WORLD TRADE
ORGANIZATIONIP/C/W/249
29 March 2001
(01-1569)
Council for Trade-Related Aspects
of Intellectual Property RightsOriginal:  English
FURTHER CONSIDERATION OF NON-VIOLATION NULLIFICATION OR
IMPAIRMENT UNDER THE AGREEMENT ON TRADE-RELATED ASPECTS OF
INTELLECTUAL PROPERTY RIGHTS.
Communication from Canada
The following communication, dated 26 March 2001, has been received from the Permanent
Mission of Canada with the request that it be circulated to Members.
_______________
I. INTRODUCTION
To illustrate the importance of non-violation nullification or impairment ("non-violation")
complaints to TRIPS Council Members, and to underline the fact that the subject has taken its rightful
place on the Council’s agenda and continues to require discussion, several Members have submittedpapers on the subject of  "non-violation" since the 1999 WTO Ministerial Conference in Seattle.
Canada joined the EU, Czech Republic, Hungary and Turkey in submitting a paper in June 2000 (see
document IP/C/W/191, in Annex II to this paper) that served to advance the work in TRIPS Council
on this important agenda item.  Australia also added substantially to the ongoing discussion (see
document IP/C/W/212) at the September 2000 meeting.  The result of these efforts has emphasized
the necessity for continued examination of the scope and modalities for "non-violation" complaints
under Article 64 of the TRIPS Agreement.  The United States also contributed a paper post-Seattle(see document IP/C/W/194), indicating that although it did not necessarily see the need for continued
discussion, it was willing to listen to the views of other Members.
In our view, the TRIPS Council should proceed with its work on this issue until Members
have had the opportunity to analyze the serious and legitimate questions being explored in thesubmissions to date, and make recommendations to the Ministerial Conference on scope and
modalities (Article 64.3 of the TRIPS Agreement).  With this present discussion paper, Canada
intends to contribute to the increasingly substantive dialogue on the issues that have been raised in
respect of "non-violation".  This paper also serves as a follow-up to Canada’s submission of February
1999 encouraging discussion on "non-violation" issues prior to the Seattle Ministerial (see documentIP/C/W/127, in Annex I to this paper).
II. RECOGNITION OF THE EXCEPTIONAL CHARACTER OF "NON-VIOLATION"
COMPLAINTS AND THE SPECIFIC NATURE OF THE TRIPS AGREEMENT
Canada believes that the potential application of "non-violation" complaints in the context of
the TRIPS Agreement is distinct from how it applies in the context of trade in goods.  The actual goal
of the TRIPS negotiations was the creation of a minimum standards agreement through an accepted
international system of intellectual property protection to address uneven levels protection that were
not conducive to trade.  TRIPS is not principally concerned with questions of market access and doesIP/C/W/249
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not include a commitment to a certain level of market access.  Aside from the assertions that Members
have made frequently regarding the specific nature of the TRIPS Agreement, it is worth repeating that
the results of WTO market access negotiations are recorded in national schedules of concessions
annexed to the Uruguay Round Protocol that forms an in tegral part of the Final Act.  There is not the
same type of exchange of commitments within th e TRIPS Agreement as there is in GATT.  Instead,
the TRIPS Agreement sets out basic rules to ensure that all WTO Members follow universal minimum
standards for intellectual property protection, and that those standards remain consistent with national
treatment and MFN.  Although specific rights may be transferred through contractual licences, there is
no actual trade in intellectual property rights as there is trade in goods.  Intellectual property rights are
embedded within tradeable goods and services.
While it is true that insufficient intellectual property protection can sometimes deter trade and
investment, the issues confronting negotiators are not the same ones faced by those tackling non-tariff
barriers or other impediments to trade.  Intellectual property rights represent a balance between the
need to provide incentives to reward and spur innovation and the need to ensure that society benefits
from having maximum access to new creations.  Just as too little protection of intellectual property
can impede innovation and trade, so can too mu ch protection.  For example, although it can be
expected that some Members may unilaterally increase their term/duration of protection of rights, in
keeping with the spirit of TRIPS and the principle of intellectual property protection, it is possible that
a very large increase in the term of protection in Member A could effectively nullify or impair
benefits that Member B was expecting to enjoy at the time of negotiations and thereafter.  For
instance, nationals of Member B may have invested in the production of separate works, say moviesor theatre plays, based on or using a work that was expected to be in the public domain.  If that
underlying work is kept out of the public domain by Member A for another 40 or 50 years, the new or
prospective work is potentially affected in an indeterminate manner in Member A, the country where
the term of protection has been increased.
