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Working of the TRIPS

By Shruthee Srinivasan July 26, 2016

This blog aims to provide a preliminary insight into the working procedure of TRIPS Agreement. It follows the common route that is followed when countries try to approach the WTO Dispute Settlement Body to resolve issues relating to trade laws or infringing intellectual property rights.

The TRIPS Agreement establishes minimum substantive standards for the establishment of rights to IP. However, it is addressing a subject matter of very broad scope with rules that are deliberately designed to provide Members with substantial flexibility in their implementation. Predicting the specific issues that will be raised in dispute settlement would be rather difficult in light of the broad scope of potential subject matter.

The TRIPS Agreement Part III on Enforcement of IPRs take the approach of obligating Members to establish administrative and judicial mechanisms through which private IPRs holders can seek effective protection of their interests. It is implicit in all international agreements that their parties will undertake to implement them in good faith.There are two basic types of claims regarding the enforcement provisions of the TRIPS Agreement that are foreseeable. The first are claims that Members have failed to adopt laws and establish administrative mechanisms that satisfy the basic requirements of Part III of the Agreement. The second are claims that while Members may have adopted the relevant laws and mechanisms, they are failing to operate them in a manner that is “effective”.

The TRIPS Agreement incorporates the general consultation and dispute settlement mechanism of Articles XXII and XIIII of the GATT 1994, and the DSU, and from that standpoint the same procedural considerations apply in the TRIPS context as in the GATT and GATS contexts. There are familiar procedures for initiation of consultations, consultations, request for the establishment of a panel, third party participation, establishment of a panel, establishment of terms of reference, submission of pleadings and evidence, proceedings before the panels, possibilities for expert consultation, and so forth.[1]

A procedure for settling disputes existed under the old GATT, but it had no fixed timetables, rulings were easier to block, and many cases dragged on for a long time inconclusively. The Uruguay Round agreement introduced a more structured process with more clearly defined stages in the procedure. It sets out in considerable detail the procedures and the timetable to be followed in resolving disputes. If a case runs its full course to a first ruling, it should not normally take more than about one year — 15 months if the case is appealed. The agreed time limits are flexible, and if the case is considered urgent (e.g. if perishable goods are involved), it is accelerated as much as possible.

The Uruguay Round agreement also made it impossible for the country losing a case to block the adoption of the ruling. Under the previous GATT procedure, rulings could only be adopted by consensus, meaning that a single objection could block the ruling. Now, rulings are automatically adopted unless there is a consensus to reject a ruling — any country wanting to block a ruling has to persuade all other WTO members (including its adversary in the case) to share its view.

Although much of the procedure does resemble a court or tribunal, the preferred solution is for the countries concerned to discuss their problems and settle the dispute by themselves. The first stage is therefore consultations between the governments concerned, and even when the case has progressed to other stages, consultation and mediation are still always possible.

Settling disputes is the responsibility of the Dispute Settlement Body (the General Council in another guise), which consists of all WTO members. The Dispute Settlement Body has the sole authority to establish “panels” of experts to consider the case, and to accept or reject the panels’ findings or the results of an appeal. It monitors the implementation of the rulings and recommendations, and has the power to authorize retaliation when a country does not comply with a ruling.

First stage: consultation (up to 60 days)

Before taking any other actions the countries in dispute have to talk to each other to see if they can settle their differences by themselves. If that fails, they can also ask the WTO director-general to mediate or try to help in any other way.

Second stage: the panel (up to 45 days for a panel to be appointed, plus 6 months for the panel to conclude).

 If consultations fail, the complaining country can ask for a panel to be appointed. The country “in the dock” can block the creation of a panel once, but when the Dispute Settlement Body meets for a second time, the appointment can no longer be blocked (unless there is a consensus against appointing the panel).

Officially, the panel is helping the Dispute Settlement Body make rulings or recommendations. But because the panel’s report can only be rejected by consensus in the Dispute Settlement Body, its conclusions are difficult to overturn. The panel’s findings have to be based on the agreements cited.

