Usage of TRIPS Flexibilities in the Context of TRIPS-Plus Provisions in FTAs

(Term Paper towards Partial Fulfillment of the Assessment in the Subject of International Intellectual

Property)

Submitted by:

Submitted to:

Lakshmi. N

Mr. Yogesh Pai

Roll No 651

Assistant Professor

Semester VIII

Faculty of Law

National Law University, Jodhpur

Winter Session
(January- May 2012)

Acknowledgement
A research project of this magnitude could not have possibly resulted as a singular effort. It is a
culmination of cumulative inputs and research. First, I would like to thank God for bestowing up
on us the strength and knowledge to undertake a research project of such magnitude. Secondly,
Mr. Yogesh Pai, for being a constant source of guidance and support. Thirdly, my friends for
being a constant motivating factor throughout by sharing light-hearted moments and taking the
pressure of the project off my mind and also being a constant source of competition egging me
on to complete the same according to acceptable standards.

Usage of TRIPS Flexibilities in the Context of TRIPS-Plus Provisions in FTAs

The debate surrounding TRIPS-plus obligations in FTAs has focused, for the most part, on how
the obligations fit in within the larger context of flexibilities contained in the TRIPS agreement,
and its effect on the concerns of developing nations.1 However, questions with regard to the
legality of such obligations, in the context of the principles of treaty interpretation as well as by
the rulings by panels and the Appellate Body are fairly unsettled and rife with divergent views.
The approaches stated above examine the nature of TRIPS-plus obligations in FTAs against the
flexibilities contained in the TRIPS agreement by using norm conflict provisions in public
international law. These concepts generally point to provisions on subsequent agreements
contained in the Vienna Convention on the Law of Treaties 1969 (VCLT), in addition to
general principles on the interpretation of a treaty. An analysis of TRIPS flexibilities in this
regard would decide the manner in which TRIPS plus obligations must be construed and enrich
the debate surrounding the area. This paper attempts to understand TRIPS plus obligations and
how it affects TRIPS flexibilities in the context of provisions of the VCLT.
The surge of TRIPS plus provisions has prompted developing nations to express concerns about
these initiatives having a negative impact on how TRIPS provisions can assist developing nations
with regard to public health, transfer of technology, socio-economic development, promotion of
innovation and access to knowledge. Therefore, it is vital to understand the nature of the conflict
in order to determine the validity of such measures. The TRIPS agreement contains optional
1 Charles T. Collins-Chase, The Case Against Trips-Plus Protection In Developing Countries Facing
Aids Epidemics, 29 U Pa J Int'l L 763 (2008).

flexibilities available to its members, which are curtailed by TRIPS plus obligations in FTAs.
The analysis proposed to be carried out will attempt to understand the manner in which norms
contained in FTAs and TRIPS flexibilities are to be interpreted, giving effect to the principles in
the VCLT.2 Prof. Khan3 proposed an approach in which he she detailed the manner in which the
conflict could be examined and offered the conclusion that, on the basis of the principles of
public international law, TRIPS-plus norms in FTAs would eventually prevail over optional
flexibilities contained in the TRIPS agreement. This paper attempts to serve as a critique of the
approach adopted by Prof. Khan, and in doing so, concludes that principles contained in the
VCLT promote an interpretation that do allow nations to curtail TRIPS-plus norms in FTAs in
order to exercise the flexibilities contained in the TRIPS agreement.

The most frequently voiced argument in favour of TRIPS-plus provisions in FTAs seems to be
that TRIPS flexibilities are optional in nature and are intended to be exercised in accordance with
the situation prevailing in the country at the discretion of the country in question. In other words,
proponents of the theory argue that the optional nature of the flexibilities turns the debate on its
head i.e. upholding the validity of the flexibilities would then change the nature entirely and
render them mandatory.
2 U.N. Intl L. Commn [ILC I], Conclusions of the Work of the Study Group on the Fragmentation

ofInternational Law: Difficulties Arising from the Diversification and Expansion of International Law,
1, U.N.Doc A/CN.4/L.702 (July 18, 2006)

3 Henning Grosse RuseKhan, The International Law Relation Between Trips And Subsequent Trips-Plus
Free Trade Agreements: Towards Safeguarding Trips Flexibilities?, 18 J. Intl Prop Law (2011).