The fact that the TRIPS Agreement represents a carefully negotiated balance is also raised in
Australia’s discussion paper.  Australia makes an important point regarding the interpretation of the
"non-violation" provision in relation to the specific objectives and principles of the TRIPS
Agreement, as set out in Articles 7 and 8, and in the preamble.  While recognizing that one goal of the
TRIPS Agreement is to ensure that the application of intellectual property rights does not create
barriers to legitimate trade, a major concern continues to be the potential for diluting or rendering
obsolete the acknowledgments, principles and objectives in the TRIPS Agreement through the use of"non-violation" for purposes other than those that what would logically have been intended by
Members.  In establishing scope and modalities, Members need to ensure that the "non-violation"
provision is applied in a manner intended by them and consistent with the entire TRIPS Agreement.
For example, if a measure is put in place in accordance with Articles 7 and 8, it may not be
unreasonable to expect that someone’s rights might somehow be affected.  Members should decidewhether "non-violation" complaints should be available in these instances.
III. DEFINITIONS
(a) Application of a Measure
To bring a "non-violation" case, the complain ing party must show a causal link between the
harm suffered and a "measure" of the responding party.  "Measure" has not yet been explicitly defined
but the decision in the Japan -Film  case suggested that WTO panels might interpret this term broadly,
extending it to all aspects of government action.  In the majority of "non-violation" cases, to date, the
claims have related to governmental laws or regulations.  In some cases, panels have also consideredadministrative guidelines as falling within the sc ope of "measure".   However, in these cases ( Japan -
Semi-conductors and Japan - Restrictions on Imports of Certain Agricultural Products ), the specific
context was deemed critical in that the administrative guidelines applied as if they were mandatory.IP/C/W/249
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Members should examine the application of the "non-violation" remedy to actions of courts or
law enforcement authorities.  For example, if a cour t of last instance in a Member country overturned
legislation that was in the process of being passed or had been passed at the time Members were
negotiating the TRIPS Agreement, could other Members claim to have based some concessions on theexpectation that this legislation would be passed or would remain in place?
Although GATT/WTO jurisprudence does not offer much specific guidance, panels will be
called upon to determine if "measure" includes court decisions and actions of law enforcement
authorities in the TRIPS context because, in additi on to setting international standards for intellectual
property rights, the TRIPS Agreement establishes obligations regarding their enforcement through
civil, administrative and criminal procedures and remedies.  It is reasonable to presume that Memberswould not want to use the "non-violation" remedy as a means to appeal specific domestic disputes, in
effect making WTO panels the final resort.  Even if recourse to the "non-violation" remedy were
restricted to address only systemic acts, what type of constraints would WTO panels be under in
making judgements on  the exercise of discretionary authority granted by Members to their domestic
courts, enforcement agencies?  In this context, would the "non-violation" remedy suddenly beavailable for non-action?  This seems to be a dangerous prospect which Members should consider
rejecting officially.  More importantly, how would panels avoid intruding upon issues related to the
very function of state institutions (i.e. their organization, the resources available to them, the manner
in which decisions are made)?
(b) Benefits Accruing Under the TRIPS Agreement
In order to establish a case of "non-violation", nullification or impairment under
Article XXIII:1(b), a Member must demonstrate that an expected "benefit" accrued to it at the time of
conclusion of the TRIPS Agreement, and that this "benefit" was subsequently nullified or impaired.
How should "benefit" be defined?  The TRIPS negotiating history provides little or no guidance.  Asthere was no common understanding about how th e "non-violation" remedy would apply, no
substantive discussion took place regarding the concept of "benefit".  The existing jurisprudence on
the "non-violation" remedy provides a useful fram ework for the overall analysis, but it is also of
limited use in defining the concept of "benefit" in the context of the TRIPS Agreement.  The objective
in GATT negotiations is to exchange market access concessions.  In this context, it is appropriate that
the "benefit" claimed is the additional market access obtained during a particular negotiating round.
