WORLD TRADE WT/DS50/AB/R
19December 1997
ORGANIZATION(97-5539)
Appellate Body
INDIA -PATENT PROTECTION FOR PHARMACEUTICAL
AND AGRICULTURAL CHEMICAL PRODUCTS
AB-1997-5
Report oftheAppellate BodyWT/DS50/AB/R
Page1
WORLD TRADE ORGANIZATION
APPELLATE BODY
India -Patent Protection for
Pharmaceutical andAgricultural Chemical
Products
India, Appellant
United States, Appellee
European Communities, Third ParticipantAB-1997-5
Present:
Lacarte-Muró, Presiding Member
Bacchus, Member
Beeby, Member
I. Introduction
1. India appeals from certain issues oflawandlegal interpretations inthePanel Report,
India -Patent Protection forPharmaceutical andAgricultural Chemical Products1(the"Panel Report").
ThePanel wasestablished toconsider acomplaint bytheUnited States against India concerning the
absence inIndiaofeither patent protection forpharmaceutical andagricultural chemical products under
Article 27oftheAgreement onTrade-Related Aspects ofIntellectual Property (the"TRIPS Agreement "),
orofameans forthefiling ofpatent applications forpharmaceutical andagricultural chemical products
pursuant toArticle 70.8oftheTRIPS Agreement andoflegalauthority forthegranting ofexclusive
marketing rights forsuchproducts pursuant toArticle 70.9oftheTRIPS Agreement .Therelevant
factual aspects ofIndia's"legal regime"2forpatent protection forpharmaceutical andagricultural
chemical products aredescribed atparagraphs 2.1to2.12ofthePanel Report.
1WT/DS50/R, 5September 1997.
2WT/DS50/4, 8November 1996.WT/DS50/AB/R
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2. ThePanel Report wascirculated totheMembers oftheWorld Trade Organization (the"WTO")
on5September 1997. ThePanel reached thefollowing conclusions:
Onthebasis ofthefindings setoutabove, thePanel concludes that
India hasnotcomplied withitsobligations under Article 70.8(a) and,
inthealternative, paragraphs 1and2ofArticle 63oftheTRIPS
Agreement, because ithasfailed toestablish amechanism that
adequately preserves novelty andpriority inrespect ofapplications
forproduct patents inrespect ofpharmaceutical andagricultural
chemical inventions during thetransitional period towhich itisentitled
underArticle65oftheAgreement,andtopublishandnotifyadequately
information about suchamechanism; andthatIndiahasnotcomplied
withitsobligations under Article 70.9 oftheTRIPS Agreement,
because ithasfailed toestablish asystem forthegrant ofexclusive
marketing rights.3
ThePanel made thefollowing recommendation:
ThePanel recommends thattheDispute Settlement Body request India
tobring itstransitional regime forpatent protection ofpharmaceutical
andagricultural chemical products intoconformity withitsobligations
under theTRIPS Agreement ...4
3. On15October 1997, India notified theDispute Settlement Body5(the"DSB") ofitsintention
toappeal certain issues oflawcovered inthePanel Report andlegalinterpretations developed bythe
Panel, pursuant toparagraph 4ofArticle 16oftheUnderstanding onRules andProcedures Governing
theSettlement ofDisputes (the"DSU"), andfiledaNotice ofAppeal withtheAppellate Body, pursuant
toRule 20oftheWorking Procedures forAppellate Review (the"Working Procedures ").On
27October 1997, India filedanappellant 'ssubmission.6On10November 1997, theUnited States
filedanappellee 'ssubmission pursuant toRule22oftheWorking Procedures .Thatsame day,the
European Communities filedathird participant 'ssubmission pursuant toRule 24oftheWorking
Procedures .Theoralhearing provided forinRule 27oftheWorking Procedures washeldon
14November 1997. Attheoralhearing, theparticipants andthirdparticipant presented theirarguments
andanswered questions from theDivision oftheAppellate Body hearing theappeal.
3Panel Report, para. 8.1.
4Panel Report, para. 8.2.
5WT/DS50/6, 16October 1997.
6Pursuant toRule 21(1) oftheWorking Procedures.WT/DS50/AB/R
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II. Arguments oftheParticipants
A. Appellant -India
4. India appeals certain aspects ofthelegal findings andconclusions ofthePanel relating to
Articles 70.8, 70.9and63oftheTRIPS Agreement .India asserts thatithasestablished, through
"administrative instructions"7,"ameans" bywhich applications forpatents forpharmaceutical and
agricultural chemical products (often referred toas"mailbox applications") canbefiledandfiling dates
assigned tothem. Indiacontends that,asof15October 1997, 1924suchapplications hadbeenreceived,
ofwhich 531werebyUnited States 'applicants. Upon receipt, theparticulars ofthese applications,
including serial number, date, name ofapplicant, andthetitleoftheinvention werepublished inthe
Official Gazette ofIndia. None ofthese applications hadbeentaken upforexamination, andnone
hadbeenrejected. On2August 1996, theGovernment hadstated inParliament: "ThePatent Offices
have received 893patent applications inthefield ofdrug ormedicine from Indian orforeign
companies/institutions until15July1996. Theapplications forpatents willbetaken upforexamination
after1January 2005, aspertheWorld Trade Organization (WTO) Agreement which came intoforce
on1January 1995".8
5. India argues thatthefunction ofArticle 70.8(a) oftheTRIPS Agreement istoensure thatthe
Member concerned receives patent applications asfrom1January 1995andmaintains arecord ofthem
onthebasisofwhich patent protection canbegranted asfrom2005. India asserts thatthePanel ruled
thatArticle 70.8(a) comprises twoobligations: first,toestablish amailbox toreceive patent applications
forpharmaceutical andagricultural chemical products andtoallotfiling andpriority dates tothem;
andsecond, tocreate legalcertainty thatthepatent applications andthepatents based onthem will
notberejected orinvalidated inthefuture. India maintains thatthesecond obligation isacreation
ofthePanel.
6. Indiaasserts thatthePanel justified thecreation ofthissecond obligation byinvoking theconcept
ofpredictability ofcompetitive relationships thatwasdeveloped bypanels inthecontext ofArticles III
andXIoftheGATT 1947. India contends thatthisconcept cannot beunquestioningly imported into
theTRIPS Agreement .Furthermore, thePanel usedthisconcept toadvance thedateonwhich India
mustgivesubstantive rights toinventors ofpharmaceutical andagricultural chemical products. Thus,
7India'sappellant 'ssubmission, p.10.
8SeePanel Report, Annex 2.WT/DS50/AB/R
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Indiaconcludes,thePanelincorporatedintotheproceduralrequirementsofArticle70.8(a)thesubstantive
obligations setoutinparagraphs (b)and(c)ofArticle 70.8andturned anobligation tobecarried out
inthefuture intoacurrent obligation.
7. Indiaasserts thatthemeans offiling provided byIndiaensures thatpatents canbegranted when
theyaredue. According toIndia, there isabsolute certainty thatIndia can,when patents areduein
accordance withparagraphs (b)and(c)ofArticle 70.8, decide togrant suchpatents onthebasis of
theapplicationscurrentlysubmittedanddeterminethenoveltyandpriorityoftheinventionsinaccordance
withthedateofthese applications. India insists thatthere isnological linkbetween thetheoretical
refusal ofamailbox application under current lawandthegrant ofapatent inaccordance with
paragraphs (b)and(c)ofArticle 70.8inthefuture.
8. According toIndia, thePanel interpreted intotheTRIPS Agreement therequirement thata
Member musteliminate anyreasonable doubts thatithasmettherequirements setoutinthatAgreement.
ToIndia, thePanel’sinterpretation ofArticle 70.8(a) entails aviolation ofestablished principles
governing theburden ofproof.
9. India argues thattheeffect ofthePanel’sshiftintheburden ofproof from thecomplainant
tothedefendant wasexacerbated bythestandard ofproof which thePanel applied totheevidence
submitted byIndia todemonstrate thattheUnited States ’assertion wasbased onanincorrect
interpretation ofIndian law. InIndia'sview, thePanel didnotassess theIndian lawasafacttobe
established bytheUnited States, butasalawtobeinterpreted bythePanel. According toIndia, the
Panel'sinitiative contrasts withthecautious approach ofprevious panels toissues ofmunicipal law.9
ThePanel should havefollowed GATT practice andgiven India, astheauthor ofthemailbox system,
thebenefit ofthedoubt astothestatus ofthatsystem under itsdomestic law. ThePanel alsoshould
havesought guidance onthemanner inwhich theIndian authorities interpreted thatlaw.Indiacontends
thattheassertion byaMember thatamailbox system exists, andthatithasbeensetupinaccordance
withitsdomestic law,maybedisplaced onlybycompelling evidence thatthemailbox isillegal in
domestic law: itisessentially fortheMember itself todetermine themethodology bywhich itsets
outthemailbox system interms ofitsmunicipal laws.
9India citesPanel Report, Canada -Measures Affecting theSaleofGold Coins ,L/5863, 17September 1985, unadopted,
paras. 58and59;andPanel Report, United States -Measures Affecting theImportation, Internal SaleandUseofTobacco ,
adopted 4October 1994, DS44/R, para. 75.WT/DS50/AB/R
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10. IndiaarguesthatthetextofArticle70.9establishestheobligationtoprovideexclusivemarketing
rights toapharmaceutical oragricultural chemical product forwhich apatent application hasbeen
made onlyaftertheevents specified intheprovision haveoccurred. Indiamaintains thatthereisnothing
inthetextofArticle 70.9thatcreates anobligation tomake asystem forthegrantofexclusive marketing
rights system generally available inthedomestic lawbefore theevents listed inArticle 70.9have
occurred.
11. InIndia'sview, thePanel didnotexamine thecontext ofArticle 70.9fully. There aremany
provisions intheTRIPS Agreement --including Articles 22.2, 25.1, 39.2, 42-48 and51--which
explicitly oblige Members tochange theirdomestic lawtoauthorize theirdomestic authorities totake
certain actions before theneedtotakesuchactions actually arises. India alsonotes thatacomparison
oftheterms ofArticle 70.9withthose ofArticle 27,according towhich "patents shallbeavailable"
forinventions, isrevealing. According toIndia, thePanel examines Article 70.9onlyinthecontext
ofArticle 27,anddismisses therelevance ofthedistinction between "shall beavailable" and"shall
begranted" inthewording ofthese related provisions because "anexclusive marketing rightcannot
be‘granted ’inaspecific caseunless itis‘available ’inthefirstplace".10
12. Indiamaintains thatArticle 70.9ispartofthetransitional arrangements oftheTRIPS Agreement
whose veryfunction istoenable developing countries topostpone legislative changes. Patent protection
forpharmaceutical andagricultural chemical products isthemost sensitive TRIPS issue inmany
developing countries. ToIndia, thePanel’sinterpretation ofArticle 70.9hastheconsequence that
thetransitional arrangements would allow developing countries topostpone legislative changes inall
fields oftechnology except inthemost sensitive ones.
