TRIPs:
An Appeal to Developing Countries

DAYA SHANKER / AgBioIndia 14jan03

In continuation with our legal expo into the TRIPs negotiations and its implications for developing countries, we provide you the second part of the analysis, and that too in the form of an appeal addressed to the developing countries. We only hope that the concerns that have been voiced by the author reaches the right quarters.

To Developing Country Members of the WTO,

I am not a politician neither much of an activist. I am essentially a conservative legal person (not too many academics have my experience of law) with qualifications in science and economics who believes in human dignity, human rights and sovereignty of countries howsoever poor or helpless.

What the developing countries achieved at Doha was affirmation of a rule of law in international relations and international treaty interpretations and in the garb of negotiation leading to para 6 solution of the Doha Declaration, the rule of law is being comprehensively subverted. Any use of Article 31 of TRIPS modification even without any of the elaborate regulations to fulfill the export obligations would convert the Doha Declaration into a total inutility and would remove it completely from providing even a context for treaty interpretation. I am not very comfortable using strong words but what I have seen in the last few months of overpowering use of their positions by the USA and the EC at present irreverently espoused by certain academics, pseudoacademics and sometimes pure charlatans, the developments deserve something worse.

The US Communication, both first and second are not only grotesque and vulgar, it is obscene in treating members of the developing countries as nothing but cheap dirt under its shoes. The obscenity of its communication is in paragraph 29 of its Second Communication which says "Finally, if a country begins production for export relying on either authoritative interpretation or an amendment, its actions could be challenged as being inconsistent with interpretation or amendment." The argument is not unique. It is obscene in even suggesting that the " authoritative interpretations' is inferior to the decision of Dispute Settlement System or even the fact that a Ministerial Conference's authoritative interpretation can be questioned in the Dispute Settlement System. The obscenity of the US Communication does not end in para 29. Para 31 of the Second Communication says "interpreting Article 30 to allow members to amend their patent laws to permit compulsory licences to be granted to authorize their manufacturers to produce and export patented pharmaceutical products to other countries would both unreasonably conflict with the normal exploitation of a patent and unreasonably prejudice the legitimate interests of the patent owner."

The First Communication was comparative milder than the Second Communication and was more in the nature of exploratory. It said "We believe that an interpretation of Article 30 to allow exceptions to patent rights to permit otherwise infringing acts to supply a patented pharmaceutical for purposes of export would seriously prejudice the rights and obligations of members under the TRIPS Agreement."

The Second Communication is essentially 'an authoritative interpretations' by the USTR which interpretation which became far more valuable and legally binding than the authoritative interpretation of the WTO Ministerial Conference irrespective of Article IX:1 of Marrakech Agreement. The obscenity of the US Communication is evident that such arm-twisting assertion has no legal basis or meaning. The patent rights is without any controversy about its interpretation is territorial. It is not universal. Article 4bis of the Paris Convention which is through Article 2 of the TRIPS Agreement is part of the TRIPS Agreement specifically says Article 4bis [Patents: Independence of Patents Obtained for the Same Invention in different Countries] (1) Patents applied for in the various countries of the Union by nationals of countries of the Union shall be independent of patents obtained for the same invention in other countries, whether members of the Union or not. (2) The foregoing provision is to be understood in an unrestricted sense, in particular, in the sense that patents applied for during the period of priority are independent, both as regards the grounds for nullity and forfeiture, and as regards their normal duration." Article 4bis(2) specifically discusses the situation that the territoriality is to be understood independent "both as regards the grounds for nullity and forfeiture".

The US' assertion or USTR's authoritative interpretation is without any legal basis as both "unreasonably conflict with the normal exploitation of a patent and unreasonably prejudice the legitimate interests of the patent owner" is to be interpreted in terms of direct economic effect on the territory of the patent. When the patented products are exported out of the patented areas , they are not and I repeat not affecting the interests of the patent holder reasonably or unreasonably at all in the territory of that patent. This is not my not interpretation but the interpretation arrived at by the Panel in Canada-Patent Pharmaceuticals which was essentially a TRIPS amendment through collusive use of the Dispute Settlement System by the EC, the USA and Canada which confirmed by the Canadian arguments in the Ministerial Conference as reported on ip-health. Even without Article 30, the US supreme Court has given decision that patented products exported under knocked-down conditions is not violative of the US Patent Act.

The reason why I am writing so late about the US Communication is that it was so absurd and perverted that I thought in terms of the Doha Declaration, it would have no meaning till I saw Motta's Chairman's note presented on 13th November, 2002 at Sydney Min-Ministerial Meeting which was just the reproduction of the US assertion of removing Article 30 solution completely and introducing Article 31 solution if that is a solution at all with extensive and exceptionally elaborate regulations. I was under impression that world has come round to higher system of international treaty negotiations since 1990 where imposition of US will "thou shall not" was no longer the norms. My understanding appears to be sadly totally misplaced. The world has not changed at all. The imposed treaty by the US and its other western allies on the developing countries is the only norm of international treaty formation and international treaty interpretation. Do you think, we have left our colonial past behind?