The TRIPS Agreement, however, is principally a minimum standards agreement, one that sets globalrules on the acquisition, maintenance and enforcement of intellectual property rights.  While
intellectual property rights may facilitate trade and investment, the obligations within the TRIPS
Agreement cannot be characterized as market access concessions.  The "benefit" conferred is the
ability of third parties to "acquire, maintain, and enforce" intellectual property rights.  The "benefit"
does not automatically extend to the exploitation of those rights.  Also, there are different forms ofnon-economic benefits consider.  One would be the positive factors generated by the number of times
an article in a scientific journal is cited.  Below are some examples illustrating the problematic
implications of a market access conception of "benefit" under the TRIPS Agreement:
National Security:  A notorious terrorist signs a contract with a publisher to publish and
distribute a book regarding how terrorist operations are conducted.  The publisher in Member A
obtains the global rights to the book and sets about to accept advance orders of the book, thereby
demonstrating the sales potential of the book.  Member B takes action to ban the book from
publication on the grounds of national security.  Should Member A be able to allege a TRIPS "non-
violation" case on the grounds that market access associated with the copyright in the work was
nullified and impaired?  Or should the ban be more appropriately addressed as a trade-in-goods issueunder GATT Articles XI (quantitative restrictions) and XX (general exceptions) or XXI (security
exceptions)?  Similar issues are likely to arise when copyright exists in works that are otherwiseIP/C/W/249
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subject to limitations on freedom of expression and whose interpretation may vary from Member to
Member (e.g. libel, pornography, hate literature).
Regulatory Authority:  Member A adopts a registration scheme for hand guns which is
implemented through an periodic renewal of a licence and associated fee.  Following adoption of this
measure, there is a reduction in exports of patented hand guns from Member B.  Should Member B be
able to allege a TRIPS "non-violation" case on the grounds that market access associated with the
patent rights in guns exported to Member A was being nullified and impaired?  If a "non-violation"
case is permissible in this situation, then under what circumstances can WTO Members exercise
regulatory authority to control entry onto the market of what could be perceived as less restricted but
still controlled patented products (e.g. pharmaceuticals, electronic goods, machine parts)?
Institutional Authority:  As a result of a rising number of confrontations between children
regarding collectible trading cards, school authorit ies in Member A prohibit students from bringing
such cards onto school grounds.  The measure results in reduced sales of trademarked collectible
trading cards from Member B.  Should Member B be  able to allege a TRIPS "non-violation" case on
the grounds that market access associated with the trademarked trading cards exported by Member Bwas being nullified and impaired?  If a "non-violati on" case is permissible in this situation, then on
what basis can limits be drawn on the use of the remedy against government measures, such as health
or safety measures for example, that negatively influence market access of trademarked goods or
services?
(c) Remedy
One of the key differences between a "violation" complaint (Article XXIII:1(a) of GATT) and
a "non-violation" complaint (Article XXIII:1(b)) is  the nature of the remedy.  While the remedial
action required for a "violation" case under dispute settlement is generally withdrawal of the measure,
this is not the case for "non-violation" (Article 26.1(b) of the Understanding on Rules and ProceduresGoverning the Settlement of Disputes (DSU)).  As the Appellate Body in  India-Patents noted, in a
"non-violation" case, "[t]he ultimate goal is not the withdrawal of the measure concerned, but rather
achieving a mutually satisfactory adjustment, usually by means of compensation."  In the context of
the GATT, where the allegation relates to nullification or impairment of market access concessions,
quantification of compensation does not usually present a significant problem.  However,
quantification of the level of nullification and impairment may be more difficult within the TRIPS
Agreement context.
Let us suppose that Member A provides civil a nd administrative procedures and remedies for
the enforcement of intellectual property rights but introduces an amendment raising the burden of
proof on the right holder so that successful claims become very difficult to achieve.  Member B raises
a "non-violation" complaint.  How does one quantify the level of nullification and impairmentsuffered without precise information about how many right holders from Member B were affected,
and how many of those would have won their claims  in the absence of the change and what, if any,
expected "economic" benefits were forfeited?  The fact that economic/monetary remedies are
available under the TRIPS Agreement is quite a separate concept from guarantees to market access,
which is not the aim of the TRIPS Agreement.
