CHANGES MAY BE NEEDED IN TRIPS ACCORD

10:13 AM May 29, 1996

CHANGES MAY BE NEEDED IN TRIPS ACCORD
Geneva 30 May (Chakravarthi Raghavan) -- The Committee on Trade and Environment at the World Trade Organization has been holding a stock-taking exercise this week to begin a process of a report to the Singapore Ministerial meeting and or recommendations for changes in the agreements annexed to the WTO multilateral trading system and promote sustainable development.

Among the various ideas and proposals before the CTE, chaired by Amb. Sanchez Arnau of Argentina, are proposals for changes to Art XX Exception clause of the GATT 1994, for reduction of agricultural subsidies and increased market access, for changes in the TRIPs Agreement and for a WTO decision/understanding on exports of domestically prohibited goods.

The opposition of the United States and other industrial countries to any understanding on domestically prohibited goods that will cast an obligation on them visavis the activities of their TNCs and exporters seems likely to result in no more than another notification requirement which might even give a misleading impression of a WTO actions to prevent this.

On the TRIPs issue, India has put forward a 'non-paper' that suggests revisiting some of the provisions of the TRIPs accord -- the subject matter of patentability, the issue of plant varieties protection, protection of layout designs of integrated circuits and protection of undisclosed information.

The CTE's work programme calls for consideration of the relationship of the TRIPs agreement to access and transfer of technology and development of environmentally-sound technology and relationship between TRIPs and multilateral environment agreement containing IPR-related obligations.

The subject was discussed in the CTE meeting of March where, according to the WTO's Trade and Environment Bulletin, several members suggested that the Indian paper could be a good basis for further discussions. The United States, EU and some other industrial nations were clearly opposed to any changes in TRIPs, arguing that a strong Intellectual Property (IP) regime promotes innovation of technology, including technologies for protection of environment.

In its paper, India has contended that an essential rationale for coordinating international rules on IP and Multilateral Environment Agreements (MEAs) with IPR-related obligations lies in that it is the same international community including members of the WTO that set both sets of rules. The need for coordination between the two arises from the fact that there are technologies, with one or other type of IP that directly affect the environment.

Production and use of some technologies cause serious prejudice to the environment and others benefit. International community should discourage global use of technologies injurious to the environment and encourage those that benefit.

Technologies that might become eligible for patent protection in the future as a result of TRIPs might include those with negative effects.

A related issue is whether commercial exploitation of technologies can be banned on these grounds while granting current or future IPR protection, and whether these could give rise to non-violation complaints.

In India's view for technologies causing serious prejudice to the environment, exclusion from patentability or ban on their use or commercial exploitation would be a prima facie necessity.

Under Art. 27.2 of TRIPs, provided commercial exploitation of products are also prohibited, countries could exclude from patentability inventions on ground of ordre public or morality, or to protect human, animal, plant life or health or to avoid serious prejudice to the environment.

Thus, the TRIPs recognizes use of such exclusions to discourage generation of environmentally-injurious technologies, but subject to safeguards against unwarranted dilution of IP protection

A similar solution should be sought for areas of conflict between IP objectives and sustainable development.

But the question would arise whether ban on commercial exploitation, while granting patents, could result in a complaint and dispute of nullification by non-violation.

Also of concern to developing countries is the relation between environmentally beneficial technologies and the TRIPs agreement.

While developing countries were adhering to the international consensus to phase out environmentally-injurious substances (such as under the Montreal Protocol), substitute technologies where either not being transferred voluntarily or not being transferred by the TNCs on "fair and most favourable terms" (as required in Art. 16.3 of the Biodiversity Convention and Art 10A of the Montreal Protocol) or even on reasonable terms. While governments and international organizations are free to persuade such patent owners with more favourable financial terms (not prohibited under the TRIPs), given the paucity of funds at the national and international levels for developing countries, this is not a very practicable or even feasible solution.

In the extreme cases, the Indian non-paper argues, Members may have to exclude from patentability in order to allow for free production and use of technologies as are essential to safeguard or improve the environment. But such an exclusion is incompatible with the TRIPs Agreement and thus would need an amendment.

In respect of technologies which are currently patented, WTO Members can revoke the patents. TRIPs does not set out any grounds for revocation of patents and thus any patent revocation will be compatible with TRIPs. However, under the Paris Convention (of the WIPO), such a revocation has to satisfy certain conditions and is subject to full judicial review.

The conditions set in the Paris Convention require first exploring the route of compulsory licensing. But the procedures laid down in Art 31 of the TRIPs for compulsory licensing are pretty cumbersome.

While grant of compulsory licences on grounds of encouraging transfer of environmentally-beneficial technologies is compatible with TRIPs, since Art. 31 does not restrict the grounds on which compulsory licenses may be granted, there are some conditions. These include:

* requirement that proposed user (making use of the compulsory licence) has made efforts to obtain from the holder of the IPR authorization for use on reasonable commercial terms and conditions but had been unsuccessful;

* termination of the compulsory licence when circumstances leading to its grant ceases to exist;

* adequate remuneration of the IPR holder taking into account the economic value of the licence;

* strict conditions for dependent patents and their exploitation.

All these conditions may prove hurdles for quick and effective transfer of such technologies and such conditions may hence have to be made subject to the "environment exception" through amendment to the TRIPs.

A reduction in the term of a patent (minimum of 20 years under the TRIPs), the Indian non-paper suggests an amendment to the TRIPs to enable reduction of this period to ten years to allow free access to environmentally-beneficial technologies.

Another TRIPs provision that may need revision would be the requirement in Art. 27.3.(b) about protection of plant varieties either by patents or a sui generis system.

This provision is to be taken up for review by 1 January 1999.

Under a sui generis system, Members would be free to incorporate provisions for plant varieties protection that allows for exclusion, revocation, or use without authorization of the rights holder, reduction in term of protection and for sharing of benefits with traditional communities -- in the context of discouraging production and use of plant varieties injurious to the environment or encouraging production and use of those that safeguard or are beneficial to the environment.

The Indian non-paper has suggested inclusion of such an agreed interpretation by the CTE in its report to the Singapore meeting.

In regard to layout designs, where use or commercial exploitation of such designs or products harm the environment, members should be free to revoke the existing protection granted or provide for its exclusion.

Similarly when use or commercial exploitation of such design or products protect or benefit the environment, Members should be able to take measures for their wider dissemination.

Neither of these are now provided for in the TRIPs Agreement and changes would be needed.

The TRIPs provisions providing for protection of undisclosed information should also be amended to provide for use of technologies (kept secret and not patented and thus disclosed) where their use would protect or benefit the environment. Harmful technologies not disclosed should also be capable of being banned or their patent protection disallowed.

In explaining the non-paper (according to the Trade and Environment Bulletin), India stressed the fine balance between IP protection, environmental protection and promotion of sustainable development.

Referring to the issue of IP rights of traditional communities (which arises in the Biodiversity Convention) in the context of patents, India recalled the case of the neem seed from which a US TNC had patented a process to make a pesticide. Whether such a process or product was "novel" to warrant a patent was an issue under discussion. But sharing benefits of such technology with traditional communities that had preserved that knowledge and maintained genetic resources should also be addressed.