Issues Governed By the Agreement

With respect to the aforementioned intellectual property areas, the Agreement governs issues like
application of international IP agreements and basic principles of the trading system, adequate
protection to IPRs, adequate enforcement of IPR by member nations in their territories,
settlement of disputes on IP between the members of WTO, special transitional arrangements
during the period when the new system is being introduced. The Agreement is the first
agreement under WTO which requires member nations to establish relatively detailed norms
within their respective legal frameworks, as well as to establish such measures of enforcement
and such procedures which meet the minimum standards. The three important features of this
agreement are:

 Standards – In respect of each of the IP areas covered by the Agreement, all member
nations are obliged to provide a minimum set of standards for the protection of IPRs.
Each area of IP is covered such that it clearly describes the main elements of protection
i.e. the subject matter which seeks protection, rights which are to be conferred and
permissible exceptions to such rights and also the minimum duration of protection.
 Enforcement – Each member nation is obliged to provide domestic procedures and
remedies with respect to protection of IPR. Further, the agreement lays down certain
other provisions so that right holders can effectively enforce their rights. These
provisions relate to civil and administrative procedures and remedies and detailed
specifications as to special requirements related to border measures and criminal
procedures.
 Dispute Settlement – All the disputes arising between members of WTO with respect to
the obligations arising out of the TRIPS Agreement are subject to WTO’s dispute
settlement procedures1.

General Provisions and Basic Principles

Article 1  of the agreement provides for the member nations to implement the provisions of the
agreement in such way as member nations deem appropriate, that is to say, the standards of
1
http://www.wto.org/english/tratop_e/dispu_e/dsu_e.htm
provisions of this agreement are a ‘minimum’ which is to be maintained at the ground level and
the nations can further invoke an extensive protection domestically. An IPR acquired in one
country cannot be enforced in another country. The minimum standard maintenance and basic
enforcement standards enshrined in the TRIPS Agreement make it flexible for member nations to
one, enforce the aforementioned basic standards; two, implement higher levels of protection
domestically thus leaving the Members to have ‘TRIPS plus’ laws and regulations. These higher
standards are now making appearance on the world trade timeline as Free Trade Agreements
(FTA) entered into between trading partner nations. However, since these agreements establish
standards much higher than those of the TRIPS Agreement, they may take away the flexibilities
which exist in the Agreement. Articles 3 and 4 constitute the fundamental principles of the
agreement.

Article 3 deals with National Treatment commitment. It reads as following:

“1.Each Member shall accord to the nationals of other Members treatment no less favourable
than that it accords to its own nationals with regard to the protection of intellectual property,
subject to the exceptions already provided in, respectively, the Paris Convention (1967), the
Berne Convention (1971), the Rome Convention or the Treaty on Intellectual Property in
Respect of Integrated Circuits. In respect of performers, producers of phonograms and
broadcasting organizations, this obligation only applies in respect of the rights provided under
this Agreement. Any Member availing itself of the possibilities provided in Article 6 of the Berne
Convention (1971) or paragraph 1(b) of Article 16 of the Rome Convention shall make a
notification as foreseen in those provisions to the Council for TRIPS.                                          
2.Members may avail themselves of the exceptions permitted under paragraph 1 in relation to
judicial and administrative procedures, including the designation of an address for service or
the appointment of an agent within the jurisdiction of a Member, only where such exceptions are
necessary to secure compliance with laws and regulations which are not inconsistent with the
provisions of this Agreement and where such practices are not applied in a manner which would
constitute a disguised restriction on trade.”

This article calls for the member nations to accord such treatment to the nationals of other
member nations as the former would grant to its own nationals with regard to protection of
Intellectual Property Rights. This article also recognises certain exceptions already provided in
the Paris Convention (1967), the Berne Convention (1971), the Rome Convention or the Treaty
on Intellectual Property in Respect of Integrated Circuits.

Article 4 deals with Most Favoured Nation Treatment. It reads as follows:

“With regard to the protection of intellectual property, any advantage, favour, privilege or
immunity granted by a Member to the nationals of any other country shall be accorded
immediately and unconditionally to the nationals of all other Members. Exempted from this
obligation is any advantage, favour, privilege or immunity accorded by a Member:

(a) Deriving from international agreements on judicial assistance or law enforcement of a

(b) granted in accordance with the provisions of the Berne Convention (1971) or the Rome
Convention authorizing that the treatment accorded be a function not of national treatment but
of the treatment accorded in another country;

(c) In respect of the rights of performers, producers of phonograms and broadcasting

(d) deriving from international agreements related to the protection of intellectual property
which entered into force prior to the entry into force of the WTO Agreement, provided that such
agreements are notified to the Council for TRIPS and do not constitute an arbitrary or
unjustifiable discrimination against nationals of other Members.”

According to this article, any advantage, favour, privilege or immunity accorded to the nationals
of one member nation by another member nation shall automatically be accorded to all the other
member nations except for the exceptions mentioned above from sub-clause (a) to (d).

