The Agreement on Trade related Aspects of Intellectual Property

Rights of the WTO is commonly known as the TRIPS Agreement or

simply TRIPS. TRIPS is one of the main agreements comprising the
World Trade Organisation (WTO) Agreement. This Agreement was
negotiated as part of the eighth round of multilateral trade
negotiations in the period 1986-94 under General Agreement on
Tariffs and Trade (GATT) commonly referred to as the Uruguay
Round extending from 1986 to 1994. It appears as Annex 1 C of
the Marrakesh Agreement which is the name for the main WTO
Agreement. The Uruguay Round introduced intellectual property
rights into the multilateral trading system for the first time
through a set of comprehensive disciplines. The TRIPS Agreement
is part of the “single undertaking” resulting from the Uruguay
Round negotiations. This implies that the TRIPS Agreement
applies to all WTO members, mandatorily. It also means that the
provisions of the agreement are subject to WTO dispute
settlement mechanism which is contained in the Dispute
Settlement Understanding (the “Understanding on Rules and
Procedures Governing the Settlement of Disputes”). The TRIPS
Agreement is one of the most important agreements of the WTO.

Features

The three important features of the Agreement are:

 Standards

In respect of each of the areas of IP covered by the Agreement,

each of the member nations is obliged to provide a minimum set
of standards for protecting the respective IPR. Under each of the
areas of IP covered by the Agreement, the main elements of
protection are defined, namely the subject-matter to be
protected, the rights to be conferred and permissible exceptions
to those rights, and the minimum duration of protection.

 Enforcement

Each member nation is obliged to provide domestic procedures

and remedies with respect to protection of IPR. The Agreement
lays down certain general principles applicable to all IPR
enforcement procedures. The Agreement also lays down certain
other provisions on civil and administrative procedures and
remedies, special requirements related to border measures and
criminal procedures, which specify, in a certain amount of detail,
the procedures and remedies that must be available so that right
holders can effectively enforce their rights.

 Dispute Settlement

Under the Agreement disputes between WTO member nations

regarding the respect of the TRIPS obligations are subject to the
WTO’s dispute settlement procedures.

STRUCTURE OF THE TRIPS AGREEMENT

The three important features of the Agreement, i.e. standards,

enforcement and dispute settlement are covered in seven parts
i.e. the Agreement consists of seven parts. Part I deals with the
general provisions and basic principles. Part II describes the
standards concerning the availability, scope and use of IPR with
respect to different types of IP. Part III describes the IPR
enforcement obligations of member nations, and Part IV
addresses the provisions for acquiring and maintaining IPR. Part V
is directed specifically to dispute settlement under the
Agreement. Part VI concerns transitional arrangements, and the
Part VII concerns various institutional arrangements.

TRIPS AGREEMENT AND INDIA

India became a party to the TRIPS Agreement in April 1995. The

Patent Act of 1970 was in contravention with the Article 27 of the
Agreement. Hence India needed to take some measures to make
its IPR laws compliant with the Agreement. The Agreement
provided a three stage framework for developing countries like
India which did not allow product patents in the areas of
pharmaceuticals and agricultural chemicals before the Agreement
came into force. These three stages included:
 Introduction of Mail-Box facility from 1st January, 1995 for
product patent applications in the field of pharmaceuticals and
agricultural chemicals. These Mail-Box applications were not
examined till the end of 2004. But Exclusive Marketing Rights
(EMR) could be granted for the Mail-Box applications for which a
patent had been granted in at least one member nations and the
application was not rejected in the member nation where IPpro
Services (India) P. Ltd. 16 the patent protect was sought by the
applicant for the reason of invention being not patentable.

Compliance with the other obligations of the Agreement such as,

rights of patentee, term of protection, compulsory licensing, etc.
from 1st January, 2000.

Full implementation of product patents in all technological

domains including pharmaceuticals and agricultural chemicals
with effect from 1st January, 2005. Also, all Mail-Box applications
were to be taken for examination from 1st January, 2005. Thus
the Agreement came into force in India from 1st January, 2005.

The Agreement changed the face of the IP regime in the world.

