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India - Patent Protection for Pharmaceutical and Agricultural Chemical Products Report of the Panel 4.29 India rebutted by stating that the United States had not responded to its arguments, based on the methods of interpretation set out in the Vienna Convention on the Law of Treaties, demonstrating that the obligation to accord exclusive marketing rights was triggered by the events listed in Article 70.9. 40 Neither the wording of the provision, nor its context, nor its object and purpose supported the United States' claim that the provision required developing countries to enable their executive authorities to grant such rights as from the entry into force of the WTO Agreement. India made the following comments on the United States' arguments: - The United States had sidestepped the results of India's legal demonstration by asserting that, according to Article 3.8 of the DSU, trade damage was presumed and that it was therefore not necessary to speculate on whether products had become eligible for exclusive marketing rights. That response did not deal with the interpretative issue before the Panel, which was what triggered the application of the obligations under Article 70.9: the entry into force of the WTO Agreement in 1995 or the series of future events listed in that Article. The principle that a failure to observe an obligation was presumed to cause nullification or impairment was totally irrelevant in addressing the interpretative question of whether the obligation already existed. - The principles recognized by the GATT CONTRACTING PARTIES, that the basic provisions of the GATT established conditions of competition and that mandatory legislation could constitute a measure within the meaning of those provisions even before the legislation was applied in a concrete case, were equally irrelevant, because they simply did not address the issue which was before this Panel, namely as of when certain conditions of competition had to be established and as of when mandatory legislation could be considered to be actionable (emphasis by India). It would be logically untenable to use these principles to turn transitional arrangements designed to postpone the applicability of obligations into current obligations forcing Members to immediately empower their executive authorities to take the measures necessary to meet the obligations applicable at the end of the transitional period. - If the United States' argument that it would be easier to plan business if the transitional provisions of the TRIPS Agreement were interpreted to require legislative changes before the end of the transitional period were accepted, it would have to be applied to all the transitional arrangements contained in the WTO agreements. Thus, it would arguably be easier for Indian textiles’ producers to plan business if all textiles-importing WTO Members had legislation presently in place providing for the elimination of textiles import restrictions on the date of the termination of the Agreement on Textiles and Clothing. Unfortunately, however, the obligation to bring the textiles restrictions into conformity with the GATT would arise only in the future just as the obligation to grant patents or exclusive marketing rights only arose in the future. Until the end of the transitional periods accorded under different WTO agreements, the source of predictability could therefore only be the relevant WTO agreement. The CONTRACTING PARTIES had never applied the principles invoked by the United States in the manner suggested by the United States. To do so would constitute an unanticipated change in obligations that could not legitimately be brought about by way of interpretation, and to do so only in the field of intellectual property rights but not in the many other areas covered by transitional arrangements would be fundamentally unfair. - India's research had not revealed any case in which a product for which a patent application had been filed after 1 January 1995 had received marketing approval in India and had thus become eligible for exclusive marketing rights in India under Article 70.9. The letter from Dr. Bale produced by the United States merely stated that one company "has received a patent and marketing approval for a drug in the United States and Europe and is ready to request the grant of exclusive marketing rights from the Indian health authorities". The request that this company intended to submit to the Indian health authorities was obviously a request for marketing approval; only when that approval had been obtained would this product become eligible for exclusive marketing rights. There was no evidence available in India of any such case. It should also be noted that before any applicant could make such a request, it must first request the Indian health authorities, i.e. the Drugs Controller General of India, to grant marketing approval. - Although it was difficult to provide evidence or state with absolute certainty when products would start becoming eligible for exclusive marketing rights under Article 70.9, a delay of ten or more years between the date of filing of applications for patents and the grant of marketing approvals seemed likely. In India, registration and approval of new drugs required submission of technical data on safety and efficacy as well as analytical specifications in relation to steps of manufacture, in-process control and marketing status in other countries, clinical trial data generated within the country and examination labels and package inserts. The technical data were examined in consultation with the experts. The final bulk drug was required to be tested at the Central Drugs Laboratory, Calcutta, as per analytical specifications furnished. A new drug derived