RESTRICTEDWORLD TRADE
ORGANIZATIONIP/C/W/214
6 October 2000
(00-4108)
Council for Trade-Related Aspects
of Intellectual Property RightsOriginal:  English
COMMUNICATION FROM INDIA
The following communication, dated 22 September 2000 has been received from the
Permanent Mission of India with the request that it be circulated to Members.
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CLARIFYING TRIPS:  A CONFIDENCE-BUILDING MEASURE
1. The scenes of Seattle, both inside and outside the negotiating rooms, brought out many
lessons for the WTO membership.  One of these is that the long-term health of the multilateral trading
system would depend, inter alia , on the extent of flexibility retained by Members in meeting their
WTO obligations.  Second is the expression of frustration in some quarters on the lack of empathy of
the multilateral trading system with, inter alia , the protection of public health and nutrition, and the
promotion of public interest in sectors of vital importance to socio-economic and technological
development of the Member countries.
2. In the WTO, these are times of introspection.  Introspection to determine the extent of
sovereign flexibility necessary to retain a balance between the right of peoples in Member countries to
achieve their needs and aspirations, and the obligations of Member Governments to provide apredictable multilateral trading system.  Introspection also to distinguish between what is the
consensus of the membership on interpretation of what they have negotiated during the Uruguay
Round and the "clarificatory" interpretation evolving through the strengthened dispute settlement
mechanism.
1  The TRIPS Agreement is perhaps the most intrusive of the WTO Agreements and
therefore needs deeper introspection.
3. Article XVI:4 of the WTO Agreement obliges each Member to ensure the conformity of its
laws, regulations and administrative procedures with its obligations as provided in the TRIPS
Agreement.  To determine whether such conformity is being ensured, recourse is available either
through discussions in the TRIPS Council or thro ugh the Dispute Settlement Understanding (DSU).2
                                                     
1 Article IX:2 of the WTO Agreement provides the Ministerial Conference, the General Council and
the TRIPS Council, in that order, the exclusive authority to adopt interpretations of WTO rules.
2 Article 3.2 of the DSU recognizes, inter alia , that the dispute settlement system serves to clarify the
existing provisions of the covered agreements in acco rdance with customary rules of interpretation of public
international law.IP/C/W/214
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4. The objectives of the TRIPS Agreement are contained in Article 7.3  These objectives have
two pillars;  first, to promote inventions;  and second, the transfer and dissemination of technology
embodied in such inventions.  The principles of the Agreement are contained in Article 8.4
5. The objectives and principles of the Agreement, and the fact that it is lodged in the WTO,
demonstrate two things.  Firstly, the TRIPS Agreem ent is a trade agreement with the overarching
objective of promoting trade through international transfer of technology.  That, in fact, is the only
reason it could become a part of the WTO acquis.  Although export of pharmaceuticals or active
ingredients, of sound recordings, films, software packages, etc. may have been the primary objective
of the demandeurs  of the Agreement, they sold it to the membership as a trade agreement and thus
transfer of technology is necessarily an integral part of its objectives.  Second, the Agreement
balances the private rights of inventors with the rights of the users of inventions.  In any debate on the
TRIPS Agreement, therefore, these objectives and principles need to be preserved.  This being theintention of the negotiators, the TRIPS Council as we ll as the Dispute Settlement Body (DSB) of the
WTO need to reflect these objectives and principles in their discussions and decisions.
6. The preambular objective of the WTO Agreement is to raise standards of living, ensure full
employment and a large and steadily growing volume of real income and effective demand, and
expanding the production of and trade in goods and services.  On a conventional economic analysis,raising intellectual property protection may actually reduce total domestic and even global economic
welfare.  It is important therefore that all discussions and decisions on interpretation of the TRIPS
Agreement take account of the objectives of the WTO and circumscribe intellectual property rights
protection with competing public values embodied in Articles 7 and 8.  Whether this has happened or
not can be assessed from the discussions in the TRIPS Council and decisions of the DSB.
