VI. Interim Review

6.1 On 1 July 1998, India requested the Panel to review, in accordance with Article 15.2 of the DSU, certain precise aspects of the interim report that had been issued to the parties on 19 June 1998. The European Communities and their member States did not request a review, but submitted, in a letter dated 6 July 1997, comments on India's request for a review of the aspects in question requesting the Panel to reject India's comments. Neither party requested the Panel to hold an additional meeting. The Panel reviewed the entire range of arguments presented by India and finalized its findings as in Section VII below, taking into account the specific aspects of those arguments it considered to be relevant.

A. Articles 9.1 And 10.4 Of The Dsu

6.2 In its review request, India claimed that the Panel had not followed the principles of treaty interpretation set out in Article 31(1) of the Vienna Convention on the Law of Treaties, i.e. the Panel had failed to interpret the DSU in accordance with the ordinary meaning to the terms of the treaty in their context and in the light of its object and purpose. This failure, according to India, significantly affected the reasoning and conclusions of the Panel.

6.3 India noted that Article 3.10 of the DSU declared the guiding provision in that "[i]t is understood that requests for conciliation and the use of dispute settlement procedures should not be intended or considered as contentious acts and that, if a dispute arises, all Members will engage in these procedures in good faith in an effort to resolve the dispute". It also noted that under the MFN provisions of the TRIPS Agreement, any benefit or concession made to any country would be equally extended to all the other Members. India considered that these two provisions read together in the context of dispute settlement invested the Panel with the power to examine whether the EC complaint should be taken up for examination or should be dismissed in limine. It was all the more important, in India's view, for the Panel to exercise this power because the DSB did not have discretion to make a summary examination of the complaint.

6.4 According to India, the first sentence of Article 11 of the DSU, which provided that "[t]he function of the panels is to assist the DSB in discharging its responsibilities under this Understanding and the covered agreements" would also suggest that the Panel should exercise such a power. In doing so, "a panel should make an objective assessment of the matter before it, including an objective assessment of the facts of the case ...". The objective assessment, in India's view, included an examination whether a matter existed in substance or not. India argued that the power to make an objective assessment of the facts might not be interpreted as overriding the power of objective assessment of the matter.

6.5 India further noted that Article 3.2 of the DSU provided that "[t]he dispute settlement system of the WTO is a central element in providing security and predictability to the multilateral trading system". In India's view, an unmitigated right to bring successive complaints, particularly by parties who had joined as a third party in earlier similar disputes, with nothing to add, would not provide any security to the multilateral trading system and would go against its predictability.

6.6 According to India, the Panel's failure to so assess the EC complaint was inconsistent with the panel rulings in the Bananas case⁸⁶ made with reference to the power of panels to examine compliance with Article 6.2 of the DSU.

6.7 India argued that the consultations factor relied upon by the Panel in what is now paragraph 7.16 was not relevant as there was nothing to be added. India also noted that the EC had requested the Panel to "extend its findings" and not to settle the dispute. India considered that there was no possibility in the scheme of the DSU for a panel to extend the findings of an earlier dispute.

6.8 Noting the Panel's discussion in what is now paragraph 7.22, India observed that the Panel had not found itself the appropriate forum for resolving certain issues raised by India. In India's view, proper consideration of the context and the object and purpose of the DSU as mentioned in the preceding paragraphs would have led to a different conclusion.

6.9 India argued that the security and predictability of the multilateral trading system envisaged by Article 3.2 of the DSU bound the parties to the statements made by them in earlier disputes, unless the context did not permit the same. According to India, India's argument in this regard at paragraph 4.2 had not been dealt with by the Panel. The complainant's statement in earlier cases before a panel should have been taken as an admission in the present case and the EC should not have been allowed to make a volte face in the present procedures.

6.10 India considered that the acceptance by the Panel at what is now paragraph 7.15 of the complainant's right to determine whether and when to pursue a complaint under the DSU was fraught with danger and was not consistent with the spirit of Article 3.10 and 3.12 of the DSU. India also considered that acceptance of such a right would be inconsistent with the principles of the DSU relating to non-contentious acts, good faith and achievement of positive solutions to disputes and would result in harassment of the defending Member. There would also be problems of implementation of different DSU decisions given at different points in time. India felt that this should have engaged the attention of the Panel.

