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Trade
Related Intellectual Property Rights (TRIPs): |
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The World Trade
Organization (WTO), which was established in 1995 as a successor to the
General Agreement on Tariffs and Trade-1947 (GATT 1947), is the principal
international organization governing multilateral trade among Members. The
WTO administers the implementation of a set of agreements, which include
the General Agreement on Tariffs and Trade, other agreements in the goods
sector and in addition, agreements in two other areas, viz., trade in
services, and Trade Related Intellectual Property Rights (TRIPs). The
TRIPs agreement is a special agreement which introduced intellectual
property law into the international trading system for the first time, and
it remains the most comprehensive and all inclusive international
agreement on intellectual property to date.
This article is intended to bring out the meaning of intellectual
property and its component and the details of the Agreement on TRIPs and
finally would discuss in brief the possible impact of it on various
sectors in developing countries with specific reference to India.
Introduction:
The World Trade Organization (WTO), which was
established in 1995 as a successor to the General Agreement on Tariffs and
Trade-1947 (GATT 1947), is the principal international organization
governing multilateral trade among Members. The WTO embraces the principle
of non-discrimination, based on the twin concepts of Most Favoured Nation
(MFN) and national treatment between Members.
The WTO administers the implementation of a set of
agreements, which include the General Agreement on Tariffs and Trade,
other agreements in the goods sector (e.g., agriculture, textiles,
sanitary and psycho-sanitary measures, Trade Related Investment Measures-TRIMs,
anti-dumping, etc.), and in addition, agreements in two other areas, viz.,
trade in services, and Trade Related Intellectual Property Rights (TRIPs).
Trade Related Intellectual Property Rights (TRIPs) was added to the
General Agreement on Tariffs and Trade (GATT) treaty at the end of the
Uruguay Round of trade negotiations in 1994. After the Uruguay round, the
GATT became the basis for the establishment of the World Trade
Organization. Therefore, when GATT was succeeded by WTO in 1995, and all
the members of WTO had to sign an agreement related to Intellectual
Property Rights if it was interested in multi-lateral trading and also
enact mandatorily some regulations related to it in the domestic system.
The TRIPs agreement is a special agreement which introduced intellectual
property law into the international trading system for the first time, and
it remains the most comprehensive and all inclusive international
agreement on intellectual property to date.
The TRIPs Agreement tries to bring in uniformity in the
standards of intellectual property rights among the WTO irrespective of
their development status. While this is expected to result in technology
transfer and flow of investment among the Members, the extent of benefits
accruing will depend on domestic industries and the status of development
of the countries.
This article is intended to bring out the meaning of
intellectual property and its component and the details of the Agreement
on TRIPs under the aegis of WTO and finally would discuss in brief the
possible impact of it on various sectors in developing countries with
specific reference to India.
What is IPR?
Intellectual Property Rights (IPRs) refers to the legal
ownership of by a person or business of an invention/ discovery attached
to a particular product/ process which protects the owner against
unauthorized copying or limitation.
Intellectual property rights are the rights given to
persons over the creations of their minds. They usually give the creator
an exclusive right over the use of his/her creation for a certain period
of time. Therefore, one important feature that requires note is that the
right is not perpetual1.
The World Trade Organization classifies the IP broadly
into two main parts namely copyright and rights related to copyright and
industrial property. Let us understand each one in greater detail.
(i) Copyright and rights related to copyright:
The rights of authors of literary and artistic works
(such as books and other writings, musical compositions, paintings,
sculpture, computer programs and films) are protected by copyright, for a
minimum period of 50 years after the death of the author.
Also protected through copyright and related (sometimes
referred to as "neighbouring") rights are the rights of
performers (e.g. actors, singers and musicians), producers of
phonograms (sound recordings) and broadcasting organizations. The main
social purpose of protection of copyright and related rights is to
encourage and reward creative work.
(ii) Industrial property:
Industrial property can usefully be divided into two
main areas:
According to WTO, the protection of such distinctive signs aims to
stimulate and ensure fair competition and to protect consumers, by
enabling them to make informed choices between various goods and
services. The protection may last indefinitely, provided the sign in
question continues to be distinctive.