7. Discussions in the TRIPS Council have focused on two aspects so far.  First, practices of
Members in implementing their obligations have been reviewed.  Second, some mandated
negotiations and reviews have been initiated.  A survey of the numerous questions raised by
Members, particularly developed country Members themselves, on the legislation reviewed in the last
four years leads to an interesting conclusion.  This is that the questions have all been based onobligations relating to minimum standards of protection provided for under the Agreement; no
questions are asked on the extent to which the objectives and principles of the Agreement are
translated into the legislation.  Rather, exercise of legislative or administrative flexibility by Members
to accommodate competing public values, such as the use of compulsory licences or Government use,
have been the subject of some repeated follow-up questions, meant primarily to question the use of
such flexibility.  Clearly, the transfer and dissemination of technology and the consequential increase
in trade have been of little concern to the questioning Members.  It could thus be argued that theTRIPS Agreement, instead of being a trade agreement that it is, has been sought to be converted into a
means of enforcing private rights irrespective of their trade effects.
                                                     
3 Article 7:  "The protection and enforcement of intellectual property rights should contribute to the
promotion of technological innovation and to the transfer and dissemination of technology, to te mutual
advantage of producers and users of technological kn owledge and in a manner conducive to social and
economic welfare, and to a balance of rights and obligations."
4 Article 8.1:  "Members may, in formulating or amending their laws and regulations, adopt measures
necessary to protect public health and nutrition, and to promote the public interest in sectors of vital importanceto their socio-economic and technological development, pr ovided that such measures are consistent with the
provisions of this Agreement."
Article 8.2:  "Appropriate measures, provided that they are consistent with the provisions of this
Agreement, may be needed to prevent the abuse of intellectual property rights by right holders or the resort topractices, which unreasonably restrain trade or advers ely affect the international transfer of technology."IP/C/W/214
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8. During the discussions on the mandated negotiations and reviews in the TRIPS Council,
while the developing countries have been emphasizing the flexibilities available under the Agreement
to pursue public interest, some developed countries have been proposing further strengthening of the
rights of inventors irrespective of public interest.
9. The developments in the dispute settlement body are no different.  In an important dispute
involving two public policy provisions in a Member's Patent Act, the dispute settlement mechanism
appears to have relegated the objectives and principles to secondary importance as compared to the
minimum standards of protection.  So much so, in order to focus on standards of intellectual property
right protection per se , and not on the larger context of the TRIPS Agreement as a trade agreement,
the particular Panel took pains to clarify in the begi nning of its findings that in interpreting the TRIPS
Agreement they have taken into account the extended context, beyond the negotiating history,
encompassing incorporated international instrument s.  These, of course, are intellectual property
right-related instruments and not trade-related instru ments.  In interpreting "limited" in Article 30 of
the Agreement, again, the Panel considered the expression solely from the perspective of the
right holders, disregarding the policy goals or social  purposes of the measure.  It did not take guidance
from the Appellate Body, which had earlier held th at an exception provision does not ipso facto
become "stricter" or "narrower".5  Instead, it did not even take a clue of the negotiating intent of the
membership when the majority of third parties found both the impugned policy provisions as
acceptable limited exceptions under Article 30.  Another, perhaps more damaging, evolutionary
interpretation of the dispute settlement mechanism in a particular case is its finding that the
non-discrimination provisions in Article 27.1 of the Agreement apply to any exception granted under
Article 30.  Such an interpretation renders ineffective the otherwise legitimate and prescribedobjectives and principles of the Agreement including legitimate social and economic objectives,
health concerns and creation of a balance between private interests and public interests.  After all,
Article 30 is not subject to Article 27 by any reading or interpretation of the plain words of the
Agreement.  This reduces the legal security of both  right holders and those social interests seeking to
limit intellectual property protection.  Therefore, in its evolutionary interpretation, the WTO disputesettlement mechanism has interpreted Article 30 in a very limited way.  The importance of Articles 7
and 8 was limited, firstly, by counting them as two among many provisions which indicate the object
and purpose of the Agreement and, secondly, by referring mainly to the limitations of these Articles.
Thus, Article 30 has to virtually stand on its own feet, and will not be read as sub-serving the
objectives and principles of the Agreement.
10. Many developing country Members have sought the operationalization of Articles 7 and 8 of
the TRIPS Agreement in their proposals submitted dur ing the preparations for the Seattle Ministerial
Conference.  Documents WT/GC/W/147, WT/GC/W/302, WT/GC/W/209 and Corr.1,
WT/GC/W/225, WT/GC/W/233 and Job(99)/3169 and Add. 1 refer in this regard.  While lip service
has been given to the objectives and principles in the discussions on these proposals, there has been
little accommodation in terms of accepting these principles and objectives in actual legislative or
administrative practice.  The developed country Members have shown little accommodation of theessence of these proposals in the preparations for the Seattle Ministerial Conference, or in considering
related implementation issues during the Conference.