Enforcement of Intellectual Property Rights

The TRIPS Agreement aimed not only at protection of the Intellectual Property rights but their
due enforcement as well. The Agreement, thus, sets out minimum standards to be established and
also provides for the administrative and civil mechanisms for enforcement. These minimum
standards for the enforcement of IPR allow right holders to protect their legitimate interests
through civil court or administrative proceedings.

It is not required for a WTO member nation to establish special or separate courts for IPR, or
specially allocate resources, like human resources, special offices for enforcement, etc. for IPR
enforcement. Part III of the Agreement on Enforcement of IPR sets out the obligations on
member nations to establish administrative and judicial mechanisms through which IPR holders
can seek effective protection of their interests. The general obligation of member nations to
provide enforcement mechanisms requires that enforcement procedures should be available
under their national law so as to permit effective action against any act of infringement of IPR
covered by the Agreement, including expeditious remedies to prevent infringements and
remedies which constitute a deterrent to further infringements.

As per Article 41,  member nations are obligated to ensure that enforcement procedures are “fair
and equitable”, and “not unnecessarily complicated or costly, or entail unreasonable time limits
or unwarranted delays.” Regarding the civil administrative procedures and remedies, the
Agreement provides for equal rights for both the defendant and complaining parties. The rules of
the Agreement provide that both parties should have the opportunity to present and contest
evidence, and that adequate remedial measures should be available. The Agreement permits
member nations to exclude the grant of injunctions in circumstances involving compulsory
licenses and other uses.

The Agreement obligates member nations to make provision for the ordering of prompt and
effective provisional measures to prevent entry of infringing goods into channels of commerce
and preserve evidence against such infringing goods and their traders. This means that the IPR
holder should be entitled to seek a prompt action against the infringement, whether or not the
party alleged to be acting in an infringing manner can be notified and given opportunity to be
heard. With respect to Border Measures, the Agreement requires member nations to allow certain
right holders to prevent release by customs authorities of infringing goods into circulation
especially, with respect to counterfeit trademarks and pirated copyright goods. The Agreement
also provides for certain Criminal Measures (penalties) for trademark counterfeiting and
copyright piracy on a commercial scale.

Dispute Settlement and Prevention:Mechanisms

Part V of the agreement deals with dispute settlement and prevention. Article 63 establishes
the transparency requirements. Under these requirements there is an obligation on the part of
member nations to publish or otherwise make available legal texts such as laws and judicial
decisions. The provisions related to dispute settlement and prevention is governed by the TRIPS
council. Article 63 establishes an obligation to notify laws and regulations to the TRIPS Council
or to World Intellectual Property Organization (WIPO) for the common register, which contains
a compilation of laws and regulations, final judicial decisions, etc. pertaining to the Agreement,
should that be decided upon.

Member nations are obligated to furnish applicable rules or decisions, or sufficient details about
them, at the request of member nations who reasonably believe their rights may be
affected. Confidential information is entitled to protection. Each member nation is required to be
prepared to supply, in response to a written request from another member nation, the information
regarding Law, rulings, Judicial decisions and administrative rulings pertaining to the subject
matter of the Agreement (the availability, scope, acquisition, enforcement and prevention of the
abuse of IPR).

Article 64  deals with the dispute settlements. The Articles XXII and XXIII of GATT 1994 as
described and applied by the Dispute Settlement Understanding (WTO’s procedure for resolving
the trade quarrels) also apply to consultations and the settlement of disputes under the Agreement
except as otherwise specifically provided. Article XXIII of the GATT 1994 provides for three
types of cause of action (a set of facts sufficient to justify a right to sue) in GATT dispute
settlement: “violation”, “non-violation” and “situation”.

TRIPS: The Indian Context

India became a signatory of the TRIPS Agreement in the year 1994 but this Agreement entered
into force on January 1, 1995 and came across in the world scenario as the most important
multilateral agreement on Intellectual Property. By setting out minimum standards of IP rights
internationally, the Agreement encourages trade and technology transfer between countries. The
Patent Act, 1970 was in contravention with Article 27 of the Agreement2. In order to completely
comply with the Agreement, India needed to take necessary measures in the grace period. The
Agreement provided a three stage framework for strengthening the IP regime in developing
countries like India which did not allow product patents in the areas of pharmaceuticals and
agricultural chemicals (patent applications for which are also known as ‘mail-box’ applications)
before the Agreement came into force. These stages are described as follows:

 Introduction of Mail-box facility from 1st January, 1995 for product patents in the field
of agrochemicals and pharmaceuticals. These mail-box applications were not examined
until 2004. But Exclusive Marketing Rights (EMR) were granted for such applications
for which a patent had been granted in at least one member nations and the application
was not rejected in that member nation where the said patent was sought for the reason
non-patentability of the invention.
 Compliance with other obligations of the Agreement such as, rights of Patentee, term of
protection, compulsory licensing, etc. From 1st January, 2000.
 Full implementation of product patents in al technological domains including mail-box
applications e.f. 1st January, 2005. Also, in the case of Agouron Pharmaceuticals Inc v
Controller of Patents, the Hon’ble High Court of Kolkata held that applications filed
prior to 1st January, 2005 were to be considered in accordance with the Patents Act, 2005.
As a result, all mail-box applications were to be taken for examination from the
abovementioned date.

