SUBJECT: INTELLECTUAL PROPERTY RIGHTS

PROJECT TOPIC:
WTO DISPUTE SETTLEMENT MECHANISM

Submitted By
RICHA JOSHI
Roll no. 1225
th th
4 Year, 7 Semester, B.B.A.LL.B(Hons.)

Submitted to
Dr. Shaiwal Satyarthi
Faculty of Intellectual Property Rights

CHANAKYA NATIONAL LAW UNIVERSITY, PATNA

NOVEMBER, 2017
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ACKNOWLEDGEMENT

I take this opportunity to express my profound gratitude and deep regards to my guide
Dr. Sc roy for his exemplary guidance, monitoring and constant encouragement
throughout the course of this project. The blessing, help and gu idance given by him time to
time shall carry me a long way in the journey of life on which I am about to embark.
I also take this opportunity to express a deep sense of gratitude to my seniors, the library staff
and my friends for their valuable information and guidance, which helped me in completing this
task through various stages.
I would also thank my institution and my faculty members without whom this project
would have been a distant reality. I also extend my heartfelt thanks to my family and well
wishers.

-RICHA JOSHI

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AIMS AND OBJECTIVES

No stone has been left unturned to make this project a worthy task. To let it not go a
futile exercise every possible step has been taken. It is being believed by the researcher that
it will open a door of success in making many such academic researches and even better
than it, when needed.

It would quench the thirst for academic excellence and dealing with such wrong in
real life, if continued. Besides this it will also fulfill the desire of the researcher to
contribute services to the society.
The objective of this project is to understand the impact of precautionary measures on risk
perceptions and to seek a coherent, explicit, and transparent way to apply precautionary principle
in order to ensure comprehensiveness, consistency, and accountability at every level of
development.

SOURCES OF DATA

The following secondary sources of data have been used in the project-

1. Articles/Journals

2. Books

3. Websites

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METHOD OF WRITING AND MODE OF CITATION

The method adopted in making this project is the Doctrinal Method of research.
Doctrinal Study basically deals with theoretical study which includes use of Journals,
Articles, Newspapers, Websites, and Book etc. which shows in itself the very pattern of
study.

This method of study is adopted because it is less exhaustive, less time consuming and
most importantly it deals with library study in general. And as a matter of fact, it is one of
the best method to be adopted so as to get authentic material and provides numerous
solutions to the problems.

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CONTENTS

ACKNOWLEDGEMENT ............................................................................................................ 2

Introduction ................................................................................................................................... 6

Meaning Of Dispute Settlement.................................................................................................... 8

Dispute Settlement And TRIPS .................................................................................................. 11

Case Law on Settlement of Intellectual Property Disputes ........................................................ 14

Conclusion .................................................................................................................................. 21

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INTRODUCTION
In 1994, with the conclusion of the Uruguay Round Agreement, international disputes
concerning intellectual property were brought within the jurisdiction of the World Trade
Organisation (WTO). Legally, this event was doubly significant in that previously intellectual
property had effectively lacked an international tribunal and, secondly, the WTO dispute
resolution system itself was juridicised in a manner analogous to the domestic legal system.
Although previous international arrangements under the Paris and Berne Conventions referred
international intellectual property disputes to the International Court of Justice (ICJ), states
have in the past tended to avoid any form of third party adjudication that deprives them of their
sovereign power of decision-making. In particular this has been the case in matters of
intellectual property where sensitive issues of national policy are likely to be involved. It is not
surprising that no dispute concerning intellectual property was ever brought before the ICJ.
Likewise, the fact that during the 1980s GATT panels were requested to consider several
disputes concerning intellectual property was attributed to the pragmatic, negotiations-driven
character of the GATT dispute settlement process. In what represents a landmark
development, not only have international intellectual property disputes been brought within the
jurisdiction of the WTO but the former predominantly diplomatic character of the GATT
dispute settlement mechanism has also been succeeded by a thoroughgoing legalism. The
legalistic character of the dispute settlement system has been strengthened by the addition of a
standing Appellate Body1 or trade “supercourt”2 and binding “judicial” decision-making, to be
enforced by monitoring, and if necessary, by trade sanctions. Panel and Appellate Body
decisions will automatically come into force as a matter of international law in virtually every
case3. Although Member States, through the Dispute Settlement Body (DSB), continue to have
the last word as a formal matter, in a practical sense the last legal word in reality now lies with
the panels and the Appellate Body4. They may yet lack the authority to prosecute or issue
summons, but increasingly they bear a striking resemblance to courts5. As India recently found
in its patent dispute with the United States6, the new trade court has jurisdiction to rule that
governments must amend or repeal domestic laws that are inconsistent with world trade norms
or risk the imposition of trade sanctions.