6.11 In India's view, there was another inconsistency in the findings of the Panel. While the trouble, expense and exposure of India to successive WTO proceedings had not influenced the Panel's findings, in what is now paragraph 7.54 the Panel was relying on the mere possibility of the challenge of India's mailbox system under the administrative instructions and the further possibility of its being struck down by a court of law in India. The finding emphasized the guarantee that the public - including interested nationals of WTO Members - be adequately informed, but denied a similar guarantee to a harassed defending party.

6.12 According to India, the Panel's findings would lead to a vacuum in the scheme of the DSU. India considered that it was an established rule of interpretation that where two views were possible, the one which promoted the scheme should be favoured. Non-examination of India's arguments caused prejudice to India's defence.

6.13 The Panel carefully examined these comments by India, but was not convinced that it should modify its findings regarding Articles 9.1 and 10.4 of the DSU. The Panel noted that India's arguments reflected in paragraphs 6.2 to 6.6 above were essentially a repetition of the arguments that had been reflected in paragraph 4.2 of the report. The Panel's view in this regard was clearly stated in what is now paragraph 7.23. In the Panel's view, India's criticism, as reflected in paragraphs 6.7 and 6.8 above, of what is now paragraph 7.16 was unwarranted because the Panel was not "relying on" the consultations factor. The Panel's view remained unchanged: it was not feasible to establish a single panel to hear the complaints of the United States and the EC in this instance. Nor did the Panel simply "extend its findings" in the prior case.⁸⁷ Regarding India's argument about a volte face by the EC (see paragraph 6.9 above), the Panel took the view that statements made by the EC in another context � that is to say, not the context of the present dispute including, in the present situation, statements made in the context of dispute WT/DS50 - were outside the purview of its examination of the matter referred to it; it did not consider the statements made by the EC in this case contradictory. The Panel took note of India's comments reflected in paragraphs 6.8 and 6.10 above, but did not consider it necessary to amend its reasoning in what are now paragraphs 7.15 and 7.22 below. Regarding India's charge of inconsistency within the findings (see paragraph 6.11 above), the Panel failed to understand the basis of comparison, as suggested by India, between the procedural aspects of the DSU and the substantive obligations under the TRIPS Agreement. Finally, the Panel did not consider that its findings in this particular case would lead to a vacuum in the scheme of the DSU.

6.14 Accordingly, the Panel did not introduce any changes to its findings regarding Articles 9.1 and 10.4 of the DSU.

B. Article 70.8(a) and 70.9 of the Trips Agreement

6.15 India noted that, in what is now paragraph 7.30, the Panel concluded that it was not legally bound by the conclusions of the Panel in dispute WT/DS50 as modified by the Appellate Body report, but that in what are now paragraphs 7.55 and 7.73 the Panel refused to review questions relating to the manner in which the Appellate Body had reached its conclusions. In India's view, the two positions were mutually inconsistent. India considered that once the Panel held that it was not legally bound by the conclusions arrived at by an earlier panel or Appellate Body report, it followed that it was legally competent to review their conclusions as well as reasons. The absence of power to review conclusions reached earlier was different from the absence of material to review the process of arriving at such conclusions. In India's view, the self-imposed limitation by the Panel in not reviewing the manner in which the Panel or the Appellate Body in dispute WT/DS50 had reached their conclusions was not warranted.

6.16 In the Panel's view, however, India's comments above failed to take account of the remainder of what are now paragraph 7.30, where the Panel stated:

and paragraph 7.33, where the Panel stated:

Moreover, the paragraphs to which India had referred, i.e. what are now paragraphs 7.55 and 7.73, not only stated that the Panel was of the view that it was not for it to review questions regarding how the Appellate Body had arrived at its conclusions, but also that the Panel did "not consider it necessary in the light of the foregoing".

C. Article 70.8(A) of the Trips Agreement

6.17 India argued that the finding at what is now paragraph 7.51 was not substantiated by its reasoning. According to India, the basis for the Panel's assumption was that, had the administrative instructions been effective, there would have been no need to recommend the amendment of the Indian Patents Act. In other words, India suggested that the Panel believed that statutory actions could only "create" law. However, according to India, many statutory provisions were of a declaratory or clarificatory nature: they declared in a statutory form what the law otherwise was. Since the Panel had not examined whether the amendments to the Patents Act fell in the category of clarification provisions, in India's view, what is now paragraph 7.51 should be deleted from the final report.

6.18 The Panel examined the point made by India, but saw no reason to delete what is now paragraph 7.51. The paragraph was stating a fact by reiterating the content of paragraph 2.3 above. For clarification, it decided to add a footnote to paragraph 7.51 which refers back to the language of paragraph 2.3.

