Article 10 of the DSU

7.18 We now turn to the examination of whether the EC's complaint in the present case is permissible under Article 10 of the DSU, which provides:

7.19 India claims that since the EC was a third party in the previous case, and since it was "possible" to do so, it was required to submit its complaint to the Panel which examined the United States' claims on this matter (WT/DS50) under Article 10.4 of the DSU. As the EC did not meet this requirement, India requests that the Panel declare the EC's complaint as inadmissible.

7.20 India's claim that the EC did not meet the requirement of Article 10.4 can only be understood in the light of India's view that the term "original panel" is limited to a panel which has not yet issued its final report. We do not see that this limitation flows from the ordinary meaning of the text. We also note that, the phrase "original panel" is used elsewhere in the DSU (Article 21.5 and Article 22.6), where it is clear that the reference is to a panel the final report of which has already been issued and adopted. The text of Article 10.4, read in this context, does not support the Indian view.

7.21 Thus, in our view, the terms of Article 10.4 have been complied with in the present case. The EC, which was a third party in the proceeding initiated by the United States in respect of the same Indian measures, decided to have recourse to a panel under the DSU. This is precisely what Article 10.4 permits. The two members of the Panel in WT/DS50 were reappointed, while the Panel chairman, who was no longer available, was replaced.⁹⁵ We therefore find that India's claim regarding a violation of Article 10.4 lacks both factual and legal basis.

Conclusion

7.22 We note that India's rationale behind its restrictive reading of Articles 9.1 and 10.4 is that an unmitigated right to bring successive complaints by different parties based on the same facts and legal claims would entail serious risks for the multilateral trade order because of the possibility of inconsistent rulings, as well as problems of waste of resources and unwarranted harassment. While we recognize that these are serious concerns, this Panel is not an appropriate forum to address these issues.

7.23 According to Article 11 of the DSU, the Panel's role is to "make an objective assessment of the matter before it, including an objective assessment of the facts of the case and the applicability and conformity with the relevant covered agreements". Furthermore, under Article 3.2 of the DSU, the purpose of the panel process is to "clarify the existing provisions of [covered] agreements in accordance with customary rules of interpretation of public international law". The same paragraph goes on to state that "Recommendation and rulings of the DSB cannot add to or diminish the rights and obligations provided in the covered agreements", and Article 19.2 also states that "... in their findings and recommendations, the panel and the Appellate Body cannot add to or diminish the rights and obligations provided in the covered agreements".⁹⁶ Thus, the Panel is required to base its findings on the language of the DSU. We simply cannot make a ruling ex aequo et bono to address a systemic concern divorced from explicit language of the DSU.

7.24 For the reasons stated above, the Panel rejects India's request for dismissal of the EC's complaint.

C. The Extent of the Binding Nature of Precedents

7.25 Before we move on to the examination of substantive aspects of this dispute, however, we need to address the question of whether, and if so, to what extent we are bound by the reports by the Panel and the Appellate Body regarding the same subject-matter in the dispute between the United States and India (WT/DS50). This question is relevant because the EC, on the one hand, is asking the Panel to "extend" to it the findings in the earlier dispute and India, on the other hand, argues that it is entitled to "normal dispute settlement procedures" under Article 10.4 of the DSU.

7.26 A number of GATT panels have examined complaints by different contracting parties involving the same or similar measures of a responding party. For instance, both the 1983 panel report on Spring Assemblies (complaint by Canada)⁹⁷ and the 1989 panel report on Section 337 (complaint by the EC)⁹⁸ concerned the application of Section 337 of the Tariff Act by the United States. The 1980 panel report on Apples (complaint by Chile)⁹⁹ and the 1989 panel reports on Dessert Apples (complaints by Chile and the United States)¹⁰⁰ essentially dealt with the same measure taken by the EEC.¹⁰¹ The 1988 panel report on Canadian Liquor Boards (complaint by the EC)¹⁰² and the 1992 panel report on the same subject-matter (complaint by the United States)¹⁰³ were indeed examined by the same panelists. The unadopted panel reports on Tuna¹⁰⁴ addressed the same legislation - the Marine Mammal Protection Act - of the United States.

