4.24 According to India, the Panel faced conflicting signals from the Appellate Body. The Panel could not follow in the present dispute the reasoning in the previous dispute and base its interpretation of Article 70.9 on the notion of predictability of conditions of competition without risking that it would be castigated for misapplying Article 31 of the Vienna Convention and failing to examine the words of the treaty to determine the intention of the parties. However, if the Panel based its interpretation exclusively on the language of Article 70.9 itself, it was bound to arrive at a conclusion that was different from the one reached by the Appellate Body in the previous case. India requested the Panel to resolve this dilemma in the light of the following two rulings of the Appellate Body. The first was:

The second ruling of the Appellate Body that the Panel should take into account was the following:

It followed from the above that the Panel was strictly bound by the principles of interpretation referred to in Article 3.2 of the DSU, but not by the rulings of panels and the Appellate Body in a single instance and therefore had no option but to base its interpretation of Article 70.9 of the TRIPS Agreement exclusively on Article 31 of the Vienna Convention.

4.25 The European Communities and their member States were of the view that India had not advanced any new elements that had not yet been considered in the earlier dispute or that were otherwise relevant for the resolution of the present dispute.

• India's debate on the implementation of Article 70.9 of the TRIPS Agreement was a replica of its arguments before the Panel and the Appellate Body in the earlier dispute (WT/DS50), as was apparent from the extensive quotations of portions of the Panel and Appellate Body reports in that dispute. The EC was unable to discover any new arguments in India�s discussion and therefore referred the Panel to its report and that of the Appellate Body in the earlier dispute. The EC did not believe that the arguments that India was submitting in this context added anything to the debate that had already taken place in the earlier dispute which was equally relevant for the present dispute. Furthermore, no reasonable doubt could exist that the filing date and the validity of the filing could be fundamental issues in the context of exclusive marketing rights granted under Article 70.9 of the TRIPS Agreement in a litigation before an Indian court at any time prior to the year 2005.

• As regards EC companies which were ready to apply for exclusive marketing rights in India, the EC provided to the Panel a copy of a fax, dated 28 April 1998, which it had received from Dr. Alan Hesketh, Manager, Global Intellectual Property, Glaxo Wellcome.⁷⁶

4.26 Commenting on the views expressed by the European Communities and their member States, India noted that the EC had not claimed that India had denied any exclusive marketing rights to European companies and had not refuted India's argument that the terms of Artice 70.9 did not require the establishment of a system for the grant of exclusive marketing rights, but merely required the grant of such rights to particular products meeting specified conditions. India further noted that the EC refused to address the arguments presented by India.

V. Arguments Presented By Third Party

United States

Procedural history of the related dispute

5.1 The United States argued in its third party submission that the precise measures and provisions of the WTO Agreement at issue in this dispute had been the subject of a previous WTO dispute settlement proceeding that had concluded very recently. This did not mean that the European Communities and their member States did not have the right to bring this complaint; the DSU did not deny the EC the right to do so. However, the Appellate Body had thoroughly analyzed the legal issues in the case and it was neither necessary nor appropriate for the Panel to repeat that work. The Panel should consider the arguments of the parties, but be guided by the Appellate Body�s recent interpretation of the obligations at issue. In accordance with this approach, the Panel should find that India had failed to comply with Article 70.8 and 70.9 of the TRIPS Agreement and recommend that India amend its law to comply with these obligations.

5.2 The United States, describing the procedural history of the earlier dispute (WT/DS50 - United States' complaint against India regarding patent protection for pharmaceuticals and agricultural chemicals), said that the Panel in that dispute had been established by the DSB on 20 November 1996 and had issued its report on 5 September 1997.⁷⁷ In its report, the Panel had found that India had failed to comply with Articles 70.8, 70.9 and 63 of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement). India had appealed these findings to the Appellate Body, which had upheld the Panel�s conclusions with respect to Article 70.8 and 70.9.⁷⁸ The Panel and the Appellate Body had considered India's arguments with respect to the obligations in Article 70.8 and 70.9 of the TRIPS Agreement and, after analysing the text, context, object and purpose of Article 70.8, concluded that the provision required the establishment of a mailbox system that provided a "sound legal basis" for filing product patent applications for pharmaceuticals and agricultural chemicals.⁷⁹ Both the Panel and the Appellate Body had examined the evidence presented regarding India's Patents Act (1970)⁸⁰ and then concluded that India had failed to comply with Article 70.8 of the TRIPS Agreement.⁸¹ With respect to Article 70.9, the Panel and the Appellate Body had determined that this provision required the establishment of a system for granting exclusive marketing rights as of 1 January 1995. By India's own admission, it had not established such a system. Consequently, the Panel and the Appellate Body had found that India had failed to comply with Article 70.9 of the TRIPS Agreement.⁸² The DSB had adopted the Panel and Appellate Body reports on 16 January 1998. On 13 February 1998, India had indicated its intention to implement the DSB's recommendations and rulings. India and the United States had not reached an agreement regarding the time in which India would implement these recommendations and rulings; that issue might have to be decided by arbitration in accordance with Article 21.3 of the Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU). India thus had not yet amended its law to comply with its obligations under Article 70.8 and 70.9 of the TRIPS Agreement and had not argued in this proceeding that the situation was otherwise.