However, this seems to be an inadequate comprehension of the intention of the drafters in

allowing for the flexibilities to be present. The flexibilities are present in the TRIPS agreement in
an optional manner precisely for the reason of providing countries with the discretion needed to
prevent the crystallization of certain obligations, which might result in the implementation of its
obligations under the TRIPS agreement. Therefore, the manner in which the optional flexibilities
under TRIPS were regarded seems to be the issue. TRIPS plus provisions in FTAs might very
well result in a conflict with TRIPS flexibilities but this is precisely the raison dtre of the
flexibilities. As a result, the fact of the flexibilities being optional does not change the ultimate
intended flexibilities of the TRIPS agreement.

At the outset, it is necessary to understand that the rules on interpretation under Article 31 have
been held to constitute customary international law by the Appellate Body in US Gasoline.4
The Panel on US Section 301 Trade Act held that the elements referred to in Article 31
text, context and object-and-purpose as well as good faith are to be viewed as one holistic rule
of interpretation rather than a sequence of separate tests to be applied in a hierarchical order.
Further, as stated by the Appellate Body in EC-Chicken Cuts,5 it would not be necessary to
divorce a treatys object and purpose from the object and purpose of specific treaty provisions,
or vice versa. The Appellate Body also cautioned against importing objects of the treaty into the
interpretation of specific treaty terms but policy space in this area seems to be available.
4 US Gasoline, p. 23, DSR 1996:I, p. 3 at 21 (WT/DS2/AB/R)
5 EC Chicken Cuts, paras. 175-176 (WT/DS269/AB/R)

Article 41 VCLT addresses the question of whether the prior multilateral treaty allows the
conclusion of a bi- or plurilateral treaty. It provides that :
1. Two or more of the parties to a multilateral treaty may conclude an agreement to modify the
treaty as between themselves alone if:
(a) The possibility of such a modification is provided for by the treaty; or
(b) The modification in question is not prohibited by the treaty and:
(i) Does not affect the enjoyment by the other parties of their rights under the treaty or the
performance of their obligations;
(ii) Does not relate to a provision, derogation from which is incompatible with the effective
execution of the object and purpose of the treaty as a whole.
2. Unless in a case falling under paragraph 1(a) the treaty otherwise provides, the parties in
question shall notify the other parties of their intention to conclude the agreement and of the
modification to the treaty for which it provides.

TRIPS-plus provisions in FTAs generally affect the domestic IP regimes of the FTA contracting
parties only. TRIPS rights and obligations relate to domestic implementation only, so that inter se
modifications can hardly affect other WTO Members. The question is whether any TRIPS-plus
standard derogates from a TRIPS rule in a way that is incompatible with the TRIPS objectives
expressed in Articles 7 and 8.

The answer is usually couched in the negative due to the very

general terms used in TRIPS and the difficulties of quantifying and expressing such a standard.
An effect on other WTO Members and their ability to implement the TRIPS objectives should be
required for a finding of incompatibility. Prof. Pauwelyn opines that this type of conflict can be

resolved only by resorting to the intention of the parties to both treaties, even if it should be
merely implicit or has to be deduced from general principles of law or logic. Further, on the
question of inter se agreements, he states that execution of a treaty with respect to the execution
of the object and purpose of the treaty can be compared to the distinction proposed by
Fitzmaurice and more specifically, the elements of i. reciprocity, ii. Interdependence and iii. the
integral nature of the same.6