13. InIndia'sview, thePanel didnotbaseitsinterpretation ontheterms ofArticle 70.9, nordid
ittakeintoaccount thecontext andthetransitional object andpurpose ofthisprovision; instead, the
Panel justified itsexpansive approach withtheneedtoestablish predictable conditions ofcompetition.
India contends thatthisnotion turns anobligation totakeactions inthefuture intoanobligation to
takeaction immediately. India notes thattherearenumerous transitional provisions intheMarrakesh
Agreement Establishing theWorld Trade Organization (the"WTO Agreement ")11thatrequire action
atsome point inthefuture, either when adatehasarrived oranevent hasoccurred. These areall
obligations thatare,justlikethose under Article 70.8and70.9oftheTRIPS Agreement ,contingent
10Panel Report, para. 7.56 andnote112.
11Done atMarrakesh, Morocco, 15April 1994.WT/DS50/AB/R
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upon adateorevent. While itwould bedesirable ifallMembers were immediately toenable their
executive authorities totaketherequired actions evenbefore thedatesorevents requiring those actions
haveoccurred, Indiaasserts thattheseprovisions cannot reasonably beinterpreted toimply theobligation
toprovide forsuchconditions inthedomestic lawinadvance ofthatdateorevent.
14. India asserts that,under Articles 3,7and11oftheDSU, panels aretomake findings and
recommendations onlyonmatters submitted tothem bytheparties tothedispute. India therefore
contends thatthePanel exceeded itsauthority under theDSU byruling onthesubsidiary claim by
theUnited States relating toArticle 63afteraccepting itsprincipal claim under Article 70.8. Ifthe
Appellate Body weretoconclude thatthePanel wasentitled topresent findings ontheUnited States '
Article 63claim, India askswhether thePanel wasentitled torecommend simultaneously thatIndia
bring itsmailbox system intoconformity withArticle 70.8(a) andArticle 63oftheTRIPS Agreement .
IfthePanel wassoentitled, Indiafurther askstheAppellate Body towhattherecommendation relating
toArticle 63refers.
B. Appellee -United States
15. TheUnited States endorses thelegal findings andconclusions ofthePanel relating to
Articles 70.8, 70.9and63oftheTRIPS Agreement .TheUnited States asserts thatthePanel correctly
analyzed thetextandcontext ofArticle 70.8, andfocused onthefailure ofthesystem described by
India toachieve theobject andpurpose ofthisprovision. TheUnited States contends thattheconcept
oftheimportance ofcreating thepredictability needed toplanfuture tradewasdeveloped inthecontext
ofArticles IIIandXIoftheGATT 1947, asthePanel observed. However, itdoesnotfollow that
theobjectives ofensuring minimum standards oftreatment andregulating competitive relationships
aremutually exclusive. Protecting legitimate expectations ofWTO Members regarding conditions
ofcompetition isascentral totrade relating tointellectual property asitistotrade ingoods thatdo
notrelate tointellectual property.
16. According totheUnited States, under Article 70.8, reasonable assurances oftreatment must
beprovided formailbox applications. TheUnited States deems thatthePanel correctly interpreted
Article 70.8torequire amailbox system under which patent applications haveasecure legalstatus.
Thisinterpretation respects therelationship between paragraphs (a),(b)and(c)ofArticle 70.8, and
thepurpose ofthemailbox system. TheUnited States insists thattheadministrative system described
byIndia doesnotprovide asound legalbasisforfiling mailbox applications. According totheUnited
States, thePanel correctly placed theburden ofproof ontheUnited States, consistent withtheAppellateWT/DS50/AB/R
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Body Report inUnited States -Measure Affecting Woven Wool Shirts andBlouses from India
("United States -Shirts andBlouses ").12TheUnited States argues thatnothing inthePanel'sanalysis
hadtheeffect ofshifting theburden ofproof fromtheUnited States toIndia, andthatthePanel applied
thecorrect standard ofproof. IntheviewoftheUnited States, thePanel didnotrequire India toprove
thatitsadministrative instructions topatent offices wereimmune fromchallenge, butrather found that
Indiahadnotrebutted theevidence presented bytheUnited States regarding thelikelihood thatmailbox
applications andpatents ultimately based onthem would beinvalidated bysuchachallenge.
17. TheUnited States asserts thatthePanel appropriately considered India'sfactual arguments
regarding theoperation oftheActtoAmend andConsolidate theLawRelating toPatents (the"Patents
Act"), andthatIndia'sarguments represent anattempt toturnafactual question intoalegal issue.
While theUnited States acknowledges thepropriety ofseeking guidance fromMembers regarding their
domestic laws, itargues thatgiving aMember thebenefit ofthedoubt regarding matters ofinterpretation
ofitsdomestic lawisnotequivalent tounquestioning acceptance oftheMember 'sposition. Inthe
viewoftheUnited States, India'sargument isinconsistent withtherequirement inArticle 11ofthe
DSU thatapanel make "anobjective assessment" ofthefactsofthecase. Onthispoint, theUnited
States recalls thatthepanel inUnited States -Restrictions onImports ofCotton andMan-Made Fibre
Underwear stated, "apolicy oftotaldeference tothefindings ofthenational authorities could notensure
an"objective assessment" asforeseen byArticle 11".13
18. TheUnited States contends thatthePanel correctly found thatIndia hasfailed tocomply with
Article 70.9. According totheUnited States, thetextofArticle 70.9indicates thattheobligation to
establish exclusive marketing rights became effective upontheentry intoforce oftheWTO Agreement .
Theordinary meaning oftheterm"granted" isto"give (rights, property, etc.)formally; transfer
legally".14Thedefinition implies thatavailability andauthority arenecessary, butnotsufficient,
conditions for"granting" something. TheUnited States asserts thatthePanel correctly stated: "an
exclusive marketing right cannot be"granted" inaspecific caseunless itis"available" inthefirst
place".15Moreover, theterms usedinother Articles oftheTRIPS Agreement reflect thecontext of
12Adopted 23May 1997, WT/DS33/AB/R.
13Adopted 25February 1997, WT/DS24/R, para. 7.10.
14TheUnited States citesH.W. Fowler andF.G. Fowler (eds.), TheConcise Oxford English Dictionary (1990), p.514.
15Panel Report, para. 7.56, note112.WT/DS50/AB/R
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eachArticle, anddonotsupport theconclusion thatthereisnoobligation under Article 70.9toprovide
asystem forgranting exclusive marketing rights before aparticular casearises.
19. TheUnited States maintains thatthecontext, object andpurpose ofArticle 70.9indicate that
itimposes acurrent, notfuture, obligation. IntheviewoftheUnited States, thePanel correctly found
thattheaverage period oftimerequired tosatisfy theconditions setforthinArticle 70.9isnotrelevant
totheanalysis. TheUnited States further argues thatIndia'sargument isfactually incorrect: thePanel
found thatatleastoneUnited States 'company hadsatisfied thestepsrequired forthegrant ofexclusive
marketing rights, buthadnotapplied fortheminIndiabecause itcould notobtain information regarding
theappropriate procedure fordoing so.Inaddition, theUnited States presented evidence regarding
thelikelihood thatvarious products designed totreatserious medical conditions would beready for
introduction totheIndian market inadvance ofthetimeframe described byIndia.
20. TheUnited States argues thattheconsequence ofIndia'sviewofArticle 70.9isthatanational
ofanother WTO Member would havetoapply forexclusive marketing rights thatdidnotexistunder
Indian law,andonlyatthattimewould India beobligated toenact legislation providing suchrights.
There would beatleastatemporary violation ofaMember 'srights because thatMember 'snational
would havetowaitforIndia toenact legislation making these rights available. According tothe
United States, sucharesult isinconsistent withtheprinciple offostering predictable conditions of
competition anddoesnotprotect thelegitimate expectations ofMembers under Article 70.9.
21. IntheviewoftheUnited States, thePanel'sfinding onArticle 70.9doesnotimply thatall
future obligations under theWTOAgreement should beimplemented immediately inMembers 'domestic
law.Requiring asystem forgranting exclusive marketing rights protects thecorebalance oftheTRIPS
Agreement withrespect topharmaceutical andagricultural chemical product patents. Under theTRIPS
Agreement ,thequidproquofortaking advantage oftheextended transition period forgranting product
patents forpharmaceutical andagricultural chemical inventions wasthegrant ofexclusive marketing
rights.
22. TheUnited States askstheAppellate Body toaffirm thePanel'sdecision tomake findings on
theArticle 63issue submitted toitbytheUnited States. IntheviewoftheUnited States, thePanel
correctly addressed boththeissueofIndia'sfailure tocomply withArticle 70.8anditsfailure tocomply
withArticle 63.TheUnited States asserts thatArticles 3,7,and11oftheDSU establish thatthe
Panel acted within itsauthority inaddressing theUnited States 'claim: theUnited States submitted
thisissue tothePanel inbothwritten andoralsubmissions andIndia hadanabundant opportunity toWT/DS50/AB/R
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respond; andtheUnited States 'characterization ofitsArticle 63claim isnotdeterminative ofthe
Panel'sauthority toaddress it.
C. Third Participant -European Communities
23. TheEuropean Communities endorses thePanel'sfindings concerning thefailure byIndia to
taketheaction necessary toimplement itsobligations under Article 70.8oftheTRIPS Agreement and
agrees with thePanel’sinterpretation ofArticle 70.9 oftheTRIPS Agreement .TheEuropean
Communities supports thePanel'sfinding thatIndia failed totaketheaction necessary toimplement
itsobligations under Article 70.8oftheTRIPS Agreement .IntheviewoftheEuropean Communities,
India'sarguments about thePanel'sinterpretation ofmunicipal lawareunfounded: there isnothing
intheruling ofthePanel which suggests thatitdidanything other thantreatdomestic lawasaquestion
offacttobeproved bytheparty asserting abreach ofArticle 70.8. TheEuropean Communities asserts
thatthePanel’sfindings show thatthePanel treated thequestion ofmunicipal lawasamatter of
evidence. Moreover, India'ssubmission thatthePanel'sinterpretation onthispoint betreated asa
question offactwould result initbeing excluded from theremit oftheAppellate Body.