out of cell-line and recombinant DNA based products also needed approval from the Ministry of Science and Technology and the Ministry of Environment. If a new drug was already marketed in a number of countries and pre-clinical and clinical data generation was adequate, Phase III multi-centric clinical trial was required to be carried out on a protocol approved by the Drugs Controller General of India. If the data were complete, as per the requirements of Schedule Y of the Drugs and Cosmetics Rules, an average time of three years was taken for approval and registration of new molecules with a maximum period of eight to ten years. Discovery of drugs in India for the purpose of registration and approval took much longer as, at that point of time, there might not be access to scientific data available on the drug published in international journals and literature. In respect of agricultural chemicals, the time schedule for grant of marketing approvals would depend on the submission of satisfactory data by the applicant and the satisfaction of the Registration Committee constituted under the Insecticides Act. As in the case of pharmaceuticals, it could not be stated with absolute certainty as to when products would become eligible for exclusive marketing rights under Article 70.9. 4.30 The United States reiterated that it knew of two pharmaceutical products that were now becoming eligible for exclusive marketing rights under Article 70.9. The only step remaining was the establishment by India of a system for the grant of such rights so that an application for marketing approval/exclusive marketing rights could be filed and processed. The United States' pharmaceutical company Eli Lilly Corp. had two pharmaceutical products that were the subject of a patent application filed in the United States after 1 January 1995 and had been granted patent protection and marketing approval after that time. This company was in the process of determining how to apply for exclusive marketing rights in India and had asked the United States' Government for any information it had on the process for doing so. The United States could not say, for example, whether the company must indicate in its application for marketing approval that it was a candidate for exclusive marketing rights, and whether it must include a fee to preserve its ability to get those rights. Alternatively, the United States could not say whether any special procedure for the grant of exclusive marketing rights had been established (i.e. whether the application for marketing approval would result automatically in the grant of exclusive marketing rights). The United States indicated that companies would be wary about proceeding without knowing what the system for the grant of such rights was, for fear of losing their ability to receive those rights because of some procedural problem. The United States' Government had no information on the Government of India’s intended system for the grant of these rights. (b) The scope of "exclusive marketing rights" 4.31 As regards the exclusive marketing rights to be provided in accordance with the standard set forth in the Agreement, the United States argued that Article 70.9 required India to grant exclusive marketing rights that were not subject to compulsory licences or any other form of use without the permission of the right holder. Since Article 70.9 did not define the term "exclusive" when used with marketing rights, either explicitly or through reference to other provisions of the TRIPS Agreement, this unqualified term should be applied based on its ordinary meaning. The term "exclusive" was defined in the Oxford English Dictionary as meaning "[h]aving the power or the function of excluding" or "[e]xcluding all other persons from the rights conferred". The ordinary meaning of the terms used would therefore indicate that no competitors were permitted on the market without the consent of the holder of the "exclusive" marketing rights. There was no basis to believe that the drafters had intended to depart from this ordinary meaning of "exclusive marketing rights". 41 4.32 India responded that the scope of exclusive marketing rights was not an issue relating to an existing measure and could therefore not be the subject of a ruling by the Panel. It made the following arguments to support this statement: - The United States was seeking a ruling on a potential future measure. The United States was apparently asking for this finding because of concerns it had about the nature of some provisions in the lapsed Patents (Amendment) Ordinance 1994 and the Patents (Amendment) Bill of 1995, which would have accorded the Government discretionary powers to subject exclusive marketing rights to certain conditions. However, even the said Ordinance and Bill did not make it mandatory for the executive authorities to grant exclusive marketing rights subject to compulsory licensing or other use. However, since neither of these instruments was in force in India, the scope of exclusive marketing rights was a matter that had not yet arisen. The United States was thus essentially asking the Panel to make a declaratory judgement on a potential future action that the executive authorities of India might be authorized to take on the basis of a law Parliament might adopt. - The WTO dispute settlement procedures did not permit rulings on potential future measures. Article 64 of the TRIPS Agreement stated that the provisions of Articles XXII and XXIII of GATT 1994 as elaborated and applied by the DSU shall apply to consultations and the settlement of disputes under the TRIPS Agreement except as otherwise specifically provided in that Article. The texts of Article XXIII:1(a) of GATT 1994, Article 19.1 of the DSU and Article 22.8 of the DSU made clear that the