Many developing countries, including India, which had weaker IPR
systems (for example, patents) had to extensively revise their
patent laws, or where there were no IPR regimes (the most
important examples being plant variety protection, layout designs
and geographical indications) had to put in place new IPR
systems. The implications of the Agreement have their own pros
and cons. On the positive side, with the revision of patent laws, a
stronger patent protection system came into existence which is of
international standards, because of which the foreign investors
were encouraged to invest in India. It may be expected that while
domestic investment may not respond to a stronger patent
regime in a big way in either the short or long term, Foreign Direct
Investment (FDI) might. Further, the research and development
expenditures of the domestic players tremendously increased in
post Agreement period as compared to the preAgreement period.
The other positive implication of a technological nature is the
availability of better products which might not have been
available with weaker IPR protection. However, the prices of these
better and patented products may not be affordable for majority
of population. Domestic private sector investment and foreign
investment in the seeds sector has risen. The post Agreement
environment has encouraged domestic private sector IPpro
Services (India) P. Ltd. 17 and foreign firms to invest in research
and development for the development of better seeds. Some of
the geographical indications belonging to India which are of
importance for domestic industry have got protection and have
encouraged investment in these sectors, for example, Dargiling
Tea. On the negative side, the most immediate impact of post
Agreement may be seen on prices of drugs. The new and required
drugs will have product patent protection unlike the earlier
scenario and so the prices might escalate.

IPRs covered under TRIPS

The IPRs covered by the TRIPS Agreement are:

• Copyright and related rights (i.e. the rights of performers,

producers of sound recordings and broadcasting organizations)

• Trademarks, including service marks

• Geographical indications including appellations of origin

• Industrial designs

• Patents including the protection of new varieties of plants

• Layout-designs (topographies) of integrated circuits

• Undisclosed information, including trade secrets and test data.

Indian Scenario:

As a signatory to the Uruguay round of GATT, and the founder

member of the WTO, India was obliged to meet all provisions of
the Trade Related Aspects of Intellectual Property Rights (TRIPs). A
transition period was accorded to developing countries depending
on their state of development. India has completed the complete
term of this transition period i.e. 10 years, to set up an IPR system
in compliance with TRIPS. The main elements of change in the
Indian patent system are:

 Enforcement of product patent protection in all branches of

technology, including drugs.

 20 years of protection instead of 14 or 7 in the case of the

Indian patent Act.

 No discrimination between imported and domestic products.

 Accommodate compulsory licensing (though no country

south of the equator has yet used this clause).

A brief comparison is given in Table 1 indicating the main changes

that are warranted in the Indian patents Act of 1970 3.

Table 1

Comparison of India's Patent Act and TRIPs

Indian Patent Act of 1970 TRIPs

Only process not product Process and product patents in

patents in food, medicines, almost all fields of technology
chemicals

Term of patents 14 years; 5-7 Term of patents 20 years

in chemicals, drugs

Compulsory licensing and Limited compulsory licensing,

license of right no license of right
 Several areas excluded from Almost all fields of technology
patents (method of agriculture, patentable. Only area
any process for medicinal conclusively excluded from
surgical or other treatment of patentability is plant varieties;
humans, or similar treatment debate regarding some areas
of animals and plants to render in agriculture and
them free of disease or biotechnology
increase economic value of
products)

Government allowed to use Very limited scope for

patented invention to prevent governments to use patented
scarcity inventions

Source: Adapted from Patent Office Technical Society, Indian

Patent Act, 1970 and Rules, 1991 and MVIRDC, GATT Agreements:
Results of the Uruguay Round, World Trade Centre, January 1995

Impact on Major Sectors:

The Major sectors and industries that would be affected with the
TRIPs agreement would be Ariculture, Pharmaceutical and
Biotechnology Industries.

The greatest impact is expected to be on the Pharmaceutical

industry as it's a knowledge based and research oriented industry.
Here are some challenges and opportunities that can be noted
specifically arising out of this agreement. India today has become
one of the major exporters of cheap drugs not only to developed
countries but also to other developing countries, the advantage
India has is lower prices due to low labour costs and
comparatively lower expenditure on Research and development.
With the significant change in the IPR regime, there are concerns
regarding the export earnings diminishing. Another concern is
that compliance with the TRIPs is expected to create a monopoly
of the patented drugs and lead to a crisis in the public health
issues.
On the other hand, some feel that it is equally plausible that the
Indian national system of innovative has evolved sufficiently to
take advantage of the strengthening of the IPR system. This view
is particularly supported by the clear success of India, in market
based, high-tech domains, such as generics and software.

However the protagonists claim that "The fear that prices of

medicines will spiral are unfounded....We must realize the fact
that 97% of all drugs manufactured in India are off-patent, and so
will remain unaffected." On the other hand, protection of
innovation through patents is also justified on the front that
patent protection will stimulate investment into R&D that will
benefit Indian consumers and will reward India with increased
foreign investment.

