Curbing anti-competitive licensing contracts

The owner of a copyright, patent or other form of intellectual property right can issue a license for someone else to produce or copy the protected trademark, work, invention, design, etc. The agreement recognizes that the terms of a licensing contract could restrict competition or impede technology transfer. It says that under certain conditions, governments have the right to take action to prevent anti-competitive licensing that abuses intellectual property rights. It also says governments must be prepared to consult each other on controlling anti-competitive licensing.

TRIPS Agreement recognizes that some licensing practices or conditions pertaining to intellectual property rights which restrain competition may have adverse effects on trade and may impede the transfer and dissemination of technology. Member countries may adopt, consistently with the other provisions of the Agreement, appropriate measures to prevent or control practices in the licensing of intellectual property rights which are abusive and anti-competitive. The Agreement provides for a mechanism whereby a country seeking to take action against such practices involving the companies of another Member country can enter into consultations with that other Member and exchange publicly available non-confidential information of relevance to the matter in question and of other information available to that Member, subject to domestic law and to the conclusion of mutually satisfactory agreements concerning the safeguarding of its confidentiality by the requesting Member. Similarly, a country whose companies are subject to such action in another Member can enter into consultations with that Member.

Enforcement of IPRs

 

Having intellectual property laws is not enough. They must be enforceable. WTO Members have to implement the TRIPs agreement through their respective domestic legislation. In the multilateral forum of the WTO, a Member is responsible for the establishment of the necessary administrative and legal framework and for ensuring that the machinery works. The agreement says governments have to ensure that intellectual property rights can be enforced under their laws, and that the penalties for infringement are tough enough to deter further violations. The procedures must be fair and equitable, and not unnecessarily complicated or costly. They must not entail unreasonable time-limits or unwarranted delays. People involved should be able to ask a court to review an administrative decision or to appeal a lower court’s ruling.

The agreement describes in some detail how enforcement have to be handled, including rules for obtaining evidence, provisional measures, injunctions, damages and other penalties. It says courts must have the right, under certain conditions, to order the disposal or destruction of pirated or counterfeit goods. Willful trademark counterfeiting or copyright piracy on a commercial scale must be criminal offences. Governments have to make sure that intellectual property rights owners can receive the assistance of customs authorities to prevent imports of counterfeit and pirated goods.

Transition arrangements.

When the WTO agreements took effect on 1 January 1995, developed countries were given one year to ensure that their laws and practices conform with the TRIPS agreement. Developing countries and (under certain conditions) transition economies from centrally planned economy to a market economy are given five years, or 4 years after 1 January 1996. Least developed countries have 11 years, or 10 years from 1 January 1996. Thus, it has to apply it, at the least, by 1 January 2006.

If a developing country did not provide product patent protection in a particular area of technology when the TRIPS Agreement came into force (1 January 1995), it has up to 10 years to introduce the protection. But for pharmaceutical and agricultural chemical products, the country must accept the filing of patent applications from the beginning of the transitional period, though the patent need not be granted until the end of this period. If the government allows the relevant pharmaceutical or agricultural chemical to be marketed during the transition period, it must — subject to certain conditions — provide an exclusive marketing right for the product for five years, or until a product patent is granted, whichever is shorter.

Subject to certain exceptions, the general rule is that obligations in the agreement apply to intellectual property rights that exist at the end of a country’s transition period, as well as to new ones.

Annex: Other intellectual property conventions incorporated by reference into the TRIPS Agreement. The TRIPS Agreement contains references to the provisions of certain pre-existing intellectual property conventions.

Below is a list of these agreements.

- Paris Convention for the Protection of Industrial Property (1967) (the Stockholm Act of 14 July 1967 of the Paris Convention for the Protection of Industrial Property)

- Berne Convention for the Protection of Literary and Artistic Works (1971) and the Appendix thereto (the Paris Act of 24 July 1971 of the Berne Convention for the Protection of Literary and Artistic Works)

- The Rome Convention: International Convention for the Protection of Performers, Producers of Phonograms and Broadcasting Organizations adopted at Rome on 26 October 1961

- Treaty on Intellectual Property in Respect of Integrated Circuits (1989), adopted at Washington on 26 May 1989

Questions

 

1. What is the rationale of protecting intellectual property rights in general? Should IPs be protected under the WTO? Wouldn’t the WIPO be sufficient?

2. Think of other legal (under WTO or beyond WTO) grounds for exempting TRIPs obligations as to pharmaceuticals in order to save human lives in poor countries?

3. What would be demerits of expanding the protection of geographical indication?

4. What is the relationship between the TRIPS Agreement and the pre-existing international conventions that it refers to?

5. Which of the following statements is correct? Support your respond with arguments.

a) intellectual property rights are divided into 2 main categories – industrial property rights, and copyrights and related rights

b) Copyrights and related rights include the protection of distinctive signs such as trademarks and geographical indications

c) TRIPS Agreement requires all member’s rules on protection of intellectual property to be identical

d) the main principles of the TRIPS agreement are free trade, non-discrimination, MFN and tarification

Reference

 

1. Jackson, The World Trading System, 305-317.

2. Jackson/Davey/Sykes, 844-892, 893-490.

3. WIPO. 2004. WIPO Intellectual Property Handbook: Policy, Law and Use. WIPO Publication No.489 (E). Geneva.

4. Trading into the Future – WTO, 3rd edition, Revised August 2003.

5. Robert H. Folsom, International Trade and Investment in a Nutshell (2nd ed., St. Paul, Minn.: West Pub. Co., 2000).

6. World Bank. 2002-2005. Global Economic Prospects. Washington, DC: World Bank. http://www.worldbank.org/prospects.

7. www.wto.org see Trade topics à TRIPS.