6.19 In the interim report, the fourth sentence of the paragraph corresponding to what is now paragraph 7.54 read as follows: "In any event, India itself admits that once an exclusive marketing right is granted to a mailbox applicant, the competitor would be able to demonstrate actual damage, which constitutes proper cause of action". India claimed that this sentence did not put India's argument in the proper context. India's reply to the Panel cited in footnote 59 referred to the time when a mailbox application would result in the grant of a patent or exclusive marketing right. According to India, nowhere had India made the admission attributed to it.

6.20 The Panel had some difficulty in addressing the point raised by India because the sentence to which India was referring was clearly limited to the situation when an exclusive marketing right had been granted; there was no suggestion that India had made a statement in regard to any earlier date. Nonetheless, given the need to avoid any risk of misrepresentation, the Panel decided to modify what is now paragraph 7.54 as follows. In the sentence referred to in the previous paragraph, the phrase "India itself admits that" was deleted and the word "would" was changed to "might". The Panel also decided that it would be a helpful clarification to add two new sentences, reading: "As pointed out in paragraph 7.67 and following below, since it is impossible to indicate the exact time on which a product may meet the terms of Article 70.9, WTO Members concerned are required to reckon with the possibility that this moment may arise at any time subsequent to the date of entry into force of the WTO Agreement. By the same token, the possibility of a dispute over a relevant filing date in the context of a court procedure regarding the grant of an exclusive marketing right must also be reckoned with at any point in time after 1 January 1995."

6.21 India observed that the Panel noted that applications had been received by the Patent Office and stored for future action (paragraph 7.56); that to date neither the system established by the administrative instructions nor any individual mailbox applications had been challenged before a court (paragraph 7.54); and that economic operators in this area were usually well informed about the systems for the protection of their rights (paragraph 7.56). However, no inference had been drawn that India had provided a "means" by which applications for patents of inventions could be filed. On the contrary, the Panel had come to the conclusion that "there must be a guarantee that the public - including interested nationals of other WTO Members - is adequately informed" (paragraph 7.56).

6.22 In India's view, this added something more to the text of Article 70.8(a) than could be done through interpretation. According to India, the drafters of the TRIPS Agreement had been consciously silent on the nature, method or sweep of the "means". India considered that the Panel put an additional obligation by reading a guarantee in the obligation under Article 70.8(a). The conclusion at what is now paragraph 9.1 was, therefore, not in consonance with the provisions of Article 70.8(a).

6.23 The Panel did not agree with India and recalled that the relevance of the unwritten, unpublished nature of the administrative instructions had already been discussed by the Panel in the previous case and had also been addressed by the Appellate Body. In what are now paragraphs 7.56 to 7.58, the Panel reiterated the essence of the reasoning in question while adding its views on India's argument that the present system ensured the retention of the necessary facts to determine novelty and priority for the purposes of decisions on the future grant of patent rights pursuant to Article 70.8(b) and (c). In any event, the Panel's reasoning which led to its conclusion at what is now paragraph 9.1 was not limited to paragraph 7.56. However, for clarification, the Panel decided to change the last sentence of what is now paragraph 7.56, so that it would read: "While Article 70.8 does not explicitly provide for a publication obligation, doubts have to remain as to whether an unwritten and unpublished system for permitting the filing of applications by nationals of other WTO Members could be construed as a 'means' which adequately responds to the requirements of Article 70.8." However, the Panel did not feel it necessary to make a specific finding on the point.

VII. Findings

A. Claims Of The Parties

Introduction

7.1 This dispute arises essentially from the following facts. Section 5 of the Indian Patents Act of 1970 does not permit product patents to be granted in respect of "substances intended for use, or capable of being used, as food or as medicine or drug".⁸⁸ Only "claims for the methods or processes of manufacture shall be patentable" in respect of those substances.⁸⁹ Thus, India currently does not make available patent protection for pharmaceutical and agricultural chemical products commensurate with the obligations of Article 27 of the Agreement on Trade-Related Aspects of Intellectual Property Rights ("TRIPS Agreement"), which requires that "patents shall be available for any inventions, whether products or processes, in all fields of technology ... ", subject to the transition provisions of Articles 65.4 and 70.8 of the TRIPS Agreement and to certain exceptions not applicable in this case.