provisions defining the cause of action, the remedy available and the scope for retaliation all presupposed the existence of a measure that was currently nullifying or impairing benefits and capable of being brought into conformity with the obligations under the WTO Agreement (emphasis by India). The only WTO procedure that permitted the resolution of interpretative issues in the abstract was that set out in Article IX:2 of the WTO Agreement, according to which the WTO Ministerial Conference and the General Council had the power to adopt authoritative interpretations. - The customary practice of the CONTRACTING PARTIES to GATT 1947 had been to examine under Article XXIII only measures that were currently applied. The CONTRACTING PARTIES had never ruled on potential future measures or what type of law might be required to meet future obligations (emphasis by India). They had proceeded on the assumption that a contracting party would meet its obligations under the GATT as long as its legislature had not yet taken a decision to the contrary or had left the executive authority the option of acting in accordance with the GATT. 42 According to Article XVI:1 of the WTO Agreement "the WTO shall be guided by the..... customary practices of the CONTRACTING PARTIES to GATT 1947.....". In Japan - Taxes on Alcoholic Beverages, the Appellate Body had noted that Article XVI:1 of the WTO Agreement brought the legal history and experience under GATT 1947 into the realm of the WTO in a way that ensured continuity and consistency. The customary practice of the CONTRACTING PARTIES, while not binding on panels, should be taken into account by panels where relevant to any dispute. The Panel could therefore not deviate from the customary practice of the CONTRACTING PARTIES without due cause and justification. - Panel rulings on potential future measures would be regarded by the WTO Membership as an unacceptable interference in domestic decision-making processes. GATT contracting parties had generally refused to consult under the formal dispute settlement procedures on measures they had not yet taken. When asked to consult on provisions in the Treaty of Rome that accorded the European Communities the competence to impose quantitative restrictions inconsistently with the GATT, the European Communities had pointed out that "many contracting parties had permissive legislation of a general character which, if implemented in full, would enable them to impose restrictions in a manner contrary to Article XI. These countries were, however, not required to consult with the CONTRACTING PARTIES about their possible intentions as regards the implementation of such legislation". 43 The United States had shared this view in the past, as illustrated by its reaction to the report of the panel on Wine and Grape Products 44 which had examined a law which mandatorily imposed on the executive authority the requirement to apply a definition of industry for the purposes of anti-dumping and countervailing duty investigations of wine and grape products that was inconsistent with the Tokyo Round Subsidies Code 45 (emphasis by India). When this report was adopted in 1992, the United States had declared that it "reserved its position of opposition to the Panel’s view that it was ripe for the Panel to consider a matter that did not involve an actual initiation of an action, but rather an abstract question whether a proceeding, if initiated, would have been consistent with the Subsidies Code" (emphasis by India). In a case involving countervailing duties, the United States had thus formally objected to a panel examination of a future action prescribed by its existing law; in the present case involving intellectual property rights, the United States was seeking the examination of a measure that was not even referred to in any existing law. The Members of the WTO had often expressed legitimate concerns regarding the future policies of their trading partners, for instance about possible action under Section 301 of the United States Trade Act of 1974 or about protectionist bills under consideration by the United States Congress. 46 However, the view had nevertheless prevailed that formal international inquiries into matters still under domestic consideration were an inappropriate and unwelcome interference into the domestic decision-making process, and the drafters of the DSU therefore rightly had not authorized panels to make declaratory judgements on potential future measures. Questions of striking an appropriate balance of interests at the national level between the holder of an exclusive marketing right, on the one hand, and society, on the other, as well as of the conformity of possible legislation with the basic provisions of the Constitution of India and the various decisions of the Apex Court which had elaborated these provisions were outside the jurisdiction of a dispute settlement panel. 4.33 The United States responded that it was not seeking specific or declaratory relief; it was seeking a finding by the Panel that identified those obligations India had failed to implement. The Agreement required, and India had not contested this, that exclusive marketing rights be granted so that competitors would not be permitted on the market without the consent of the right holder. India had entered into these obligations with a full understanding of what implementing these obligations would entail and could not now claim that it was permitted to rebalance, as the Appellate Body had stated in the Wool Shirts case, these obligations off against other interests. Only full implementation by India would ensure that the balance that had been struck in the TRIPS Agreement was respected. 