Council for Trade-Related Aspects of Intellectual Property Rights (00-2784)
At the meeting of the Council for TRIPS that took place from 26 to 29 June 2000, the delegation of India requested that the following communication, which had been circulated on 18 February 1999 in the context of the preparations for the 1999 Ministerial Conference (document WT/GC/W/147), would be circulated as a TRIPS Council document.
- The TRIPS Agreement has as its preambular objective a desire to ensure that measures and procedures to enforce intellectual property rights do not themselves become barriers to legitimate trade. Further, one of its objectives is to contribute to the transfer and dissemination of technology. It has, amongst its principles, the promotion of public interest in sectors of vital importance to the socioeconomic and technological development of its Members. At the same time the Agreement recognises intellectual property rights as private rights. Finally, the Agreement encourages adjustments aimed at higher levels of protection of intellectual property rights. With these objectives, principles and provisions in view, India would like to initiate a discussion on some of the issues that have been of great concern to WTO Members, including many developing countries. These issues are by no means exhaustive, nor do they represent the entirety of Members’ concerns on intellectual property rights. They are intended to initiate discussions on issues related to IPRs so that the objectives of the WTO Agreement such as raising standards of living, ensuring full employment increasing trade and promoting sustainable development are achieved.
- This proposal aims at a more effective implementation of the provisions relating to transfer of technology.
Article 7 of the TRIPS Agreement states:”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 the mutual advantage of producers and users of technological knowledge and in a manner conducive to social and economic welfare, and to a balance of rights and obligations.”
- Article 8.2 states: “Appropriate measures, provided they are consistent with the provisions of the Agreement, may be needed to prevent the abuse of intellectual property rights by right holders or the resort to practices which unreasonably restrain trade or adversely affect the international transfer of technology.”
- India believes that Articles 7 and 8.2 are overarching provisions that should qualify other provisions of the Agreement that are meant to protect intellectual property rights. Technology has become one of the most important determinants for economic development. Emerging patterns of technology generation and transfer have been researched intensively. A recent analysis of the mode of technology transfers suggests a reversal of the growing popularity of arm’s length licensing in the 1970s and mid-1980s to intra-firm transfers since the mid-1980s. For example, 80 per cent of transfers by US corporations and 95 per cent by German corporations in 1995 were made on internal basis compared to 69 per cent and 92 per cent respectively in 1985. This is only one example of the changing pattern of technology transfers, provided here to highlight the need to address in the WTO issues such as transfer, dissemination and innovation.
- One of the important objectives of the WTO Agreement, as mentioned in its preamble, is the need for positive efforts designed to ensure that developing countries secure a share in the growth in international trade commensurate with the needs of their economic development. However, the TRIPS Agreement in its current form might tempt IPR holders to charge exorbitant and commercially unviable prices for transfer or dissemination of technologies held through such IPRs. It is important, therefore, to build disciplines for effective transfer of technology at fair and reasonable costs to developing countries so as to harmonise the objectives of the WTO Agreement and the TRIPS Agreement.
- Similarly, Article 40 recognises that licensing practices or conditions pertaining to IPRs could restrain competition and have adverse effects on trade and may impede the transfer and dissemination of technology. It provides Members which certain rights to ensure that this does not happen. Further, of more importance to developing and least developed countries, Article 67 obliges developed country Members to provide, on request and on mutually agreed terms and conditions, technical and financial cooperation in their favour. Since developing countries are still availing transition periods under the Agreement, awareness and capacity to seek such cooperation may be lacking. Again, Article 66.2 obliges developed country Members to provide incentives to enterprises and institutions in their territories for the purpose of promoting and encouraging technology transfer to least developed countries. There has been little effort to implement this provision, raising doubts about the effectiveness of the Agreement to facilitate technology transfers.
