TWN Info Service on Intellectual Property Issues (Nov11/01)
2 November 2011
Third World Network

Review of "Para 6" system, ACTA feature at TRIPS Council
Published in SUNS #7252 dated 2 November 2011

Geneva, 1 Nov (Kanaga Raja) -- A formal meeting of the regular session of the TRIPS Council last week took up, amongst others, the review of the implementation of the "Paragraph 6" solution in respect of the Doha Declaration on the TRIPS Agreement and Public Health.

The "Paragraph 6" solution is aimed at helping developing countries with insufficient or no manufacturing capacities in the pharmaceutical sector to import cheaper generic medicines produced under compulsory licensing, and the Council annually reviews how well the Paragraph 6 system is working.

At its meeting on 24-25 October, the TRIPS Council also held discussions on the Anti-Counterfeiting Trade Agreement (ACTA), Australia's plain packaging bill for tobacco products, and on a "triplet" of related issues -- review of the provisions of Article 27.3(b), the relationship between the TRIPS Agreement and the Convention on Biological Diversity (CBD), and protection of traditional knowledge and folklore.

The discussion on the "triplet" of related issues largely followed that of previous Council meetings, said trade officials.

According to trade officials, at this TRIPS Council session, Members agreed to extend the period for acceptance of the protocol amending the TRIPS Agreement (of 2005) for a further two years - till 31 December 2013. This is the third such extension, and according to trade officials, is needed in order to allow for two thirds of the WTO Members to accept the amendment, which will then take effect.

Trade officials said that the General Council, in December, is expected to approve the decision to extend the deadline till end December 2013.

Trade officials noted that the number of countries accepting the TRIPS amendment is steadily rising. Argentina, Indonesia and New Zealand accepted it just before this Council meeting, and Turkey, Costa Rica and Rwanda said they will do so soon.

According to trade officials, both Ecuador and Cuba said that they are not ready to accept the amendment - with Ecuador saying that it considers the system to be not working, while Cuba was of the view that the TRIPS Council still needs to study the situation more.

The WTO Secretariat clarified that accepting the TRIPS amendment is completely independent from revising a country's own laws and regulations to implement the Paragraph 6 system. When enough countries have accepted the amendment, they will be allowing their fellow-members to use it, and when they revise their laws and regulations, they allow themselves to use it.

With respect to the annual review of the Paragraph 6 system, the TRIPS Chair, Ambassador Federico A Gonzalez of Paraguay, had urged Members not to repeat what they had said in last year's review (October 2010) and in the follow-up in March 2011. The review lasted just over two hours.

According to trade officials, the review was organized under six headings: Members' experience in using or considering using the system (only used once for Canadian exports to Rwanda); implementing the system in domestic law and regulations; accepting the amendment; capacity-building on the Paragraph 6 system and related flexibilities; alternatives to the system for access to medicines, including procurement and other means; and next steps and recommendations.

According to trade officials, Canada updated Members on Bill C-393 that sought to amend Canada's Access to Medicines Regime. It said that this bill died at the end of the last parliamentary session before the May 2011 general federal elections. Canada said it does not know whether any member of Parliament will propose a new bill.

On the question of whether the Paragraph 6 system is working, trade officials said that some developing countries (Ecuador and Venezuela) continued to argue that since the system has only been used once, it is too complicated to be effective.

Some other Members questioned whether it is working and said they need more information. China, Cuba, India, Turkey and several others called for a workshop, open to all Members and with other participants also invited such as non-governmental organizations, and research-based and generic pharmaceutical companies, said trade officials.

India and Ecuador asked questions about specific cases involving compulsory licensing and injunctions on patent issues in Italy and the US. The EU and US replied that these were not related to the Paragraph 6 system.

India said that the TRIPS Agreement handles the delicate balance between the exclusive right of the patent holder and the public interest. One of the public interest that is under current discussion is regarding the issuance of the Compulsory License, a flexibility under the TRIPS Agreement, for providing access to public health.

