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 The Implementation of the TRIPS Agreement

Paul VANDOREN*

I. SOME CONSIDERATIONS RELATING TO THE TRIPS AGREEMENT

A. THE SITUATION PRIOR TO THE TRIPS AGREEMENT

The protection of intellectual property rights has a long international history.

For a long time, binding rules have been recognized as necessary to provide a stable
and predictable environment for both right-holders and users. Indeed it would
probably be true to say that intellectual creations and related efforts would not be
undertaken if there was little entitlement to reward. For over one hundred years,
international conventions have provided us with international rules and standards
which have attempted to strike a balance between the interests of right-holders and
those of users of intellectual property.
There has been a varied world-wide approach towards the development of
intellectual property protection. Historically, industrialized countries have allocated
both private and public resources to the education, research and development of
creative materials. For example, the production costs of some Hollywood films have
run into tens of millions of dollars. These resources have meant that industrialized
countries have been constantly upgrading their systems of protection for intellectual
property rights. Gradually, protection of computer programs was introduced, layout
designs for semi-conductor products were protected, producers, performers and
broadcasters of phonograms and films were given enhanced possibilities to prevent
others from unfairly exploiting their investment.
The protection of intellectual property rights in many developing countries
evolved very differently. Some countries just maintained the level of intellectual
property protection which they had inherited from their former colonial powers.
This often represented the legislative situation of earlier decades. Other countries
regressed in their level of intellectual property protection either because of a political
belief that any kind of property constituted undesirable remains from capitalism with
which one wanted to dispose of, or because the protection of patents was considered
an obstacle to swift industrialization.

* European Commission, Brussels, Belgium.

This article was first presented as a speech at the Conference on Securities and Intellectual Property
Law and Regulation in London on 14 September 1998.
26 THE JOURNAL OF WORLD INTELLECTUAL PROPERTY

This all resulted in uneven world-wide protection, where a number of

developing countries and newly industrialized countries provided only little, if any,
effective protection of intellectual property rights.
To put the significance of these two competing situations into perspective
consider the following:
(i) if a developing country allows piracy of sound recordings, to the extent that
90 percent of the foreign repertoire is pirated, such a situation is
tantamount to an outright ban on imports of foreign sound recordings into
that country, resulting in an effective end to trade in the product
concerned;
(ii) if a producer of generic pharmaceutical products copies a Japanese drug for
which several hundred million dollars were spent on development, the legal
manufacturer is effectively excluded from that country's market and possibly
other markets to which the generic products may be exported.
The economic effects, particularly the effect on trade, are reflected in the fact
that it appears to be generally accepted that currently 3-6 percent of world trade
occurs in counterfeit and pirated goods, which in real terms represents about
US$ 120-240 billion per year.
Any previous international discussions held with the aim of achieving a
consensus on intellectual property right protection had not proved very fruitful.
There were numerous world-wide differences in intellectual property legislation,
most of which reflected differing philosophies and approaches, which had proved
very difficult to overcome.

B. MAJOR ACHIEVEMENTS OF THE TRIPS AGREEMENT

The Uruguay Round negotiations of the General Agreement on Tariffs and

Trade (GATT) offered a unique forum for international negotiations on intellectual
property. It was during these negotiations that countries, both developed and
developing, grasped the nettle and reached, inter alia, an Agreement on Trade-
Related Aspects of Intellectual Property (the so-called TRIPS Agreement). The
TRIPS Agreement is a major advance in the international system for the protection
of intellectual property rights this century and will probably be the corner-stone of
the international system in this area for the foreseeable future. The TRIPS
Agreement was one of the success stories of the Uruguay Round, largely based on
EU proposals. Together with the Agreements on Trade in Goods and Trade in
Services, it constitutes one of the three pillars of the new World Trade Organization
(WTO). Thus, the importance of intellectual property for the conditions of
international trade was fully recognized. Before that, industrialized countries were
losing more and more of their comparative advantage in areas such as
pharmaceuticals, computer software, sound recordings or luxury goods because they
 THE IMPLEMENTATION OF THE TRIPS AGREEMENT 27

were copied in countries with a low level of protection of intellectual property

rights (including the enforcement of such rights). The TRIPs Agreement is designed
to re-balance these trade distortions.
The TRIPS Agreement covers each of the main areas of intellectual property-
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; the layout designs of integrated
circuits and undisclosed information including trade secrets.
In respect of these seven categories of intellectual property, the Agreement
contains the following three main sets of provisions.

