2007 USTR Report on Trade Policy Agenda and TRIPS

Complete Report here.

F. Council on Trade Related Aspects of Intellectual Property Rights

Status

The Agreement on Trade-Related Aspects of Intellectual Property Rights (the TRIPS Agreement) sets minimum standards of protection for copyrights and neighboring rights, trademarks, geographical indications (GIs), industrial designs, patents, integrated circuit layout designs, and undisclosed information. The TRIPS Agreement also establishes minimum standards for the enforcement of intellectual property rights through civil actions for infringement and, at least in regard to copyright piracy and trademark counterfeiting, in criminal actions and actions at the border. The TRIPS Agreement
requires as well that, with very limited exceptions, WTO Members provide national and most-favored nation treatment to the nationals of other Members with regard to the protection and enforcement of intellectual property rights. Disputes between Members regarding implementation of the TRIPS Agreement can be settled using the procedures of the WTO’s Dispute Settlement Understanding.

Developed country Members were required to implement fully the obligations of the TRIPS Agreement by January 1, 1996, and developing country Members generally had to achieve full implementation by January 1, 2000. LDC Members have had their deadline for full implementation of the TRIPS Agreement extended to July 1, 2013, as part of a package that also requires them to provide information on their priority needs for technical assistance in order to facilitate TRIPS implementation. This action is without prejudice to the existing extension, based on a proposal made by the United States at the Doha Ministerial Conference, of the transition period for LDC Members to implement or apply Sections 5 and 7 of Part II of the TRIPS Agreement with respect to pharmaceutical products, or to enforce rights with respect to such products, until January 1, 2016. In 2002, the WTO General Council, on the recommendation of the WTO Council for Trade-Related Aspects of Intellectual Property Rights (the TRIPS Council), similarly waived until 2016 the obligation for LDC country Members to provide exclusive marketing rights for certain pharmaceutical products, if those Members did not provide product patent protection for pharmaceutical inventions.

The TRIPS Council monitors implementation of the TRIPS Agreement, provides a forum in which WTO Members can consult on intellectual property matters and carries out the specific responsibilities assigned to the Council in the TRIPS Agreement. The TRIPS Agreement is important to U.S. interests and has yielded significant benefits for U.S. industries and individuals, from those engaged in the pharmaceutical, agricultural chemical, and biotechnology industries to those producing motion pictures, sound recordings, software, books, magazines, and consumer goods.

Major Issues in 2006

In 2006, the TRIPS Council held three formal meetings, including “special negotiation sessions” on the establishment of a multilateral system for notification and registration of GIs for wines and spirits called for in Article 23.4 of the TRIPS Agreement (see separate discussion of this topic under section B of this Chapter, “Council for Trade-Related Intellectual Property Rights, Special Session”, and below). In addition to continuing its work reviewing the implementation of the Agreement, the TRIPS Council’s work in 2006 focused on TRIPS issues addressed in the Doha Ministerial Declaration and the Declaration on the TRIPS Agreement and Public Health. Some Members, including the United States, also sought to have the TRIPS Council examine issues related to the enforcement provisions of the TRIPS Agreement.

Review of Developing Country Members’ TRIPS Implementation: The TRIPS Council during 2006 continued to devote time to reviewing the TRIPS Agreement’s implementation by developing country Members and newly acceding Members, as well as to providing assistance to developing country Members so they can implement fully the Agreement. In particular, the TRIPS Council continued to urge developing country Members to respond to the questionnaires already answered by developed country Members regarding their protection of GIs and implementation of the TRIPS Agreement’s enforcement provisions, and to provide detailed information on their implementation of Article 27.3(b) of the Agreement. The United States continued to press for full implementation of the TRIPS Agreement by developing country Members and participated actively during the reviews of legislation by highlighting specific concerns regarding individual Member’s implementation of the Agreement’s obligations, particularly with regard to China’s efforts.

The Transitional Review Mechanism under Section 18 of the Protocol on the Accession of the People’s Republic of China has been an important means to raise concerns about China’s implementation of the TRIPS Agreement. This process has been instrumental in helping to understand the levels of protection of intellectual property rights in China, and provides a forum for addressing the concerns of U.S. interests in this process. The United States has been active in seeking answers to questions on a wide range of intellectual property matters and in raising concerns about enforcement of intellectual property rights. The United States also continued to seek satisfactory responses to a formal request submitted to China in October 2005 seeking additional enforcement-related information pursuant to Article 63.3 of the TRIPS Agreement.

During 2006, the TRIPS Council undertook reviews of the implementing legislation of Congo and Qatar, in addition to the above-referenced review of China.

