Potential Benefits and Risks of Agreeing to Trade Related Aspects of Intellectual Property Rights (TRIPS) Plus Standard (Case Study “Impact on Thailand Public Health”)

 A.     Introduction

The Trade Related Aspects of Intellectual Property Rights (TRIPs) Agreement defines “counterfeit” products and sets out the types of Intellectual Property (IP) enforcement measure that World Trade Organization (WTO) Member States are obliged to enact.[1] Such measures are aimed at permitting “effective action” against infringement of the intellectual property covered by TRIPs, including the prevention of imminent infringement and deterrence of further infringement.[2]

TRIPs impose limitations and safeguards on the enforcement of IP by government officials. For instance, the only types of IP infringement that must be criminalized under TRIPS are “willful trademark counterfeiting” and “copyright piracy on a commercial scale”.[3] In addition, TRIPs requires that actions taken against goods suspected of infringing IP be justified on the basis of evidence and that Member States provide for the indemnification of owners and importers of goods that are unjustifiably targeted.[4] Article 41 requires that all enforcement procedures be applied in “such a manner as to avoid the creation of barriers to legitimate trade and to provide for safeguards against their abuse”.

A WTO panel recently confirmed that Member States may implement the TRIPs-enforcement provisions as appropriate to their national contexts.[5] Least-developed countries do not have to implement TRIPs patent rules related to pharmaceuticals until at least 2016 and can request extended timelines for implementing TRIPs-enforcement obligations.[6]

In arguing against inclusion of certain intellectual property-related provisions in Preferential Trade Agreements (PTAs), the European Union’s Economic Partnership agreement (EPAs) and the anti counterfeiting trade  agreement (ACTA), a number of developing country government and NGOs assert  that these provision  are “TRIPs Plus” and therefore may be harmful to consumer and/or developmental  interests.

The Anti-Counterfeiting Trade Agreement (ACTA) is a pluri-lateral treaty which introduces new TRIPs-plus standards of IP enforcement.[7] Proponents claim that ACTA protect consumers from “dangerous counterfeit goods”, including pharmaceuticals.[8] It is primarily an agreement among developed countries; just two developing countries – Morocco and Mexico – participated in the talks.

B.    The Potential Benefits and Risks of agreeing to, or not agreeing to TRIPs Plus Standard

       Requirements to offer exclusive rights to originator product that go beyond what is mandated by the TRIPS Agreement are sometimes referred to as TRIPs-Plus requirements. Data exclusivity is an important example. But it is not the only example. Other “TRIPs-Plus” requirements are for instance:[9]

1. Patent term extensions, e.g.; Provisions to extend the duration of a patent beyond the 20 years required by TRIPs, in order compensate for delay in granting the inventor in registering the medicine. it is important to note that three is no obligation, from an international / legal perspective, to grant such extensions
2. Limitations of the grounds for compulsory licenses, which may preclude  issuing a compulsory license for reasons of public health. Requirements to limit the grounds (or reason) for issuing a compulsory license  go directly against the Doha Declaration, which  has unambiguously confirmed that countries which has unambiguously confirmed that countries are free to determine the reasons for granting compulsory licenses
3. Linkage between patent status and generic registration, meaning that the Regulatory Authority may not register generic versions of a pharmaceutical that is under patent. This would be problematic, since the Regulatory Authority would probably lack the resources and manpower to check the patent status of each product. Moreover, in case there is a patent, regulators may not have the expertise to asses whether the patent is valid and would be infringed. As a result, it is likely that they will enforce all patents, even ones – and thus create additional and unnecessary hurdles for generic competition. “Linkage” is also problematic in view of the fact that patents are private rights; as such, they should be enforced by the right holder, not by the government.

Requiring WTO Member States to enforce their obligations under TRIPs may not seem unreasonable. However, rich countries are proposing “enforcement” measures that would modify and extend IP protection beyond the global standards in the TRIPs Agreement. They have pursued these new rules via multi-lateral and bilateral trade agreements, anti-counterfeiting conventions, and national legislation.[10]

Such “TRIPs-Plus” enforcement rules erect new barriers to the development and distribution of generic medicines, as follows: [11]

1. Introduce new measures that enhance the ability of companies to enforce IP rules, regardless of the impact on public welfare, including health.
2. Expand substantive monopoly rights that various industries, including the pharmaceutical industry, can enforce to secure greater market share and profits.
3. Shift the burden of enforcement from the private sector (such as the pharmaceutical industry) to the public sector (regulatory agencies, customs and border officials, and patent offices). This includes granting ex officio authority to customs officials to seize and potentially destroy suspected goods, on their own initiative.

The proponents of TRIPs-plus IP enforcement have also sought to expand the definition of “counterfeit” products, together with the type and scope of anti-counterfeit measures, and to modify law enforcement priorities to emphasize fighting counterfeit goods. The combination of an expansive definition and broader anti-counterfeit measures enables customs and other officials to take action against a broad category of products, at the direction of pharmaceutical or other IP-reliant companies. Often this category of products includes legitimate generic medicines produced by competitors.[12]

TRIPs-plus IP enforcement measures disrupt the production and distribution of generic medicines in different ways: [13]

1. Heightened damages for IP infringement and the elimination of limitations and exceptions for injunctions discourage generics manufacturers from challenging tenuous monopolies held by multinational drug companies in various jurisdictions.
2. Third-party and intermediary liability, broadly defined, can hold the suppliers of active pharmaceutical ingredients (APIs), who are responsible for providing bulk ingredients used by manufacturers to produce medicines, accountable for IP violations that occur downstream. This could discourage API suppliers from openly selling the basic ingredients which generics manufacturers need to formulate medicines. Distributors, shippers, procurement agents, and other actors in the supply chain could also be affected.
3. Expanded border measures grant draconian powers to customs officials to seize and even destroy products, including legitimate generic medicines.

