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The issues at stake for the Less-Advantaged Countries in the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS)

(held in the Centre William Rappard, Geneva on 24 November 2000)

Introduction

Exclusions and alternatives to patents - Article 27.3(b)

Geographical indications

Transfer of technology, foreign direct investment (FDI) and competition

Traditional knoledge and genetic resources

Round Table on LAC interests

 

I. Introduction

1. In response to requests from less-advantaged countries (LACs), and in the current series of AITIC assistance projects, on 24 November 2000 AITIC held a workshop on the issues at stake for the LACs in the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). It was held with the sponsorship and collaboration of the World Trade Organization and the World Intellectual Property Organization.

2. The formal sessions covered:

• exclusions and alternatives to patents - Article 27.3(b);

• geographical indications;

• transfer of technology, foreign direct investment (FDI) and competition;

•  traditional knowledge and genetic resources;

• a Round Table on less-advantaged country interests.

II. Exclusions and alternatives to patents - Article 27.3(b)

3. The key points made by the speakers were that:

• TRIPS is concerned with setting minimum standards and there is flexibility within Article 27.3(b). The patentability of plants and animals is not mandatory (but is allowed), whereas it is mandatory for micro-organisms, micro-biological processes and micro-non-biological processes;

• developing country communities are often closely involved with plants and animals which is not the case in developed societies. The flexibility to exclude plants and animals from patentability should be maintained;

• there are major definition problems, e.g. of an inventive step, novelty or an industrial application when considering patentability; also there is no scientific agreement on the definition of a number of basic concepts, including micro-organisms. Under TRIPS the definition issue might be left to the dispute settlement process, but given that some 90% of genetic resources are in developing countries, this is probably too risky;

• on plant varieties, protection is by patent or an effective sui generis system or a combination of the two. The Convention on the Protection of New Varieties of Plants (UPOV), through licensing systems which allow free access for research or seed-saving by subsistence farmers, can provide a sui generis system. However, it is important to maintain farmers' traditional rights in seed retention; although UPOV 1991 does not specifically mention farmers' rights, it contains certain clauses limiting (seed) breeders' rights;

• any sui generis system must contain a clear definition of the subject matter, its distinctness, its uniformity and its stability;

• there are two international treaties of particular importance, TRIPS and the  Convention on Biological Diversity (CBD). TRIPS,  inter alia, provides private monopoly rights whereas the CBD provides sovereign rights over biological resources within a state's borders. There should be some harmonisation between the two which might be achieved by amending Article 27.3(b);

• some very broad patents in developing countries, especially in respect of genetic resources, are causing problems in that they restrict research;

• ethical, cultural and religious concerns about the patentability of life forms, and the exclusions from patentability to protect public order, need to be addressed in a review of Article 27.3(b).

III. Geographical indications

4. The key points made by the speakers were that:

• there was no logic in there being specific protection for wines and spirits. This was essentially an accident of history in that when TRIPS was negotiated these were the only products covered in certain national legislation and it was important to the EU to have this coverage. In logic, there was a case for extending the coverage and there was a further case for all products to be covered;

• Article 24.1 should be sufficient justification for negotiations to start on extending the coverage;

• however, in considering an extension, LACs should carefully consider the balance of advantages. There may be competitive gains for some products, but others may become less competitive and the necessary administrative arrangements could be burdensome;

• the Swiss Government had introduced a Register of Geographical Indications for Agricultural Products which:

• provided a two tier system: appellations of origin (all phases of production being in the same area) and geographical indications (a less demanding requirement);

• for a product to be registered, there was a rigorous application, examination and public consultation process. After registration there were monitoring arrangements and sanctions for non-compliance;

• this process was designed to comply with EU procedures and may provide useful guidelines for any future international arrangement.

IV. Transfer of technology, foreign direct investment (FDI) and competition

5. The key points made by the speakers were that:

• Articles 7 and 8 of the Objectives and Principles state that the protection and enforcement of intellectual property rights should contribute to the promotion of technological innovation and to the transfer and dissemination of technology, to the mutual advantage of producers and users of technological knowledge and in a manner conducive to social and economic welfare, and to a balance of rights and obligations;

• Article 66.2 states that developed country Members shall provide incentives to enterprises and institutions in their territories for the purpose of promoting and encouraging technology transfer to least-developed country Members in order to enable them to create a sound and viable technological base;

• it was important that developed countries honour Articles 7, 8 and 66.2;

• technology transfer is a means of increasing supply/productive capacity and of reducing the marginalisation of least-developed countries;