4.34 India considered this revised request for a finding also a request for a specific remedy, only more artfully disguised. The United States was not claiming that India had accorded exclusive marketing rights under which "competitors of the owner of such right (are) permitted on the market absent the owner’s consent"; it claimed that India had not provided any exclusive marketing rights. The specific finding sought by the United States did not relate to the legal consistency of a measure that India was claimed to have taken, but to the ways in which India was to implement its obligations. 4.35 The United States remained of the view that, instead of asking for specific or declaratory relief, the finding that it was seeking was a determination from the Panel that India's laws and regulations were not in compliance with its obligations under Article 70.9 to provide exclusive marketing rights meeting the standard set forth in the Agreement. It did so for the following reasons: - Unlike many other provisions of the WTO agreements, the TRIPS Agreement contained obligations to act affirmatively to establish rights, procedures and remedies in respect of intellectual property. The United States was not alleging that India had taken an action that was inconsistent with its obligations under the TRIPS Agreement; on the contrary, it believed that India had failed to take affirmative actions that it was required to take under the TRIPS Agreement. In defining how India had violated the TRIPS Agreement, the Panel must indicate with some specificity which affirmative obligation India had not met. It was important to distinguish between the request that the Panel define how India was out of compliance with its TRIPS obligations and the request that the Panel suggest a way in which India could meet those obligations. The requested finding above represented an example of a request to define what obligations India had not met. The request that the Panel suggest that India implement these obligations in a manner similar to the way in which Pakistan was implementing these obligations was an example of the second category. India was attempting to blur the distinction between these two categories and between the affirmative obligations in the TRIPS Agreement and the prohibitions found in other WTO agreements. - India had not contested, nor could it contest, that the TRIPS Agreement required that exclusive marketing rights be granted so that competitors were not permitted on the market without the consent of the right holder. There was no basis in the TRIPS Agreement to conclude that the drafters had intended to depart from the ordinary meaning of the terms used. Whenever they had intended a type of right to be subject to permissive or mandatory exceptions, they had provided specifically for such exceptions in the text defining the right. 47 Likewise, where the permissive or mandatory exceptions applying to one type of right were intended to apply to another type of right, this had specifically been provided in the text of the Agreement. 48 Therefore, had the drafters of the Agreement intended the exclusive marketing rights to be subject to a permissive or mandatory exception, they would have either included such exception in the text of Article 70, or they would have incorporated by reference an exception in another part of the Agreement. India had failed to grant to the holder of marketing rights the exclusive right to control the entry of competitors onto the market during the period of those rights and, thereby, to implement Article 70.9. Request for a suggestion that India implement its obligations under Article 70.8 and 70.9 in a manner similar to the way in which Pakistan had implemented these obligations 4.36 The United States requested the Panel to suggest that India meet its obligations under Article 70.8 and 70.9 in a manner similar to the way in which Pakistan had implemented these obligations. 49 It stressed that this request should be distinguished from the findings it was seeking from the Panel that would identify the obligations under these provisions which India had failed to implement. 4.37 India said that this United States' request had been introduced for the first time at the first substantive meeting of the Panel with the parties. To submit such an additional request after the first submission constituted an unacceptable procedural scheme, as had been recognized by the recent WTO Panel on European Communities - Regime for the Importation, Sale and Distribution of Bananas. 50 4.38 India also advanced the following reasons why the United States’ request should be rejected as legally inappropriate: - It had serious doubts whether a panel constituted to resolve a dispute on the basis of rights and obligations enshrined in a multilateral agreement should formally endorse a settlement bilaterally negotiated between two sovereign States in the context of their particular overall relations. - There were technical reasons that would make it inappropriate to transpose the system adopted by Pakistan to India. Pakistan had agreed with the United States that the relevant date of filing for the purposes of Article 70.8 would be the date on which a patent application had been filed not in Pakistan, as foreseen in Article 70.8, but in another Member (emphasis by India). In India, patent applications for pharmaceutical and agricultural chemical products had been filed and a filing date had been given to each of these applications. The United States’ request for a panel suggestion would therefore imply that applications made in other Members would have to be inserted by India into the queue of applications already made. Consequently, the order of priority of the applications would have to be changed in a manner that was not foreseen in the TRIPS Agreement and that favoured some Members over others. The United States was