However, developed countries argue that the TRIPs-Plus will bring some beneficial contributions to public health itself, such as:

1. To help countries in countering the infringement and counterfeiting of medicine.
2. To assist developing countries to combat illegal medicine to be sold in the market.
3. TRIPs-Plus standard will probably modify the approach to IP enforcement to be more stringent and stricter. It will enforce measures that would modify and extend IP protection beyond the global standards in the TRIPs Agreement.
4. It would potentially bring patent owner more benefits, since TRIPs Plus heightened damages for IP infringement and it will also provide the patent term extensions beyond the TRIPs Agreement.

 

C.    Impact On Thailand’s Public Health

October 12, 2003, President Bush and Thai Prime Minister Thaksin Sinawatra were agreed to negotiate a bilateral free trade agreement (FTA). The Bush Administration notified Congress on February 12, 2004, that it intends to begin the negotiations, prompting a 90-day consultation period with Congress and the private sector. Five negotiating rounds have taken place to date, the most recent September 26- September 30, 2005, in Hawaii. U.S. trade officials hope to conclude the negotiations by early 2006.[14]

In the notification letter sent to the congressional leadership, then-U.S. Trade Representative Robert Zoellick put forth an array of commercial and foreign policy gains that could be derived from the agreement. The letter states that an FTA would be particularly beneficial to U.S. agricultural producers who have urged the administration to move forward, as well as to U.S. companies exporting goods and services to Thailand and investing there. Mr. Zoellick also alluded to sensitive issues that will need to be addressed: trade in automobiles, protection of intellectual property rights, and labor and environmental standards.[15]

In the protection of intellectual property, the bilateral free trade agreement itself will impose the TRIPS Plus approach which reflected in strong intellectual property protections, including additional protection standards relevant to digital environment, protection for bio-inventions, and an agreement to limit the use of compulsory licenses.[16]

This TRIPs Plus approach would increase social and economic costs and exacerbate the public health crisis, while making Thailand’s self-sufficiency in technology impossible. Around a million people live with HIV/AIDS in Thailand. According to a 2002 UNAIDS report AIDS is Thailand’s leading cause of death. The Thai Government Pharmaceutical Organization produces cheap reliable generic drugs including one of the cheapest anti-retroviral drugs in the world, GPO-VIR, which the government hopes will reach 70,000 people this year who otherwise would not afford treatment. Under the FTA, People of Thailand can wave goodbye to hopes of accessible treatment.[17]

In negotiating the bilateral free trade agreement, The Thai DRA, the Food and Drug Administration (FDA), refused TRIPS Plus to be included. A number of government agencies agreed to consider, but the FDA still refused to consider it, due to the anticipated impact on public health.

Finally, there are concerns that the US government, which placed Thailand on the Priority Watch List of its 2010 Special 301 Report, will use an out-of-cycle review of Thailand’s IP law to pressure the Thai government to amend both its IP regulations and customs law, in line with bilateral free trade agreement primary policy objectives which is strong protection of intellectual property in particular.

 D.    Conclusion

TRIPs-Plus Standard which proposed by developed countries, on behalf of industries that rely on IP as their “competitive advantage”, using legitimate concerns about the quality of medicines in developing countries to pursue an array of stringent new IP enforcement measures. Such measures threaten to undermine generic competition, with grave consequences for patients and public health.

TRIPs-Plus Standard probably modify the approach to IP enforcement to be more stringent and stricter. It will enforce measures that would modify and extend IP protection (in bilateral, regional, and pluri-lateral agreement) beyond the global standards in the TRIPs Agreement. However, it will be acceptable if it is clear that new IP standards developed in concert with developing countries like the Thailand case priorities, including the protection of public health. And they should ensure that TRIPs flexibilities and safeguards have been implemented in their national legislations.

 E.     List of References

Mitsuo Matsushita, Thomas J.schoeenbaum & Petros C.Mavroids, The World Trade Organization, Second Edition, The Oxford Internatonal Law Library, Oxford, 2006.

Aziz Choudrym, “Fighting the US-Thailand Free Trade Agreement”,. http://www.globalresearch.ca/articles/AZI403A.html

European Commissions, “The Anti-Counterfeiting Trade Agreement (ACTA)”, http://ec.europa.eu/trade/creating-opportunities/trade-topics/intellectual-property/anti-counterfeiting/.

European Union, “Anti-Counterfeiting Trade Agreement (ACTA) Fact sheet” http://trade.ec.europa.eu/doclib/docs/2009/January/tradoc_ 142039.pdf  .

Oxfam Briefing Paper, “Medicine regulation – not IP enforcement – can best deliver quality medicines”, Eye On The Ball, Oxfam GB, Oxford, February 2011

Raymond J. Ahearn and Wayne M. Morrison, “U.S.-Thailand Free Trade Agreement Negotiations” , CRS Report for Congress, recieved through CRS Web, November 3, 2005, http://www.au.af.mil/au/awc/awcgate/crs/rl32314.pdf

World Trade Organization, TRIPS Agreement Part III, “Marrakesh Agreement Establishing the World Trade Organization”, April 1994, http://www.wto.org/english/docs_e/legal_e/27trips_01_e.htm.

World Trade Organization “TRIPS: Least Developed Countries: Least developed countries” priority needs in intellectual property at http://www.wto.org/english/tratop_e/trips_e/ldc_e.htm .

World Trade Organization, “China – Measures Affecting the Protection and Enforcement of Intellectual Property Rights”, March 2010. http://www.wto.org/english/tratop_e/dispu_e/cases_e/ds362_e.htm 

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