1. Minimum Standards of Protection

The Agreement lays down the minimum substantive standards of protection that
must be provided in the national law of each Member for each category of rights.
These standards were set at a level broadly comparable with that in the main
industrial countries. Each of the main elements of protection is 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. The Agreement sets these
standards by requiring first that the substantive obligations of the main conventions
of the World Intellectual Property Organization (WiP)-the Paris Convention for
the Protection of Industrial Property and the Berne Convention for the Protection
of Literary and Artistic Works-must be complied with and, second, by adding a
substantial number of additional obligations on matters where these Conventions are
silent or were seen as being inadequate.

2. Enforcement

The second major characteristic of the Agreement is that it requires Members

to provide effective procedures and remedies for the enforcement of intellectual
property rights-through the normal civil judicial process, through customs action
against imports of counterfeit and pirated goods and through criminal procedures in
respect of wilful counterfeiting and piracy on a commercial scale. Pre-existing
international law in the area of intellectual property was almost entirely silent on the
issue of enforcement.

3. Dispute Settlement

The TRIPs Agreement makes disputes between governments about whether

TRIPS' obligations have been complied with, whether in the field of substantive
28 THE JOURNAL OF WORLD INTELLECTUAL PROPERTY

standards or in the field of domestic enforcement, subject to the integrated dispute

settlement system of the WTo. This is a considerably strengthened version of the
earlier GATT dispute settlement system. The pre-existing international law did not
provide any functioning means of recourse to a government that believed another
member government was not living up to its obligations.
In addition to these three main features, the Agreement provides for certain
basic principles, such as national treatment and most-favoured-nation treatment of
the nationals of other Members, and also some general rules to ensure that
procedural difficulties in acquiring or maintaining intellectual property rights are not
employed to negate the protection that is due. Another general feature of the TRIPS
Agreement is that it is a minimum standards agreement. It explicitly leaves Members
free to provide more extensive protection of intellectual property if they so wish-
whether for purely domestic reasons or because they have concluded international
agreements to this effect, at a bilateral or regional level.

C. TRANSITIONAL PERIODS

Given that the TRIPs Agreement provides a significant number of new

obligations, transitional periods were agreed upon to enable WTO Members to
review and amend their legislation.
Developed country Members had a transition period of one year after the date
of entry into force of the WTo Agreement, i.e. up until 1 January 1996. Developing
country Members have, in general, five years (up until 1 January 2000) and least-
developed country Members have eleven years (up until 1 January 2006). A Member
in transition has been given the possibility of a transition period until the year 2000,
if three criteria are met:
- it is in the process of a transformation from a centrally planned into a market,
free-enterprise economy;
- it is undertaking structural reform of its intellectual property system; and
- it faces special problems in the preparation and implementation of intellectual
property laws and regulations.
However, all WTO Members had to meet the national treatment and most-
favoured-nation requirements as of 1 January 1996. In addition, there is the standstill
clause, providing that during a transition period, Member countries shall not make
changes in their legislation or practices which would result in a lesser degree of
consistency with the provisions of the TRIPS Agreement.
Experience has shown that, in practice, some country Members do not wait
until the end of the transitional period of which they can avail themselves, to amend
their legislation. The world's major trading nations have encouraged country
Members to advance the implementation of their obligations on a voluntary basis,
without much success however. Therefore, the magic deadline of 1 January 2000 by
 THE IMPLEMENTATION OF THE TRIPS AGREEMENT 29