If some of you have forgotten about 1990 leading to the so called TRIPS negotiations, I would narrate the incident in brief. When the USA pushed its TRIPS agenda in the Uruguay Round, there was a similar facade of negotiations. While the developing countries were still talking about the propriety of bringing so called Intellectual Property (How Trademarks and Trade Secrets qualify to be anywhere near any perceived intellect is still a mystery to me) the EC introduced a draft Agreement on 29th March 1990 (MTN.GNG./NG11/W/68) with amore stringent conditions than even in practiced in all the member countries without any exception at that time. The US followed immediately on 11th May 1990 with more stricter conditions than present in its own patent laws.

The US brought two other draft agreements from Switzerland and Austria along with its own. Switzerland had Roche, a prominent pharmaceutical multinationals but the role of Austrian taking the trouble of preparing draft agreement on the US line was nothing but an attempt to strengthen the Western line not that it needed any strengthening. The developing countries cam up with their own draft proposals on 14th May, 1990. This document has not been put on the WTO website by the TRIPS Council in spite of numerous reminder although the EC and the US draft agreement have been available. This document is however available in Intellectual Property and International 'trade: The TRIPS Agreement 441 (Carlos Correa & Abdulqawi A. Yusuf eds., 1998) (Communication from Argentina, Brazil, Chile, China, Colombia, Cuba, Egypt, India, Nigeria, Peru, Tanzania, Uruguay, and Pakistan, GATT Doc. No. MTN.GNG/NG11/W/71). On 23rd July 1990, in Chairman's report to GNG (MTN.GNG/NG11/W/76), Anell put all of the proposal together including those from the developing countries. Anell put the views from all the drat together as he asserted "The two basic approaches to the negotiations on TRIPS are identified in the text by the letters A and B. These approaches differ not only in substance but also in structure.

In broad sense approach A envisages a single TRIPS Agreement, encompassing all the areas of negotiations and dealing with all seven categories of intellectual property on which proposals have been made; this agreement would be implemented as an integral part of the General Agreement. Approach B provides for two parts one on trade in counterfeit and pirated goods (reflected in Part IX of the attached text) and the other on standards and principles concerning the availability , scope and use of intellectual property rights (reflected in Parts I-VIII). Under this approach, the latter part would cover the same categories of intellectual property as approach A, with the exception of the protection of trade secrets, which its proponents do not accept as a category of intellectual property; this part would be implemented in the "relevant international organizations, account being taken of the multidisciplinary and overall aspects of the issues involved". Options within an approach, A or B, are indicated by the use of square brackets or little "a"s , "b"s etc." The contents market B were all from the developing countries. This document i.e. the document including proposals from the developing countries dealing with non-patenting for medicines and compulsory licensing for government use etc were sent as part of draft text in document MTN.TNC/W/35/Rev.1 (dec. 3, 1990) to Brussels Ministerial Conference where no agreement was could be reached. At this moment, the Chairman and other officials who were working more as clerks and depository of documents were activated and vide document no. MTN.TNC/W/89Add.1 dated Nov. 7, 1991, Arthur Dunkel, the director General of the GATT introduced Article 27.1 saying that "parties needed to determine the availability of patents without discrimination with regard to . whether the product is imported or locally produced". This was never part of any negotiations. Canada who was never tired of quoting negotiating history in its so called dispute with the EC in Canada- Patent Protection (WT/DS114/R dated 17th March 2000) could not find any other relevant document. In its argument, it could mention only the TRIPS 10+10 Meeting, 16th December 1991, Speaking Note for the Chairman (unpublished) to talk about the purpose of Article 27.1. The finality on the TRIPS Agreement was put by Chairman Anell and GATT director general Arthur Dunkel on December 20, 1991 which excised all the references of not only "local working" but all the references coming from the developing countries in their "arbitrated draft". Each and every one of them were removed or sabotaged by the Secretariat. (Daniel Gervais, The TRIPS Agreement: Drafting Analysis and Negotiating History (1998), p. 24)

The current developments exactly show that the script may be old but nothing, absolutely nothing at all has changed since then. All the proposals for para 6 solution were put together by the secretariat or the TRIPS Council (IP/C/W/363 dated 11th July 2002 Proposals on Paragraph 6 of the Doha Declaration on the TRIPS Agreement and Public Health: Thematic compilation) which was discussed by WTO Members on 18th July 2002 (IP/C/M/36) and which included all the proposals from every submission including those from the developing countries and all the proposals from the developing countries were removed by the Chairman of the TRIPS Council Ambassador Eduardo Perez Motta (Mexico) in Sydney Mini-ministerial through his note with far more stringent provisions have been included than even present in the US or the EC patent laws. The last part of the script is waiting where trade representatives or the concerned ministers are going to put their thumb impressions on this piece of enslavement charter.