1 Art. 17, Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU), Final Act, pt 2,
Annex 2, reprinted in 33 I.L.M. at 1226-4 (1994) at 1236-37.
2 P.R.Trimble, “International Trade and the Rule of Law” (1985) 83 Michigan Law J., 829 at 1016, 1019
3 Art. 16 of the DSU.
4 Agreement establishing the WTO, Art. 4(3), reprinted in 33 I.L.M. at 1145.
5 D. Palmeter, “The Need for Due Process in WTO Proceedings” (1997) 31 Journal of World Trade, 51 at 57.M.
6 Tumlir J., India -- Patent Protection for Pharmaceutical and Agricultural Chemical Products Report of the
Panel, September 5, 1997, WT/DS50/R. Appellate Body Report, December 19, 1997, WT/DS50/AB/R.E.U.
Petersmann, at 201-221.

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Considering that the WTO now comprises over 130 members, what we have in effect is a form
of judicial review of states' intellectual property legislation in order to ensure its conformity
with the WTO charter. In short, the closing decade of the twentieth century has witnessed the
emergence of a trade super court, a quasi-judicial forum that has the power to review states'
intellectual property legislation.
The GATT Articles, incorporated into the WTO Agreements, and the associated schedules of
national concessions do not, with very rare exceptions, constrain a country from exploiting
monopoly power in world markets by taxing its exports. Article XI explicitly exempts „duties,
taxes or other charges‟, and, therefore, export taxes, from its elimination of quantitative
restrictions „or other measures‟7. The GATT does require most-favored- nation (MFN)
treatment for export taxes, and it does allow countries to bind export taxes in their schedules of
concessions. But, with very rare exceptions, they have just not done so. In contrast, even
sophisticated economic theories employ a two-commodity model in which export taxes are
completely equivalent to import tariffs for everything the government is assumed to care
about. They therefore analyze WTO trade rules in an environment in which the actual WTO
rules would be completely meaningless.5
It is not sensible to base a theory of the WTO Agreement on Trade-Related Aspects of
Intellectual Property Rights (TRIPS Agreement)8 on an entirely imaginary theory of
multilateral agreements about trade in goods. However, the received economic model does
bear relevance, for its true value lies in its insistence that trade agreements should be viewed as
responses to international externalities. Identifying this externality exclusively with the terms
of trade, though understandable in light of the existing trade theory literature that recent
authors followed and further developed, was most unfortunate. It has condemned the work to
apparent irrelevance.

7 Marrakesh Agreement Establishing the World Trade Organization, Annex 1A, Multilateral Agreements on
Trade in Goods, 15 April 1994, 33 I.L.M. (1994), 1154, Art. XI.
8 Ibid at pg 61.

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MEANING OF DISPUTE SETTLEMENT

It is widely believed that the WTO‟s understanding on Rules and Procedures Governing the
Settlement of Disputes (DSU) has something to do with punishment. It does, after all,
authorize a retaliatory withdrawal of concessions when a country fails to comply with an
obligation it has accepted. The common view is that at least one of the purposes of the DSU is
to facilitate punishments that can deter violations of trade agreements9. These punishments are
sometimes characterized by economists as tit-for-tat, meaning that the country believing its
trade benefits to have been nullified or impaired is permitted to implement retaliatory
sanctions on volumes of trade that are only roughly equivalent to the reduced trade it has
suffered10. This view reflects a fundamental misunderstanding of the punishment role of the
WTO dispute settlement process. That role is not to facilitate punishment; rather, it is to
constrain it. The actual source of punishment potential is not to be found in the formal
activities of the Dispute Settlement Body, but in the bilateral essence of the bargains embodied
in the multilateral trade agreements. If one country‟s trade partner does not supply the access
that was bargained for, it will not deliver the access it had promised. The bilateral nature of the
WTO and its DSU in a legal sense was argued persuasively by Pauwelyn 11.The DSU
constrains this punishment potential in three crucial ways. First, it accords the peaceful
resolution of trade disputes primacy over punishment for past violations. Article 22, paragraph
1 of the WTO Dispute Settlement Understanding (DSU) states:
“Compensation and the suspension of concessions or other obligations are temporary
measures available in the event that the recommendations and rulings are not implemented
within a reasonable period of time. However, neither compensation nor the suspension of
concessions or other obligations is preferred to full implementation of a recommendation to
bring a measure into conformity with the covered agreements. Compensation is voluntary,
and, if granted, shall be consistent with the covered agreements”12.
Second, the DSU seeks to maintain reciprocity by restricting the punishments to a substantially
equivalent withdrawal of concessions. As stated in Article 22, paragraph 4 of the DSU: „The
level of the suspension of concessions or other obligations authorized by the DSB shall be
equivalent to the level of the nullification or impairment.‟ Further, DSU itself calculates what

9 Eric W. Bond, „The Economics of International Agreements and Dispute Settlement with IPRs‟, in K. E.
Maskus and J. H. Reichman (eds), International Public Goods and Transfer of Technology under a Globalized
Intellectual Property Regime (Cambridge: Cambridge University Press, 2004 forthcoming).
10 Kyle Bagwell and Robert M. Staiger, The Economics of the World Trading System (Cambridge, MA: MIT
Press, 2002).
11 Joost Pauwelyn, „WTO Dispute Settlement: Of Sovereign Interests – Private Rights and Public Goods‟ in
International Public Goods.
12 Marrakesh Agreement Establishing the World Trade Organization, Annex 2, Understanding on Rules and
Procedures Governing the Settlement of Disputes, 15 April 1994, Art 9.