which developing country Members will need to fully comply with their TRIPS
obligations remains a major concern. In this respect, the Directors-General of the
World Intellectual Property Organization and the World Trade Organization recently
took a joint initiative on technical co-operation.
In order to facilitate the implementation of the TRIPs Agreement, in particular
by developing and least-developed country Members, developed country Members
shall provide technical and financial co-operation. Such co-operation shall include
assistance in the preparation of laws and regulations on the protection and
enforcement of intellectual property rights and the prevention of their abuse. It shall
also include support for the establishment or reinforcement of domestic offices and
agencies, including the training of personnel. The European Community is one of
the major providers of technical assistance in this area, in particular through the
PHARE and TACIS (Technical Assistance to the Cis and Mongolia) programmes.
As far as future new WTO Members are concerned, the European Community
and its major trading partners have requested such countries to implement their
TRIPS obligations, as of the day of their accession, i.e. without a transitional period.
This is not unreasonable, given that by then these countries will have known for
several years the contents of the TRIPs Agreement and will have had several years to
amend their legislation. To this end, the European Community co-operates with
countries such as Russia and China.

II. THE TRIPS COUNCIL

A. REVIEW OF THE IMPLEMENTING LEGISLATION

An important feature of the WTo is that the monitoring of the operation of the
Agreements and, in particular, of Members' compliance with their obligations, is
done in a systematic way. This is also true for the TRIPs Agreement, which is
monitored by the TRIPS Council, to which Members are obliged to submit their
implementing legislation for examination.
In 1996 and 1997, the implementing legislation of all developed country
Members was reviewed in four meetings of the TRIPs Council which each lasted for
about a week. The examination of the legislation took place in the form of a staged
process. On the basis of the notified legislation, Members submitted, in written
form, questions relating to the legislation of other Members, who were requested to
respond in writing before the TRIPS Council actually met. At the TRIPS Council
itself, these questions and answers were debated orally. In certain cases, follow-up
questions were raised.
The review encompassed the following developed country Members: the fifteen
Member States of the European Community, the United States, Canada, Japan,
Australia, New Zealand, Liechtenstein, Norway, Switzerland and Iceland. Also,
South Africa took part in this exercise. In addition, the TRIPS Council reviewed the
30 THE JOURNAL OF WORLD INTELLECTUAL PROPERTY

legislation of the following Eastern and Central European countries: Bulgaria,

Hungary, the Czech Republic, Romania, Slovakia, Slovenia and Poland. As far as
the developing country Members are concerned, Korea, Singapore and Hong Kong
indicated that they would be open to participate in an advance review. Cyprus also
took a similar position. Unfortunately, no agreement on "ground rules" for such a
review could be reached in the TRIPS Council.
Overall, the review of the implementing legislation of the above-mentioned
countries was clearly interesting but time-consuming, in particular for the European
Commission, which co-ordinated the work relating to the legislation of the fifteen
Member States and scrutinized, with the help of outside consultants, the legislation
of the other WTO Members under review. However, the exercise was well worth
the effort, mainly for the following reasons:
- it raised in a significant way the awareness and understanding of WTO
Members of the TRIPs obligations;
- it helped to identify shortcomings, and in many cases to remove them (others
might be dealt with in the WTo dispute settlement procedure); and
- an important precedent has been set which is likely to serve as the standard
for the upcoming review of the legislation of the developing country
Members as of the year 2000, although some changes concerning the
procedures might be necessary.

B. THE BUILT-IN AGENDA

1. Geographical Indications

On the basis of TRIPs, Article 24(2), work in this area has started with the
preparation by the WTO Secretariat, with the input of WTO Members, of a check-
list of questions in relation to the national regimes for the protection and
enforcement of geographical indications, to which WTo Members have been asked
to respond.
Article 23(4) of the TRIPS provides that, in order to facilitate the protection of
geographical indications for wines (and spirits), negotiations shall be undertaken in
the TRIPs Council on the establishment of a multilateral system of notification and
registration. Preliminary work has been undertaken by the WTO Secretariat and
preliminary discussions have taken place amongst WTO Members. These discussions
have shown opposition between two groups of countries, of which one is led by the
European Community and the other by the United States, supported by Canada,
Australia and New Zealand. The Community has recently tabled a proposal for a
multilateral register for geographical indications for wines and spirits. In general, the
Community will seek to obtain in this area, a reduction and the eventual elimination
of the exceptions contained in Articles 23 and 24 of the TRIPs.
 THE IMPLEMENTATION OF THE TRIPS AGREEMENT 31

