under Article 70.8 of the TRIPS
Agreement to establish a mailbox system in its law which permitted the filing of mailbox applications. 
4.2 India  responded by stating that applications for the grant of patent protection for
pharmaceutical and agricultural chemical products were being filed, registered and stored in India and
that the system, which was consistent with th e provisions of the Patents Act 1970, was operating
effectively.  India argued that the system fu lfilled the requirements of Article 70.8 of the TRIPS
Agreement for the following reasons:
- The Patents Act and the administrative practices governing patent applications
permitted the filing of a patent application for a pharmaceutical or agricultural chemical
product notwithstanding the fact th at such products were currently not patentable.  Section 6 of
the Act provided for the receipt of applications  for a patent for inventions.  It was not a
precondition of Section 6 that the application s hould relate to a patentable invention.  The
Patents Act of 1970 defined "invention" in Secti on 2(1)(j) and further provided in Section 3
that certain subject matters were not inventions .  In Section 5, the Act recognized that there
might be an invention in relation to pha rmaceutical products and chemical products, but
provided that such inventions were not patent able in respect of the product itself while being
patentable for the methods or  processes of manufacture. 
- It was true that, should an application be examined under the provisions of Section 12,
the examiner would be duty-bound to apply the prov isions of Section 5 and at this stage raiseWT/DS50/R
Page 7
objections to the patentability of a pharmaceu tical and agricultural chemical product. 
However, applications for patents for pharmaceu tical and agricultural chemical products were
not being referred by the Controller General of Patents, Trademarks and Designs forexamination.  Therefore, the question of their re jection did not arise, si nce that question could
only arise after examination and the application of Section 5.  Thus, patent applications for
pharmaceutical or agricultural chemical products  would not be refused and withdrawn from
consideration prior to the date when such pr otection would become available.  Once patent
protection or exclusive marketing rights for pharmaceutical and agricultural chemical products
must be granted in accordance with Article 70.8(c) and 70.9, a complete record going back tothe date of entry into force of the WTO Agreement of all patent applications for
pharmaceutical and agricultural chemical products, including the date and the sequence of the
applications, would thus be available.   
 - Article 70.8(a) of the TRIPS Agreement cr eated, at present, only one obligation for
India in respect of pharmaceutical and agricultu ral chemical products, namely "to provide as
from the date of entry into force of the WTO Agreement a means  by which applications for
patents  for such inventions can be filed " (emphasis added by India ).  A method of filing
applications for pharmaceutical and agricultural chemical products had been made available
and was being used. 
- WTO Members were free to determine the means by which patent applications could be
filed.  Article 70.8(a) required Members to provid e "a means" for filing;  it did not prescribe
the choice of a particular method.  This was explicitly recognized in Article 1.1 of the TRIPSAgreement which made clear that "Members shall be free to determine the appropriate method
of implementing the provisions of th is Agreement within their own legal system and practice "
(emphasis added by India ).  India had initially decided to provide for a means for the filing of
applications through an ordinance by the Pr esident and, when this ordinance had lapsed,
through administrative action by instructing the patent offices to continue to receive
applications and to store them separately for future action in accordance with Article 70.8. 
Both the legislative and the administrative appr oaches were available to India under Articles 1
and 70 of the TRIPS Agreement.  It was therefore not correct for the United States  to claim
that India must create a mailbox system  in its law for the filing of patent applications
(emphasis by India ).  WTO Members were free to determine the means by which patent
applications could be filed and India was free to choose an administrative method pending the
change in legislation.
- The means currently provided by India was capable of attaining the objectives of
Article 70.8.  The main rationale of the require ment of subparagraph (a) of Article 70.8 was to
ensure that the WTO Member, when it eventu ally granted patents for pharmaceutical and
agricultural chemical products, was able to assign  a filing date to the patent for the purpose of
determining the remaining patent term.  Any method of filing, registration and storage ofapplications that enabled the Member to assign  a filing date to patent applications must,
therefore, be regarded as a proper means for filing within the meaning of Article 70.8. 
- The number of filings submitted under this system indicated that the companies
concerned did not experience or anticipate an y difficulty in the matter of filing their
applications.
5 
                                          
     5The numbers are reflected in paragraph 2.11 aboveWT/DS50/R
Page 8
4.3 The United States  argued that the Indian claim that a mailbox system had been put in place in
India was contrary to its laws, its statements and its actions:
- India had made it clear that changes to its laws were necessary to establish a mailbox
system consistent with the requirements of Ar ticle 70.8.  India had done so through statements
and actions surrounding its issuance and notification of the Patents (Amendment)
Ordinance 1994 and its attempt to get the Patents (Amendment) Bill 1995 adopted byParliament.  The text of the Patents Ordina nce made it clear that the relatively automatic
system for the rejection of pharmaceutical  and agricultural chemical product patent
applications must be modified to establish a legally defensible mailbox system.  The Patents
Ordinance had, temporarily, amended Section 5 of the Patents Act by the insertion of a
Chapter IVA stipulating special rules for the handling of mailbox applications, which overrode
the operation of Section 12 of the Patents Ac t and prohibited the C ontroller to forward
mailbox applications to examiners.  India thus had thought that it was necessary  to modify the
Indian Patents Act with respect to the ha ndling of applications for pharmaceutical and
agricultural chemical products ( emphasis by the United States ).  The Patents Ordinance would
not have been issued unless the President, pres umably acting on the advice of his legal experts,
had determined that it was "necessary" to take "immediate action" under Article 123 of theIndian Constitution.  The importance of issuing the Ordinance and implementing its provisions
in India’s laws had been restated in the c ontext of the Indian Government’s unsuccessful
attempts to get the Patents (Amendment) Bill 1995 passed by Parliament.  The IndianGovernment had also stated in its notification of 6 March 1995 of the Patents Ordinance to the
Council for TRIPS that the Ordinance had been i ssued "with a view to meet India’s obligations
under paragraphs 8 and 9 of Article 70 of the [TRIPS] Agreement".  These statements made
perfectly clear that India knew it had to make amendments to the Patents Act to implement its
Article 70.8 mailbox obligations, and that if it di d not do so it would be out of compliance with
its TRIPS obligations. 
- As a result of the rejection by Parliament of the Patents (Amendment) Bill 1995,
Sections 5, 12 and 15 of the Patents Act 1970 rema ined in force and continued to require that
applications drawn to pharmaceutical and agricultu ral chemical products be rejected.  In this
case, Parliament must take action to modify th is statutory system before an administrative
system of the type described by India could have legal effect. 
- India's claim that the Patents Act 1970 pe rmitted it to grant special treatment to
applications drawn to pharmaceutical and ag ricultural chemical products because such
applications allegedly were different from app lications drawn to other types of unpatentable
subject matter listed in Section 3 of the Patents Act had no legal or regulatory basis.  Theprocess for review of applications that dealt w ith subject matter listed in Sections 3 and 5 was
identical to the review of any other type of subject matter - once filed with the Patent Office,
these applications were to be forwarded to ex aminers for a review of patentability.  Section 15
of the Patents Act stated that an examiner sh all identify unpatentable subject matter, regardless
of whether it fell within the subject matter listed in  Sections 3 and 5.  In any event, this alleged
distinction between applications  drawn to different types of unpatentable subject matter was
irrelevant.  The matters before this Panel rela ted only to the fact that Sections 5, 12 and 15 of
the Patents Act required the Controller to forw ard applications drawn to pharmaceutical and
agricultural chemical products to examiners a nd ultimately reject them for being drawn to
unpatentable subject matter.  Therefore, Indian  law did not permit the Indian Patent Office to
treat, on an ad hoc  basis, one set of applications any differently;  once filed with the Patent
Office, applications must be forwarded to the examiners for a review of patentability.  India’s
attempt to claim that it was able to do so was contrary to the law, and any patents granted on
applications filed under this informal, unrecognized  system might be subject to legal challengeWT/DS50/R
Page 9
based on a claim that they were filed and pro cessed in a manner inconsistent with the current
law.  In such a case, a court might find that  the system for handling the applications was ultra
vires  and applications filed under that system could not result in the grant of a valid patent.  A
group of 11 patent experts convened by the I ndian Government in 1994 to discuss whether
India's laws must be amended to implement Article 70.8 and 70.9 had known this.  Theyspecifically had considered the option of im plementing the mailbox system administratively
and rejected it, finding it far too likely to invite  legal challenges to any applications filed under
such a system.  They had concluded that amendments to the Patents Act to disable theautomatic process for forwarding applications  to examiners and ultimately rejecting those
drawn to pharmaceutical and agricultural chemical  inventions were necessary to establish a
mailbox system in accordance with Article 70.8. 
- India's claim that it had a mailbox system in  place was called into question by the fact
that it had never notified such a system to th e Council for TRIPS, as required by the TRIPS
Agreement.  The only notification India had made to the Council for TRIPS was thenotification setting forth the text of th e Patents (Amendment) Ordinance 1994.  This
notification made it clear to all government s and potential applicants that the system
established by the Ordinance created the basi s for accepting mailbox applications.  In other
words, without this system mailbox applications  would not be processed or have the legal
status required by the TRIPS Agreement.  Indi a had never sent a follow-up notification to the
Council for TRIPS stating that, not withstanding the clear requireme nts of its law, applications
for unpatentable subject matter would not be re fused and would receive the status required by
the TRIPS Agreement. 
- India's claim that it had implemented a mailbox system was inconsistent with its
obligations under Article 63 of the TRIPS Agreement to publish or make publicly available thespecific terms and provisions of its system " in such manner as to enable governments and
right holders to become acquainted with them " (emphasis by the United States ).  This claim
had been made for the first time on 8 April 1997 in a confidential document that would not be
circulated to WTO Members, let alone to the public.  The private sector had no idea of the
existence of this system and those people who, despite all indications to the contrary, had
invested time and money in filing applicati ons claiming pharmaceutical and agricultural
chemical inventions, had no idea of the legal stat us of their applications.  This could not under
any criteria be considered an acceptable impl ementation of India’s Article 70.8 obligation,
particularly in light of the transparency oblig ations in the TRIPS Agreement, and should create
a presumption that it did not have a legally valid  system in place.  Article 70.8 was clear in its
requirement that an open and known process be developed for accepting applications for
pharmaceutical and agricultural chemical product patents and granting those applications the
proper legal status.  The first element of this obligation was the establishment of a system that
people knew about and knew how to use.  A mailbox system that was unknown to the world
was useless.
4.4 The United States also argued that the Indian system, by failing to give applications the legal
status necessary to protect the expectations of  applicants, did not fulfil the underlying purpose of
Article 70.8: 
- The principal purpose of the requirement to  establish a mailbox system was to ensure
that applications that were filed in the tran sitional period would not lose their novelty and,
consequently, to allow mailbox applicants to pr eserve their ability to obtain patent protection
for pharmaceutical and agricultural chemical produc ts in a Member taking advantage of some
or all of the transitional period.  The benefit prov ided by the system was such that, when patent
protection for pharmaceutical and agricultura l chemical products was established, such
protection would also be availabl e to persons who had filed applications during the transitionalWT/DS50/R
Page 10
period based on the effective filing date of thei r applications.  To this end, Article 70.8 did not
require the examination and grant of the patent at the time of application;  rather it required
that a system be established to ensure that e ffective filing dates were granted in anticipation of
the future benefit of eligibility for product pate nt protection based on those dates.  A mailbox
applicant must have the assurance that the application would  lead to the grant of a patent if the
conditions foreseen in paragraphs (b) and (c) of Article 70.8 were met ( emphasis by the United
States ).  In the case of India, which had indicated  its intent to take advantage of the entire
transitional period, this future benefit of the mailbox system would not be available to
applicants until 2005.  Once a filing date had been granted and applications were given therequired legal status, the applicants would be able to factor this status into their operations and
business decisions.
- The mailbox system, therefore, had a rationale common to many other WTO
obligations, "namely to protect expectations of  the contracting parties as to the competitive
relationship between their products and those of other contracting parties"
6.  The Superfund
report had established clearly the importance of "creat[ing] the predictability needed to plan
future trade"7.  Applicants must be able to anchor, during the transitional period, their right to
receive a patent at the end of the transitional period so that they could plan their business
operations accordingly (e.g., where to invest, where to move operations, whom to hire, whichdistribution networks to establish, etc.).  As  regards how applicants could make informed
business decisions based on the right to seek a patent in the future, it should be borne in mindthat, if the particular application proved unpatentable in other WTO Members during the
transitional period, then this right might not be of much value, but that, on the contrary, if an
application proved to be patentable everywhere else, then it would presumably be patentable in
India at the end of the transitional period;  t hus, the current right to seek patent protection
based on the appropriate filing date was of great strategic and commercial value to applicants. Article 70.8 established the expectation that thr ough the grant of this legal status to their
applications, applicants would be able to es tablish their competitive position in the country at
issue and factor this competitive position into their business plans. 
 
- Despite India’s claim that it had decided for the moment not to enforce the mandatory
provisions of Sections 5, 12 and 15 of th e Patents Act 1970 (which claim was unknown to
other governments and the public), that "measure continues to be mandatory legislation whichmay influence the decisions of economic operators"
8.  The economic operators in the present
case - potential patent applicants - had no c onfidence that a valid mailbox system had been
established, and thus would not file mailbox-eligib le applications in India.  To paraphrase the
Beer II  panel, a non-enforcement of a mandatory law that violated a WTO obligation did not
ensure that the obligation was not being broken.9  Here, Sections 5, 12 and 15 mandated that
applications for pharmaceutical and agricultura l chemical product patents be forwarded to
examiners, determined to be drawn to unpate ntable subject matter, and rejected.  Because
India had failed to establish a fully functional mailbox system that granted mailboxapplications the legal status required by the TR IPS Agreement as of their priority filing date,
                                          
     6Panel Report on "United States - Taxes on Petroleum and Certain Imported Substances" (Superfund) , adopted on
17 June 1987, BISD 34S/136, at 160
     7Id.
     8Panel Report on "United States - Measures Affecting Alcoholic and Malt Beverages"  (Beer II ), adopted on 19 June 1992,
BISD 39S/206, at 290
     9Id.WT/DS50/R
Page 11
large numbers of applications that would have been filed were currently being withheld until
India established such a system.  Although Indi a would not be obligated to grant patents on
such applications meeting the criteria for pa tentability set out in Article 27 of the TRIPS
Agreement as of their appropriate filing date until the end of the transitional period, it would
not be sufficient that the legal changes necessary  to provide an assurance of patentability were
made at the end of the transitional period.  App licants must be given the legal assurance of a
current right to the conditional futu re benefit that they would be able to seek patent protection
on the basis of those criteria as of 1 January  1995, allowing them to plan their business
operations accordingly as of that time.  If a valid mailbox system were established today andan applicant who would have filed in July 1995 did so tomorrow and was assigned its July
1995 filing date, that applicant would be granted the right it must have under the TRIPSAgreement, but would have lost  almost two years of shaping its business plan with the
knowledge that it had an application with  the legal status required by Article 70.8. 
4.5 The United States further contended that th e number of applications filed in India for
pharmaceutical and agricultural chemical products was irrelevant. 
- In light of India's clear violation of the mailbox provisions of the TRIPS Agreement, a
showing of actual damage was not a prerequisite to  a finding that India's failure to establish a
TRIPS-consistent mailbox system was nullifying or impairing benefits under the TRIPSAgreement.  Article 3.8 of the DSU provided  that, where there was a violation of the
obligations under a covered agreement, the action was considered prima facie  to constitute a
case of nullification or impairment.  In any event, during 1995 and 1996 the United States
Patent and Trademark Office had r eceived over 50,000 such applications.
10
4.6 In response, India  argued that the mailbox system in pl ace in India had a sound basis in Indian
law and the United States' claims that change s in Indian law were necessary were unfounded.
- Under India’s legal system there was more than one method by which it could satisfy its
obligations under Article 70.8 of the TRIPS Agr eement.  This could be done by statute,
subordinate legislation, such as rules or regu lations, and even by administrative instructions
and practice.  Initially, India had chosen the le gislative route to provide a means for receiving
applications for pharmaceutical and agricultura l chemical products and according priority to
them.  At present, India administratively con tinued to receive applications for pharmaceutical
and agricultural chemical products and was deferring their examination.  Such anadministrative decision was permissible under Article 73(1)(a) of the Indian Constitution
which provided that "the executive power of th e Union shall extend to the matters to which
Parliament has the power to make law".  Under this constitutional provision, the Executivecould act administratively in cases in which Pa rliament had legislative competence.  In the
case of providing the necessary "means" under Article 70.8 of the TRIPS Agreement, therelevant legislative power would be Entry 49 of List I or List III of the Seventh Schedule to theConstitution which read "Patents, inventions and designs; copyright; trade marks andmerchandise marks".  In this connecti on, two Supreme Court opinions showed that
administrative action was an available method for the Executive, namely J.R. Raghupathy vs
State of Andra Pradesh  and Union of India vs H. R. Patankar and Others .
11
                                          
     10Following India's response reflected in paragraph 4.8 below, the United States added that, given the size and importance of
the Indian market, it was clear that well over 1,339 of these applications would have been filed in India had India established  and
maintained a valid mailbox system since 1 January 1995.
     11All India Report 1988 SC 1681 and 1984 SC 1587WT/DS50/R
Page 12
- Advancing evidence of the decision not to ta ke up the applications for examination until
1 January 2005, India referred to a question that had been asked in Parliament about the actiontaken or proposed to be taken in respect of applications for pharmaceutical and agricultural
chemical products (Unstarred Question N o. 2601 asked by a Member of Parliament
(Lok Sabha)) and the reply given by the Govern ment in Parliament on 2 August 1996 that "the
applications for patent will be taken up for examination after 1 January 2005 as per the WTOAgreement which had come into force on 1 January 1995".
12
- There was no requirement that Parliament should recognize an administrative practice
unless explicitly required by the Constitution or statute.
- With regard to the claim of the United St ates with respect to Article 123 of the
Constitution, India stated that Article 123 was intended to enable legislation even whenParliament (either House or both Houses) was not  in session.  Therefore, the determination that
the President was required to make under Article 123 was that it was necessary to take
immediate action  to promulgate an Ordinance despite Parliament not being in session and not
that legislation was the only means of  satisfying a particular obligation ( emphasis by India ). 
4.7 As regards the arguments put forward by the United States regarding publication and
notification, India made  the following points:
- Article 70.8 merely stated that a means of filin g must be provided.  It did not state that it
must be made "clear to the public" through "p ress releases or international news reports".
Article 70.8 merely stipulated that Members pr ovide a means by which applications could be
filed and that "to provide" means "to supply fo r use";  it did not mean "make known to the
world".  The usefulness of a means of filing did not depend on it being made "known to the
world";  it was sufficient that individual companie s that wished to submit an application could
obtain the necessary information from the relevant  authorities.  The fact that as many United
States' companies as could be expected on the basi s of past trends had in fact filed applications
under the means provided by India underscored this point.
- Article 70.8 did not state that the means of filing provided must be notified to the WTO.
 Besides, it should be stressed that India was c ontinuing to apply the same means of filing that
it had initially provided by virtue of the Ordinance and which had been given publicity andnotified to the WTO.  The transparency obligations were set out in Article 63, not inArticle 70.8;  moreover, these obligations related in this case to the Patents Act of 1970, whichhad been published, and not to the administrative arrangements made under that Act.  In anyevent, as noted above, as a practical matter, adequate publicity had been given to the means of
filing which had initially been provided by India and subsequently continued administratively.
4.8 As regards the number of patent applica tions filed, India had compared the number of
applications made in India by United States ' companies and found that the proportion between
applications in the United States and applications in India by United States' companies in recent years
had been around 0.7 per cent.  The 363 applications  received from United States' companies under the
Indian filing system for pharmaceutical and agricultu ral chemical products concurred with that trend. 
4.9 India further argued that whether the means of filing provided by India conformed to the
requirements set out in Article 70.8 should be consid ered in accordance with the principle set out in
Article 31 of the Vienna Convention on the Law of  Treaties that a treaty shall be interpreted in
                                          