• Article 66.2 should be made operational with clear action programmes, involving UNCTAD, WIPO and the World Bank;

• the action programmes might include:

• staffing and equipping public non-profit research institutes;

• state of the art technology education programmes covering such as agro-processing and other primary sectors;

•  investment insurance coverage, double taxation treaties and loans;

• the transfer of technology was a key aspect of technical assistance, but it had to be backed by a supportive multilateral regime. It is a complex process involving such as IPRs, know-how, trade and technology policies, investment flows, competition policies and the private sector;

• it is often assumed that:

• advanced IPR regimes are synonymous with economic development;

• the protection of IPRs induces innovation among firms;

• the effective enforcement of IPRs will help technology transfer by reducing the fear of misappropriation;

• strong IPR regimes encourage FDI;

• however, there are assertions that:

• TRIPS benefits mainly international companies which can manipulate the system by deciding where best to transfer proprietary technology and who may use restrictive business practices;

• TRIPS increases the cost to net technology importing countries, which are mainly developing countries;

• stronger IPRs and the reduction of trade barriers makes the exporting of finished products more attractive than the transfer of technology

• TRIPS restricts access to technology and thus limits development;

• in general the position for LDCs might lie somewhere between the above assumptions and assertions. It is also relevant that: 

• the bulk of the technology needed by LDCs is of a generic and non-proprietary nature, outside the ambit of IPRs;

• FDI flows to LDCs are small and mainly not in IPR sensitive sectors;

• patent protection may have less relevance than other IPRs for LDCs, but they should seek to exploit such as copyright, trademarks and industrial design;

• research is needed into the various ways of transferring technology, e.g. by capital goods, joint ventures, technical assistance and training, licensing, movement of persons, net-working/alliances, reverse engineering and copying.

V. Traditional knowledge and genetic resources

6. The key points made by the speakers were that:

• the emphasis for LACs should be on how to prevent misappropriation and to ensure equitable benefit sharing between international companies and the traditional communities. This was often an unequal negotiation;

• the TRIPS Council was not the only forum: the FAO, the CBD and WIPO also had a role to play;

• developed countries as well as LACs had a real interest in these issues;

•  WIPO is currently conducting feasibility studies into how best to protect these areas with an International Committee due to report in 2004. The issues to be addressed include:

• whether or not to attempt to define traditional knowledge and genetic resources (probably not);

•  how to acquire rights;

• how to enforce the provisions;

• for how long to grant rights;

• an important area for many was traditional ecological knowledge;

• it was important that the legislation and coordination on these issues covered not only national but also sub-regional (e.g. Amazon Basin), regional (South American or African countries) and international (TRIPS/WIPO) bodies.

VI. Round Table on LAC interests

7. The key points made by the speakers were that:

•  IPRs are a compromise between preserving the incentive to create knowledge and the desirability of disseminating knowledge at little or no cost;

• IPR rent transfers to developed countries are huge, the major losers being such big developing countries as Brazil, India, Korea, Mexico and South Africa;

• there are doubts that, of themselves, patents are a sufficient stimulus to FDI;

• geographical indications introduced by developing countries may hurt other developing countries which are consumers, by raising prices, or which can produce almost as good or better product substitutes;

• TRIPS provisions on the transfer of technology should be made operational. Concrete targets should be set and could involve the purchase of patents and granting them to developing countries, contributions to the Global Alliance for Vaccines and Immunization and tax incentives for companies transferring technology to LDCs in priority areas;

• the benefits of R & D in developed countries originating in traditional knowledge should be shared equitably with indigenous people and local communities;

• reasonable time extensions for implementing TRIPS should be sought;

• compatibility between Article 27.3(b), the CBD and UPOV should be studied, with time being allowed to implement any changes;

• the World Bank should develop active programmes for knowledge dissemination;

• UNCTAD had just held a meeting of experts to consider the protection of traditional knowledge. The points that emerged were:

• the importance of traditional knowledge in such as medical care and handicrafts was not sufficiently understood;

• legal instruments alone were not enough: cooperation and information exchange at all levels (international, regional and national) was important;

• sui generis systems may be helpful in protecting traditional knowledge, as might a registration system. Geographical indications might also be used;

• a report on the meeting of experts will issue shortly;

• on the transfer of technology, it was for the developed countries to provide incentives, although, as currently under consideration in the TRIPS Council, the developing countries might make suggestions. As much knowledge is now proprietory, it would be for governments to do deals with the private sector.

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