Jul 13, 1989

INDIA PRESENTS TRIPS IDEAS THAT CHALLENGES U.S. DEMANDS.

GENEVA, JULY 12 (BY CHAKRAVARTHI RAGHAVAN)— India has presented to the Uruguay round TRIPS negotiating group Wednesday a comprehensive document on standards and principles and philosophy of intellectual property protection which challenge the basic thesis behind U.S. demands for a GATT regime and for uniform international standards.

The Indian paper was presented Wednesday to the negotiating group on "trade-related intellectual property rights" (TRIPS) by the newly appointed special secretary in the Indian Commerce Ministry, A. V. Ganesani an Indian expert in patents and in TNCS, who has been put in charge of entire Uruguay round negotiations.

In its presentation, the Indian delegation has said that as it understood the April decision of the Uruguay round TNC in this area, only "trade-related" intellectual property rights could be addressed, and all the issues identified for negotiations have to be in this context.

"India is of the view that only the restrictive and anti-competitive practices of owners of intellectual property rights than can be considered to be trade-related because they alone distort or impede international trade."

India also said that the protection of IPRS and substantive issues involved were neither germane nor had any direct relationship to trade, and it was not appropriate to establish within GATT any new rules and disciplines about standards and-principles on availability, scope and use of IPRS.

In the context of the recent U.S. actions and threats against India over this issue under U.S. "special 301", the Indian paper mounted a conceptual challenge to the neo-mercantilist efforts of U.S. and other industrialised countries, to use IPRS issue in GATT to secure monopoly renter incomes for their TNCS and block rising third world competitive capacities.

At a meeting Tuesday evening of the informal group of third world countries in GATT, where India explained its paper and why it was submitting it, a number of countries praised its quality and in presenting a paper for debate in an area where the ground had so far, been determined by the industrial world.

While taking the position that only restrictive and anti-competitive practices of IPRS could be dealt with in GATT, India has also given its views on the substantive issues, covered in other international agreements relating to intellectual property protection, and the principles underlying all such agreements to make the point that efforts of the U.S. and others to use GATT negotiations to enhance and extend such protection and provide for a universal standard was neither feasible nor possible.

Through its submission, India has brought into the Uruguay round debate in this area, the issues that have been the subject of international negotiations in the various fora like the WIPO for a more equitable intellectual property system, and where the negotiations have been stymied and blocked by the U.S. and other major industrialised countries.

In effect India has said that if the U.S. and other industrialised nations want to use the Punta del Este mandate and the April compromise at the TNC to rewrite the intellectual property system and conventions, all the issues disputes and debates over this system, including some on which compromises were reached a 100 years ago at Paris, when the majority of the third world was absent would have to be reopened, taken on board and negotiated.

The essence of IPR system, India points out, is its "monopolistic and restrictive character" and its aim is not to "liberalise" (the primary GATT objective), but to confer exclusive rights on their owners.

It is because of this that international conventions incorporate as a central philosophy the freedom of member states to attune their IPR protection system to their needs and conditions.

"This fundamental principle should inform and guide all of the discussions in the negotiating group," India has said.

The patent system in third world countries should not block or hinder the building up of their own industrial and technological capabilities, and it would not be appropriate for the international community to think of a patent regime focussing merely on protection of monopoly rights of owners, ignoring the enormous differences in economic, industrial and technological development between industrialised and third world countries.

"There should be no attempt at harmonisation of the patent laws of the industrialised and developing countries nor should there be any imposition on developing countries of standards and principles that may be relevant to industrialised countries, but inappropriate to developing countries."

The Indian paper has noted that many economists have challenged the view of U.S. and others that patents were necessary to encourage inventions and investments in R and D.

But even if the system did so, protection of exclusive rights of owners was only one side of the coin.

Experience of third world countries showed that the patent system had serious adverse effects in sectors of importance to them - food production, poverty alleviation, nutrition, health care and disease prevention.

Hence protection of monopoly rights of the patent owner had to be adequately balanced by socio-economic and technological needs of the country.

A patent law had to focus equally on rights and obligations of patent owners as well as remedial steps to prevent possible abuse of monopoly rights.

Patents were seldom worked in third world countries, whereas its working led to saving of foreign exchange and lowering of price of products in critical sectors.

Also, without working of patent there was hardly any transfer or diffusion of technology, an objective of a patent system.

Hence the working of a patent in the host country had to be regarded as "a fundamental obligation" of the patent owner. The "working" should mean making the product or working of the process, for whichever the patent had been granted.