     12The full text of the question and answer, as submitted to the Panel by India, can be found at Annex 2 of this report.WT/DS50/R
Page 13
accordance with "the ordinary meaning to be given to the terms  of the treaty in their context  and in the
light of its object and purpose " (emphasis added by India ).  In this connection, India noted that the
Appellate Body had, consistently with Article 3 of th e DSU, determined the meaning of the terms of the
WTO agreements on the basis of the principles of  interpretation of the said Vienna Convention.
The terms of the TRIPS Agreement  
- India maintained its argument that WTO Me mbers were free to determine the means by
which patent applications could be filed and that Article 70.8(a) required Members to provide
“a means” for filing without prescribing the choice of a particular method.  In this context, it
also reiterated that Indian law did not require a change in law to implement these obligations
and reiterated that the transparency obligations  in the TRIPS Agreement could not be found in
Article 70.8 but in Article 63.
Context  
- Subparagraph (a) of Article 70.8 must be read in conjunction with
subparagraphs (b) and (c) of that provision and the transitional arrangements set out inArticle 65.  Subparagraph (a) of Article 70.8 obliged Members to provide a means of filing, i.e.the first step in a procedure leading to the gran t of patent protection "as from the date of entry
into force of the WTO Agreement", i.e. 1 January 1995.  The obligation to apply the TRIPSAgreement’s criteria of patentability and to prov ide patent protection when those criteria were
met arose only "as of the date of application of  this Agreement" (subparagraphs (b) and (c)). 
This date was defined in Article 65.  Paragraph 4 of that Article made it clear that the relevantdate of application in India of the provisi ons on product patents in respect of pharmaceutical
and agricultural chemical products was 1 Ja nuary 2005.  Article 70.8 thus established two
different obligations that became effective on two different dates:  the obligation to provide a
means of filing on 1 January 1995 and the obligation to accord patent protection on 1 January2005.  Given this context, subparagraph (a) of Ar ticle 70.8 could not be interpreted to establish
already now the obligation to provide for the gr ant of patents in the year 2005.  To give this
interpretation to subparagraph (a) would effectively turn an obligation that arose at the end of a
transitional period into a current obligation.  Th e rationale of Articles 65 and 70 was clearly to
permit developing country Members to postpone changes in their law that other Members were
required to make under Article 27 of the TRIPS Agr eement.  It would be inconsistent with that
rationale if Article 70.8(a) were interpreted to  require the establishment of a procedure that
would  lead to the granting of a patent ( emphasis by India ).  The consequence of such an
interpretation would be that developing country  Members would have to change their law to
provide for the patentability of pharmaceuti cal and agricultural chemical products before
having to grant patentability to other products ( emphasis by India ) - a consequence completely
at odds with the purpose of Article 65.4 which wa s designed to extend for these products the
period of transition beyond the normal five-year period. 
- The fundamental purpose of the transitiona l arrangements was to enable developing
countries to accept the WTO Agreement without havi ng to change their patent law at the same
time.  There had been a recognition among the negotiators of the TRIPS Agreement of the factthat many developing countries still needed  more time to build the domestic consensus
necessary to accord patent protection, in pa rticular for products where patentability was
perceived to have certain adverse implications .  The United States’ complaint was an attempt
to eliminate this function of the transitional arrangements of the TRIPS Agreement.  During
the first five years of the TRIPS Agreement, dur ing which developing countries expected to be
free from the need to make  any legislative change, they thus would have to make such changesWT/DS50/R
Page 14
in the most sensitive area ( emphasis by India ).  The United States’ interpretation of
Articles 70.8 and 70.9, therefore, effectively turn ed transitional arrangements designed to
create a special benefit in respect of pharmaceuti cal and agricultural chemical products into a
source of an additional burden.  To the knowle dge of India, no devel oping country had acted
under Article 70 on the basis of the interp retations proposed by the United States. 
Examination of the notifications submitted to the TRIPS Council under Article 63.2 of theTRIPS Agreement relating to Article 70.8 showed that not one of these notifications provided
for a procedure to be established under whic h patents for pharmaceutical and agricultural
chemical products would be made available as from 2005. 
- Regarding the jurisprudence of th e CONTRACTING PARTIES to GATT 1947 under
which certain basic obligations under GATT, su ch as the national treatment obligation under
its Article III and the general prohib ition of quantitative restrictions under its Article XI, had
been interpreted as obligations  "protecting expectations" of Members as to the "competitive
relationship" between their products and those of other Members and that a measure could
therefore be inconsistent with these provisions even if it had not yet had a trade effect, India
would not suggest that the Panel apply a different  principle to the basic obligations set out in
the TRIPS Agreement.  However, it argued th at, under the transitional arrangements of the
TRIPS Agreement, the date of application of th e provision to which the principle developed by
the CONTRACTING PARTIES could be applied in this case, i.e. Article 27 of the TRIPSAgreement, had not yet arrived. 
- It would have far-reaching implications if  - for the sake of creating predictable
conditions of competition - the many arrangements under the WTO agreements wereinterpreted to entail the immediate obligation to empower the executive authorities to carry out
the obligations that would have to be observed at  the end of the transitional period.  To give a
specific example, the Agreement on Textiles and Clothing permitted the maintenance of
restrictions during a transitional period.  Did that Agreement imply the obligation to change
any domestic law mandatorily prescribing these restrictions?  A provision creating theobligation to establish certain conditions of comp etition as from a specified date or as from the
occurrence of a certain event could not be interp reted as entailing the obligation to provide for
such conditions of competition in the domestic la w in advance of that date or event.  The
CONTRACTING PARTIES to GATT 1947 had never used the concept of conditions ofcompetition to advance the effective date of application of an obligation.
Object and purpose
- The purpose of subparagraph (a) of Article 70.8 emerged clearly from
subparagraphs (b) and (c) of that provision a nd Article 70.9.  According to subparagraphs (b)
and (c), developing country Members must gr ant patents to pharmaceutical and agricultural
chemical products for a period of at least 20 years "counted from the filing date" as if the
criteria for patentability laid down in the TRIPS Agreement were being applied on "the date of
filing".  Furthermore, according to Article 70.9 only products for which a patent application
had been filed in accordance with Article 70.8(a)  were eligible for the grant of exclusive
marketing rights.  The purpose of subparagraph (a ) was thus not to create a procedure ensuring
that pharmaceutical and agricultural chemical products would  become patentable or  would be
given exclusive marketing rights, but rather to ensure that each patent applicant obtained a date
of filing on the basis of which patent protection could  be granted as from the date on which
Article 27 applied and that exclusive marketing rights could  be granted to products at the point
at which they were eligible for such rights ( emphasis by India ). WT/DS50/R
Page 15
4.10 The United States  commented as follows on the evidentia l material concerning the decision to
postpone the referral of patent applications for pha rmaceutical and agricultural chemical products by the
Controller for their examination a nd the two Supreme Court opinions c oncerning Article 73(1)(a) of the
Indian Constitution that had been advanced by India:
- The only evidence that India could muster to  show that it had made a public decision to
establish an administrative mailbox system was a question and answer in the Lok Sabha thatapparently had taken place on 2 August 1996.  However, it was interesting to note that theanswer to the question:  (a) did not state that  the applications that had been filed had been
granted the proper legal status;  (b) had appare ntly never been made known to the public (let
alone notified to other WTO Members through the Council for TRIPS);  and (c) was of noapparent legal effect.
- The opinions provided by India clarified that amendments to the Patents Act were
necessary to establish a mailbox system.  They did not support India's a ssertion that it could
create a mailbox system through administrative guidance.  In Union of India vs . H.R. Patankar
and Others , the Supreme Court had held that "if ther e are no statutory rules in force.... or even
if there are statutory rules but they are silent on any particular subject, it is competent to the
Government [to make appropriate rules] to fill in the lacuna in the statutory rules"
13.  Rather
than an instance of statutory silence or a gap in statutory rules, the present case concerned a
specific statutory provision that  directed the Controller to forward applications to the
examiners, where applications drawn to pha rmaceutical or agricultural chemical products
would be identified as being drawn to unpatentab le subject matter and ultimately rejected.  By
implication, Union of India  stood for the proposition that the Government was not authorized
to issue administrative guidance that was c ontrary to the letter of the law.  In J.R. Raghupathy
vs. State of A.P. , the Supreme Court had addressed the issue of the ability of the High Court to
review the Government's exercise of discreti on conferred upon it, even when that exercise of
discretion was contrary to its own guidelines.  Citing prior authorities, the Court had held that
administrative guidelines had no statutory fo rce and conferred no right on any citizen to
complain that they were not being met.14  Thus, even if India had issued instructions to its
Controller to ignore the mandatory nature of Article 12(1) of the Patents Act 1970, which the
United States doubted, those inst ructions would have no legal effect and a court would be
unable to compel the Patent Office to follow them.  The J.R. Raghupathy  case also stood for
the proposition that, where a statute was to be  implemented by a designated authority,
Parliament "must have assumed that the de signated authority w ould act properly and
responsibly, with a view to doing what was best in the public interest and most consistent with
the policy of the statute"15.  This language did not provide any support for the Indian
Government's assertion that it was permitted to act administratively in a manner that thwarted
or circumvented clear and direct  statutory instruction to take a particular action.  As a result,
the Indian patent experts referred to earlier had b een correct in their conclusion that the Patents
Act 1970 must be amended if India was to fully implement the mailbox obligations underArticle 70.8 of the TRIPS Agreement.
4.11 The United States also responded that India could not persuasively claim that individual
companies had access to the necessary information.  India apparently acknowledged that a mailbox
                                          
     13Paragraph 4 of the opinion
     14Paragraphs 18 and 30 of the opinion
     15Paragraph 29 of the opinionWT/DS50/R
Page 16
system that was totally unknown to the public was of  no value, but claimed that "it is sufficient that
individual companies that wish to submit an appli cation can obtain the necessary information from the
relevant authorities".  Even if India's assertion of  what constituted fulfilment of WTO obligations were
correct (which it was not), India had not even met this  low standard.  India repeatedly had made clear to
WTO Members, its own nationals, and the rest of the world that it would not have a valid mailbox
system in place until it had amended its patent law.  The United States Government had attempted forover two years to clarify the situation and had been either ignored or led to believe that India did not
have a valid mailbox system in place.  There was no reason to expect individual companies to receive
any better treatment or information than the United States Government.  Individual companies that had
filed or would have filed pharmaceutical and agricultu ral chemical product patent applications in India
continued to believe that India did not have  a TRIPS-consistent mailbox system in place.
16
4.12  India  maintained that mailbox applications had a proper legal status under Indian law and that
the filing system put in place by India had the nece ssary support from the provisions of the Patents Act
1970 and the provisions of Article 73 of the Indian Constitution.17
- The written answer from the Government to Unstarred Question No. 2601 in the LokSabha on 2 August 1996 put beyond any doubt that  the applications received had a proper
legal status.  The Government had stated in this written answer that until 15 July 1996 as manyas 893 applications had been received from Indian as well as foreign companies in the fields of
drugs and medicine.  It had further been stated  that these applications would be taken up for
examination after 1 January 2005 as per the WTO Agreement which had come into force on 1January 1995.  It was to be borne in mind that the Indian legal system was based uponcommon law systems and that any statement, more  particularly written statement, made in any
House of the central legislature, by the Minist er who was an authorized functionary of the
Government, put that Government under th e obligation of the common law doctrine of
"estoppel", in the sense that the Governme nt at no stage could perform any act in
contravention of the position alr eady taken under that statement.
- As regards the United States' assertion that  the answer to Unstarred Question No. 2601
had apparently never been made known to the public, all answers to questions put by Members
of Parliament were given in writing and were laid on the table of the relevant House andcirculated amongst all Members of that House.  The national and international electronic, print
and other media had open access to the answers given in the House and widely reported them. Questions and answers given were reported in th e Reporters published by the secretariat of the
respective House and formed a permanent prin ted record which was accessible to the public. 
- Regarding the United States' assertions  based on the two Indian Supreme Court
opinions, India stated that it was a settled propos ition in Indian law that the executive power of
the central government under Article 73 was co-e xtensive with the legi slative power of the
Parliament.  In other words, it extended over the whole of the territory of India with respect to
the matters enumerated in List I (including  Entry 49 "Patents, inventions and designs; 
copyright, trademarks and merchandise marks") and List III of the Seventh Schedule to theIndian Constitution.  In J.R. Raghupathy vs St ate of Andra Pradesh , the Supreme Court had
stated that the executive powers of the Uni on under Article 73 were much wider than the
                                          
     16In this regard, the United States subm itted to the Panel a copy of a letter from Dr. Harvey E. Bale, Jr., of the US
Pharmaceutical Research and Manufacturers Association, to the United States Special Trade Representative, Ambassador
Barshefsky (see Annex 3 of this report).
     17India also made a number of arguments relevant to the issues concerning Article 70.8 in the context of Article 63.WT/DS50/R
Page 17
prerogative powers in England.  The provisions of Article 73 of the Constitution as interpreted
in Union of India vs H. R. Patankar and Others  and J.R Raghupathy vs Stat e of Andra Pradesh
were in the nature of support mechanisms for the legislative provisions in the Patents Act 1970which formed the basis for the current filin g system.  The United States had quoted the
J.R.Raghupathy  opinion out of context.  The essence of the Supreme Court opinion was that if
there were certain deviations from the guid elines set for in-house management of the
government departments, the courts did not need  to interfere.  However, where administrative
instructions impinged upon the rights of pers ons, there was no way out and the courts were
bound to come into active play.  The explicit position taken by the Supreme Court in Union of
India vs H.R. Patankar  made it clear that even if there were any statutory rules, but they were
silent on any particular subject, the Government  was competent to fill in the lacunae in the
statutory rules. 
(b) The United States' claim that  Article 70.8 of the TRIPS Agr eement requires India to ensure
that persons who filed or would have filed mailbox applications had the mailbox been in place on time
and maintained can file such applications and receive the filing date they would have received
4.13 The United States  argued that the number of applicati ons filed in India for pharmaceutical and
agricultural chemical products was far less than that  which would have been filed had a valid system
been in place.  Any applications filed subseque nt to the expiration of the Patents (Amendment)
Ordinance 1994 had been filed by companies willing to take the risk that they would have the legal
status required by the TRIPS Agreement.  Many ot her applicants who would have filed had a system
been in place had not filed.  Under a mailbox system  that had been established by 1 January 1995 and
subsequently maintained in acco rdance with Article 70.8 of the TRIPS Agreement, ensuring that
applications were assigned their effective filing date  was relatively straightforward:  applications were
simply assigned an effective filing date of either (a) the date they had been filed with the Member, or (b)
where that Member granted priority filing benefits, the priority filing date.  Where, as in the case of
India, a Member had failed to establish a mailbox system by 1 January 1995 and subsequently maintainit, additional steps might be necessary  to ensure that applicants were  assigned an effective filing date
that reflected the filing date they would have r eceived had a mailbox application system been in place.
4.14 India  responded that the United States’ request for a ruling on the retroactive allocation of
filing dates was moot and inconsistent with Article 19.1 of the DSU.  The administrative mechanismswhich India had put into place did permit the filing of  applications and enabled the patent offices to
assign a filing date to each application.  A substan tial number of applications had been filed under these
procedures.  The situation that would make the finding requested by the United States meaningful
therefore did not exist.  The finding  requested by the United States di d not concern the consistency of a
measure actually taken by India but corrective actions that Indi a allegedly would need to take
subsequent to the violation of Article 70.8 of the TRIPS Agreement claimed by the United States
(emphasis by India ). The request thus did not relate to the question of whether  India had failed to
observe its obligations but to the question of how India should bring itself into conformity with its
obligations, in particular the steps India should take to eliminate the legal consequences of an
inconsistency alleged by the United States ( emphasis by India ).  The scope of the Panel’s examination
should remain limited to the allegation of the United States that India had not fulfilled its obligation
under Article 70.8 of the TRIPS Agreement.  The Pa nel could not and should not get into hypothetical
questions as to how India should deal with the situ ation in the event that the United States' allegation
was found to be substantiated.  This was a matte r entirely within the co mpetence of the Member
concerned, i.e. the Indian authorities.  Article 19.1 of  the DSU did not permit the Panel to make a ruling
on how India should eliminate the consequences of the alleged violation of Article 70.8 of the TRIPS
Agreement. WT/DS50/R
Page 18
4.15 The United States  rebutted that it was not seeking a specific remedy in this matter, but a
determination by this Panel that India had failed to fulfil the Article 70.8 obligation to ensure that
transitional period applicants would be able to obtain patent protection when it became available in
India for pharmaceutical and agricultural chemical pr oducts, and to establish a means to ensure that
applications that were filed in this transitional pe riod would not lose their novelty.  Although the number
of these applicants was irrelevant since, in light of India's clear violation of the mailbox provisions of
the TRIPS Agreement, a showing of actual damage was not a prerequisite to a finding that India's failure
to establish a TRIPS-consistent mailbox system was nullifying or impairing benefits under the TRIPSAgreement
18, evidence of the fact that additional applica tions would have been filed had a legally valid
mailbox system been in place on time could be found in the letter from Dr. Harvey E. Bale, Jr.19,20 
Article 63
4.16 At the first substantive m eeting with the parties, the United States  stated that it had been
surprised by India's statement in its first written s ubmission to the Panel that it had established a system
for the filing of applications.  In response to that statement, the United States said that it was of the
opinion that the administrative instructions in ques tion did not meet the requi rements of Article 70.8 but,
if the Panel were to find that they did constitute a valid mailbox system in the context of Article 70.8,
would argue, in the alternative, th at India had failed to comply with  its transparency obligations under
Article 63 of the TRIPS Agreement.  In support of th at alternative claim, the United States made the
arguments outlined in the last two indents of paragraph 4.3 above.
4.17 India disputed the United States' requested fi nding on Article 63 on procedural and substantive
grounds.
(a)Procedural grounds
4.18 India  argued that the United States' request for a finding that India had failed to comply with
its transparency obligations under Article 63 of the TRIPS Agreement had been made for the first time
in its oral statement at the first meeting of the Pane l and argued that to submit such an additional request
for a finding after the first written submission constituted an unacceptable procedural scheme. 
- The Panel's terms of reference did not cover th e United States' Article 63 claim.  According to
Article 7.1 of the DSU, the mandate of the Pa nel was to examine the matter referred to the
DSB in the document in which the United States had requested the establishment of a panel in
accordance with Article 6 of the DSU, i.e. doc ument WT/DS50/4.  Neither that request nor,
earlier, the United States' request for consultati ons had raised the issue of transparency or
compliance with Article 63 of the TRIPS Agreemen t.  In these requests, the United States had
summarized the issues as follows:  "The legal regime in India currently does not make patent
protection available for inventions as specifi ed in Article 27 of the TRIPS Agreement or
provide systems that conform to obligations of the TRIPS Agreement regarding the acceptance
of applications and the grant of exclusive mark eting rights.  As a result, India's legal regime
appears to be inconsistent with the obligati ons of the TRIPS Agreement, including but not
necessarily limited to Articles 27, 65 and 70".
                                          
     18Article 3.8 of the DSU provides that where there is a violation of the obligations under a covered Agreement, the action is
considered prima facie  to constitute a case of nullification or impairment.
     19The letter referred to above in paragraph 4.11 and footnote 16
     20In this regard, reference was also made to the arguments reflected above in paragraph 4.4, third indent.WT/DS50/R
Page 19
- According to Article 6.2 of the DSU, the request  for the establishment of a panel must meet
two central requirements:  it must "identify the sp ecific measures at issue" and "provide a brief
summary of the legal basis of the complaint su fficient to present the problem clearly".  The
United States' request did not iden tify lack of transparency as a specific measure at issue. The
vague reference to "obligations of the TRIPS Agreement, including but not necessarily limited
to" is not sufficient to present the problem clearly.  The recent WTO Panel on European
Communities - Regime for the Impor tation, Sale and Dist ribution of Bananas21 had concluded
in a comparable situation that "reference to a WTO Agreement without mentioning any
provisions or to unidentified 'other' provis ions are too vague to meet the standards of
Article 6.2 of the DSU".
4.19 The United States  responded that its Article 63 claim was inexorably linked to the description
of the "problem" it had with th e Indian failure to implement Articles 70.8 and 70.9 of the TRIPS
Agreement as articulated in its request for consultati ons and the establishment of a panel.  It advanced
the following arguments: 
- Under the unusual and unfortunate circumst ances of this case - where India had
indicated publicly and during consultations that  it had no mailbox system in place and refused
to answer United States' questions regarding whether such a system existed - it would be
appropriate for the Panel to provide the United States with an opportun ity to identify specific
legal claims regarding transparency during the first substantive meeting.  The only reason that
Article 63 had not been explicitly referenced prev iously was that India had maintained for two
years that it had no mailbox system in place and first claimed that it had a mailbox system in
place in its first written submission to the Panel.
- The basis for the ruling of the Bananas  Panel was that panel procedures should not
operate so as to permit surprise and prejudice of a party's interests.  That concept was
applicable here, where the interests of the Unite d States would be unfairl y disadvantaged if the
Panel did not consider, in the alternative, its Article 63 claim. 
(i) The Bananas  Panel had found that because of the way the panel request had been
written "it is not possible at the panel request stage, even in the broadest generic terms,
to describe what legal 'problem' is asserte d.  While a reference to a specific provision of
a specific agreement may not be essential if  the problem or legal claim is otherwise
clearly described, in the absence of some de scription of the problem, a mere reference to
an entire argument or simply to 'other' unspecified agreements or provisions is
inadequate under the terms of Article 6.2".22  The Panel therefore had indicated that
where a "problem" had been clearly describe d, a reference to a specific provision in a
specific agreement might not be necessary.  In this case, the United States had madeabundantly clear in its panel request and in its first written submission to the Panel thatthe "problem" was India’s failure to impl ement a mailbox system that (a) allowed
applicants to submit applications and (b) granted those applications the required legalstatus.  Assuming that India had a system in place, its failure to make that system known
to WTO Members was necessarily part of th is "problem".  This transparency issue
could not be separated from the central "pr oblem" of not establishing a useful mailbox
system, i.e. a system enabling applicants to  know how and where to submit applications.
                                          
     21The report of the Bananas  Panel was issued on 22 May 1997 and circulated as document WT/DS27/R.
     22Banana  Panel Report at para. 7.30WT/DS50/R
Page 20
(ii) India could not realistically claim surp rise, particularly because its own actions
had delayed full consideration of this issue.  The panel on Brazil - Measures Affecting
Desiccated Coconut  had noted regarding Brazil’s refusa l to consult that such a refusal
was "a matter which this Panel views with th e utmost seriousness.  Compliance with the
fundamental obligation of WTO Members to en ter into consultations where a request is
made under the DSU is vital to the operation of the dispute settlementsystem..... pursuant to Article 4.6 of the DSU, consultations are 'without prejudice to the
rights of any Member in any further proceedings'.  In our view, these provisions makeclear that Members' duty to consult is abso lute, and is not susceptible to the prior
imposition of any terms and conditions by a Member".
23  It was no less serious a matter
when a Member refused in consultations to  provide information of which it was aware,
or gave misleading information in consultations.  The Panel could and must respond tothis situation through a simple application of  the concept of estoppel:  where a party had
actively refused to respond concerning informa tion within its exclusive control, or had
given misleading information in consultations , that party should be held to its earlier
representations and estopped from contradicting them at a later stage in the proceeding. 
At the very least, the other party should be able to present arguments on that information
in the ongoing proceeding.  Any contrary re sult would act as an incentive for parties to
be as uninformative as possible in consulta tions and would lead to a breakdown in the
WTO dispute settlement process.
4.20 India  maintained that the United States had failed to make its claim based on Article 63 within
the time the procedures permitted and made the following further points:
- It was incorrect that India had only inform ed the United States of the mailbox system
currently in place in India in its first written s ubmission to the Panel.  The United States had
been informed about the means of filing in I ndia during the consultations held on 27 July 1996
with the United States and the European Comm unities.  The internal written record of the
Indian Government on the consultations held between India and the United States and the
European Communities on 27 July 1996 in Geneva indicated that the representative of India
had given the following information:
"In the meanwhile, product patent applications in the pharmaceutical and
agrochemical sector were being receive d under the provisions of the Patents
Act of 1970.  About 1,000 applications had been received so far, and are being
preserved in a manner which will facilitate establishing the necessary queuingorder as and when the necessary legislation is in place. The Patents Act 1970has provided the necessary legal scope for receipt of applications for productpatents even in sectors like pharmaceu ticals and agrochemicals though the
Patents Act 1970 does not provide for the processing of such applications or
for grant of product patents in those sectors."
The Indian record of the consultations further indicated that the United States had responded to
this information as follows:
"The US appreciated the update given by India. It was helpful to know that
around 1,000 applications had been filed."
                                          
     23WT/DS22/R, para. 287WT/DS50/R
Page 21
If the United States had been of the view that  the means of filing in question should have been
published in accordance with Article 63 of the TRIPS Agreement, notwithstanding the factthat the Patents Act of 1970 had been published, it could therefore easily have identified thisissue in the request for the establishment of a panel.
- Under the DSU, the complainant could not expand the scope of its factual and legal
claims after having made its first submission.   It was a well-established practice that the first
written submission of the complainant incorporated  all its legal claims and all the requests for
findings and recommendations it wished to submit to  the Panel.  This practice was reflected in
paragraphs 5 and 7 of the standard Working Procedures in Appendix 3 to the DSU which
stated that "At the first meeting with the pa rties, the Panel shall ask the party which has
brought the complaint to present its case" and th at "Formal rebuttals shall be made at a second
substantive meeting of the Panel".  It fo llowed from these procedures that the written
submissions for the first meeting must constitu te the full presentation of the case by the
complainant.  An indirect reflection of this principle was Article 10.3 of the DSU which stated
that "third parties shall receive the submissions of  the parties to the dispute to the first meeting
of the Panel".  This provision had obviously been drafted on the assumption that the first
submission informed the third parties fully of th e complainant's case.  However, not only third
parties’ rights would be curtailed if compla inants could introduce new claims and requests
after the first submission, but also the rights of the respondent. This had been recognized in the
recent report of the Panel on European Communities - Regime for the Importation, Sale and
Distribution of Bananas,  which had ruled that:
"For the purposes of determining whether a Comp lainant in this matter has made a claim, we
have examined its first written submission , as we consider that document determines the
claims made by a complaining party .  To allow the assertion of additional claims after that
point would be unfair to the respondent .....  In our view, the failure to make a claim in the first
submission cannot be remedied by later submissions....."  ( emphasis added by India )
24
The extremely tight timetables for panel work set out  in the DSU entailed the need for complainants to
carefully prepare their case in advance of the proceed ings and incorporate in their first submission all
their factual and legal claims.  According to para graph 12 of the Working Procedures annexed to the
DSU, five to eight weeks normally lapsed between the receipt of the first written submission of the
complainant and the receipt of the written rebuttals.  Thus, while the complainant could prepare its case
without any time constraint, the respondent normally ha d only five to eight weeks to prepare its rebuttal,
which created a significant imbalance between co mplainants and respondents.  According to the
Working Procedures, only two to th ree weeks normally lapsed between the first meeting of the Panel
and the receipt of the written rebuttals.  If the comp lainant were permitted to make new claims at the
time of the first substantive meeting, the time av ailable to prepare the rebuttal would therefore be
reduced by more than half and the existing imbalan ce would be exacerbated to the point of effectively
curtailing the respondent's right to be given sufficien t time for the preparation of its rebuttal  - a right
which Article 12.10 of the DSU specifically  accorded to developing countries. 
4.21 The United States  responded by denying that India had told it during the consultations on this
matter that it had a valid mailbox system in place and remained convinced that India did not have a valid
system in place.  It also argued that India had been given a reasonable opportunity to respond to the
United States' transparency claim under Article 63.
                                          