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is substantially equivalent. The purpose is not to punish; it is to maintain reciprocity in the face
of violations. Of course, there is still some element of punishment because a complainant
country can choose to withdraw those concessions that are the most damaging politically to the
government of its non-compliant partner. But this reflects inherent bilateralism rather than an
underlying intent of the DSU. A government that feels it needs to back out of a trade
commitment can do so legally, by negotiating with the foreign countries principally affected
over appropriate reciprocal suspensions, or illegally, by simply refusing to honor its
commitment13. The latter route allows the government to accommodate domestic interest
groups and to postpone the implementation of reciprocal retaliation. But, in the end, it must
either negotiate or forsake playing a role in determining what those reciprocal suspension
actions will be.
Third, the DSU attempts to constrain disputes in order that they remain bilateral and not
develop into multilateral issues. All the details of the DSU reflect the aim of keeping disputes
bilateral. Although collective punishment would greatly enhance deterrence, the DSU has no
provision for any kind of collective punishment. Only complainants themselves may punish
noncompliance under a finding by the DSB. The purpose is not to limit the ability of other
countries to become involved. They can either become co-complainants or declare themselves
to be interested parties, thereby reserving the right to contribute input to the process. Rather,
the purpose is to prevent an individual dispute from escalating into a conflict that could
threaten or split the WTO.
The WTO dispute settlement process has nothing to do with facilitating punishment. Its
purpose is to prevent retaliation from undermining the nature of trade agreements as a
collection of bilateral, reciprocal, non-discriminatory deals between sovereign states14. The
under- lying philosophy of the WTO is that no country should be forced to implement policies
that it does not want to implement. However, this effective possibility of renegotiation must
preserve reciprocity in order to maintain the integrity of the original agreement. Thus, the
purpose of the DSU is simply to preserve reciprocity even when renegotiation does not
succeed15.
The WTO Agreement with respect to intellectual property rights covers five broad issues:
 how basic principles of the trading system and other international intellectual property
agreements should be applied

13 Supra note 11.

14 Bernard Hoekman and Michel Kostecki, The Political Economy of the World Trading System: The WTO and
Beyond, 2nd edn (Oxford: Oxford University Press, 2001).
15 Wilfred J. Ethier, „Punishments and Dispute Settlement in Trade Agreements‟, Philadelphia: University of
Pennsylvania PIER Working Paper 01-021, 2001.

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 how to give adequate protection to intellectual property rights

 how countries should enforce those rights adequately in their own territories
 how to settle disputes on intellectual property between members of the WTO
 special transitional arrangements during the period when the new system is being
introduced.
An important feature of the TRIPS Agreement is that it provides an operational system for the
settlement of disputes between governments of Members about compliance with their
respective obligations relating to intellectual property rights. Pre-existing international law in
this area did not provide any practical means of recourse, at the multilateral level, to a
government that believed that another government was not respecting its treaty obligations.
Now, Member governments who wish to take action against an alleged violation of a TRIPS
obligation have recourse to the multilateral WTO dispute settlement procedures in order to
obtain a satisfactory settlement of the matter. These procedures also apply to alleged violations
of the provisions of the Berne and Paris Convention, and other treaties, where incorporated in
the TRIPS Agreement.

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DISPUTE SETTLEMENT AND TRIPS

The significance of the TRIPS Agreement is not that it addresses IPRs in an international
context, for international patent and copyright conventions have done this for over a century16.
The TRIPS Agreement moves beyond this situation in two ways. First, the earlier conventions
were essentially concerned with national treatment (a UK inventor should be able to apply for
a patent in Japan on the same terms as a Japanese inventor) whereas TRIPS addresses
harmonization (all countries should implement a common minimal standard of intellectual
property protection)17.
Second, TRIPS promotes harmonization in a comprehensive global context with a formal
dispute settlement mechanism, the dispute settlement process at the WTO. Note that the DSU
is not an international enforcement mechanism that can be utilized by, or for the necessary
benefit of, private parties with grievances, for the WTO is a contract between states18. This
fact may be what is most important from a legal perspective19 and presumably will have
fundamental economic implications.
Previous international agreements and conventions regarding IPRs were concluded among
countries regarding the protection of such rights to be in their mutual self-interest. Countries
believing that such protection would not, on balance, promote their self-interest, because they
were net importers of intellectual property, simply did not participate20. Thus in the nineteenth
century the United States declined to conclude a copyright agreement with Britain when the
US was a heavy consumer of British literature, but experienced a change in values as the
literary balance of trade changed21.
The TRIPS Agreement has changed these tradeoffs. The Uruguay Round can be seen, on one
interpretation, as including a Great Bargain (the so-called „Single Undertaking‟), in which
many developing countries believed – rightly or wrongly – that the protection of intellectual
property was not in their self- interest but agreed to it in exchange for trade concessions on
goods, such as textiles and apparel, that were important to them as exports or as potential

