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ASIAN LAW CENTRE
OCCASIONAL SEMINAR SERIES
SEPTEMBER 20, 2001
REORIENTING TRIPS: INTELLECTUAL PROPERTY LAW IN NORTH ASIA
A.S.TAUBMAN1
If TRIPs is successful across the breathtaking sweep of signatory countries, it will be one of the most effective
vehicles of Western imperialism in history... [TRIPs] imposes presuppositions about human value, effort and
reward.
Marci A. Hamilton, The TRIPs Agreement: Imperialistic, Outdated and Overprotective, 29 Vand. J.
Transnat'l L. 613 (1996), 614-16
The principles of common heritage, free flow and national sovereignty along with the NIEO [new international
economic order] agenda meet their Waterloo in TRIPS.
Peter Drahos, Property Rights in Information: The Trade Paradigm, Prometheus, Vol. 16, No. 3
(1998), at 245
I couldn‟t at first understand the reason for the Duc‟s agitation. It was rubbish, of course, but the New Yorker
is not as naggingly edited as it once was. Oh, then it came to me. Of course, the Duc was agitated about
Hollywood‟s belief that it had invented the „French kiss‟ (which is beyond the reach of the cameras, anyhow). I
patted his back and said that I agreed with him and he calmed down, grateful that I had understood.
Although I fear there was something to do with the World Trade Organisation and protection of the French
film industry in his point which I missed.
Frank Moorhouse, Loose Living, Picador, 1995, p. 116
The incorporation of intellectual property standards in the World Trade Organization
(WTO) package of trade agreements, in the form of the Agreement on Trade-Related
Aspects of Intellectual Property Rights (TRIPS) has led to a rare coalition in protest: free
traders see it as an intolerable „anomaly within GATT‟ creating the alarming precedent of
introducing non-trade domestic regulatory issues in the trade rules system, a precursor for
labour and environmental standards; anti-globalist activists see it as the worst sort of
imposition of Western values and economic interests on developing countries, where they
are most vulnerable. Developing countries are, by and large, getting on with the
burdensome task of implementing TRIPS, but continue to question whether it has any
tangible benefits to offer them.
This paper suggests that this view of TRIPS is the equivalent of Cold War strategic thinking.
It is based on a rigid view both of developing countries‟ actual interests and of the policy
options available under TRIPS. The assumption that TRIPS imposes a rigid Western policy
template on developing countries has the unfortunate consequence of promoting that as an
outcome, and creates a deterrent to the kind of regulatory diversity that may be needed for
developing countries to capture the benefits of the international IP system. Japan, in its early
1Senior Lecturer, Australian Centre for Intellectual Property in Agriculture, Faculty of Law, Australian
National University, antony.taubman@anu.edu.au
use of the international patent system, and China in its current implementation of TRIPS in
the course of WTO accession, provide insights into the potential that may be otherwise
untapped. Finally, it may be fruitful to look behind the polarities – public/private,
north/south, producer/user of technological knowledge – that dominate international
debate on the patent system, and explore ways in which patent rights and claims of
community interest in a common heritage can be merged in practice. The revolution in
availability of patent information is one practical, but symbolically significant, instance of this
dual potentiality moving closer to a realization.
TRIPS, development and biotechnology
The scenario: an Asian developing country with strong ambitions to become a technological
power undertakes a detailed study of the United States patent system, and sets up its own
patent office on the US model. Within a few years, it has produced a stream of patents in a
range of industrial sectors, including a key biotechnology patent used in food processing. It
accedes to the key global treaty on industrial property, which gives its patentees rights in
foreign markets. This patent is licensed to major US food companies and helps fund further
biotechnology research.