     24Paragraph 7.57 of the reportWT/DS50/R
Page 22
- The United States had no information as to what might be in an Indian staffer's notes
from the consultations held with India, but c ould state, as it had throughout this proceeding,
that until India's first written submission to the Panel, the Indian Government had never stated
that it had established a valid mailbox system.  Had the Indian Government made this assertionearlier, the United States would necessarily have included a reference to Article 63 of theTRIPS Agreement in its panel request.  In light of this surprise, equity demanded that the Panelbe able to take up the transpar ency issue, in the alternative.
- India had been given three opportunities to respond to the United States' alternative
transparency claim under TRIPS Article 63
25, and its last written submission on this issue had
been submitted seven weeks after the first substa ntive meeting of the Panel with the parties. 
India had therefore had a reasonable opportunity to  respond to this issue.  Furthermore, India
could not claim prejudice to third parties as a basis for refusing a claim under Article 63. 
Article 10.3 of the DSU stated that "[t]hird par ties shall receive the submissions of the parties
to the dispute to the first meeting of the Pane l".  The rules of the DSU provided for third
parties no more than the opportunity to present views to a panel.  Dispute settlement wasconducted first and foremost for the benefit of th e parties to the dispute, not for the benefit of
third parties or possible third parties.
(b) Substantive grounds
4.22 India  also disputed the United St ates' claims regarding the transparency obligations under
Article 63 on the basis of substantive grounds.  It recalled the arguments summarised in paragraph 4.7and 4.12 above and put forward the following additional arguments:
- Article 63 applied to developing countries only as of 1 January 2000.  According to Article
65.2 of the TRIPS Agreement, developing countries were entitled to delay up to 1 January2000 the date of application of the TRIPS Agreement except for its Articles 3, 4 and 5. Consequently, the provisions of Article 63 esta blished obligations applicable to India only as
of 1 January 2000.  It was true that the minutes of meetings of the Council for TRIPS madereference to a "Working Hypothesis" according to which national laws and regulations wouldbe notified as of the time that the co rresponding substantive obligation applied
26, but this
"Working Hypothesis" did not  reflect a common understanding among Members on their
obligations under the TRIPS Agreement.  It had been elaborated because the differences ofinterpretation among Members on the scope of  the transparency obligations during the
transitional period could not be overcome.  At the meeting of the Council for TRIPS of
21 September 1995, the Chairman had noted the existence of the "Working Hypothesis" but
then correctly had stated that the "basic differences of interpretation had remained".
27  A n
informal arrangement of this type did not esta blish obligations binding under international law
and could therefore not modify  rights or obligations under a WTO agreement.  The legal
situation under Article 63 had not been changed as  a result of the elaboration of the "Working
Hypothesis".
                                          
     25Reference was made to India's second written submission to the Panel, in its oral presentation at the second Panel meeting
and in its third written submission to the Panel.
     26IP/C/M/3, p. 8
     27Id.WT/DS50/R
Page 23
- As regards paragraph 1 of Article 63, whic h was the only paragraph the United States
had referred to at the first substantive meeting of the Panel with the parties while not having specified
any paragraph in its written submission, India took the view that the law on which India had based itsmeans of filing had been published.  This means of  filing had been established on the basis of the
Patents Act 1970 which, like all other acts of Parliame nt, had been published in the Gazette of India. 
According to Article 63.1, only "laws and regulations, and final judicial decisions and administrative
rulings of general application" had to be publishe d.  The decision of India to continue to receive
applications for pharmaceutical and agricultural ch emical product patents under the Patents Act was an
administrative measure of a kind that did not n eed to be published under Article 63.1.  Under that
provision, only the law on which this measure was based was subject to the publication requirement.
4.23 The United States  responded that India's claims were either inaccurate or irrelevant, for the
following reasons:
- It was not correct that Article 63 app lied to developing countries only as of
1 January 2000.  The Council for TRIPS had decided on 21 November 1995 that "[a]s of the time that a
Member is obliged to start applying a provision of the TRIPS Agreement, the corresponding laws and
regulations shall be notified without delay (norma lly within 30 days, except where otherwise provided
in the TRIPS Council)".
28  The TRIPS Council had also decided that amendments to laws and
regulations shall be notified within 30 days where no translation is required.29  India had participated in
these decisions and had not objected to them.  In fact, India had already notified the Patents
(Amendment) Ordinance 1994 on 6 March 1995 well before this clarifying decision had been issued by
the TRIPS Council.  India was well aware of the ob ligation to notify any amendments to its laws or
regulations regarding Article 70.8 in accordance with th is decision, but had failed to do so.  India's claim
that it did not have to do so because its mailbox system had been created through administrative
guidance was of no merit, because administrative guid ance could not be used to overcome the express
provisions in the Patents Act 1970 requiring the rejection of mailbox-type applications.
4.24 In response, India  reiterated that the method of filing curre ntly in place in India created all the
conditions necessary to enable the Government of India to determine the date of filing of patent
applications at the time when the products must be made patentable and, while referring to its earlier
statement that this apparently also had been th e conviction of the companies that had submitted 1,339
applications between 1 January 1995 and 15 February  1997, it stressed that the trend and pace of filing
applications established initially had been maintained.  This was a clear indication of the fact that the
companies concerned did not experience any difficulty or anticipate any difficulty  in the matter of filing
of their applications.
Article 70.9
4.25 It was not in dispute between the parties that India was subject to the provisions of
Article 70.9, given that it did not provide patent pr otection for pharmaceutical and agricultural chemical
products as of 1 January 1995.  Nor was it disputed th at the Indian executive authorities did not have the
legal powers under present Indian law to grant exclus ive marketing rights and that such legal powers
                                          
     28Paragraph 2.1 of  document IP/C/2
     29Id. at paragraph 2.2WT/DS50/R
Page 24
would have to be obtained in order to grant ex clusive marketing rights in accordance with the
obligations under Article 70.9.  The main issues betw een the parties concerned the questions of the
timing of when the Indian Executive needed to have the legal authority to implement the provisions of
Article 70.9 and of the scope of the term "exclusive  marketing rights" as stipulated in Article 70.9.
(a) Timing
4.26 The United States  contended that, because no formal system existed today in India governing
the grant of exclusive marketing rights pursuant to  Article 70.9 and this requirement was applicable in
India from 1 January 1995, India was not in conf ormity with its obligations under Article 70.9.
4.27 India  responded by arguing that it had not denied any requests for exclusive marketing rights
and that Article 70.9 did not require WTO Members to  make exclusive marketing rights available in
their law prior to the events th at triggered the obligation to gr ant an exclusive marketing right.
According to the terms  of Article 70.9 as well as its context  and object and purpose , exclusive
marketing rights must be accorded to specific pr oducts when these were eligible for such rights
(emphasis by India ).  As with Article 70.8, India based its argumentation on the principle set out in
Article 31 of the Vienna Convention on the Law of Treaties.30
The terms of the TRIPS Agreement
- According to Article 70.9, exclusive marketing rights must be granted by India to a
pharmaceutical or agricultural chemical product fo r which a patent application had been made
only after the product met the following conditions:
(a) A patent application  had been filed in respect of that product in another Member
of the WTO after 1 January 1995 .
(b) The other Member of the WTO had granted the patent .
(c) The other Member had approved the marketing  of the product.
(d) India had approved the marketing  of the product.
(emphases above by India )
- The last step in the procedures prior to eligibility - marketing approval in the Member
not according patentability - was a step controlled by the Member that must subsequently grant
exclusive marketing rights or patentability.   It was consequently not an abstract category of
products that was eligible for exclusive marketing rights under Article 70.9;  the individualproducts that were eligible would be known before the duty to accord exclusive marketing
rights arose.  Article 70.9 was a transitional pr ovision the application of which was triggered
by specified future events.
31
                                          
     30See paragraph 4.9 above
     31India's views on the fundamental purpose of  the transitional provisions concerning Article 70.8 and 70.9 are reflected in
paragraph 4.9 above.WT/DS50/R
Page 25
- The United States had not presented evid ence showing that all the above-mentioned
events had occurred with respect to a par ticular pharmaceutical or agricultural chemical
product.  The principal products covered by Ar ticle 70 were drugs and medicines.  It took
considerable time to obtain a patent for such  products and then to obtain the marketing
approval first in the country of origin and th en in the country in which exclusive marketing
rights were sought under Article 70.9.  So far, no request for exclusive marketing rights hadbeen received by the Government of India.  Th ere was, therefore, no question of India having
denied exclusive marketing rights to any pr oduct entitled to such rights under Article 70.9 of
the TRIPS Agreement. 
- According to the text of Article 70.9, an excl usive marketing right must be granted for a
pharmaceutical or agricultural chemical produc t only "until a product patent is granted or
rejected in that Member".  The terms of Article 70.9 thus explicitly accorded developing
country Members the right to choose between the grant of patentability and the grant of
exclusive marketing rights with respect to  each pharmaceutical or agricultural chemical
product for which a patent application had been made. It would be logically inconsistent with
this right to opt out of the obligation to gran t exclusive marketing rights if Article 70.9 were
interpreted to oblige Members to provide in th eir legislation for the general availability of
exclusive marketing rights as from 1 January 1995.
Context- The obligation under Article 70.9 needed to be distinguished from those under other
provisions of the TRIPS Agreement.  The TR IPS Agreement made a clear distinction between
obligations to change the domestic law govern ing intellectual property rights and obligations
to take, or refrain from taking, specific measures in relation to intellectual property rights.  For
instance, according to Article 27 of the TRIPS Agreement " patents shall be available  for any
invention".  The obligation created by this prov ision was thus not merely to take a specific
measure but to change the law to make futu re measures possible.  The same applied to
Article 42 of the TRIPS Agreement, according to which "Members shall make available to
right holders civil j udicial procedures  concerning the enforcement of any intellectual property
right covered by this Agreement".  Articles 27 and 42 of the TRIPS Agreement thus set out
requirements to change the domestic law to cr eate legal opportunities for inventors and right
holders.  These provisions were violated when the Member failed to adjust its law to create
those opportunities and complaints  could therefore be brought before  the opportunity had
actually been denied to a particular inventor or  right holder.  Most of the basic provisions of
the TRIPS Agreement were of this nature, such as Articles 26.1, 28.1, 32, 36, 39.2 and 41.1. Articles 45, 46, 47, 48, 50, 53 and 56 stated that the competent authorities " shall have the
authority " to perform certain acts.  In the case of all these provisions, the drafters thus chose
terms that made it explicit that the domestic la w of Members must give certain persons and
authorities defined rights.  If the drafters had m eant to do so in the case of exclusive marketing
rights, they would therefore have chosen term s such as "the competent authorities shall have
the authority to grant exclusive marketing righ ts" or "exclusive marketing rights shall be
available".  Instead, they had chosen terms clear ly indicating that particular products shall be
granted such rights after they met certain conditions.  Article 70.9 of the TRIPS Agreement,therefore, did not fall into this category of norms.  ( emphases above by India )WT/DS50/R
Page 26
Object and purpose
- Article 70.9 formed part of the transitional arrangements for developing countries and
its object and purpose could theref ore only be ascertained in the light of these arrangements.32 
According to Article 70.9, an exclusive marketin g right had to be granted only for a maximum
period of five years.  This five-year peri od corresponded to the five-year period by which
developing country Members might, according to Article 65.4, delay the application of theprovisions on product patents in areas of tec hnology not protectable on 1 January 1996, i.e. the
period between 1 January 2000 and 1 January 2005.  The purpose of Article 70.9 was thus to
give inventors of pharmaceutical and agricultura l chemical products the economic privilege of
an exclusive marketing right for the five-year period preceding 1 January 2005 if theirproducts were denied patentability even bey ond the normal five-year transitional period for
developing countries.  It would be completely contrary to this purpose to interpret Article 70.9
as giving rise to obligations before 1 January 2000.  That Article 70.9 essentially related toevents that the drafters expected to take place during the period covered by Article 65.4became obvious when one analysed the practi cal operation of Article 70.9.  In order to be
eligible for the grant of an excl usive marketing right, a United States' inventor must have filed
a patent application in the United States after 1 January 1995 and have been granted the patentin the United States and marketing approval in  both the United States and in India.  Common
sense and practical experience i ndicated that all these steps took a long time and normally the
products in question would not get on the market in a developing country before the expiry of
the ten-year transitional period.  The provision had been made for the grant of exclusivemarketing rights of up to five years only to  tide over the gap between the obtaining of
marketing approval and the grant of patent  protection for the product in question in a
developing country benefiting from the ten-year tr ansitional period, so that inventions that met
the criteria for patentability on or after the date  of entry into force of the Agreement would
become eligible for protection in such c ountries by the time that protection became of
commercial significance, either by the grant of  a patent after the expiration of the ten-year
period or by an exclusive marketing right for products getting marketing approval before that
time.  Commentators had confirme d these practical implications.
33 
- That the object and purpose of Article 70.9 we re not to oblige developing countries to
make exclusive marketing rights available i mmediately upon the entry into force of the WTO
Agreement but to tide over the gap between ma rketing approval and patentability during the
five years preceding the end of the ten-year transitional period could also be deduced from
commercial realities.  In general, it simply ma de no commercial sense to obtain an exclusive
marketing right for a five-year period unless that  period was immediately followed by the grant
of the exclusive rights to be conferred on patent owners under Article 28 of the TRIPSAgreement.  If the inventor of a pharmaceutical  product obtained an exclusive marketing right
in 1997 and made his product known and widely used in India, his competitors could enter themarket in the year 2002 and free-ride on the invent or’s marketing efforts for three years.  Only
in the year 2005 could the inventor again enjoy th e exclusive rights of a patent owner.  Thus,
even if an inventor had succeeded in obtaining  a patent in the United States and marketing
                                          
     32India's views on the fundamental purpose of  the transitional provisions concerning Article 70.8 and 70.9 are reflected in
paragraph 4.9 above.
     33Reference was made to Adrian Otten, "Improving the Playing Field for Exports:  The Agreements on Intellectual Property,
Investment Measures and Government Procurement" in GATT-Uruguay Round:  Nine Papers , Bern:  Verlag Staempli, 1995, pp.
79-80;  Marco C.E.J. Bronckers, "The Impact of TRIPS:  Intellectual Property Protection in Developing Countries", Common
Market Law Review , 1994, Vol. 31, p.1245;  Adrian Otten and Hannu Wager, "Compliance with TRIPS:  The Emerging World
View",  Vanderbilt Journal of Transnational Law , 1996, Vol. 29, p.408.WT/DS50/R
Page 27
approval in the United States and India within  a period of less than five years, he would
nevertheless in most situations have a commerc ial interest to request exclusive marketing
rights only in the year 2000 so as to ensure  a seamless transition from exclusive marketing
rights to the exclusive rights of a patent owner. The economic purposes of Article 70.9 would
thus not be furthered if it were interpreted to give rise to obligations before 1 January 2000. 
- Article 70.9 obliged a Member to grant ex clusive marketing rights for a particular
product only "until a product patent is granted or rejected in that Member".  Under Article 70.9
developing countries were thus explicitly given the right to choose between the grant ofexclusive marketing rights and the grant of pa tentability.  The economic impact of the grant of
an exclusive marketing right was very similar to that of the grant of the exclusive rights to be
conferred under Article 28 on the owners of patents.  Moreover, exclusive marketing rightsmust be granted even for those products for whic h a patent could be rejected consistently with
the TRIPS Agreement.  The function of Article  70.9 was thus not only to create rights for
holders of patents in other Members but also to  give developing country Members an incentive
to opt for patentability.  Under the United States ’ interpretation the provision could not fulfil
this function. 
- According to the United States’ interpre tation of Article 70.9, developing countries
would be obliged to take a decision on the patentability of pharmaceutical and agricultural
chemical products immediately while being able to postpone that decision with respect to all
other products until 1 January 2000.  This interp retation therefore frustrated the basic purpose
of the transitional regime established by Articles 65 and 70, which was to give developingcountries the right to postpone sensitive decisions  beyond the date of entry into force of the
WTO Agreement.  In fact, this interpretati on would turn Article 70 on its head because it
would oblige developing countries to deci de on the patentability of pharmaceutical and
agricultural chemical products before  having to implement the TRIPS Agreement with respect
to other products ( emphasis by India ). 
- Examination of the 14 notifications submitted to the TRIPS Council under Article 63.2
of the TRIPS Agreement showed that not one of  these notifications provided that exclusive
marketing rights were made available as from 1995 in the domestic law.
4.28 The United States  was of the view that India had an immediate obligation to implement
Article 70.9 and, since India had admitted that it had taken no steps to establish a mechanism by whichpersons who had filed mailbox appli cations could obtain and enforce exclusive marketing rights, it was
out of compliance with its obligations under the Ag reement.  As a result, the United States was,
according to Article 3.8 of the DSU, presumed to be adversely impacted.  India bore the burden ofrebutting the charge
34, but had failed to do so.  In support of this view, the United States made the
following arguments:
- As was the case with Article 70.8, India had made it clear that modifications to its
intellectual property system were necessary to implement the requirements of Article 70.9.35 
While India was correct in its claim that Memb ers were free to determine the manner in which
                                          
     34Reference was made to the Appellate Body report on "United States - Measure Affecting Imports of Woven Wool Shirts
and Blouses from India" (Wool Shirts) , WT/DS33/AB/R, p. 13.  Additionally, the Superfund  report made clear that "the impact
of a measure inconsistent with [an applicab le agreement] is not relevant for a determ ination of nullification or impairment by the
CONTRACTING PARTIES" ("United States - Taxes on Petroleum and Certain Imported Substances" (Superfund)  adopted on
17 June 1987, BISD S34/136, at 156).
     35Reference was made to the arguments reflected in paragraph 4.3 above.WT/DS50/R
Page 28
they implemented their obligations, Members were not free to determine whether their
obligations must be implemented at all.  Indi a had repeatedly made clear that, unless its laws
and regulations were modified, it would not  have implemented its obligations under
Article 70.9.  Having made this matter clear, it was unable to assert now that, because it haddiscretion as to the manner in which it fulfille d its Article 70.9 obligations, it could decide to
do nothing.
- Regarding India's claim that it was in co mpliance with its obligations under Article 70.9
because no person had been denied exclusive marketing rights in India and that this was amatter for future implementation, the United States  said that right holders had not been denied
exclusive marketing rights because they had not sought such rights and they had not soughtsuch rights because there were no such rights under Indian law or regulations to seek.  Rightholders would not even know to whom they s hould apply, let alone the procedures and costs
involved or, since India had also failed to es tablish a mailbox application system, who would
be eligible to request such protection had a syst em been in place.  Even now, nearly two and a
half years after the TRIPS Agreement had come  into force, India had not stated where
applications could be filed, what procedures would be fo llowed, what authority would be
responsible for reviewing applications, and the wa y in which rights would be enforced.  In the
absence of relevant information, it was impossible for a national of a WTO Member to requestsuch protection, even if it were available.
- Even though the level of actual damages suffered by United States' interests was
irrelevant, since the United States had made a prima facie  showing that India had failed to
implement its obligations under Article 70.9 and it was, consequently, unnecessary for theUnited States to identify particular companies th at would be eligible for exclusive marketing
rights, the United States understood from its priv ate sector that, had a mailbox system been in
place since 1 January 1995, and had exclusive marketing rights been provided in accordancewith Article 70.9, some companies would have  begun seeking exclusive marketing rights
under Indian law.  Their ability to do so was dependent on the Indian health authoritiesprocessing their applications, but they had me t all the requirements for such protection other
than those dependent on the actions of the Indian  health authorities.  Evidence of this could be
found in the letter to Ambassador Barshefsky from Dr. Harvey E. Bale, Jr.
36
- The obligation in Article 70.9 to establish a system for the grant of exclusive marketing
rights was not distinguishable from any othe r obligation in the TRIPS Agreement and did
require changes in India's laws.  Article 70.9, like Article 27, required the grant of certainrights upon the fulfilment of specified conditions.  In the case of Article 27, a patent must be
granted if an application was filed that was drawn to an invention that met the criteria of
novelty, non-obviousness and industrial applica tion.  In the case of Article 70.9, exclusive
marketing rights must be granted if a mailbox a pplication was filed that met the criteria set out
in Article 70.9.  Both provisions demanded the establishment of a system for the grant of thespecified rights.
- As with the obligation to establish a fu lly functional mailbox system under Article 70.8,
the obligations in Article 70.9 established e xpectations on the part of WTO Members and
potential applicants that exclusiv e marketing rights would be available.  As long as India did
not have in place a system for the grant of thos e rights, potential applicants would not be able
to request the grant of such rights, let alone  make informed business decisions with the
understanding that such rights might be request ed and granted.  The expectations created by
                                          
     36The letter referred to above in paragraph 4.11 and footnote 16 (see also Annex 3 of this report)WT/DS50/R
Page 29
the inclusion of Article 70.9 in the TRIPS Agreement would be frustrated until India had
established a clear and stable system for the grant of such rights.  The Superfund  case was thus
relevant to this matter because it clarifie d that Members were obligated "to protect
expectations" of other Members as to the "c ompetitive relationship" between their respective
products.  Moreover, in applyi ng the principle behind the Superfund  decision to the present
case, there was no need to wait for a violation to take place or speculate on whether it would
take place, since the present case concerned a failure to take an affirmative action to
implement a specific obligation in a WTO agreement. 
- The grant of an additional five years in Article 65.4 to implement the provisions on
product patent protection in Article 27 of the TR IPS Agreement had been balanced against the
inclusion of obligations to establish fully functional mailbox and exclusive marketing rights
systems in Articles 70.8 and 70.9.  India could not now be permitted to pocket the benefit of anadditional five years of transition and not implement the corresponding obligation.  The
Appellate Body recently had made this clear in the Wool Shirts  case, in which India had argued
that under the Agreement on Textiles and Clot hing (ATC) the burden of proof should be
shifted to the importing country taking temporary safeguard action.  In rejecting the Indianargument, the Appellate Body had clarified that the ATC was a transitional arrangementcontaining "carefully negotiated language..... whic h reflects an equally carefully drawn balance
of rights and obligations of Members.....".
37  This characterization was equally applicable to
the balance between the trans itional rules in Article 65.4 of the TRIPS Agreement and the
obligations established in Article 70.8 and 70.9 of the TRIPS Agreement.  As the AppellateBody succinctly had stated in the Wool Shirts  report "[t]hat balance must be respected".
38  The
quid pro quo  for taking advantage of the transitional period was the grant of exclusive
marketing rights.  Far from turning Article 70.9 on its head, this represented the core balance
in this area of the Agreement.  If India did not want to grant patents, then it must grant
exclusive marketing rights;  conversely, if it di d not want to grant exclusive marketing rights,
then it must grant patents.
- There was nothing in the Agreement indicatin g that the obligation to provide exclusive
marketing rights arose only after 2000.  When the drafters of the Agreement intended atransitional period to apply to a particular obligation, they had specifically included the
transition in the Agreement.  There was no such  transition with respect to the obligations in
Article 70.9.  On the contrary, Article 70.9 specifi cally stated that the obligation to provide
exclusive marketing rights applied "notwithstandi ng the provisions of Part VI" of the TRIPS
Agreement, which established the transitional pe riods.  As a result, just as with Article 70.8,
the obligations of Article 70.9 must be fulfilled as  of the date of entry into force of the WTO
Agreement.
- India had provided no support for its argume nt that the obliga tion to comply with
Article 70.9 had not yet arisen.  None of the co mmentators India had quoted  had stated that it
was impossible for a pharmaceutical or agricultura l chemical product to fulfil all the criteria
for the grant of exclusive marketing rights.  They  all left open the possibility that those criteria
might be fulfilled long before the end of the transitional period and none of them suggestedthat the obligation to implement Article 70.9 did not arise on 1 January 1995.  Moreover, as
                                          