24. TheEuropean Communities maintains thatthePanel’sapproach ininterpreting Article 70.8(a)
wasconsistent withtheprovisions ofArticle 31oftheVienna Convention ontheLawofTreaties ("the
Vienna Convention ").16Accordingly, inanalyzing themeaning tobegiven totheterm"means" in
paragraph (a)ofArticle 70.8, thePanel considered thatterminitscontext andinthelightoftheobject
andpurpose ofArticle 70.8. TheEuropean Communities asserts thatthesetting upofsuchamailbox
mechanism isclearly notanendinitself. Theobjective ofthemechanism cannot simply betopermit
thefiling ofapplications: suchamechanism would serve nouseful purpose. Theobjective israther
toensure thatthenovelty andpriority ofsuchapplications ispreserved andmade available asfrom
thedateofapplication oftheAgreement fordeveloping countries.
25. Withrespect toIndia'sclaims thatthePanel effectively relieved theUnited States oftheburden
ofproof ofadducing evidence thatabreach ofArticle 70.8hadoccurred, theEuropean Communities
asserts thatthePanel’sreasoning iscorrect. According totheEuropean Communities, itisclear, from
paragraph 7.37ofthePanel’sfindings, thatIndia wasnotabletodischarge theburden ofproof upon
ittodemonstrate thatitssystem formailbox applications wasnottainted withadegree oflegalinsecurity.
16Done atVienna, 23May 1969, 1155 U.N.T.S .331; 8International Legal Materials 679.WT/DS50/AB/R
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IntheviewoftheEuropeanCommunities,thisquestionrelatestothePanel’sappreciationoftheevidence
before itandistherefore notaquestion oflaw. Inconsequence, itfallsoutside thescope oftheremit
oftheAppellate Body.
26. TheEuropean Communities supports thePanel'sinterpretation ofArticle 70.9oftheTRIPS
Agreement .TheEuropean Communities maintains thatArticle 70.9provides forthegranting ofa
residual right(theexclusive marketing right) toapplicants aslongastheproducts arenotpatentable
during thetransitional period available todeveloping country Members. Forthatpurpose, applicants
must beabletoidentify theauthority towhom theyhavetoaddress arequest forthegranting ofan
exclusive marketing right They mustalsobegiven theopportunity toknow whattheirrights arewith
regard toother potential applicants whomight request exclusive marketing rights forthesameproduct.
Intheview oftheEuropean Communities, India’sproposed reading ofArticle 70.9disregards this
aspect ofthelawonintellectual property rights thatconcerns therelationship between different actual
orpotential applicants. Itisnotpossible toregulate thisrelationship bylegislative oradministrative
action onlyaftertherelevant events haveoccurred, since suchsubsequent action would notbecapable
ofdeterminingtherelationshipbetweenseveralactualorpotentialapplicants.TheEuropeanCommunities
insists thattheprotection oftheexclusivity oftheexclusive marketing rightisanecessary component
ofthemechanism thatisrequired under Article 70.9.
27. TheEuropean Communities contends thatIndia’sattempt todenytheneedforamechanism
forthegrant ofexclusive marketing rights cannot beconsidered asagood faithinterpretation of
Article70.9.AccordingtotheEuropeanCommunities,India’sreferencetothesensitivityofthequestion
ofexclusive rights forthemarketing ofpharmaceuticals andagricultural chemical products indeveloping
countries isnotrelevant. TheEuropean Communities contends thatthebasicruleofinternational treaty
lawis"pacta suntservanda ",thatis,thattreaties mustbeobserved. Moreover, treaty provisions must
bereadincontext andtreaty interpretation mustbecarried outingoodfaith. IntheviewoftheEuropean
Communities, theTRIPS Agreement contains many provisions concerning therights ofapplicants and
rightholders withregard tothird parties; thecontext oftheTRIPS Agreement requires developing
country Members thatinvoke thetransitional period toallow, inadvance, thegrant ofexclusive
marketingrightsunderArticle70.9andtoprovidetherelevantmechanismforthegrantofsuchexclusive
marketing rights inorder todefine theposition ofapplicants andrightholders withregard toother
persons. According totheEuropean Communities, India’sargument thatthisreading ofArticle 70.9
isnotconsistent withthegeneral understanding ofthekindofaction thatisrequired byMembers during
transitional periods, provided forinanumber ofother multilateral trade agreements, ismisleading:WT/DS50/AB/R
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itneglects thatArticle 70.9deals withanobligation arising during thetransitional period, notafter
itsexpiry.
III. Issues Raised InThisAppeal
28. Theappellant, India, raises thefollowing issues inthisappeal:
(a) What istheproper interpretation tobegiven totherequirement inArticle 70.8(a) of
theTRIPS Agreement thataMember shallprovide "ameans" bywhich applications
forpatents forinventions relating topharmaceutical oragricultural chemical products
canbefiled?
(b) DidthePanel errinitstreatment ofIndian municipal law,orinitsapplication ofthe
burden ofproof, inexamining whether India hadcomplied withitsobligations under
Article 70.8(a) oftheTRIPS Agreement ?
(c) Does Article 70.9oftheTRIPS Agreement require thatthere mustbea"mechanism"
inplace toprovide forthegrant ofexclusive marketing rights effective asfrom the
dateofentry intoforce oftheWTO Agreement ?
(d) DidthePanel, afterhaving accepted theprincipal claim oftheUnited States under
Article 70.8oftheTRIPS Agreement ,errbymaking conclusions onthealternative
claim bytheUnited States under Article 63oftheTRIPS Agreement ?
IV. TheTRIPS Agreement
29. TheTRIPS Agreement isoneofthenewagreements negotiated andconcluded intheUruguay
Round ofmultilateral trade negotiations. TheTRIPS Agreement brings intellectual property within
theworld trading system forthefirsttimebyimposing certain obligations onMembers inthearea
oftrade-related intellectual property rights. Asoneofthecovered agreements under theDSU, the
TRIPS Agreement issubject tothedispute settlement rulesandprocedures ofthatUnderstanding. The
dispute thatgives risetothiscaserepresents thefirsttimetheTRIPS Agreement hasbeensubmitted
tothescrutiny oftheWTO dispute settlement system.WT/DS50/AB/R
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30. Among themany provisions oftheTRIPS Agreement arecertain specific obligations relating
topatent protection forpharmaceutical andagricultural chemical products. Withrespect topatentable
subject matter, Article 27.1oftheTRIPS Agreement provides generally:
Subject totheprovisions ofparagraphs 2and3,patents shall
beavailable foranyinventions, whether products orprocesses, inall
fields oftechnology, provided thattheyarenew,involve aninventive
stepandarecapable ofindustrial application. Subject toparagraph
4ofArticle 65,paragraph 8ofArticle 70andparagraph 3ofthis
Article, patents shallbeavailable andpatent rights enjoyable without
discrimination astotheplace ofinvention, thefieldoftechnology and
whether products areimported orlocally produced. (footnote deleted)
31. However, Article 65oftheTRIPS Agreement provides, inpertinent part:
1. Subject totheprovisions ofparagraphs 2,3and4,noMember
shallbeobliged toapply theprovisions ofthisAgreement before the
expiry ofageneral period ofoneyearfollowing thedateofentry into
force oftheWTO Agreement.
2. Adeveloping country Member isentitled todelay forafurther
period offouryears thedateofapplication, asdefined inparagraph 1,
oftheprovisions ofthisAgreement other thanArticles 3,4and5.
...
4. Totheextent thatadeveloping country Member isobliged
bythisAgreement toextend product patent protection toareas of
technology notsoprotectable initsterritory onthegeneral dateof
application ofthisAgreement forthatMember, asdefined inparagraph
2,itmaydelay theapplication oftheprovisions onproduct patents
ofSection 5ofPartIItosuchareas oftechnology foranadditional
period offiveyears.
5. AMember availing itself ofatransitional period under
paragraphs 1,2,3or4shall ensure thatanychanges initslaws,
regulationsandpracticemadeduringthatperioddonotresultinalesser
degree ofconsistency withtheprovisions ofthisAgreement.
32. Withrespect topatent protection forpharmaceutical andagricultural chemical products, certain
specific obligations arefound inArticles 70.8and70.9oftheTRIPS Agreement .Theinterpretation
ofthese specific obligations isthesubject ofthisdispute. Ourtaskistoaddress thelegalissues arising
from thisdispute thatareraised inthisappeal.WT/DS50/AB/R
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V. Interpretation oftheTRIPS Agreement
33. Asoneofthefundamental issues inthisappeal, India hasquestioned thePanel'senunciation
andapplication ofageneral interpretative principle which, thePanel stated, "must betaken intoaccount"
ininterpreting theprovisions oftheTRIPS Agreement .ThePanel found that:
...when interpreting thetextoftheTRIPS Agreement, thelegitimate
expectations ofWTO Members concerning theTRIPS Agreement must
betaken intoaccount, aswellasstandards ofinterpretation developed
inpastpanel reports intheGATT framework, inparticular thoselaying
down theprinciple oftheprotection ofconditions ofcompetition
flowing from multilateral trade agreements.17
IndiaarguesthatthePanel'sinvocationofthisprinciplecausedthePaneltomisinterpretbothArticle70.8
andArticle 70.9andledthePanel toerrindetermining whether India hadcomplied withthose
obligations.18
34. ThePanel stated that:
Theprotection oflegitimate expectations ofMembers regarding the
conditions ofcompetition isawell-established GATT principle, which
derives inpartfrom Article XXIII, thebasic dispute settlement
provisions ofGATT (andtheWTO).19
ThePanel alsoreferred tocertain GATT 1947panel reports20asauthority forthisprinciple. ThePanel
noted thatwhereas the"disciplines formed under GATT 1947(so-called GATT acquis )wereprimarily
directed atthetreatment ofthegoods ofother countries", "theconcept oftheprotection oflegitimate
expectations" inrelation totheTRIPS Agreement applies to"thecompetitive relationship between a
Member 'sownnationals andthoseofotherMembers (rather thanbetween domestically produced goods
andthegoods ofother Members, asinthegoods area)".21
17Panel Report, para. 7.22.
18India'sappellant 'ssubmission, pp.5-8and21.
19Panel Report, para. 7.20
20Inparticular: Panel Report, Italian Discrimination Against Imported Agricultural Machinery ,adopted 23October 1958,
BISD 7S/60, paras. 12-13; Panel Report, United States -Taxes onPetroleum andCertain Imported Substances ,adopted
17June1987, BISD 34S/136, para. 5.22; andPanel Report, United States -Section 337oftheTariff Actof1930,adopted
7November 1989, BISD 36S/345, para. 5.13.