(d) Reasonable Expectation
GATT practice indicates that a complaint must be based on a measure that the complaining
party could not have reasonably or legitimately expected or anticipated (see  EEC - Citrus Products ).
Panels have also examined complaining parties’ reasonable expectations as to benefits accruing tothem under a given agreement.  The Note from the Secretariat (IP/C/W/124) suggests that
reasonableness of expectation is viewed from the point in time when the negotiation of the relevant
commitments were concluded, and therefore the question of timing is key when establishing whetherIP/C/W/249
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the measure could have been reasonably expected.  In this regard, the TRIPS Agreement would
appear to have been concluded on 15 April, 1994, when the Final Act of the Uruguay Round was
adopted by Members.  The question of timing appears to be an issue worthy of discussion in the
TRIPS Council.
IV. BURDEN OF PROOF
Since "non-violation" complaints encroach on the expectation that Members will only be held
responsible for breaching obligations, GATT practice established different rules regarding  burden of
proof for such cases.  In "violation" cases, nullifi cation or impairment is inferred from the breach of
the obligation.  Therefore, once the complaining party establishes a breach has occurred, the onus
shifts to the defending party to show an absence of nullification or impairment.  By contrast, in a
"non-violation" case, nullification or impairment cannot be inferred.  It is up to the complaining party
to submit a "detailed justification" supporting its case (Article 26.1(a) of the DSU).  The cases
histories suggest that this justification must go further than a simple description of the offending
measure.  It must provide a detailed substantiation of the expectations of the negotiating parties as
well as demonstrate a clear causal link between the measure at issue and the nullification orimpairment.  Generally speaking, it appears that panels have applied a standard of proof based on a
balance of probabilities.  Members should consider whether a higher standard should be applied in
"non-violation" cases in a TRIPS context.
V. ADOPTION OF TRIPS "NON-VIOLATION" DECISIONS THROUGH "POSITIVE"
RATHER THAN "NEGATIVE" CONSENSUS
Under the DSU, decisions of panels and the appellate body are adopted by "negative"
consensus, i.e., unless all Members reject a report, it is adopted.  There appears to be an exception to
this practice in the case of "situation" complaints under GATT Article XXIII:1(c).  Article 26.2 of theDSU develops the rules applicable to cases where Article XXIII:1(c) is invoked.  In particular, it
establishes that the 1989 GATT Decision on "Improvements to the GATT Dispute Settlement Rules
and Procedures"(L/6489) shall apply to the consideration for adoption, and surveillance and
implementation of recommendation and rulings on "situation" complaints.  It provides that:
"The practice of adopting panel reports by consensus shall be continued, without prejudice to
the GATT provisions on decision-making which remain applicable".
With respect to Article XXIII:1(b), in the absence of specific wording to the contrary at Article 26.1
of the DSU, it would appear that "non-violation" decisions would be adopted by "negative"
consensus.
By imposing a five-year moratorium and a requirement for mandatory review of the
application of GATT Article XXIII:1(b) and (c), pursuant to Article 64.2 and 3 of the TRIPS
Agreement, Members recognized certain inherent similarities and shared concerns about "non-
violation" and "situation" complaints.  Historical ly, "non-violation" provisions were formulated to
address non-tariff barriers which would otherwise have frustrated the effectiveness of the old GATTrules.   The rationale for "situation" complaints was to leave open the possibility for Members "to seek
a modification of the undertakings it has given if, by the action of others, conditions are created in
which it can no longer carry out those undertakin gs" (E/CONF.2/C.6/W.19, p.1).  From a policy
perspective, "non-violation" complaints manifest many of the same issues as do "situation"
complaints.  Members’ abilities to introduce new and perhaps vital social, economic development,health, environmental and cultural measures should not be construed as denying ambiguously-defined
benefits under the TRIPS Agreement.  As detailed in the burden of proof section of this paper, unlike
Article XXIII:1(a), Articles XXIII:1(b) and (c) do not benefit from the presumption of nullificationIP/C/W/249
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and impairment.  The complaining party must prove that the infringing Member has nullified or
impaired benefits which had been reasonably anticipated when the TRIPS negotiations were
concluded.  Similarly, as discussed in the remedy  section of this paper, for both "non-violation"
complaints and "situation" complaints, the ultimate goal is not the withdrawal of the measure in
question, but rather achieving a mutually satisfactory adjustment, usually by means of compensation.Therefore, it is reasonable to ask whether, in the context of the TRIPS Agreement, "non-violation"
complaints and "situation" complaints should not also share the same process for adoption of
decisions - namely "positive" consensus (i.e. all Members would need to agree to a report before it is
adopted).