     37Appellate Body Report on "United States - Measures Affecting Imports of Woven Wool Shirts and Blouses from India"
p.16, citing the Appellate Body Report on "United States - Rest rictions on Imports of Cotton a nd Man-made Fibre Underwear", 
adopted 25 February 1997, WT/DS24/AB/R, p.15
     38Id.WT/DS50/R
Page 30
Dr. Bale's letter39 showed, there was at least one company that was seeking exclusive
marketing rights in India in respect of two pharmaceutical products.
4.29 India  rebutted by stating that the United States had not responded to its arguments, based on
the methods of interpretation set out in the Vienna  Convention on the Law of Treaties, demonstrating
that the obligation to accord exclusive marketing righ ts was triggered by the events listed in Article 70.9.
 Neither the wording of the provision, nor its c ontext, nor its object and purpose supported the United
States' claim that the provision required developing countries to enable their executive authorities to
grant such rights as from the en try into force of the WTO Agreement.  India made the following
comments on the United States' arguments:
- The United States had sidestepped the results of India's legal demonstration by asserting
that, according to Article 3.8 of the DSU, trade damage was presumed and that it was thereforenot necessary to speculate on whether products had become eligible for exclusive marketing
rights.  That response did not deal with the in terpretative issue before the Panel, which was
what triggered the application of the obligations  under Article 70.9:  the entry into force of the
WTO Agreement in 1995 or the series of future ev ents listed in that Article.  The principle that
a failure to observe an obligation was presumed to cause nullification or impairment wastotally irrelevant in addressing the interpre tative question of whether the obligation already
existed. 
- The principles recognized by the GATT CONTRACTING PARTIES, that the basic
provisions of the GATT established conditions of competition and that mandatory legislation
could constitute a measure within the meaning of those provisions even before the legislation
was applied in a concrete case, were equally irrelevant, because they simply did not addressthe issue which was before this Panel, namely as of when  certain conditions of competition
had to be established and as of when  mandatory legislation could be considered to be
actionable ( emphasis by India ).  It would be logically untenable to use these principles to turn
transitional arrangements designed to postpone  the applicability of obligations into current
obligations forcing Members to immediately em power their executive authorities to take the
measures necessary to meet the obligations a pplicable at the end of the transitional period. 
- If the United States' argument that it would be  easier to plan business if the transitional
provisions of the TRIPS Agreement were interpre ted to require legislative changes before the
end of the transitional period were accepted, it woul d have to be applied to all the transitional
arrangements contained in the WTO agreements. Thus, it would arguably be easier for Indiantextiles’ producers to plan business if all textiles-importing WTO Members had legislation
presently in place providing for the elimination of  textiles import restrictions on the date of the
termination of the Agreement on Textiles and Clothing. Unfortunately, however, the obligationto bring the textiles restrictions into conform ity with the GATT would arise only in the future
just as the obligation to grant patents or excl usive marketing rights only arose in the future. 
Until the end of the transitional periods accorded under different WTO agreements, the sourceof predictability could therefore only be th e relevant WTO agreement. The CONTRACTING
PARTIES had never applied the principles in voked by the United States in the manner
suggested by the United States.  To do so would constitute an unanticipated change in
obligations that could not legitimately be broug ht about by way of interpretation, and to do so
only in the field of intellectual property rights  but not in the many other areas covered by
transitional arrangements would be fundamentally unfair.
                                          
     39The letter referred to above in paragraph 4.28, third indentWT/DS50/R
Page 31
- India's research had not revealed any case in which a product for which a patent
application had been filed after 1 January 1995 had received marketing approval in India and
had thus become eligible for exclusive marketing rights in India under Article 70.9.  The letterfrom Dr. Bale produced by the United States mere ly stated that one company "has received a
patent and marketing approval for a drug in the United States and Europe and is ready to
request the grant of exclusive marketing rights  from the Indian health authorities". The request
that this company intended to submit to the I ndian health authorities was obviously a request
for marketing approval;  only when that a pproval had been obtai ned would this product
become eligible for exclusive marketing rights.  There was no evidence available in India of
any such case.  It should also be noted that be fore any applicant could make such a request, it
must first request the Indian health authorities,  i.e. the Drugs Controller General of India, to
grant marketing approval.
- Although it was difficult to provide evidence or state with absolute certainty when
products would start becoming eligible for exclusive marketing rights under Article 70.9, a
delay of ten or more years between the date of filing of applications for patents and the grant
of marketing approvals seemed likely.  In I ndia, registration and a pproval of new drugs
required submission of t echnical data on safety and efficacy as well as analytical specifications
in relation to steps of manufacture, in-process c ontrol and marketing status in other countries,
clinical trial data generated w ithin the country and examination labels and package inserts. 
The technical data were examined in consultati on with the experts.  The final bulk drug was
required to be tested at the Central Drugs Labor atory, Calcutta, as per analytical specifications
furnished.  A new drug derived out of cell-line and recombinant DNA based products alsoneeded approval from the Ministry of Sc ience and Technology and the Ministry of
Environment.  If a new drug was already mark eted in a number of countries and pre-clinical
and clinical data generation was adequate, Phase III mu lti-centric clinical trial was required to
be carried out on a protocol appr oved by the Drugs Controller General of India.  If the data
were complete, as per the requirements of Sc hedule Y of the Drugs and Cosmetics Rules, an
average time of three years was taken for approv al and registration of new molecules with a
maximum period of eight to ten years.  Di scovery of drugs in India for the purpose of
registration and approval took mu ch longer as, at that point of  time, there might not be access
to scientific data available on the drug publis hed in international journals and literature. In
respect of agricultural chemicals, the time sc hedule for grant of marketing approvals would
depend on the submission of satisfactory data by  the applicant and the satisfaction of the
Registration Committee constituted under the Insecticides Act.  As in the case ofpharmaceuticals, it could not be stated with ab solute certainty as to when products would
become eligible for exclusive marketing rights under Article 70.9.
4.30 The United States  reiterated that it knew of two pharmaceutical products that were now
becoming eligible for exclusive marketing rights under Article 70.9.  The only step remaining was the
establishment by India of a system for the grant of such rights so that an application for marketing
approval/exclusive marketing rights could be f iled and processed.  The United States' pharmaceutical
company Eli Lilly Corp. had two pharmaceutical products that were the subject of a patent application
filed in the United States after 1 January 1995 and had been granted patent protection and marketing
approval after that time.  This company was in th e process of determining how to apply for exclusive
marketing rights in India and had asked the United States' Government for any information it had on the
process for doing so.  The United St ates could not say, for example, whether the company must indicate
in its application for marketing approval that it was a candidate for exclusive marketing rights, and
whether it must include a fee to preserve its ability to  get those rights.  Alternatively, the United States
could not say whether any special procedure for th e grant of exclusive marketing rights had been
established (i.e. whether the application for marketin g approval would result automatically in the grant
of exclusive marketing rights).  The United Stat es indicated that companies would be wary aboutWT/DS50/R
Page 32
proceeding without knowing what the system for the gran t of such rights was, for fear of losing their
ability to receive those rights because of some pro cedural problem.  The United States' Government had
no information on the Government of India’s in tended system for the grant of these rights.
(b) The scope of "excl usive marketing rights"
4.31 As regards the exclusive marketing rights to be provided in accordance with the standard set
forth in the Agreement, the United States  argued that Article 70.9 required India to grant exclusive
marketing rights that were not subject to compulso ry licences or any other form of use without the
permission of the right holder.  Since Article 70.9 di d not define the term "exclusive" when used with
marketing rights, either explicitly or through referen ce to other provisions of the TRIPS Agreement, this
unqualified term should be applied based on its ordinary meaning.1  The term "exclusive" was defined in
the Oxford English Dictionary as meaning "[h] aving the power or the function of excluding" or
"[e]xcluding all other persons from the rights conferred".1  The ordinary meaning of the terms used
would therefore indicate that no competitors were permitted on the market without the consent of the
holder of the "exclusive" marketing rights.  There wa s no basis to believe that the drafters had intended
to depart from this ordinary meanin g of "exclusive marketing rights".
4.32 India  responded that the scope of exclusive marketing rights was not an issue relating to an
existing measure and could therefore not be the subject  of a ruling by the Panel.  It made the following
arguments to support this statement:
- The United States was seeking a ruling on a potential future measure.  The United States
was apparently asking for this finding because of concerns it had about the nature of someprovisions in the lapsed Patents (Amendmen t) Ordinance 1994 and the Patents (Amendment)
Bill of 1995, which would have accorded the Government discretionary powers to subjectexclusive marketing rights to certain conditions .  However, even the said Ordinance and Bill
did not make it mandatory for the executive au thorities to grant exclusive marketing rights
subject to compulsory licensing or other use.  However, since neither of these instruments was
in force in India, the scope of exclusive marke ting rights was a matter that had not yet arisen. 
The United States was thus essentially asking the Panel to make a declaratory judgement on apotential future action that the ex ecutive authorities of India might be authorized to take on the
basis of a law Parliament might adopt.
- The WTO dispute settlement procedures did not permit rulings on potential future
measures.  Article 64 of the TRIPS Agreement st ated that the provisions of Articles XXII and
XXIII of GATT 1994 as elaborated and applied by the DSU shall apply to consultations and
the settlement of disputes under the TRIPS Agreement except as otherwise specificallyprovided in that Article.  The texts of Article XXIII:1(a) of GATT 1994, Article 19.1 of the
DSU and Article 22.8 of the DSU ma de clear that the provisions defining the cause of action,
the remedy available and the scope for retaliation all presupposed the existence of a measurethat was currently  nullifying or impairing benefits and capable of being brought into
                                          
     40Reference was made to the Vienna Convention on the Law of Treaties, Article 31.1.  The Appellate Body has recognized
that both Article 31 and Article 32 of the Vienna Convention apply to disputes under the WTO Agreement.  Appellate Body
Report on "Japan-Taxes on Alcoholic Beverages" (adopted 1 November 1996), WT/DS8/AB/R, WT/DS10/AB/R,WT/DS11/AB/R, pages 10-13.
     41Reference was made to the Oxford English Dictionary (Second Edition 1989), volume V, p. 510, definitions 1 and 6.b,
respectively.  Other relevant definitions include: "[e]xcluding (some other) from participation" (definition 2); "[e]xclusively
confined to" (definition 6.b); "[s]trictly limited to the object or objects designated" (definition 7); "[e]mployed or followed  to the
exclusion of everything else; single, sole" (definition 8).WT/DS50/R
Page 33
conformity with the obligations under the WTO Agreement ( emphasis by India ).  The only
WTO procedure that permitted the resolution of in terpretative issues in the abstract was that
set out in Article IX:2 of the WTO Agreem ent, according to which the WTO Ministerial
Conference and the General Council had the pow er to adopt authoritative interpretations. 
- The customary practice of the CONTRA CTING PARTIES to GATT 1947 had been to
examine under Article XX III only measures that were currently applied.  The
CONTRACTING PARTIES had never ruled on potentia l future measures or what type of law
might be required to meet future  obligations ( emphasis by India ).  They had proceeded on the
assumption that a contracting party would meet  its obligations under the GATT as long as its
legislature had not yet taken a decision to the c ontrary or had left the executive authority the
option of acting in accordance with the GATT.42  According to Artic le XVI:1 of the WTO
Agreement "the WTO shall be guided by th e..... customary practices  of the CONTRACTING
PARTIES to GATT 1947.....".  In  Japan - Taxes on Alcoholic Beverages , the Appellate Body
had noted that Article XVI:1 of the WTO Agr eement brought the legal history and experience
under GATT 1947 into the realm of the WTO in  a way that ensured continuity and
consistency.  The customary practice of th e CONTRACTING PARTIES,  while not binding on
panels, should be taken into account by panels wh ere relevant to any dispute.  The Panel could
therefore not deviate from the customary pr actice of the CONTRACTING PARTIES without
due cause and justification. 
- Panel rulings on potential future measures would be regarded by the WTO Membership
as an unacceptable interference in domestic decision-making processes.  GATT contractingparties had generally refused to consult under the formal dispute settlement procedures onmeasures they had not yet taken.  When asked to consult on provisions in the Treaty of Romethat accorded the European Communities the competence to impose quantitative restrictions
inconsistently with the GATT, the Europ ean Communities had pointed out that "many
contracting parties had permissive legislation of a general character which, if implemented in
full, would enable them to impose restrictions  in a manner contrary to Article XI.  These
countries were, however, not required to c onsult with the CONTRACTING PARTIES about
their possible intentions as regards th e implementation of such legislation".
43  The United
States had shared this view in the past, as illust rated by its reaction to the report of the panel on
Wine and Grape Products44 which had examined a law which mandatorily  imposed on the
executive authority the requirement to apply a definition of industry for the purposes of
anti-dumping and countervailing duty investigati ons of wine and grape products that was
inconsistent with the To kyo Round Subsidies Code ( emphasis by India ).  When this report was
adopted in 1992, the United States ha d declared that it "reserved its position of opposition to
the Panel’s view that it was ripe for the Pane l to consider a matter that did not involve an
actual initiation of an action, but rather an abstract question  whether a proceeding, if
initiated, would have been consistent with the Subsidies Code"45 (emphasis by India ) .   I n  a
case involving countervailing duties, the United St ates had thus formally objected to a panel
                                          
     42Reference was made to the su mmary of this practice in United States - Standards for Reformulated and Conventional
Gasoline :  "The Panel observed that it had not been the usual practice of a panel established under the General Agreement to rule
on measures that, at the time the Panel's terms of reference were fixed, were not and would not become effective."
     43Reference was made to GATT document L/778.
     44Reference was made to the Panel Report on "United States - Definition of Industry Concerning Wine and Grape
Products", adopted on 28 April 1992, BISD 39S/436.
     45Reference was made to GATT document SCM/M/59, p.31.WT/DS50/R
Page 34
examination of a future action  prescribed by its existing law;  in th e present case involving
intellectual property rights, the United States was seeking the examination of a measure that
was not even referred to in any existing law.  The Members of the WTO had often expressedlegitimate concerns regarding th e future policies of their trad ing partners, for instance about
possible action under Section 301 of the Un ited States Trade Act of 1974 or about
protectionist bills under considera tion by the United States Congress.
46  However, the view
had nevertheless prevailed that formal intern ational inquiries into matters still under domestic
consideration were an inappropriate and unwelcome interference into the domesticdecision-making process, and the drafters of the  DSU therefore rightly had not authorized
panels to make declaratory judgements on potentia l future measures.  Questions of striking an
appropriate balance of interests at the nati onal level between the holder of an exclusive
marketing right, on the one hand, and society, on the other, as well as of the conformity ofpossible legislation with the basic provisions  of the Constitution of India and the various
decisions of the Apex Court which had ela borated these provisions were outside the
jurisdiction of a dispute settlement panel.
4.33 The United States  responded that it was not seeking speci fic or declaratory relief;  it was
seeking a finding by the Panel that identified thos e obligations India had failed to implement.  The
Agreement required, and India had not contested this, th at exclusive marketing rights be granted so that
competitors would not be permitted on the market wit hout the consent of the right holder.  India had
entered into these obligations w ith a full understanding of what im plementing these obligations would
entail and could not now claim that it was permitted to rebalance, as the Appellate Body had stated inthe Wool Shirts  case, these obligations off against other in terests.  Only full implementation by India
would ensure that the balance that had been struck in the TRIPS Agreement was respected.
4.34 India  considered this revised request for a findi ng also a request for a specific remedy, only
more artfully disguised.  The United States was not claiming that India had accorded exclusive
marketing rights under which "competitors of the owner of such right (are) permitted on the market
absent the owner’s consent";  it claimed that India ha d not provided any exclusive marketing rights.  The
specific finding sought by the Unite d States did not relate to the legal consistency of a measure that
India was claimed to have taken, but to the ways in which India was to implement its obligations.
4.35 The United States  remained of the view that, instead of asking for specific or declaratory
relief, the finding that it was seeking was a dete rmination from the Panel that India's laws and
regulations were not in compliance with its ob ligations under Article 70.9 to provide exclusive
marketing rights meeting the standard set forth in th e Agreement.  It did so for the following reasons:
- Unlike many other provisions of the WTO agreements, the TRIPS Agreement contained
obligations to act affirmatively to establish rights, procedures and remedies in respect of
intellectual property.  The United States was not  alleging that India had taken an action that
was inconsistent with its obligations under the TRIPS Agreement;  on the contrary, it believedthat India had failed to take affirmative actions that it was required to take under the TRIPSAgreement.  In defining how I ndia had violated the TRIPS Agr eement, the Panel must indicate
with some specificity which affirmative obligation India had not met.  It was important todistinguish between the request that the Panel define how India was out of compliance with its
TRIPS obligations and the request that the Pa nel suggest a way in which India could meet
those obligations.  The requested finding above represented an example of a request to define
what obligations India had not met.  The request  that the Panel suggest that India implement
these obligations in a manner similar to the way in which Pakistan was implementing these
obligations was an example of the second cat egory.  India was attempting to blur the
                                          
     46Reference was made to the GATT Council discussion on unilateral measures in February 1989 (GATT document C/163)WT/DS50/R
Page 35
distinction between these two categories and betw een the affirmative obligations in the TRIPS
Agreement and the prohibitions found in other WTO agreements.
- India had not contested, nor could it contes t, that the TRIPS Agreement required that
exclusive marketing rights be granted so th at competitors were not permitted on the market
without the consent of the right holder.  There was no basis in the TRIPS Agreement to
conclude that the drafters had intended to depa rt from the ordinary meaning of the terms used.
 Whenever they had intended a type of right to be subject to permissive or mandatoryexceptions, they had provided specifically for su ch exceptions in the text defining the right.
47 
Likewise, where the permissive or mandatory ex ceptions applying to one type of right were
intended to apply to another type of right, this had specifically been provided in the text of the
Agreement.48  Therefore, had the drafters of the Agreement intended the exclusive marketing
rights to be subject to a permissive or manda tory exception, they would have either included
such exception in the text of Article 70, or th ey would have incorporated by reference an
exception in another part of the Agreement.  India had failed to grant to the holder ofmarketing rights the exclusive right to control the entry of competitors onto the market during
the period of those rights and, thereby, to implement Article 70.9. 
Request for a suggestion that  India implement its obligat ions under Article 70.8 and 70.9
in a manner similar to the way in which Pakistan had implemented these obligations
4.36 The United States  requested the Panel to suggest that India meet its obligations under
Article 70.8 and 70.9 in a manner similar to the way in which Pakistan had implemented theseobligations.
49  It stressed that this request should be distinguished from the findings it was seeking from
the Panel that would identify th e obligations under these provisions which India had failed to
implement. 
4.37 India  said that this United States' request had b een introduced for the first time at the first
substantive meeting of the Panel with the parties.  To submit such an additional request after the first
submission constituted an unacceptable procedural sche me, as had been recognized by the recent WTO
Panel on European Communities - Regime for the Importation, Sale and Di stribution of Bananas .50
4.38 India  also advanced the following reasons why the United States’ request should be rejected
as legally inappropriate:
- It had serious doubts whether a panel constituted to  resolve a dispute on the basis of rights and
obligations enshrined in a multilateral agr eement should formally endorse a settlement
bilaterally negotiated between two sovereign States  in the context of their particular overall
relations. 
- There were technical reasons th at would make it inappropriate to transpose the system adopted
by Pakistan to India.  Pakistan had agreed with the United States that the relevant date of filing
                                          