21Panel Report, para. 7.21.WT/DS50/AB/R
Page14
35. InJapan -Taxes onAlcoholic Beverages ,onthestatus ofadopted panel reports, we
acknowledged:
Article XVI:1 oftheWTO Agreement andparagraph 1(b)(iv) ofthe
language ofAnnex 1Aincorporating theGATT 1994 intotheWTO
AgreementbringthelegalhistoryandexperienceundertheGATT1947
intothenewrealm oftheWTO inawaythatensures continuity and
consistency inasmooth transition fromtheGATT 1947system. This
affirms theimportance totheMembers oftheWTO oftheexperience
acquired bytheCONTRACTING PARTIES totheGATT 1947 --
andacknowledges thecontinuing relevance ofthatexperience tothe
newtrading system served bytheWTO. Adopted panel reports are
animportant partoftheGATT acquis .22
36. Although thePanel states thatitismerely applying a"well-established GATT principle",
thePanel'sreasoning does notaccurately reflect GATT/WTO practice. Indeveloping its
interpretative principle, thePanel merges, andthereby confuses, twodifferent concepts fromprevious
GATT practice. Oneistheconcept ofprotecting theexpectations ofcontracting parties asto
thecompetitive relationship between theirproducts andtheproducts ofother contracting parties. This
isaconcept thatwasdeveloped inthecontext ofviolation complaints involving Articles IIIand
XI,brought under Article XXIII:1(a), oftheGATT 1947. Theother istheconcept oftheprotection
ofthereasonable expectations ofcontracting parties relating tomarket access concessions. Thisis
aconcept thatwasdeveloped inthecontext ofnon-violation complaints brought under Article XXIII:1(b)
oftheGATT.
37. Article 64.1oftheTRIPS Agreement incorporates byreference Article XXIII oftheGATT 1994
asthegeneral dispute settlement provision governing theTRIPS Agreement .23Thus, wehavenoquarrel
inprinciple withthenotion thatpastGATT practice withrespect toArticle XXIII ispertinent to
interpretation oftheTRIPS Agreement .However, suchinterpretation mustshow proper appreciation
ofthedifferent bases foraction under Article XXIII.
22Adopted 1November 1996, WT/DS8/AB/R, WT/DS10/AB/R, WT/DS11/AB/R, p.14.
23Article 64.1 oftheTRIPS Agreement reads:
Theprovisions ofArticles XXII andXXIII ofGATT 1994 aselaborated andapplied
bytheDispute Settlement Understanding shallapply toconsultations andthesettlement
ofdisputes under thisAgreement except asotherwise specifically provided herein.WT/DS50/AB/R
Page15
38. Article XXIII:1 oftheGATT 1994 setsoutthevarious causes ofaction onwhich aMember
maybaseacomplaint. AMember mayhaverecourse todispute settlement under Article XXIII when
itconsiders that:
...anybenefit accruing toitdirectly orindirectly under thisAgreement
isbeing nullified orimpaired orthattheattainment ofanyobjective
oftheAgreement isbeing impeded astheresult of
(a) thefailure ofanother contracting party tocarry outits
obligations under thisAgreement, or
(b) theapplication byanother contracting party ofanymeasure,
whether ornotitconflicts with theprovisions ofthis
Agreement, or
(c) theexistence ofanyother situation.24
39. Article XXIII:1(a) involves so-called "violation" complaints. These aredisputes thatarisefrom
analleged failure byaMember tocarry outitsobligations. During nearly fiftyyears ofexperience,
Article XXIII:1(a) hasformed thebasis ofalmost alldisputes under theGATT 1947 andtheWTO
Agreement .Incontrast, Article XXIII:1(b) involves so-called "non-violation" complaints. These are
disputes thatdonotrequire anallegation ofaviolation ofanobligation. Thebasisofacause ofaction
under Article XXIII:1(b) isnotnecessarily aviolation oftherules, butrather thenullification or
impairment ofabenefit accruing toaMember under acovered agreement. Inthehistory ofthe
GATT/WTO, therehavebeenonlyahandful of"non-violation" casesarising under Article XXIII:1(b).25
Article XXIII:1(c), covering what arecommonly called "situation" complaints, hasnever beenthe
foundation forarecommendation orruling oftheGATT CONTRACTING PARTIES ortheDispute
Settlement Body, although ithasformed thebasisforparties ’arguments before panels inasmall number
ofcases.26
40. Inthecontext ofviolation complaints made under Article XXIII:1(a), itistruethatpanels
examining claims under Articles IIIandXIoftheGATT havefrequently stated thatthepurpose of
24Article XXIII:1 oftheGATT 1994.
25Previous panels havefound "non-violation" nullification orimpairment inonlyfourof14cases where itwasalleged:
WorkingPartyRepor t,Australia-SubsidyonAmmoniumSulphate,adopted3April1950, BISDII/188; Panel Repor t,Germany
-Imports ofSardines ,adopted 31October 1952, BISD IS/53; Panel Report, Germany -Import Duties onStarch andPotato
Flour ,noted 16February 1955, BISD 3S/77; andPanel Report, European Communities -Payments andSubsidies Paid
toProcessors andProducers ofOilseeds andRelated Animal-Feed Proteins ,adopted 25January 1990, BISD 37S/86.
26See,generally, F.Roessler, "The Concept ofNullification andImpairment intheLegal System oftheWorld Trade
Organization" inE.-U. Petersmann (ed.), International Trade LawandtheGATT/WTO Dispute Settlement System (Kluwer,
1997), pp.123-142; andE.-U. Petersmann, TheGATT/WTO Dispute Settlement System: International Law, International
Organizations andDispute Settlement (Kluwer, 1997), pp.170-176.WT/DS50/AB/R
Page16
thesearticles istoprotect theexpectations ofMembers concerning thecompetitive relationship between
imported anddomestic products, asopposed toexpectations concerning trade volumes. However,
thisstatement isoften made afterapanel hasfound aviolation of,forexample, Article IIIorArticle
XIthatestablishes aprima faciecaseofnullification orimpairment.27Atthatpoint initsreasoning,
thepanel isexamining whether thedefending party hasbeenabletorebut thecharge ofnullification
orimpairment. Itisinthiscontext thatpanels havereferred totheexpectations ofMembers concerning
theconditions ofcompetition.
41. Thedoctrine ofprotecting the"reasonable expectations" ofcontracting parties developed in
thecontext of"non-violation" complaints brought under Article XXIII:1(b) oftheGATT 1947. Some
oftherules andprocedures concerning "non-violation" cases havebeencodified inArticle 26.1of
theDSU. "Non-violation" complaints arerooted intheGATT 'sorigins asanagreement intended to
protect thereciprocal tariff concessions negotiated among thecontracting parties under Article II.28
Intheabsence ofsubstantive legalrulesinmany areasrelating tointernational trade, the"non-violation"
provisionofArticleXXIII:1(b)wasaimedatpreventingcontractingpartiesfromusingnon-tariffbarriers
orotherpolicy measures tonegate thebenefits ofnegotiated tariffconcessions. Under Article XXIII:1(b)
oftheGATT 1994, aMember canbring a"non-violation" complaint when thenegotiated balance of
concessions between Members isupset bytheapplication ofameasure, whether ornotthismeasure
isinconsistent withtheprovisions ofthecovered agreement. Theultimate goalisnotthewithdrawal
ofthemeasure concerned, butrather achieving amutually satisfactory adjustment, usually bymeans
ofcompensation.29
42. Article 64.2oftheTRIPS Agreement states:
Subparagraphs 1(b)and1(c)ofArticle XXIII ofGATT 1994
shallnotapply tothesettlement ofdisputes under thisAgreement for
aperiod offiveyears from thedateofentry intoforce oftheWTO
Agreement.
27See,forexample: Working Party Report, Brazilian Internal Taxes ,adopted 30June1949, BISD II/181, para. 16;
Panel Report, United States -Taxes onPetroleum andCertain Imported Substances ,adopted 17June1987, BISD 34S/136,
para. 5.1.9; Panel Report, Canada -Administration oftheForeign Investment Review Act,adopted 7February 1984, BISD
30S/140, para. 6.6;Panel Report, Japanese Measures onImports ofLeather ,adopted 15/16 May1984, BISD 31S/94, para.
55;Panel Report, Japan -Customs Duties, Taxes andLabelling Practices onImported Wines andAlcoholic Beverages ,
adopted 10November 1987, BISD 34S/83, para. 5.11; Panel Report, European Economic Community -Restrictions on
Imports ofApples ,adopted 22June1989, BISD 36S/135, para. 5.25; andPanel Report, United States -Measures Affecting
theImportation, Internal SaleandUseofTobacco ,adopted 4October 1994, DS44/R, para. 99.
28See,ingeneral, E.-U. Petersmann, "Violation Complaints andNon-violation Complaints inInternational Law" (1991)
German Yearbook ofInternational Law175.
29Thisiscodified inArticle 26.1(b) oftheDSU.WT/DS50/AB/R
Page17
Themeaning ofthisprovision isclear: theonlycause ofaction permitted under theTRIPS Agreement
during thefirstfiveyears aftertheentry intoforce oftheWTO Agreement isa"violation" complaint
under Article XXIII:1(a) oftheGATT 1994. Thiscaseinvolves allegations ofviolation ofobligations
under theTRIPS Agreement .However, thePanel'sinvocation ofthe"legitimate expectations" of
Members relating toconditions ofcompetition melds thelegally-distinct bases for"violation" and"non-
violation" complaints under Article XXIII oftheGATT 1994intooneuniform cause ofaction. This
isnotconsistent witheither Article XXIII oftheGATT 1994 orArticle 64oftheTRIPS Agreement .
Whether ornot"non-violation" complaints should beavailable fordisputes under theTRIPS Agreement
isamatter thatremains tobedetermined bytheCouncil forTrade-Related Aspects ofIntellectual
Property (the"Council forTRIPS") pursuant toArticle 64.3oftheTRIPS Agreement .Itisnotamatter
toberesolved through interpretation bypanels orbytheAppellate Body.
43. Inaddition torelying ontheGATT acquis ,thePanel relies alsoonthecustomary rules of
interpretation ofpublic international lawasabasisfortheinterpretative principle itoffers fortheTRIPS
Agreement .Specifically, thePanel relies onArticle 31oftheVienna Convention ,which provides in
part:
1. Atreaty shallbeinterpreted ingoodfaithinaccordance with
theordinary meaning tobegiven totheterms ofthetreaty intheir
context andinthelightofitsobject andpurpose.