Under Article 10.4 of the DSU, WTO Members were entitled to bring complaints regarding matters that had been the subject of a previous panel proceeding

5.3 Commenting on India's argument that the Panel should dismiss the EC's complaint on the basis of Articles 9.1 and 10.4 of the DSU, the United States said that these provisions did not support dismissal of the EC's complaint, but rather indicated a pronounced concern for safeguarding the rights of multiple complainants and third parties.

• The text of Article 10.4 did not support India's argument that third parties must join an initial panel proceeding whenever possible. Article 10.4 specifically provided for the possibility of a second panel being established to examine a complaint based on a measure already examined by a previous panel. Article 10.4 referred to "third parties". By definition, a dispute involving a complaint by a third party would be a successive dispute. Under this provision, successive disputes should proceed in accordance with "normal dispute settlement procedures". Nothing in Article 10.4 implied that recourse to normal dispute settlement procedures was limited to third parties that had not been able to present their complaint jointly with the initial complainant.

• As India acknowledged in its first written submission, there might be many reasons why a WTO Member might not initially join a particular dispute settlement proceeding. Regardless of the reason, however, Article 10.4 of the DSU did not deny such a Member the right to resort to the dispute settlement process. In fact, the drafters of Article 10.4 had anticipated situations such as this - where a violation of a WTO agreement had already been established, but nullification or impairment of benefits accruing to a third party had not yet been established - and Article 10.4 was intended to address them. This was the sole purpose of this panel proceeding: to establish the nullification or impairment of benefits accruing to the EC.

• Article 9 of the DSU was entitled "Procedures for Multiple Complainants". Like Article 10.4, the text of Article 9 did not support the mandatory joinder rule suggested by India. Article 9 did not address potential complainants or whether there were any circumstances in which Members must join a dispute as a complainant. It only assumed that there would be situations with multiple complainants and provided procedures to govern such situations.

• There was no support in either the text or negotiating history of the DSU for India's argument that the EC's complaint should be dismissed because it had not been brought at the same time as the United States' complaint. India's interpretation had far-reaching consequences and could result in the denial to a WTO Member of its rights under Articles 10.4 and 22.2 of the DSU. Such a result must be avoided, in accordance with Articles 3.2 and 19.2 of the DSU, which provided that the recommendations or rulings of panels and the Appellate Body could not diminish the rights of WTO Members.

• For the purpose of clarifying the status of the present dispute, the Panel should issue a preliminary ruling rejecting India's request that the complaint of the European Communities and their member States be dismissed as untimely. The Panel should examine the pending complaint under normal dispute settlement procedures.

In examining the complaint brought by the EC, the Panel should apply the interpretation of Article 70.8 and 70.9 of the TRIPS Agreement of the Panel and the Appellate Body in the earlier case

5.4 The United States supported the view of the EC that it was not necessary or appropriate to repeat all of the legal arguments made in the earlier dispute (WT/DS50) in the context of the present proceedings. India had failed to comply with Article 70.8 and 70.9 of the TRIPS Agreement. The Appellate Body had already analysed the obligations in Article 70.8 and 70.9 and determined that India had failed to comply with those obligations. It was undisputed that India had not amended its Patents Act since the Appellate Body had issued its ruling three months ago.

• Under Article 10.4 of the DSU, the Panel should proceed in accordance with "normal dispute settlement procedures". Under normal procedures, it was not necessary for the Panel to approach the legal issues in this case without reference to the work in the earlier dispute. WTO panels could and should be guided by the legal interpretations developed in the context of previous panel proceedings. This was particularly important in a case such as the present one, in which precisely the same measures had recently been the subject of a separate panel proceeding. The relevance of this fact was supported by Article 10.4 of the DSU, which provided that a subsequent dispute regarding a measure should be referred to the "original panel" that had examined the measure. If the original panel proceedings had been essentially irrelevant to the subsequent panel proceedings, there would have been no reason to refer the successive dispute back to the original panel.

• India appeared to seek an entirely redundant proceeding. Despite India's obligation under Article 17.14 of the DSU to accept the Appellate Body's report in the earlier case unconditionally, India's submission gratuitously disparaged the work of the Appellate Body, calling the report "internally inconsistent", "contradictory", "distressing" and "regrettable". In its first written submission, India proceeded to re-argue many of the same points which it had made in the prior appellate proceeding and which the Appellate Body had rejected. India had reiterated these arguments in its criticism of the Appellate Body's report during the DSB meeting on 16 January 1998, when the report had been adopted. These same arguments had now reappeared again.