     47In this regard,the United States said that note should be  taken of the exceptions explicitly permitted in the case of
copyrights (Article 13), trademarks (Article 17), geographic indications of origin (Article 24), patents (Articles 30 and 31), lay-
out designs of integrated circuits (Article 37.1), and industrial designs (Article 26.2).
     48According to the United States, the example of this approach to exceptions could be found in the TRIPS Agreement's
Section on lay-out designs of integrated circuits (Article 37.2).
     49Reference was made to document IP/D/2/Add.1
     50For a further elaboration by India of this argument, see above in relation to Article 63.WT/DS50/R
Page 36
for the purposes of Article 70.8 would be the date  on which a patent application had been filed
not in Pakistan, as foreseen in Article 70.8, but in another Member  (emphasis by India ).  In
India, patent applications for pharmaceutical a nd agricultural chemical products had been filed
and a filing date had been given to each of these applications.  The United States’ request for apanel suggestion would therefore imply that a pplications made in other Members would have
to be inserted by India into the queue of app lications already made.  Consequently, the order of
priority of the applications would have to be changed in a manner that was not foreseen in the
TRIPS Agreement and that favoured some Me mbers over others.  The United States was
therefore requesting that the Panel suggest a solution whose consistency with the TRIPS
Agreement would be doubtful in the case of India. 
V. ARGUMENTS PRESENTED BY THIRD PARTY
European Communities and their Member States
5.1 The European Communities and their Member St ates argued in their third party submission
that, while India had made a bona fide  attempt to implement the "mailbox" mechanism by the Patents
(Amendment) Ordinance 1994, this Ordi nance had meanwhile lapsed and was no longer in force, since
it had not been confirmed within si x weeks of the re-assembly of the Indian Parliament in early 1995 by
the Indian legislative authorities as required by th e Indian Constitution.  This meant that filings made
under the Ordinance did not presently enjoy the lega l status they should be granted under Articles 70.8
and 70.9 of the TRIPS Agreement, and the status of filings made after the date when the Ordinance
lapsed until such time as India were to take th e necessary steps to implement Articles 70.8 and 70.9 of
the TRIPS Agreement was presently also unclear.  Under these circumstances, India did not presently
provide for the mailbox mechanism and the mechanism for the granting of exclusive marketing rights as
foreseen under Articles 70.8 and 70.9 of the TRIPS Ag reement and was therefore not living up to its
obligations under the WTO Agreement.
5.2 At the third party meeting, the European Communities and their Member States, expressed
surprise about the arguments of India in its firs t submission that it had observed its obligations as
contained in Articles 70.8 and 70.9, on three counts:
- India had adopted an Ordinance in late 1994 allowing the filing of patent applications
concerning pharmaceutical and agricultural chem ical products, since these products were not
patentable under existing Indian law.  This Ordinance had meanwhile lapsed and had beenreplaced, according to India, by administrative in structions to the Indian patent authorities to
continue to accept filings.  How could India now argue that simple administrative instructions
to accept filings were sufficient, while it had felt the need to act by an Ordinance in the first
place which had been meant to be replaced by a formal act of its legislature?  An
administrative instruction was only capable of binding the administrati on itself;  it could not
have an effect on the applicants.  In other words, if there was a dispute between severalapplicants about the time of the filing, such a dispute  could not be resolved by simply
adopting an instruction addressed to the admini stration.  A legislative act capable of creating
rights and obligations between applicants was therefore necessary.
- Questions arose as to what were the preci se terms of the administrative instructions,
where they had been published and what were th e guarantees in case of a dispute before the
Indian courts.  In answering these questi ons, India would have to admit that simple
administrative instructions did not fulfil th e requirements laid down in Articles 70.8 and 70.9.WT/DS50/R
Page 37
- As far as the exclusive marketing rights under Article 70.9 were concerned, India
claimed that no applications had been filed so far.   India seemed to believe that because of the
absence of such applications th e entry into force of the mechan ism allowing such filings could
be postponed.  This position was untenable.  Article 70.9 was intimately linked with Article70.8 which in turn left no doubt that it applied as of the date of entry into force of the TRIPS
Agreement for a Member, i.e. 1 January 1995.  In  promulgating the Ordinance already referred
to, India had itself recognized the obligation to put the mechanism required by Article 70.8
into place by that date.  India could not now argue that the rules governing the exclusive
marketing rights envisaged under Article 70.9 s hould only be adopted once applications for
such exclusive marketing rights had been recei ved.  Moreover, how would it be possible to file
such applications in the absence of any rule s governing such applications?  Was it not the
absence of such rules that had led to the absen ce of applications?  Rules must be put in place
before applications could be made and those rules should have existed as of 1 January 1995.
5.3 Turning to the question of how to handle appli cations made before the rules would be adopted
that India was obliged to introduce, the European  Communities and their Member States expressed
concern regarding the fate of applications that had been made after the obligations under Articles 70.8
and 70.9 had become applicable but before India had taken the necessary domestic measures toimplement these provisions.  Another concern related to the fate of the filings made under the Ordinanceadopted at the end of 1994.  India owed other WTO Members assurances on the fate of such
applications and filings.  Since such assurances ha d not been given so far, the European Communities
and their Member States urged the Panel to incl ude in its report findings with regard to these
applications and filings.
5.4 In conclusion, the European Communities and th eir Member States lent their full support to
the requests made by the United States in the presen t dispute and asked the Panel to find that India, not
having carried out its obligations under Articles 70.8 and 70.9 of the TRIPS Agreement, should bring its
domestic legislation into conformity with these obliga tions, also with regard to applications that would
have been lodged under these provisions had the rules been adopted in good time and not lapsedsubsequently.
VI. INTERIM REVIEW
6.1 On 8 July 1997, India requested the Panel to review, in accordance with Article 15.2 of the
DSU, certain precise aspects of the interim report that had been issued to the parties on 27 June 1997. 
The United States did not request a review, but reserved, in a letter dated 9 July 1997, its rights to
comment on any changes suggested by India.  No further comments were subsequently submitted by theUnited States.  Neither India nor the United States requested the Panel to hold an additional meeting. 
The Panel reviewed the entire range of arguments pr esented by India and finalized its findings as in
Section VII below, taking into account the specifi c aspects of these arguments it considered to be
relevant.
6.2 India requested the Panel to review its findings mainly for the following reasons:
- In respect of Article 70.8 of the TRIPS Ag reement, India did not share the Panel's
assessment of the legal situation in India;
- It was procedurally and legally incorrect for the Panel to rule on Article 63 of the TRIPS
Agreement, mainly because the United States  had requested a ruling on this provision
only in case the Panel were to find that I ndia had a valid mailbox system in place; andWT/DS50/R
Page 38
- The Panel's discussion of Article 70.9 of th e TRIPS Agreement did not define the issue
presented to the Panel correctly and did not  fully take into account India's arguments.
The Panel carefully examined these assertions, as elaborated below.
Article 70.8
6.3 In its review request, India essentially reiterated its argument in paragraph 4.9 above, arguing
that the effect of the Panel's finding in what is now paragraph 7.28 was to force developing countries to
adopt now legislation that the TRIPS Agreement cl early required them to adopt only on 1 January 2005.
 Furthermore, India submitted that the Panel's fi ndings in what are now paragraphs 7.36 and 7.37 on the
legal situation in India were erroneous and largely speculative and requested the Panel to reconsider its
findings in those paragraphs.
6.4 The Panel was not persuaded by these argument s.  As explained in paragraph 7.31 below, the
obligation under Article 70.8 was a special obligation imposed on those Members benefitting from thetransitional arrangements, clearly distinguishable fro m the obligation to provide full patent protection
under Article 27.  Regarding the assessment of the lega l situation in India, as stated in paragraph 7.40
below, the Panel felt that the United States had successf ully raised questions as to the legal security of
the current "mailbox" system in India and that India had failed to rebut these challenges.  In the Panel's
view, India's explanation on why the mailbox system that it had put in place administratively was not in
contradiction with current law nor with the Constitution
51 did not remove concerns on the legal security
of the system.
6.5 Accordingly, the Panel did not accept India's request on this point, except that it slightly
modified what are now paragr aphs 7.28 and 7.29 and that it expanded what is now paragraph 7.31.
Article 63
6.6 In its review request, India noted that the Panel had found that India did not have a valid
mailbox system in place.  Given that the United Stat es had requested a ruling on Article 63 only if the
Panel were to find that India had a valid mailbox syst em in place, the Panel, in India's view, should not
have made any findings or recommendations on Article  63.  India requested the Panel to strike from its
findings and recommendations the references to Article 63 and to replace them by a sentence noting thatits findings on the mailbox system made the request for a finding on Article 63 moot.  India further
noted that the discussion on proce dural issues contained in what are now paragraphs 7.8 to 7.15 was
only relevant to the findings on Artic le 63.  India thus requested that these paragraphs also be struck
from the final report.
6.7 According to India, it was perfectly logical for the United States to present its claim under
Article 63 only in the alternative.  India argued that Article 63 required Members to publish and notify
measures "made effective" by them, in other words, measures with legal effect actually taken by them. Consequently, if a Member failed to take a measure prescribed by a provision of the TRIPS Agreement,
it could not be found to violate that provision and Article 63, given that there was then no measure that
had been made effective ( emphasis by India ).
6.8 The Panel was not persuaded by this argument.  The Panel felt that India's reading of the term
"made effective" was unduly narrow.  The consistenc y of a measure with a Member's international
obligations under the WTO Agreement and the putting of the measure into effect in the Member's
                                          
     51Paragraph 4.12 aboveWT/DS50/R
Page 39
domestic jurisdiction were two separate issues.  In th e Panel's view, a measure that was inconsistent with
WTO rules could still be "made effective" within th e meaning of Article 63 of the TRIPS Agreement. 
Indeed, the very purpose of notifications under Artic le 63.2 was to assist the Council for TRIPS in its
review of the operation of the TRIPS Agreement a nd "in particular, Members' compliance with their
obligations thereunder"52.  If a measure that was inconsistent with the TRIPS Agreement were relieved
from the notification obligation a priori , this function of the Council for TRIPS could not be achieved.
6.9 Finally, India argued that, if the Panel's recommendation on Article 63 related to the existing
system, it would serve no purpose and that, if it related to a future modified system, it would relate to a
matter that had not arisen in this dispute.  Indi a further argued that the purpose of the WTO dispute
settlement procedure was not to generate interpretations  that were not required to resolve the dispute.  In
support of its position, India quoted the panel in the Semiconductor  case, which, facing the dual claim
that a measure was inconsistent with GATT Artic le XI and not published in accordance with GATT
Article X, had refused to rule on the transparency issue by pointing out:
"The measures under examination had been found to be inconsistent with Article XI.
 At issue was thus their elimination or bringing them into conformity with GATT,
not their publication."53
Thus, according to India, the United States' claim on Article 63 should not be addressed by the Panel,
even if it could be interpreted as an additional claim.  If the Panel were to take that step, it would be the
first panel to do so.
6.10 The Panel disagreed. This Panel was not the first to address the issue of transparency in
addition to the violation of substantive obligations.  The panel on Restrictions on Imports of Apples
(complaint by the United Stat es) had stated as follows:
"The Panel recognized that, given its finding that the EEC measures were a violation
of Article XI:1 and not justified by Article  XI:2(c)(i) or (ii), no further examination
of the administration of the measure woul d normally be required.  Nonetheless, and
even though the Panel was concerned w ith measures which had already been
eliminated, it considered it appropriate to examine the administration of the EEC
measures in respect of the provisions men tioned above, in view of the questions of
great practical interest which ha d been raised by both parties.
"...The Panel therefore considered that the allocation of back-dated quotas did not
conform to the requirements of Article XIII:3(b) and (c).  It also interpreted therequirements of Article X:1 as likewise pr ohibiting back-dated quotas.  It therefore
found that the EEC had been in breach of  these requirements since it had given
public notice of the quota allocation only about two months after the quota period
had begun."
54 
                                          
     52Article 68 of the TRIPS Agreement
     53Panel Report on "Japan - Trade in Semi-conductors", adopted on 4 May 1988, BISD 35S/116, para. 128
     54Panel Report on "European Economic Community - Restrictions on Imports of Apples, Complaint by the United States",
adopted on 22 June 1989, BISD 36S/135, paras. 5.20 and 5.23WT/DS50/R
Page 40
6.11 The following passage from the Appellate Body report on the Shirts and Blouses  case had
been cited by India:
"Given the explicit aim of dispute settlement that permeates the DSU, we do not
consider that Article 3.2 of the DSU is meant to encourage either panels or theAppellate Body to 'make law' by clarifying existing provisions of the WTOAgreement outside the context of resolving a particular dispute."
55 
The Panel fully agreed with the Appellate Body on this point.  In the present case, the Panel had no
intention of "making law" by clarifying existing pr ovisions of the TRIPS Agr eement outside the context
of resolving the dispute before it.  Rather, in vi ew of the Appellate Body's observation on the limitation
of its mandate under Articles 17.6 and 17.13 of the DSU in its recent report on the Periodicals  case56,
the Panel felt all the more strongly the need to av oid a legal vacuum in the event that, upon appeal, the
Appellate Body were to reverse the Panel's findings on Article 70.8.
6.12 Accordingly, the Panel decided to retain th e paragraphs on Article 63 unchanged from the way
they had appeared in the interim report, except for certain drafting modifications in paragraphs 7.11 and
7.44.
Article 70.9
6.13 India objected to the characterization of th e issue in the interim report in what is now
paragraph 7.52, where it stated: "Thus, the central question before this Panel is that of timing: as ofwhen should there be a mechanism ready for the grant of exclusive marketing rights?".  In India's view,
the more appropriate question was whether Article 70.9 obliged Members to grant exclusive marketingrights to particular products that met the conditions sp ecified in that provision or whether this provision
obliged Members to authorize their executive author ities to grant such rights before the occasion to
exercise such authority arose.  India requested  the Panel to reformulate the question accordingly.
6.14 The Panel was not persuaded that India's fo rmulation of the question was the more accurate
one.  However, to clarify the issue further, it in troduced paragraph 7.53 in the final report.  It also
slightly modified what is now paragraph 7.54.
6.15 In its review request, India reiterated its argument in paragraph 4.27 regarding the ordinary
meaning of the term "shall be granted".  The Pane l modified what is now paragraph 7.56 to clarify its
position.
6.16 India further objected to the summary of Indi a's arguments which now appears in paragraphs
7.57 to 7.62.  According to India, India did not argue that Article 70.9 applied only as from certain dates
or only during certain periods, nor c ould India be reasonably expected to  indicate such dates.  India's
essential argument was that, because operators woul d "normally" be interested in exclusive marketing
rights only in the five-year period preceding pate ntability, the objective of Article 70.9 could not have
been to oblige developing countries to change th eir laws as from the entry into force of the WTO
Agreement.  The gist of India's argument was th at there was simply no economic or political reality
                                          
     55Appellate Body Report on "United States - Measure Affecting Imports of Woven Wool Shirts and Blouses from India",
adopted on 23 May 1997, WT/DS33/AB/R, page 19
     56Appellate Body Report on "Canada - Certain Measures Concerning Periodicals", adopted on 30 July 1997,
WT/DS31/AB/R, page 22WT/DS50/R
Page 41
behind the assumption that Article 70.9 had been drafted with the objective to make developing
countries change their laws as from the entry into force of the WTO Agreement.  For reasons expressed
in paragraphs 7.58 and 7.59 below, the Panel did not agree with India's argu ment, and did not find it
necessary to change its conclusions in this respect .  However, at the suggestion of India, the Panel
modified what is now paragraph 7.57.
6.17 India reiterated its argument in paragraph 4.27 to the effect that no other developing country
had notified the creation of a system for the grant of exclusive marketing rights under its domestic law
and that this indicated that Article 70.9 was not  understood by the developing country Members
concerned as a provision that entailed the obligation to make changes in their domestic law as from the
entry into force of the TRIPS Agreement.  India reque sted the Panel to address this argument, given the
importance of subsequent practice in treaty interpre tation.  The Panel understood that this request was
an implicit reference to Article 31(3) of the Vie nna Convention on the Law of Treaties, which reads:
"There shall be taken into account, togeth er with the context:  (a) ... ; (b) any
subsequent practice  in the application of the treaty which establishes the agreement
of the parties regarding its interpretation; (c) ..." ( emphasis added )
In the Panel's view, however, India had failed to  demonstrate that the "subsequent practice" by
developing country Members in fact established the agreement of all WTO Members regarding the
interpretation of Article 70.9.  On the contrary, the record showed that there had been no agreement on
this issue in the Council for TRIPS; at most mee tings of the Council, concern had been expressed by
some Members about the absence of notifications or the limited information content of notifications
related to the implementation of Article 70.9.57 Moreover, the matter had also been the subject of
another recourse to the DSU in "Pakistan - Pate nt Protection for Pharmaceutical and Agricultural
Chemical Products" (WT/DS36). In any event,  to paraphrase an Appellate Body report58, the Panel felt
that it was much too early for practice to have arisen under the TRIPS regime which had commencedonly on 1 January 1995.
6.18 The interim report contained a heading entitle d "Practical Considerations" immediately
preceding what is now paragraph 7.60.  India stated that it did not understand why the Panel had created
a separate section given that such considerations were only relevant to the extent that they elucidated the
context, object and purpose of Article  70.9.  India suggested the deletion of the heading, which the Panel
accepted.  6.19 Finally, India considered it inappropriate and procedurally indefensible for the Panel tocorroborate its findings on Article 70.9 by refere nce to unsubstantiated and contested evidence
submitted by interested companies of one of the partie s to the dispute. The Panel noted that in its use of
the evidence in the findings, it had made what it considered to be an objective assessment of that
evidence  - as required under Article 11, second sentence, of the DSU - taking into account India'sreaction thereto.  The Panel further noted that it had not relied on this piece of evidence as a sole basis
for its findings and that India had presented no c ounter-evidence other than the comment contained in
the fourth indent of paragraph 4.29 above.  Accordin gly, the Panel did not introduce any changes to the
report on this point.
                                          
     57The record of discussions on these matters in the Council for TRIPS can be found in documents IP/C/M/2, 6, 7, 8, 9, 11,
12 and 13.
     58Appellate Body Report on "United States - Restrictions on Imports of Cotton and Man-made Fibre Underwear", adopted
on 25 February 1997, WT/DS24/AB/R, page 17WT/DS50/R
Page 42
Suggestions by the Panel
6.20 In the interim report, the section corresponding  to what was now "Suggestions by the Panel"
was entitled "Remedies" and contained one additional paragraph.  India requested the change in the title
and the deletion of this paragraph, which the Panel accepted and introduced in its final report.
VII. FINDINGS
A. Claims of the parties
Introduction
7.1 This dispute arises essentially from the following  facts.  Section 5 of the Indian Patents Act
1970 does not permit product patents to be granted in re spect of "substances intended for use, or capable
of being used, as food or as medicine or drug".59  Only "claims for the methods or processes of
manufacture shall be patentable" in respect of those substances.60  Thus, India currently does not make
available patent protection for pharmaceutical and agricultural chemical products commensurate with
the obligations of Article 27 of the Agreement on Trade-Related Aspects of Intellectual Property Rights("TRIPS Agreement"), which requires that "patents  shall be available for any inventions, whether
products or processes, in all fields  of technology ... " subject to certain  exceptions not applicable in this
case and to the transition provisions of Articles 65.4 and 70.8 of the TRIPS Agreement.
7.2 On 31 December 1994, while Parliament was in r ecess, the President of India promulgated the
Patents (Amendment) Ordinance 1994, with a view to meeting Indi a's obligations under Article 70.8
and 70.9 of the TRIPS Agreement.  The Ordinance in serted a new Chapter IVA in the Patents Act to
deal with "a claim for patent of an invention for a substance itself in tended for use, or capable of being
used, as medicine or drug".  The Ordinance explicitly  allowed the filing of patent applications in respect
of those substances and subsequent  processing by the Patent Offices  notwithstanding the provisions of
Sections 5 and 12 of the Patents Act.
61  It also established a system fo r the grant of "exclusive marketing
rights" with respect to the products that are the subject of such pate nt applications, subject to certain
conditions.  The Ordinance was notified to the WTO Council for Trade-Related Aspects of Intellectual
Property Rights ("Council for TRIPS").62
7.3 The Ordinance had been issued in exercise  of the powers conferred upon the President by
Article 123 of the Indian Constitution, which enables th e President to legislate when Parliament (either
House or both Houses) is not in session and the Pres ident "is satisfied that circumstances exist which
render it necessary for him to take immediate action" .  However, such Presidential actions expire six
weeks after the reassembly of Parliament.  T hus, under the relevant provisions of the Indian
                                          
     59According to Section 2(1)( l) of the Patents Act, the term "medicine or dr ug" includes "insecticides, germicides, fungicides,
weedicides and all other substances intended to be used for the protection or preservation of plants" (see Annex 1 of this repo rt).
     60See paragraph 2.10 above and Annex 1 of this report
     61Section 12 sets out the procedure for the reference of patent applications by the Controller to examiners (see Annex 1 of
this report).
     62See document IP/N/1/IND/1WT/DS50/R
Page 43
Constitution, the Patents Ordinance 1994 lapsed on 26 March 1995.63  In March 1995, the Indian
administration introduced the Patents (Amendment) B ill 1995 into Parliament to implement the contents
of the Ordinance on a permanent basis.  Howeve r, the Bill lapsed because of the dissolution of
Parliament on 10 May 1996.  The expiry of the Ordina nce was not publicized, nor was it notified to the
Council for TRIPS.
7.4 Currently, India allows the filing and handlin g of patent applications for pharmaceutical or
agricultural chemical products through unpublished "administrative practices", even though those
products are not patentable under Section 5 of the Patents Act 1970.  Between 1 January 1995 and
15 February 1997, a total of 1,339 applications for pharmaceutical and agricultural chemical products
have been received.64  All these applications are, according to India, stored separately for future action
under subparagraphs (b) and (c) of Article 70.8 and under Article 70.9 of the TRIPS Agreement.65 
7.5 Under the current Indian legislation, there is no legal basis - procedurally or substantively - for
the grant of exclusive marketing rights when a produc t which is the subject of a patent application under
Article 70.8 (commonly called a "mailbox" applicati on) becomes eligible for protection under Article
70.9 of the TRIPS Agreement.  So far, no request for the grant of exclusive marketing rights has beensubmitted to the Government of India.
Claims of the Complainant
7.6 The United States essentially claims before th e Panel that (a) India has failed to implement its
obligation under Article 70.8 of the TRIPS Agreement to establish a mechanism that preserves thenovelty of applications for pharmaceutical and agri cultural chemical product patents during the TRIPS
transition period;  (b) such a mechanism must ensu re that persons, who filed or would have filed
applications had the "mailbox" been in place on time and maintained, can file such applications and
receive the filing date they would have received;  or , in the alternative, (c) India has failed to comply
with its transparency obligations under Article 63 of  the TRIPS Agreement in respect of a mechanism
for filing patent applications pursuant to Article 70.8;   (d) India has failed to implement its obligations
under Article 70.9 of the TRIPS Agreement, which arose on 1 January 1995, to establish a system forthe grant of exclusive marketing rights;  and (e) under a system for the grant of exclusive marketing
rights under Article 70.9, competitors of the owner of such rights should not be permitted on the marketin the absence of the owner's consent.  The Unite d States requests the Panel to recommend that India
bring its measures into conformity  with its obligations under the TRIPS Agreement.  The United States
further requests that (f) the Panel suggest that India implement its obligations under Articles 70.8
and 70.9 in a manner similar to the way in which Pakistan has indicated it is implementing these
obligations
66.
 Claims of the Respondent
7.7 India essentially claims that (i) India has prov ided a means for filing patent applications for
pharmaceutical and agricultural chemical products that  is consistent with Article 70.8 of the TRIPS
Agreement;  (ii) India is not obligated to establish a system for the grant of exclusive marketing rights
under Article 70.9 before all the conditions for the grant of the rights stipulated therein have been met in
                                          
     63See paragraph 2.3 above
     64See paragraph 2.11 above
     65See paragraph 2.8 above
     66In this regard, reference is made to document WT/DS36/4.WT/DS50/R
Page 44
respect of a specific product;  and (iii) the United St ates' requests for the findings described in (b) and
(e) of the previous paragraph are requests for specifi c remedies or declaratory judgements inconsistent
with Article 19 of the DSU in that they do not relate  to the legal consistency of the existing measures but
to the ways in which India is to implement its ob ligations.  Regarding the United States' alternative
claim on transparency (i.e., item (c) in the previous  paragraph) and its request that the Panel suggest
how India should implement its obligations under Article 70.8 and 70.9 (i.e., item (f) in the sameparagraph), India requests the Panel to dismiss them because (iv) the Panel's terms of reference do notcover the United States' Article 63 claim and the scope  of factual and legal claims cannot be expanded
after the first written submission;  and, in the alte rnative, (v) Article 63 does not apply to India until
1 January 2000 under Article 65.2 of the TRIPS Agreement and, in any event, the means of filing that ithas established is based on the Patents Act 1970, which has been published.
B. Procedural Issues
7.8 Before moving on to the examination of substantive claims, we take up the procedural
objections raised by India.  India requests the Pane l to dismiss the claims on transparency (item (c) in
paragraph 7.6 above) and implementation (item (f) in the same paragraph) because, according to India,they were submitted too late to be accepted as valid claims before the Panel.  We note that Article 63 ofthe TRIPS Agreement was not mentioned in the request for the establishment of a panel
67 or in the first
written submission by the United States.  Similarly, the request for a suggestion for implementation was
put forward by the United States for the first time in its oral statement at the first substantive meeting of
the Panel.  India argues that these two claims were  not specified in the United States' request for the
establishment of a panel as required by Article  6.2 of the Understanding on Rules and Procedures
Governing the Settlement of Disputes (DSU) and th at these claims, at the latest, should have been
elaborated by the United States in its first writte n submission.  In support of  its argument, India quotes
from the recent panel report on European Communities - Regime for the Importation, Sale and
Distribution of Bananas .68 
Article 6.2 of the DSU provides that:
"The request for the establishment of a panel shall be made in writing.  It shall indicate
whether consultations were held, identify the sp ecific measures at issue and provide a brief
summary of the legal basis of the complaint suffi cient to present the problem clearly.  In case
the applicant requests the establishment of a pane l with other than standard terms of reference,
the written request shall include the proposed  text of special terms of reference."
We note that, regarding Article 6.2 of the DSU, the Bananas  panel found that:
"While a reference to a specific provision of a specific agreement may not be essential if the
problem or legal claim is otherwise clearly descri bed, in the absence of some description of the
problem, a mere reference to an entire agreement or simply to 'other' unspecified agreements or
provisions is inadequate under the terms of Ar ticle 6.2.  Accordingly, we find that references
to a WTO agreement without mentioning any prov isions or to unidentified 'other' provisions
are too vague to meet the standa rds of Article 6.2 of the DSU."69
                                          
     67WT/DS50/4
     68Panel Report on "European Communities - Regime for the Impor tation, Sale and Distribution of Bananas", issued on
22 May 1997, WT/DS27/R
     69Id., para. 7.30WT/DS50/R
Page 45
Furthermore, the panel stated that:
"For purposes of determining whether a Complain ant in this matter has made a claim, we have
examined its first written submission, as we consider that document determines the claimsmade by a complaining party.  To allow the assertion of additional claims after that point
would be unfair to the respondent, as it would have little or no time to prepare a response tosuch claims."
70
7.9 While we do not disagree with the general conclusions of the Bananas  panel on this point,
there is an important difference between the Bananas  case and the present case:  this Panel ruled, at the
outset of the first substantive meeting held on 15 Apr il 1997, that all legal claims would be considered if
they were made prior to the end of that meeting; and this ruling was accepted by both parties.  However,
we do not intend to cut off India's objection solely based on this ground.  It would seem unfair to do so
in view of the fact that India had not heard the new United States' arguments when the ruling was made.
7-10 We now look at the admissibility of each of  th ese requests in turn, first that relating to the
transparency obligations under Article 63 a nd then that relating to implementation.
Transparency
7.11 In respect of the transparency issue, there are two other significant differences between the
Bananas  case and this case.  First, as noted above, Article 6.2 of the DSU requires the panel request,
which effectively sets a panel's terms of reference in most cases, to "provide a brief summary of the
legal basis of the complaint sufficien t to present the problem clearly".  The United States argues that the
"problem" in this case is India's failure to implem ent a mailbox system that allows and grants legal
status to submissions of certain pate nt applications.  In its view, if India has a valid system in place, its
failure to make that system known to WTO Members is part of this "problem".71  We agree.  The
Bananas  panel noted in the passage quoted above that: "a  reference to a specific provision of a specific
agreement may not be essential if the problem or lega l claim is otherwise clearly described".  Here, there
is a more detailed description of the "problem" that  the United States alleges in respect of Indian non-
compliance with the TRIPS Agreement.  In our view , the panel request in this case does describe the
problem sufficiently to raise the issue of whether,  assuming India has a valid mechanism for receiving
mailbox applications, it is in compliance with Article 63 of the TRIPS Agreement.72
7.12 Second, and more fundamentally, we note that the United States' claim concerning Article 63
was a direct response to the Indian argument in its first written submission to the effect that India had a
valid mailbox system in place.  The United States a sserts that this argument by India was a surprise
because it had not been told by India during the consu ltations that India had such a system in place.  In
support of this assertion, the United States submitte d that written questions it posed to India in this
regard during the consultations had not been answer ed until the proceedings before this Panel started. 
To counter this assertion, India submitted to the Panel its internal record of the consultations indicating
                                          