7.2 On 31 December 1994, while Parliament was in recess, the President of India promulgated the Patents (Amendment) Ordinance 1994, with a view to meeting India's obligations under Article 70.8 and 70.9 of the TRIPS Agreement, pursuant to the recommendation by a group of patent experts. The Ordinance inserted a new Chapter IVA in the Patents Act to deal with "a claim for patent of an invention for a substance itself intended for use, or capable of being used, as medicine or drug". The Ordinance explicitly allowed the filing of patent applications in respect of those substances and subsequent processing by the Patent Offices notwithstanding the provisions of Sections 5 and 12 of the Patents Act.⁹⁰ It also established a system for the grant of "exclusive marketing rights" with respect to the products that are the subject of such patent applications, subject to certain conditions.

7.3 The Ordinance had been issued in exercise of the powers conferred upon the President by Article 123 of the Indian Constitution, which enables the President to legislate when Parliament (either House or both Houses) is not in session and the President "is satisfied that circumstances exist which render it necessary for him to take immediate action". However, such Presidential actions expire six weeks after the reassembly of Parliament. Thus, under the relevant provisions of the Indian Constitution, the Patents Ordinance 1994 lapsed on 26 March 1995.⁹¹ In March 1995, the Indian administration introduced the Patents (Amendment) Bill 1995 into Parliament to implement the contents of the Ordinance on a permanent basis. However, the Bill lapsed because of the dissolution of Parliament on 10 May 1996.

7.4 Since the lapse of the Patents Ordinance, India has continued receiving patent applications for pharmaceutical or agricultural chemical products through unpublished "administrative instructions". Between 1 January 1995 and 31 January 1998, a total of 2,212 applications for pharmaceutical and agricultural chemical products have been received.⁹² All these applications are, according to India, stored separately for future action under subparagraphs (b) and (c) of Article 70.8 and under Article 70.9 of the TRIPS Agreement.

7.5 Under the current Indian legislation, there is no legal basis - procedurally or substantively - for the grant of exclusive marketing rights when a product which is the subject of a patent application under Article 70.8 (commonly called a "mailbox" application) becomes eligible for protection under Article 70.9 of the TRIPS Agreement. So far, no request for the grant of exclusive marketing rights has been submitted to the Government of India.⁹³

7.6 On 20 November 1996, the Dispute Settlement Body (DSB) established a panel to examine this matter at the request of the United States (WT/DS50). The European Communities and their member States (hereinafter collectively referred to as the "EC") participated in the panel process as an interested third party. The report of the Panel, which found that India violated the provisions of Article 70.8(a) and Article 70.9 of the TRIPS Agreement, was circulated to WTO Members on 5 September 1997. India appealed from certain issues of law and legal interpretations in the Panel report. The report of the Appellate Body, which modified the reasoning of the Panel but essentially upheld the conclusions of the Panel report in respect of Article 70.8(a) and Article 70.9, was circulated to WTO Members on 19 December 1997. The Appellate Body report and the Panel report, as modified by the Appellate Body, were adopted by the DSB on 16 January 1998. At the DSB meeting of 22 April 1998, the United States and India announced that they had agreed on an implementation period of 15 months.

Claims of the Complainant

7.7 The EC claims - largely relying on the conclusions of the Panel and the Appellate Body in dispute WT/DS50 � that: (a) India has not complied with its obligations under Article 70.8 of the TRIPS Agreement 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 period provided for in Article 65 of the TRIPS Agreement; (b) India has not complied with it obligations under Article 70.9 of the TRIPS Agreement; and (c) India thereby nullifies or impairs benefits accruing directly or indirectly to the EC under the TRIPS Agreement.

Claims of the Respondent

7.8 India claims that the EC's complaint in this case should be dismissed as inconsistent with the rules of the Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU) on multiple complaints, in particular Articles 9.1 and 10.4, because the EC did not join the United States' complaint in the previous case. In the alternative, India claims that: (i) the mailbox system currently in force in India is consistent with Article 70.8(a) of the TRIPS Agreement; and (ii) India has not acted inconsistently with Article 70.9 of the TRIPS Agreement because it is not obligated to establish a system for the grant of exclusive marketing rights before all the conditions for the grant of the rights have been met in respect of a specific product.