- One proposal on technology transfers has already been made in the Committee on Trade and Environment. In that Committee, India has proposed that owners of environmentally sound technology and products should sell such technologies and products at fair and most favourable terms and conditions upon demand to any interested party which has an obligation to adopt these under national law of another country or under international law. Similar concerns regarding the need for the transfer of technology have been expressed with respect to electronics commerce also. Concerns have also been raised on the need for transfer of technology in a commercially viable manner for ensuring positive outcomes for developing countries through the increasing linkage between trade and investment.
- Transfer of technology at fair and most favourable terms has been highlighted in all discussions and debates on sustainable development. The Rio Declaration of 1992 as well as most of the multilateral environmental agreements emphasizes the need for such technology transfers. The preamble of the WTO Agreement affirms the objective of sustainable development in a manner consistent with the respective needs and concerns of Members at different levels of development. Thus, an obligation is cast upon the WTO to bring about easy access to and wide dissemination of technology relevant for sustainable development.
- Facilitating the access to developing countries of technologies selected by them as appropriate to their requirements constitutes one of the key elements in accelerating the pace of their economic and social development. Such access is generally the result of licences and technology transfer agreements. Prospective technology seekers in developing countries face serious difficulties in their commercial dealings with technology holders in the developed countries. These difficulties are basically of three kinds: those which arise from the imperfections of the market for technology; those attributable to the relative lack of experience and skill of enterprises and institutions in developing countries in concluding adequate legal arrangements for the acquisition of technology; and those government practices, both legislative and administrative, in both developed and developing countries, which influence the implementation of national policies and procedures designed to encourage the flow of technology to, and its acquisition by, developing countries. These difficulties may have to be addressed specifically in order to fully implement TRIPS provisions relating to transfer and dissemination of technology, particularly in the light of Articles 7, 8, 40, 66.2 and 67. Some of these difficulties may be overcome by suitable safeguards in the domestic IPR laws of developing countries, particularly those arising out of the provisions of Articles 30, 31 and 40. Since developing countries have transition periods available under Article 65, these laws may still be in the formulation stage. In addition, the transfer and dissemination needs of the developing countries have to be seen from the point of view of the capacity of those in need of accessing technologies, particularly where the cost of technology may be prohibitive due to economies of scale and other reasons. In such cases, in order to implement the related provisions of the TRIPS Agreement, commercially viable mechanisms need to be found. This could be studied in the WTO, particularly in the light of the need for effective implementation of Articles 7, 8, 40, 66.2 and 67.
- The high cost of technology makes it difficult for the smaller, poorer developing countries to acquire appropriate technology on commercial terms. Such countries may be able to acquire appropriate technology critically needed for their development only through government to government negotiations and with the financial assistance provided by government and other institutions in developed countries or inter-governmental organisations. For those enterprises and institutions in developing countries, which will not have the benefit of external financing, the acquisition of appropriate technology on international commercial terms will impose a burden on the local economy unless the price of the technology can be brought within manageable limits.
- The denial of dual-use technologies, even on a commercial basis, to developing countries is another aspect that leads to widening of the technology gap between developed and developing countries. Under this guise a variety of technologies and products are being denied to developing countries which could otherwise have helped to accelerate their growth process. This issue needs to be carefully examined and seriously dealt with as a trade distorting and restrictive measure.
- It is therefore proposed that the TRIPS Agreement may be reviewed to consider ways and means to operationalize the objective and principles in respect of transfer and dissemination of technology to developing countries, particularly the least developed amongst them.
- The scope of this proposal is limited to harmonisation of the approaches to the utilisation of living resources found in the TRIPS Agreement on the one hand and the UN Convention on Biological Diversity (CBD) on the other. It does not address issues which are likely to come up in the built-in agenda with regard to Article 27.3(b) or Article 71. It does not address issues relating to patenting of plants and animals or to the issue of benefit sharing in commercial exploitation of ex situ materials. The above issues are being and will be engaging the attention of the international community in WTO and other fora and separate proposals would surely be presented there.