     70Id., para. 7.57
     71See paragraph 4.19 above
     72The panel request includes the following passage: "The legal regime in India currently does not make patent protection
available for inventions as specified in Article 27 of the TRIPS Agreement, or provide systems that conform to obligations of t he
TRIPS Agreement regarding the acceptance of applications and the grant of exclusive marketing rights.  As a result, India’s leg al
regime appears to be inconsistent with the obligations of the TRIPS Agreement, including but not necessarily limited to  Articles
27, 65 and 70" ( emphasis added ).WT/DS50/R
Page 46
that India had informed the United States about th e fact that "product patent applications in the
pharmaceutical and agrochemical sector were being received under the provisions of the Patents Act of
1970" and that "the Patents Act 1970 has provided the necessary legal scope for receipt of applications
for product patents".73  In our view, however, this is mere factual information regarding the filing of
product patent applications and does not amount to a legal claim for the existence of a valid mailbox
system.  In this regard, we note that it is ag reed that under the Patents Act it is possible to file a patent
application for these products.  The issue is how such applications are handled ( e.g., whether they are
subject to examination and rejection) and the Indian statements do not address this issue.  Accordingly,
it would seem unreasonable to require that the United States should have anticipated the particular line
of Indian defence in advance and should have include d its alternative claim on transparency in its panel
request or in its first written submission. 
7.13 It is true that the interests of parties involve d, including those of third parties, would be harmed
if a panel would freely accept new claims and argume nts which had not been reflected in the first
written submissions.  However, it should also be recognized that the panel process is a dynamic onewhere claims by the parties become refined and el aborated through arguments and counter-arguments.
74
 Thus, in an exceptional case like this, we are of the view that a new argument which is a direct response
to a party's first written submission is acceptable, prov ided that such an argument is presented, at the
latest, by the close of the first substantive meeting.  Moreover, in this particular case, we note that the
parties had an opportunity to elaborate their ar guments on this issue through oral and written
submissions to the Panel.75 
7.14 One could argue that such an interpretation woul d not sufficiently protect the interests of third
parties, which were not exposed to the new argument  and thus were not able to present their views on
that point in their submissions to the Panel.  Howeve r, in our view, principal parties to the dispute have
an overriding interest under the circumstances.76 If a third party is not satisfied with the proceedings or
the outcome of a case to which it has submitted its views, it "may have recourse to normal disputesettlement procedures" in its own right.
77  We also observe that the appe llate process protects third party
interests.  If the new argument is such an importa nt one that the case is a ppealed on that point, third
parties can make their own submissions to the Appella te Body even though they may not have expressed
their views on that particular point in the panel process.78 
7.15 Put another way, our view is that the examin ation of the United Stat es' claim on transparency
is within the terms of reference of this Panel, cited in paragraph 1.2 above.  Since this claim is a direct
response to the Indian argument on the existence of a valid mailbox system in India, which in turn was a
rebuttal to the United States' argument in its request for the establishment of a panel as elaborated in its
                                          
     73Paragraph 4.20 above
     74The Bananas  panel acknowledges this dynamic nature of the panel process when it discusses "cure" of omitted arguments
at a later stage.  Panel Report on "European Communities - Regime for the Importation, Sale and Distribution of Bananas", op.
cit., para. 7.44
     75See paragraph 1.3 above
     76We note that the interests of the third party in this particular case were not harmed on the issue of transparency. 
Independently from the United States' arguments, the European Co mmunities had already referred to this issue in reaction to the
first written submission from India at the th ird party session (see paragraph 5.2 above).
     77Article 10.4 of the DSU
     78Rule 24, Working Procedures for Appellate Review, WT/AB/WP/3WT/DS50/R
Page 47
first written submission, it constitutes part of "the matter referred to the DSB by the United States in ...
document [WT/DS50/4]".
Request for Suggestion Concerning Implementation
7.16 The reasoning underlying our finding in respect of the United States' claim on Article 63 of the
TRIPS Agreement does not apply to the United States ' request for a panel suggestion on implementation
(item (f) in paragraph 7.6 above).  However, we note th at this particular request by the United States is
not sensu stricto  a legal claim.  It is simply a request for the Panel to exercise its discretionary authority
under Article 19.1, second sentence, of the DSU.  In view of the fact that a panel can, on its own
initiative, suggest how its recommendations should be im plemented and that, in this particular case, the
respondent was given an ample opportunity to present its views on the complainant's request, there is no
reason why this Panel should not ex amine the United States' request. 
7.17 In conclusion, we reject the procedural objec tions submitted by India and proceed with the
examination of substantive issues.
C. Interpretation of the TRIPS Agreement
7.18 Before examining specific measures in dispute,  we first deal with a general interpretative
issue, namely standards applicable  to interpretation of the TRIPS Ag reement.  In the first instance,
Article 3.2 of the DSU directs panels  to clarify the provisions of th e covered agreements, including the
TRIPS Agreement, "in accordance with customary rule s of interpretation of public international law". 
As a number of recent panel reports and Appellate Body reports have pointed out, customary rules of
interpretation of public international law are embodied  in the text of the 1969 Vienna Convention on the
Law of Treaties ("Vienna Convention").   Artic le 31(1) of the Vienna Convention provides:
"A treaty shall be interpreted in good faith  in accordance with the ordinary meaning
to be given to the terms of the treaty in th eir context and in the light of its object and
purpose."
Accordingly, the TRIPS Agreement must be interpreted in good faith in light of (i) the ordinary meaning
of its terms, (ii) the context and (iii) its object and purpose.  In our view, good faith interpretation
requires the protection of legitimate expectations derived from the protection of intellectual property
rights provided for in the Agreement.  A similar view has also been taken in the Underwear  panel
report:
"[T]he relevant provisions [of the Agreement on Textiles and Clothing] have to be
interpreted in good faith.  Based upon the wording, the context and the overallpurpose of the Agreement, exporting Member s can ... legitimately expect that market
access and investments made would not be frustrated by importing Members takingimproper recourse to such action." 
79
7.19 Second, we must bear in mind that the TRIPS Agreement, the entire text of which was newly
negotiated in the Uruguay Round and occupies a relatively self-contained, sui generis  status in the WTO
Agreement, nevertheless is an integral part of the WTO system, which itself builds upon the experience
over nearly half a century under the General Agreement on Tariffs and Trade 1947 ("GATT 1947"). 
Indeed, Article XVI:1 of the WTO Agreement provides:
                                          
     79Panel Report on "United States - Restrictions on Imports of Cotton and Man-made Fibre Underwear", adopted on 25
February 1997, WT/DS24/R, para. 7.20  WT/DS50/R
Page 48
"Except as otherwise provided under th is Agreement or the Multilateral Trade
Agreements, the WTO shall be guided by the decisions, procedures and customary
practices followed by the CONTRACT ING PARTIES to GATT 1947 and the bodies
established in the framework of GATT 1947."
Since the TRIPS Agreement is one of the Multilatera l Trade Agreements, we must be guided by the
jurisprudence established under GATT 1947 in interp reting the provisions of the TRIPS Agreement
unless there is a contrary provision.  As  the Appellate Body indicated in the Japan -Alcoholic Beverages
case, adopted panel reports "create legitimate e xpectations among WTO Members, and, therefore,
should be taken into account where th ey are relevant to any dispute".80  Indeed, in light of the fact that
the TRIPS Agreement was negotiated as a part of the overall balance of concessions in the UruguayRound, it would be inappropriate not to apply the same  principles in interpreting the TRIPS Agreement
as those applicable to the interpretati on of other parts of the WTO Agreement.
7.20 The protection of legitimate expectations of Members regarding the conditions of competition
is a well-established GATT principle, which derives in part from Article XXIII, the basic disputesettlement provisions of GATT (and the WTO).
81  Regarding Article III of GATT, the panel on Italian
Agricultural Machinery  stated that "the intent of the draf ters was to provide equal conditions of
competition once goods had been cleared through customs".82  This principle was later elaborated by the
Superfund  panel, which stated that "[t]he general prohi bition of quantitative restrictions under Article XI
... and the national treatment obligation of Article III ... have the same rationale, namely to protect
expectations of the contracting parties as to th e competitive relationship between their products and
those of the other contracting parties".83 The panel on Section 337 , which dealt with issues involving
protection of intellectual property at the border, also reached similar conclusions.84 
7.21 The protection of legitimate expectations is centr al to creating security and predictability in the
multilateral trading system.  In this connection, we note that disciplines formed under GATT 1947 (so-
called GATT acquis ) were primarily directed at the treatme nt of the goods of other countries, while
rules under the TRIPS Agreement mainly deal with th e treatment of nationals of other WTO Members. 
While this calls for the concept of the protection of  legitimate expectations to apply in the TRIPS areas
to the competitive relationship between a Member's own nationals and those of other Members (ratherthan between domestically produced goods and the g oods of other Members, as in the goods area), it
does not in our view make inapplicable the unde rlying principle.  The Preamble to the TRIPS
Agreement, which recognizes the need for new rules and disciplines concerning "the applicability of the
basic principles of GATT 1994 ...", provides a useful context in this regard. 
                                          
     80Appellate Body Report on "Japan - Taxes on Alcoholic Beverages", adopted on 1 November 1996, WT/DS8/AB/R,
WT/DS10/AB/R, WT/DS13/AB/R, page 14
     81We note in this regard that Article 64 of the TRIPS Agr eement (on dispute settlement) provides for the application of
Article XXIII of GATT 1994, as elaborated by the DSU, to the settlement of disputes under the TRIPS Agreement.
     82Panel Report on "Italian Discrimination against Imported Agricultural Machinery", adopted on 23 October 1958, BISD
7S/60, para. 12 -13
     83Panel Report on "United States - Taxes on Petroleum and Certain Imported Substances", adopted on 17 June 1987, BISD
34S/136, para. 5.2.2
     84Panel Report on "United States - Section 337 of the Tariff Act of 1930", adopted on 7 November 1989, BISD 36S/345,
para. 5.13WT/DS50/R
Page 49
7.22 In conclusion, we find that, when interpreting th e text of the TRIPS Agreement, the legitimate
expectations of WTO Members con cerning the TRIPS Agreement must be taken into account, as well as
standards of interpretation developed in past panel reports in the GATT framework, in particular those
laying down the principle of the protection of conditions of competition flowing from multilateral trade
agreements.
D. Article 70.8
7.23 We now turn to the examination of the Un ited States' claim on Article 70.8 of the TRIPS
Agreement.  Article 70.8 provides as follows:
"Where a Member does not make available as of the date of entry into force of the WTO
Agreement patent protection for pharmaceu tical and agricultural chemical products
commensurate with its obligations under Article 27, that Member shall:
(a) notwithstanding the provis ions of Part VI, provide as from the date of entry into
force of the WTO Agreement a means by which applications for patents for suchinventions can be filed;
(b) apply to these applications, as of the da te of application of this Agreement, the
criteria for patentability as laid down in this Agreement as if those criteria were
being applied on the date of filing in that  Member or, where priority is available
and claimed, the priority date of the application;  and
(c) provide patent protection in accordance with this Agreement as from the grant of
the patent and for the remainder of the pa tent term, counted from the filing date in
accordance with Article 33 of this Agreemen t, for those of these applications that
meet the criteria for protection referred to in subparagraph (b)."
The United States claims that India has failed to fulfil its obligations under this paragraph by not
establishing a valid system for receiving "mailbox" a pplications.  In this regard, we note that the only
obligation India currently assumes under this paragraph is that of subparagraph (a), the effective date of
which is "the date of entry into force of the WTO Agreement", i.e., 1 January 1995.  Obligations under
subparagraphs (b) and (c) will become binding on I ndia only "as of the date of application of this
Agreement", which in this particular instance m eans no later than 1 January 2005 by virtue of the
provisions of paragraphs 2 and 4 of Article 65 of the TRIPS Agreement.  Thus, the question before this
Panel is whether India has taken the action necessary to implement its obligations undersubparagraph (a) of Article 70.8.
Nature of the Obligations
7.24 Subparagraph (a) of Article 70.8, like all other pr ovisions of the covered agreements, must be
interpreted in good faith in light of (i) the ordinary  meaning of its terms; (ii) the context; and (iii) its
object and purpose, following the rules set out in Article 31(1) of the Vienna Convention.85
7.25 Subparagraph (a) starts with th e phrase "notwithstanding the pr ovisions of Part VI".  This
indicates that this provision is an exception to the tr ansitional arrangements contained in Part VI of the
TRIPS Agreement.  Thus, if a Member does not make  available as of 1 January 1995 patent protection
for pharmaceutical and agricultural chemical pr oducts commensurate with its obligations under
                                          
     85See paragraph 7.18 aboveWT/DS50/R
Page 50
Article 27, that Member cannot avail itself of a transitional period under Article 65 regarding the
operation of this subparagraph.  This is clear from the textual analysis, and in any event is not in dispute
between the parties.  The subs tantive obligation to be assumed by such a Member as from
1 January 1995 is to provide "a means" by which app lications for patents for inventions in respect of
pharmaceutical and agricultural chemical products "can be  filed".  The analysis of the ordinary meaning
of these terms alone does not lead to a definitive inte rpretation as to what sort of "means" is required by
this subparagraph.
7.26 We thus need to analyze the context of this  subparagraph.  The means for filing is necessary
because, under subparagraphs (b) and (c), a Member which does not make patents available as of1 January 1995 for pharmaceutical and agricultural chemi cal products must examine, after the expiry of
the transitional period, the applications so filed and must accord patent protection for those products that
meet certain criteria.  In addition, the Member is ob ligated to grant exclusive marketing rights to those
products that meet the conditions set out in Article  70.9 even during the transitional period.  The terms
of subparagraph (a) must be understood in this context.
7.27 Furthermore, the object and purpose of Article 70.8 must be taken into account in our analysis.
 There seems to be a common understanding between th e parties to the dispute regarding the object and
purpose of subparagraph (a).  India concedes that the purpose of subparagraph (a) is to " ensure  that each
patent applicant obtains a date of filing on the basis of which patent protection [can] be granted as from
the date on which Article 27 applies and that exclusive marketing rights [can] be granted to products atthe point at which they are eligible for such rights" ( emphasis added ).
86  We affirm this view.  The
object and purpose of Article 70.8(a)  can be derived from the structure of the TRIPS Agreement. 
Article 27 requires that patents be made available in all fields of technology, subject to certain narrow
exceptions.  Article 65 provides for transitional periods  for developing countries: in general five years
from the entry into force of the WTO Agreement, i.e. 1 January 2000, and an additional five years to
provide for product patents in areas of technology not so patentable as of 1 January 2000.  Thus, in such
areas of technology, developing countries are not required to prov ide product patent protection until 1
January 2005.  However, these transitional provisions are not applicable to Article 70.8, which ensuresthat, if product patent protection is not already available for pharmaceutical and agricultural chemical
product inventions, a means must be in place as of 1 January 1995 which allows for the entitlement tofile patent applications for such inventions and the allocation of filing and priority dates to them so that
the novelty of the inventions in question and the prio rity of the applications claiming their protection can
be preserved for the purposes of determining their e ligibility for protection by a patent at the time that
product patent protection will be available for these inve ntions, i.e. at the latest after the expiry of the
transitional period.
7.28 In order to achieve the object and purpose of Article 70.8, there must be a mechanism to
preserve the novelty of pharmaceutical and agricultura l chemical inventions which are currently outside
the scope of product patent protection and the priority  of applications claiming  their protection, for the
purposes of determining their eligibility for protec tion by patents.  Once these inventions can be
protected by product patents, Article 27 requires them to  be available for, at least, those inventions that
are (i) new, (ii) involve an inventive step and (iii)  are capable of industrial application.  In accordance
with the normal meaning of these conditions, an inven tion is new and involves an inventive step if, at
the filing date or, if applicable, the priority date of  the application in which pa tent protection is claimed,
the invention did not form part of the prior art a nd required an inventive step to be deduced from that
prior art by a person skilled in the art.  Thus, in orde r to prevent the loss of the novelty of an invention in
this sense, filing and priority dates need to have a sound legal basis if the provisions of Article 70.8 areto fulfil their purpose.  Moreover, if available, a f iling must entitle the applican t to claim priority on the
                                          
     86Paragraph 4.9 aboveWT/DS50/R
Page 51
basis of an earlier filing in respect of the claimed in vention over applications with subsequent filing or
priority dates.  Without legally sound filing and prio rity dates, the mechanism to be established on the
basis of Article 70.8 will be rendered inoperational.  In  our view, preservation of novelty and priority in
respect of applications for product patents in respect of pharmaceutical and agricultural chemical
inventions so as to provide for e ffective future patent protection afte r examination of the applications as
of, at the latest, 1 January 2005 is the central object  and purpose of Article 70.8(a).  This is a special
obligation imposed on those Members benefitting from the transitional arrangements. 7.29 The findings above can be confirmed by the negotiating history of the TRIPS Agreement.
87 
We note that in the negotiation of the TRIPS Ag reement the question of patent protection for
pharmaceutical and agricultural chemical products was a key issue, which was negotiated as part of a
complex of related issues concerning the scope of  the protection to be accorded to patents and some
related rights and the timing of the economic impact of  such protection.  A critical  part of the deal struck
was that developing countries th at did not provide product patent  protection for pharmaceuticals and
agricultural chemicals were permitted to delay the in troduction thereof for a period of ten years from the
entry into force of the WTO Agreement.  However, if  they chose to do so, they were required to put in
place a means by which patent applications for such  inventions could be filed so as to allow the
preservation of their novelty and priority for the pur poses of determining thei r eligibility for protection
by a patent after the expiry of the transitional period.  In addition, they were required to provide also for
exclusive marketing rights in respect of the produc ts in question if those products obtained marketing
approval during the transitional period, subject to a numbe r of conditions.  It is our view that this means
that Article 70.8(a) requires the de veloping countries in question to  establish a means that not only
appropriately allows for the entitlement to file ma ilbox applications and the allocation of filing and
priority dates to them, but also takes away any r easonable doubts as to whethe r mailbox applications and
eventual patents based on them could be rejected or in validated because, at the filing or priority date, the
matter for which protection was sought was unpatentable in the country in question. 
7.30 Finally, we recall that one of the precepts developed under GATT 1947 is that rules and
disciplines governing the multilate ral trading system serve to protect legitimate expectations of
Members as to the competitive relationship between  their products and those of the other Members.88 
As the Superfund  panel pointed out, such rules and disciplines  "are not only to protect current trade but
also to create the predictability needed to plan future trade".89  Predictability in the intellectual property
regime is indeed essential for the nationals of WTO Members when they make trade and investment
decisions in the course of their businesses. 
7.31 To sum up, in determining whether India has taken the action necessary to implement its
obligations under subparagraph (a) of Article 70.8, we need to examine whether the current Indiansystem for the receipt of mailbox applications can sufficiently protect the legitimate expectations of
other WTO Members as to the competitive relations hip between their nationals and those of other
Members, by ensuring the preservation of novelty a nd priority in respect of products which were the
subject of mailbox applications.  Our findings are not based on the notion that, to implement
Article 70.8(a) fully, a Member must already, as of  1 January 1995, have created the rights that will be
granted after 2005:  i.e., the Member must already ha ve amended its patent law to provide that mailbox
                                          
     87We note that Article 32 of the Vienna Convention gives the negotiating history a status of "supplementary means of
interpretation" only.  Here we use it only to confirm the meanin g resulting from the application of the rules set out in Articl e 31
of the Vienna Convention.
     88See paragraphs 7.20 and 7.21 above
     89Panel Report on "United States - Taxes on Petroleum and Certain Imported Substances", op. cit. , para. 5.2.2WT/DS50/R
Page 52
applications will lead to the grant of patents after 2005 if th e conditions foreseen in paragraphs (b) and
(c) of Article 70.8 are met.  Rather, as indicated in paragraphs 7.28 and 7.29 above, our view is that
Article 70.8(a) requires the Members in question to es tablish a means that not only appropriately allows
for the entitlement to file mailbox applications and th e allocation of filing and priority dates to them, but
also provides a sound legal basis to preserve novelty and priority as of those dates, so as to eliminate any
reasonable doubts regarding whether mailbox applicati ons and eventual patents based on them could be
rejected or invalidated because, at the filing or pr iority date, the matter for which protection was sought
was unpatentable in the country in question.  Since we are not concluding th at immediate action should
be taken to give effect to the conditions of comp etition that must prevail after 1 January 2005 through
the mechanism of Article 70.8 (b) and (c), we do not consider our findings would have the implications
for the transitional periods under other WTO agreements to which India has alluded.90  We are,
however, of the view that India does have an obligation to take legislative measures as from1 January 1995 to the extent that such measures ar e necessary in India to implement Article 70.8(a) in
the way indicated above.  In other words, we do not  agree with India that the transitional arrangements
of the TRIPS Agreement necessarily relieve India of  the obligation to make legislative changes in its
patent regime during the first five years of operati on of the Agreement.  As indicated in paragraph 7.28
above, Article 70.8(a) is a special obligation linke d with the possibility of some developing country
Members to avail themselves of an extended transitional period until 1 January 2005.  Not to require thisprovision to be implemented with a sound legal basis would upset the delicate balance of the transitional
arrangements of Articles 65, 70.8 and 70.9 that  was negotiated during the Uruguay Round.
Mechanism for Implementing the Obligations
7.32 The United States claims that Indian law must be modified to implement India's obligations
under Article 70.8 and that the current administrative pr actice of receiving mailbox applications is not a
valid "means" for implementation.  The United States claims that the Indian administration itself had
admitted the necessity of legislative changes when  it promulgated the Patents (Amendment) Ordinance
1994, the issuance of which was permissible only if th e President "is satisfied that the circumstances
exist which render it necessary for him to take immediate action" under Ar ticle 123 of the Indian
Constitution.91  To this argument, India essentially point s out that Article 70.8 does not prescribe the
choice of a particular method of im plementation.  India further points out that the purpose of Article 123
of the Indian Constitution is to enable legislati on even when Parliament is not in session, and the
United States' reading of the term "necessary" is an incorrect one.92
7.33 In respect of this particular issue, we note that Article 1.1 of the TRIPS Agreement provides in
part as follows:
"Members shall be free to determine the appropriate method of implementing the provisions of
this Agreement within their own legal system and practice."
Thus, it is up to India to decide how to implemen t its obligations under Article 70.8.  We therefore find
that the mere fact that India relies on an administ rative practice to receive mailbox applications without
legislative changes does not in itself constitute a violation of India's obligations under subparagraph (a)of Article 70.8.  The lapse of the Patents (Amendm ent) Ordinance 1994, which was promulgated for the
purpose of specifically addressing these obligations, does not automatically mean the lack of a "means"
                                          