• India represented in its first written submission that it was presenting "new arguments and new facts" to the Panel and that it was not seeking "a further appeal" from the findings of the Appellate Body or "a rehearing of the previous case". These statements were refuted by the text of India's own submission. The basic arguments presented in the submission were not new and, indeed, much of the submission reiterated in hac verba the arguments that India had presented to the Appellate Body in the earlier case. For example, with respect to Article 70.8, pages 23-24 and 28-29 of India's first written submission to this Panel repeated, word-for-word, arguments set out in pages 10-12 and 13-14 of India's submission to the Appellate Body in the earlier case. Regarding Article 70.9, pages 36-39 also appeared to have been copied verbatim from India's appellate submission, pages 18-22. At the third party meeting, the United States added that, moreover, India did not argue that it had modified its patent r�gime since the Appellate Body's ruling and that, in that situation, the Panel should be guided by the Appellate Body's decision, not by allegedly new arguments about the same patent r�gime.

• India should not be permitted to reopen legal issues that had been conclusively determined by a panel and the Appellate Body. Such a result would invite repetitive litigation. Defendants that prevailed on some or all of the issues in a case could find themselves compelled to re-litigate those issues over and over again until they lost. Article 10.4 had been intended to prevent this scenario and reflected the desire of the drafters for finality in dispute settlement proceedings. The drafters had wanted to avoid giving complainants or defendants an incentive to re-litigate disputes to see if different panels would produce different results. If such "panel shopping" did produce different results, the effect on the dispute settlement system would be profoundly destabilizing.

• An important function of the WTO dispute settlement system was "to clarify the existing provisions of [covered] agreements in accordance with customary rules of interpretation of public international law".⁸³ The Appellate Body had recently clarified the obligations of Article 70.8 and 70.9 of the TRIPS Agreement. It had not found India's arguments convincing the first time and the Panel should be guided by its conclusions.

• The WTO dispute settlement system could not function effectively without consistent panel judgments. The United States had a strong interest in ensuring that these panel proceedings did not prejudice its rights as determined by the Appellate Body. Inconsistent interpretations of India's TRIPS obligations would also prejudice the rights of other WTO Members and make it impossible to apply the most-favoured-nation obligation in a meaningful way. Without consistent judgments, WTO Members would find little guidance in the legal interpretations developed by dispute settlement panels and the Appellate Body. The role of the dispute settlement system was greatly diminished and the system could not fulfill its purpose: to serve as a "central element in providing security and predictability to the multilateral trading system".⁸⁴

Article 3.8 of the DSU

5.5 Commenting on the approach that the Panel should take in the present dispute, the United States expressed the view that the Panel should presume that India's non-compliance with Article 70.8 and 70.9 had had an adverse impact on right holders in the European Communities, but that India was entitled to present evidence to rebut that presumption. Article 3.8 of the DSU provided that "In cases where there is an infringement of the obligations assumed under a covered agreement, the action is considered prima facie to constitute a case of nullification or impairment. This means that there is normally a presumption that a breach of the rules has an adverse impact on other Members parties to that covered agreement, and in such cases, it shall be up to the Member against whom the complaint has been brought to rebut the charge". According to the analysis of the Appellate Body, India's legal regime did not comply with Article 70.8 and 70.9 of the TRIPS Agreement. This Panel should therefore follow the Appellate Body's analysis and reach the same conclusion. If the Panel reached this conclusion, under Article 3.8 of the DSU, the EC was entitled to a presumption that India's breach of the TRIPS Agreement had had an adverse impact on the nationals of its member States.⁸⁵

5.6 Of course, this presumption was a rebuttable one and the Panel should consider any evidence presented by India that its failure to comply with Article 70.8 and 70.9 had not nullified or impaired benefits to the European Communities and their member States.

Continuation: Interim Review

⁷⁴ Document WT/DS50/AB/R, paragraph 47

⁷⁵ Appellate Body Report on Japan - Taxes on Alcoholic Beverages, Section E (WT/DS8/AB/R, WT/DS10/AB/R, WT/DS11/AB/R)

⁷⁶ See Annex 4 below.

⁷⁷ Document WT/DS50/R

⁷⁸ Document WT/DS50/AB/R

⁷⁹ Document WT/DS50/AB/R, paragraph 58; document WT/DS50/R, paragraph 7.28

⁸⁰ Document WT/DS50/AB/R, paragraph 69; document WT/DS50/R, paragraph 7.35

⁸¹ Document WT/DS50/AB/R, paragraph 97; document WT/DS50/R, paragraph 8.1

⁸² Document WT/DS50/AB/R, paragraph 97; document WT/DS50/R, paragraph 8.1

⁸³ DSU, Article 3.2

⁸⁴ DSU, Article 3.2 (emphasis added)

⁸⁵ In a scenario involving two successive disputes concerning the same matter and legal claims, such a presumption would not necessarily exist in the later case if the earlier case concerned solely "non-violation" nullification or impairment.