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TWN Info Service on WTO and Trade Issues (June09/12)
29 June 2009
Third World Network

EU demands in EU-India FTA could adversely affect access to drugs
Published in SUNS #6722 dated 18 June 2009

Geneva, 17 Jun (Sangeeta Shashikant*) -- The European Union's demands on India to take on higher intellectual property (IP) standards, if adopted, could spell disaster for the supply of low-cost generic medicines, undermine India's development and set a significant precedent for the future of IPR protection globally, cautioned Dr Carlos M. Correa, an expert on IP and the WTO TRIPS Agreement.

Dr. Correa's warning is in a recent report by him titled "Negotiation of a Free Trade Agreement European Union-India: Will India accept TRIPS-PLUS Protection?". The report was commissioned by Oxfam Germany and the Church Development Service.

India has played a central role in resisting the trend towards TRIPS-plus protection in areas of key economic and social relevance for developing countries. However, India's stance on the matter is being tested as the country is engaged in bilateral negotiations with the European Union on a free trade agreement (FTA), which contains a comprehensive chapter on intellectual property.

The report by Dr Correa analyses the sections on IPR in the draft EU-India FTA that was available before the sixth round of negotiations held in New Delhi from 17-19 March 2009.

Noting that India is home to one of the largest populations of poor people in the world, Dr Correa warns that the explicit demands by the EU for India to adopt higher standards of IPR protection will "only aggravate the exclusion of the poor from access to essential products, such as medicines and input for agricultural production, the very basis for the survival of the largest part of [the] Indian population".

The higher IP standards sought by the EU are also likely to spell disaster for the supply of low-cost generic medicines for the world, as the EU proposes provisions that extend patent monopoly and delay generic competition.

"The intention to exceed the TRIPS standards is explicit," states the report. This is so despite the European Parliament's repeated calls on the European Commission not to seek TRIPS-plus standards of protection in developing countries, as they may affect access to medicines.

The report notes that as a result of the "Most Favoured Nation" clause, any TRIPS-plus standard agreed upon with the EU would also be extended automatically and unconditionally to other WTO members without any trade concession from them.

It further notes that the texts indicate that India is resisting many aspects of the EU demands for higher IP standards.

While in some cases, India appears to have rejected the EU proposals, in other cases, the strategy has apparently been to accept certain obligations but only to the extent admissible under "existing" or "applicable" laws or where the proposed measures are deemed "appropriate" by the relevant authorities, or the provisions are redrafted by India as facultative ("the Parties may..."), or converted into a best-effort obligation ("the Parties shall endeavour...").

A "noticeable gap" is that the draft FTA does not contain provisions aimed at curbing the misappropriation ("bio-piracy") of traditional knowledge and genetic resources, says the report, which speculates that "India may have opted to have these issues out of the FTA discussion to fully preserve its capacity to regulate the matter at the national level".

It advises that "the FTA might be an opportunity to demand from [the] EU full compliance with the Convention on Biological Diversity and, in particular, the incorporation of an obligation on patent applicants to disclose the origin of biological materials claimed in a patent application".

In relation to patents, the report highlights two TRIPS-plus provisions, which if adopted, may significantly limit access to drugs.

The first proposal, modeled on the concept of "supplementary protection certificate" in the EU, compels India to extend monopoly patent protection for an additional five years to compensate for the time required for the marketing approval of a medicinal product. The second proposal obligates India to provide exclusive rights for test data submitted for the approval of pharmaceutical (and agrochemical) products.

India has on previous occasions refused to grant this type of protection, as it is not required by the WTO TRIPS Agreement. The EU draft does not yet specify the period of protection. The EU provides for 10 years of protection with an additional year if new indications for a known product have been found.

On the proposals' implications, the report notes that the first proposal would "extend the monopoly conferred by a patent and delay the entry of generic competition, which reduces prices and increases the affordability of drugs", while as a result of the second proposal, "Indian consumers may be deprived during the test data exclusivity period of access to low-price drugs, even in the absence of a patent on the respective product".

The report finds a positive feature in that the draft FTA at least recognizes the "importance of the Doha Declaration on the TRIPS Agreement and Public Health adopted on 14 November 2001 by the Ministerial Conference of the WTO", which "should be applied for interpretative purposes in the case that a dispute arises between the Parties".

Another positive feature in the draft FTA is the statement that "[N]othing in this Agreement shall be construed as to impair the capacity of the Parties to promote access to medicines". The report however notes that the "precise implications" of this formulation are yet to be determined.