The worst impact of TRIPS that the pharmaceutical industry

expects is the end of the reverse engineering; the industry now
has to emphasize and concentrate on basic research. It is also
feared that number of units in the industry may close down and
only few hundreds may survive this onslaught of imposition of
conditions by the TRIPS. This may result in unemployment on
large scale.

To put it in a nut-shell, the prescription by TRIPS for product

patent implies the following for the industry:

 The industry has to now emphasis on basic research. The

days of core competence of the industry in reverse
engineering seems to move towards natural death. The firms
in the industry now have to offer newer drugs to the
customers to break the competitive forces.

 Huge investments are required by the pharmaceutical

industries on Research and development infrastructure.

 Every industry has to develop a strategic outlook and have a

internal policy for innovation if it is looking for sustainability
in the long run.
  IPR system requires further strengthening for encouraging
real outputs in innovation and creativity.

Overall, the industry feels that the TRIPS in its present form, is
bent in favor of developed nations and its MNC's and that there is
nothing trade related about TRIPS and that the right to trade is
being exploited by developed countries. Besides these, the
imports are expected to increase leading to a serious question on
self-reliance of these industries and overall it may have a
dampening impact on the growth of this industry.

However, there is a light at the end of every tunnel, and there is

an opportunity hidden in the agreement. The first opportunity is
using the off patent drugs to capture markets across the globe.
The strong process re-engineering skills and lower cost of
development is another competitive advantage. As predicted by
the different analysts, the out sourcing by MNCs would mean
serious strategic alliances, contract manufacturing and bringing in
of foreign exchange. The industry would use its technical and man
power skills for research and innovation. However the industry
would still be able to market older drugs which are not included in
the patents list.

Impact on biotech: Most of the research orients towards the

impact of TRIPs on pharmaceutical industry and agriculture.
However, little research that has been conducted has concluded
that the impact of TRIPs will be restricted to an elimination of the
production of patented products. It will not have a deleterious or a
positive impact on their levels of inventive activity. Even more
importantly, TRIPs is not likely to create any incentive to increase
technological knowledge or create innovations other than that
provided by the national system of innovation. TRIPs is not going
to have a significant impact on biotech in India or on the other
preoccupations of Indian pharmaceutical firms. Hence, the major
effect of TRIPS would seem to be to force Indian firms to put their
re-engineered products on the market only when they get off
patent4.

Impact on Agriculture: The TRIPS Agreement of the WTO includes

three items related to agriculture: Geographical indications (Art
22-24); Patent protection of agricultural chemical products (Arts.
70.8 and 70.9); Plant Variety Protection (Art 27.3(b)). Out of which
the plant variety protection is of great importance for the current
scenario.

TRIPS is a clearly anti-developing country agreement contend the

critics. Its provisions seriously threaten self reliance in agriculture
and the livelihoods of farmers, by seeking to establish a monopoly
because it embodies the philosophy of the industrialized nations
where it was developed and where the primary goal is to protect
their interests.

Therefore, when a question is raised as to what would be the

impact of compliance to agreement TRIPs on developing
economies like India, a reply pops up that would be a clear
compromise with national security. Food security, as we are all
aware, is a critically important part of national security. A nation
that does not produce its own seed and its own food can not be a
secure nation. The agriculture remains a crucial as well as a
controversial subject in WTO negotiations. No clear negotiations
have worked out so far, as the developing countries are trying to
push their interests in these negotiations to which the developed
countries have serious objections to implementing them as it
would have adverse impact on their agricultural sector.

Concluding Remarks:

It is generally observed that a strong patent regime has often

been found detrimental to the process of industrial development
in particular and scientific advancement in general. TRIPS may
prove to be a breeding ground for cost inefficient process
technologies. The possible solutions suggested by experts in the
field to this problem are:

 Simplify and streamline India's compulsory licensing

procedure.

 Retain the pre-grant opposition procedure in its original form.

This permits opposition to potentially frivolous patent
applications, protecting consumers against high prices on
 non-innovative pharmaceutical products under consideration
for patent protection.

 Remove provisions for the granting of new-use or second-use

patents,

 Immediately implement the clause which allows compulsory

licensing and importation if the domestic production facility
is in-sufficient.

It is thus advised by the group of experts, that the Indian

government should, instead of fulfilling its obligation in haste,
shall make such amendments in the act which adequately
safeguard and protect the interests of the domestic industries and
market, taking advantage of the concessions given in the TRIPs
agreement.