therefore requesting that the Panel suggest a solution whose consistency with the TRIPS Agreement would be doubtful in the case of India. V. ARGUMENTS PRESENTED BY THIRD PARTY European Communities and their Member States 5.1 The European Communities and their Member States argued in their third party submission that, while India had made a bona fide attempt to implement the "mailbox" mechanism by the Patents (Amendment) Ordinance 1994, this Ordinance had meanwhile lapsed and was no longer in force, since it had not been confirmed within six weeks of the re-assembly of the Indian Parliament in early 1995 by the Indian legislative authorities as required by the Indian Constitution. This meant that filings made under the Ordinance did not presently enjoy the legal status they should be granted under Articles 70.8 and 70.9 of the TRIPS Agreement, and the status of filings made after the date when the Ordinance lapsed until such time as India were to take the necessary steps to implement Articles 70.8 and 70.9 of the TRIPS Agreement was presently also unclear. Under these circumstances, India did not presently provide for the mailbox mechanism and the mechanism for the granting of exclusive marketing rights as foreseen under Articles 70.8 and 70.9 of the TRIPS Agreement and was therefore not living up to its obligations under the WTO Agreement. 5.2 At the third party meeting, the European Communities and their Member States, expressed surprise about the arguments of India in its first submission that it had observed its obligations as contained in Articles 70.8 and 70.9, on three counts: - India had adopted an Ordinance in late 1994 allowing the filing of patent applications concerning pharmaceutical and agricultural chemical products, since these products were not patentable under existing Indian law. This Ordinance had meanwhile lapsed and had been replaced, according to India, by administrative instructions to the Indian patent authorities to continue to accept filings. How could India now argue that simple administrative instructions to accept filings were sufficient, while it had felt the need to act by an Ordinance in the first place which had been meant to be replaced by a formal act of its legislature? An administrative instruction was only capable of binding the administration itself; it could not have an effect on the applicants. In other words, if there was a dispute between several applicants about the time of the filing, such a dispute could not be resolved by simply adopting an instruction addressed to the administration. A legislative act capable of creating rights and obligations between applicants was therefore necessary. - Questions arose as to what were the precise terms of the administrative instructions, where they had been published and what were the guarantees in case of a dispute before the Indian courts. In answering these questions, India would have to admit that simple administrative instructions did not fulfil the requirements laid down in Articles 70.8 and 70.9. - As far as the exclusive marketing rights under Article 70.9 were concerned, India claimed that no applications had been filed so far. India seemed to believe that because of the absence of such applications the entry into force of the mechanism allowing such filings could be postponed. This position was untenable. Article 70.9 was intimately linked with Article 70.8 which in turn left no doubt that it applied as of the date of entry into force of the TRIPS Agreement for a Member, i.e. 1 January 1995. In promulgating the Ordinance already referred to, India had itself recognized the obligation to put the mechanism required by Article 70.8 into place by that date. India could not now argue that the rules governing the exclusive marketing rights envisaged under Article 70.9 should only be adopted once applications for such exclusive marketing rights had been received. Moreover, how would it be possible to file such applications in the absence of any rules governing such applications? Was it not the absence of such rules that had led to the absence of applications? Rules must be put in place before applications could be made and those rules should have existed as of 1 January 1995. 5.3 Turning to the question of how to handle applications made before the rules would be adopted that India was obliged to introduce, the European Communities and their Member States expressed concern regarding the fate of applications that had been made after the obligations under Articles 70.8 and 70.9 had become applicable but before India had taken the necessary domestic measures to implement these provisions. Another concern related to the fate of the filings made under the Ordinance adopted at the end of 1994. India owed other WTO Members assurances on the fate of such applications and filings. Since such assurances had not been given so far, the European Communities and their Member States urged the Panel to include in its report findings with regard to these applications and filings. 5.4 In conclusion, the European Communities and their Member States lent their full support to the requests made by the United States in the present dispute and asked the Panel to find that India, not having carried out its obligations under Articles 70.8 and 70.9 of the TRIPS Agreement, should bring its domestic legislation into conformity with these obligations, also with regard to applications that would have been lodged under these provisions had the rules been adopted in good time and not lapsed subsequently. VI. INTERIM REVIEW 6.1 On 8 July 1997, 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 27 June 1997. The United States did not request a review, but reserved, in a letter dated 9 July 1997, its rights to comment on any changes suggested by India. No further comments were subsequently submitted by the United States. Neither India nor the United States 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 these arguments it considered to be relevant. 