The report also notes that the draft FTA stipulates that Parties "shall contribute to the implementation and respect" of the WTO Decision of August 30, 2003 (which allows for the exportation of pharmaceutical products under compulsory licenses to countries without manufacturing capacity in pharmaceuticals), and agree to take the necessary steps to accept the Protocol amending the TRIPS Agreement, done in Geneva on 6 December 2005.

The EU has also proposed that India comply with the provisions of the Patent Cooperation Treaty (PCT), the Budapest Treaty on the International Recognition of the Deposit of Micro-organisms for the Purposes of Patent Procedure (Budapest Treaty) and the Patent Law Treaty (PLT), all of which are administered by the World Intellectual Property Organization (WIPO). The PCT and Budapest Treaty have been in force in India since 1998 and 2001, respectively.

The report however cautions India that should it accept the PLT, "it may face difficulties to implement the obligation - currently imposed by the Indian Patent Act - to disclose the origin of claimed biological material. Under the Indian law, non-disclosure or wrongful disclosure of origin of a biological material can result in denial or revocation of the patent."

The PLT limits the grounds for revocation or invalidation of a patent in a way that may exclude the possibility of taking measures in case of lack of disclosure "except where the non-compliance with the formal requirement occurred as a result of fraudulent intention," states the report.

In the area of breeders' rights, the draft FTA "obligates the Parties 'to co-operate to promote and reinforce the protection of plant varieties' based on the Convention on the Protection of Plant Varieties (UPOV) 1991", says the report, adding that India presently deliberately protects plant varieties according to UPOV 1978, as "1991 is perceived as altering the balance attained in the 1978 Act between breeders' and farmers' rights".

However, it notes that the specific reference in the draft FTA to the possibility of introducing an exception for the use in their own exploitation of seeds saved by farmers (a right explicitly recognized under the Indian law), "would be sufficient to change India's resistance to expand the protection accorded to plant varieties in line with UPOV 1991".

In the area of copyright, the report notes the EU requests of Indian accession to a number of international conventions, including the Rome Convention for the Protection of Performers, Producers of Phonograms and Broadcasting Organizations, the WIPO Copyright Treaty and the WIPO Performances and Phonograms Treaty.

This demand, according to Dr Correa, "shows the complementarity of plurilateral and bilateral efforts by the EU to increase the levels of protection of IPRs in foreign countries".

According to the report, India has "not accepted so far the obligation to adhere to such conventions nor many of the provisions proposed by the EU in the area of copyright".

In line with the trend promoted by the developed countries, the EU has demanded the extension of the copyright protection term.

In an "apparently agreed text", both parties agreed to commit to 60 years to recognize author's rights after death, a right that already exists in India. With regard to related rights, the EU has demanded a minimum of 50 years counted from the date of performance, fixation of a phonogram or film and the first broadcast, which the report notes, except in the case of broadcasts, India has apparently accepted the term.

The EU would however like to extend the protection term from a different date, such as the first publication or communication of a performance or of a phonogram.

According to the report, there seems to be no agreement regarding a complex provision proposed by the EU on "Broadcasting and Communication to the Public", which would significantly reinforce related rights. The EU has also proposed to India a provision obligating the Parties to recognize a "resale right" for original works. Such a right is recognized in India but subject to limitations, which the EU proposal is intended to eliminate.

There are also demands for India to adopt technological protection and anti-circumvention measures, which Dr Correa cautions, "may drastically limit access to knowledge and put a significant obstacle to the implementation of educational policies".

"Measures designed to prevent third parties from unauthorized access to and use of digital works may, in effect, permit right-holders to control, monitor and meter every possible use of a work. If strengthened by the legal prohibition to defeat them, such measures may prevent fair use and other legitimate acts".

"An operative set of exceptions to the exclusive rights granted under copyright is essential in a country like India, where millions of people may be deprived of access to copyrighted work for education and general information," Dr Correa adds.

The report notes that the EU is also attempting to embark India on the protection of "non original databases", despite a critical evaluation by the European Commission that casts serious doubts over the necessity of the sui generis protection established by Directive 96/9/EC of the European Parliament and of the Council on 11 March 1996 on the legal protection of databases.

According to the report, the Indian government has apparently rejected this demand.