Thus, the Agreement came into force in India in January, 2005. TRIPS changed the face of IP in
the world as many developing countries, including India 3[viii], which had weak IPR mechanisms
had to extensively revise, amend and create their patent laws, or where there were no IPR
regimes (the most important examples being plant variety protection, lay-out designs and
geographical indications) had to put in place an entirely new IPR regime. However, implication
of the Agreement and the regime so incorporated has its own pros and cons.

2
http://shodhganga.inflibnet.ac.in/bitstream/10603/21666/9/chapter-vi.pdf

3
http://www.ictsd.org/downloads/2010/07/ipsustainable_developmentinformationnote.pdf
The revision of Patent laws brought into existence a stronger patent protection mechanism which
is at par with the international standards or the standards set out in the Agreement. The result of
this has been positive for India as foreign investors were encouraged to invest in India. It can be
expected that the domestic investment might not respond to the stronger patent regime but
Foreign Direct Investment (FDI) might. Further, the research and development (R&D)
expenditures of the domestic players tremendously increased in post Agreement period as
compared to the pre-agreement period.

Another positive implication is more technological in nature. The availability of products ought
to be better with stronger IPR protection. However, the prices of these better and patented
products may not be affordable for majority of the population.

Investments from domestic as well as foreign sector have risen in the field of seeds and
agriculture. That is, post the Agreement, stronger protection regimes have encouraged domestic
private sector as well as foreign firms to invest in R&D for the development of better seeds.
Many Geographical Indications and methods in Traditional Knowledge which are of importance
to the domestic industry of India have got protection and have encouraged investment in these
sectors, for example: Darjeeling Tea. Also, patent revocation [by U.S. Patent Office (USPTO)]
of Curcuma longa Linn  (turmeric) and Azadirachta indica A. Juss (neem) after actions from
Indian residents in U.S courts have also created a positive atmosphere for creation of protection
laws for Traditional Knowledge (TK), a very new form of IP.

When the Indian parliament passed the new patent law in 2005, it not only brought back product
patents, but also granted all patents a term of 20 years. Moreover, the new law paved way for the
formation of the Intellectual Property Appellate Board, a specialised judiciary to hear the IP
cases4.

This transition has been chaotic. Patent litigations have increased three-fold since 1995, and
many of these have been highly controversial and long-drawn affairs. Interestingly, it appears
that the courts are also grappling with how to balance the pro-innovation and anti-competitive
effects of IPR. The court battle of Cipla and Roche is one such instance.

4
http://forbesindia.com/printcontent/29302
In early 2009, the Delhi High Court rejected a temporary injunction against Cipla for
manufacturing a copy-cat version of the drug Erlotinib, manufactured by Roche, to treat lung
cancer. Roche claimed that rejection of its plea would be against public interest and hurt R&D.
Cipla argued that granting an injunction would deprive the needy of an important drug. Although
the main reason for rejecting Roche’s plea was its inability to prove that Erlotinib was
substantially more efficacious, the judgment received a lot of publicity due to certain
observations by Justice Bhatt, who decided this case. Noting that Roche’s original drug was at
least three times more expensive than the copy-cat version and was not manufactured in India he
opined: “I come to the interesting and novel point as to whether the court ought ever, and in
particular, in this case to exercise its discretion to grant an injunction the effect of which will be,
temporarily at any rate, to deprive members of the public of the benefit of a ‘life saving drug
which may be prescribed’… If the evidence shows it to be the fact there may and well be cases
where it would make little, if any, difference to the public, apart from satisfying personal
preference, whether a particular drug was no longer available or not, then in such a case it may
well be proper to grant an injunction. At the other end of the scale, however, there is the unique
life-saving drug where, in my judgment, it is at least very doubtful if the court in its discretion
ever ought to grant an injunction5”

Roche vs. Cipla6 is just one instance of how IPR’s enforcement has been at odds with the actual
intent behind the law. Since 2005, the (average) chances of winning IP litigation have declined
to17%, from about 50% before Trips.

The Agreement has increased R&D investments by Indian firms. The amount of R&D activity in
India has been on an increase since the Agreement. Stronger IPR regime has spurred Indian
companies to invest in R&D and simultaneously encouraged multinational corporations to
outsource more R&D work to India.

The Indian policymakers seem unsure about how they should react to IPR. But considering the
innovations in technological fields, increased patent filing, new symbols being created everyday

5
http://www.werksmans.com/legal-briefs-view/patients-rights-the-achilles-heel-of-the-patient-system-an-indian-
perspective-for-south-africa/

6
148 (2008) DLT 598
and works requiring copyrights, IPR enforcement needs to be strengthened further.  It would help
even better if the enforcers follow the spirit of the law unlike in the case of Cipla and Roche.
Laws need to be made regarding the protection of Trade Secrets, patent filing and granting
procedure needs to be speeded up, lessons for which can be taken from the USPTO7. 

7
http://www.uspto.gov/patents/init_events/transcript_031314_uspto.pdf