44. With thiscustomary ruleofinterpretation inmind, thePanel stated that:
Inourview, good faith interpretation requires theprotection of
legitimate expectations derived from theprotection ofintellectual
property rights provided forintheAgreement.30
45. ThePanelmisappliesArticle31oftheViennaConvention.ThePanelmisunderstandstheconcept
oflegitimate expectations inthecontext ofthecustomary rulesofinterpretation ofpublic international
law. Thelegitimate expectations oftheparties toatreaty arereflected inthelanguage ofthetreaty
itself. Thedutyofatreaty interpreter istoexamine thewords ofthetreaty todetermine theintentions
oftheparties. Thisshould bedoneinaccordance withtheprinciples oftreaty interpretation setout
inArticle 31oftheVienna Convention .Buttheseprinciples ofinterpretation neither require norcondone
30Panel Report, para. 7.18.WT/DS50/AB/R
Page18
theimputation intoatreaty ofwords thatarenotthere ortheimportation intoatreaty ofconcepts
thatwere notintended.
46. InUnited States -Standards forReformulated andConventional Gasoline31,wesetoutthe
proper approach tobeapplied ininterpreting theWTOAgreement inaccordance withtherulesinArticle
31oftheVienna Convention .These rules must berespected andapplied ininterpreting theTRIPS
Agreement oranyother covered agreement. ThePanel inthiscasehascreated itsowninterpretative
principle, which isconsistent withneither thecustomary rulesofinterpretation ofpublic international
lawnorestablished GATT/WTO practice. Bothpanels andtheAppellate Body must beguided by
therules oftreaty interpretation setoutintheVienna Convention ,andmust notaddtoordiminish
rights andobligations provided intheWTO Agreement .
47. Thisconclusion isdictated bytwoseparate andveryspecific provisions oftheDSU. Article
3.2oftheDSU provides thatthedispute settlement system oftheWTO:
...serves topreserve therights andobligations oftheMembers under
thecovered agreements, andtoclarify theexisting provisions ofthose
agreements inaccordance withcustomary rules ofinterpretation of
public international law. Recommendations andrulings oftheDSB
cannot addtoordiminish therights andobligations provided inthe
covered agreements.
Furthermore, Article 19.2oftheDSU provides:
Inaccordance withparagraph 2ofArticle 3,intheirfindings
andrecommendations, thepanel andAppellate Body cannot addto
ordiminish therights andobligations provided inthecovered
agreements.
These provisions speak forthemselves. Unquestionably, bothpanels andtheAppellate Body arebound
bythem.
48. Forthese reasons, wedonotagree withthePanel thatthelegitimate expectations ofMembers
andprivate rights holders concerning conditions ofcompetition must always betaken intoaccount
ininterpreting theTRIPS Agreement .
31Adopted 20May 1996, WT/DS2/AB/R, pp.16-17.WT/DS50/AB/R
Page19
VI. Article 70.8
49. Article 70.8states:
Where aMember doesnotmake available asofthedateof
entry intoforce oftheWTO Agreement patent protection for
pharmaceutical andagricultural chemical products commensurate with
itsobligations under Article 27,thatMember shall:
(a) notwithstanding theprovisions ofPartVI,provide asfrom
thedateofentry intoforce oftheWTO Agreement ameans
bywhich applications forpatents forsuchinventions canbe
filed;
(b) apply totheseapplications, asofthedateofapplication ofthis
Agreement, thecriteria forpatentability aslaiddown inthis
Agreement asifthose criteria werebeing applied onthedate
offiling inthatMember or,where priority isavailable and
claimed, thepriority dateoftheapplication; and
(c) provide patent protection inaccordance withthisAgreement
asfrom thegrant ofthepatent andfortheremainder ofthe
patent term, counted from thefiling dateinaccordance with
Article 33ofthisAgreement, forthose ofthese applications
that meet thecriteria forprotection referred toin
subparagraph (b).
50. With respect toArticle 70.8(a), thePanel found that:
...Article 70.8(a) requires theMembers inquestion toestablish a
means thatnotonlyappropriately allows fortheentitlement tofile
mailbox applications andtheallocation offiling andpriority dates to
them, butalsoprovides asound legalbasis topreserve novelty and
priority asofthose dates, soastoeliminate anyreasonable doubts
regarding whether mailbox applications andeventual patents based on
themcould berejected orinvalidated because, atthefiling orpriority
date,thematter forwhich protection wassought wasunpatentable in
thecountry inquestion.32
51. InIndia'sview, theobligations inArticle 70.8(a) aremetbyadeveloping country Member
where itestablishes amailbox forreceiving, dating andstoring patent applications forpharmaceutical
andagricultural chemical products inamanner thatproperly allots filing andpriority dates tothose
32Panel Report, para. 7.31.WT/DS50/AB/R
Page20
applications inaccordance withparagraphs (b)and(c)ofArticle 70.8.33India asserts thatthePanel
established anadditional obligation "tocreate legalcertainty thatthepatent applications andtheeventual
patents based onthemwillnotberejected orinvalidated inthefuture".34This, India argues, isalegal
error bythePanel.
52. Theintroductory clause toArticle 70.8provides thatitapplies "[w]here aMember doesnot
make available asofthedateofentry intoforce oftheWTO Agreement patent protection for
pharmaceuticalandagriculturalchemicalproductscommensuratewithitsobligationsunderArticle27..."
oftheTRIPS Agreement .Article 27requires thatpatents bemade available "foranyinventions, whether
products orprocesses, inallfields oftechnology", subject tocertain exceptions. However, pursuant
toparagraphs 1,2and4ofArticle 65,adeveloping country Member maydelay providing product
patent protection inareasoftechnology notprotectable initsterritory onthegeneral dateofapplication
oftheTRIPS Agreement forthatMember until1January 2005. Article 70.8relates specifically and
exclusively tosituations where aMember doesnotprovide, asof1January 1995, patent protection
forpharmaceutical andagricultural chemical products.
53. Byitsterms, Article 70.8(a) applies "notwithstanding theprovisions ofPartVI"oftheTRIPS
Agreement .PartVIoftheTRIPS Agreement ,consisting ofArticles 65,66and67,allows forcertain
"transitional arrangements" intheapplication ofcertain provisions oftheTRIPS Agreement .These
"transitional arrangements", which allow aMember todelay theapplication ofsome oftheobligations
intheTRIPS Agreement forcertain specified periods35,donotapply toArticle 70.8. Thus, although
there are"transitional arrangements" which allow developing country Members, inparticular, more
timetoimplement certain oftheir obligations under theTRIPS Agreement ,nosuch"transitional
arrangements" existfortheobligations inArticle 70.8.
54. Article 70.8(a) imposes anobligation onMembers toprovide "ameans" bywhich mailbox
applications canbefiled"from thedateofentry intoforce oftheWTO Agreement". Thus, this
obligation hasbeeninforce since 1January 1995. Theissue before usinthisappeal isnotwhether
33India'sappellant 'ssubmission, pp.4-5.
34India'sappellant 'ssubmission, p.5.
35Pursuant toArticle 65.1, allMembers were entitled todelay theapplication ofmost oftheprovisions oftheTRIPS
Agreement foroneyearafterthedateofentry intoforce oftheWTO Agreement .Pursuant toArticle 65.2, developing country
Members aregenerally entitled toadelay ofafurther fouryears. Where adeveloping country Member isobliged toextend
patent protection toareas oftechnology towhich itdidnotextend suchprotection onthegeneral dateofapplication ofthe
TRIPS Agreement forthatMember, Article 65.4states thatthatdeveloping country Member maydelay theapplication of
theprovisions onproduct patents tosuch areas oftechnology foranadditional period offiveyears.WT/DS50/AB/R
Page21
thisobligation exists orwhether thisobligation isnowinforce. Clearly, itexists, and,equally clearly,
itisinforcenow. Theissuebefore usinthisappeal is:whatprecisely isthe"means" forfiling mailbox
applications thatiscontemplated andrequired byArticle 70.8(a)? Toanswer thisquestion, wemust
interpret theterms ofArticle 70.8(a).
55. Weagree withthePanel that"[t]he analysis oftheordinary meaning ofthese terms alone does
notleadtoadefinitive interpretation astowhatsortof‘means ’isrequired bythissubparagraph".36
Therefore, inaccordance withthegeneral rulesoftreaty interpretation setoutinArticle 31oftheVienna
Convention ,todiscern themeaning oftheterms inArticle 70.8(a), wemustalsoreadthisprovision
initscontext, andinlightoftheobject andpurpose oftheTRIPS Agreement .
56. Paragraphs (b)and(c)ofArticle 70.8constitute partofthecontext forinterpreting Article
70.8(a). Paragraphs (b)and(c)ofArticle 70.8require thatthe"means" provided byaMember under
Article 70.8(a) must allow thefiling ofapplications forpatents forpharmaceutical andagricultural
chemical products from1January 1995andpreserve thedatesoffiling andpriority ofthoseapplications,
sothatthecriteria forpatentability maybeapplied asofthose dates, andsothatthepatent protection
eventually granted isdated backtothefiling date. Inthisrespect, weagree withthePanel that,
...inorder toprevent thelossofthenovelty ofaninvention ...filing
andpriority dates needtohaveasound legalbasis iftheprovisions
ofArticle 70.8aretofulfil theirpurpose. Moreover, ifavailable, a
filing must entitle theapplicant toclaim priority onthebasis ofan
earlier filing inrespect oftheclaimed invention overapplications with
subsequent filing orpriority dates. Without legally sound filing and
priority dates, themechanism tobeestablished onthebasis of
Article 70.8willberendered inoperational.37
57. Onthis,thePanel isclearly correct. ThePanel'sinterpretation hereisconsistent alsowith
theobject andpurpose oftheTRIPS Agreement .TheAgreement takes intoaccount, interalia,"the
needtopromote effective andadequate protection ofintellectual property rights".38Webelieve the
Panel wascorrect infinding thatthe"means" thattheMember concerned isobliged toprovide under
Article 70.8(a) mustallow for"theentitlement tofilemailbox applications andtheallocation offiling
36Panel Report, para. 7.25.
37Panel Report, para. 7.28.
38Preamble totheTRIPS Agreement .WT/DS50/AB/R
Page22
andpriority datestothem".39Furthermore, thePanel wascorrect infinding thatthe"means" established
under Article 70.8(a) must alsoprovide "asound legal basis topreserve novelty andpriority asof
those dates".40These findings flowinescapably from thenecessary operation ofparagraphs (b)and
(c)ofArticle 70.8.