Further biotechnology inventions follow soon after, concerning, for instance, a synthetised
product using biological processes to treat a major disease that is blighting the community, a
synthetic food product that spawns the development of a major food conglomerate, and a
synthesized hormone that is used for medical treatment (the inventor of the last invention
wins a key test case on biotechnology patenting in the United States). This has the air of the
bland, faintly patronising pro-IP propaganda that is currently put about by industry interests
in the developed world. It‟s actually the story of Japan in the late 19th Century. The patents
mentioned covered the synthesis and industrial application of the enzyme diastase (used in
the brewing industry), Vitamin B1 (which eradicated an epidemic of beriberi), monosodium
glutamate (which led to the formation of Ajinomoto Co, Inc, which sells food products to
100 countries) and adrenaline (Parke- Davis & Co. v. H. K. Mulford Co., 189 F. 95, 103
(S.D.N.Y. 1911) (J. Learned Hand)).2
It would be foolish, and even callow, to draw on this example to assert that IP rights systems
are an unalloyed good for developing countries today, and that intellectual property
protection inherently serves their interests. But it is a theme of this paper that it is
potentially self-fulfilling and hence self-defeating to assume that the international IP system
is inherently weighted against the interests of developing countries in Asia – because the
assumption clouds clear analysis of the underlying sets of interests and above all the policy
options available within the general IP framework. This assumption is behind much of the
concern about the impact of the Agreement on Trade-Related Aspects of Intellectual
Property Rights (TRIPS) in the World Trade Organisation (WTO). Above all, it fails to see
2„Even if it were merely an extracted product without change, there is no rule that such products are not
patentable. Takamine was the first to make it [adrenaline] available for any use by removing it from the other
gland-tissue in which it was found, and, while it is of course possible logically to call this a purification of the
principle, it became for every practical purpose a new thing commercially and therapeutically. That was a good
ground for a patent.‟
2
the intellectual property system as a dynamic and pliable mechanism, the benefits of which
depend more on how it is adapted and calibrated to take account of the domestic
commercial and technological environment, and whether it is strategically managed and
skilfully used.
TRIPS was included in the agreed package of rules covering international trade relations that
was confirmed and established upon the creation of the WTO in 1995. Developing
countries, led especially by Brazil and India, had trenchantly opposed in principle the
inclusion of an IP agreement in the Uruguay Round negotiations on the WTO package. But
the „single act‟ approach taken to the Uruguay Round outcomes meant that any country
seeking access to the WTO trade system had to apply TRIPS standards – there was little
flexibility, and no provision for reservations to TRIPS. When TRIPS came into force, it
removed, in a stroke, many of the policy options available to developing countries to limit
the availability and scope of intellectual property rights, and to create exceptions and
limitations to those rights. If the 1883 Paris Convention was, in terms of intellectual
property rights, the equivalent of Commodore Matthew Perry‟s „black ships‟ sailing into
Tokyo harbour,3 TRIPS was closer to the full exercise of gunboat diplomacy in „the new
intellectual property world order, where gunboat diplomacy is concerned with software
piracy rather than banana plantations and glass beads for ungrateful natives.‟4 TRIPS
may not amount to „gun boat‟ diplomacy, but it does smack of economic imperialism against uppity
"pirate' states who deign to compete by "imitation,' which, if not "the very lifeblood of a competitive
economy,' is at least an aspect of economic completion. 5
These concerns were clearly present at the Marrakesh Conference in 1994 which adopted the
WTO package, and well expressed by the then Indonesian Minister of Trade, H.E. Mr
S.B.Joedono:
Among the new obligations which we consider as a major concession is the agreement on intellectual
property. In order for us to implement the agreement fully, we require technical assistance from our
developed trading partners. As we make our adjustment, what we need most is technical cooperation
and not legal harassment.6
By the time of the Seattle Conference, the criticism was more blunt:
[TRIPS was] pushed through as part of the "single undertaking". These were meant to balance
elements ostensibly in favour of developing countries, i.e. the Agreement on Textiles, and special and
differential treatment provisions. While these were honoured more in the breach than in their
observance, the TRIPS and TRIMs Agreements have been asserted with full force, regardless of their
consequences for the developing countries.