Articles 30 and 31 do provide such a mechanism. Article 30 is a substantive exception, detailing three criteria for any exception to exclusivity. Article 31, in contrast, is primarily procedural in nature, detailing a list of requirements for a limitation to exclusivity. Taken together, the Articles appear to define the universe of allowed unauthorized use under TRIPS. Similarly, Article 44 of the TRIPS Agreement does provide some flexibility as far as the State's right to provide permanent injunction is concerned, added India.

In its question to the US, India said that the question is aimed at accessing the State practices on the application of TRIPS Articles 30, 31 and 44 which may be of importance to the current discussion. Its question relates to the application of Article 44 of the TRIPS Agreement where the court decides about the injunction when a patent has been infringed.

India referred to a recent case between eBay, which owns and operates an Internet website that allows buyers and sellers to do transaction in goods, and the MercExchange. MercExchange alleged that eBay had violated some of its patents and requested the Court to provide permanent injunction.

Noting that the US Supreme Court pronounced a landmark judgement, India said that in this judgement, the Supreme Court held that principles of equity required that the plaintiff in infringement cases satisfy a four-factor test before a court may issue a permanent injunction: (1) that it has suffered an irreparable injury; (2) that remedies available at law, such as monetary damages, are inadequate to compensate for that injury; (3) that, considering the balance of hardships between the plaintiff and defendant, a remedy in equity is warranted; and (4) that the public interest would not be dis-served by a permanent injunction.

Secondly, India noted that in the case of Edwards Lifesciences vs CoreValve, a compulsory licence was granted for manufacturing a medical device in the United States and meant exclusively for the export market.

It requested the US delegation to explain to the Members how these cases are not bound by the restrictions on exports under a compulsory license granted under Article 31 of the TRIPS. "In fact we feel that these cases and practices in the US can shed light in addressing the present problem of providing access to public health without the complicated mechanism of Para 6," India added.

According to trade officials, some developed countries (Canada, the EU, Japan, Switzerland, and the US) said that the number of times the system has been used is not a good measure of its effectiveness because it is only one among a wide range of policies for making medicines more available and affordable.

Compulsory licensing under the Paragraph 6 system can also be used as a bargaining chip to lower prices: when it is used it is working and when it is not used it could well still be working, the EU said.

These developed countries also said that potential importers under the Paragraph 6 system have not described their experience in using or considering using the system. This was among their reasons for arguing that work should continue among Members within the TRIPS Council, some adding that delegations could seek information from outside organizations and introduce that into the Council's discussions, said trade officials.

Regarding the proposal of some Members to hold a workshop including non-governmental actors, the US said it does not support the idea of the TRIPS Council organizing a seminar on the Paragraph 6 system.

Rwanda, an importing country, said that it supports the Paragraph 6 system and is about to accept the TRIPS amendment.

On Australia's plain packaging bill for tobacco products, Australia reported that this bill, first discussed at the last TRIPS Council meeting, has passed the lower house and is now in the Senate. It is part of Australia's anti-smoking campaign.

According to trade officials, Ukraine, and some developing countries (the Dominican Republic, Mexico, Nigeria, Cuba, Nicaragua, Honduras, and Zimbabwe) reiterated their concerns that the law will violate intellectual property rights by preventing cigarette and cigar companies from using their trademarks, ultimately hurting their poor farmers. Some argued that the plain packaging will make counterfeiting easier, while some said it will cut costs and lower prices, stimulating demand rather than inhibiting it.

Brazil, Chile, El Salvador, China, Switzerland, India and the EU asserted countries' right to use flexibilities in the TRIPS Agreement for public health purposes, including tobacco control. They sought more information and some of them urged Australia to ensure that its measures do not conflict with the agreement, said trade officials.

Uruguay and New Zealand voiced support for Australia, which described how serious a problem smoking is and assured Members that the policy has been studied carefully to ensure that it does not violate TRIPS provisions and that it will be effective in reducing smoking.

The World Health Organization described the serious global picture and said plain packaging is part of its Framework Convention on Tobacco Control.

