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Intellectual Property Disputes and the Supercourt of the World Trade Organisation: The Case for a New Model of Dispute Resolution
Abstract
The closing decade of the 20th century witnessed the emergence of a WTO ‘supercourt’ having the power to review states' intellectual property legislation. This article challenges the use of law as an instrument of global economic integration without a commensurate growth in legitimacy and public accountability to accompany the process. The recent case of United States and India—Patent Protection for Pharmaceutical and Agricultural Chemical Products provides a focal point for an analysis of key issues of legitimacy in the dispute resolution process. The article concludes that matters would be best remedied with an appropriate theoretical model in mind. To this end, having reviewed various models of trade legalism, the author endorses the stakeholder model as best suited to underpin the necessary reforms.
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Nates and References
Article 17, Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU), Final Act, Part 2, Annex 2, reprinted in 33 ILM (1994) at 1226-4 and at 1236-37.
Arguing against a proposal to create a trade ‘supercourt’ within the GATT see P. R. Trimble, International trade and the rule of law (1985) 83 Michigan LJ, 829 at 1016, 1019 and 1025.
Article 16, DSU.
The Dispute Settlement Body (DSB) composed of all WTO member countries, oversees the dispute resolution process: Agreement Establishing the WTO, art 4(3), reprinted in 33 ILM (1994) at 1145. The DSB will have the power to reverse decisions of the Appellate Body, or of dispute panels if no appeal is taken, but only by unanimous vote: Articles 16(4), 17(14) DSU, reprinted in 33 ILM at 1235, 1237.
D. Palmeter, ‘The need for due process in WTO proceedings’, (1997) 31 Journal of World Trade 1, February, 51 at 57.
See India--- Patent Protection for Pharmaceutical and Agricultural Chemical Products, Report of the Panel, 5 September 1997, WT/DS50/R. Appellate Body Report, 19 December 1997, WT/DS50/AB/R.
While compliance with the measure in question is the primary aim, under the DSU, losing respondents may attempt to negotiate a settlement involving payment of compensation to winning complainants rather than change their trade policies. If no such mutual agreement can be reached, the winner may seek approval from the DSB to withdraw treaty benefits in the amount of the nullification and impairment it has suffered: Article 22(2), 33 ILM (1994) at 1239. The amount and form of trade sanctions is subject to a separate WTO dispute resolution procedure: Article 22(6)(7), 33 ILM (1994) at 1240-1241.
S. Jarvin, ‘The sources and limits of the arbitrator's powers’, in J. D. M. Lew (ed.), Contemporary Problems In International Arbitration, School of International Arbitration, London, 1986 at 50, 67. The DSU mandates that panelists serve in their individual capacities and not as representatives of any government or organization: Articles 8.9 and 8.11, DSU.
Hobbes, Leviathan, Part I, Chs. 6, 8, 11 and 12.
Havana Charter, Article 93, para 1.
Idem., Articles 93 and 94.
Idem., Articles 94 and 96.
Law and Force’ in D. Lloyd, The Idea of Law, Penguin, Harmondsworth, 1985, Ch. 2.
The Special 301 provisions of the Trade Act of 1974 as amended by the US Omnibus Trade and Competitiveness Act of 1988 (the Trade Act) were designed to provide a statutory framework within which to assess the adequacy of protection of intellectual property rights and market access overseas: 1988 Trade Act section 1302 102 Stat 1176-79 (1988) codified as amended at 19 USC section 2420(a)(1) (1988). On the goals of section 301 see J. C. Bliss, ‘The amendments to section 301: an overview and suggested strategies for foreign response’ (1988-89) 20 Law & Policy in International Business 501. The EC has a similar trade policy instrument that is designed to afford private petitioners the opportunity to complain of foreign unfair trade practices. However, Reg. No. 2641/84 primarily seeks to protect the Common Market against foreign unfair trade practices and securing access to export markets for Community industries appears to be a secondary concern: see Council Regulation 2641/84 EEC OJ Eur Comm (No. L252) 1 (1984).
The Berne Convention for the Protection of Literary and Artistic Works, 1886. The Paris Convention for the Protection of Industrial Property, 1883.
Article 1.1 DSU provides that the ‘[the] rules and procedures of this Understanding shall apply to disputes brought pursuant to the consultation and dispute settlement rules and procedures’ under the ‘covered agreements’ which include those for GATS and the TRIPS Agreements listed in Appendix 1 to this Understanding, hereinafter referred to as the ‘covered agreements’. Complementary provisions reinforce Article 1, DSU, in the covered agreements. Thus, Article 64 of the TRIPS Agreement mandates the application of ‘the provisions of Articles XXII and XXIII of the GATT 1994 as elaborated and applied by the Dispute Settlement Understanding … to consultations and the settlement of disputes’ arising under it. For example, on 2 July 1996, the United States requested India to hold consultations pursuant to Article 4 of the Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU) and Article 64 of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) regarding the absence in India of either patent protection for pharmaceutical and agricultural chemical products or formal systems that permit the filing of patent applications for pharmaceutical and agricultural chemical products and that provide exclusive marketing rights in such products (WT/DS50/1).