The social purpose is to provide protection for the results of
investment in the development of new technology, thus giving the incentive
and means to finance research and development activities.
A functioning intellectual property regime should also
facilitate the transfer of technology in the form of foreign direct
investment, joint ventures and licensing.
The protection is usually given for a finite term
(typically 20 years in the case of patents).
WTO claims that the exclusive rights given are generally subject to a
number of limitations and exceptions, aimed at fine-tuning the balance
that has to be found between the legitimate interests of right holders and
of users, such that the social objectives are kept in mind besides the
economic interests.
What is TRIPs?
Having defined and classified IP, let us now look at TRIPs:
The Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs)
is an international treaty administered by the World Trade Organization (WTO)
which sets down minimum standards for most forms of intellectual property
(IP) regulation within all member countries of the World Trade
Organization.
TRIPs deals with the following IPRs
TRIPs also specifies enforcement procedures, remedies, and dispute
resolution procedures.
WTO specifies the three main features of the Agreement as;
Under TRIPs, all countries have to provide for protection of product
patents from January 1, 1995. But developing countries like India, which
did not have a regime of product patents, had a transition period of ten
years-until January 1, 2005, to affect the switch over. During this
transition period, it was decided that these economies would accept
applications for patents (which would be considered and granted after
January 2005) and provide EMR (Exclusive Marketing Rights) for the
producers of patented drugs (in the pharmaceutical industry) and
agrochemicals.
The transition period for least developed countries was extended to
2016, and could be extended beyond that.
The TRIPS Agreement is a minimum standards agreement,
which allows members to provide more extensive protection of intellectual
property if they so wish. Members are left free to determine the
appropriate method of implementing the provisions of the Agreement within
their own legal system and practice.
Why TRIPs?
The Controversy:
Since TRIPs came into force it has received a growing
level of criticism from developing countries, academics, and
Non-governmental organizations. Some of this criticism is against the WTO
as a whole, but many advocates of trade liberalisation also regard TRIPS
as bad policy. TRIPS' wealth redistribution effects (moving money from
people in developing countries to copyright and patent owners in developed
countries) and its imposition of artificial scarcity on the citizens of
countries that would otherwise have had weaker intellectual property laws,
are a common basis for such criticisms2.
There exists an extensive literature on the possible impact of TRIPs on
developing countries. They deal with this problem along different lines,
examining the impact on: R&D, foreign direct investment, technology
transfer, market demand and prices that consumers would be paying.
Indian Scenario:
As a signatory to the Uruguay round of GATT, and the founder member of
the WTO, India was obliged to meet all provisions of the Trade Related
Aspects of Intellectual Property Rights (TRIPs). A transition period was
accorded to developing countries depending on their state of development.
India has completed the complete term of this transition period i.e. 10
years, to set up an IPR system in compliance with TRIPS. The main elements
of change in the Indian patent system are:
A brief comparison is given in Table 1 indicating
the main changes that are warranted in the Indian patents Act of 19703.
Table 1
Source: Adapted from Patent Office Technical Society, Indian Patent Act, 1970 and Rules, 1991 and MVIRDC, GATT Agreements: Results of the Uruguay Round, World Trade Centre, January 1995 Impact on
Major Sectors:
The Major sectors and industries that would be affected
with the TRIPs agreement would be Ariculture, Pharmaceutical and
Biotechnology Industries.
The greatest impact is expected to be on the Pharmaceutical
industry as it's a knowledge based and research oriented industry.
Here are some challenges and opportunities that can be noted
specifically arising out of this agreement. India today has become one of
the major exporters of cheap drugs not only to developed countries but
also to other developing countries, the advantage India has is lower
prices due to low labour costs and comparatively lower expenditure on
Research and development. With the significant change in the IPR regime,
there are concerns regarding the export earnings diminishing. Another
concern is that compliance with the TRIPs is expected to create a monopoly
of the patented drugs and lead to a crisis in the public health issues.