     90See paragraph 4.9 above
     91See paragraphs 4.3 and 7.3 above
     92See paragraph 4.6 aboveWT/DS50/R
Page 53
for filing patent applications for pharmaceutical  and agricultural chemical products in India.
7.34 However, in order to make an objective assessment regarding the consistency of the current
Indian mechanism with the TRIPS Agreement, as required under Article 11 of the DSU, we must ask
ourselves the following question:  can that mech anism achieve the object and purpose of Article 70.8
and thereby protect the legitimate expectations of other WTO Members, by en suring the preservation of
novelty and priority in respect of products which we re the subject of mailbox applications?  To answer
this, we need to analyze the current Indian system  from the viewpoint of whether it ensures the degree of
legal security and predictability fo r patent applicants of other WTO Members that they are entitled to
legitimately expect under the provisions of Article 70.8(a).  There appear to be a few serious problems.
7.35 First, under Section 12(1) of  the Patents Act 1970, when the complete specification has been
filed in respect of a patent application, the C ontroller must refer the matter to an examiner. 
Section 12(2) clearly obliges the examiner ordinar ily to complete examination within 18 months from
the date of reference from the Controller.93  Under Section 15(2) of the Pa tents Act, any application for
the grant of a patent on a pharmaceutical or agricu ltural chemical product must be refused by the
Controller for lack of patentability.94  In light of these provisions, the current administrative practice
creates a certain degree of legal insecurity in that it requires Indian officials to ignore certain mandatory
provisions of the Patents Act.  We recall that the Malt Beverages  panel dealt with a similar issue.  There,
the respondent offered as a defence that certain  GATT-inconsistent legislation was not currently
enforced.  The panel rejected this defence by stating as follows:
"Even if Massachusetts may not currently be us ing its police powers to enforce this mandatory
legislation, the measure continues to be mandatory legislation which may influence thedecisions of economic operators.  Hence, a non- enforcement of a mandatory law in respect of
imported products does not ensure that imported beer and wine are not treated less favourably
than like domestic products to which the law does not apply."
95
We find great force in this line of reasoning.  There is no denying that economic operators -in this case
potential patent applicants - are influenced by the le gal insecurity created by the continued existence of
mandatory legislation that requires the rejecti on of product patent applications in respect of
pharmaceutical and agricultural chemical products.  We note that the present situation is slightly
different from the Malt Beverages  case in that India is entitled to re tain this mandatory legislation until
1 January 2005 by virtue of Article 65.4 of the TRI PS Agreement.  The existence of the legislation per
se is not a problem under the TRIPS Agreement.  Ho wever, in the absence of clear assurance that
applications for pharmaceutical and agricultural chem ical product patents will not be rejected and that
novelty and priority will be preserved despite the wording of the Patents Ac t, the legal insecurity
remains.
7.36 This legal insecurity is further compounde d by the lapse of the Patents (Amendment)
Ordinance 1994, which formally and publicly established legal procedures for the receipt of mailboxapplications.  This is a particular problem accord ing to the United States because a group of Indian
patent law experts advised the Indian Government th at a formal legal basis for mailbox applications was
required to give them legitimacy under Indian law.   Although India counters that the group issued no
                                          
     93See paragraph 2.10 above
     94Id.  Furthermore, under Section 9 of the Patents Act, a complete specification must be filed within 12 months of the filing
of a provisional application, failing which the applica tion is deemed abandoned (see Annex 1 of this report).
     95Panel Report on "United States - Measures Affecting Alcoholic and Malt Beverages", adopted on 19 June 1992, BISD
39S/206, para. 5.60WT/DS50/R
Page 54
specific report on this issue and that the group contai ned patent law and not constitutional law experts, a
press note issued at the time of the promulgation of  the Ordinance indicates that the Ordinance was
based in part on the group's recommendations.96
7.37 Second, even if Patent Office officials do not  examine and reject mailbox applications, a
competitor might seek a judicial order to force them  to do so in order to obtain rejection of a patent
claim.97  If the competitor successfully establishes the illegality of the separate storage and non-
examination of mailbox applications before a court, the filing of those applications could be rendered
meaningless.  The evidence submitted by India - tw o Supreme Court rulings on administrative practices
- does not sufficiently demonstrate that a court w ill uphold the validity of administrative actions which
apparently contradict mandatory legislation.  One case cited by India involved a situation where the
administrative practice was not contrary to the stat utory provisions.  In the other case, the Supreme
Court reached a conclusion that administrative guide lines had no statutory force and conferred no right
on any citizen to complain th at they were not being met.98  These cases may confirm the Indian position
that its reliance on an administrative practice rega rding the handling of pharmaceutical and agricultural
chemical product patent applicati ons is not unconstitutional, but they do not specifically answer the
question we are facing, i.e., whether a court will uphold the validity of administrative actions which
apparently contradict mandatory legislation.
7.38 Third, despite India's commitment to seek le gislative changes before the expiry of the
transitional period available to it, without a suffi cient legal basis now for preserving novelty and
priority, there would remain doubt during the tran sitional period regarding the eligibility of these
products for future patent protection.  As a result, th e legal status of patent applications in respect of
these products would remain insecure and unpredic table for a possibly long period, which could last
until 1 January 2005. 
7.39 The fact that patent applications have been filed in respect of pharmaceutical and agricultural
chemical products does not alter the situation.  It  is unknowable how many applications would have
been filed if an appropriate system had been in place.  As it appears that a number of United States'
pharmaceutical companies do not believe that India has established a mailbox application system, and
consequently have not filed applications for patent protection of pharmaceutical products99, it is
reasonable to assume that potential applicants both in India and outside the country have lost
opportunities for patent protection for their products in a belief that there is no mechanism to secure
their rights.  In this regard, we note that the in terests of those persons who would have filed patent
applications had there been an appropriate mech anism in place after the expiry of the Patents
(Amendment) Ordinance 1994 should be  protected, since the lack of an adequate mailbox application
system has effectively deprived them of benefits wh ich they would have enjoyed in the future under the
TRIPS Agreement.
                                          
     96See paragraph 2.4 above.  We also note that the Preamble to the Patents Ordinance contained the following passage: "...
whereas with a view to meeting India's obligations, it has become necessary to amend the Patents Act 1970 in conformity with
the obligations under the [WTO] agreement ..." (see document IP/N/1/IND/1).  While India is, as discussed above, free to choosethe legal form of implementing its obligations under the WTO Agreement, we note that India has not officially and publicly
changed or corrected the view expressed in this Preamble.
     97Because, under the current Indian system, patent applications for pharm aceutical and agricultural chemical pr oducts are not
examined and such applications are not pub lished, competitors might not be in a pos ition to raise objections.  However, since
data such as the title of the invention, the filing date of the application and the name of the applicant are publicized in the  Official
Gazette, competitors will often be able to find out with which patent applications filed in other countries the applications
correspond.
     98See paragraphs 4.10 and 4.12 above
     99See Annex 3 of this reportWT/DS50/R
Page 55
7.40 The United States has raised these questions in  a persuasive manner.  As the Appellate Body
report on Shirts and Blouses  points out, "a party claiming a vi olation of a provision of the WTO
Agreement by another Member must assert and prove its claim".100  In this case, it is the United States
that claims a violation by India of Article 70.8 of the TRIPS Agreement.  Therefore, it is up to the
United States to put forward evidence and legal argume nts sufficient to demonstrate that action by India
is inconsistent with the obligations assumed by India under Article 70.8.  In our view, the United States
has successfully put forward such evidence and arguments.  Then, again to paraphrase the AppellateBody, the onus shifts to India to bring forward evidence and arguments to disprove the claim.  We are
not convinced that India has been able to do so. 
7.41 In consideration of the above, we find that th e lack of legal security in the operation of the
mailbox system in India is such that the system  cannot adequately achieve the object and purpose of
Article 70.8 and protect legitimate expectations cont ained therein for inventors of pharmaceutical and
agricultural chemical products.  It would be extrem ely difficult to make informed trade and investment
decisions based upon the current legal situa tion in India.  To quote again from the Superfund  panel, "the
predictability needed to pl an future trade" cannot be created under the system.
101 Thus, security and
predictability in the multila teral trading system, which is one of the central goals of the dispute
settlement mechanism, cannot be achieved.  Consequently, the answer to the question we posedourselves in paragraph 7.34 above clearly cannot be answered in the affirmative.  
7.42 Furthermore, independently of India's tran sparency obligations under Article 63, we believe
that there is a serious issue in the current Indian system of mailbox applications in that it is not made
public.  Within the context of Article 70.8, it may be questioned whether unpublicized administrative
practices can be regarded as "a means by whic h applications for patents for such inventions can be
filed".  If the means is not publicized, how can an in ventor file a claim?  India argues that "it [is]
sufficient that individual companies that [wish] to submit an application [can] obtain the necessary
information from the relevant authorities".
102 In our view, the mere existence of such possibility is
hardly sufficient, even if we take into account the fact that economic operators in this area are usually
well informed about systems for the protection of thei r rights.  There must be a guarantee that the public
- including interested nationals of other WTO Me mbers - is adequately informed.  For potential
applicants from other WTO Members to be adequately informed, it is arguable that they must not only
have information about the existence of a system fo r the filing of patent applications for pharmaceutical
and agricultural chemical products, but also be inform ed of the purpose of such a system, i.e., to protect
the novelty of the inventions in question and the prio rity of the applications claiming their protection so
that the applications concerned are capable of lead ing to the grant of a patent under the conditions of
subparagraphs (b) and (c) of Article 70.8, and to lead to the grant of exclusive marketing rights underthe conditions set out in Article 70.9 even during the transitional period.  Otherwise, the security and
predictability necessary for the operation of the TRIPS Agreement would be lost, and legitimate
expectations of interested nationals of other WTO Members would not be protected.  However, we
make no specific finding on the points discussed in this paragraph, since we deal in more detail with the
transparency claim in the following section.
7.43 In conclusion, we find that India has failed to take the action necessary to implement its
obligations under subparagraph (a) of Article 70.8 because  of the lack of legal security regarding the
                                          
     100Appellate Body Report on "United States - Measure Affecting Imports of Woven Wool Shirts and Blouses from India",
adopted on 23 May 1997, WT/DS33/AB/R, page 16
     101See paragraph 7.30 above
     102See paragraph 4.7 aboveWT/DS50/R
Page 56
status of product patent applications in respect  of pharmaceutical and agricultural chemical products
under the system it presently operates.
E. Article 63
7.44 The United States claims that India has viol ated Article 63 of the TRIPS Agreement by its
failure to make public any information on the exis tence of a new system for the filing of mailbox
applications after the expiry of the Patents (A mendment) Ordinance 1994.  Although the United States
formulates it as an alternative cl aim in the event that the Panel were to find that India has a valid
mailbox system in place, and we have, as stated abov e, found that the current mailbox system in India is
at variance with Article 70.8(a) of the TRIPS Agreement, we believe it necessary to make our findingsclear on the issue of transparency in order to avoi d a legal vacuum in the event that, upon appeal, the
Appellate Body were to reverse our findings on Article 70.8.
103 
7.45 In response to the United States' claim, Indi a argues - apart from the procedural objections
described earlier - that under Article 65.2 India, as a developing country, is entitled to delay theapplication of Article 63 until 1 January 2000.  Paragraphs 1 and 2 of Article 63 read as follows:
"1. Laws and regulations, and final judicial d ecisions and administrative rulings of general
application, made effective by a Member pertai ning to the subject matter of this Agreement
(the availability, scope, acquisition, enforcement and prevention of the abuse of intellectual
property rights) shall be published, or where su ch publication is not practicable made publicly
available, in a national language, in such a manner as to enable governments and right holdersto become acquainted with them.  Agreements c oncerning the subject matter of this Agreement
which are in force between the government or a governmental agency of a Member and thegovernment or a governmental agency of  another Member shall also be published.
"2. Members shall notify the laws and regulati ons referred to in paragraph 1 to the Council
for TRIPS in order to assist that Council in its review of the operation of this Agreement.  The
Council shall attempt to minimize the burden on Members in carrying out this obligation and
may decide to waive the obligation to notify such  laws and regulations directly to the Council
if consultations with WIPO on the establishmen t of a common register containing these laws
and regulations are successful.  The Council shall also consider in this connection any action
required regarding notifications pursuant to the obligations under this Agreement stemming
from the provisions of Article 6 ter of the Paris Convention (1967)."
Paragraphs 1 and 2 of Article 65 further read as follows:
"1. Subject to the provisions of paragraphs 2, 3 and 4, no Member shall be obliged to apply
the provisions of this Agreement before the e xpiry of a general period of one year following
the date of entry into force of the WTO Agreement.
"2. A developing country Member is entitled to delay for a further period of four years the
date of application, as defined in paragraph 1, of the provisions of this Agreement other than
Articles 3, 4 and 5."
7.46 The issue before the Panel is whether this exemption should be understood to cover the
transparency obligations under Article 63 or whether such a procedural obligation to publish and notify
national laws and regulations should be understood as becoming applicable at the time that a Member is
                                          
     103See paragraphs 6.6 to 6.12 aboveWT/DS50/R
Page 57
obliged to start applying a substantive provision of  the TRIPS Agreement, i.e.  that the timing of the
transparency obligation is a function of the timing of the substantive obligation.  In the former case,
India would not be under an obligation to publis h and notify, as from 1 January 1995, laws and
regulations giving effect to the requirements of Ar ticle 70.8(a).  In examining this matter, we note that
the TRIPS Agreement contains a range of procedur al and institutional provisions, relating not only to
transparency but also to dispute settlement, the esta blishment of the Council for TRIPS and international
cooperation, which have to be understood, and have been understood in the practice of the Council for
TRIPS, as applying either from 1 January 1995 or from the time that the corresponding substantiveprovision has to be met consistently with the provisi ons of Part VI and Article 70.  An example is Part V
of the TRIPS Agreement on "Dispute Prevention a nd Settlement", which includes both transparency
provisions (Article 63) and dispute settlement provisi ons (Article 64).  If transparency provisions were
not applicable to India by virtue of Article 65.2, then the logical conclusi on would be that dispute
settlement provisions are equally not applicable.  This clearly cannot be the case and we reject the
Indian argument on this point.
7.47 We also note that the WTO Members have conf irmed this understanding in the actions taken
by the Council for TRIPS.  The Council has considered  Article 63.2 as requiring that "as of the time that
a Member is obliged to start applying a provision of the TRIPS Agreement, the corresponding laws and
regulations shall be notified without delay".
104  Moreover, the Preparatory Committee for the World
Trade Organization, which met in 1994, noted that "one substantive obligation, Article 70.8, which
comes into force as of the date of  entry into force of the WTO Agreement was referred to and there was
acceptance that, under Article 63.2, national laws and regulations should be notified as of the time thatthe corresponding substantive obligation applies".
105  The Preparatory Committee's report was adopted
by the General Council in January 1995 as reflected  in document WT/GC/M/1.  In our view, such an
interpretation is fully consistent w ith the terms of the TRIPS Agreemen t in their context and in the light
of its object and purpose.  The purpose of the notifi cation obligation in Article 63.2 is "to assist [the
Council for TRIPS] in its review of the operation of this Agreement".  In order to undertake this task,
clearly the Council needs the info rmation as from the time that obligations become applicable.
7.48 It is clear that a mechanism for receiving ma ilbox applications is, whether made effective by
law or through administrative practices, a measure "of general application" within the meaning of
Article 63.1.  As the Underwear  panel observed in respect of Article X of GATT 1994, to the extent the
measure "affects an unidentified number of econom ic operators, including domestic and foreign
producers", it is a measure of general application.106  Thus, India has an obligation to publish or, where
this is not practicable, make publicly available the specific terms and provisions of its mailbox system in
such a manner as to enable governments and righ t holders to become acquainted with them under
Article 63.1 of the TRIPS Agreement.  India claims  that the existence of the mailbox system was
recognized in a written answer from the Go vernment to a question in Parliament.107  However, such a
way of conveying information cannot be regarded as a sufficient means of publicity under Article 63.1of the TRIPS Agreement.  India has not complied with this obligation.  Equally, we find unpersuasive
the Indian claim that only the Patents Act 1970, on which the administrative practices are based, is
                                          
     104Procedures for Notification of , and Possible Establishment of a Common Register of, National Laws and Regulations
under Article 63.2, Decision of the Council for TRIPS of 21 November 1995 (see document IP/C/2)
     105PC/R, paragraph 45, approving the reports and recommendations contained in document PC/IPL/7, paragraph 9
     106Panel Report on "United States - Restrictions on Imports of Cotton and Man-made Fibre Underwear", op. cit ., para. 7.65. 
This conclusion was upheld by the Appellate Body in its report on the same case, WT/DS24/AB/R, page 21 .
     107See Annex 2 of this reportWT/DS50/R
Page 58
subject to the publication requirement.  In view of  the fact that the Patents Act contains mandatory
provisions which are contrary to the administrative practice, the text of the Patents Act alone would at
best mislead the public regarding the existence of the mailbox system, and would not satisfy the
requirement under Article 63.1.
7.49 With respect to its notification obligations under Article 63.2,  it is evident that India did not
notify to the Council for TRIPS the legal basis of  the current system for the handling of mailbox
applications after the expiry of the Patents (Amendment) Ordinance 1994.
7.50 In view of the above, we find that India has failed to comply with its  transparency obligations
under paragraphs 1 and 2 of Article 63 of the TRIPS Agreement.
F. Article 70.9
7.51 Finally, we turn to our examination of the Un ited States' claim regarding exclusive marketing
rights under Article 70.9 of the TRIPS Agr eement.  Article 70.9 reads as follows:
"Where a product is the subject of a patent application in a Member in accordance with
paragraph 8(a), exclusive marketing rights sha ll be granted, notwithstanding the provisions of
Part VI, for a period of five years after obtaining  marketing approval in that Member or until a
product patent is granted or rejected in that  Member, whichever period is shorter, provided
that, subsequent to the entry into force of th e WTO Agreement, a patent application has been
filed and a patent granted for that product in another Member and marketing approval obtained
in such other Member." 
It is not contested that currently there is neither legislation nor administrativ e practice in place in India
regarding the grant of exclusive marketing rights  on those products that satisfy the conditions of
Article 70.9.  India also admits that legislation is needed to effect a system of granting exclusive
marketing rights.  As noted above, the Patents (A mendment) Ordinance 1994 had provisions to establish
such a system as of 1 January 1995, but the syst em lapsed with the expiry of the Ordinance.
7.52 The United States claims that the obligation to  establish an exclusive marketing rights system
arose on 1 January 1995 and that, since India has failed to provide for an exclusive marketing rightssystem in its legislation, it is currently not in comp liance with Article 70.9.  India claims that, since there
has not been any request for the grant of exclusive mark eting rights in India so far, India has not failed to
implement its obligations under Article 70.9 and that I ndia is not obligated to make exclusive marketing
rights generally available before all the events sp ecified in Article 70.9 have occurred.  Thus, the central
question before this Panel is that of timing: as of  when should there be a mechanism ready for the grant
of exclusive marketing rights?
7.53 To be more specific, this que stion contains two subquestions:
(a) Is India in breach of the TRIPS Agreement if, at the appropriate time, its executive
authorities do not have the legal authority to  grant exclusive marketing rights, even if
the grant of such rights has not yet been refused to an eligible product?
(b) If the answer is yes, what is the appropria te time by which such legal authority must be
provided?
In our view, the answer to question (a) is yes for the following reasons.  Most of the provisions in the
WTO Agreement aim to prevent governments from taking  measures that might be harmful to trade and,
therefore, concern the existence of legislation requiri ng governments to act in a way that is inconsistentWT/DS50/R
Page 59
with the obligations under the WTO Agreement.  Thus, if a Member has legislation mandating the
executive to act in such a way, it is in breach of its obligations even if that particular legislation has not
yet been applied.108  The TRIPS Agreement is different from other covered agreements in that most of
its provisions require Members to take positive acti on;  in this particular case to grant exclusive
marketing rights pursuant to Article 70.9.  In situations  where it is necessary for a Member to give effect
to such positive action, a failure to provide the ex ecutive with the required authority constitutes a breach
of the Agreement, because the lack of the author ity mandates the executive not to comply with the
Member's WTO obligations.  The underlying reasoning  is that, as we have already discussed, the
absence of legislation frustrates legitimate exp ectations regarding the conditions of competition.109 
Thus, if the executive branch of the Indian Government  does not have the authority to give effect to the
obligations under Article 70.9, it would be in breach of its obligations under the TRIPS Agreement evenin the absence of a specific act of non-compliance.  Given this analysis, the issue before the Panel
becomes one of timing:  as of when does the TRI PS Agreement oblige the Indian executive to have the
necessary authority to grant exclusive marketing righ ts and, thus, protect the legitimate expectations of
other Members as to the competitive relationship between their nationals and Indian nationals.
Textual Analysis
7.54 The starting point of our analysis on the question of timing should be the wording of
Article 70.9.110  We note that, as is also the case with Article 70.8, Article 70.9 uses the term
"notwithstanding the provis ions of Part VI".  The ordinary mean ing of this term clearly indicates that
Members to which this provision applies cannot avail themselves of the transitional arrangements underPart VI, including Article 65.  Thus, the effective date  of this provision must be the date of entry into
force of the WTO Agreement, which means a Member which is subject to the provisions of Article 70.9
must be ready to grant exclusive marketing rights  at any point in time subsequent to 1 January 1995.
7.55 India seems to have reached a different conclu sion based on the wording of Article 70.9.  First,
India notes that Article 70.9, in contrast to Article  70.8(a), does not contain the phrase "provide as from
the date of entry into force of the WTO Agreement".  However, this difference is not significant in view
of the fact that Article 70.9 is directly tied to Article 70.8(a).  Article 70.9 applies "where a product is
the subject of a patent application in a Member  in accordance with paragraph 8(a)".  Given that
Article 70.8(a) must be implemented as of the date  of entry into force of the WTO Agreement, one
would expect the same implementation date would a pply in the absence of a clear indication to the
contrary. 
7.56 Second, India argues that the obligations under Article 70.9 should be distinguished from those
under other provisions of the TRIPS Agreement because it uses the term "exclusive marketing rightsshall be granted ...".  According to India, there is a material difference between this expression and such
other expressions as "patents shall be available ..." in Article 27.
111  We are not persuaded by this
argument.  Both parties agree that the implemen tation of Article 70.9 requires a system under which
applications for exclusive marketing rights can be made.  Articles 27 and 70.9 have a common basis in
                                          