16 World Intellectual Property Organization, WIPO Intellectual Property Handbook: Policy, Law and Use, at
www.wipo.int.
17 Keith E. Maskus, Intellectual Property Rights in the Global Economy (Washington, DC: Institute for
International Economics, 2000); and Suzanne Scotchmer, „The Political Economy of Intellectual Property
Treaties‟, Cambridge.
18 Supra Note 14.
19 Graeme B. Dinwoodie and Rochelle Cooper Dreyfus, „International Intellectual Property Law and the Public
Domain of Science‟.
20 Zorina Khan, „Intellectual Property and Economic Development: Lessons from American and European
History‟, Commission on Intellectual Property Rights, study paper 1a.
21 Ibid.

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exports22. Newer WTO Members have accepted it to gain accession. This was the first really
significant example of such an inter-bloc bargain in all the GATT rounds.
The Great Bargain featured an asymmetry of implementation reflecting an asymmetry of
power. The TRIPS Agreement was to be implemented reasonably promptly, but the
developed-country trade concessions were to be delayed23. For example, abolition of the
Multi-Fiber Agreement (MFA), the main developed-country concession, was to be gradually
adopted over a ten-year period, with most of the trade-barrier elimination scheduled for the
final year. At this point it is far from clear that the Great Bargain will in fact be consummated.
In view of the Great Bargain, it is likely that disputes will emerge in which the suspension of
trade concessions is the threatened response, or the action necessary to maintain reciprocity, in
response to an asserted failure in the protection of IPRs. But the opposite possibility, of a
country suspending its TRIPS commitments in response to a goods trade violation, is probably
even more interesting. For example, when the EU declined to abide by a negative DSB finding
in its banana dispute with the US, Ecuador, a co-complainant (and the country with the world‟s
largest banana exports), was authorized to suspend concessions in response. When a country is
authorized to suspend concessions to a trading partner that has refused to abide by a negative
DSB ruling, the concessions ordinarily should be in sectors reasonably close to that in which
the original violations are taking place24. If this is not practical, either because withdrawals in
such sectors would be unduly damaging to the aggrieved country or because they would not be
sufficiently politically painful to the government in violation, the suspensions may take place
in more distant sectors. If necessary, they may even involve suspension under related
agreements, such as the General Agreement on Trade in Services (GATS) or TRIPS.
Ecuador did not think that suspending market-access concessions in merchandise trade would
be useful in this regard. It imports small quantities (relative to world markets) of a wide variety
of consumer goods, and so could not inflict political pain on the EU with such restrictions.
Moreover, Ecuador‟s imports of producer goods were intermediate products vital to
Ecuadorian industry. Thus, the country sought, and was awarded, approval to suspend some of
its TRIPS obligations in favour of the EU25.
This threat got the attention of the EU, which complained to the DSB for arbitration under
Article 22, paragraph 6 of the DSU. The final result was largely in Ecuador‟s favor. Thus, the

22 Susan K. Sell, Private Power, Public Law: The Globalization of Intellectual Property Rights (Cambridge:
Cambridge University Press, 2003).
23 J. Michael Finger and Philip Schuler, „Implementation of Uruguay Round Commitments: The Development
Challenge‟, Washington, DC: World Bank, manuscript.
24 DSU, Article 22, Paragraph 3.
25 European Communities: Regime for the Importation, Sale and Distribution of Bananas, WT/ DS27/18.

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policy advocated by Bond26 is indeed currently available. The main question is how strictly the
„practicality‟ test is to be applied. The fact that in the EU – Banana case the WTO permitted
Ecuador to suspend concessions in IPRs suggests that the test will not be applied strictly
enough to prevent such cross-agreement suspensions.
The reason however, of the possibility of such cross-agreement suspensions is desirable is not
that without them the set of retaliatory responses is too small, though that no doubt often is
true. It is that this situation is necessary for the DSU to fulfill its function of maintaining the
reciprocity of relevant bilateral bargains across agreements within the Great Bargain.
Indeed, this situation should give pause to critics of TRIPS, who often assert that it amounts to
a massive transfer from poor countries to rich countries, with the former having little prospect
of developing significant intellectual property of their own and the latter little incentive to
invest in innovations especially useful for the poor countries27. There may be considerable
validity to these points. There is, however, another significant consideration that could turn out
to be of greater long-term importance. Since the late 1980s, numerous developing countries
have dramatically reoriented their trade policies from import substitution to open participation
in the multilateral trading system28. But most of these countries, like Ecuador, are unable to
exert much negotiating leverage through an ability to withdraw trade concessions. The TRIPS
Agreement, along with the possibility of cross- agreement suspensions, could help to change
that situation. It is sometimes claimed that the developing countries have been slow to utilize
the WTO dispute settlement process and that the lack of significant punishment ability in the
event of noncompliance could be part of the reason. The TRIPS Agreement conceivably could
turn out to be just what is required for developing countries to make full use of their DSU
rights. In any event it cannot but help aid those countries in trying to make sure that the Great
Bargain is indeed consummated and that the MFA is actually eliminated.