On the other hand, some feel that it is equally plausible that the
Indian national system of innovative has evolved sufficiently to take
advantage of the strengthening of the IPR system. This view is
particularly supported by the clear success of India, in market based,
high-tech domains, such as generics and software.
However the protagonists claim that "The fear that
prices of medicines will spiral are unfounded....We must realize the fact
that 97% of all drugs manufactured in India are off-patent, and so will
remain unaffected." On the other hand, protection of
innovation through patents is also justified on the front that patent
protection will stimulate investment into R&D that will benefit Indian
consumers and will reward India with increased foreign investment.
The worst impact of TRIPS that the pharmaceutical
industry expects is the end of the reverse engineering; the industry now
has to emphasize and concentrate on basic research. It is also feared that
number of units in the industry may close down and only few hundreds may
survive this onslaught of imposition of conditions by the TRIPS. This may
result in unemployment on large scale.
To put it in a nut-shell, the prescription by TRIPS for
product patent implies the following for the industry:
Overall, the industry feels that the TRIPS in its present form, is bent
in favor of developed nations and its MNC's and that there is nothing
trade related about TRIPS and that the right to trade is being exploited
by developed countries. Besides these, the imports are expected to
increase leading to a serious question on self-reliance of these
industries and overall it may have a dampening impact on the growth of
this industry.
However, there is a light at the end of every tunnel, and
there is an opportunity hidden in the agreement. The first opportunity is
using the off patent drugs to capture markets across the globe. The strong
process re-engineering skills and lower cost of development is another
competitive advantage. As predicted by the different analysts, the out
sourcing by MNCs would mean serious strategic alliances, contract
manufacturing and bringing in of foreign exchange. The industry would use
its technical and man power skills for research and innovation. However
the industry would still be able to market older drugs which are not
included in the patents list.
Impact on biotech: Most of the research orients
towards the impact of TRIPs on pharmaceutical industry and agriculture.
However, little research that has been conducted has concluded that the
impact of TRIPs will be restricted to an elimination of the production of
patented products. It will not have a deleterious or a positive impact on
their levels of inventive activity. Even more importantly, TRIPs is not
likely to create any incentive to increase technological knowledge or
create innovations other than that provided by the national system of
innovation. TRIPs is not going to have a significant impact on biotech in
India or on the other preoccupations of Indian pharmaceutical firms.
Hence, the major effect of TRIPS would seem to be to force Indian firms to
put their re-engineered products on the market only when they get off
patent4.
Impact on Agriculture: The TRIPS Agreement of the
WTO includes three items related to agriculture: Geographical indications
(Art 22-24); Patent protection of agricultural chemical products (Arts.
70.8 and 70.9); Plant Variety Protection (Art 27.3(b)). Out of which the
plant variety protection is of great importance for the current scenario.
TRIPS is a clearly anti-developing country agreement
contend the critics. Its provisions seriously threaten self reliance in
agriculture and the livelihoods of farmers, by seeking to establish a
monopoly because it embodies the philosophy of the industrialized nations
where it was developed and where the primary goal is to protect their
interests.
Therefore, when a question is raised as to what would
be the impact of compliance to agreement TRIPs on developing economies
like India, a reply pops up that would be a clear compromise with national
security. Food security, as we are all aware, is a critically important
part of national security. A nation that does not produce its own seed and
its own food can not be a secure nation. The agriculture remains a crucial
as well as a controversial subject in WTO negotiations. No clear
negotiations have worked out so far, as the developing countries are
trying to push their interests in these negotiations to which the
developed countries have serious objections to implementing them as it
would have adverse impact on their agricultural sector.
Concluding Remarks:
It is generally observed that a strong patent regime
has often been found detrimental to the process of industrial development
in particular and scientific advancement in general. TRIPS may prove to be
a breeding ground for cost inefficient process technologies. The possible
solutions suggested by experts in the field to this problem are:
It is thus advised by the group of experts, that the Indian government
should, instead of fulfilling its obligation in haste, shall make such
amendments in the act which adequately safeguard and protect the interests
of the domestic industries and market, taking advantage of the concessions
given in the TRIPs agreement.
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