7.27 The issue of whether adopted panel reports are stare decisis, i.e. binding precedents, has not been directly addressed in any of these cases. The following passage from the second Tuna report is the only instance where a discussion of stare decisis occurs in GATT panel reports:

It should be noted that in the Tuna case, the EEC did not rely on the notion of stare decisis and rather advocated a softer approach of "coherence". It should also be noted that this argument was about the interpretation of Article XX in general and that the EEC did not ask the panel simply to extend the findings of the earlier Tuna panel.

7.28 Turning to the issue of how adopted panel reports should be treated in the absence of stare decisis, we note that the Appellate Body discussed the effect of adopted panel reports in its report on the Japan - Liquor case as follows:

7.29 This approach follows GATT practice, as explained in the above-mentioned 1989 Apples report, which stated:

7.30 It can thus be concluded that panels are not bound by previous decisions of panels or the Appellate Body even if the subject-matter is the same. In examining dispute WT/DS79 we are not legally bound by the conclusions of the Panel in dispute WT/DS50 as modified by the Appellate Body report. However, in the course of "normal dispute settlement procedures" required under Article 10.4 of the DSU, we will take into account the conclusions and reasoning in the Panel and Appellate Body reports in WT/DS50. Moreover, in our examination, we believe that we should give significant weight to both Article 3.2 of the DSU, which stresses the role of the WTO dispute settlement system in providing security and predictability to the multilateral trading system, and to the need to avoid inconsistent rulings (which concern has been referred to by both parties).¹⁰⁹ In our view, these considerations form the basis of the requirement of the referral to the "original panel" wherever possible under Article 10.4 of the DSU.

D. Article 70.8(A) of the Trips Agreement

Introduction

7.31 We now turn to the examination of the EC's claim on Article 70.8 of the TRIPS Agreement. Article 70.8 provides as follows:

The EC claims, largely relying on the results of the previous case (dispute WT/DS50), that India has failed to fulfil its obligation under this paragraph by not establishing a valid system for receiving "mailbox" applications. In particular, it notes that there has been no legislative change in the Indian patent system after the adoption of the Panel and the Appellate Body reports in dispute WT/DS50, in which it was found that India had failed to fulfil such obligation.

7.32 Initially, we note that the only obligation India currently assumes under Article 70.8 is that of subparagraph (a), the effective date of which is "the date of entry into force of the WTO Agreement", i.e., 1 January 1995. Obligations under subparagraphs (b) and (c) will become binding on India only "as of the date of application of this Agreement", which in this particular instance means no later than 1 January 2005 by virtue of the provisions of paragraphs 2 and 4 of Article 65 of the TRIPS Agreement. Thus, the question before us is whether India has taken the action necessary to implement its obligations under subparagraph (a) of Article 70.8.

7.33 In this regard, we recall that the Panel in dispute WT/DS50 reached the conclusion that India had failed to take the action necessary to implement its obligations under Article 70.8(a), which had been upheld by the Appellate Body. We note that India has not introduced any changes to its patent regime since the adoption of the Panel and the Appellate Body reports in dispute WT/DS50. However, we also note that the Appellate Body modified the reasoning in the Panel report in dispute WT/DS50 and that India has provided certain additional information regarding its mailbox system to us. In the following analysis, we will take account of these new elements as necessary.

Nature of the Obligations

7.34 We recall that the Panel report in dispute WT/DS50 first described the nature of obligations at issue under Article 70.8(a). The EC, by requesting the Panel to extend the finding in that report as modified by the Appellate Body, implicitly accepts the analysis set out in the following six paragraphs. India does not contest this part of the finding in the previous case, either.

7.35 Subparagraph (a) of Article 70.8, like all other provisions of the covered agreements, must be interpreted in good faith in the light of: (i) the ordinary meaning of its terms; (ii) the context; and (iii) its object and purpose, following the rules set out in Article 31(1) of the 1969 Vienna Convention on the Law of Treaties (hereinafter referred to as the "Vienna Convention").