VI. CONCLUSION
This discussion paper, along with the previous submissions of other Members, identifies valid
reasons for continued substantive discussion and examination in the TRIPS Council of the scope and
modalities for "non-violation" complaints as they pertain to the TRIPS Agreement and intellectual
property rights.  Therefore, we would encourage the TRIPS Council to advance discussion on issues
as identified in the papers submitted to date, with the view of fulfilling its responsibility underArticle 64 of the TRIPS Agreement.
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ANNEX I: DOCUMENT IP/C/W/127
NON-VIOLATION NULLIFICATION OR IMPAIRMENT
UNDER THE AGREEMENT ON TRADE RELATED ASPECTS OF
INTELLECTUAL PROPERTY RIGHTS (TRIPS)
Communication from Canada
By means of a communication from its Permanent Mission, dated 5 February 1999, Canada
has requested that the following text be circulated to Members.
_______________
Issue
Article 64 of the TRIPS Agreement makes provision for a non-violation nullification or
impairment ("non-violation") remedy under the Agreement.  According to the terms of this Article,
recourse to non-violation complaints concerning intellectual property rights will become available on
1 January 2000, unless there is consensus among all WTO Members to the contrary.  To date, therehave been no substantive discussions about non-violation nullification or impairment by the TRIPS
Council.  Canada believes that there is an urgent need to begin this examination.  Canada is concerned
that applying the remedy in the context of intellectual property may constrain Members’ abilities to
introduce important measures in many vital areas.
Background
Incorporated into the TRIPS Agreement is Article XXIII of GATT 1994, which makes a
measure which qualifies as "non-violation nullification or impairment" subject to compensation.  In
simple terms, a "non-violation nullification or impairment" measure is one which, while it does not
conflict with the provisions of the agreement, has the effect of nullifying or impairing a "benefit"
ensured under a treaty.  The rationale for such a provision is to protect the overall balance ofconcessions reasonably expected when the agreement was reached.
This concept finds its roots in trade in goods.  Its history and application have been in the
areas of market access, dating back to the early days of international trade agreements when
governments could circumvent the relatively few undertakings (usually with respect to tariff bindings)by erecting new, non-tariff barriers to undermine the promises contained in the agreements.  In its
construction (narrow interpretation of the measure, concept of reasonable expectations, standard of
causation, heightened evidentiary standard) and its application (only eight cases under GATT, one
under the WTO), this remedy reflects the concern of Members that its scope be carefully
circumscribed.  After all, having agreed to specific obligations in exchange for a defined set ofscheduled benefits, governments did not want to expose themselves to disputes for actions that do not
infringe the terms of the agreement.
During the Uruguay Round negotiations, the conc ept of non-violation was extended to apply
to the other multilateral agreements on trade in goods (in addition to GATT 1994) and to trade in
services.  During the TRIPS negotiations in particular, there was significant disagreement regarding
the inclusion of a provision on non-violation in the context of an intellectual property agreement.  As
a result, the final text included reference to the c oncept, but delayed the provision's entry into force
until 1 January 2000, and provided that the Council for TRIPS "examine the scope and modalities" for
such complaints in the intervening period and submit recommendations to the Ministerial ConferenceIP/C/W/249
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for approval.  The Ministerial Conference may decide to approve such recommendations or to extend
the moratorium by consensus (Article 64).
In Canada's view, the effect of the doctrine in the context of TRIPS is highly undesirable for
related reasons: (1) it is very difficult to gauge the degree of liability that would be created throughintroducing non-violation into the TRIPS regime; and (2) as a result, domestic policy making may be
unacceptably constrained.