As a result, certain obligations are not purely bilateral in international law, and the performance
of one partys obligations depends on performance by all the other parties. Whenever one party
violates its obligations, it necessarily does so toward all the others and further performance
would be of little use. The binding nature of the obligations in question is autonomous and
absolute. The treaty cannot be reduced to state-to-state obligations, nor does it depend on the
performance of other parties. Inter se agreements modifying interdependent and, in particular,
integral treaties are most likely to affect the rights of third parties, as well as be incompatible
with the effective execution of the object and purpose of the treaty as a whole.7

The issue with regard to Article 30 of the VCLT can be analysed by examining the provision,
which states, in relevant part:

2. When a treaty specifies that it is subject to, or that it is not to be considered as incompatible
with, an earlier or later treaty, the provisions of that other treaty prevail.
6 [1958] 2 Y.B. Intl L. Commn 2728, 4145, UN Doc. A/CN.4/SER.A/1958/Add.1
7 Joost Pauwelyn, The Role of Public International Law in the WTO: How far can we go?, 95 AM. J.
INTL L. 535, 54347 (2001)

3. When all the parties to the earlier treaty are parties also to the later treaty but the earlier treaty
is not terminated or suspended in operation under article 59, the earlier treaty applies only to the
extent that its provisions are compatible with those of the latter treaty.
4. When the parties to the later treaty do not include all the parties to the earlier one that:
(a) As between States parties to both treaties the same rule applies as in paragraph 3;
(b) As between a State party to both treaties and a State party to only one of the treaties, the
treaty to which both States are parties governs their mutual rights and obligations.

Article 30(2) applies to provisions that indicate the intention of the negotiating parties that,
instead of the later, the earlier treaty shall prevail. Examples in the international IP context are
Article 2:2 TRIPS or Article 1:2 of the WIPO Copyright Treaty, each of which state that its
provisions shall not derogate from existing obligations under various existing multilateral IP
treaties.

Article 30(3) VCLT resolves conflicts between provisions from subsequent treaties in favour of
the later treaty provision. This applies only for those contracting parties which are bound by
both the earlier and the later treatyin our case, only to those WTO Members which are equally
bound by the subsequent FTA. Insofar as countries that are parties to both the FTA as well as
TRIPS are concerned, this presents the biggest roadblock to the preservation of the flexibilities
granted to them under TRIPS. However, as stated earlier, the flexibility and policy space granted
to them could possibly be used as a valid justification for the country in question need not adhere
to its obligations under the TRIPS plus standard. In that case, however, it would have to be

viewed and justified as a progressive interpretation that accords due value to both its obligations
and not merely one.

Article 30(4)(b) VCLT makes clear that, regarding their relation to the FTA parties, TRIPS
prevails. This is an expression of the general principle embodied in VCLT Article 34 that a
treaty does not create either obligations or rights for a third State without its consent.

Further, while generally TRIPS establishes only minimum standards of IP protection, it also
constrains the ability of WTO Members to foresee more extensive protectioninter alia, by
requiring that such protection shall not contravene the provisions of TRIPS.87 This also a view
shared by delegates from China, Peru, South Africa, Egypt, Bolivia, Ecuador, and from other
developing countries. There are convincing arguments in favour of understanding the second
sentence of Article 1(1) TRIPS as the relevant conflict rule concerning any international
obligation demanding additional IP protection.

In conclusion, references to TRIPS flexibilities are often subject to TRIPS-plus FTA

obligations which limit their application. Their main role is to ensureto the extent possible
coherence between TRIPS-plus FTA obligations and the right to use TRIPS flexibilities. Their
effectiveness as a TRIPS flexibility is significantly enhanced where TRIPS-plus obligations are
made subject to the right to use TRIPS flexibilities. TRIPS plus provisions in FTAs might very
well result in a conflict with TRIPS flexibilities but this is precisely the raison dtre of the
flexibilities they are intended to assist the countries at an important juncture . As a result, the

fact of the flexibilities being optional does not change the ultimate benefit of intended
flexibilities of the TRIPS agreement.