6.2 India requested the Panel to review its findings mainly for the following reasons: - In respect of Article 70.8 of the TRIPS Agreement, India did not share the Panel's assessment of the legal situation in India; - It was procedurally and legally incorrect for the Panel to rule on Article 63 of the TRIPS Agreement, mainly because the United States had requested a ruling on this provision only in case the Panel were to find that India had a valid mailbox system in place; and - The Panel's discussion of Article 70.9 of the TRIPS Agreement did not define the issue presented to the Panel correctly and did not fully take into account India's arguments. The Panel carefully examined these assertions, as elaborated below. Article 70.8 6.3 In its review request, India essentially reiterated its argument in paragraph 4.9 above, arguing that the effect of the Panel's finding in what is now paragraph 7.28 was to force developing countries to adopt now legislation that the TRIPS Agreement clearly required them to adopt only on 1 January 2005. Furthermore, India submitted that the Panel's findings in what are now paragraphs 7.36 and 7.37 on the legal situation in India were erroneous and largely speculative and requested the Panel to reconsider its findings in those paragraphs. 6.4 The Panel was not persuaded by these arguments. As explained in paragraph 7.31 below, the obligation under Article 70.8 was a special obligation imposed on those Members benefitting from the transitional arrangements, clearly distinguishable from the obligation to provide full patent protection under Article 27. Regarding the assessment of the legal situation in India, as stated in paragraph 7.40 below, the Panel felt that the United States had successfully raised questions as to the legal security of the current "mailbox" system in India and that India had failed to rebut these challenges. In the Panel's view, India's explanation on why the mailbox system that it had put in place administratively was not in contradiction with current law nor with the Constitution 51 did not remove concerns on the legal security of the system. 6.5 Accordingly, the Panel did not accept India's request on this point, except that it slightly modified what are now paragraphs 7.28 and 7.29 and that it expanded what is now paragraph 7.31. Article 63 6.6 In its review request, India noted that the Panel had found that India did not have a valid mailbox system in place. Given that the United States had requested a ruling on Article 63 only if the Panel were to find that India had a valid mailbox system in place, the Panel, in India's view, should not have made any findings or recommendations on Article 63. India requested the Panel to strike from its findings and recommendations the references to Article 63 and to replace them by a sentence noting that its findings on the mailbox system made the request for a finding on Article 63 moot. India further noted that the discussion on procedural issues contained in what are now paragraphs 7.8 to 7.15 was only relevant to the findings on Article 63. India thus requested that these paragraphs also be struck from the final report. 6.7 According to India, it was perfectly logical for the United States to present its claim under Article 63 only in the alternative. India argued that Article 63 required Members to publish and notify measures "made effective" by them, in other words, measures with legal effect actually taken by them. Consequently, if a Member failed to take a measure prescribed by a provision of the TRIPS Agreement, it could not be found to violate that provision and Article 63, given that there was then no measure that had been made effective (emphasis by India). 6.8 The Panel was not persuaded by this argument. The Panel felt that India's reading of the term "made effective" was unduly narrow. The consistency of a measure with a Member's international obligations under the WTO Agreement and the putting of the measure into effect in the Member's domestic jurisdiction were two separate issues. In the Panel's view, a measure that was inconsistent with WTO rules could still be "made effective" within the meaning of Article 63 of the TRIPS Agreement. Indeed, the very purpose of notifications under Article 63.2 was to assist the Council for TRIPS in its review of the operation of the TRIPS Agreement and "in particular, Members' compliance with their obligations thereunder". 52 If a measure that was inconsistent with the TRIPS Agreement were relieved from the notification obligation a priori, this function of the Council for TRIPS could not be achieved. 6.9 Finally, India argued that, if the Panel's recommendation on Article 63 related to the existing system, it would serve no purpose and that, if it related to a future modified system, it would relate to a matter that had not arisen in this dispute. India further argued that the purpose of the WTO dispute settlement procedure was not to generate interpretations that were not required to resolve the dispute. In support of its position, India quoted the panel in the Semiconductor case, which, facing the dual claim that a measure was inconsistent with GATT Article XI and not published in accordance with GATT Article X, had refused to rule on the transparency issue by pointing out: "The measures under examination had been found to be inconsistent with Article XI. At issue was thus their elimination or bringing them into conformity with GATT, not their publication." 