Globalising Intellectual Property Rights

The TRIPS Agreement

Duncan Matthews

• Publisher: Routledge
• Year: 2003
• Print ISBN:
  9780415406581
• eBook ISBN:
  9781134594962
• Topic: Politics & International Relations
• Subtopic: Politics
• Index: Politics & International Relations

In Globalising Intellectual Property Rights, Matthews looks at various aspects of the TRIPS Agreement: agenda-setting, legal interpretation, implementation, enforcement and revision - from the viewpoint of global business interests and developing countries. It is argued that the Agreement was largely the result of an initiative by multinational companies who sought to protect their own intellectual property through international law, and, furthermore, that it is these multinational companies who are now its main guardians. The book concludes that the history of the TRIPS Agreement and the role of business is a clear example of governance by non-state actors on a global scale.
This book will be of interest to students and researchers in the fields of international relations, intellectual property law, international economic law and development studies.

1 Origins of the TRIPs Agreement

Ministers of GATT met in Marrakesh on 12–15 April 1994 to conclude the Uruguay Round of Multilateral Trade Negotiations that had begun in Punta del Este nearly eight years earlier. At Marrakesh, 114 countries, together with the European Communities,¹ became signatories to the Final Act embodying the results of the Uruguay Round and parties to the Agreement establishing the WTO, which came into effect on 1 January 1995. Signatories (the WTO Members) also became parties to the Agreement on Trade-Related Aspects of Intellectual Property Rights (the TRIPs Agreement), annexed to the WTO Agreement, as well as to thirteen Multilateral Agreements on Trade in Goods, a General Agreement on Trade in Services and a number of other measures, including an Understanding on the Settlement of Disputes.

This chapter describes the events that led to the inclusion of intellectual property protection as an agenda item during the Uruguay Round negotiations. It explores the reasons why intellectual property protection became a key issue for international trade, reviews earlier multilateral attempts to link intellectual property to trade through multilateral and bilateral initiatives and, most crucially, examines how a consensus in favour of global action was achieved across a range of industry sectors. Moves towards achievement of that consensus, led by key individuals in the business community, were motivated first by a strategy of encouraging use of bilateral trade law in the United States as a means of encouraging other countries to protect the intellectual property rights of multinational companies based in the United States. Once that strategy had proved successful, global corporate actors shifted the forum for their efforts from domestic law to global trade law. In the United States, Europe and Japan, businesses exerted pressure on their governments to ensure that intellectual property became a global commercial issue and the focus of attention during the Uruguay Round of GATT negotiations. These developments, discussed here, constitute the origins of the TRIPs Agreement. Progress made towards intellectual property protection subsequently during the GATT negotiations is then discussed in Chapter 2, with later chapters dealing with the content of the TRIPs Agreement, its implementation, impact and future priorities. This chapter begins by explaining the scope of intellectual property rights and the reasons why piracy and counterfeiting² became such an important issue in international trade.

Perceptions of intellectual property rights

The term ‘intellectual property’ refers to a range of legal rights over new ideas relating to patents, copyright and related rights, trademarks, geographical indications, industrial designs, layout designs of integrated circuits and the protection of undisclosed information.³ As international trade has developed and the significance of technology as a commodity of that trade has increased (Doane 1994: 465), so an awareness of the importance of intellectual property protection has also grown (see also Sell 1995: 163; May 2000: 81). Today, intellectual property constitutes a valuable economic asset that accounts for an ever greater ‘value added’ in high technology areas such as the pharmaceutical⁴ and information technology industries, and in audiovisual entertainment areas such as the music and cinema industries. In the pharmaceutical sector, for example, US and European companies invest about 20 per cent of their sales income in research and development with the aim of producing the next generation of medicinal products, this being by far the highest level of investment of any industrial sector (according to Yeutter, foreword to Gorlin 1999: ii). Unfortunately, high technology sectors, such as proprietary medicines, also produce commodities that have proved particularly susceptible to misappropriation through piracy (Welch 1992: 41). From a developed country perspective, for as long as there has been legal protection of intellectual property rights there has also been a history of misappropriation of those rights through piracy (see also Halbert 1997: 55) and counterfeiting. The argument against allowing piracy and counterfeiting is that it amounts to theft, since rights are owned and right holders should be allowed to recoup the investment they have made in terms of research and development endeavours and/or intellectual creativity. Yet, from a developing country perspective, allowing the (mis)appropriation of rights is based on perceptions of intellectual property rights as the common heritage of society, namely the view that humankind should have equal access to life-saving medicines, for example. Developing countries have also argued that recouping investment will in any case be achieved primarily from markets in developed countries, where consumers are more readily able to afford the higher cost of products protected by intellectual property rights. Many developing countries have tended to consider that the purpose of intellectual property rights was simply to reinforce the economic power of developed nations and transfer wealth from poorer countries to richer ones (Worthy 1996: 195).