With respect to the Anti-Counterfeiting Trade Agreement (ACTA), the participants in these negotiations (Australia, Canada, the EU, Korea, Japan, New Zealand, Singapore, Switzerland and the US) informed the Membership about the agreement, which eight of them signed on 1 October 2011. The EU, Mexico and Switzerland are expected to sign soon.

According to trade officials, they described ACTA as a means of strengthening the enforcement of intellectual property rights without altering the obligations of the TRIPS Agreement. The Doha Declaration on TRIPS and Public Health, which makes health a priority, is upheld (in the preamble), they said, and generic medicines in transit or traded across borders will not be affected because the agreement excludes patents from actions at the border (footnote 6 of Article 13).

The US said that parties concluded the ACTA because counterfeiting and piracy were spreading faster than governments could effectively react, robbing individuals and businesses of billions of dollars. "We realized that because this was a global problem it needed a global solution."

For example, said the US, today, counterfeiters and pirates move shipments through multiple ports to hide the origin of the shipment, and to lower the risk of detection by customs. The Internet has provided counterfeiters and pirates with an extremely fast and efficient tool to distribute their illicit products - with the ease of a click of a mouse, pirated movies, music and games can be uploaded or downloaded; counterfeit foods and medicines can be sold and sent. This was not the case when the TRIPS Agreement was concluded.

The US went on to cite a variety of means through which ACTA promotes the enforcement of intellectual property rights. Amongst others, it said that ACTA will enhance the TRIPS Agreement framework on civil enforcement provisions and deals with issues such as damages, provisional measures, recovery of costs and attorneys' fees, and destruction of infringing goods.

Canada said that ACTA represents an important initiative to more effectively combat the growing and internationally recognized problems of large-scale trademark counterfeiting and copyright piracy and achieve progress on enhancing IP (intellectual property) enforcement.

According to Canada, ACTA sets new standards for the enforcement of existing IP rights which are consistent with and complementary to those provided in the TRIPS Agreement. "ACTA is also consistent with the TRIPS Agreement and the Declaration on TRIPS and Public Health and will not hinder the cross-border transit of legitimate generic medicines," it added.

According to trade officials, India, Angola, Ecuador, Brazil, China, Chile, Venezuela and Zimbabwe reiterated a number of concerns raised in previous meetings, including whether access to medicines would be impeded or pressure would increase on countries to protect intellectual property to a higher standard than required in the WTO, and the implications for the WTO system of discussing an agreement negotiated outside the WTO.

India said that during the past several TRIPS Council meetings, it, along with other countries, have consistently highlighted the systemic implications of TRIPS+ initiatives launched by a few country members. The ensuing discussions demonstrated the concerns echoed by a vast majority of WTO Members about how ACTA through its TRIPS+ provisions can disturb the fine balance of rights and obligations provided in the TRIPS Agreement and negate the decisions like the Doha Declaration on Public Health.

India said that the scope of ACTA is broad and it felt that it would target generic medicines, which have served as a lifeline by providing access to medicines at an affordable cost in developing countries. ACTA does not limit itself to counterfeits, a category of products defined narrowly in the TRIPS Agreement as involving the deliberate or fraudulent use of trademark in order to deceive consumers.

Instead, India added, ACTA targets all forms of intellectual property infringement under the guise of targeting counterfeits. Goods that are suspected of infringing IP, broadly defined, may be seized by customs officials under ACTA. This is worrisome especially from a public health point of view, as ACTA measures would target generic medicines.

India stressed that ACTA border measures, which are TRIPS+ on several grounds, constitute a grave threat to trade in generics. The customs detention of legitimate Indian generics through the European Union on account of the EU border measures demonstrates the adverse impact that such border measures can have on public health on a global scale including life-saving medicines to treat HIV/AIDS , heart diseases etc. Under ACTA, such seizures would continue. ACTA also provides for border measures for the goods in transit through a signatory - even if they do not infringe any IP in the place of production or where they will be consumed.

"Our apprehension is that ACTA will pose grave risks for international trade in generics and thereby adversely affect public health initiatives in developing countries," said India.