26 Supra Note 9.
27 Commission for Intellectual Property Rights, Integrating Intellectual Property Rights with Economic
Development (London: Commission for Intellectual Property Rights, 2002).
28 Hoekman and Kostecki, The World Bank, Globalization, Growth and Poverty: Building an Inclusive World
Economy (Washington, DC: The World Bank, 2002).

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CASE LAW ON SETTLEMENT OF INTELLECTUAL PROPERTY

DISPUTES

Patent Protection for Pharmaceutical and Agricultural Chemical Products 1997

a) In May 1996 the United States lodged a complaint claiming that India had failed:to
establish under Article 70(8) a mechanism that adequately preserves novelty and
priority in respect of applications for product patents in respect of pharmaceutical and
agricultural chemical inventions during the transitional period to which it is entitled
under Article 65 of the Agreement;
b) to publish and notify adequately information about such a mechanism in accordance
with its transparency obligations under Article 63 of the TRIPS Agreement; and
c) to comply with its obligations under Article 70.9 of the TRIPS Agreement, because it
has failed to establish a system for the grant of exclusive marketing rights.
As of January 1995 every country, including developing countries, had to have “a means by
which applications for patents for such inventions can be filed”. These applications go into a
box, known as a mailbox, and if a patent is eventually granted, the patent term “will be
counted from the filing date”. Article 70(9) provides that when such a patent application has
been received, exclusive marketing rights shall be granted for a period of five years after
obtaining market approval in that Member or until a product patent is granted or rejected in
that Member, whichever period is shorter, provided that a patent application has been filed
and a patent granted for that product in another Member and marketing approval obtained in
such Member.
Subject to three conditions, exclusive marketing rights (EMRs) have to be granted. First,
marketing approval must be obtained in India. Second, marketing approval must be obtained
in another WTO country. Third, a valid and current patent must exist in another WTO
country. The patent legislation needed to be changed in December 1994 to permit exclusive
marketing rights and the receipt of patent applications. The Indian Patents Act did not have
such provisions. So there was an ordinance in December 1994 to incorporate such clauses.
India submitted that WTO Members were free to determine the means by which patent
applications could be filed, given that Article 70.8(a) requires Members to provide “a
means” for filing but does not prescribe the choice of a particular method29. In this, India
relied on Article 1.1 of the TRIPS Agreement which provides that “Members shall be free to
determine the appropriate method of implementing the provisions of this Agreement within
their own legal system and practice”. India had initially decided to provide for a means for

29 para. 4.2. This provision is an exception to the transitional arrangements contained in Part VI of the TRIPS
Agreement.

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the filing of applications through an ordinance by the President and, when this ordinance
lapsed, through administrative action by instructing the patent offices to continue to receive
applications and to store them separately for future action in accordance with Article 70.8.
India argued that both the legislative and the administrative approaches were available to it
under Articles 1 and 70 of the TRIPS Agreement and it was therefore free to choose an
administrative method pending the change in legislation.
The panel rejected India's submission. In the first place it affirmed India's right to choose how
to implement the TRIPS Agreement pursuant to Article 1.1. Thus, the mere fact that India
relied on an administrative practice to receive mailbox applications without legislative changes
did not in itself constitute a violation of its obligations under subparagraph (a) of Article 70.8.
However, it found that the lack of adequate administrative procedures, namely a mailbox
application system, had effectively deprived both existing and intending applicants of benefits
which they would have enjoyed in the future had there been an appropriate mechanism in
place after the expiry of the Patents.
The panel concluded that:
a) India had not complied with its obligations under Article 70.8(a) to establish “a means”
that adequately preserves novelty and priority in respect of applications for product
patents in respect of pharmaceutical and agricultural chemical inventions during the
transitional periods provided for in Article 65 of the TRIPS Agreement.
b) India had not complied with its obligations under Article 70.9 of the TRIPS Agreement
with respect to the grant of exclusive marketing rights.
c) Alternatively, India had not complied with paragraphs 1 and 2 of Article 63 of the
TRIPS Agreement in accordance with its obligation to publish and notify such
information.52

On appeal, the Appellate Body upheld the panel's conclusions with respect to Article 70.89(a)
and Article 70.9, but reversed the panel's alternative findings in respect of Article 63.

