Brief Analysis of the WTO Dispute Settlement Body panel´s report to resolve the United States´ complaint against India

Por: Luisa Herrera Sierra - LL.M, Docente Investigadora

This review aims to briefly examine the WTO Dispute Settlement Body (DSB) panel´s report in relation to the transitional arrangements under the TRIPS Agreement, as well as its consequences in the future interaction between the north and the south (under the TRIPS Agreement).

This review aims to briefly examine the WTO Dispute Settlement Body (DSB) panel´s report in relation to the transitional arrangements under the TRIPS Agreement, as well as its consequences in the future interaction between the north and the south (under the TRIPS Agreement). This was the first intellectual property case examined through the WTO dispute resolution process. Therefore is an important case to be analysed, because it determines how the TRIPS Agreement must be interpreted in the future. As Reichman claims, the implementation of the TRIPS by developed and developing countries is crucial for the future level of competition in the global market for knowledge goods[1].

Although the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) allowed a higher protection, its effects in the developing world have been criticized. Stiglitz, cited by Sherry S. Marcellin, claimed: “TRIPS was designed to ensure higher priced medicines” and that trade ministers signed a “death warrant” for the poor”[2]. In fact, higher protection and its extension over those parts of the world that did not have an intellectual property system may cause higher prices and the preservation of the dominant position of big technology – exporting firms. However, there are some lessons and strategies that developing countries can learn from the panel´s report, which enable them to avoid overprotection without infringing mandatory rules imposed by the TRIPS Agreement. First, the decision will be analysed; secondly, this review will offer conclusions about the possible lessons developing countries could learn from this decision.

 

WTO Member States were obliged, under the TRIPS Agreement, to grant protection from January 1st, of 1996, “for any inventions, whether products or processes, in all fields of technology, provided that they are capable of industrial application”. Nevertheless, under articles 65.4 and 70.8 of TRIPS, developing countries were enabled to delay the integration of TRIPS into their legislations until January 1st, of 2005.

 

According to the Article 70.8, a member that has not stipulated patent protection for pharmaceutical and agricultural chemical products is obliged to set up a “mailbox” system. Through this system, patent applications can be filed while patent protection is legislated, and the applicant will be able to claim this original filling or original date as the priority date. Similarly, the article 70.9 obliges to that member to create a system of exclusive marketing rights, subjected to a regulatory regime stipulated in the same article.

 

On July 2nd, of 1996, the United States complained to the WTO, asserting that India had infringed both articles. Although India had ratified the WTO Agreements on December 31, of 1994, by governmental decree, it did not seek the approval of the Indian Parliament. According to the United States, the Indian Patent Office allowed mailbox applications but they were not properly regulated[3].

 

The panel concluded that the system of exclusive marketing rights was a legitimate expectation infringed by India. Consequently, the panel recommended that the WTO Dispute Settlement Body request India to integrate its transitional regime for patent protection for pharmaceutical and agricultural chemical products with the TRIPS Agreement. The appellate body upheld the panel´s findings but rejected the legitimate expectations test.

 

Reichman rightly maintains that the United States Victory before the WTO´S Dispute Settlement Body weakened the position of the developing countries[4]. Therefore, groups of developing countries may integrate their markets and harmonise their rules, seeking a correct balance of interests in the application of the TRIPS Agreement, as explains Reichman.

 

Regarding the refusal of the “legitimate expectations” test by the appellate body, developing countries can learn some crucial lessons. In fact, the appellate body stated that members are free to determine the appropriate method of implementing the provisions of the TRIPS Agreement. Stating this, the appellate body reinforced the residual power of states to built their own intellectual property system, which has to comply with the black letter and the clear provisions stipulated in the TRIPS. Consequently, panels cannot fill the gaps of the system using as a tool the “legitimate expectations”. For that reason, members shall use those “grey areas” of the TRIPS to harmonise local rules and seek a proper balance of rights.

 

Under these circumstances, the panel´s report provides developing countries of sufficient tools to avoid “bullying tactics” of the developed countries. Certainly, developing countries must legislate in accordance with the TRIPS Agreement, but by doing so, they are not obliged to ignore their own capacity and interests. Developing countries have to look for pro-competitive strategies and for a balance of rights. In other words, developing countries are free to legislate those issues that were not expressly harmonized in the TRIPS.

 

In a macro vision, the panel´s report gives developing countries all the guidelines to interpret the transitional provisions of the TRIPS agreements. This enables the developing countries to adopt pro competitive strategies, to create the proper environment for foreign investment and to improve their technical and telecommunications capacities, knowing what are the boundaries stipulated in the TRIPS. The panel´s report may teach also developed countries to reduce the rigid and confrontational attitude to the transitional period. Thus, North – South divisions should be weakened and each part of the world must look for a collaborative attitude under the context of the TRIPS Agreement.