Under ACTA, India noted, third parties supplying inputs or services in support of the manufacture or commercialization of allegedly IP infringing products could be subject to civil and criminal sanctions. The imposition of so-called third party liability will dissuade suppliers from selling inputs and services to even genuine generic manufacturers.

In addition, ACTA also requires that the officials be authorized to grant injunctions including for third parties contributing to alleged infringement of IP, in order to prevent the infringing goods from entering the channels of commerce. ACTA language on aiding and abetting could affect providers of inputs including those that unknowingly supply labels, materials or services to IP infringers. This would have an adverse impact on the availability of affordable medicines globally.

As far as systemic concerns go, India said that ACTA bypasses the multilateral processes of WTO or WIPO and goes way beyond the enforcement levels laid down in the TRIPS Agreement. The MFN provisions of the TRIPS Agreement mean that any TRIPS+ protection secured by any trading partner via an RTA (Regional Trade Agreement) or a plurilateral agreement is ipso facto applicable to all other WTO Members.

Thus, India added, this agreement will have a direct bearing even on the members not involved in ACTA, but who will subsequently enter into RTAs with ACTA signatories. ACTA has thus inalterably changed the balance of rights and obligations of the parties to the TRIPS Agreement, without their having had any say in the negotiation of ACTA.

India also drew attention to the Trans-Pacific Partnership (TPP) Agreement currently under negotiation. This agreement could also end up seriously hampering public health efforts in developing countries. As per some reports, the stance of some parties at the TPP, if agreed upon, will result in creating monopolies for the big Pharma companies and driving out generic manufacturers from the global market, it added.

India said that as per reports, there are proposals that can undermine the provisions and flexibilities in the TRIPS Agreement by requiring patentability of new uses and minor variations of older known drugs. This will result in indefinite lengthening of the patent life and undermine the generics industry. There is also a proposal to lengthen the patent period by taking into account the time required for getting marketing approval. This will bring in subjectivity in the patent life and delay the entry of generic drugs.

According to India, there are also provisions against pre-grant opposition and compulsion to provide for patent linkage. Thus even a spurious drug can act as barriers by bringing in patent linkage in the agreement. There is also a proposal to dictate the pricing of drugs in the country by big Pharma companies. Thus even the prices of essential drugs which are kept low by the countries in public interest would be dictated by the big Pharma, it added.

India said it is deeply concerned by ACTA and agreements under negotiations like TPP, which aim at enforcing TRIPS+ measures directly or indirectly on the WTO membership. "While India is committed to dealing with IPR enforcement issues in line with its TRIPS obligations, the introduction of intrusive IPR enforcement rules has indeed set up very high non-tariff barriers in the multilateral trading system and we cannot remain oblivious to such developments."

According to trade officials, the Council reviewed China's implementation of its intellectual property obligations for the last time under Beijing's 2001 membership agreement, with some praise for the efforts the country has made in protecting intellectual property but also concerns about the amount of counterfeiting and piracy.

Japan, the US, the EU, Korea and Canada praised China for the efforts it has put into protecting intellectual property rights, the information it has supplied to the committee, in some cases the bilateral cooperation that has taken place and the campaigns on protection.

According to trade officials, they and their companies however remain seriously concerned about counterfeiting and piracy, particularly digital, hi-tech and brand-name products. They commented on a range of issues, such as the threshold set to determine whether a case is serious enough to justify prosecution and other aspects of the enforcement process. Some were also concerned about legislation involving compulsory technology transfer.

Trade officials said that China circulated a document (IP/C/W/564) before the meeting, outlining latest developments in revising its copyright, trademark and patent laws, enforcement, and other intellectual property issues. In the meeting, China explained these at length in reply to Members' questions.

Trade officials added that China concluded by thanking Members for cooperation over the 10 years of the review and pledged to continue to work with them bilaterally and in the WTO. China said its government had shown the political will to implement and enforce intellectual property protection and highlighted the Chinese population's increasing awareness about the issue.

Also at the Council meeting, Members delayed a decision concerning TRIPS non-violation complaints, which trade officials said could be taken up at the upcoming Ministerial Conference in Geneva (15-17 December 2011). +