THE TRIPS AGREEMENT AND DEVELOPING COUNTRIES. Jayashree Watal
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1 UNCTAD Expert meeting on the impact of FDI on development: Globalization of R&D by TNCs and implications for developing countries THE TRIPS AGREEMENT AND DEVELOPING COUNTRIES Jayashree Watal Wednesday, 26 January 2005 ( p.m.)
2 OUTLINE OF PRESENTATION BACKGROUND TO TRIPS NEGOTIATIONS, SOME STATISTICS MAIN FEATURES OF THE TRIPS AGREEMENT PATENTS UNDISCLOSED INFORMATION TRANSFER OF TECHNOLOGY 2
3 BACKGROUND Uruguay Round TRIPS Negotiations Many developing and former central planned economies already liberalizing economic policies, including FDI and strengthening IPRs IPRs considered important, particularly for FDI in R&D Level playing field for efficient division of R&D activities by TNCs IPRs considered important even for independent innovation and global S&T competitiveness, e.g. China 3
4 PATENT GRANT IN THE USPTO TO DEVELOPING COUNTRIES USPTO patents granted to top 10 developing countries doubled in period (2.28% to 4.27%): Chinese Taipei (4 th ) patents per year Korea (6 th ) patents in 2003 Singapore, India, China and Hong Kong, China ( patents in 2003) from a base of in South Africa, Brazil, Mexico, Argentina ( patents in 2003) 4
5 Copyright IPRs under TRIPS Agreement Artistic Literary works [computer software and data bases] Related (neighbouring) rights Performers Phonogram producers Broadcasters Industrial property Trademarks Geographical indications Industrial designs Patents Plant varieties protection Topographies of int. circ. Undisclosed information (e.g. trade secrets; test data) [other types not in TRIPS: e.g. data bases not protected as copyright] 5
6 The TRIPS Agreement: Main features Minimum standards of protection not harmonization Basic principles: national treatment, m.f.n. Coverage: all key IPRs reference to the incorporated treaty, if any; definition of the subject-matter, if possible, including exclusions; conditions for protection; term for protection (except for GIs and undisclosed information); exclusive rights, including exceptions. Enforcement Dispute settlement Transitional arrangements Review of implementation 6
7 National treatment - Article 3 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[1] of intellectual property [1] For the purposes of Articles 3 and 4, "protection" shall include matters affecting the availability, acquisition, scope, maintenance and enforcement of intellectual property rights as well as those matters affecting the use of intellectual property rights specifically addressed in this Agreement. 7
8 Most-favoured-nation treatment Article 4 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 Subject to certain exceptions 8
9 TRIPS OBLIGATIONS ON PATENTS Patents shall be available for any invention, whether product or process, in all fields of technology, provided that they meet the criteria for patentability and subject to certain exclusions. What are these criteria? 9
10 Patentability There are three criteria to qualify for a patent (Article 27.1): 1. an invention has to be new ( novelty ) 2. it must be an inventive step (i.e. it must not be obvious) 3. it must have industrial applicability (i.e. it must be useful) A complete and sufficient disclosure of the invention is required. 10
11 Exclusions from patent protection Governments can refuse to grant a patent for an eligible invention for three reasons: 1. If prevention of commercial exploitation is necessary to protect public order or morality, Including to protect human, animal or plant life or health Or to avoid serious prejudice to the environment 2. diagnostic, therapeutic and surgical methods 3. plants and animals (other than microorganisms), or essentially biological processes for the production of plants and animals 11
12 PROVISIONS OF ARTICLE 27.3 (B) Members may exclude from patentability: Plants and animals Essentially biological processes for their production Members shall not exclude: Micro-organisms Non-biological and microbiological processes Members shall protect plant varieties By patents or By an effective sui generis system or By any combination thereof Provisions to be reviewed 4 years after 1995 i.e
13 Patent rights and limited exceptions What are the patent owner s rights? To prevent others from making, using, offering for sale, selling or importing the patented product To prevent others from using the patented process or doing any of the above acts with respect to the product directly obtained by that process Exceptions to patent rights may be provided (such as prior use, private non-commercial use, research, education) if these are: Limited Do not unreasonably conflict with a normal exploitation Do not unreasonably prejudice the legitimate interests of patent owner, taking into account the legitimate interests of third parties Regulatory exemption (or the so-called Bolar exemption ) (WTO panel EU vs. Canada) 13