7.36 Subparagraph (a) starts with the phrase "notwithstanding the provisions of Part VI". This indicates that the transitional arrangements contained in Part VI of the TRIPS Agreement are not applicable. Thus, a Member not making available as of 1 January 1995 patent protection for pharmaceutical and agricultural chemical products commensurate with its obligations under Article 27 cannot avail itself of a transitional period under Article 65 regarding the operation of this subparagraph. This is clear from the textual analysis and in any event is not in dispute between the parties. The substantive obligation to be assumed by such a Member as from 1 January 1995 is to provide "a means" by which applications for patents for inventions in respect of pharmaceutical and agricultural chemical products "can be filed". The analysis of the ordinary meaning of these terms alone does not lead to a definitive interpretation as to what sort of "means" is required by this subparagraph.

7.37 We thus need to analyse the context of this subparagraph. The means for filing is necessary because, under subparagraphs (b) and (c) of Article 70.8, a Member which does not make patents available as of 1 January 1995 for pharmaceutical and agricultural chemical products must, after the expiry of the transitional period, apply the criteria for patentability as laid down in the TRIPS Agreement to the applications so filed and must accord patent protection for those products that meet these criteria. In addition, the Member is obligated to grant exclusive marketing rights to those products that meet the conditions set out in Article 70.9 even during the transitional period. The terms of subparagraph (a) must be understood in this context.

7.38 Furthermore, the object and purpose of the TRIPS Agreement must be taken into account in our analysis. Article 27 of the TRIPS Agreement requires that patents be made available in all fields of technology, subject to certain narrow exceptions. Article 65 provides for transitional periods for developing countries: in general five years from the entry into force of the WTO Agreement, i.e. 1 January 2000, and an additional five years to provide for product patent protection in areas of technology to which such protection would otherwise have to be extended in its territory on 1 January 2000 under the general transition rule. Thus, in such areas of technology, developing countries meeting these conditions are not required to provide product patent protection until 1 January 2005. However, these transitional provisions are not applicable to Article 70.8, which ensures that, if product patent protection commensurate with Article 27 is not already available for pharmaceutical and agricultural chemical product inventions, a means must be in place as of 1 January 1995 which allows for the entitlement to file patent applications for such inventions and the allocation of filing and priority dates to them so that the novelty of the inventions in question and the priority of the applications claiming their protection can be preserved for the purposes of determining their eligibility for protection by a patent at the time that product patent protection will be available for these inventions, i.e. at the latest after the expiry of the transitional period.

7.39 In order to achieve the object and purpose of the TRIPS Agreement, as expressed in Article 70.8, there must be a mechanism to preserve the novelty of pharmaceutical and agricultural chemical inventions which are currently outside the scope of product patent protection and the priority of applications claiming their protection, for the purposes of determining their eligibility for protection by patents after the expiry of the transitional period. Once these inventions can be protected by product patents, Article 27 requires such patents to be available for those inventions that are: (i) new; (ii) involve an inventive step; and (iii) are capable of industrial application. In accordance with the normal meaning of these conditions, an invention is new and involves an inventive step if, at the filing date or, if applicable, the priority date of the application in which patent protection is claimed, the invention did not form part of the prior art and required an inventive step to be deduced from that prior art by a person skilled in the art. Thus, in order to prevent the loss of the novelty of an invention in this sense, filing and priority dates need to have a sound legal basis if the provisions of Article 70.8 are to fulfil their purpose. Moreover, a filing must entitle the applicant to claim priority, if available, on the basis of an earlier filing in respect of the claimed invention over applications with subsequent filing or priority dates. Without legally sound filing and priority dates, the mechanism to be established on the basis of Article 70.8 will be rendered inoperational. In our view, preservation of novelty and priority in respect of applications for product patents in respect of pharmaceutical and agricultural chemical inventions so as to provide for effective future patent protection after examination of the applications as of, at the latest, 1 January 2005 is the central object and purpose of Article 70.8(a). This is a special obligation imposed on those Members benefitting from the transitional arrangements.