Interpreting the TRIPS Agreement

The panel addressed the general interpretative issue, that is, the standards applicable to
interpretation of the TRIPS Agreement. It began by identifying the principles of international
law appropriate to its interpretation. In the first place, it noted that Article 3.2 of the DSU
directs panels to clarify the provisions of the covered agreements, including the TRIPS
Agreement, “in accordance with customary rules of interpretation of public international law”
as embodied in the 1969 Vienna Convention on the Law of Treaties (“Vienna Convention”).
Second, the panel affirmed the application of the jurisprudence established under the GATT

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1947 to the interpretation of the TRIPS Agreement, given that it is an integral part of the
Charter30.
The Panel proceeded to argue that in accordance with Article 31(1) of the Vienna
Convention31 as well as GATT jurisprudence, an interpretation in “good faith” requires the
protection of Members' legitimate expectations derived from the protection of the intellectual
property rights provided for in the TRIPS Agreement32. Based upon the context and the
purpose of the Agreement, this means, argued the Panel, that exporting Members can
legitimately expect that market access and investments would not be frustrated by the actions
of importing Members. In support of their argument the panel further noted that the protection
of legitimate expectations of Members regarding the conditions of competition is a well-
established GATT principle. According to the Superfund panel the rationale of the national
treatment obligation in GATT Article III, is to protect the expectations of the contracting
parties as to the competitive relationship between their products and those of the other
contracting parties.
The panel acknowledged that the disciplines formed under the GATT 1947 were primarily
directed at the treatment of international trade in goods, whereas the TRIPS Agreement is
mainly concerned with the treatment of the nationals of other Members. Nevertheless, it had
no difficulty in finding that the notion of protecting Members' legitimate expectations could
also apply by analogy, in so far as TRIPS was concerned, with the competitive relationship
between the nationals of the various Member states. In support of this contention the panel
referred to the Preamble to the TRIPS Agreement, which recognises the need for new rules
and disciplines concerning “the applicability of the basic principles of GATT 1994”. The panel
therefore concluded that, when interpreting the text of the TRIPS Agreement, the legitimate
expectations of WTO Members concerning the TRIPS Agreement must be taken into account,
as well as standards of interpretation developed in past panel reports laying down the principle
of the protection of conditions of competition flowing from multilateral trade agreements.

30 Article XVI:I of the WTO Agreement provides: “ Except as otherwise provided under this Agreement or the
Multilateral Trade Agreements, the WTO shall be guided by the decisions, procedures and customary practices
followed by the Contracting Parties to GATT 1947 and the bodies established in the framework of GATT 1947.
31 Article 31(1) of the Vienna Convention provide: “ A treaty shall be interpreted in good faith in accordance
with the ordinary meaning to be given to the terms of the treaty in their context and in light of its object and
purpose.
32 Appellate Body Report on “Japan – Taxes on Alcoholic Beverages”, adopted on November 1, 1996
WT/DS8/AB/R, WT/DS10/AB/R, WT/DS13/AB/r, p. 14.

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Framing of Issues in reference

Applying these principles to Article 70.8(a), the panel framed its inquiry in terms of whether
the current Indian system for the receipt of mailbox applications could sufficiently protect the
legitimate expectations of other WTO Members as to the competitive relationship between
their nationals and those of other Members, by ensuring the preservation of novelty and
priority in respect of products which were the subject of mailbox applications. By way of
answer, the panel took into account: (a) the object and purpose of Article 70.8; and (b) the
negotiating history of the TRIPS Agreement33. The panel found that in order to achieve the
object and purpose of Article 70.8 India had to have a mechanism to preserve the novelty of
pharmaceutical and agricultural chemical inventions, for the purposes of determining their
eligibility for patent protection. Given that patent protection for pharmaceutical and
agricultural chemical products was a critical issue during the Uruguay Round, the panel
considered that the negotiating history of the TRIPS Agreement tended to confirm this view34.
The panel then returned to the broader question of whether the current Indian system for the
receipt of mailbox applications could sufficiently protect the legitimate expectations of WTO
Members by ensuring the preservation of novelty and priority in respect of products which
were the subject of mailbox applications. In finding against India, it emphasised that
predictability in the regulation of intellectual property was essential not only to protect current
trade but also to create the conditions necessary to the planning of future trade and investment.

In search of a broader theoretical base for decision-making

The character and tenor of the reasoning in India -- Patent Protection throws into sharp relief
the vocational nature of the trade court. Its interpretation of the provisions in question is
dominated by the theoretical underpinning of free trade, the doctrine of comparative advantage
and wealth maximization35. At the same time, the limits of legalism and of the current
procedural framework also become clear. One of the serious disadvantages of a strictly
formalist approach is that the outcome is obtained only by a conscientious application of legal
rules. Substantive conceptions of justice may thereby be excluded from legal reasoning.
Yet, as the Legal Realists and Critical Legal scholars tell us, political considerations
nevertheless attach to judicial decisions and may motivate those decisions at the margin. With
regard to intellectual property, we are dealing with private rights that have a social dimension.
Yet there is no theoretical underpinning that either reflects the impact of patenting on a

33 Article 32 of the Vienna Convention gives the negotiating history a status of “supplementary means of
interpretation” only.
34 J. C. Thomas “The Need for Due Process in WTO Proceedings” (1997) 31Journal of World Trade 45 at 49.
35 The Leutwiler Report: Trade Policies for a Better Future: Proposals for Action, GATT Sectretariat, Geneva
1985.