Issues of Concern
1. Uncertainty as to Scope
The non-violation remedy is based on the premise that a government measure can be the
subject of a complaint even if it does not violate specific obligations.  Given its unusual nature, the
remedy was narrowly construed by GATT panels, although there is some uncertainty regarding its
interpretation as a result of the WTO panel in the Japan-Film  case.  This adds to the uncertainty
surrounding the remedy and potentially makes it an extremely broad one.    Furthermore, the remedyhas not been used frequently, so there is little analysis upon which to rely.
To understand the nature and scope of the obligation not to nullify or impair expected benefits
as it applies to intellectual property rights, one has to appreciate how the TRIPS Agreement differs
from GATT and GATS and how these differences make the consequences of the remedy much moredifficult to predict.  Unlike other WTO agreements, such as those concerning goods or services, the
TRIPS Agreement is not principally concerned with questions of market access and does not include a
commitment to a certain level of market access.  There is not the same exchange of rights and
obligations within the TRIPS Ag reement as there is in GATT and GATS.  Instead, the TRIPS
Agreement sets out basic rules to ensure that all WTO Members follow universal minimum standardsfor intellectual property protection, and that those standards are applied consistent with national
treatment and MFN.  This distinction between the TRIPS Agreement and other WTO agreements has
important consequences for the application of the non-violation remedy in the context of intellectual
property.
The difficulty of applying non-violation to TRIPS obligations is most apparent in examining
the concept of "benefit".  The rationale for the non-violation remedy is that Members enter into a tradeagreement that is grounded in "reasonable expectations" of the benefits to result.  Hence, it seems
essential that there be some common understanding among Members at the time they negotiate of
what such "benefits" would consist.  In the case of intellectual property, there are very different views
of what is meant by "benefit" - it is a term that has generated much debate but no common view.
Consistent with the main objectives of the TR IPS Agreement, the Canadian viewpoint is that
"benefit" consists primarily of the right conferred on the intellectual property holder to prohibit
unauthorized use.  However, some Members have asserted that overall anticipated economic returns
are the proper benefit of an intellectual property right.  Because of a lack of agreement or even
substantial discussion of the meaning of "benefit" in  the context of intellectual property rights, a panel
would have to come up with a definition almost in a void.  This goes beyond the desirable mandate of
the dispute settlement process.
It is normal that there will be different interpretations of obligations but, in this instance, the
lack of a common view on the essential element of the remedy makes its application veryunpredictable.  Any such uncertainty has a chilling effect on the exercise of legitimate regulatory
authority.  The greater the uncertainty, the greater the impact.  Moreover, in given cases, it can lead to
a severe curtailment of what many would regard as the normal exercise of sovereign authority to
achieve health, safety and environmental objectives.IP/C/W/249
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2. Undermining Regulatory Authority
Because of the indeterminacy of non-violation in th e context of intellectual property, Governments
may find themselves genuinely and unduly constrained in the development of policy.  It is recognized
that measures and policies enacted in pursuit of legitimate public policy objectives, even if fullyconsistent with the obligations of the TRIPS Agreement, may have an impact on intellectual property
rights. Through the process of binding dispute settlement, Members could discover that the vague
concept of non-violation applied to TRIPS obligations may take on a much wider scope than was ever
intended.
The exercise of normal governmental powers often results in a change in the conditions of
doing business.  Such changes may involve the diminishment of the value of an intellectual propertyright.  For example, a requirement for plain packaging of cigarettes could be seen as "nullifying or
impairing" the benefit which cigarette-exporting countries expected their nationals to derive from
their trademark rights.
Due to the uncertainty surrounding the reme dy in a TRIPS context, it is vital that
Governments are fully cognizant of the obligations they assume, and that, to the greatest extent
possible, the obligations be written so as to minimize the possibility of unintended interpretation.
Conclusion
The non-violation remedy was developed in a context wholly different from the TRIPS
Agreement as a means of ensuring market access.  Transplanting this remedy into the TRIPS
environment is not suitable in the context of intellectual property and, in Canada's view, will introduce
into the Agreement a deleterious measure of uncertainty.  By so doing, it risks constraining Members'
abilities to introduce new and perhaps vital social, economic development, health, environmental andcultural measures that might be construed as denying ill-defined benefits under the TRIPS Agreement.