In the area of trademarks, the EU draft requires accession (by India) to the Protocol Relating to the Madrid Agreement Concerning the International Registration of Marks (1989), the Singapore Treaty on the Law of Trade Marks (2006) and the Trademark Law Treaty (1994).

Dr Correa notes that India seems to agree on complying with the two latter treaties, but "only wishes to commit to the endeavour to encourage accession' to the referred-to Protocol."

"Accession to the latter may limit the intervention of national office in the registration of marks of foreign origin, and is resisted in many countries by local trademark agents," says Dr Correa.

The EU draft also contains detailed provisions on the protection of geographical indications (GIs), although according to Dr Correa, no agreement on it exists as yet.

The EU proposals include (in addition to the recognition of specific GIs for agricultural products and foodstuffs, wines, aromatized wines and spirits) a mechanism for the addition of new GIs as well as provisions on the use of GIs in Internet and organizational matters.

The IP expert notes that "incorporating this kind of TRIPS plus provisions in this FTA will represent a significant achievement for European countries... who have consistently championed an expansion of the international protection of GIs".

India already has an advance system for the protection of GIs, which was influenced by the country's concerns over the use of the generic name "basmati rice" by foreign companies and countries.

However, Dr Correa recommends that "given the scarcity of research-based inputs on the impact of GIs protection, it has been recommended a more prudent approach on the part of India' and to go slow' in accepting international obligations on the matter."

As the EU has in the last five years become very active in the field of IP enforcement, the longest detailed section is on the adoption of different types of enforcement measures.

The EU's initiatives on promoting IP enforcement include Enforcement Directive 2004/48/EC to enhance enforcement among member states, the "Strategy for the Enforcement of Intellectual Property Rights (IPRs) in Third Countries", which aims to enhance IPR enforcement outside the EU and the negotiation of a new "Anti-Counterfeiting Trade Agreement (ACTA)."

Proposals on enforcement include those that: specify the type of evidence
(including banking, financial or commercial documents) that the opposing party may be ordered to communicate; requires the Parties to grant, "if necessary" inaudita altera parte (ex parte), measures to preserve a detailed set of pieces of evidence; introduce in great detail information that the alleged infringer may be ordered to provide; provide for provisional and precautionary measures to prevent "the continuation" of an alleged infringement; require that judges be authorized to order, inter alia, the destruction of infringing goods, even in cases of non-intentional infringement; and extend the applicability of permanent injunctions to "intermediaries whose services are used" to infringe IPRs.

Also included among the proposals are those that: provide for pecuniary compensation for cases where infringement was "non-intentional and without negligence", stipulates about the determination of damages, imposes legal costs and other expenses on the unsuccessful party; require the publication of judicial decisions; provide for a presumption of ownership in the case of enforcement of copyright and related rights; regulate the liability of intermediary service providers; obligate the Parties to adopt expansive border measures; and to encourage the development of codes of conduct aimed at contributing towards the enforcement of intellectual property rights and to enter into forensic cooperation.

According to Dr Correa, for the most part, except on presumption of ownership, India has apparently not accepted these provisions. In some cases, India has proposed alternative texts (in many cases, based on facultative clauses or references to applicable existing laws).

He cautions that the "proposed expansion of border measures much beyond what is required under the TRIPS Agreement would make such measures applicable not only to the importation but also to the exportation of goods and to goods in transit".

He notes that the seizures of generic medicines in transit by the European customs authorities illustrate the possible implications on legitimate trade of the broad application of border measures.

"This case not only shows the problems posed by the application of IPRs to goods merely in transit (which may constitute a violation of Article V of the GATT) but also the inadequateness of applying, as proposed by the EU, border measures to patent infringements", as "determination of such an infringement generally requires complex technical testing and raises difficult legal issues, such as the interpretation of the scope of patent claims (namely, in order to establish whether a non-literal violation exists)," says the report.

"Custom authorities lack the capacity to properly handle these issues", the report adds.

Dr Correa also says that there is nothing in the EU-India FTA that "would enhance technology flows from Europe to India".

The draft EU-India FTA limits itself to the "Parties' exchange of views and information on their domestic and international policies affecting transfer of technology' and to the creation of an enabling environment for technology transfer in the host countries, including issues such as the relevant legal framework and development of human capital'".

This general declaration, Dr Correa adds, seems "to put on India the burden of creating the appropriate conditions for the transfer of technology to occur, without any substantial obligation on the EU".

(* With inputs from Asmeret Ashgedom.) +

 


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