The period in which the panel shall conduct its examination, from the time the composition and terms of reference of the panel have been agreed upon to the time when the final report is provided to the parties to the dispute, shall, as a general rule, not exceed 6 months. In cases of urgency, including those relating to perishable goods, the panel shall aim to provide its report to the parties to the dispute within 3 months. The interim review stage shall be conducted within the time period set out in para. 12.8
Within 60 days panel reports will be deemed to have been adopted unless the DSB decides by consensus not to adopt the report, or one of the parties notifies the DSB of its intention to appeal. A consensus will occur if no member lodges a formal objection to the decision within 60 days. Appellate Body decisions are also binding on states unless all members vote unanimously to overrule them. The Appellate Body's report is subject to the same automatic adoption rule as regular panel reports. It is to be adopted (absent consensus to the contrary) with 30 days of its circulation to DSB members: Article 17.14.
Where the Appellate Body or panel concludes that a measure is inconsistent with a covered agreement, it shall recommend that the member concerned bring the measure into conformity with that Agreement: section 19.1.
Such retaliation can consist of increases in bound tariffs or other actions. Moreover, there are specific procedures for determining the level or extent of suspension if no agreement can be reached. The level of retaliation is to be equivalent to the economic damage sustained by the complaining state as a consequence of the original illegal measure. When the panel or appellate report is implemented, the retaliatory action shall cease: Article 22.1.
For the advantages and disadvantages of permanent tribunals and a comparison to ad hoc arbitral tribunals see, H. Mosler & R. Bernhardt (eds), Judicial Settlement of International Disputes, Springer, Berlin, 1974; H. Steinberger, ‘Judicial settlement of international disputes’, in R. Bernhardt (ed.) Encyclopedia of Public International Law, Elsevier, North-Holland 1981 Instalment I at 120ff.
Article 17, DSU.
S. Jarvin, ‘The sources and limits of the arbitrator's powers’, in J. D. M. Lew (ed.), Contemporary Problems In International Arbitration, School of International Arbitration, London, 1986 at 50, 67.
J. H. Jackson, The World Trading System: Law and Policy of International Economic Relations, MIT Press, Cambridge, Mass. (1989) 85-88; cf. R. E. Hudec, Enforcing International Trade Law: The Evolution of The Modern GATT Legal System, Butterworth, Salem, NH, 1993 at 364-365. See also O. Long, stating that ‘the primary objective of [the GATT] dispute settlement procedure's is not to decide who is right and who is wrong … but to proceed in such a way that even important violations are only temporary and are terminated as quickly as possible’: Law and its limits in the GATT Multilateral Trade System, M. Nijhoff, Hingham, MA, 1985 at 71 and that ‘legalism does not contribute to trade liberalization’: idem, at 73.
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’.
Para. 8.1.
Article 31(1), Vienna Convention provides: ‘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 the light of its object and purpose’.
The panel cited the report of the Appellate Body in Japan---Alcoholic Beverages, to the effect that adopted panel reports ‘create legitimate expectations among WTO Members, and, therefore, should be taken into account where they are relevant to any dispute’: Appellate Body Report on Japan---Taxes on Alcoholic Beverages’, adopted on 1 November 1996, WT/DS8/AB/R, WT/DS10/AB/R, WT/DS13/AB/R, p. 14.
The panel based its view on Underwear panel report: Panel Report on ‘United States---Restrictions on Imports of Cotton and Man-made Fibre Underwear’, adopted on 25 February 1997, WT/ DS24/R, para. 7.20.
Paras 7.20 and 7.30. 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 Superfund panel stated that ‘[t]he general prohibition of quantitative restrictions under Article XI … and the national treatment obligation of Article III … have the same rationale, namely to protect expectations of the contracting parties as to the competitive relationship between their products and those of the other contracting parties’: Panel Report on ‘United States---Taxes on Petroleum and Certain Imported Substances’, adopted on 17 June 1987, BISD 34S/ 136, para. 5.2.2.
Para. 7.21.
Para. 7.34.
Para. 7.18.
The preface to the GATT 1947 calls for: ‘[T]he substantial reduction of tariffs and other barriers to trade and … the elimination of discriminating treatment in international commerce’. See generally J. H. Jackson, World Trade and the Law of GATT, Part II, Bobbs-Merrill, Indianapolis, 1969; J. H. Jackson, W. J. Davey & A. O. Sykes, Legal Problems of International Economic Relations, 3rd edn, West Publishing Co, St Paul, Miss, 1995; Chs 8-11; J. H. Jackson, The World Trading System, Chs 5-11.
Appellate Body Report, WT/DS50/AB/R.
Subparas 1(b) and 1(c) of Article XXIII of GATT 1994 shall not apply to the settlement of disputes under the TRIPS Agreement for a period of 5 years from the date of entry into force of the WTO Agreement. Thus the only cause of action permitted under the TRIPS Agreement during the first five years after the entry into force of the WTO Agreement is a ‘violation’ complaint under Article XXIII: 1(a) of the GATT 1994.