53 Thus, according to India, the United States' claim on Article 63 should not be addressed by the Panel, even if it could be interpreted as an additional claim. If the Panel were to take that step, it would be the first panel to do so. 6.10 The Panel disagreed. This Panel was not the first to address the issue of transparency in addition to the violation of substantive obligations. The panel on Restrictions on Imports of Apples (complaint by the United States) had stated as follows: "The Panel recognized that, given its finding that the EEC measures were a violation of Article XI:1 and not justified by Article XI:2(c)(i) or (ii), no further examination of the administration of the measure would normally be required. Nonetheless, and even though the Panel was concerned with measures which had already been eliminated, it considered it appropriate to examine the administration of the EEC measures in respect of the provisions mentioned above, in view of the questions of great practical interest which had been raised by both parties. "...The Panel therefore considered that the allocation of back-dated quotas did not conform to the requirements of Article XIII:3(b) and (c). It also interpreted the requirements of Article X:1 as likewise prohibiting back-dated quotas. It therefore found that the EEC had been in breach of these requirements since it had given public notice of the quota allocation only about two months after the quota period had begun." 54 6.11 The following passage from the Appellate Body report on the Shirts and Blouses case had been cited by India: "Given the explicit aim of dispute settlement that permeates the DSU, we do not consider that Article 3.2 of the DSU is meant to encourage either panels or the Appellate Body to 'make law' by clarifying existing provisions of the WTO Agreement outside the context of resolving a particular dispute." 55 The Panel fully agreed with the Appellate Body on this point. In the present case, the Panel had no intention of "making law" by clarifying existing provisions of the TRIPS Agreement outside the context of resolving the dispute before it. Rather, in view of the Appellate Body's observation on the limitation of its mandate under Articles 17.6 and 17.13 of the DSU in its recent report on the Periodicals case, 56 the Panel felt all the more strongly the need to avoid a legal vacuum in the event that, upon appeal, the Appellate Body were to reverse the Panel's findings on Article 70.8. 6.12 Accordingly, the Panel decided to retain the paragraphs on Article 63 unchanged from the way they had appeared in the interim report, except for certain drafting modifications in paragraphs 7.11 and 7.44. Article 70.9 6.13 India objected to the characterization of the issue in the interim report in what is now paragraph 7.52, where it stated: "Thus, the central question before this Panel is that of timing: as of when should there be a mechanism ready for the grant of exclusive marketing rights?". In India's view, the more appropriate question was whether Article 70.9 obliged Members to grant exclusive marketing rights to particular products that met the conditions specified in that provision or whether this provision obliged Members to authorize their executive authorities to grant such rights before the occasion to exercise such authority arose. India requested the Panel to reformulate the question accordingly. 6.14 The Panel was not persuaded that India's formulation of the question was the more accurate one. However, to clarify the issue further, it introduced paragraph 7.53 in the final report. It also slightly modified what is now paragraph 7.54. 6.15 In its review request, India reiterated its argument in paragraph 4.27 regarding the ordinary meaning of the term "shall be granted". The Panel modified what is now paragraph 7.56 to clarify its position. 6.16 India further objected to the summary of India's arguments which now appears in paragraphs 7.57 to 7.62. According to India, India did not argue that Article 70.9 applied only as from certain dates or only during certain periods, nor could India be reasonably expected to indicate such dates. India's essential argument was that, because operators would "normally" be interested in exclusive marketing rights only in the five-year period preceding patentability, the objective of Article 70.9 could not have been to oblige developing countries to change their laws as from the entry into force of the WTO Agreement. The gist of India's argument was that there was simply no economic or political reality behind the assumption that Article 70.9 had been drafted with the objective to make developing countries change their laws as from the entry into force of the WTO Agreement. For reasons expressed in paragraphs 7.58 and 7.59 below, the Panel did not agree with India's argument, and did not find it necessary to change its conclusions in this respect. However, at the suggestion of India, the Panel modified what is now paragraph 7.57. 6.17 India reiterated its argument in paragraph 4.27 to the effect that no other developing country had notified the creation of a system for the grant of exclusive marketing rights under its domestic law and that this indicated that Article 70.9 was not understood by the developing country Members concerned as a provision that entailed the obligation to make changes in their domestic law as from the entry into force of the TRIPS Agreement. India requested the Panel to address this argument, given the importance of subsequent practice in treaty interpretation. The Panel understood that this request was an implicit reference to Article 31(3) of the Vienna Convention on the Law of Treaties, which reads: "There shall be taken into account, together with the context: (a) ... ; (b) any subsequent practice in the application of the treaty which establishes the agreement of the parties regarding its interpretation; (c) ..." (emphasis added) In the Panel's view, however, India had failed to demonstrate that the "subsequent practice" by developing country Members in fact established the agreement of all WTO Members regarding the interpretation of Article 70.9. On the contrary, the record showed that there had been no agreement on this issue in the Council for TRIPS; at most meetings of the Council, concern had been expressed by some Members about the absence of notifications or the limited information content of notifications related to the implementation of Article 70.9. 