Article 31 solution even in the present TRIPS Agreement has been totally nullified even now without expansive controls attempted to be imposed by the USA through Chairman's note at Sydney Mini-Ministerial and has no chance of ever being implemented in the near future. Even Amir Attarn who is no admirer of the developing countries and who is prone to reproduce PhRMA literature as academic research paper and whose reproduction of IIPI Report prepared by Lee Gilllespie entitled "Do Patents for Antiretroviral Drugs Constrain Access to AIDS Treatment in Africa? (Amir Attaran, JAMA, October 17, 2001) provided USTR a base to pronounce in the TRIPS Council that an unpublished report from Harvard University has suggested that patenting is not depriving AIDS sufferers in Africa from access to medicines, has also observed "Unlike Article 31(f) amendment, an Article 30 exception allows the producer country to manufacture and export without issuing a compulsory license. This is significant, because compulsory licensing is a such an extraordinary and rare remedy that a producer country's government is unlikely to take that route just to help a developing country desirous of importing -indeed, governments can be slow to act on the health needs of their own citizens, much less invoke compulsory licensing on a case-by-case.

It should be remembered that compulsory licenses are so rare and exceptional that not one has been issued by any TRIPS member for the manufacture of a generic pharmaceuticals since TRIPS entered into force six years ago (though threats have occurred.)" (Paragraph 6 of the Doha Declaration on the TRIPS Agreement and Public health: Options for TRIPS Council, P. 6)." Even otherwise, the litigations pertaining to remuneration would not make it work it at all.

The EC's contempt on behalf of its multinationals for Article 30 is evident from its argument in Canada -Patent Protection which observation was accepted by the Panel led by Prof. Robert Hudec without any contextual support when it said "It was one of the major features of the TRIPS Agreement that its implementation was a principle neutral vis-à-vis societal values. This principle was most clearly expressed in Article 8.1 of the Agreement: members may, in formulating or amending their laws and regulations , adopt measures necessary to protect public health and nutrition, and to promote the public interest in sectors of vital importance to their socio-economic and technological development, provided that such measures are consistent with the provisions of this Agreement (emphasis by the EC). This provision made it utterly clear that none of the public policy considerations, referred to in the first half, sentence, could be involved to justify measures which were inconsistent with provisions of the TRIPS Agreement. This principle of neutrality vis-à-vis societal values was also confirmed if one compared the exception provisions in Article 30 while the exceptional provisions contained in Article XX of the GATT. While exceptions under the latter were only permissible if they were necessary to achieve certain well-defined societal values (public morals, protection of human, animal or plant life or health etc), Article 30 of the TRIPS Agreement did not refer to any such societal values top justify an exception."

It was with great difficulty that the developing countries through the Doha Declaration managed to bring the requisite sensibility in the treaty interpretation by incorporating that the TRIPS Agreement is to be interpreted in terms of societal values and not in terms of societal neutrality of Article 30. By resorting to Article 31(f) solution, the US, the EC and their allies have brought the Doha Declaration to nullity.

What we are witnessing is the vicious arrogance of primitive power as described by Prof. Hudec in his article ("transcending the ostensible": some reflections on the Nature of Litigations Between Governments, Minnesota Law Review, December 1987, p. 211, 212 ". international legal arrangements have relatively more in common with law of primitive societies studied by anthropologists, in which litigation is still emerging as a rather tenuous alternative to dispute resolution by force."). Or what Foucault (1971) described for knowledge: 'the criteria of what constitutes knowledge, what is to be excluded and who is qualified to know involves acts of power'.

I have discussed before (in "India, the Pharmaceutical Industry and the Validity of TRIPS" (published but still available in SSRN Journals) that the TRIPS Agreement is an invalid treaty because of presence of Article 1 permitting unlimited extension of monopoly whose sole purpose is to sequester and block the access to Western market. (Even the US government argued in Parker v. Flook as late as 1977 that patenting of software would have debilitating effect on the US economy which was confirmed by extension of patenting to software in State Street by the Court of Appeals for Patents in 1998 and led to a total collapse of software industry.)

I can understand the suzerainty of the USA (every time you show your foreign currency reserves in US Dollars or use US dollars to buy petroleum from your neighbours, you pay seignior to the US Government. The dictionary meaning of seignior is 'something claimed or taken by a sovereign or other superior as his or her just right or due' or 'ruler's dues') but by signing the present document you are not only accepting the US suzerainty but you are accepting the suzerainty of PhRMA and its ilk. We are not only revisiting 1990, we are revisiting British East India Company and Dutch East Indies which for the first time in the human history enslaved free people of India, Indonesia and other countries. Western countries needed a map and a pencil to divide Africa but right now they are even saving that expenditure.

Any negotiation with the USA and its allies on the line suggested by Chairman Motta's note is not only absolutely repugnant to rule of law but amounts to compromising your freedom and your sovereignty apart from nullifying rule of law so laboriously and critically gained at Doha. Your citizens have not given you the mandate to bargain away their freedom. We the citizens from the developing countries do not have anything. You cannot even provide medicines to your dying people, not even to the new born babies born with HIV. All you have is your freedom and it would be greatest act of back-stabbing to your people, their freedom, their sovereignty if such travesty of rule of law as proposed by the USA and Edourad Mottas is allowed to get through as a part of international treaty negotiation.

With regards,
Daya Shanker
ds20@uow.edu.au

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