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predominantly rural society or gives any consideration to questions of cultural relativity.

Adjudicators are constrained by the demands of the received legal reasoning and discourse.
The choice between them as to the correct “legal” outcome is clear. The weight of text and
precedent, the requirements of precision, clarity, and determinacy in rule interpretation, tend to
leave little space for sufficient consideration of the potentially serious social or political
consequences attendant on one of the proposed readings of a textual provision.
For the time being, the combination of an economic approach to problem solving and a
legalistic style of decision-making helps the trade court and Member States alike avoid
problems of accountability. However, a testing time must come when the actions of the trade
court are no longer legitimated by results. Professor Hudec has previously referred to the risk
of so-called “wrong” cases having the effect of bringing the dispute settlement system into
disrepute36, a “wrong” case being one that is initiated in respect of an issue on which the
international community has either not yet reached a consensus or on which past consensus
has broken down. Past examples of such cases include contentious agricultural trade practices,
such as those of the E.C. In such cases the parties show extreme reluctance to accept the
panel's decision. It is then that the paucity of the trade court's theoretical underpinning will be
revealed. Nonetheless, that is not to say that there can be any regression in conceptual thinking
about the international legal system. The power of the WTO as a law-making body and the
new-found legalism of its super court calls for new ways of thinking about international
dispute settlement.

The erosion of the rule against individual standing

Nevertheless, the broad participation of private parties in the affirmation of the WTO rules has
been a gradual but marked development. While WTO law does not directly grant individuals
the right to initiate or participate in the dispute settlement mechanism, several agreements
contain provisions requiring the participation of foreign private parties in domestic
enforcement procedures. For example, anti-dumping and countervailing duty procedures; as
well as procedures to obtain safeguard relief under Article XIX of the GATT 1994, are
domestic procedures in which the defendant/importer is a party. The control of dumping
involves private rights. As the focus of trade liberalisation moved the regulation of tariffs to
other areas of private conduct, such as intellectual property rights, services, investment and
competition law, this trend has been accentuated.

36 R.E. Hudec, The GATT Legal System and World Trade Diplomacy (2nd ed., 1990).

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Enhanced international participation and the DSU

The results of the Uruguay Round enhance the position of the world citizen in indirect ways.
Article V(2) of the Agreement Establishing the WTO requires the General Council to make
appropriate arrangements for co-operation and consultations with non-governmental
organisations (NGOs) concerned with matters related to those of the WTO. Although the new
DSU does not permit the individual to bring a complaint, it takes private interests into account.
Under Article 13.1 the panel can seek information from an individual or body which it deems
appropriate. In addition, under Article 13.2 “a panel may request an advisory report in writing
from an expert review group”. However, the ultimate right to determine the course of the
proceedings essentially remains in the hands of governments. Thus Article 13.1 requires the
panel to inform the authorities of the Member State before it addresses the private person.

A case for change

Although international trade law has succeeded in freeing itself from some of the boundaries
of traditional international law given developments within the new corpus juris of the WTO,
the principle of the state as the sole actor under international law still dominates international
litigation. Yet the rationale for the rule dates back to Vattel's conception of international
society in the eighteenth century, a society in which the primary objects of international law
was to maintain peace among European nations. By contrast, in the latter twentieth century the
scope and volume of international trade drives the harmonisation of commercial law and
policy. A transnational society, representing the spectrum of business, environmental and
social welfare organisations and interests, demands a voice in law and decision-making.
Similarly, recent developments in the law of human rights also demonstrate that individuals
are being increasingly recognised as participants and subjects of international law.
The prohibition on the participation of individuals in international dispute resolution can no
longer be justified on the basis that states are the primary subjects of international law. When
the WTO legislates for intellectual property rights, individuals are directly affected. In this
regard, the impact of the TRIPS Agreement on Australian legislation was significant, its
implementation requiring reforms to the Copyright, Patents and in particular to the Trade
Marks Act. In the case of patents and trade marks individuals found the scope of their
monopoly rights in ownership considerably increased. Moreover, those in industry and
business with valuable intellectual property are the ones to best observe the contravention of
their rights. In as much as individuals have become the “subjects” of international law, so they
should also have a right to participate in enforcement proceedings where their interests are
affected.

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In view of the changed circumstances, to deny individuals the right to enforce their intellectual
property rights at the international level lacks legitimacy. It permits the state to rely on the
traditional principle prohibiting individual participation as a means of protecting its
sovereignty and its power to ensure its citizens have no other recourse against the law than the
state itself. The difficulty with this arrangement is that the interests of government do not
always coincide with those of the individual. Moreover, the indirect method of taking legal
action tends to exacerbate the politicisation of the issue of enforcement since individuals must
persuade their government to take up the dispute with another state. It is with the aim of
avoiding these political obstacles that international law in the areas of both commerce and
human rights has granted certain limited procedural rights to individuals.