58. However, wedonotagree withthePanel thatArticle 70.8(a) requires aMember toestablish
ameans "soastoeliminate anyreasonable doubts regarding whether mailbox applications andeventual
patents based onthemcould berejected orinvalidated because, atthefiling orpriority date,thematter
forwhich protection wassought wasunpatentable inthecountry inquestion".41India isentitled ,by
the"transitional arrangements" inparagraphs 1,2and4ofArticle 65,todelay application ofArticle 27
forpatents forpharmaceutical andagricultural chemical products until1January 2005. Inourview,
Indiaisobliged, byArticle 70.8(a), toprovide alegalmechanism forthefiling ofmailbox applications
thatprovides asound legalbasistopreserve boththenovelty oftheinventions andthepriority ofthe
applications asoftherelevant filing andpriority dates. Nomore.
59. Butwhatconstitutes suchasound legalbasisinIndian law? Toanswer thisquestion, wemust
recall firstanimportant general ruleintheTRIPS Agreement .Article 1.1oftheTRIPS Agreement
states, inpertinent part:
...Members shall befreetodetermine theappropriate method of
implementing theprovisions ofthisAgreement within theirownlegal
system andpractice.
Members, therefore, arefreetodetermine howbesttomeettheirobligations under theTRIPS Agreement
within thecontext oftheirownlegal systems. And, asaMember, India is"free todetermine the
appropriate method ofimplementing" itsobligations under theTRIPS Agreement within thecontext
ofitsownlegalsystem.
60. Indiainsists thatithasdonethat.Indiacontends thatithasestablished, through "administrative
instructions"42,a"means" consistent withArticle 70.8(a) oftheTRIPS Agreement .According toIndia,
39Panel Report, para. 7.31.
40Panel Report, para. 7.31.
41Ibid.
42ThisisIndia'sterm foritsmeasure. India'sappellant 'ssubmission, p.10.WT/DS50/AB/R
Page23
these "administrative instructions" establish amechanism thatprovides asound legalbasistopreserve
thenovelty oftheinventions andthepriority oftheapplications asoftherelevant filing andpriority
dates consistent withArticle 70.8(a) oftheTRIPS Agreement .According toIndia, pursuant tothese
"administrative instructions", thePatent Office hasbeendirected tostoreapplications forpatents for
pharmaceutical andagricultural chemical products separately forfuture action pursuant toArticle 70.8,
andtheController General ofPatents Designs andTrademarks ("theController") hasbeeninstructed
nottorefer them toanexaminer until1January 2005. According toIndia, these "administrative
instructions" arelegally valid inIndian law43,astheyarereflected intheMinister 'sStatement to
Parliament of2August 1996.44And, according toIndia:
There is...absolute certainty thatIndia can,when patents aredue
inaccordance withsubparagraphs (b)and(c)ofArticle 70.8, decide
tograntsuchpatentsonthebasisoftheapplicationscurrentlysubmitted
anddetermine thenovelty andpriority oftheinventions inaccordance
withthedateofthese applications.45(emphasis added)
61. India hasnotprovided anytextofthese "administrative instructions" either tothePanel or
tous.
62. Whatever theirsubstance ortheirimport, these"administrative instructions" werenottheinitial
"means" chosen bytheGovernment ofIndia tomeetIndia'sobligations under Article 70.8(a) ofthe
TRIPS Agreement .TheGovernment ofIndia'sinitial preference forestablishing a"means" forfiling
mailbox applications under Article 70.8(a) wasthePatents (Amendment) Ordinance (the"Ordinance"),
promulgated bythePresident ofIndia on31December 1994 pursuant toArticle 123ofIndia's
Constitution. Article 123enables thePresident topromulgate anordinance when Parliament isnot
insession, andwhen thePresident issatisfied "thatcircumstances existwhich render itnecessary for
himtotakeimmediate action". India notified theOrdinance totheCouncil forTRIPS, pursuant to
Article 63.2oftheTRIPS Agreement ,on6March 1995.46Inaccordance withtheterms ofArticle 123
ofIndia'sConstitution, theOrdinance expired on26March 1995, sixweeks afterthereassembly of
Parliament. Thiswasfollowed byanunsuccessful effort toenact thePatents (Amendment) Bill1995
43Response byIndia toquestioning attheoralhearing.
44Panel Report, Annex 2.
45India'sappellant 'ssubmission, p.8.
46IP/N/1/IND/1, 8March 1995.WT/DS50/AB/R
Page24
toimplement thecontents oftheOrdinance onapermanent basis.47ThisBillwasintroduced inthe
LokSabha (Lower House) inMarch 1995. After being passed bytheLokSabha, itwasreferred to
aSelect Committee oftheRajya Sabha (Upper House) forexamination andreport. However, theBill
wassubsequently notenacted duetothedissolution ofParliament on10May1996. From theseactions,
itisapparent thattheGovernment ofIndia initially considered theenactment ofamending legislation
tobenecessary inorder toimplement itsobligations under Article 70.8(a). However, Indiamaintains
thatthe"administrative instructions" issued inApril 1995 effectively continued themailbox system
established bytheOrdinance, thusobviating theneedforaformal amendment tothePatents Actor
foranewnotification totheCouncil forTRIPS.48
63. With respect toIndia's"administrative instructions", thePanel found that"thecurrent
administrative practice creates acertain degree oflegalinsecurity inthatitrequires Indian officials
toignore certain mandatory provisions ofthePatents Act"49;andthat"even ifPatent Office officials
donotexamine andreject mailbox applications, acompetitor might seekajudicial order todosoin
order toobtain rejection ofapatent claim".50
64. India asserts thatthePanel erred initstreatment ofIndia'smunicipal lawbecause municipal
lawisafactthatmust beestablished before aninternational tribunal bytheparty relying onit.In
India'sview, thePanel didnotassess theIndian lawasafacttobeestablished bytheUnited States,
butrather asalawtobeinterpreted bythePanel. India argues thatthePanel should havegiven India
thebenefit ofthedoubt astothestatus ofitsmailbox system under Indian domestic law.Indiaclaims,
furthermore, thatthePanel should have sought guidance from India onmatters relating tothe
interpretation ofIndian law.51
65. Inpublic international law,aninternational tribunal maytreatmunicipal lawinseveral ways.52
Municipal lawmayserve asevidence offactsandmayprovide evidence ofstatepractice. However,
municipal lawmayalsoconstitute evidence ofcompliance ornon-compliance withinternational
47WenotethatanExpert Group advised theIndian Government thataformal legalbasis wasrequired tomake themailbox
system valid under Indian law. SeePanel Report, para. 7.36.
48Response ofIndia toquestioning attheoralhearing.
49Panel Report, para. 7.35.
50Panel Report, para. 7.37.
51India'sappellant 'ssubmission, pp.13and15.
52See,forexample, I.Brownlie, Principles ofPublic International Law,4thed.(Clarendon Press, 1990), pp.40-42.WT/DS50/AB/R
Page25
obligations. Forexample, inCertain German Interests inPolish Upper Silesia ,thePermanent Court
ofInternational Justice observed:
Itmight beasked whether adifficulty doesnotarisefromthefactthat
theCourt would havetodealwiththePolish lawofJuly14th, 1920.
This, however, doesnotappear tobethecase. From thestandpoint
ofInternational LawandoftheCourt which isitsorgan, municipal
lawsaremerely factswhich express thewillandconstitute theactivities
ofStates, inthesame manner asdolegaldecisions andadministrative
measures. TheCourt iscertainly notcalled upontointerpret thePolish
lawassuch; butthere isnothing toprevent theCourt 'sgiving
judgment onthequestion whether ornot,inapplying thatlaw,Poland
isacting inconformity withitsobligations towards Germany under
theGeneva Convention.53(emphasis added)
66. Inthiscase, thePanel wassimply performing itstaskindetermining whether India's
"administrative instructions" forreceiving mailbox applications were inconformity withIndia's
obligations under Article 70.8(a) oftheTRIPS Agreement .Itisclearthatanexamination oftherelevant
aspects ofIndian municipal lawand,inparticular, therelevant provisions ofthePatents Actasthey
relate tothe"administrative instructions", isessential todetermining whether India hascomplied with
itsobligations under Article 70.8(a). There wassimply nowayforthePanel tomake thisdetermination
without engaging inanexamination ofIndian law.But,asinthecasecitedabove before thePermanent
Court ofInternational Justice, inthiscase,thePanel wasnotinterpreting Indian law"assuch"; rather,
thePanel wasexamining Indian lawsolely forthepurpose ofdetermining whether India hadmetits
obligations under theTRIPS Agreement .TosaythatthePanel should havedoneotherwise would be
tosaythatonlyIndia canassess whether Indian lawisconsistent withIndia'sobligations under the
WTO Agreement .This, clearly, cannot beso.
67. Previous GATT/WTO panels alsohaveconducted adetailed examination ofthedomestic law
ofaMember inassessing theconformity ofthatdomestic lawwiththerelevant GATT/WTO obligations.
Forexample, inUnited States -Section 337oftheTariff Actof193054,thepanel conducted adetailed
examination oftherelevant United States 'legislation andpractice, including theremedies available
under Section 337aswellasthedifferences between patent-based Section 337proceedings andfederal
district court proceedings, inorder todetermine whether Section 337wasinconsistent withArticle
III:4oftheGATT 1947. Thisseems toustobeacomparable case.
53[1926], PCIJ Rep., Series A,No.7,p.19.
54Adopted 7November 1989, BISD 36S/345.WT/DS50/AB/R
Page26
68. And, justasitwasnecessary forthePanel inthiscasetoseekadetailed understanding ofthe
operation ofthePatents Actasitrelates tothe"administrative instructions" inorder toassess whether
India hadcomplied withArticle 70.8(a), so,too,isitnecessary forusinthisappeal toreview the
Panel'sexamination ofthesame Indian domestic law.
69. Todoso,wemustlookatthespecific provisions ofthePatents Act.Section 5(a)ofthePatents
Actprovides thatsubstances "intended foruse,orcapable ofbeing used, asfoodorasmedicine or
drug" arenotpatentable. "When thecomplete specification hasbeenledinrespect ofanapplication
forapatent", section 12(1) requires theController toreferthatapplication andthatspecification to
anexaminer. Moreover, section 15(2) ofthePatents Actstates thattheController "shall refuse" an
application inrespect ofasubstance thatisnotpatentable. Weagree withthePanel thattheseprovisions
ofthePatentsActaremandatory.55And,likethePanel,wearenotpersuadedthatIndia's"administrative
instructions" would prevail overthecontradictory mandatory provisions ofthePatents Act.56Wenote
alsothat,inissuing these "administrative instructions", theGovernment ofIndia didnotavailitself
oftheprovisions ofsection 159ofthePatents Act,which allows theCentral Government "tomake
rules forcarrying outtheprovisions of[the]Act"orsection 160ofthePatents Act,which requires
thatsuchrules belaidbefore eachHouse oftheIndian Parliament. WearetoldbyIndia thatsuch
rulemaking wasnotrequired forthe"administrative instructions" atissue here. Butthis,too,seems
tobeinconsistent withthemandatory provisions ofthePatents Act.
