The World Trade Organization (WTO), which was established in 1995 as a successor to the General Agreement on Tariffs and Trade-1947 (GATT 1947).
It is the principal international organization governing multilateral trade among Members.
The WTO embraces the principle of non-discrimination, based on the twin concepts of Most Favoured Nation (MFN) and national treatment between Members.
The WTO administers the implementation of a set of agreements, which include
General Agreement on Tariffs and Trade
Other agreements in the goods sector (e.g., agriculture, textiles, sanitary and psycho-sanitary measures, Trade Related Investment Measures- TRIMs, anti-dumping, etc.), and in addition, agreements in two other areas, viz.,
Trade in services
Trade Related Intellectual Property Rights (TRIPs).
What is IPR?
Intellectual Property Rights (IPRs) refers to the legal ownership of by a person or business of an invention/ discovery attached to a particular product/ process which protects the owner against unauthorized copying or limitation.
Intellectual property rights are the rights given to persons over the creations of their minds. They usually give the creator an exclusive right over the use of his/her creation for a certain period of time. Therefore, one important feature that requires note is that the right is not perpetual.
The World Trade Organization classifies the IP broadly into two main parts namely copyright and rights related to copyright and industrial property. Let us understand each one in greater detail.
Copyright and rights related to copyright
The rights of authors of literary and artistic works (such as books and other writings, musical compositions, paintings, sculpture, computer programs and films) are protected by copyright, for a minimum period of 50 years after the death of the author.
Industrial property can usefully be divided into two main areas:
One area can be characterized as the protection of distinctive signs, in particular Trademarks(which distinguish the goods or services of one undertaking from those of other undertakings) and Geographical Indications (which identify a good as originating in a place where a given characteristic of the good is essentially attributable to its geographical origin).
Other types of industrial property are protected primarily to stimulate innovation, design and the creation of technology. In this category fall inventions (protected by Patents), Industrial Designs and Trade secrets.
The protection is usually given for a finite term (typically 20 years in the case of patents).
WTO claims that the exclusive rights given are generally subject to a number of limitations and exceptions, aimed at fine-tuning the balance that has to be found between the legitimate interests of right holders and of users, such that the social objectives are kept in mind besides the economic interests.
What is TRIPs?
The Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs) is an international treaty administered by the World Trade Organization (WTO) which sets down minimum standards for most forms of intellectual property (IP) regulation within all member countries of the World Trade Organization.
TRIPs deals with the following IPRs
Copyright and related rights;
Geographical indications, including appellations of origin;
Integrated circuit layout-designs;
Protection of undisclosed information
Control of anti-competitive practices in contractual licenses
TRIPs also specifies enforcement procedures, remedies, and dispute resolution procedures.
WTO specifies the three main features of the Agreement as;
Standards: In respect of each of the main areas of intellectual property covered by the TRIPS Agreement, the Agreement sets out the minimum standards of protection to be provided by each Member. 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.
Enforcement: The second main set of provisions deals with domestic procedures and remedies for the enforcement of intellectual property rights. The Agreement lays down certain general principles applicable to all IPR enforcement procedures.
Dispute settlement: The Agreement makes disputes between WTO Members about the respect of the TRIPS obligations subject to the WTO’s dispute settlement procedures.
For social and economic welfare and to a balance of rights and obligations of the members.
Prevention of abuse of IPR that will restrain trade or adversely affect international transfer of technology.
It is contended that an expanded and strengthened protection of IPRs would bring about increased flows of foreign direct investment and technology transfer to developing countries. It would also stimulate local innovation.
It would also enable the multinationals of the developed countries to recuperate markets from local imitators.
Since TRIPs came into force it has received a growing level of criticism from developing countries, academics, and Non-governmental organizations.
TRIPS’ wealth redistribution effects (moving money from people in developing countries to copyright and patent owners in developed countries) and its imposition of artificial scarcity on the citizens of countries that would otherwise have had weaker intellectual property laws, are a common basis for such criticisms.
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.
Comparison of India’s Patent Act and TRIPs
Indian Patent Act of 1970
Only process not product patents in food, medicines, chemicals
Process and product patents in almost all fields of technology
Term of patents 14 years; 5-7 in chemicals, drugs
Term of patents 20 years
Compulsory licensing and license of right
Limited compulsory licensing, no license of right
Several areas excluded from patents (method of agriculture, any process for medicinal surgical or other treatment of humans, or similar treatment of animals and plants to render them free of disease or increase economic value of products)
Almost all fields of technology patentable. Only area conclusively excluded from patentability is plant varieties; debate regarding some areas in agriculture and biotechnology
Government allowed to use patented invention to prevent scarcity
Very limited scope for governments to use patented inventions
Impact on Major Sectors
The Major sectors and industries that would be affected with the TRIPs agreement would be Ariculture, Pharmaceutical and Biotechnology Industries.
Impact on Pharmaceutical industry
The greatest impact is expected to be on the Pharmaceutical industry as it’s a knowledge based and research oriented industry.
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.
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.
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.
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.
Impact on biotech
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 patent.
Impact on Agriculture
The TRIPS Agreement of the WTO includes three items related to agriculture:
Patent protection of agricultural chemical products
Plant Variety Protection
Out of which the plant variety protection is of great importance for the current scenario.
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.
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.