TWN Info Service on WTO and Trade Issues  (Nov10/03)
9 November 2010
Third World Network

Concerns raised over ACTA at TRIPS Council
Published in SUNS #7030 dated 1 November 2010

 Geneva, 29 Oct (Kanaga Raja) -- Concerns were raised by several countries at a meeting of the TRIPS Council over the proposed Anti-Counterfeiting Trade Agreement (ACTA), with those opposed to the agreement arguing that it threatens the negotiated balance that was achieved in the TRIPS Agreement, and could also pressure countries into adopting TRIPS-plus standards.

India complained that ACTA completely bypasses the existing multilateral processes provided, in particular, by the WTO and the World Intellectual Property Organization (WIPO), and that it also scales up the minimum enforcement level enshrined in the TRIPS agreement.

According to trade officials, the discussion on enforcement trends that featured the draft ACTA (under the agenda item of "other business" at this meeting) echoed the debate in the previous meeting of the TRIPS Council in June (see SUNS #6945 dated 16 June 2010 for details of the discussions on ACTA at that meeting.)

Trade officials said that the focus this time was on the latest version of the draft ACTA released on 2 October, and which some WTO members are negotiating and is said to be near completion after 11 rounds of negotiation.

(ACTA is currently being negotiated by Australia, Canada, the EU and its 27 member states, Japan, Korea, Mexico, Morocco, New Zealand, Singapore, Switzerland, and the United States.)

Critics of ACTA said that the proposed agreement threatens the negotiated balance of the TRIPS Agreement, could lead to countries being put under pressure to adopt standards that are stricter than TRIPS ("TRIPS-plus"), undermines multilateralism and that the negotiations are non-transparent.

In its statement at the TRIPS Council on this issue, India said that it had requested a discussion on "Enforcement Trends" under "Other Business" due to its continuing concerns on the issue of TRIPS+.

It elaborated on a few such systemic and specific concerns regarding ACTA, in particular, and TRIPS+ enforcement trends, in general. It said that the ACTA text of 2 October has several elements which have far- reaching implications for ACTA non-Members.

Highlighting some specific provisions in the draft ACTA, India said that while it is somewhat relieved that patents have been removed, for the time being, from the section on "border measures", it cannot ignore the fact that ACTA is a plurilateral IPR (intellectual property rights) enforcement agreement substantially broader than trademarks and copyrights. It was also concerned at the ambivalence of the proponents to include patents in the section on "civil enforcement", as well as in the overall scope of the agreement.

This is further aggravated by the fact that "in-transit" goods is otherwise included in the overall scope of the agreement. There is no general assurance that border measures shall not apply to goods which are "in-transit", in "customs transit" and in "transhipment". Damages and injunctions also continue to be applicable to certain patent infringements as also provisions for seizures, forfeiture and destruction, said India.

According to India, there remain provisions of the ACTA with significant implications for trade in legitimate generics, including those dealing with labelling which may affect the practice of parallel importation, and the importation of legitimate generics more generally.

"Although border measures with respect to patents appear to be excluded from the scope of the agreement, including with respect to goods in transit, there remain provisions that might otherwise provide the basis for seizures of legitimate generic drug consignments."

India further said that the section on "Civil Enforcement" (in ACTA) continues to include patents. It encourages significant damage awards, e. g., damages based on "suggested retail price" of goods; and valuation and lost profit presumptions in favour of right holders. "This represents an inflated damages basis. The section also extends injunctions to third-parties not directly accused as infringers and contains no time limitations for determinations or for notice to accused infringers."

"The United States appears to have proposed to exclude patents from this civil enforcement section, and India presumes this is because US negotiators recognize that the provisions of that section are inconsistent with US patent law, and appear to adversely prejudge the outcome of patent reform legislation in its Congress," said India.

[Meanwhile, according to "Inside US Trade" and some other media reports, the US patent office is undertaking an analysis on whether the draft ACTA is in conflict with the US patent law and the US health care law. Inside US Trade has cited US patent officials for the view that the draft ACTA that is nearly finalised may be in conflict with the recently enacted US Health Care Law as well as US patent and other laws.]

"As far as systemic concerns go, first and foremost, ACTA completely bypasses the existing multilateral processes provided in particular by the WTO and WIPO. The ACTA also scales up the minimum enforcement level enshrined in TRIPS," said India.

It added: "The floor and ceiling in TRIPS conforms to a certain balance encapsulated in the Objectives and Principles of TRIPS. The MFN (most favoured nation) provisions of TRIPS Agreement mean that any TRIPS+ protection secured by one trading partner via an RTA (regional trade agreement) or a plurilateral agreement is ipso facto applicable to imports from all WTO Members. Therefore, ACTA will have a direct impact on exports, even of Members which are not involved in its negotiations. The trade restrictive effects of such scaling up is contrary to one of the main principles of the WTO rules based system, which is, to liberalise trade."

"The ACTA text in Article 1.1 recognises that parties will not derogate with respect to obligations of other parties under existing agreements, including TRIPS Agreement. However, we do not see any explicit obligation regarding GATT provisions. This is a significant omission," said India.