70. Wearenotpersuaded byIndia'sexplanation ofthese seeming contradictions. Accordingly,
wearenotpersuaded thatIndia's"administrative instructions" would survive alegalchallenge under
thePatents Act. And, consequently, wearenotpersuaded thatIndia's"administrative instructions"
provide asound legalbasistopreserve novelty ofinventions andpriority ofapplications asoftherelevant
filing andpriority dates.
71. Forthesereasons,weagreewiththePanel'sconclusionthatIndia's"administrativeinstructions"
forreceiving mailbox applications areinconsistent withArticle 70.8(a) oftheTRIPS Agreement .
72. Indiaraises theadditional argument thatthePanel erred initsapplication oftheburden ofproof
inassessing Indian municipal law. Inparticular, India alleges thatthePanel, afterhaving required
55Panel Report, para. 7.35.
56Panel Report, para. 7.37.WT/DS50/AB/R
Page27
theUnited States merely toraise"reasonable doubts" suggesting aviolation ofArticle 70.8, placed
theburden onIndia todispel suchdoubts.57
73. ThePanel states:
AstheAppellate Body report onShirts andBlouses points out,"aparty
claiming aviolation ofaprovision oftheWTO Agreement byanother
Member mustassert andprove itsclaim". Inthiscase,itistheUnited
States thatclaims aviolation byIndia ofArticle 70.8oftheTRIPS
Agreement. Therefore, itisuptotheUnited States toputforward
evidence andlegalarguments sufficient todemonstrate thataction by
India isinconsistent withtheobligations assumed byIndia under
Article 70.8. Inourview, theUnited States hassuccessfully put
forward suchevidence andarguments. Then, ...theonusshifts to
India tobring forward evidence andarguments todisprove theclaim.
Wearenotconvinced thatIndia hasbeenabletodoso(footnotes
deleted).58
74. Thisstatement ofthePanel isalegally correct characterization oftheapproach toburden of
proof thatwesetoutinUnited States -Shirts andBlouses .59However, itisnotsufficient forapanel
toenunciate thecorrect approach toburden ofproof; apanel must alsoapply theburden ofproof
correctly. Acareful reading ofparagraphs 7.35and7.37ofthePanel Report reveals thatthePanel
hasdone sointhiscase. These paragraphs show thattheUnited States putforward evidence and
arguments thatIndia's"administrative instructions" pertaining tomailbox applications were legally
insufficient toprevail overtheapplication ofcertain mandatory provisions ofthePatents Act. India
putforward rebuttal evidence andarguments. Indiamisinterprets whatthePanel saidabout "reasonable
doubts". ThePanel didnotrequire theUnited States merely toraise"reasonable doubts" before the
burden shifted toIndia. Rather, afterproperly requiring theUnited States toestablish aprima facie
caseandafter hearing India'srebuttal evidence andarguments, thePanel concluded thatithad
"reasonable doubts" thatthe"administrative instructions" would prevail overthemandatory provisions
ofthePatents Actifachallenge were brought inanIndian court.
75. Forthesereasons, weconclude thatthePanel applied theburden ofproof correctly inassessing
thecompliance ofIndia'sdomestic lawwithArticle 70.8(a) oftheTRIPS Agreement .
57India'sappellant 'ssubmission, p.12.
58Panel Report, para. 7.40.
59Adopted 23May 1997, WT/DS33/AB/R, p.16.WT/DS50/AB/R
Page28
VII. Article 70.9
76. Article 70.9oftheTRIPS Agreement reads:
Where aproduct isthesubject ofapatent application ina
Member inaccordance withparagraph 8(a),exclusive marketing rights
shallbegranted, notwithstanding theprovisions ofPartVI,foraperiod
offiveyears afterobtaining marketing approval inthatMember or
untilaproduct patent isgranted orrejected inthatMember, whichever
period isshorter, provided that,subsequent totheentry intoforce of
theWTO Agreement, apatent application hasbeenfiledandapatent
granted forthatproduct inanother Member andmarketing approval
obtained insuchother Member.
77. With respect toArticle 70.9, thePanel found:
Based oncustomary rules oftreaty interpretation, wehavereached
theconclusion thatunder Article 70.9theremustbeamechanism ready
forthegrant ofexclusive marketing rights atanytimesubsequent to
thedateofentry intoforce oftheWTO Agreement.60
78. India argues thatArticle 70.9establishes anobligation togrant exclusive marketing rights for
aproduct thatisthesubject ofapatent application under Article 70.8(a) afteralltheother conditions
specified inArticle 70.9havebeenfulfilled.61Indiaasserts thattherearemany provisions intheTRIPS
Agreementthat,unlikeArticle70.9,explicitlyobligeMemberstochangetheirdomesticlawstoauthorize
theirdomestic authorities totakecertain action before theneedtotakesuchaction actually arises.62
India maintains thatthePanel’sinterpretation ofArticle 70.9hastheconsequence thatthetransitional
arrangements inArticle 65allow developing country Members topostpone legislative changes inall
fieldsoftechnologyexceptthemost"sensitive"ones,pharmaceuticalandagriculturalchemicalproducts.
India claims thatthePanel turned anobligation totakeaction inthefuture intoanobligation totake
action immediately.63
60Panel Report, para. 7.60.
61India'sappellant 'ssubmission, p.19.
62Ibid.;forexample, India asserts thataccording toArticles 42-48 oftheTRIPS Agreement ,thejudicial authorities of
Members "shall have theauthority" togrant certain rights. Article 51obliges Members to"adopt procedures" toenable
right holders toprevent therelease ofcounterfeited orpirated products from customs. Article 39.2requires Members to
givenaturalandlegalpersons"thepossibilityofpreventing"thedisclosureofinformation.Accor dingtoArticle25.1"Member s
shallprovide fortheprotection" ofcertain industrial designs andArticle 22.2obliges Members to"provide thelegalmeans
forinterested parties toprevent" certain misuses ofgeographical indications. India further asserts thatacomparison ofthe
terms ofArticle 70.9withthose ofArticle 27according towhich "patents shall beavailable" forinventions isrevealing.
63India'sappellant 'ssubmission, p.21.WT/DS50/AB/R
Page29
79. India'sarguments mustbeexamined inthelightofArticle XVI:4 oftheWTOAgreement ,which
requires that:
Each Member shall ensure theconformity ofitslaws,
regulations andadministrative procedures with itsobligations as
provided intheannexed Agreements.
80. Moreover, India acknowledged before thePanel andinthisappeal that,under Indian law,it
isnecessary toenact legislation inorder togrant exclusive marketing rights incompliance withthe
provisions ofArticle 70.9. Thiswasalready implied intheOrdinance, which contained detailed
provisions forthegrant ofexclusive marketing rights inIndia effective 1January 1995. However,
withtheexpiry oftheOrdinance on26March 1995, nolegalbasis remained, andwiththefailure to
enact thePatents (Amendment) Bill1995 duetothedissolution ofParliament on10May1996, no
legalbasiscurrentlyexists,forthegrantofexclusivemarketingrightsinIndia.IndianotifiedtheCouncil
forTRIPS ofthepromulgation oftheOrdinance pursuant toArticle 63.2oftheTRIPS Agreement64,
buthasfailed asyettonotify theCouncil forTRIPS thattheOrdinance hasexpired.
81. Given India'sadmissions thatlegislation isnecessary inorder togrant exclusive marketing
rights incompliance withArticle 70.9andthatitdoesnotcurrently havesuchlegislation, theissue
forustoconsider inthisappeal iswhether afailure tohaveinplace amechanism ready forthegrant
ofexclusive marketing rights, effective asfromthedateofentry intoforce oftheWTO Agreement ,
constitutes aviolation ofIndia'sobligations under Article 70.9oftheTRIPS Agreement .
82. Byitsterms, Article 70.9applies onlyinsituations where aproduct patent application isfiled
under Article 70.8(a). LikeArticle 70.8(a), Article 70.9applies "notwithstanding theprovisions of
PartVI". Article 70.9specifically refers toArticle 70.8(a), andtheyoperate intandem toprovide
apackage ofrights andobligations thatapply during thetransitional periods contemplated inArticle 65.
Itisobvious, therefore, thatbothArticle 70.8(a) andArticle 70.9areintended toapply asfrom the
dateofentry intoforce oftheWTO Agreement .
83. India hasanobligation toimplement theprovisions ofArticle 70.9oftheTRIPS Agreement
effective asfrom thedateofentry intoforce oftheWTO Agreement ,thatis,1January 1995. India
concedes thatlegislation isneeded toimplement thisobligation. Indiahasnotenacted suchlegislation.
64IP/N/1/IND/1, 8March 1995.WT/DS50/AB/R
Page30
Togivemeaning andeffect totherights andobligations under Article 70.9oftheTRIPS Agreement ,
suchlegislation should havebeenineffect since 1January 1995.
84. Forthese reasons, weagree withthePanel thatIndia should havehadamechanism inplace
toprovide forthegrant ofexclusive marketing rights effective asfrom thedateofentry intoforce
oftheWTO Agreement ,and,therefore, weagree withthePanel thatIndia isinviolation ofArticle
70.9oftheTRIPS Agreement .
VIII. Article 63
85. India argues that,under Articles 3,7and11oftheDSU, apanel maymake findings only
onissues thathavebeensubmitted toitbytheparties tothedispute. Withthisinmind, India contends
thatthePanel exceeded itsauthority under theDSU byruling onthesubsidiary claim bytheUnited
States under Article 63oftheTRIPS Agreement afterhaving firstaccepted theprincipal claim bythe
United States ofaviolation ofArticle 70.8oftheTRIPS Agreement .65
86. Thefactsarethese. ThePanel'sterms ofreference66refertotherequest bytheUnited States
fortheestablishment ofapanel.67TheUnited States didnotinclude aclaim under Article 63inits
request fortheestablishment ofapanel inthiscase.68TheUnited States didnotmention Article 63
initsfirstwritten submission tothePanel. TheUnited States didnotraiseArticle 63asanalternative
claim forthefirsttimeuntilitsoralstatement atthefirstsubstantive meeting oftheparties withthe
Panel.
87. InUnited States -Shirts andBlouses ,wesaidthat"[a]panel need onlyaddress those
claims which mustbeaddressed inorder toresolve thematter inissueinthedispute".69Thismeans
thatapanel hasthediscretion todetermine theclaims itmustaddress inorder toresolve thedispute
between theparties --provided thatthose claims arewithin thatpanel'sterms ofreference. Wehave
stressed, onmore thanoneoccasion, thefundamental importance ofapanel'sterms ofreference.