It was necessary to provide for compulsory licensing to prevent abuse or misuse of the monopoly rights of a patent owner, subject only to a judicial review in accord with the host country's legal system.

But given the protracted litigations involved in this, there should also be provision for the remedial effect, for the benefit of society to be exercised by a government, of "license of right" in critical sectors like foods pharmaceuticals and chemicals.

Many countries and their laws also recognised the exclusion of certain types of inventions from patents.

Food, pharmaceutical and chemical sectors had been accorded different treatment in third world countries because of their socio-economic and public interest needs and these should be provided for.

In pharmaceuticals, for example, this was necessary to bring down prices of essential drugs. There was also considerable evidence of transfer pricing in this sector leading to excessive prices for bulk drugs and intermediates.

This was also true of food products and agro-chemical sectors.

Moral, ethical, environmental and other issues were also involved in patenting living things and genetically engineered micro-organisms, and even in industrialised world the legal and other implications of IPR protection in biotechnology and genetic engineering was subject to serious scrutiny.

Hence every country should be free to determine both general and particular categories, and specific products or sectors that would be excluded from patent protection.

Industrialised countries themselves until recently did not provide product patents in some sectors, but only process patents. This was particularly so in chemicals and drugs. This was because the same product could be produced through a different process.

The use of process patent also to products, whether or not produced by that process, both discourage more efficient and economic processes being discovered and created monopoly rights for owners.

Third world countries should hence be free to follow either of the two options.

The duration of patents similarly had to take account of the enormous economic and technological gaps between third world and industrialised countries, and a uniform international standard was not feasible.

Third world countries should be free to link duration of a patent at a level lower than in ICS, set shorter duration in areas of critical importance to them, and link duration to its actual working in the host country, failing which the patent would be subject to revocation.

Such revocations should also be possible in public interest, if the government found a patent had not been worked on a commercial scale or inadequately worked without a valid reason or when a patent was being used in a manner prejudicial to public interest.

However, there should be provision for hearing IPR owner before revocation and for judicial review.

Patent licensing was characterised by restrictive and anti-competitive practices. Listing several of them, India said the negotiating group should work out a comprehensive list of such practices, enable laws on IPRS being able to prohibit such practices and declare all licences, contracts and agreements with such practices to be null and void.

The Indian paper also argued against allowing as of right use of foreign trade marks in domestic markets of third world countries in view of the encouragement this gave to production and consumption of non-essential and luxury goods in poor countries, distorting their socio-cultural objectives and values, and leading to misallocation of resources.

Trade-marks, India pointed out, did not result in transfers of technology.

There were thus compelling socio-economic reasons and public policy objectives behind third world regulations of use of foreign trade markets in domestic markets.

The main ground for trade-marks lay in assurances of quality for the consumer. Hence trade-mark laws should have clear stipulation that owner of a foreign trade mark should give categorical assurance that the product manufactured and marketed in a country was of the same quality as in the licensor's own home country.

There were instances where products made in a country and exported under licensed trade mark had been challenged in the importing country of the licensor on the ground of "quality".

There was no internationally accepted standard for protection of "well-known trade marks", and it was for the owner to apply for registration in accord with host country laws and or seek recourse to common law protection available in host country legal systems.

India also rejected the arguments for uniform standards for registration and protection of trade-marks and their periods or for use by a third party unless the party had registered it as a "registered user".

Each country should be able to stipulate the special requirements for use of trademarks, including size in using them and or in conjunction with generic names (as for drugs), specify terms and conditions for assignment of trademarks, and for cancellation of trademarks for non-use over a reasonable period.

The issue of copyright was adequately dealt with in the Berne convention and there was no need for separate provisions through the Uruguay round. In integrated circuits, a treaty had just been concluded and there was no need for any GATT action.

Trade-secrets were not intellectual property by their very nature were not patentable, in the Indian view, and issues of secrecy and confidentiality would have to be dealt with through contractual obligations and appropriate civil law.

Barring the restrictive and anti-competitive practices of patent and trade-mark owners that distorted and impeded international trade, the other features of the intellectual property system were not related to international trade.

It was because protection of IPRS had no direct or significant relationships to international trade, that GATT had only played a peripheral role in this area, and international community had set up specialised agencies to deal with the substantive issues of IPR protection.

"It would not therefore be appropriate to establish within the framework of GATT any new rules and disciplines pertaining to standard and principles concerning availability, scope and use of intellectual property rights," India concluded in its paper.