MILE 12 Assessment

INTELLECTUAL PROPERTY RIGHTS

PROFESSOR THOMAS COTTIER

&

PROFESSOR FREDERICK ABBOTT

By

Ankur Mahanta

TRIPS-Plus Agreements: A Discussion on ACTA

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The US and EU have been forum shifting from bilateral to multilateral and now, plurilateral

standard setting, in order to secure stronger Intellectual Property (IP) protection for export of

knowledge-goods.1 These negotiations have resulted in IP provisions that go well beyond the

global minimum standards established by the Trade-Related Aspects of Intellectual Property

Rights (TRIPS) Agreement (often referred to as “TRIPS-plus” standards), and are the subject

matter of intense debate cutting across developed and developing countries.2 This paper

argues that the TRIPS Agreement does not preclude WTO Members from agreeing to

TRIPS-plus standards, as ‘flexibilities’ within the TRIPS Agreement permit measures that

limit the rights conferred or raise the level of protection above the minimum standards

negotiated under the TRIPS Agreement. The paper then discusses the potential benefits and

risks of TRIPS-plus standard setting by examining the recently concluded, but not ratified,

Anti-Counterfeiting Trade Agreement (ACTA).

In India – Patents (US),3 the Appellate Body, while reviewing the Panel’s findings that India

did not meet its obligations under the TRIPS Agreement in providing “a sound legal basis to

preserve novelty and priority” of certain patent applications, notes that Article 1.1 of the

TRIPS Agreement states, in pertinent part:

‘Members shall be free to determine the appropriate method of implementing the

provisions of this Agreement within their own legal system and practice.’

The Appellate Body concludes that India, as a member, is “‘free to determine the appropriate

method of implementing’ its obligations under the TRIPS Agreement within the context of its

own legal system”.4

Further, TRIPS Article 1.1, second sentence, states: ‘Members may, but shall not be obliged

to, implement in their law more extensive protection than is required by this Agreement,

provided that such protection does not contravene the provisions of this Agreement.’ The

non-binding (“may”) clause in TRIPS Article 1.1, second sentence, read along with the

flexibilities built in TRIPS Article.1.1, as to the nature and scope of obligations of Members,

1 Ruth, M., “Regionalism, Bilateralism, and “TRIPS-plus” Agreements: The Threat to Developing

Countries”, Human Development Office Occasional Paper, Human Development Report 2005, 2005.

2 The discussions on TRIPS-plus agreements and its impact also cut across many international

institutions, including at the UN Human Rights Commission, World Health Organisation, UN

Development Programme and World Trade Organisation.

3 See, Appellate Body Report on India – Patents (US), para. 59.

4 Ibid. para. 59.

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signifies these flexibilities can operate downwards, like exceptions to rights conferred, as well

as upwards, like extension of the scope of patentability beyond the minimum standards

established by TRIPS Article 27. However, the proviso contained in TRIPS Article 1.1,

second sentence, ‘[...] provided that such protection does not contravene the provisions of

this Agreement’, is of particular significance in the discussion of legality and compatibility of

TRIPS-plus Agreements, like the ACTA.

The EU, US and Japan, among the OECD countries, have favoured upward flexibilities (or,

TRIPS-plus measures), via, regional, bilateral and now plurilateral agreements.5 6 At the

regional level, the enlargement of the EU to 25 member states has achieved the strongest IP

regulatory system, although the NAFTA (North America) to a greater extent, and smaller

regional arrangements like ASEAN (South-east Asia) and SACU (Southern Africa) have

adopted some form of harmonisation in IP regulations. Bilaterally, the EU, through the EPAs,

and the US, through its FTAs, has typically insisted on TRIP-plus provisions with developing

countries.7

These regional and bilateral TRIPS-plus arrangements place considerable obligations on

partner countries, some of which could undermine the development agenda set forth in the