2. Patentability

Article 27(3)(b) of the TRIPS provides for the review of the provisions of
patentability of plants and animals other than micro-organisms, and the protection of
plant varieties as of 1999. With respect to the question of patentability of plants and
animals, the Community pharmaceutical and chemical industry generally has a vested
interest in this matter. However, progress is likely to depend on more general and
politically sensitive considerations such as the question of life forms or traditional
knowledge. The Organisation for Economic Co-operation and Development is also
working on this matter. Account also needs to be taken of the fact that the
Community recently, and after lengthy debates, adopted the Directive on the legal
protection of biotechnological inventions. It is uncertain whether the Community
will be in a position to go further than what is provided in this Directive. With
respect to the question of the protection of plant varieties, account needs to be
taken of developments in the International Union for the Protection of New
Varieties of Plants (UPov).

3. Review of the Implementation of the TRas Agreement

Article 71(1) provides that the TRIPS Council shall review implementation of
the TRIPS Agreement as of 1 January 2000. Work on this provision has not yet
started.

4. Non- Violation Complaints

Under Article 64(3) of the TRIPS Agreement the TRIPS Council is required to
examine, during the period from 1 January 1995 to 1 January 2000, the scope and
modalities for "non-violation" complaints, and to submit its recommendations to the
Ministerial Conference for approval. Any decision of the Ministerial Conference to
approve such recommendations or to extend the five-year period has to be made by
consensus. During that five-year period, the rules on "non-violation" do not apply.
The Community supports this automatic "re-inclusion" of such complaints into the
dispute settlement procedures.

III. DISPUTE SETTLEMENT

The WTo Dispute Settlement system is gradually becoming a major instrument

for providing further clarification of the TRIPS Agreement. Since the latter came
into force, ten cases were launched of which seven were initiated by the United
States and three by the EU. Out of the procedures initiated by the United States, the
Community and Member States were involved in five.
32 THE JOURNAL OF WORLD INTELLECTUAL PROPERTY

A. CASES IN WHICH THE COMMUNITY AND THE MEMBER STATES ACTED AS

COMPLAINANTS

1. EC v. India

This case relates to the implementation of Article 70(8) and (9) of the TRIPs,
i.e. the absence of formal systems permitting the filing of patent applications and
providing exclusive marketing rights for such products in cases of the absence of
patent protection for pharmaceutical and chemical products. The issues are identical
to those of the panel request by the United States against India and which fully
confirmed the U.S. position that India is not in compliance with its obligations
under the TRIPS. The parties agreed that India would implement the panel findings
by the end of April 1999, at the latest. The dispute settlement procedure launched
by the Community/Member States is less advanced. The Community has requested
the Dispute Settlement Body (22 September 1998) to adopt the panel report fully
confirming the EC position.

2. EC v. Canada

This procedure concerns an alleged infringement of Articles 27(1) (patentable

subject-matter), 28 (rights conferred) and 33 (term of protection) by Canada on
patent protection for pharmaceutical product inventions. Under Canadian patent
legislation, a third party may, without the consent of the right-holder, use a patented
invention to:
- carry out experiments and tests required to obtain marketing approval for the
copy of an innovative medicine before the expiration of the relevant patent;
and
- manufacture and stockpile patented products for a period of up to six months
before the patent expiry, for sale immediately after expiry.
Several rounds of consultations were held but without success. The Community is
considering requesting the establishment of a panel.