Intellectual Property and Access to Medicines: The August 30, 2003 solution (the General Council Decision on “Implementation of Paragraph 6 of the Doha Declaration on the TRIPS Agreement and Public Health”, in light of the statement read out by the General Council Chairman) continues to apply to each Member until the formal amendment to the TRIPS Agreement replacing its provisions takes effect for that Member. The amendment text adopted by the General Council in December 2005 and the statement by the Chair preserve all substantive aspects of the August 30, 2003 solution and do not alter the substance of the previously agreed solution. The United States was the first Member to submit its acceptance of the amendment to the WTO, and was joined during 2006 by Switzerland and El Salvador.

The amendment will enter into force, for those Members that have accepted it, upon its acceptance by two-thirds of the membership of the WTO. At its October 2006 meeting, the TRIPS Council reviewed implementation of the August 30, 2003 solution. Several members commented on the importance of the solution and reported on preparations to formally accept the amendment.

TRIPS-related WTO Dispute Settlement Cases: During 2006, the United States continued to monitor EU compliance with a 2005 ruling of the WTO Dispute Settlement Body (DSB) that the EU’s regulation on food-related GIs is inconsistent with the EU’s obligations under the TRIPS Agreement and the GATT 1994. The DSB ruled that the EU’s GI regulation impermissibly discriminates against non-EU products and persons and also agreed with the United States that the regulation could not create broad exceptions to trademark rights that Members must provide under the TRIPS Agreement. The DSB recommended that the EU amend its GI regulation to come into compliance with its WTO obligations. The EU adopted an amended GI regulation in March 2006. The United States has raised certain questions and concerns with regard to the revised EU regulation and its compliance with the DSB findings and recommendations, and continues to monitor implementation in this dispute.

There are a number of other Members that appear not to be in full compliance with their TRIPS obligations. The United States, for this reason, is still considering initiating dispute settlement procedures against several Members. We will continue to consult informally with these Members in an effort to encourage them to resolve outstanding TRIPS compliance concerns as soon as possible. We will also gather data on these and other Members’ enforcement of their TRIPS obligations and assess the best cases for further action if consultations prove unsuccessful.

Geographical Indications: The Doha Declaration directed the TRIPS Council to discuss “issues related to extension” of Article 23-level protection to GIs for products other than wines and spirits and to report to the Trade Negotiations Committee (TNC) by the end of 2002 for appropriate action. Because no consensus could be reached in the TRIPS Council on how the Chair should report to the TNC on the issues related to extension of Article 23-level protection to GIs for products other than wines and spirits, and, in light of the strong divergence of positions on the way forward on GIs and other implementation issues, the TNC Chair closed the discussion by saying he would consult further with Members. At the December 2005 Hong Kong Ministerial Conference, the Ministers directed the Director-General to continue his consultative process on all outstanding implementation issues, including on extension of the protection of GIs. Consistent with this mandate, the Director-General appointed a Deputy Director-General to hold a number of such consultations with Members on the issue of extension.

Throughout 2006, the United States and many like-minded Members maintained the position that the demandeurs had not established that the protection provided GIs for products other than wines and spirits was inadequate, and thus proposals for expanding GI protection were unwarranted. The United States and other Members noted that the administrative costs and burdens of proposals to expand protection would be considerable for those Members that did not have a longstanding statutory regime for the protection of GIs, that the benefits accruing to those few Members that had longstanding statutory regimes for the protection of GIs would represent a windfall, and other Members with few or no GIs would receive no counterbalancing benefits. While willing to continue the dialog in the TRIPS Council, the United States believes that discussion of the issues has been exhaustive and that no consensus has emerged with regard to extension of Article 23-level protection to products other than wines and spirits.

The United States and other Members have also steadfastly resisted efforts by some Members to obtain new GI protections in the WTO agriculture negotiations. The United States views such initiatives as efforts to take back the names of many famous products, such as feta and parmesan, from U.S. producers who have invested considerable time and resources to make these names famous and who are currently using such terms in a manner fully consistent with international intellectual property agreements.

No further progress has been made on the Article 24.2 review of the application by Members of TRIPS provisions on GIs notwithstanding the continued presence of this topic on the TRIPS Council’s agenda. There is continuing disagreement surrounding the methodology to be used in such a review, with the United States and other Members supporting a process that would focus on reviewing each article of the TRIPS Agreement covering GIs in light of the experience of Members. The United States also continued to urge developing country Members that have not yet provided information on their regimes for the protection of GIs (most of them have not) to do so.

Review of Article 27.3(b), Relationship Between TRIPS and the Convention on Biological Diversity, and Protection of Traditional Knowledge and Folklore: As called for in the TRIPS Agreement, the TRIPS Council initiated a review of TRIPS Article 27.3(b) (permitting Members to except from patentability plants and animals and biological processes for the production of plants and animals). Most developing country Members have chosen not to provide such information and have raised topics that fall outside the scope of Article 27.3(b).