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Annex I to IP/C/W/124
Relevant Provisions
Excerpt from the TRIPS Agreement
Article 64
Dispute Settlement
1. The provisions of Articles XXII and XXIII of GATT 1994 as elaborated and applied by the
Dispute Settlement Understanding shall apply to consultations and the settlement of disputes under
this Agreement except as otherwise specifically provided herein.
2. Subparagraphs 1(b) and 1(c) of Article XXIII of GATT 1994 shall not apply to the settlement
of disputes under this Agreement for a period of five years from the date of entry into force of the
WTO Agreement.
3. During the time period referred to in paragraph 2, the Council for TRIPS shall examine the
scope and modalities for complaints of the type provided for under subparagraphs 1(b) and 1(c) ofArticle XXIII of GATT 1994 made pursuant to this Agreement, and submit its recommendations to
the Ministerial Conference for approval.  Any decision of the Ministerial Conference to approve such
recommendations or to extend the period in paragraph 2 shall be made only by consensus, and
approved recommendations shall be effective for all Members without further formal acceptance
process.
Excerpt from GATT 1994
Article XXIII
Nullification or Impairment
1. If any contracting party should consider that any benefit accruing to it directly or indirectly
under this Agreement is being nullified or impaired or that the attainment of any objective of the
Agreement is being impeded as the result of
(a) the failure of another contracting party to carry out its obligations under this
Agreement, or
(b) the application by another contracting party of any measure, whether or not it
conflicts with the provisions of this Agreement, or
(c) the existence of any other situation,
the contracting party may, with a view to the satisfactory adjustment of the matter, make written
representations or proposals to the other contracting party or parties which it considers to beconcerned.  Any contracting party thus approached shall give sympathetic consideration to the
representations or proposals made to it.
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ANNEX II: DOCUMENT IP/C/W/191
NON-VIOLATION COMPLAINTS UNDER THE TRIPS AGREEMENT – SUGGESTED
ISSUES FOR EXAMINATION OF SCOPE AND MODALITIES UNDER
ARTICLE 64.3 OF THE TRIPS AGREEMENT
Communication from Canada, the Czech Republic, the European Communities
and their member States, Hungary and Turkey1
The Secretariat has received the present communication, dated 21 June 2000, from the
Permanent Delegation of the European Commission, submitted on behalf of Canada, the Czech
Republic, the European Communities and their member States, Hungary and Turkey.
_______________
1. Introduction
1. The specific nature of the TRIPS Agreement calls for careful consideration of the extent and
means for non-violation complaints.  The issue of scope and modalities for such complaints under the
TRIPS Agreement has, however, not been adequately addressed so far.  Insufficient headway has been
made to allow for final conclusions to be drawn from the inputs of Members and discussions in theTRIPS Council.
2. In a general way, views of Members have diverged.  However, few details have been given so
far to illustrate positions, which can be summarized along the following lines:  one Member has
stressed the similar characteristics of the WTO's three pillar agreements, and as a result has stated its
abiding interest in ensuring that complaints can be brought against measures which, although they donot violate the TRIPS Agreement, may nonetheless nullify or impair benefits that can be expected to
be derived from it.  The potentially wide application of non-violation complaints has led other
Members to stress the importance of pursuing the debate.  The point was made that an overarching
coherence between the WTO's main agreements had to be maintained, and their potentially
contradictory application to be avoided.  The attent ion was also drawn to the need to remain free to
pursue legitimate public policy objectives.
3. Taking into account the strong support for the continuation of a thorough examination, which
emerged from discussions at the last meeting of the TRIPS Council, on 21 March 2000, this
communication intends to provide a contribution to the future substantial debate on scope and
modalities for non-violation complaints in the TRIPS Council.  It is clearly not exhaustive on all
possible issues which delegations might wish to raise in this context and is open for completion by
further written submissions.
2. Considerations
4. There are a number of elements which need to be weighed carefully when the scope and
modalities for non-violation complaints under the TRIPS Agreement are being examined.