TRIPS Agreement.8 Moreover, once a WTO member agrees to a higher standard of IP

protection, either bilaterally or regionally, it is obliged to ‘immediately and unconditionally’

extend those standards to the nationals of other WTO members under the MFN provision in

TRIPS Article 4. TRIPS-plus arrangements at the bilateral and regional levels are often

negotiated through a give-and-take policy, where some concessions are granted based on

stronger IP regulation commitments. However, in a plurilateral agreement, particularly ACTA,

third country members states, even though not signatories to such an agreement, would

receive the ‘concessions’ negotiated by ACTA member states. These would extend from

5 These TRIPS-plus agreements are, in no small measure, a response to the concerns raised by

makers of ‘brand name’ goods that were hurt by counterfeiting and generic goods from newly

industrialising and large developing countries, particularly, ‘big’ pharma companies, record labels and

chemical producers.

6 For a detailed discussion,see, Ruth, M., “Regionalism, Bilateralism, and “TRIPS-plus” Agreements:

The Threat to Developing Countries”, Human Development Office Occasional Paper, Human

Development Report 2005, 2005.

7 Abbott, F.M., ‘Toward a New Era of Objective Assessment in the Field of TRIPS and Variable

Geometry for the Preservation of Multilateralism’, Journal of International Economic Law, 8, 77., 2005.

8 UNCTAD-ICTSD, Intellectual Property Rights: Implications for Development, Policy Discussion

Paper, Geneva, 2003.

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substantive standards of IP protection to enforcement mechanisms and lastly to non-IP

issues such as treatment of ‘transit goods’.

Benefits and Risks of ACTA

The final text of ACTA, which has been negotiated over eleven rounds, is considered a much

watered down version of the initial ‘wish list’ that would have imposed some draconian trade-

restrictions on international trade.9 The present discussion is based on the benefits and risks

arising from the final text negotiated in November 2010.

The original mandate of ACTA, which survives in the final text, is to enhance cooperation in

the enforcement mechanisms of IP protection in member countries. Counterfeiting and piracy

in international trade has increased enormously in the past decade, and is considered

welfare-reducing for both developed and developing countries.10 In 2009, trade in counterfeit

and pirated goods was estimated at US$ 250 billion (or, nearly 2 per cent of global exports).11

In the joint statement issued after the conclusion of negotiations, members of ACTA stated

that, “It [ACTA] includes state-of-the-art provisions on the enforcement of intellectual property

rights, including provisions on civil, criminal, border and digital environment enforcement

measures, robust cooperation mechanisms among ACTA Parties to assist in their

enforcement efforts, and establishment of best practices for effective IPR enforcement.”12

Major proponents of the ACTA, including business and industry organisations across the

Atlantic and certain government arms of these countries, have stressed that ACTA will boost

legal trade in products protected by IP laws and in turn benefit innovation, creativity, quality

and brand exclusivity that are the competitive advantages of their industries in the world

market. ACTA contain general provisions for balanced enforcement procedures and hence

do not extend the scope of IP protection granted under national laws. However, the legal

compatibility of these enforcement provisions, coupled with political economy concerns, has

raised serious concerns as to the risk it poses on the world trading system.

9 Abbott, F.M., ‘Trading’s End: Is ACTA the Leading Edge of a Protectionist Wave?’, Intellectual

Property Watch, 6 May 2011.

10 OECD, The Economic Impact of Counterfeiting and Piracy, June 2008. Executive Sumamry.

11 OECD, ‘Magnitude of Counterfeiting and Piracy of Tangible Goods: An Update’, The Economic

Impact of Counterfeiting and Piracy, November 2009.

12 Accessed from, http://www.ustr.gov/about-us/press-office/press-releases/2011/october/joint-press-

statement-anti-counterfeiting-trade-ag, on 25 February 2012.