"It may be recalled that in the request for consultations on the drug seizure issue, India has raised the issue of violation of GATT Articles V and X. Our reading of TRIPS+ enforcement initiatives in general and ACTA in particular is that they can lead to serious trade distortions by creating barriers to legitimate trade in contravention of Article 41 of TRIPS. We have to bear in mind that ACTA members account for about 70% of world trade. ACTA provisions could undermine trade liberalisation when there already are several threats to the multilateral trading system in the form of trade protectionist measures in wake of the economic crisis and a simmering currency issue."

India also called attention to the fact that ACTA negotiators have decided among themselves to overturn the decision of the WTO dispute settlement panel in the recent China Enforcement case by reinterpreting the phrase "commercial scale" with respect to wilful trademark counterfeiting and copyright piracy so as to refer to any activity carried out for a direct or indirect economic or commercial advantage. "This is startling in light of the WTO panel's contrary decision that the term scale' refers to a level of activity, and it highlights the risk to WTO law posed by turning enforcement matters over to small groups of plurilateral negotiators operating outside the WTO legal framework."

India added: "the ACTA will substantially increase the ex officio activity of customs authorities in enforcing IPRs, meaning that the public will be paying more for enforcement of originator pharmaceutical industry IPRs. The draft ACTA limits the protection otherwise available to accused infringers under the TRIPS Agreement by potentially lowering knowledge thresholds, limiting due process requirements (e. g., requirements to act within particular time frames), limiting evidentiary requirements, and by not specifying the type of authority empowered to make critical decisions."

"This shift to summary administrative action may curtail the rights of accused infringers to defend patent infringement claims, ordinary trademark and copyright infringement claims. This represents a substantial transformation from the original concept of enforcement under the TRIPS Agreement."

India was also concerned at the setting up of a "plurilateral" IP enforcement body outside the purview of either WIPO or the WTO. "This may undermine the role of the multilateral organizations dealing with IP."

Noting that it is no secret that TRIPS+ substantive commitments are being actively pursued through Regional Trade Agreements and other means, and that substantive provisions like limiting grounds for Compulsory License, data exclusivity, and patent linkage figure in several of the US Free Trade Agreements with developing countries, India said: "Therefore, ACTA is one of the prongs of the multi-pronged efforts to make substantive and procedural changes in IP (intellectual property) law."

India was also concerned when enforcement is seen as divorced from other obligations in the TRIPS Agreement. "To recall, Article 7 and 8 bring out a balance of rights and obligations by referring to transfer of technology, socioeconomic development, promotion of innovation and access to knowledge. Enforcement provisions of ACTA could potentially disturb this balance."

India was of the view that agreements such as ACTA have the portents to completely upset the balance of rights and obligations of the TRIPS Agreement. They could also potentially undermine seriously decisions taken multilaterally such as the Doha Declaration on Public Health in WTO and the Development Agenda in WIPO.

"As goods and services of developing countries are becoming competitive with those of developed country producers, TRIPS-plus measures, like the ACTA, seek to introduce a new set of 'non-tariff' barriers to trade that will preponderantly hinder developing country exporters. WTO cannot remain oblivious to such developments," stressed India.

In its statement on this issue at the meeting, Brazil highlighted four reasons for its concern over ACTA. Firstly, it said that ACTA may affect the balance of rights and obligations embodied in the international intellectual property system between rights holders, on the one hand, and third parties who are users of protected goods and services, on the other.

Secondly, Brazil said that it favours multilateralism and multilateral solutions. "In intellectual property matters, multilateral fora that have the legitimate credentials are the WTO and WIPO, whose deliberations are not only open to more than 140 member countries, but are also conducted in as transparent a way as possible, including (participation of) representatives from civil society and NGOs."

Third, Brazil said that ACTA proposes only one remedy against counterfeiting and piracy, and that remedy is repression. "Repression is necessary. Let there be no doubt about it. But it is not enough to combat a problem that results from the interplay of factors that are to be found in different economic and social realities. In Brazil, we are also victims of piracy and counterfeiting. We know from direct experience that repression alone will not be a substitute for a much-needed integrated approach to dealing with the complexity of the problem."

Fourthly, Brazil pointed out that specific provisions in the ACTA draft text may be interpreted as creating the seeds of a new international unit or organization. It said that Chapter 4 contains elements of international cooperation and capacity-building that are not restricted to ACTA members, but are extensive also to other international organizations, including from the private sector, and prospective member countries. Chapter 5 creates a Secretariat for ACTA and Chapter 6 foresees that any WTO member country will be allowed to negotiate its "terms of accession" and become a party to ACTA.

Taken together, chapters 4, 5 and 6 contain, in brief, the necessary ingredients that may convert ACTA, over time, into a truly international organization dealing with the enforcement of IP rights, a development whose impact on WIPO and the WTO, especially on capacity-building and technical assistance, are unpredictable at this stage, said Brazil.

According to trade officials, the participants in the ACTA negotiations said that it does not affect the TRIPS Agreement and that action is needed to tackle the real dangers arising from counterfeit products such as medicines and spare parts. +