R. Posner, ‘The ethical and political basis of the efficiency norm in common law adjudication’ (1980) 8 Hofstra LR 487-507; idem., ‘Utilitarianism, economics and legal theory’ (1979) 8 J Legal Studies, 140.
The Leutwiler Report: Trade Policies for a Better Future: Proposals for Action, GATT Secretariat, Geneva 1985. The principle of comparative advantage is open to many criticisms: for a public choice perspective see: P. B. Stephan, Barbarians inside the gate: public choice theory and international economic law, (1995) 10 American U J Int. Law and Policy 745. Also see: M. Trebilcock & R. Howse, The Regulation of International Trade, London, Routledge 1995, Ch. 2 on comparative advantage 2-4 and on public choice at 14-17; J. Bhagwati, ‘Challenges to the doctrine of free trade’, NYU J Int Law and Policy, 25, 9, 1993 at 219.
R. E. Hudec, The GATT Legal System And World Trade Diplomacy, 2nd edn, 1990.
The most prominent example is the institutional framework of the European Convention on Human Rights, consisting of the European Commission and the European Court of Human Rights.
The right of individuals to directly file a complaint in the European Court of Justice against every legally binding European Community law, under Article 173 of the Treaty of Rome, is a fundamental principle of the EU. Its application has allowed the case-law of the Court to overcome the principle of State sovereignty to the benefit of private citizens: B. Killmann, ‘The access of individuals to international trade dispute settlement’ (1996) 13 Journal of International Arbitration 143 at 145 and 163.
Killman supra note 83.
The earliest complaint made to the WTO, just 6 months after it took effect, involved a US complaint over Japanese measures on the automobile industry. Obviously there were large interests at stake, particularly those of US parts and accessories manufacturers and suppliers. Japanese government representatives asserted that these were privately imposed measures and not a matter for state intervention.
G. R. Shell, ‘Trade legalism and international relations theory: an analysis of the World Trade Organization’, (1995) 44 Duke LJ at 829.
A. M. Slaughter, ‘International law and international relations theory’ (1993) 87 AJIL 205 at 217-219.
J. H. Jackson, arguing that the rule-oriented approach to resolving trade disputes involves negotiation ‘by reference to what [parties] would expect an international body would conclude about the action of the transgressor in relation to its international obligations’. When parties bargain ‘in the shadow of the law’, they must take into account not only their relative power positions and interests, but also their predictions about how tribunals will interpret rules in particular cases: The World Trading System: Law and Policy of International Economic Relations, MIT Press, Cambridge, Mass, 1989 at 99ff.
See B. F. Fitzgerald, characterizing Ann-Marie Slaughter's theory of liberalism: ‘An emerging liberal theory of international law and the non-enforcement of foreign public laws’ (1995) AYIL Vol. 16 at 311-314 and at 322-324; also L. C. Reif, Multidisciplinary Perspectives on the Improvement of International Environmental Law and Institutions (1994) 15 Mich J Il L 723, 738.
See M. Trebilcock & R. Howse, The Regulation of International Trade, Routledge, London, 1995, Ch. 1.
By the end of the 1980s, a metamorphosis of the international political economy had begun: the old, close relationship between state, civil society, and economy was being replaced by a new relationship between authority and economy, and between authority and society. A global business civilization had emerged … According to Strange, this ‘civilization’ is composed of millions of individual economic actors held together in a ‘complex network or web of transnational, bilateral bargains---bargains between corporations and other corporations, between corporations and governments, and between governments’. Susan Strange, ‘Protectionism and world polities’, (1985) 39 Intl Org (1985) 233, 234.
M. Hilf, arguing that in an interdependent world economy ‘[states are beginning to loose [sic] their freedom to act as they want’ and that ‘international economic integration, influenced by a multitude of uncontrollable factors, entails a loss of sovereignty’: ‘Settlement of disputes in international economic organizations: comparative analysis and proposals for strengthening the GATT dispute settlement procedures, in E. U. Petersmann & M. Hilf (eds), The New GA TT Round of Multilateral Trade Negotiations: Legal and Economic Problems, E. U. Petersmann & M. Hilf (eds), Kluwer, Deventer, 1988 at 285, 321.
E. U. Petersmann, ibid. at 210-221; J. Tumlir, stating that ‘international [trade] rules represent a truer expression of the national interest of all the countries concerned than the mass of national [economic] legislation’: ‘Need for an open multilateral trading system’, (1983) 6 World Econ 393, 406.
G. R. Shell, ibid, at 858-877.
Ibid, at 877-894.
They undermine the principle of government representation of private claims by their wealth and influence: further see M. Lukas, ‘The role of private parties in the enforcement of the Uruguay Round Agreements’ (1995) 29 Journal of World Trade, 181 at 199-200.
Ibid. at 907-922.
R. Seidelmann, ‘The search for a new global order’, D. Bourantonis and M. Evriviades (eds) in A United Nations for the Twenty-First Century, Kluwer, Boston, 1997, at 54.