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The scepticism over ACTA has poured in from NGOs, academics, multilateral organisations

and developing country members at the WTO. Yu argues, “Although intellectual property is a

largely legal construct, it is not just about law and economics. It is also about politics.”13 He

considers the emergence of a non-multilateral era and the politics behind the development of

an international IP regime, before calling the ACTA a “bad country club agreement”.14

Although ACTA do not contain any substantive standards of protection, the enforcement

mechanisms it addresses raise critical concerns. In an opinion paper submitted by European

Academics on ACTA, the Agreement’s incompatibilities with European as well as

International law were elucidated.15

Civil Enforcement: Article 44 of TRIPS provides protection to accused infringers, as regards

time limits for preliminary injunctions, although ACTA do not contain any comparable

provision. This limits the rights of potential infringers even as rights holders are granted

additional rights. Further, ACTA Article 11 strengthens the right of information by making it

compulsory (voluntary under TRIPS Article 47), and the right may be directed against

infringers or alleged infringers (only against infringers in TRIPS Article 47). The

proportionality requirement established under TRIPS Article 46 and Article 47 find no

mention within ACTA.

ACTA, moreover, refers to the measure of damages that are beyond the commensurate

economic loss by adopting a criteria for damages in Article 9, where, ‘the value of the

infringed goods or services measured by the market price, or the suggested retail price”

(emphasis added), over and above what is required under TRIPS Article 45.1.

Border Measures: A major concern over ACTA is the lack of sufficient safeguards on Public

health issues, including, international trade in generic drugs and. ACTA members are obliged

to provide border enforcements against trade of goods infringing any IP rights covered by

TRIPS, except patent rights and test data that are excluded through Footnote 6 to Article 16.

However, extending border measures to goods suspected of ‘ordinary’ trademark

infringement could restrict trade in generics in transit.

Moreover, the rights of third parties are clearly curtailed in the ACTA as defendants. ACTA

Article 12.1(a) provides judicial authorities the right against alleged third party violators that is

13 Yu, P.K., ‘ACTA and its Complex Politics’, The WIPO Journal, Volume 3 Issue 1, 2011.

14 Ibid. p. 5.

15 Opinion of European Academics on Anti-Counterfeiting Trade Agreement. Downloaded from

www.statewatch.org/news/2011/jul/acta-academics-opinion.pdf on 24 February 2012.

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in general a violation of TRIPS Article 41.4 that instructs parties to a proceeding the right for

review.

ACTA also eliminates safeguards available under TRIPS Article 55 that contains mandatory

limits to the period of detention, whereas, ACTA Article 19 merely states that the initiation of

infringement proceedings be undertaken “within a reasonable period of time”.

Criminal Enforcement: the ACTA Article 23 effectively brings under its fold parallel trade by

defining ‘commercial scale’ as activities ‘for direct and indirect economic or commercial

activities’. The criminal provisions effectively overrule the holding of the WTO dispute

settlement panel in the China-Enforcement case regarding interpretation of “commercial

scale”.16

This illustrative list of non-compatibility of the ACTA with the TRIPS Agreement demonstrates

that TRIPS-plus agreements have tried to create a trading environment that is restrictive of

trade liberalisation agenda as well as curtail the built-in flexibilities of the TRIPS Agreement.

The problem becomes even more pronounced when the MFN obligation of TRIPS Article 4

extend the stricter IP regulations to other WTO members. The issue from a developing

country perspective becomes two-pronged: first, whether stronger IP protection increases the

willingness of companies to invest in its economy, which is not necessarily the case,17 and

second, the recourse available in international law over concerns on ACTA vis-a-vis its

developmental goals.

16 Abbott, F.M., ‘Trading’s End: Is ACTA the Leading Edge of a Protectionist Wave?’, Intellectual

Property Watch, 6 May 2011.

17 Sinha, M., ‘IPR Rules and their Uncertain Effects’, Business Line, 2 June 2011. Accessed from

http://www.thehindubusinessline.com/opinion/article2068519.ece on 24 February 2012.