3. EC v. Japan

Like the United States, the Community requested consultations with Japan for
an alleged violation of Article 14(6) of the TRIPS relating to the retroactive
protection of sound recordings. Japan decided to amend its legislation. Therefore,
the dispute settlement procedures were terminated before they reached the panel
stage.
The Japanese legislation extended the protection back only to 1971 instead of
to 1946 as required under the TRIPS Agreement. However, Europe's most successful
 THE IMPLEMENTATION OF THE TRIPS AGREEMENT 33

sound recordings in pop and classical music by artists such as the Beatles, the Rolling
Stones, Rod Stewart, Herbert von Karajan, Sir Georg Solti and Karl Boehm are
now protected.

B. CASES IN WHICH THE COMMUNITY AND MEMBER STATES ARE INVOLVED AS

DEFENDANTS

1. The United States v. Portugal

The United States alleged a shortcoming in Portugal's legislation relating to the

term of protection of patents (Article 33 of the TRIPS). After consultations were
held, Portugal decided to amend its legislation.

2. The United States v. The Community/Ireland

The United States complained about shortcomings in the areas of copyright,

neighboring rights and the enforcement of such rights. Ireland agreed to speed up
the legislative process on the overhaul of the copyright and related rights law and to
address some of the immediate U.S. concerns in a break-out bill (e.g. criminal
sanctions). In light of these developments, the United States postponed the decision
to request the establishment of the panels against Ireland and the Community.

3. The United States v. the Community/Sweden and Denmark

In two separate proceedings, the United States requested consultations because

of alleged violations in Swedish and Danish enforcement legislation relating to TRIPS
Article 50 as far as inaudita alteraparte search orders are concerned. Several meetings
have taken place and the cases are pending.

4. The United States v. The Community/Greece

The United States alleges that a significant number of television stations in

Greece regularly broadcast motion pictures and television programmes without the
authorization of the copyright owners. Furthermore, the United States complains
that no effective enforcement of copyright takes place. Consultations are being held.

IV NEED FOR A TRIPS II?

The Community favours the launching of a comprehensive WTo Round in

January 2000. In WTO, there is growing support for this aim but agreement has not
yet been reached. If such a launch takes place, consensus will also be required
34 THE JOURNAL OF WORLD INTELLECTUAL PROPERTY

concerning the subject-matter to be included. The question, therefore, arises: should

the TRIPs be included?
The TRIPs Agreement was not, of course, intended to be a static instrument
but one capable of development. It is obvious that it does not solve all problems in
the area of international rules on intellectual property matters and that new problems
have emerged, e.g. as a result of new technologies or new ways of communication.
As already indicated, the TRIPs Council will hold a review of the TRIPs
Agreement after five years, i.e. as of the year 2000, but is also empowered to review
it at any time in the light of any relevant new developments which might warrant
modification and amendment (Article 71, paragraph 1). However, the TRIPs
Council has no competence to take decisions on these amendments. Generally,
amendments to the TRIPS Agreement have to be adopted through a formal
acceptance process by all WTO Members. In special cases, the TRIPs Agreement
provides for a simplified procedure where amendments merely serve the purpose of
adjusting higher levels of protection of intellectual property rights (Article 71,
paragraph 2).
Apart from the items covered by the built-in agenda mentioned above, the
TRIPS Agreement does not address the issues:
- which were left out of the negotiations in the Uruguay Round, such as the
resale right for artists and the question of moral rights in the copyright area;
the definition of the "inventive moment" ("first-to-file" or "first-to-invent"),
the inclusion of Upov, improved protection for textile designs and
appellations of origin in the industrial rights area;
- where multilateral consensus building, notably in WIPO, made progress only
recently, such as protection of copyright and related rights in the Information
Society or the introduction of a sui generis protection for databases;
- which would further increase the level of protection by expanding beyond
what has been agreed upon in the TRIPs Agreement or facilitate the
processes of obtaining existing rights, such as the introduction of world-wide
patents and trademarks, the extension of the term of patent protection or
rules clarifying the protection of trademarks in relation to Internet Domain
Names. In addition, strengthened enforcement mechanisms could add to
improving intellectual property right protection.
Consultations with representatives of different categories of right-holders are still
ongoing. It is clear, however, that transitional periods already agreed upon during
the Uruguay Round negotiations are not negotiable in any new Round.