The anti-counterfeiting code

The origins of the TRIPs Agreement as a manifestation of international intellectual property rights can be traced back to the late 1970s, when the growth of trade in counterfeit goods led to the mobilisation of corporate actors on a global scale with the formation of the Anti-counterfeiting Coalition, an alliance of 100 multinational corporations with the common aim of encouraging national governments to strengthen protection against counterfeit trademarked goods (see also Blakeney 1995: 77; Stewart 1993: 2259). The Coalition provided an important industry input into the drafting of a code on anti-counterfeiting. During the Tokyo Round of the GATT between 1973 and 1979, trade in counterfeit goods had begun to emerge as a serious issue (see also Blakeney 1996a: 544; Bradley 1987: 64; Doane 1994: 471; Emmert 1990: 1339) and was no longer simply considered an ‘acceptable obstacle’ to free trade (Gervais 1998: 8). Although attempts to agree common rules to stop trade in counterfeit goods failed to receive widespread support from other national delegations at the end of the Tokyo Round, the Coalition encouraged the United States and the European Communities (see also Evans 1994: 158; Stewart 1993: 2260) to continue their efforts and, in 1979, reached agreement on a draft ‘Agreement on Measures to Discourage the Importation of Counterfeit Goods’.⁵ Under the draft code, contracting parties were to implement measures to detain and seize counterfeit trademarked goods once the owner of the trademark demonstrated a right to protection by past importation or the likelihood of future importation (Stewart 1993: 2260). This proposal came too late to receive widespread support from other delegations to the Tokyo Round of GATT, particularly since there was a lack of evidence that international copyright infringement posed a real problem to business interests in developed countries and to the US economy (see also Blakeney 1996b: 1). Yet it was the absence of an international consensus to support the draft Agreement that paradoxically provided the stimulus for US business to overcome the perceived lack of evidence of infringements and galvanised corporate interests to support the common aim of getting intellectual property protection on the agenda for the subsequent Uruguay Round of GATT negotiations. Between 1980 and 1982 informal meetings were conducted between representatives of key business interests and government officials in the United States, the European Communities, Canada, Japan and Switzerland (Blakeney 1996b: 1; Stewart 1993: 2260), culminating in the submission of a revised version of the draft GATT anti-counterfeiting code.⁶

1982 GATT Ministerial Meeting

At the Ministerial Meeting of 1982, designed to address outstanding issues that had not been resolved at the end of the Tokyo Round, the United States delegation advocated further negotiations, based on the revised version of the draft code, with the aim of belatedly achieving the adoption of a multilateral anti-counterfeiting code (Evans 1994: 159; Stewart 1993: 2261). However, the proposal still failed to attract wide support. Developing countries, led by India and Brazil, questioned the need for an agreement on intellectual property rights within the GATT at all and argued that the World Intellectual Property Organisation (WIPO) already offered an appropriate multilateral forum for raising intellectual property standards and that the GATT, with its remit for trade in goods, had no jurisdiction over trademark counterfeiting (for a detailed account of developing country opposition to including intellectual property rights within the Uruguay Round agenda, see Blakeney 1995: 78; 1996b: 2; Bradley 1987: 67; Stewart 1993: 2261).

