Oct 26, 1988

TRIPS - FOCUS ON TECHNOLOGY ACCESS AND ABUSES, SAYS BRAZIL.

GENEVA, OCTOBER 24 (IFDA/CHAKRAVARTHI RAGHAVAN)— If the ultimate objective of the Uruguay round is promotion of growth and development through trade liberalisation, the TRIPS negotiating group should focus on issues of access to technology and excessive and right protection of Intellectual Property Rights (IPRS), according to Brazil.

Excessive IPR protection, Brazil points out, has led to rigid monopoly situations and abuses or anti-competitive use of IPRS.

Restrictions imposed by technology-owners or suppliers on exports of some goods, commitments on imports of inputs, quantity and price restrictions, and clauses limiting competition, Brazil, presented on october 21 and now available to participants as a document, has further pointed out, are some examples of evident trade-restrictive and distorting effects of such situations and practices.

This Brazilian position has been outlined in a paper presented to the negotiating group an Trade-Related Intellectual Property Rights (TRIPS), chaired by Amb. Lars Anell of Sweden.

The mandate to the group calls for negotiations aiming to clarify GATT provisions and elaborates "as appropriate new rules and disciplines".

This is with a view to reduce distortions and impediments to international trade, taking account of both the need to promote effective and adequate protection of IPRS and ensure that measures and procedures to enforce such rights do not themselves become barriers to trade.

There is a sharp north-south division in the group:

The U.S., EEC and other industrial countries want to establish in GATT new and substantive or entranced norms in IPRS and provide for their enforcement through GATT’s trade retaliation mechanism.

Third world countries, on the other hand, insist on strict adherence to the mandate and respect for the jurisdiction of the World Intellectual Property Organisation (WIPO).

The WIPO administers the Paris Conventions on patents, trademarks and other IPRS, as well as the Berne Convention on copyright.

With the Montreal mid-term review meeting just six weeks away, the U.S. and others in the group have made no secret of their intention to push for and secure an "understanding" at Montreal that would in effect reinterpret the mandate and enable these substantive issues to be negotiated.

The negotiating group which ended its meeting last week on october 21, is due to meet again on november 14-15 to agree on a report to be presented to the Montreal meeting.

The paper by Brazil has sought to delineate and differentiate the scope of discussions on the issue in the TRIPS group from that in the WIPO, substantive work on IPRS going on for some years now.

Underscoring the limited natural of the TRIPS mandate in GATT, Brazil in effect has said that if there is to be any widening of the scope of negotiations, third world countries would bring up and insist on solutions to other related substantive issues.

These would include such issues as access to technology restrictive practices of IPR holders, especially the transnational corporations that inhibit and restrict international trade and development of the third world.

Some of these issues being dealt with in WIPO, UNCTAD and the UNCTC have been blocked by the U.S. and other industrialised countries.

The specific mandate provided by the Punta del Este declaration, Brazil has argued in its paper, could be "the only starting point" fur discussions in the group.

The mandate did not admit of interpretations aimed at modifying its contents, and such a step would be contrary to the agreements reached at Punta del Este.

The specific task of the group, under the mandate, is to discuss trade-related aspects of IPRS, and in doing this the ultimate objective of the Uruguay round, namely promotion of growth and development, should be kept in mind.

Brazil is the only third world country among the original signatories of the Paris Convention, and its laws and regulations are fully compatible with the convention, the paper notes.

With Brazil's full participation, the substantive and legal aspects of protection of IPRS are being discussed for quite same time at the WIPO, whose system of IPR protection is universal.

The TRIPS group should focus on and give priority to other issues like the extent to which rigid and excessive protection of IPRS impede the access to technological developments, thus participation of third world countries in international trade.

The TRIPS group should also discuss the extent to which abusive use of IPRS gave rise to restrictions and distortions in international trade, and the risks that a rigid system of IPR protection implied for international.

For 500 years, Brazil reminded the group, the objective of IPR protection has been promotion of industrial creativity for benefit of a country's economic and social development. Hence each state recognised IPRS according to well-defined public interests.

This basic orientation of the Paris Convention explained and justified the differences among various national laws on the subject.

GATT discussions in the Uruguay round have to bear in mind this basic principle of public interest and balance within the IPR system of the interests of owners and of users and the public.

There had been far too much concentration in the discussions in TRIPS so far on rights of owners of IPRS. For a balanced and realistic analysis of implications, aspects of the issue relevant to users of IPRS are also fundamental.

If attention were focussed only on interests of IPR owners, the balance established in the IPR system, between owners and users and public interest, would be ignored.

Any discussion of "rights" of IPR owners automatically involved the issue of their "obligations", and priority attention such obligations should be on access to technological innovation to IPR users.

At present only a few countries are in a position to take advantage of very strict protection of IPRS - countries that have a monopoly of technical knowledge, and a long tradition of managerial capacity and wide financial resources.

The rigid monopoly situations created by excessive IPR protection have led to serious restrictions on trade.

Countries that granted such protection leading to a monopoly could neither freely acquire and adapt foreign technology nor freely import new processes and products from alternative sources.

Excessive protection has also led to multiple problems: artificial increase in production costs and thus of prices of products in domestic and international markets, limitation in the variety of products traded among countries and, above all, in the slowness of scientific and technological progress in the third world.

Any specific exclusion of IPR protection to certain areas is a necessary exception to the general principle of recognition of such rights.

Such exclusion is necessary to safeguard sensitive technological areas in development, and even highly industrialised countries maintained such exceptions.

Such flexibility in the IPR system is essential for third world countries needing new technologies. It is precisely this flexibility that has led to greater participation of third world countries in international trade.

Closely related to technological development, the Brazilian paper argues, is the question of abusive or anti-competitive use of IPRS. This issue, already raised in the group, should be among the priority

If a more rigid system of IPR protection, in the interests of countries in an advanced stage of technological development, is to be established, then it should be done in such a way that abuses and restrictive practices are eliminated and punished.

Restrictive practices in licensing, and in other technology transfer agreements give rise to abusive practices, restricting competition and international trade and inhibiting technological development of the technology-acquiring country.

Such restrictive practices include imposition of territorial, quantity and price restrictions: restriction of trade in or exports of patented products to specified areas, and the establishment of "tried sales" clauses.

Many such licensing agreements did not even involve transfer of technology. For instance, 10 percent of ill patent licensing agreements registered in Brazil did not involve any transfer of financial resources (from the licensee to the licensor), underscoring their intra-enterprise nature and involving only subsidiaries and their parent companies.

Such practices cause distortions and restrictions on international trade, and hence have to be subject to adequate multilateral disciplines, Brazil said.

The group should also pay attention to cases where IPR protection and enforcement have itself become a barrier to or harassment of legitimate international trade.

There are many instances where protection of IPRS is used as an exclude to implement protectionist and discriminatory policies.Third world countries have been particularly harassed by such practices.