- The preamble of the TRIPS Agreement recognizes IPRs to be private rights. Article 27.3 incorporates specific obligations on the issue of patenting life forms to the extent that it obliges Members to provide product patents for microorganisms and for non-biological and microbiological processes. In addition, Article 27.3(b) stipulates that all Members shall provide for the protection of plant varieties, either by patents or by an effective sui generis system or by a combination thereof.
- CBD on the other hand, in its preamble, categorically reaffirms that nation states have sovereign rights over their own biological resources, recognizes the desirability of sharing equitably the benefits arising from the use of these resources as well as traditional knowledge, innovations and practices relevant to the conservation of biological diversity and its sustainable use, and acknowledges that special provisions are required to meet the needs of developing countries.
- These two international agreements are intrinsically linked with one another. It is important to study the relationship between the provisions of the CBD and those of the TRIPS Agreement and suggest reconciliation of any contradictions therein within the overall objective of conservation of biological resources with sustainable development. CBD unambiguously states that the authority to determine access to genetic resources rests with national governments and is subject to national legislation. It also states that access, where granted, shall be on mutually agreed terms and shall be subject to the prior informed consent of the resource provider. It also enjoins the international community to respect, preserve and maintain knowledge innovations and practices of indigenous and local communities and encourages the equitable sharing of benefits arising from their utilisation. The conference of parties of CBD have initiated a work programme to give effect to these provisions.
- Sustainable development being an objective of the WTO also, it becomes incumbent upon us to examine ways and means to harmonise the approaches to utilisation of living resources in the CBD and in the TRIPS Agreement. In implementing their obligations under the CBD, Members would exercise sovereign rights over their biological resources. In order that this does not impede innovation, intellectual property rights may have to be integrated into such an exercise. At the same time, the right of holders of traditional knowledge to share benefits arising out of such innovation cannot be over emphasised. This could be possible if commercial exploitation of such innovation is encouraged only on the condition that the innovators share the benefits through material transfer agreements/transfer of information agreements. A material transfer agreement would be necessary where the inventor wishes to use the biological material and a transfer of information agreement would be necessary where the inventor bases himself on indigenous or traditional knowledge. Such an obligation could be incorporated through inclusion of provisions in Article 29 of the TRIPS Agreement requiring a clear mention of the biological source material and the country of origin. Article 29 deals with conditions on patent applicants. This part of the patent application should be open to full public scrutiny on filing of the application. This would permit countries with possible opposition claims to examine the application and state their claims well in time. At the same time domestic laws on biodiversity could ensure that the prior informed consent of the country of origin and the knowledge holder of the biological raw material meant for usage in a patentable invention would enable the signing of material transfer agreements or transfer of information agreements, as the case may be. Such a provision in the domestic law should be considered compatible with the TRIPS Agreement. The suggestion basically asks for further transparency in the form of additional information in patent applications, and an approach which allows a harmonious construction of the two international agreements.
- Section 3 of Part II of the TRIPS Agreement deals with geographical indications. Article 23 therein provides for additional protection for geographical indications for wines and spirits even where the true origin of goods is indicated or the geographical indications is used in translation or accompanied by expressions such as ‘kind’, ‘type’, ‘imitation’ or the like. Such additional protection is not available to goods other than wines and spirits.
- It is an anomaly that the higher level of protection is available only for – wines and spirits. It is proposed that such higher level of protection should be available for goods other than wines and spirits also. This would be helpful for products of export interest like basmati rice, Darjeeling tea, alphonso mangoes, Kohlapuri slippers in the case of India. It is India’s belief that there are other Members of the WTO who would be interested in higher level of protection to products of export interest to them like Bulgarian yoghurt, Czech Pilsen beer, many agricultural products of the European Union, Hungarian Szatmar plums and so on. There is a need to expedite work already initiated in the TRIPS Council in this regard, under Article 24, so that benefits arising out of the TRIPS Agreement in this area are spread out wider.