Despite the continued misgivings of some developing countries, the Ministerial Declaration of 29 November 1982 requested the Director General of GATT to hold consultations with his counterpart at WIPO on legal and institutional aspects involved in trade in counterfeit goods⁷ (see Bradley 1987: 67; Gervais 1998: 8). In 1984, at the fortieth Session of the GATT Council, it was agreed that work concerning counterfeit goods would continue, the GATT Council appointing an Expert Group, which was to include a representative from WIPO and report its findings to the GATT Council (Stewart 1993: 2261– 2). The Expert Group met on six occasions in 1985 (Gervais 1998: 8), culminating in a report on ‘Trade in Counterfeit Goods’,⁸ which set out the adequacy of national laws to attack the counterfeit problem; the authority of the GATT to act in this area; the methods available to the GATT; and the impact of anti-counterfeiting on international trade (Stewart 1993: 2262). The Expert Group concluded that joint action was probably needed, but was not able to agree on whether the GATT was an appropriate forum for such action (Gervais 1998: 9). It recommended that it should be for the GATT Council to determine whether multilateral negotiations through the GATT framework would be appropriate. However, the report was criticised by developing countries within the GATT Council itself on the grounds that the impact of trademark counterfeiting could not actually be quantified (Blakeney 1996b: 2). Other developing countries, led by India and Brazil, were of the view that WIPO rather than GATT was the appropriate forum for addressing counterfeiting issues (Gervais 1998: 9). For developing countries, WIPO had the practical advantage of offering a forum where, owing to the system of voting, they could use their numerical advantage to better protect their interests (Evans 1994: 159).

Attempts to revise the WIPO conventions

WIPO had been established in 1967 as a United Nations (UN) agency to administer the Paris and Berne conventions and to seek the harmonisation of national intellectual property laws.⁹ The Paris Convention for the Protection of Industrial Property of 1883¹⁰ and the Berne Convention for the Protection of Literary and Artistic Works of 1886¹¹ were the result of attempts to coordinate the international dimensions of intellectual property rights. Under the Paris Convention, signatories¹² agreed to provide national treatment for foreign works under domestic laws for patents, trademarks, industrial designs, trade names, appellations of origin and utility models. The Berne Convention sets out similar provisions and minimum terms for copyrights.¹³ However, these conventions lacked strong enforcement provisions, a problem exacerbated by the reluctance of developing countries to carry through their obligations as signatories. This reluctance on the part of developing nations had its origins in concerns that strong intellectual property rights would make the acquisition of technology from the developed world prohibitively expensive (de Koning 1997: 64).

The TRIPs Agreement was therefore not an entirely new development in international economic law. In many respects, it was the successor to earlier WIPO-administered conventions (see also de Koning 1997: 71). Indeed, the TRIPs Agreement itself actually requires compliance with the Paris and Berne conventions (with the exception of Article 6bis of the Berne Convention relating to moral rights). But, as they stood, two main flaws were perceived in the Paris and Berne conventions: first, the absence of detailed rules on enforcement rights before national judicial administrative authorities, and, second, the absence of a binding and effective mechanism to settle disputes between states (see also Gervais 1998: 9–10). The Paris and Berne conventions also suffered from the reluctance of some countries to become signatories when they did not consider this to be in their national interest. For developed countries, intellectual property was a private right that should be protected as any tangible property, whereas for developing countries it was a public good that should be used to promote economic development (see also Stewart 1993: 2255). These tensions underpinned the debate that took place from the late 1970s onwards about the future of the international intellectual property regime.

From the 1970s onwards, with increasingly vocal complaints from industry about the growth in piracy of copyrighted works (Blakeney 1995: 76), developed countries attempted to revise and strengthen the WIPO intellectual property conventions (see Stewart 1993: 2249) in order to introduce effective enforcement mechanisms capable of combating international piracy and counterfeiting of intellectual property. Attempts to revise the Paris Convention, however, became polarised. From the viewpoint of developed countries, effective enforcement was needed to combat loss of revenue due to piracy and counterfeiting, whereas developing nations wanted to see revisions in the light of a report by the UN Conference on Trade and Development (UNCTAD). UNCTAD had conducted a study of transfer of technology to developing nations¹⁴ and had concluded that 84 per cent of patents issued in developing countries were owned by nationals of five countries (the United States, Germany, France, Switzerland and the UK), whereas only 1 per cent of patents were owned by nationals of developing countries within their own states (UNCTAD 1974). The UNCTAD report provided the stimulus to encourage developing countries to seek revisions to the Paris Convention that would allow them to retain the use of compulsory licences (a requirement that patents be worked locally, with the sanction of a compulsory order granting manufacturing rights to another party if the patent holder fails to meet this obligation).