7.40 The findings above can be confirmed by the negotiating history of the TRIPS Agreement.¹¹⁰ We note that in the negotiation of the TRIPS Agreement the question of patent protection for pharmaceutical and agricultural chemical products was a key issue, which was negotiated as part of a complex of related issues concerning the scope of the protection to be accorded to patents and some related rights and the timing of the economic impact of such protection. A critical part of the deal struck was that developing countries that did not provide product patent protection for pharmaceuticals and agricultural chemicals were permitted to delay the introduction thereof for a period of ten years from the entry into force of the WTO Agreement. However, if they chose to do so, they were required to put in place a means by which patent applications for such inventions could be filed so as to allow the preservation of their novelty and priority for the purposes of determining their eligibility for protection by a patent after the expiry of the transitional period. In addition, they were required to provide also for exclusive marketing rights in respect of the products in question if those products obtained marketing approval during the transitional period, subject to a number of conditions. It is our view that this means that Article 70.8(a) requires the developing countries in question to establish "a means" for filing mailbox applications that provides a sound legal basis to preserve both the novelty of the inventions and the priority of the applications as of the relevant filing and priority dates.

Mechanism for Implementing the Obligations

7.41 As noted in the previous case, pursuant to Article 1.1 of the TRIPS Agreement, it is up to India to decide how to implement its obligations under Article 70.8.¹¹¹ After examining the consistency of the administrative instructions at issue with the Patents Act, the Panel in dispute WT/DS50 reached the conclusion that the means chosen by India to implement its obligations under Article 70.8(a), i.e. administrative instructions regarding the continued receipt of mailbox applications, does not provide a sound legal basis for preserving the novelty and priority as required under Article 70.8(a). The Appellate Body upheld this conclusion in stating that "we are not persuaded that India's 'administrative instructions' provide a sound legal basis to preserve novelty of inventions and priority of applications as of the relevant filing and priority dates".¹¹² However, on the basis of additional information and arguments provided to us, India essentially requests us to reverse the finding in the previous case and to find that there is a sound legal basis in the current system.

7.42 The Panel report in dispute WT/DS50 follows the approach to the burden of proof established by the Appellate Body in the Shirts and Blouses case.¹¹³ India claims that this approach violates established principles governing the burden and standard of proof.¹¹⁴ We note, however, that the correctness of this approach was affirmed by the Appellate Body.¹¹⁵ We will follow the same approach in the present case. It is our view that the EC has, on the basis of its reference to the finding in the previous case - upheld by the Appellate Body - that India was in violation of its obligations, established a prima facie case of violation with respect to Article 70.8(a). Now the onus shifts to India to bring forward evidence and arguments to disprove the claim by the EC.

7.43 In dispute WT/DS50, the Panel found that India's current system based on administrative instructions does not provide a sound legal basis to preserve both the novelty of the inventions and the priority of the applications as of the relevant filing and priority dates, because it creates a certain degree of legal insecurity in that it requires Indian officials to ignore certain mandatory provisions of the Patents Act.¹¹⁶

7.44 The Panel noted that under Section 12(1) of the Patents Act, when the complete specification has been filed in respect of a patent application, the Controller must refer the matter to an examiner and that Section 12(2) obliges the examiner ordinarily to complete examination within 18 months of the date of reference by the Controller. The Panel also noted that under Section 15(2) of the Patents Act, any application for the grant of a patent on a pharmaceutical or agricultural chemical product must be refused by the Controller for lack of patentability.

7.45 In its examination of the Panel's finding, the Appellate Body stated:

7.46 India now argues that this reading of the Patents Act was incorrect. According to India, there is no conflict between the administrative instructions giving effect to a "mailbox" mechanism and the Patents Act; Article 73 of the Indian Constitution defining the extent of executive power provides a sound legal basis for these instructions. India argues this on the basis that, while Section 12(1) of the Patents Act requires the Controller to refer patent applications to an examiner, it does not specify the time-frame within which the Controller must do so. Moreover, India draws attention to a principle of statutory interpretation in Indian law to the effect that, even where a statutory provision specifies a time for performing a statutory duty, the time specified is only directory and not mandatory. It also argues that a principle of statutory interpretation in Indian domestic law that a statutory provision must be interpreted consistently with India's existing international obligations further justifies the Controller using discretion on matters of timing in order to give effect to mailbox obligations.

7.47 In this regard, we note that arguments relating generally to administrative discretion were made by India also in dispute WT/DS50. Indeed, the arguments on such discretion and on international law now made by India are not based on new developments in the Indian legal system. However, we will examine India's claim in more detail in view of the additional information provided by India and India's further elaboration of its arguments.