The costs of the TRIPS Agreement are becoming especially evident. The balance between producers
of intellectual property, mainly the industrialized countries, and the developing country users has been
heavily tilted in favour of the former – through higher levels of protection, longer periods of
monopoly rights, and more stringent requirements to enforce these rights. One immediate fallout has
been the increase in prices of pharmaceutical and chemicals due to higher levels of patent protection.
3 Japan actually acceded to the Paris Convention in July 1899.
4 Horrible Hegemons: Moral Repugnance and Global IP Standards, Copyrites - No. 26 (12 August 1997),
www.dcita.gov.au
5 A. Samuel Oddi, TRIPs-Natural Rights and a "Polite Form of Economic Imperialism," 29 Vand. J. Transnat'l
L. 415 (1996), 470
6 Trade Negotiations Committee, Meeting at Ministerial Level, Marrakesh, 12-15 April, document
MTN.TNC/MIN(94)ST/17
3
Industrialized countries have also brought in new subjects, such as software and biotechnology, under
the ambit of intellectual property protection. In contrast, developing countries face a situation where
their traditional knowledge in medicine, music, art and design are often appropriated by the developed
countries without any compensation. Claims are being filed for agricultural products such as basmati
rice, and for products used traditionally as medicines such as "neem" and "haldee".7
As treaties go, TRIPS is particularly disliked. Free-trade ideologues and anti-globalisation
activists show rare unity in resenting and disparaging it. Its impact on developing countries
has been highlighted as a particularly egregious form of the WTO‟s Many advocates of
developing countries‟ interests believe that it is an intolerable burden for them, and a last-
ditch attempt by the post-industrial industrialised world to preserve precious comparative
advantage; intellectual property industries in rich countries consider it inadequate and
ineffectual, or ascribe to it powers of coercion that it could never have. According to
various commentators, TRIPS is responsible for „heartless exploitation of the poor and
suffering;‟ it also undermines biodiversity and enables biopiracy, prevents access to essential
medicines, uses ideas to extort payment, transfers massive amounts of wealth from poor
countries to rich ones, ends national sovereignty, is „clearly anomalous within GATT,‟ and
creates the disturbing precedent of incorporating domestic regulatory standards in
international trade rules. The cover of Warta Ekonomi, an Indonesian economic journal, in
February 2000 depicted TRIPS as a destructive hammer, paired with a whip, crushing
compact discs with the headline BSA & Microsoft menyerang Indonesia: Jutaan Orang Kriminal
(„The Business Software Alliance & Microsoft Threaten Indonesia: A Million People are
Criminals‟).
The WTO has itself come to be increasingly stigmatised in international debate, having had
exceptionally bad press (and even worse Web) since the day the MAI died (negotiations on
the OECD Multilateral Agreement on Investment were formally suspended in 1998); and
even within the WTO family, TRIPS is considered the black sheep, disparaged as a freakish
genetically modified organism in the otherwise natural realm of free trade where market
forces healthily play – a pariah within a civil society pariah. Commentators see excision of
the TRIPS Agreement as a pressing priority in the reform of the WTO:
We demand the removal of [TRIPS] from the WTO. There is no basis for inclusion of intellectual
property claims in a trade agreement. Additionally, the TRIPS agreement promotes monopoly by
transnational corporations; prevents access to essential medicines and other goods; leads to private
appropriate of knowledge and life forms; undermines biodiversity; and keeps poorer countries from
increasing their levels of social and economic welfare and developing their technological capacity.8
The WTO is more than a multilateral trading system. It has accumulated issues that are non-trade and
not in its mandate. An example – the prime example – is TRIPs. This is not a liberalisation device,
it‟s a protectionist device…. Why is this happening? One reason is that the WTO has an enforcement
mechanism. That‟s why they have chosen it as the vehicle. In fact, I heard this from a European
Commission official: “The WTO is now our vehicle of choice for global economic governance.”