The Doha Declaration directs the TRIPS Council, in pursuing its work program under the review of Article 27.3(b), to examine, inter alia, the relationship between the TRIPS Agreement and the Convention on Biological Diversity (CBD) and the protection of traditional knowledge and folklore. Consideration of this set of issues also continues to be guided by the direction of Ministers in the Hong Kong Declaration, that all implementation issues (including the relationship of the TRIPS Agreement and the CBD) should be the subject of consultations facilitated by the WTO Director-General. Furthermore, Ministers agreed that work would continue in the TRIPS Council on this issue.

A number of developing country Members continue to advocate for amending the patent provisions of the TRIPS Agreement to require disclosure of the source of the genetic resource or traditional knowledge, as well as evidence of prior informed consent to obtain the genetic resource and adequate benefit sharing with the custodian community or country of the genetic resource in order to obtain a patent. In 2006, a group of developing country Members submitted draft text for such an amendment to the TRIPS Agreement. There is, however, no consensus in the TRIPS Council that an amendment should be pursued.

The United States, with support from other Members, continues to maintain that there is no conflict between the TRIPS Agreement and the CBD, that an amendment to the TRIPS Agreement is neither necessary nor appropriate, and that shared objectives with respect to genetic resources and traditional knowledge (such as prior informed consent and effective access and benefit-sharing arrangements) can best be achieved through mechanisms outside of the patent system. The United States has also advocated for a discussion in the TRIPS Council that is fact-based and focused on national experiences in areas such as access and benefit-sharing and prior informed consent. While some Members continue to press for amending the TRIPS Agreement, the TRIPS Council’s deliberations in 2006 generally tended toward constructive questioning and information-sharing on these matters. This approach has clarified a number of points of divergence and convergence, and has tracked more closely the debate suggested by the United States to discuss proposals based on whether or not they achieve the objectives purportedly sought, rather than presupposing any particular outcome.

Non-violation: The TRIPS Council agreed at its March 2006 meeting to keep under review the issue of non-violation nullification and impairment complaints in the context of the TRIPS Agreement. The original moratorium on non-violation nullification and impairment complaints related to the TRIPS Agreement was extended, at the Hong Kong Ministerial Conference, until the Seventh Ministerial Conference, which has not yet been scheduled. There was no substantive discussion or new submissions on this issue during the course of the TRIPS Council’s 2006 meetings. The United States maintains that TRIPS is no different than other agreements where non-violation nullification and impairment claims are permitted, and that Article 26 of the Dispute Settlement Understanding and GATT decisions on non violation provide sufficient guidance to enable a panel or the Appellate Body to make appropriate determinations in such cases.

Further reviews of the TRIPS Agreement: Article 71.1 calls for a review of the TRIPS Agreement in light of experience gained in implementation, beginning in 2002. The TRIPS Council continues to consider how the review should best be conducted in light of the Council’s other work. The Doha Ministerial Declaration directs that, in its work under this Article, the TRIPS Council is also to consider the relationship between intellectual property and the CBD, traditional knowledge, folklore, and other relevant new developments raised by Members pursuant to Article 71.1. In 2006, Members did not raise further issues under this Article.

Technical Cooperation and Capacity Building: As in each past year, the United States and other Members provided reports on their activities in connection with technical cooperation and capacity building (IP/C/W/476/Add.6).

Implementation of Article 66.2: Article 66.2 of the TRIPS Agreement requires developed country Members to provide incentives for enterprises and institutions in their territories to promote and encourage technology transfer to least-developed country Members in order to enable them to create a sound and viable technological base. This provision was reaffirmed in the Doha Decision on Implementation-related Issues and Concerns and the TRIPS Council was directed to put in place a mechanism for ensuring monitoring and full implementation of the obligation. Developed country
Members are required to provide detailed reports every third year, with annual updates, on these incentives. In October 2006, the United States provided a detailed report on specific U.S. government institutions (e.g., the African Development Foundation and Agency for International Development) and incentives, as required.

Enforcement: At the October 2006 meeting of the TRIPS Council, the United States joined the EU, Japan and Switzerland in proposing that the Council examine the experience of Members in implementing the enforcement provision of the TRIPS Agreement. The United States noted that such a discussion would be particularly valuable in light of the growing global problems surrounding counterfeiting and piracy of intellectual property. A number of Members have resisted a substantive discussion of enforcement in the TRIPS Council.

Prospects for 2007

In 2007, the TRIPS Council will continue to focus on its built-in agenda and the additional mandates established in the Doha Declaration, including issues related to the extension of Article 23-level protection for GIs for products other than wines and spirits, on the relationship between the TRIPS Agreement and the CBD, and on traditional knowledge and folklore, as well as other relevant new developments.

U.S. objectives for 2007 continue to be to:

• resolve differences through consultations and use of dispute settlement procedures, where appropriate;
• continue its efforts to ensure that developing country Members fully implement the Agreement;
• continue to encourage a fact-based discussion within the TRIPS Council on the enforcement;
• provisions of the TRIPS Agreement; and ensure that provisions of the TRIPS Agreement are not weakened