     108See, for instance, panel reports on "United States - Taxes on Petroleum and Certain Imported Substances", op. cit. , para.
5.2.9., and on "United States  - Measures Affecting Alcoholic and Malt Beverages", op. cit ., para. 5.59.
     109See discussions in paragraphs 7.18 to 7.22 above and, for a concrete example of such frustration, paragraph 7.62 below.
     110See paragraphs 7.18 and 7.24 above
     111See paragraph 4.27 aboveWT/DS50/R
Page 60
that they require a Member to establish a system for th e grant of specific rights.  Seen in this context, the
terms "shall be available" and "shall be granted" can almost be used interchangeably.112 
Context, Object and Purpose
7.57 The analysis of the context and the object and purpose of Article 70.9 does not change the
above conclusion.  Article 70.9, like all other provisions  of the TRIPS Agreement, must be interpreted in
good faith, taking into account legitimate expectati ons of other WTO Members.  Clearly, Article 70.9
shares the object and purpose of Article 70.8, to which th ere is an explicit reference: i.e., to provide a
degree of protection of the interests of inventor s of pharmaceutical and agricultural chemical products
during the transition period.  India, while generally agreeing with this observation, tries to narrow down
its scope by claiming that the purpose of Article 70.9 is to give such inventors the economic privilege of
an exclusive marketing right only for the five-y ear period preceding 1 January 2005 if their product
inventions remain unpatentable beyond the five-y ear transitional period for developing countries
stipulated in Article 65.2.  We are not convinced by  this argument.  The object and purpose of the
provision is to provide for specific marketing rights.  In context, they partly compensate for the absence
of effective patent protection in countries which av ail themselves of the transitional periods under the
TRIPS Agreement.  Such rights have to be granted as soon as the conditions are met any time after theentry into force of the WTO Agreement.  Neither  from the object and purpose of Article 70.9, nor from
its context, nor from its text, do they  take effect only after the year 2000.
7.58 India also appears to claim that the granting of  exclusive marketing rights is not needed before
1 January 2000 based on the argument that it makes no commercial sense to obtain an exclusivemarketing right for a five-year period unless that pe riod is immediately followed by the period of full
patent protection.
113  This is a mere speculation on how economic operators might react to a specific
legal situation.  Such a speculation does not entitle Indi a to delay the application of its obligations under
Article 70.9 until 1 January 2000, especially because ther e is no guarantee that the decision on the grant
of patents will be taken on 1 January 2005.114  We are not persuaded by the economic logic of this
speculation, either.  Depending on the situation of a pa rticular market, an exclusive marketing right for a
period of five years followed by a gap of a few y ears until full patent protection is granted some time
subsequent to 1 January 2005 might be essential for manufacturers of pharmaceutical and agricultural
chemical products in order to set up their position in the market.  Competitors, knowing that the grant of
subsequent patent protection is i mminent, are likely to be discouraged from entering into the market
during this brief window of opportunity.
7.59 India further argues that the transitional prov isions of the TRIPS Agreement accord developing
country Members the right to choose between providin g for the patentability of the product inventions in
question and the grant of exclusive marketing rights a nd that it would be logically inconsistent with this
right to opt out of the obligation to grant exclusiv e marketing rights if Article 70.9 were interpreted to
oblige Members to provide in their legislation for th e general availability of exclusive marketing rights
                                          
     112India maintains that the ordinary meaning of the term "available" is "at disposal" or "obtainable", which is presumably
different from "granted".  This argument would have been more persuasive if what is to be "granted" were an exclusive privilege
accorded on an ad hoc basis.  However, here we are dealing with exclusive marketing "rights".  The term "right" connotes an
entitlement to which a person has a just claim.  As such, it im plies general, non-discretionary availability in the case of tho se
eligible to exercise it.  In our view, an exclusive marketing right cannot be "granted" in a specific case unless it is "availa ble" in
the first place.
     113See paragraph 4.27 above
     114If India were to use the full transitiona l period available to it, it would be obliged to examine the patentability of these
inventions from 1 January 2005.  This process could take some time with the result that the decision on grant would be taken
somewhat later.WT/DS50/R
Page 61
as from the date of entry into force of the WTO Agreement.115  We do not find this argument to be
persuasive.  As is the case with Article 70.8(a), the granting of exclusive marketing rights is a special
obligation linked with the enjoyment by Members of  the transitional arrangements under Articles 65 and
66 of the Agreement.116  To accept India's interpretation on this point would be to exonerate those
Members from this obligation, upsetting the carefully  negotiated balance of rights and obligations
during the transitional period.
7.60 Based on customary rules of treaty interpreta tion, we have reached the conclusion that under
Article 70.9 there must be a mechanism ready for the grant of exclusive marketing rights at any time
subsequent to the date of entry into force of the WTO Agreement.  India suggests that this result ignores
the fact that in reality it will take many years before  anyone will be in a position to apply for the grant of
exclusive marketing rights under Article 70.9.  Howeve r, even if we accept that some delay after 1
January 1995 may well occur, we do not accept that the delay would extend to the date of theestablishment of this Panel or that the result of our prior analysis should be changed.  Under
Article 70.9, exclusive marketing rights must be gr anted by India after a product meets the following
conditions:
(a) A mailbox application has been filed in  India in respect of a pharmaceutical or
agricultural chemical product;
(b) A patent application has been filed in respect of that product in another WTO Member
after 1 January 1995;
(c) The other Member has granted the patent;(d) The other Member has approved the marketing of the product; and(e) India has approved the marketing of the product.
India argues that "common sense and practical experi ence indicate[s] that all these steps [take] a long
time and normally  the products in question [will] not get on the market in a developing country before
the expiry of the ten-year transitional period" ( emphasis added ).
117  T h a t  m a y  b e  s o .   H o w e v e r ,  a n
average period of time is not relevant in this analysis .  What really matters is when it would be possible
for one product to meet the terms of Article 70.9.  While one could generally argue that these eventstake some time to materialize, one can never indicat e exactly how long they will take.  Indeed, according
to the United States, there is at least one Unite d States' pharmaceutical company that has completed
steps (b) through (d) above w ith respect to two products.
118
7.61 We also note that steps (a), (b), (c) and (d) in the previous paragraph are events that are beyond
the control of the authorities in India.  In other wo rds, they do not provide any definite basis for the
postponement of the obligations under Article 70.9.  Step (e) is under the control of the Indian
authorities.  However, if marketing approvals are de nied purely for the purpose of delaying the grant of
exclusive marketing rights, it would give rise to que stions regarding good faith application of the TRIPS
Agreement. Moreover, the range of products affecte d, i.e. pharmaceuticals and agricultural chemicals, is
                                          
     115See paragraph 4.27 above
     116See paragraph 7.28 above
     117See paragraph 4.27 above
     118See paragraph 4.30 above.  See also the discussion in paragraph 7.62 below.WT/DS50/R
Page 62
large and differing marketing approval regimes will apply according to the products in question.119  For
these reasons, we are not convinced that India can establish any specific date later than 1 January 1995
as the date by which it should have in place the lega l means necessary to give effect to the exclusive
marketing rights provisions of Article 70.9.
7.62 Postponement of the effective date cannot follo w merely from the fact that there has been no
request for the grant of exclusive marketing rights so far.  Where, as we discussed with respect to
Article 70.8, lack of legal security is likely to disc ourage potential applicants to file an application,120
this is certainly the case if a system is non-existent .  The lack of a system may discourage applications,
and the lack of applications may prol ong the lack of a system.  This app ears to be a real issue.  We recall
that the evidence put forward by the United States i ndicates that there is a possibility that at least one
United States' manufacturer, which has received marke ting approval in the United States and Europe,
might apply for the grant of exclusive marketing righ ts in India. According to the United States, "[t]he
company was wary about proceeding without knowing wh at the system for the grant of such right was,
for fear of losing its ability to receive [exclusi ve marketing] rights because of some procedural
problem".121
Conclusion
7.63 In conclusion, we find that India has failed to  implement its obligations under Article 70.9 and
honour the legitimate expectations of its trading partners  to that effect.  It is the obligation of Members
to establish a system for the grant of exclusive mark eting rights to be available at any time after entry
into force of the WTO Agreement. 
7.64 In this connection, the United States requests this Panel to find that the obligations under
Article 70.9 include the granting to the holder of marke ting rights the exclusive ri ght to control the entry
of competitors onto the market during the period of t hose rights "so that competitors of the owner will
not be permitted on the market absent the owner's cons ent".  We consider a finding on the nature of the
right to be granted under Article 70.9 unnecessary to se ttle this particular dispute, which concerns the
current non-existence of an exclusive marketing rights system in India.  Rather, it is sufficient for the
Panel to recommend that India bring itself into conformity with its obligations under the TRIPS
Agreement.
G. Suggestions by the Panel
7.65 Regarding the United States' request that this Panel suggest that India implement its
obligations under paragraphs 8 and 9 of Article 70 in a manner similar to the way in which Pakistan hasindicated it is implementing these obligations, as  reflected in document WT/DS36/4, we do not deem
such a suggestion appropriate, since it would impair India's right to choose how to implement the TRIPS
Agreement pursuant to its Article 1.1.
7.66 We recall, however, that we have noted that the interests of those persons who would have
filed patent applications had there been an appr opriate mechanism in place after the expiry of the
Patents (Amendment) Ordinance 1994 should be protected, since the lack of an adequate mailbox
                                          
     119For example, India has indicated with respect to agricultural chemicals that "marketing approvals would depend on the
submission of satisfactory data by the applicant and the satisfaction of the Registration Committee constituted under the
Insecticides Act"  (see paragraph 4.29, above).
     120See paragraph 7.41 above
     121See paragraph 4.30 above and Annex 3 of this reportWT/DS50/R
Page 63
application system has effectively deprived them of  benefits which they would have enjoyed in the
future.122  The interests of those who have alread y filed such applications under the Patents
(Amendment) Ordinance 1994 or the administrativ e practices currently in place should also be
protected.  We deem it appropriate to make a sugges tion in this regard.  This suggestion is not a
declaratory judgement.  Rather, it should be understood as an attempt to secure a positive solution to this
dispute as required under Article 3.7 of the DSU.
VIII.  CONCLUSIONS
8.1 On the basis of the findings set out above, the Panel concludes that India has not complied
with its obligations under Article 70.8(a) and, in the a lternative, paragraphs 1 and 2 of Article 63 of the
TRIPS Agreement, because it has failed to establish a mechanism that adequately preserves novelty and
priority in respect of applications for product pa tents in respect of pharmaceutical and agricultural
chemical inventions during the transitional peri od to which it is entitled under Article 65 of the
Agreement, and to publish and notify adequately info rmation about such a mechanism;  and that India
has not complied with its obligations under Article 70.9 of the TRIPS Agreement, because it has failedto establish a system for the gran t of exclusive marketing rights.
8.2 The Panel recommends that the Dispute Settlement  Body request India to bring its transitional
regime for patent protection of pharmaceutical and ag ricultural chemical products into conformity with
its obligations under the TRIPS Agreement.  The Panel further suggests that, in establishing amechanism that preserves novelty and priority in resp ect of applications for product patents in respect of
pharmaceutical and agricultural chemical inventions  during the transitional period, India should take
into account the interests of those persons who would have filed patent applications had an appropriate
mechanism been maintained since the expiry of the Patents Ordinance 1994, as well as those who have
already filed such applications under that Ordinan ce or the administrative practices currently in place.
                                          
     122See paragraph 7.39 aboveWT/DS50/R
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ANNEX 1
INDIA
The Patents Act, 1970123
(No. 39 of 1970)
Section 2
(1) In this Act, unless the context otherwise requires, -
.....(j) "invention" means any new and useful -
(i) art, process, method or manner of manufacture;
(ii) machine, apparatus or other article;(iii) substance produced by manufacture,
and includes any new and useful improvement of any of them, and an alleged invention;
.....(l) "medicine or drug" includes -
(i) all medicines for internal or extern al use of human beings or animals,
(ii) all substances intended to be used for or in the diagnosis, treatment, mitigation or
prevention of diseases in human beings or animals,
(iii) all substances intended to be used for or in the maintenance of public health, or
the prevention or control of any epidemic disease among human beings oranimals,
(iv) insecticides, germicides, fungicides, w eedicides and all other substances intended
to be used for the protecti on or preservation of plants;
(v) all chemical substances which are ordi narily used as intermediates in the
preparation or manufacture of  any of the medicines or substances above referred
to;
.....
Chapter II - Inventions not patentable
Section 5
In the case of inventions -
(a) claiming substances intended for use, or capable of being used, as food or as medicine
or drug, or
(b) relating to substances prepared or produced  by chemical processes (including alloys,
optical glass, semi-conductors and inter-metallic compounds),
no patent shall be granted in respect of claims for the substances themselves, but claims for the methods
or processes of manufacture shall be patentable.
                                          
     123The short titleWT/DS50/R
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Chapter III - Applications for patents
Section 6
(1) Subject to the provisions contained in section 134, an application for a patent for an invention
may be made by any of the following persons, that is to say, -
(a) by any person claiming to be the true  and first inventor of the invention;
(b) by any person being the assignee of the person claiming to be the true and first inventor
in respect of the right to make such an application;
(c) by the legal representative of any deceased person who immediately before his death
was entitled to make such an application.
(2) An application under sub-section (1) may be made by any of the persons referred to therein
either alone or jointly with any other person.
Section 7
(1) Every application for a patent shall be fo r one invention only and shall be made in the
prescribed form and filed in the patent office.
(2) Where the application is made by virtue of an assignment of the right to apply for a patent for
the invention, there shall be furnis hed with the applicati on, or within such period as may be prescribed
after the filing of the application, proof of the right to made the application.
(3) Every application under this section shall st ate that the applicant is in possession of the
invention and shall name the owner claiming to be the true and first inventor;  and where the person so
claiming is not the applicant or one of the applicants , the application shall cont ain a declaration that the
applicant believes the person so named to be the true and first inventor.
(4) Every such application (not being a conv ention application) shall be accompanied by a
provisional or complete specification.
Section 8
(1) Where an applicant for a patent under this Act  is prosecuting either al one or jointly with any
other person an application for a patent in any country outside India in respect of the same or
substantially the same invention, or where to his k nowledge such an application is being prosecuted by
some person through whom he claims or by some pe rson deriving title from him, he shall file along with
his application -
(a)a statement setting out the name of the count ry where the application is being prosecuted,
the serial number and date of filing of the a pplication and such other particulars as may
be prescribed;  and
(b)an undertaking that, up to the date of the acceptance of his complete specification filed in
India, he would keep the Controller informed  in writing, from time to time, of details of
the nature referred to in clause (a) in resp ect of every other application relating to theWT/DS50/R
Page 66
same or substantially the same invention, if any, filed in any country outside India
subsequently to the filing of the statement re ferred to in the aforesaid clause, within the
prescribed time.
(2) The Controller may also require the applicant to furnish, as far as may be available to the
applicant, details relating to the objections, if any, ta ken to any such application as is referred to in sub-
section (1) on the ground that the invention is l acking in novelty or patentability, the amendments
effected in the specifications, the claims allowed in respect thereof and such other particulars as he may
require.
Section 9
(1) Where an application for a patent (not bein g a convention application) is accompanied by a
provisional specification, a complete specification sha ll be filed within twelve  months from the date of
filing of the application, and if the complete specifica tion is not so filed the application shall be deemed
to be abandoned:
Provided that the complete specification may be filed at any time after twelve months but
within fifteen months from the date aforesaid, if a reque st to that effect is made to the Controller and the
prescribed fee is paid on or before the date  on which the complete specification is filed.
(2) Where two or more applications in the name of the same applicant are accompanied by
provisional specifications in respect of inventions which are cognate or of which one is a modification
of another and the Controller is of opinion that the w hole of such inventions are such as to constitute a
single invention and may properly be included in one  patent, he may allow one complete specification to
be filed in respect of all such provisional specifications.
(3) Where an application for a patent (not be ing convention application) is accompanied by a
specification purporting to be a complete specification, the Controller may, if th e applicant so requests
at any time before the acceptance of the specification, di rect that such specification shall be treated for
the purposes of this Act as a provisional specifi cation and proceed with the application accordingly.
(4) Where a complete specification has been file d in pursuance of an application for a patent
accompanied by a provisional specification or by a sp ecification treated by virt ue of a direction under
sub-section (3) as a provisional specification, the Cont roller may, if the applicant so requests at any time
before the acceptance of the complete specificati on, cancel the provisional specification and post-date
the application to the date of filing of the complete specification.
Section 10
(1) Every specification, whether provisional or co mplete, shall describe the invention and shall
begin with a title sufficiently indicating the s ubject matter to which the invention relates.
(2) Subject to any rules that may be made in this behalf under this Act, drawings may, and shall, if
the Controller so requires, be supplied for the purposes of any specification whether complete or
provisional;  and any drawings so supplied shall, unl ess the Controller otherwise directs, be deemed to
form part of the specification, and references in  this Act to a specification shall be construed
accordingly.
(3) If, in any particular case, the Controller considers that an  application should be further
supplemented by a model or sample of anything illu strating the invention or alleged to constitute anWT/DS50/R
Page 67
invention, such model or sample as he may require  shall be furnished before the acceptance of the
application, but such model or sample shall not be deemed to form part of the specification.
(4) Every complete specification shall -
(a) fully and particularly describe the inve ntion and its operation or use and the method by
which it is to be performed;
(b) disclose the best method of performing the invention which is known to the applicant
and for which he is entitled to claim protection;  and
(c) end with a claim or claims defining the scope of the invention for which protection is
claimed.
(5) The claim or claims of a complete specification shall relate to a single invention, shall be clear
and succinct and shall be fairly based on the matter di sclosed in the specification and shall, in the case
of an invention such as is referred to in section 5, relate to a single met hod or process of manufacture.
(6) A declaration as to the inventorship of the inve ntion shall, in such cases as may be prescribed,
be furnished in the prescribed fo rm with the complete specification or within such period as may be
prescribed after the filing of that specification.
(7) Subject to the foregoing provisions of this  section, a complete specification filed after a
provisional specification may include claims in re spect of developments of , or additions to, the
invention which was described in the provisional specification, being developments or additions in
respect of which the applicant would be entitled under the provisions of section 6 to make a separate
application for a patent.
Section 11
(1) There shall be a priority date for each claim of a complete specification.(2) Where a complete specification is filed in pur suance of a single application accompanied by -
(a) a provisional specification;  or
(b) a specification which is treated by virt ue of a direction under sub-section (3) of
section 9 as a provisional specification,
and the claim is fairly based on the matter disclose d in the specification referred to in clause (a) or
clause (b), the priority date of that claim shall be  the date of the filing of the relevant specification.
(3) Where the complete specification is filed or  proceeded with in pursuance of two or more
applications accompanied by such specifications as are mentioned in sub-section (2) and the claim is
fairly based on the matter disclosed -
(a) in one of those specifications, the priority da te of that claim shall be the date of the
filing of the application accomp anied by that specification;
(b) partly in one and partly in another, the prior ity date of that claim shall be the date of the
filing of the application accompanied by the specification of the later date.WT/DS50/R
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(4) Where the complete specification has been file d in pursuance of a further application made by
virtue of sub-section (1) of section 16 and the claim is fairly based on the matter disclosed in any of the
earlier specifications, provisional or complete, as the cas e may be, the priority date of that claim shall be
the date of the filing of that specificati on in which the matter was first disclosed.
(5) Where, under the foregoing provisions of this  section, any claim of a complete specification
would, but for the provisions of this sub-section, have two or more priority dates, the priority date of that
claim shall be the earlier or earliest of those dates.
(6) In any case to which sub-sections (2), (3), (4) and (5) do not apply, the priority date of a claim
shall, subject to the provisions of section 137, be  the date of filing of the complete specification.
(7) The reference to the date of the filing of the application or of the complete specification in this
section shall, in cases where there has been a pos t-dating under section 9 or section 17 or, as the case
may be, an ante-dating under section 16, be a reference to the date as so post-dated or ante-dated.
(8) A claim in a complete specification of a pa tent shall not be invalid by reason only of -
(a) the publication or use of the invention so far as claimed in that claim on or after the
priority date of such claim;  or
(b) the grant of another patent which claims the invention, so far as claimed in the first
mentioned claim, in a claim of the same or a later priority date.
Chapter IV - Examination of applications
Section 12
(1) When the complete specification has been filed in respect of an application for a patent, the
application and the specification relating thereto shall be referred by the Controller to an examiner for
making a report to him in respect of the following matters, namely: -
(a) whether the application and the specificati on relating thereto are in accordance with the
requirements of this Act and of any rules made thereunder;
(b) whether there is any lawful ground of objecti on to the grant of the patent under this Act
in pursuance of the application;
(c) the result of investigations made under section 13;  and(d) any other matter which may be prescribed.
(2) The examiner to whom the application and the specification relating thereto are referred under
sub-section (1) shall ordinarily make the report to  the Controller within a period of eighteen months
from the date of such reference.
Section 15
(1) Where the Controller is satisfied that the a pplication or any specification filed in pursuance
thereof does not comply with the requirements of this Act or of any rules made thereunder, the
Controller may either -WT/DS50/R
Page 69
(a) refuse to proceed with the application;  or
(b) require the application, specification or dr awings to be amended to his satisfaction
before he proceeds with the application.
(2) If it appears to the Controller th at the invention claimed in the specification is not an invention
within the meaning of, or is not patentable unde r, this Act, he shall refuse the application.WT/DS50/R
Page 70
ANNEX 2
LOK SABHA
UNSTARRED QUESTION NO. 2601
To be answered on 2 August 1996
Amendment in Indian Patents Act, 1970
2601. SHRI ANAND RATNA MAURYA
Will the Minister of INDUSTRY be pl eased to state:
(a) whether applications have been received fro m multinational companies for product, patents in
pharmaceuticals, food and agro-chemicals in anticip ation of favourable changes in the Indian
Patents Act, 1970 in accordance with World Trade Organization guidelines;
(b) if so, the number of applications pendi ng and the dates of their pendency; and
(c) the action taken or proposed to be taken thereon?
ANSWER
THE MINISTER OF INDUSTRY (SHRI MURASOLI MARAN)
(a) to (c) The Patent Offices have received 893 patent applications in the field of drug or
medicine from Indian as well as foreign companies/institutions up until 15 July 1996. The applications for patents will be taken up for examination after 1 January 2005, asper the World Trade Organization (WTO) Agreement which came into force on1 January 1995.WT/DS50/R
Page 71
ANNEX 3
May 2, 1997
The Honorable Charlene Barshefsky
United States Trade Representative600 17th Street, N.W.Washington, D.C. 20508
Dear Ambassador Barshefsky:
I am writing to you regarding India's failure to implement "mailbox" provisions under the
WTO TRIPS Agreement on behalf of the Pharmaceu tical Research and Manufacturers of America
(PhRMA).  PhRMA represents the country's lead ing research-based pharmaceutical and biotechnology
companies, which are devoted to inventing medici nes that allow patients to lead longer and more
productive lives.  Investing nearly $19 billion a year  in discovering and developing new medicines,
PhRMA companies are leading the way in the search for cures.
As Senior Vice President in charge of PhRMA' s international matters, I am in contact with
each of the PhRMA member companies with regard to  their international operations.  I have discussed
with them in some detail whether they believe Indi a has mailbox and exclusive marketing rights systems
in place, and whether they would use such systems if  they were in place.  Based on these discussions, I
can state the following.
PhRMA member companies do not believe that India has established a mailbox application
system or a system for the grant of exclusive ma rketing rights.  Few PhRMA companies have filed
applications for pharmaceutical product patents in Indi a, knowing that because a "mailbox" system was
not in place, there is a considerable risk that t hose applications would not  receive the legal status
required by the TRIPS Agreement.  These compan ies were willing to expend the resources and time
necessary to file such applications in the hope  that India may ultimately implement its TRIPS
Article 70.8 obligations in a way that minimizes the damages created by the delay.
Other companies did not file applications for patent protection of pharmaceutical products
because India has failed to establish such a system.  I know of at least half-a-dozen such PhRMAmember companies.  These companies are prepared  to file mailbox applications when a system is
established, with the filing dates they should have been  able to specify had a system been in place since
1 January 1995.  These filing dates would, presumably, be based on their United States or other foreign
filing date.
With respect to requests for exclusive marketin g rights, not all companies are in a position to
request such rights at this time.  However, at leas t one PhRMA company is in a position to do so.  It has
received a patent and marketing approval for a drug  in the United States and Europe and is ready to
request the grant of exclusive marketing rights from the Indian health authoritie s.  This company will in
the very near future have another drug that meets these characteristics.
As you know, PhRMA companies are experiencing great losses in India because of its failure
to provide patent protection for pharmaceutical pr oducts.  Unless India establishes a mechanism to
ensure that mailbox applications can be filed a nd given the legal status required by the TRIPS
Agreement (i.e., all applications that would have been filed after 1 January 1995, had a system been in
place), they will continue to face enormous losses fo r decades to come.  Furthermore, without a systemWT/DS50/R
Page 72
for the grant of exclusive marketing rights in place,  at least one company and perhaps many others will
incur significant additional losses.
Thank you for your attention to this matter.
Sincerely,
Harvey E.Bale, Jr., Ph.D.
Senior Vice President
International
PhRMA, Pharmaceutical Research
   and Manufacturers of America