With the positions of developed and developing countries polarised along these lines, signatories to the Paris Convention held inconclusive revision conferences in Geneva (1980), Nairobi (1981) and Geneva (1982) in an unsuccessful attempt to overcome their differences.

The 1984 watershed

Parties to the Paris Convention met again in Geneva in 1984 in an attempt to agree to revisions. But negotiations broke down, with the entrenched views of developed and developing countries blocking any revision. Instead, the Paris Convention remains in its last revised form following the Stockholm amendments of 1967 (for a detailed account of why negotiations to revise the Paris Convention broke down in Geneva, see Sell 1998).

From the perspective of developed countries, 1984 marked a realisation that they had failed in their attempts to strengthen the enforcement mechanisms of the Paris and Berne conventions. Moreover, attempts to introduce common dispute settlement provisions to cover all WIPO treaties had failed because signatories did not formally ratify the measures envisaged. By the mid-1980s it became clear that the differences between developed and developing country viewpoints of how national interests could best be represented through international intellectual property systems were polarised. From the viewpoint of developed countries, it was becoming increasingly clear that there was a need to protect national industries from piracy and counterfeiting in foreign markets. US companies found themselves having to compete with mass-produced unauthorised copies of their own patented, trademarked and copyrighted goods in both domestic and foreign markets (see Sell 1998: 132), whereas developing countries sought access to the tools for achieving technological advancement and economic development through a relaxation of intellectual property rules (Stewart 1993: 2255). By the mid-1980s developed countries had begun to turn away from consensusled WIPO initiatives to ensure international protection for intellectual property rights (see also Sell 1998). Instead, the focus turned to bilateral measures designed to ensure protection of technology-based export markets, particularly through the strategy of achieving a linkage between trade and intellectual property (bilateral measures have been highlighted as being of particular significance in identifying the origins of the TRIPs Agreement by Merges 1990: 241 and Sell 1998: 132).

The emergence of a business strategy for global intellectual property protection

In the light of the failure to revise the WIPO-administered conventions and the scepticism voiced within the GATT Council as to the validity of assessments of the costs of trademark infringement on international trade, business interests in developed countries became disillusioned with WIPO ‘impotence’ (Blakeney 1995: 76) and more sophisticated in their relations with the national governments of developed countries. Efforts to strengthen existing intellectual property conventions were seen by business and government as having ended in failure. The WIPO-administered conventions were perceived as ‘toothless’ (Blakeney 1995: 76; 1996b: v; 1996b: 544; de Koning 1997: 59), with the failure to achieve significant amendment of the Paris Convention attributed to too much influence on the part of developing countries (Merges 1990: 239). Meanwhile, the growth of pirated and counterfeited goods appeared to be continuing unabated.

By the end of the 1970s, business interests had already begun to put the case for stronger intellectual property protection abroad through mechanisms other than the WIPO conventions. As early as 1978 the Publishers’ Association (PA), representing the copyright interests of book publishers in the United Kingdom, had brought, and subsequently won, a civil action in the Singapore courts against a publisher (Ng Sui Nam) found to have infringed textbook copyright. The case (unreported) was settled after a preliminary ruling against the defendant, based on the applicability of the UK Copyright Act of 1911 to Singapore following independence.¹⁵ Subsequently, the PA broadened its agenda of seeking redress for copyright infringements on an international scale by sending a delegation to the United States to press Harvey Bale, then Deputy US Trade Representative, for the United States to take action against infr...

Table of contents

• Cover
• Halftitle
• Title
• Copyright
• Contents
• Series editor’s preface
• Acknowledgements
• Abbreviations
• Introduction
• 1. Origins of the TRIPs Agreement
• 2. Negotiating the TRIPs Agreement
• 3. Content of the TRIPs Agreement
• 4. Implementing the TRIPs Agreement
• 5. Impact of the TRIPs Agreement on developing countries
• 6. Future of the TRIPs Agreement
• Appendix. Full text of the Agreement on Trade-Related Aspects of Intellectual Property Rights (the TRIPs Agreement)
• Notes
• Bibliography
• Index