Regulatory Focus™ > News Articles > US, Switzerland Campaign to End 20-Year Moratorium on Non-Violation Complaints to WTO

US, Switzerland Campaign to End 20-Year Moratorium on Non-Violation Complaints to WTO

Posted 15 June 2015 | By Michael Mezher 

US, Switzerland Campaign to End 20-Year Moratorium on Non-Violation Complaints to WTO

At the Council for Trade-Related Aspects of Intellectual Property Rights (TRIPS) meeting last week, the US and Switzerland called on the Council to end a 20-year moratorium on what are called "non-violation complaints," LiveMint reports.

While non-violation complaints were rare even before the moratorium, they could provide a way for countries to challenge controversial intellectual property provisions such as Section 3(d) of India's Patents Act.

Background

Non-violation complaints are one of three types of complaints that can be filed against other countries under the General Agreement on Tariffs and Trade (GATT):

  • violation complaints
  • non-violation complaints
  • situation complaints

The complaints are defined in the subparagraphs of Article XXIII:1 of GATT 1994:

  1. "If any contracting party should consider that any benefit accruing to it directly or indirectly under this Agreement is being nullified or impaired or that the attainment of any objective of the Agreement is being impeded as the result of
    1. the failure of another contracting party to carry out its obligations under this Agreement, or
    2. the application by another contracting party of any measure, whether or not it conflicts with the provisions of this Agreement, or
    3. the existence of any other situation,

the contracting party may, with a view to the satisfactory adjustment of the matter, make written representations or proposals to the other contracting party or parties which it considers to be concerned. Any contracting party thus approached shall give sympathetic consideration to the representations or proposals made to it."

Violation complaints, defined in Article XXIII: 1(a), account for most complaints made under GATT. These complaints can be made when a country's failure to adhere to GATT leads to the "nullification or impairment of a benefit" to another member.

Non-violation complaints, defined in Article XXIII: 1(b), can be made when a member's measures result in the "nullification or impairment of a benefit," to another member, whether or not the policy or action violates GATT. Non-violation complaints were rare under GATT, however.  Since the WTO came into being in 1995, a moratorium (see Article 64(2) of TRIPS) has been in place preventing members from exercising this type of complaint.

Both the US and Switzerland fought for non-violation complaints to be included in TRIPS, however, most members oppose their inclusion in the agreement and support either banning these complaints or continuing the moratorium.

On the Horizon

The current moratorium on non-violation complaints is set to expire this year. While the US and Switzerland are campaigning to end the moratorium, India, Brazil and 17 other countries have co-sponsored a proposal to maintain the moratorium.

The proposal argues that TRIPS is designed to "establish minimum standards of intellectual property protection," and not to "protect market access or the balance of tariff concessions." If non-violation complaints are allowed, WTO members would be able to file complaints against other members over policies or actions that trigger an economic loss.

If the moratorium expires, India could see a challenge to Section 3(d) of its Patents Act, which prevents pharmaceutical companies from "evergreening" their patents. Section 3(d) reads:

"the mere discovery of a new form of a known substance which does not result in the enhancement of the known efficacy of that substance or the mere discovery of any new property or new use for a known substance or of the mere use of a known process, machine or apparatus unless such known process results in a new product or employs at least one new reactant [are not inventions within the meaning of this act].”

Section 3(d) has allowed India's patent office to follow a strict approach to reviewing pharmaceutical patent applications, and has been used to deny patents for several high-profile drugs for failing to meet the standards of inventiveness established in the clause. In recent years, Section 3(d) has been used to deny patents for Novartis' cancer drug Glivec and Gilead's blockbuster hepatitis C drug Sovaldi.

For countries like the US and Switzerland that have strong innovative pharmaceutical sectors, non-violation complaints could provide a way to challenge other countries' intellectual property laws through WTO dispute settlement instead as opposed to individual companies taking the fight to local courts.

According to LiveMint, the US and Switzerland are campaigning to end the moratorium on non-violation complaints before bringing the issue to the WTO's 10th ministerial conference in Kenya this December. If the moratorium is not extended, non-violation complaints will be allowed.

 

India Statement, Brazil/India proposal - Non-Violation and Situation Nullification or Impairment under the TRIPS Agreement, LiveMint


Categories: Regulatory News

Regulatory Focus newsletters

All the biggest regulatory news and happenings.

Subscribe