57 Moreover, the matter had also been the subject of another recourse to the DSU in "Pakistan - Patent Protection for Pharmaceutical and Agricultural Chemical Products" (WT/DS36). In any event, to paraphrase an Appellate Body report 58, the Panel felt that it was much too early for practice to have arisen under the TRIPS regime which had commenced only on 1 January 1995. 6.18 The interim report contained a heading entitled "Practical Considerations" immediately preceding what is now paragraph 7.60. India stated that it did not understand why the Panel had created a separate section given that such considerations were only relevant to the extent that they elucidated the context, object and purpose of Article 70.9. India suggested the deletion of the heading, which the Panel accepted. 6.19 Finally, India considered it inappropriate and procedurally indefensible for the Panel to corroborate its findings on Article 70.9 by reference to unsubstantiated and contested evidence submitted by interested companies of one of the parties to the dispute. The Panel noted that in its use of the evidence in the findings, it had made what it considered to be an objective assessment of that evidence - as required under Article 11, second sentence, of the DSU - taking into account India's reaction thereto. The Panel further noted that it had not relied on this piece of evidence as a sole basis for its findings and that India had presented no counter-evidence other than the comment contained in the fourth indent of paragraph 4.29 above. Accordingly, the Panel did not introduce any changes to the report on this point. Suggestions by the Panel 6.20 In the interim report, the section corresponding to what was now "Suggestions by the Panel" was entitled "Remedies" and contained one additional paragraph. India requested the change in the title and the deletion of this paragraph, which the Panel accepted and introduced in its final report.
Notes: 40. Reference was made to the Vienna Convention on the Law of Treaties, Article 31.1. The Appellate Body has recognized that both Article 31 and Article 32 of the Vienna Convention apply to disputes under the WTO Agreement. Appellate Body Report on "Japan-Taxes on Alcoholic Beverages" (adopted 1 November 1996), WT/DS8/AB/R, WT/DS10/AB/R, WT/DS11/AB/R, pages 10-13. 41. Reference was made to the Oxford English Dictionary (Second Edition 1989), volume V, p. 510, definitions 1 and 6.b, respectively. Other relevant definitions include: "[e]xcluding (some other) from participation" (definition 2); "[e]xclusively confined to" (definition 6.b); "[s]trictly limited to the object or objects designated" (definition 7); "[e]mployed or followed to the exclusion of everything else; single, sole" (definition 8). 42. Reference was made to the summary of this practice in United States - Standards for Reformulated and Conventional Gasoline: "The Panel observed that it had not been the usual practice of a panel established under the General Agreement to rule on measures that, at the time the Panel's terms of reference were fixed, were not and would not become effective." 43. Reference was made to GATT document L/778. 44. Reference was made to the Panel Report on "United States - Definition of Industry Concerning Wine and Grape Products", adopted on 28 April 1992, BISD 39S/436. 45. Reference was made to GATT document SCM/M/59, p.31. 46. Reference was made to the GATT Council discussion on unilateral measures in February 1989 (GATT document C/163) 47. In this regard,the United States said that note should be taken of the exceptions explicitly permitted in the case of copyrights (Article 13), trademarks (Article 17), geographic indications of origin (Article 24), patents (Articles 30 and 31), lay-out designs of integrated circuits (Article 37.1), and industrial designs (Article 26.2). 48. According to the United States, the example of this approach to exceptions could be found in the TRIPS Agreement's Section on lay-out designs of integrated circuits (Article 37.2). 49. Reference was made to document IP/D/2/Add.1 50. For a further elaboration by India of this argument, see above in relation to Article 63. 51. Paragraph 4.12 above 52. Article 68 of the TRIPS Agreement 53. Panel Report on "Japan - Trade in Semi-conductors", adopted on 4 May 1988, BISD 35S/116, para. 128 54. Panel Report on "European Economic Community - Restrictions on Imports of Apples, Complaint by the United States", adopted on 22 June 1989, BISD 36S/135, paras. 5.20 and 5.23 55. Appellate Body Report on "United States - Measure Affecting Imports of Woven Wool Shirts and Blouses from India", adopted on 23 May 1997, WT/DS33/AB/R, page 19 56. Appellate Body Report on "Canada - Certain Measures Concerning Periodicals", adopted on 30 July 1997, WT/DS31/AB/R, page 22 57. The record of discussions on these matters in the Council for TRIPS can be found in documents IP/C/M/2, 6, 7, 8, 9, 11, 12 and 13. 58. Appellate Body Report on "United States - Restrictions on Imports of Cotton and Man-made Fibre Underwear", adopted on 25 February 1997, WT/DS24/AB/R, page 17 Continue on to Part 5 of India - Patent Protection for Pharmaceutical and Agricultural Chemical Products |
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