They want to extend the principles that originally applied to cross-border trade in goods to services,
then to intellectual property, then to competition policy, then to everything.‟ 9
7 PAKISTAN: Statement by H.E. Mr. Abdul Razak Dawood, Minister of Commerce, Industry and Production
(WTO document WT/MIN(99)/ST/9 dated 30 November 1999)
8 From Shrink it or sink it, The turn-around agenda, New Internationalist 334 (May 2001), p. 24
9 Martin Khor, Third World Network, quoted in „A World Turned Upside Down‟ New Internationalist, 334
(May 2001), p27
4
This paper seeks to explore an alternative view, one deliberately addressing TRIPS as a
potential empowering tool for a broader range of interests than is customary in the
mainstream discourse. The more the view of TRIPS as an inflexible constraint and burden
is allowed to flourish, the more likely it is to be vindicated: standing apart from TRIPS and
condemning it as injurious may well bring about that outcome. Equally, the more alternative
approaches to TRIPS are explored and understood, the more its impact can be made
positive. These ad hominem criticisms of TRIPS embody vitally important policy concerns,
but are misdirected in opposing a WTO agreement on intellectual property. Conceivably,
the zeal that has been expended in condemning TRIPS might be more productively
employed in exploring policy options under TRIPS and turning TRIPS towards social and
economic welfare. This requires policy skills and analytical tools required for positive and
constructive use of TRIPS to promote public policy interests, while regulating international
relations concerning intellectual property.
The preamble to TRIPS sets IP in its specific context of trade and dispute settlement:
Desiring to reduce distortions and impediments to international trade, and taking into account the
need to promote effective and adequate protection of intellectual property rights, and to ensure that
measures and procedures to enforce intellectual property rights do not themselves become barriers to
legitimate trade …
Emphasizing the importance of reducing tensions by reaching strengthened commitments to
resolve disputes on trade-related intellectual property issues through multilateral procedures;
TRIPS specifies the „objective‟ of IP protection as (Article 7):
The protection and enforcement of intellectual property rights should contribute to the promotion of
technological innovation and to the transfer and dissemination of technology, to the mutual advantage
of producers and users of technological knowledge and in a manner conducive to social and economic
welfare, and to a balance of rights and obligations.
Taking TRIPS at its word, then, it is not intended to promote the protection of intellectual
property rights for their own sake, or to restrict the flow of or effective access to new
technology. But this is precisely what it is criticised for. Something is going wrong: TRIPS
has incorrigible internal contradictions and defeats its own purpose, its implementation is
flawed and misdirected, or it has been selectively and inaccurately interpreted; at least one of
these must be true. Essentially, the question confronting the policymaker, as for advocates
of developing country and consumer interests, is how to determine and make use of the
necessary tools to enable TRIPS-consistent IP systems to attain this objective.
Above all TRIPS was drawn up as a tool for settling disputes between trading partners about
intellectual property rights. If perceived problems with intellectual property protection
internationally did not lead to disputes, then it is unlikely that TRIPS would exist. For that
matter, the need to ease disputes formed the central rationale for the creation of two key
elements of TRIPS, the Paris and Berne Conventions (originally negotiated in the 1870-
1880s). The letter of invitation to the First International Congress for the Consideration of
Patent Protection (held in Vienna in 1872) already suggested that differing IP standards
created antagonism and prejudiced general harmony.10 A perceived need to ease tensions by
10„We live no longer in the day of Industrial action, which is strictly confined and is removed from foreign
competition, and where slow communication prevents or delays the utilization of inventions. We live at a time
of liberal Customs policy; Steam and Electricity have newly united once isolated seats of industry in a way
5
promoting international cooperation on intellectual property has a long history, and TRIPS
brought about a dramatic new rigour and reach in the settlement of bilateral disputes on
intellectual property trade.