The panel’s final report should normally be given to the parties to the dispute within six months. In cases of urgency, including those concerning perishable goods, the deadline is shortened to three months.

The agreement describes in some detail how the panels are to work. The main stages are:

 Before the first hearing: each side to the dispute presents its case in writing to the panel.

First hearing: the case for the complaining country and defence: the complaining country (or countries), the responding country, and those that have announced they have an interest in the dispute, make their case at the panel’s first hearing.

Rebuttals: the countries involved submit written rebuttals and present oral arguments at the panel’s second meeting.

Experts: if one side raises scientific or other technical matters, the panel may consult experts or appoint an expert review group to prepare an advisory report.

First draft: the panel submits the descriptive (factual and argument) sections of its report to the two sides, giving them two weeks to comment. This report does not include findings and conclusions.

Interim report: The panel then submits an interim report, including its findings and conclusions, to the two sides, giving them one week to ask for a review.

Review: The period of review must not exceed two weeks. During that time, the panel may hold additional meetings with the two sides.

Final report: A final report is submitted to the two sides and three weeks later, it is circulated to all WTO members. If the panel decides that the disputed trade measure does break a WTO agreement or an obligation, it recommends that the measure be made to conform to the WTO rules. The panel may suggest how this could be done.

The report becomes a ruling: The report becomes the Dispute Settlement Body’s ruling or recommendation within 60 days unless a consensus rejects it. Both sides can appeal the report (and in some cases both sides do).

Panels

Panels are like tribunals. But unlike in a normal tribunal, the panelists are usually chosen in consultation with the countries in dispute. Only if the two sides cannot agree does the WTO director-general appoint them.

Panels consist of three (possibly five) experts from different countries who examine the evidence and decide who is right and who is wrong. The panel’s report is passed to the Dispute Settlement Body, which can only reject the report by consensus.

Panelists for each case may be chosen from an indicative list of well-qualified candidates nominated by WTO Members, although others may be considered as well, including those who have formerly served as panelist.  Panelists serve in their individual capacities. They cannot receive instructions from any government. The indicative list is maintained by the Secretariat and periodically revised according to any modifications or additions submitted by Members.

Appeals

Either side can appeal a panel’s ruling. Sometimes both sides do so. Appeals have to be based on points of law such as legal interpretation — they cannot reexamine existing evidence or examine new issues.

Each appeal is heard by three members of a permanent seven-member Appellate Body set up by the Dispute Settlement Body and broadly representing the range of WTO membership. Members of the Appellate Body have four-year terms. They have to be individuals with recognized standing in the field of law and international trade, not affiliated to any government.

The appeal can uphold, modify or reverse the panel’s legal findings and conclusions. Normally appeals should not last more than 60 days, with an absolute maximum of 90 days.

The Dispute Settlement Body has to accept or reject the appeals report within 30 days — and rejection is only possible by consensus.[2]

Case in Point:

India - Patent Protection for Pharmaceutical and Agricultural Chemical Products, WT/DS50 (“India – Patents (US)”) was the first WTO dispute under the TRIPS Agreement that resulted in a decision by a panel, and subsequently by the Appellate Body. The complaining party was the United States, which alleged that India had failed to adequately implement TRIPS Agreement requirements under Articles 70:8 and 70:9 to establish a so-called “mailbox” to receive and preserve patent applications and to adopt legislation authorizing the grant of exclusive marketing rights (EMRs)[3]

[1] http://unctad.org/en/docs/edmmisc232add18_en.pdf

[2] https://www.wto.org/english/thewto_e/whatis_e/tif_e/disp1_e.htm

[3]http://unctad.org/en/docs/edmmisc232add18_en.pdf page 43

Picture Credits: https://en.wikipedia.org/wiki/File:World_Trade_Organization_Members.svg

TAG: TRIPS , WTO , DSU , Panel reports , appeals , working of trips


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By Shruthee Srinivasan
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