                                                     
1 The Members on behalf of whom this communication was submitted have indicated that it is without
prejudice to their rights and obligations under Article 64 of the TRIPS Agreement.IP/C/W/249
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(a) The TRIPS Agreement is not a market access agreement as such
5. While it is true that the TRIPS Agreement facilitates market access of goods and services with
intellectual property rights, it is not a market access agreement as such.  Market access commitments
are encapsulated in the respective GATT and GATS schedules of WTO Members, and have been
negotiated in subsequent GATT/WTO Rounds.
6. The TRIPS Agreement is, at heart, a sui generis agreement.  It provides minimum standards
with regard to the acquisition or exploitation of intellectual property rights and on their scope, as well
as procedures and measures to enforce these rights, notably by enabling effective action against
unauthorized use of those rights by third parties.  Complaints could thus be considered as falling
within a possible ambit of a non-violation case under the TRIPS Agreement when they are primarily
linked to benefits that can reasonably be expected to result from the conferral of intellectual property
rights and their exclusivity, i.e. those that are specific  to the TRIPS Agreement,  rather than to any
resulting economic returns which are covered by market access concessions under the GATT or the
GATS.
7. Cases where limitations on the availability, maintenance or enforcement of an intellectual
property right are the specific object  of a complaint, might fall within this category.  When (a
restriction on) market access is the principal object of a complaint, by contrast, this should be filedexclusively under the relevant procedures provided in the GATT and GATS.
(b) Coherence between the different WTO agreements
8. Intellectual property rights are invariably linked to goods or services, for which market access
rights have been negotiated in the context of the GATT or the GATS.  It is important, and in the
interest of all WTO Members, to ensure that a complaint which is lodged under different WTOagreements should not lead to a dispute settlement result that could have the effect of undermining the
coherence between those agreements.
9. This is especially pertinent in the field of non-violation complaints, to the extent that these
relate not to a breach of an international obligation accepted by a WTO Member, but to the
nullification or impairment of a benefit without any provision having been specifically violated.
10. The need to maintain coherence between the different WTO agreements can be illustrated by
a few examples.  A country may decide, for exampl e, to ban the manufacture, processing, importation
and distribution of materials or products that contain a prohibited substance.  This could affect foreign
intellectual property right holders who may be the main providers of such products to that market.
Similarly, a country may decide to impose advertizing restrictions on the marketing of certain goods
or services.  This could impose significant limitations on the promotion of brands, trademarks or other
denominations.  Equally, a country may decide to apply a heavy taxation on certain goods withintellectual property rights whose use is deleterious to the environment.
11. In all these cases, it is highly questionable whether WTO Members would be in favour of
leaving the option open for countries to file a non-violation complaint under the TRIPS Agreement, if
the measure is found to be in full compliance with multilateral provisions under the GATT and its
annexed agreements or the GATS.  At a minimum, in order to maintain consistency between theWTO agreements, measures that fall within the general exceptions found within the GATT or the
GATS should not be subject to dispute settlement under the TRIPS Agreement.  Agreements listed in
the Secretariat's note
2 which contain provisions on non-violation complaints suggest that the potential
for such conflicts can be reduced.  There are also additional approaches, aside from exceptions, that
are worth considering in further discussions.
                                                     
2 IP/C/W/124, dated 28 January 1999.IP/C/W/249
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3. Suggested Follow-up
12. Given the number of outstanding issues which need further clarification and examination, it is
suggested to continue the debate on scope and modalities in the TRIPS Council.  Complementary
contributions may shed some light on other difficult questions, such as the distinction between
violation and non-violation complaints in the sole context of the TRIPS Agreement or the relationshipbetween non-violation complaints and the general principles contained in the Agreement.
13. Also, at present, there is no clear understanding on the meaning, as it applies to the TRIPS
Agreement, of benefit among WTO Members.  Mo reover, given the distinction noted between the
TRIPS Agreement and other WTO agreements, it is necessary to clarify the application of
non-violation complaints in the context of intellectual property within the existing WTO body of law.
The uncertainty regarding the application of such non-violation complaints needs to be resolved so as
to minimize the possibility of unintended interpretation.
14. Finally, we would again draw the attention of WTO Members to the aforementioned
Secretariat's note that contains valuable information worth exploring in future discussions.
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