A private right of action to challenge government acts in domestic courts

A private party may be given the right to initiate a cause of action in the domestic courts
challenging any municipal enactment that fails to comply with the Uruguay Round
Agreements. Certainly, the ability of citizens of the E.U. to challenge the inconsistency of
domestic legislation suggests that individual complainants benefit from the strengthening of
judicial power. This option is feasible since based on the reasoning of the European Court of
Justice (ECJ), the specificity of wording in the Uruguay Round Agreements presents an
opportunity for direct applicability and for excluding the traditional rule concerning the
exhaustion of local remedies.37
Nonetheless, the desirability of the direct applicability of the Uruguay Round Agreements is
hotly debated in those countries that traditionally adhere to the dualist system of implementing
international law38. In the United States for example, direct applicability appears unlikely in
the light of public debate concerning the greater legitimacy of Congress as the means of
implementing WTO law. By contrast, in Europe, the idea appears more acceptable given that
the specificity, or “hard-law” nature of the Uruguay Round Agreements, meets the ECJ's
criterion for direct effect. Nevertheless, at present, as a matter of trade policy, the Commission,
like Congress, is not prepared to consider judicial review at the municipal level. The Preamble
to the Council Decision concerning the conclusion of the Marrakesh Agreements, states that
the Agreements “cannot be directly invoked in Member States or Community courts by private
individuals who are national or legal persons”.

37 Federal Republic of Germany v. Council, Case C 280/93, 1994.

38 I. Brownlie, Principles of Public International Law, (4th ed) 1990, at 32-33.

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CONCLUSION
The decision-making in India -- Patent Protection indicates that the resolution of such
disputes is increasingly likely to test the legitimacy of the trade court as a forum that is
cognisant of due process and representative of private interests concerned in the dispute.
Given the normative weaknesses inherent in both the regime management and the efficient
market models, it is arguable that the trade stake-holders model is the preferred model for
delivering greater legitimacy to the system of dispute resolution39. In the first place, it would
grant broad participatory rights to diverse constituencies affected by trade policy, similar to
the rights accorded individuals within the European Union and by the European Court of
Justice40. Second, the trade stake-holders model would also address the need to develop
distinctive and innovative political mechanisms to complement the WTO's dispute resolution
procedures.
While it appears that the trade court is experiencing an initial period of unquestioning
approbation, the history of ECJ scholarship indicates that this will not last. Increasingly,
scholars will challenge the use of law as an instrument of global economic integration
without a commensurate growth in legitimacy and political accountability to accompany the
process41. The stronger the call for supranational institutions acting above and, if necessary,
against the nation state, the more the need to deal with, and to agree on, a concept of
legitimacy and a process of legitimization for such a new power42.
There is still much to think about. A combination of a TRIPS violation and the threatened
withdrawal of a trade concession (or the opposite) could involve other closely related
concessions in still other ways, despite their asymmetric natures. For example, the
implementation of IPRs protection by a developing country could stimulate more inward
technology transfer, inducing the production of goods that can, because of a developed-
country trade concession, be exported43. Thus, noncompliance by either side in a dispute could
undermine the efficiency of both markets.

39 Hobbes, Leviathan, Part I, chs 6, 8, 11 and 12.

40 J.H.H. Weiler, “The Transformation of Europe” (1991) 1000 Yale LJ. 2403 at 2478-2481.
41 Havana Charter, Art. 93 and 94.
42 T.M. Frank, The Power of Legitimacy Among Nations, 1990 at 16-22.
43 Kamal Saggi, „Encouraging Technology Transfer to Developing Countries: Role of the WTO‟ (Report to the
Commonwealth Secretariat, 2003).

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BIBLIOGRAPHY

1. 1 Eric W. Bond, „The Economics of International Agreements and Dispute Settlement

with IPRs‟, in K. E. Maskus and J. H. Reichman (eds), International Public Goods and
Transfer of Technology under a Globalized Intellectual Property Regime (Cambridge:
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2. D. Palmeter, “The Need for Due Process in WTO Proceedings” (1997) 31 Journal of
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3. Graeme B. Dinwoodie and Rochelle Cooper Dreyfus, „International Intellectual

Property Law and the Public Domain of Science‟.

4. Hoekman and Michel Kostecki, The Political Economy of the World Trading System:
The WTO and Beyond, 2nd edn (Oxford: Oxford University Press, 2001).

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13. P.R.Trimble, “International Trade and the Rule of Law” (1985) 83 Michigan Law J.,
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14. R.E. Hudec, The GATT Legal System and World Trade Diplomacy (2nd ed., 1990).

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16. Susan K. Sell, Private Power, Public Law: The Globalization of Intellectual Property
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17. T.M. Frank, The Power of Legitimacy Among Nations, 1990 at 16-22.

18. Tumlir J., India -- Patent Protection for Pharmaceutical and Agricultural Chemical
Products Report of the Panel, September 5, 1997, WT/DS50/R. Appellate Body Report,
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