B. Procedural Issues

Introduction

7.9 India has requested the Panel to dismiss the EC's complaint as inadmissible on procedural grounds. India argues that since it was "feasible" for the EC to have brought its complaint simultaneously with the United States' complaint (WT/DS50), the EC was required to do so. In India's view, the principle of stare decisis does not apply to the interpretations of a panel or the Appellate Body.⁹⁴ As a result, it argues that, in the absence of a specific rule to the contrary, successive multiple complaints by different Members on the same matter would have to be examined as separate new cases. The resulting danger of contradictory decisions and the waste of resources, according to India, would be tremendous. Furthermore, India argues that such complaints amount to unwarranted harassment. In India's view, these shortcomings can be avoided by strict interpretation of Articles 9.1 and 10.4 of the DSU, which require multiple complainants to submit their case to the same panel "whenever feasible" or "wherever possible".

7.10 The EC disagrees with India on the interpretation of Articles 9.1 and 10.4 of the DSU. The EC argues that neither Article 9 nor Article 10 impose any obligation on WTO Members to make a complaint at a given point in time. In support of its argument, the EC cites Article 3.7 of the DSU, which provides that Members shall, before bringing a case, exercise their judgement as to whether action under the DSU would be fruitful.

Article 9 of the DSU

7.11 Article 9 of the DSU, which sets out the procedure for multiple complaints, provides as follows:

7.12 India argues that Article 9.1 does not make clear to whom it is addressed because of its use of the passive voice. However, according to India, in view of its object and purpose, the duty to submit multiple complaints to a single panel whenever feasible is a duty falling on both the WTO and its membership. India claims that the EC's complaint should be dismissed because the EC did not perform this duty.

7.13 In order to assess India's argument, we need to consider: (i) the nature of the requirement contained in Article 9.1; (ii) the rights generally of Members under the DSU; and (iii) whether it was feasible to establish a single panel in this particular case.

7.14 Given their ordinary meaning, the terms of Article 9.1 are directory or recommendatory, not mandatory. They direct that a single panel should (not "shall") be established, and that direction is limited to cases where it is feasible. We disagree with India that the addressee of Article 9.1 is not clear. Article 9.1 is clearly a code of conduct for the DSB because its provisions pertain to the establishment of a panel, the authority for which is exclusively reserved for the DSB. As such, Article 9.1 should not affect substantive and procedural rights and obligations of individual Members under the DSU.

7.15 Indeed, the text of Article 9.1, as well as the text of Article 9.2, which is part of the context of Article 9.1, make it clear that Article 9 is not intended to limit the rights of WTO Members. In our view, one of those rights is the freedom to determine whether and when to pursue a complaint under the DSU. According to Article 3.7 of the DSU, "[t]he aim of dispute settlement mechanism is to secure a positive solution to a dispute. A solution mutually acceptable to the parties to a dispute and consistent with the covered agreements is clearly to be preferred". It would be inconsistent with this aim of the dispute settlement mechanism to attempt to force Members to take decisions earlier than they wish on whether to request a panel in a dispute, or to continue consultations aimed at securing a mutually acceptable solution.

7.16 As to feasibility, it is not disputed by the parties that the complaints by the United States (WT/DS50) and the EC (WT/DS79) relate to the same matter, i.e. India's compliance with Article 70.8 and 70.9 of the TRIPS Agreement. Was it then "feasible" for the DSB to establish a single panel at the time of the United States' panel request in November 1996? The answer is no, because at that time the EC had not requested the establishment of a panel. Indeed, the EC was not even entitled to make such a request as it was not until 28 April 1997 that the EC requested consultations with India on this matter.

7.17 Accordingly, we find no violation of Article 9.1 of the DSU.

Continuation: Article 10 of the DSU

⁸⁶ India referred to paragraph 7.26 of the panel reports on European Communities - Regime for the Importation, Sale and Distribution of Bananas, WT/DS27/R, adopted on 25 September 1997. See paragraph 4.2 above.

⁸⁷ See also section B below.

⁸⁸ According to Section 2(1)(l) of the Patents Act, the term "medicine or drug" includes "insecticides, germicides, fungicides, weedicides and all other substances intended to be used for the protection or preservation of plants" (see Annex 3 of this report). 

⁸⁹ See paragraph 2.9 above and Annex 3 of this report. 

⁹⁰ Section 12 sets out the procedure for the reference of patent applications by the Controller to examiners (see Annex 3 of this report). 

⁹¹ See paragraph 2.2 above. 

⁹² See paragraph 2.10 above.

⁹³ One EC pharmaceutical company has applied for marketing approval for a product regarding which a mailbox application has been filed (see Annex 4 of this report). 

⁹⁴ See also section C below.