7.48 In regard to the time-frame under Section 12(1) of the Patents Act for the Controller to refer applications to an examiner, we note that the relevant part of the text of Section 12(1) reads: "When the complete specification has been filed in respect of an application for a patent, the application and the specification relating thereto shall be referred by the Controller to an examiner ...". We are not persuaded that this text gives complete discretion to the Controller regarding the timing of the referral. Indeed, on its face it specifies a time for referral, i.e. "[w]hen the complete specification has been filed".

Continuation: Mechanism for Implementing the Obligations

⁹⁵ See paragraph 1.2 above. 

⁹⁶ The DSU is not included in the definition of the "covered agreements" under Article 1.1, first sentence. However, the second sentence of Article 1.1 makes it clear that the rules and procedures of the DSU are applicable to disputes concerning Member's rights and obligations under the DSU. 

⁹⁷ Panel report on United States - Imports of Certain Automotive Spring Assemblies, adopted on 26 May 1983, BISD 30S/107. It should be noted that this report was adopted "on the understanding that this shall not foreclose future examination of the use of Section 337 to deal with patent infringement cases from the point of view of consistency with Articles III and XX of the General Agreement" (C/M/168). 

⁹⁸ Panel report on United States - Section 337 of the Tariff Act of 1930, adopted on 7 November 1989, BISD 36S/345 

⁹⁹ Panel report on EEC - Restrictions on Imports of Apples from Chile, adopted on 10 November 1980, BISD 27S/98 

¹⁰⁰ Panel reports on EEC - Restrictions on Imports of Dessert Apples, Complaint by Chile, adopted on 22 June 1989, BISD 36S/93; EEC - Restrictions on Imports of Apples, Complaint by the United States, adopted on 22 June 1989, BISD 36S/135 

¹⁰¹ There is another panel report dealing with the same subject-matter between the EEC and Chile. DS39/R, circulated on 20 June 1994. This is a short report describing that the issue was settled bilaterally. 

¹⁰² Panel report on Import, Distribution and Sale of Alcoholic Drinks by Canadian Provincial Marketing Agencies, adopted on 22 March 1988, BISD 35S/37 

¹⁰³ Panel report on Canada - Import, Distribution and Sale of Certain Alcoholic Drinks by Provincial Marketing Agencies, adopted on 18 February 1992, BISD 39S/27 

¹⁰⁴ Panel reports on United States - Restrictions on Imports of Tuna, Complaint by Mexico, DS21/R, circulated on 3 September 1991; United States - Restrictions on Imports of Tuna, Complaints by the EEC and the Netherlands, DS29/R, circulated on 19 June 1994 

¹⁰⁵ Document DS29/R, op. cit., paragraph 3.74 

¹⁰⁶ Ibid. (Appellate Body report), page 14. The footnote to the cited passage states: "It is worth noting that the Statute of the International Court of Justice has an explicit provision, Article 59, to the same effect. This has not inhibited the development by that Court (and its predecessor) of a body of case law in which considerable reliance on the value of previous decisions is readily discernible." 

¹⁰⁷ The footnote to this sentence refers to BISD 27S/98-117. 

¹⁰⁸ Panel report on Dessert Apples (complaint by Chile), op. cit., paragraph 12.1. The parallel report addressing the United States' complaint, op. cit., contains almost identical paragraphs at paragraph 5.1. 

¹⁰⁹ See paragraphs 4.2, fifth indent and 4.8 above.

¹¹⁰ We note that Article 32 of the Vienna Convention gives the negotiating history a status of "supplementary means of interpretation" only. Here we use it only to confirm the meaning resulting from the application of the rules set out in Article 31 of the Vienna Convention. 

¹¹¹ Document WT/DS50/R, paragraph 7.33 

¹¹² Document WT/DS50/AB/R, paragraph 70 

¹¹³ Appellate Body report on Measure Affecting Imports of Woven Wool Shirts and Blouses from India, adopted on 23 May 1997, WT/DS33/AB/R, page 16 

¹¹⁴ See paragraph 4.12 above. 

¹¹⁵ Document WT/DS50/AB/R, paragraph 74 

¹¹⁶ Document WT/DS50/R, paragraph 7.35 

¹¹⁷ Ibid., paragraph 7.37 

¹¹⁸ Document WT/DS50/AB/R, paragraph 69