11. It is unfortunate that the WTO membership has handed over its primary responsibility of
clarifying both the trade implications of intellectual property rights and the basic objectives and
principles behind the TRIPS Agreement to the dispute settlement mechanism.  The kind of rumblingsheard in Seattle and reflected in a number of implementation issues proposed at and after Seattle will
not die down if the membership refuses to take its responsibility and interpret the Agreement for itself
                                                     
5 "…merely characterizing a treaty provision as an 'exception' does not by itself justify a 'stricter' or
'narrower' interpretation of that provision than would be warranted by examination of the ordinary meaning ofthe actual treaty words, viewed in the context and in the light of the treaty's object and purpose, or, in otherwords, by applying the normal rules of treaty interpretation".  See document WT/DS26/AB/R, pages 40-41.IP/C/W/214
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rather than leaving it to the judgement of a few.  There is more reason for such action in the TRIPS
Council than elsewhere because the TRIPS Agreemen t is uncharted territory for the WTO and would
need revisiting to clarify the negotiating intent, wh erever necessary.  After all, the membership took
firm steps in the Uruguay Round to revisit some of  the other Codes of the earlier rounds and evolved
more appropriate guidance for dispute panels and the Appellate Body.
12. India is itself the repository of immense intellectual property and there is no doubt in our
minds that intellectual property needs to be protected.  It is also true that protection of intellectual
property coupled with liberal trade and investment policies are important for development, and India
is autonomously pursuing this approach.  However, the abjectly mercantilist use of intellectual
property rights involving possible loss to health or achievement of other socio-economic objectives
was neither intended by the negotiators nor should it be encouraged.  Another worrying trend is the
increased resort to the issuance of "bad patents".6  Although numerous examples of such bad patents
could be given, it may suffice to mention the latest one here.  On 11 May 2000, the Opposition
Division of the European Patent Office at Munich adjudged that no inventive step was involved in a
patent granted on "hydrophobic extracted neem oil - a novel fungicide".  Commenting on this action,
Mr. Hiltrud Breyer, a Member of the European Parliament stated "This action illustrates how the
patent system is being abused by multinational companies (MNCs).  Genetic resources that are freelyavailable in the South are being expropriated without reward or recognition for their traditional
custodians.  This is bio-piracy at its crudest".
7
13. In this scenario it becomes even more important to check this trend through the objectives and
principles of the TRIPS Agreement.  The question of how to operationalize Articles 7 and 8 is a larger
question and it would be more appropriate to answer it in the Council itself.  The following are somesuggestions in this regard:
• A clarification could be made of the language in Articles 7 and 8 for the benefit of
national governments pursuing public interest and for the dispute settlement mechanism.
For example, it could be clarified that Article 7 contains the objectives of the Agreement
and is not circumscribed by any other provisions of the Agreement.
• The phrase "provided that such measures are consistent with the provisions of this
Agreement" in Article 8.1 could be clarified to emphasize that principles of the
Agreement contained in this Article cannot be completely negated by this proviso.
• A number of "implementation" proposals in paragraphs 21 and 22 of the Draft Ministerial
Text (DMT) of the Seattle Ministerial Conference relate to objectives and principles
contained in Articles 7 and 8.  It would be a confidence-building measure to agree to
these proposals and would also help in operationalizing these Articles.
14. Through this paper, India urges the TRIPS Council to examine the above issues in order to
build the confidence of the weaker trading partners who may not otherwise be able to express their
negotiating intent either through the existing agenda of the Council or through recourse to disputes.India also invites suggestions from other like-minded delegations for operationalization of Articles 7
and 8 of the Agreement in such a way that our trade moorings are not uprooted and we are not
subjected to protectionist objectives of commercia lly stronger companies and countries.  This would
be necessary also to preserve the democratic way of functioning of the GATT/ WTO.  It would also be
guidance for the dispute settlement mechanism grapp ling with the balance between the principles and
objectives of the TRIPS Agreement on the one hand and minimum levels of protection required under
                                                     
6 The Economist, 8 April 2000.
7 Quoted in Down to Earth, Vol.9, No.2, 15 June 2000, see www.oneworld.org/cse/html/dte/
dte20000615/dte.news.htmIP/C/W/214
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the Agreement on the other hand.  Most important, it would be a confidence-building measure for
those from whom greater accommodation is expected on some of the other proposals in the WTO
aimed at further trade liberalization.
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