14 TERM OF PROTECTION At least 20 years from the date the patent application was filed (Article 33) Maintenance fees may be charged Does not equal period of market exclusivity Extension of term of protection not required, for e.g. in case of regulatory delays in grant of marketing approval Revocation of patents (Article 32 and Article 5A of Paris Convention) 14
15 COMPULSORY LICENCES AND GOVERNMENT USE Article 31(under the patents section) covers both compulsory licences and use by governments. See also Art No restriction on grounds (except in the case of semi-conductor technology: 31-c) but subject to conditions reiterated in Doha Special exceptions for public non-commercial use (Article 31-b) and for use as remedy for anti-competitive practices (Article 31 -b, f, g, h, k) 15
16 Exhaustion of IPRs First sale doctrine National vs. International exhaustion Regional exhaustion Trademarks, copyright, patent exhaustion TRIPS Article 6 Special case of pharmaceutical products and Doha clarification Economists view of exhaustion 16
17 UNDISCLOSED INFORMATION - TRADE SECRETS Article 10bis of the Paris Convention Manner contrary to honest commercial practices: Breach of contract/confidence and inducement to breach, including gross negligence test Trade secret protection if: Information is secret Has commercial value because it is secret Has been subject to reasonable steps to keep it secret 17
18 UNDISCLOSED INFORMATION -TEST DATA When requiring submission of undisclosed test or other data for marketing approval of pharma or agro-chemical products which utilize new chemical entities Where origination of data involves a considerable effort Shall protect such data against unfair commercial use In addition to protecting against disclosure 18
19 Transition periods for DCs and LDCs : DCs (+ 5 years for pharmaceuticals and agro-chemicals "mailbox ) : for LDCs (+ possible extensions) (Art. 66.1). Mailbox for pharmaceuticals (patents and test data protection) agreed to at Doha 19
20 Objectives -Article 7 The protection and enforcement of intellectual property rights should contribute to the promotion of technological innovation and to the transfer and dissemination of technology, to the mutual advantage of producers and users of technological knowledge and in a manner conducive to social and economic welfare, and to a balance of rights and obligations. 20
21 Article 66.2 Developed country Members shall provide incentives to enterprises and institutions in their territories for the purpose of promoting and encouraging technology transfer to least-developed country Members in order to enable them to create a sound and viable technological base. 21
22 TRANSFER OF TECHNOLOGY Central issue, especially for African countries Obligation for developed countries to provide incentives to their enterprises to transfer technology to LDCs (Art. 66.2) should be extended to developing countries Concern that obligation not being met Instructions given at Doha by Ministers on the implementation of Art
23 Implementation-related issues and concerns WT/MIN(01)/ Reaffirming that the provisions of Article 66.2 of the TRIPS Agreement are mandatory, it is agreed that the TRIPS Council shall put in place a mechanism for ensuring the monitoring and full implementation of the obligations in question. To this end, developed-country members shall submit prior to the end of 2002 detailed reports on the functioning in practice of the incentives provided to their enterprises for the transfer of technology in pursuance of their commitments under Article These submissions shall be subject to a review in the TRIPS Council and information shall be updated by Members annually. 23
24 IMPLEMENTATION OF ARTICLE 66.2 OF THE TRIPS AGREEMENT Decision of the Council for TRIPS of 19 February 2003 Developed country Members shall submit annually reports on actions taken or planned in pursuance of their commitments under Article To this end, they shall provide new detailed reports every third year and, in the intervening years, provide updates to their most recent reports. These reports shall be submitted prior to the last Council meeting scheduled for the year in question. 24
25 Decision of TRIPS Council IP/C/28 New and more specific monitoring mechanism agreed to in February 2003 Format of reports: (a) an overview of the incentives regime put in place to fulfil the obligations of Article 66.2, including any specific legislative, policy and regulatory framework; (b) identification of the type of incentive and the government agency or other entity making it available; (c) eligible enterprises and other institutions in the territory of the Member providing the incentives; and (d) any information available on the functioning in practice of these incentives 25
26 OTHER DEVELOPMENTS IN THE WTO Issue of "operationalizing" the provisions of Articles 7 and 8 of the TRIPS Agreement by providing for the transfer of technology on fair and mutually advantageous terms. Working Group on the Relationship between Trade and the Transfer of Technology. WTO Decision of 2003 on Implementation of Paragraph 6 of the Doha Declaration on the TRIPS Agreement and Public Health reiterates importance of transfer of technology. 26
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