65India'sappellant 'ssubmission, p.24.
66WT/DS50/5, 5February 1997.
67WT/DS50/4, 8November 1996.
68Ibid.
69Adopted 23May1997, WT/DS33/AB/R, p.19.Afootnote tothisstatement reads: "The ‘matter inissue’isthe‘matter
referred totheDSB’pursuant toArticle 7oftheDSU".WT/DS50/AB/R
Page31
InEuropean Communities -Regime fortheImportation, SaleandDistribution ofBananas ("European
Communities -Bananas "),wefound that"[i]tisthepanel'sterms ofreference, governed byArticle 7
oftheDSU, which setouttheclaims ofthecomplaining parties relating tothematter referred tothe
DSB".70InBrazil -Measures Affecting Desiccated Coconut ("Brazil -Desiccated Coconut "),westated:
Apanel'sterms ofreference areimportant fortworeasons. First,
terms ofreference fulfil animportant dueprocess objective --they
givetheparties andthirdparties sufficient information concerning the
claims atissue inthedispute inorder toallow them anopportunity
torespond tothecomplainant 'scase. Second, theyestablish the
jurisdiction ofthepanel bydefining theprecise claims atissue inthe
dispute.71
88. Westated alsoinBrazil -Desiccated Coconut thatallclaims mustbeincluded intherequest
forestablishment ofapanel inorder tocome within thepanel'sterms ofreference, based onthepractice
ofpanels under theGATT 1947 andtheTokyo Round Codes.72Thatpastpractice required thata
claim hadtobeincluded inthedocuments referred to,orcontained in,theterms ofreference inorder
toform partofthe"matter" referred toapanel forconsideration. Following boththispastpractice
andtheprovisions oftheDSU, inEuropean Communities -Bananas ,weobserved thatthere isa
significant difference between theclaims identified intherequest fortheestablishment ofapanel, which
establish thepanel'sterms ofreference under Article 7oftheDSU, andthearguments supporting
those claims, which aresetoutandprogressively clarified inthefirstwritten submissions, therebuttal
submissions, andthefirstandsecond panel meetings withtheparties asacaseproceeds. There we
said:
Article 6.2oftheDSUrequires thattheclaims ,butnotthearguments ,
mustallbespecified sufficiently intherequest fortheestablishment
ofapanel inorder toallow thedefending party andanythirdparties
toknow thelegalbasis ofthecomplaint. Ifaclaim isnotspecified
intherequest fortheestablishment ofapanel, thenafaulty request
cannotbesubsequently"cured"byacomplainingparty'sargumentation
initsfirstwritten submission tothepanel orinanyother submission
orstatement made laterinthepanel proceeding.73
70Adopted 25September 1997, WT/DS27/AB/R, para. 145.
71Adopted 20March 1997, WT/DS22/AB/R, p.22.
72Ibid.
73Adopted 25September 1997, WT/DS27/AB/R, para. 143.WT/DS50/AB/R
Page32
89. Thus, aclaim mustbeincluded intherequest forestablishment ofapanel inorder tocome
within apanel’sterms ofreference inagiven case. Inthiscase, afterdescribing theobligations of
Articles 27,70.8and70.9oftheTRIPS Agreement ,therequest forestablishment ofapanel bythe
United States reads, inpertinent part:
...India’slegalregime appears tobeinconsistent withtheobligations
oftheTRIPS Agreement, including butnotnecessarily limited to
Articles 27,65and70....
Accordingly, theUnited States respectfully requests theestablishment
ofapanel toexamine thismatter inlightoftheTRIPS Agreement,
andtofindthatIndia’slegalregime failstoconform totheobligations
ofArticles 27,65and70oftheTRIPS Agreement, andnullifies or
impairs benefits accruing directly orindirectly totheUnited States
under theTRIPS Agreement.74
90. With respect toArticle 63,theconvenient phrase, "including butnotnecessarily limited to",
issimply notadequate to"identify thespecific measures atissue andprovide abriefsummary ofthe
legal basis ofthecomplaint sufficient topresent theproblem clearly" asrequired byArticle 6.2of
theDSU. Ifthisphrase incorporates Article 63,what article oftheTRIPS Agreement doesitnot
incorporate? Therefore, thisphrase isnotsufficient tobring aclaim relating toArticle 63within the
terms ofreference ofthePanel.
91. InEuropean Communities -Bananas ,weaccepted theview ofthepanel inthatcasethatit
was"sufficient fortheComplaining Parties tolisttheprovisions ofthespecific agreements alleged
tohavebeenviolated without setting outdetailed arguments astowhich specific aspects ofthemeasures
atissue relate towhich specific provisions ofthose agreements", andwealsoagreed withthepanel
thattherequest inthatcasewassufficiently specific tocomply withthe"minimum standards" established
byArticle 6.2oftheDSU.75Inthiscase, incontrast, there isafailure toidentify aspecific provision
ofanagreement thatisalleged tohavebeenviolated. Thisfallsbelow the"minimum standards" that
wewere willing toaccept inEuropean Communities -Bananas .
92. WenotealsothePanel'sstatement thatit"ruled, attheoutset ofthefirstsubstantive meeting
heldon15April 1997, thatalllegalclaims would beconsidered iftheyweremade prior totheend
74WT/DS50/4, 8November 1996.
75Adopt ed25September 1997, WT/DS27/AB/R, para.141; Panel Repor ts,adopted25September 1997, WT/DS27/R/ECU,
WT/DS27/R/GTM, WT/DS27/R/HND, WT/DS27/R/MEX, WT/DS27/R/USA, para. 7.29.WT/DS50/AB/R
Page33
ofthatmeeting; andthisruling wasaccepted bybothparties".76Wedonotfindthisstatement at
allpersuasive inadvancing theargument made bytheUnited States onthisissue. Nordowefind
thisstatement consistent withtheletterandthespirit oftheDSU. Although panels enjoy some discretion
inestablishingtheirownworkingprocedures,thisdiscretiondoesnotextendtomodifyingthesubstantive
provisions oftheDSU. Tobesure, Article 12.1oftheDSU says: "Panels shallfollow theWorking
Procedures inAppendix 3unless thepanel decides otherwise afterconsulting theparties tothedispute".
Yetthatisallthatitsays. Nothing intheDSU gives apanel theauthority either todisregard orto
modify other explicit provisions oftheDSU. Thejurisdiction ofapanel isestablished bythatpanel's
terms ofreference, which aregoverned byArticle 7oftheDSU. Apanel mayconsider onlythose
claims thatithastheauthority toconsider under itsterms ofreference. Apanel cannot assume
jurisdiction thatitdoesnothave. Inthiscase, Article 63wasnotwithin thePanel'sjurisdiction, as
defined byitsterms ofreference. Therefore, thePanel hadnoauthority toconsider thealternative
claim bytheUnited States under Article 63.
93. TheUnited States argues that,intheconsultations between theparties tothisdispute inthis
case,Indiahadnotdisclosed theexistence ofany"administrative instructions" forthefiling ofmailbox
applications forpharmaceutical andagricultural chemical products. Therefore, theUnited States asserts
thatithadnowayofknowing thatIndia would relyonthisargument before thePanel. TheUnited
States maintains that,forthisreason, ithadnotincluded aclaim under Article 63initsrequest for
theestablishment ofapanel.77Allthatsaid,thereis,nevertheless, nobasisintheDSUforacomplaining
party tomake anadditional claim, outside ofthescope ofapanel'sterms ofreference, atthefirst
substantive meeting ofthepanel withtheparties. Apanel isbound byitsterms ofreference.
94. Allparties engaged indispute settlement under theDSU mustbefullyforthcoming fromthe
verybeginning bothastotheclaims involved inadispute andastothefactsrelating tothose claims.
Claims must bestated clearly. Facts must bedisclosed freely. Thismust besoinconsultations as
wellasinthemore formal setting ofpanel proceedings. Infact,thedemands ofdueprocess thatare
implicit intheDSUmake thisespecially necessary during consultations. Fortheclaims thataremade
andthefactsthatareestablished during consultations domuch toshape thesubstance andthescope
ofsubsequent panel proceedings. If,intheaftermath ofconsultations, anyparty believes thatallthe
pertinent factsrelating toaclaim are,foranyreason, notbefore thepanel, thenthatparty should ask
thepanel inthatcasetoengage inadditional fact-finding. Butthisadditional fact-finding cannot alter
76Panel Report, para. 7.9.
77Response bytheUnited States toquestioning attheoralhearing.WT/DS50/AB/R
Page34
theclaims thatarebefore thepanel --because itcannot alterthepanel'sterms ofreference. And,
intheabsence oftheinclusion ofaclaim intheterms ofreference, apanel mustneither beexpected
norpermitted tomodify rules intheDSU.
95. Itisworth noting that,withrespect tofact-finding, thedictates ofdueprocess could better
beserved ifpanels hadstandard working procedures thatprovided forappropriate factual discovery
atanearly stage inpanel proceedings.
96. Forthese reasons, wefindthatthePanel erred initsfindings andconclusions relating tothe
alternative claim bytheUnited States under Article 63oftheTRIPS Agreement .Inthelightofthis
finding, itisnotnecessary forustoconsider whether thePanel erred alsoinrecommending
simultaneously thatIndia bring itselfintocompliance withitsobligations under bothArticles 70.8(a)
and63oftheTRIPS Agreement .
IX. Findings andConclusions
97. Forthereasons setoutinthisReport, theAppellate Body:
(a) upholds thePanel'sconclusion thatIndia hasnotcomplied withitsobligations under
Article 70.8(a) toestablish "ameans" thatadequately preserves novelty andpriority
inrespect ofapplications forproduct patents inrespect ofpharmaceutical and
agriculturalchemicalinventionsduringthetransitionalperiodsprovidedforinArticle65
oftheTRIPS Agreement ;
(b) upholds thePanel'sconclusion thatIndia hasnotcomplied withitsobligations under
Article 70.9oftheTRIPS Agreement ;and
(c) reverses thePanel'salternative findings thatIndiahasnotcomplied withparagraphs 1
and2ofArticle 63oftheTRIPS Agreement .
98. TheAppellate Body recommends thattheDispute Settlement Body request India tobring its
legalregime forpatent protection ofpharmaceutical andagricultural chemical products intoconformity
withIndia'sobligations under Articles 70.8and70.9oftheTRIPS Agreement .WT/DS50/AB/R
Page35
Signed intheoriginal atGeneva this4thdayofDecember 1997 by:
______________________________
Julio Lacarte-Muró
Presiding Member
______________________________ ______________________________
James Bacchus Christopher Beeby
Member Member