But the way this has operated since TRIPS came into effect in 1995 has led to some
unexpected consequences. Developing countries‟ worst apprehensions were borne out in
one of the first TRIPS disputes, India - Patent Protection for Pharmaceutical and Agricultural
Chemical Products. Developing countries had firmly opposed the mandatory application under
TRIPS of patent protection to pharmaceuticals and agricultural chemicals; the inclusion of
this obligation in TRIPS was „perhaps the greatest concession made by developing countries
during the negotiations.‟11 When India‟s implementing legislation was delayed in the
parliamentary process, the Indian Government resorted to various constitutional
expediencies to give effect to the obligation to provide interim rights for patent applicants in
these areas of technology. Despite India‟s own arguments that its choice of domestic legal
means was constitutional and adequate, this was challenged by the US and the EU, who
successfully secured from WTO panels and the Appellate Body rulings that this provided
insufficient legal durability and thus failed to meet the needs of foreign patent applicants for
predictability and security. This played on all the kind of concerns about TRIPS as a
coercive intrusion into sensitive areas of domestic policymaking, and as pre-empting national
sovereignty even as to choice of domestic legal mechanisms.
But developments since then have not conformed with the received view of TRIPS. For
instance,
• U.S. – Sections 301-310 of the Trade Act of 197412 clarified that the resort to unilateral
measures to resolve trade disputes – the „aggressive unilateralism‟13 which led to an
acceptance of the need for TRIPS as an agreed rules-based means of settling disputes –
was itself a breach of WTO rules, so even if the unilateral sabre could be rattled, it could
not be drawn;14
undreamt of; and the mutual exchange of goods shows today a magnitude which a generation ago one could
not have imagined. Under such altered relations the Patent granted for an invention in one country becomes in
fact a restriction unprofitable and obstructive, if the same invention without limitation or increase in price,
becomes in an adjoining country common property. The artisan who in the one country must work with the
auxiliary material there patented and therefore dearer in price, will suffer an essential injury as soon as the same
material is produced in the other country, not only without restriction, but with a damaging competition.
Moreover a continuance of the hitherto antagonistic view and measures would scarcely conduce to the
preservation of general harmony; and if, for example, Patent protection were maintained in one country, so as
to attract thereby skilled operatives from another, then the danger of disturbance of the International industrial
balance might readily be apprehended. Such and similar inconveniences can only be met by the common
action of all civilized States, disposed to the maintenance of Patent protection.‟ Quoted in Kronstein H and
Till I, „A Reevaluation of the International Patent Convention‟ in XII Law and Contemporary Problems,
(1947), p. 768
11 Carlos Correa, „Patent Rights,‟ in Intellectual Property and International Trade – the TRIPS Agreement, Kluwer, 1998,
p.191
12 WT/DS152/R (Dec. 19, 1999)
13 Jagdish Bhagwati, Aggressive Unilateralism: An Overview, in „Aggressive Unilateralism: America's 301 Trade
Policy and The World Trading System 1‟, 1-45 (Jagdish Bhagwati & Hugh T. Patrick eds., 1990).
14 Seung Wha Chang, TAMING UNILATERALISM UNDER THE MULTILATERAL TRADING
SYSTEM: UNFINISHED JOB IN THE WTO PANEL RULING ON U.S. SECTIONS 301-310 OF THE
6
• In the Article 22.6 arbitration ruling on European Communities – Regime for the Importation, Sale
and Distribution of Bananas, in the long-running Bananas saga, Ecuador reinvented TRIPS as
means of redressing economic disparities and creating trade leverage for developing
countries to gain access for their agricultural products15
• In US – Section 110(5) of the US Copyright Act16 the US lost the first (and so far only) WTO
case on copyright protection, with Brazil exercising third party rights to defend the
interests of its copyright owners in the US market;
• Developing countries (other than least developed countries) were due to implement
TRIPS by January 2000 – most have failed to implement it fully, but their failure to do so
has not triggered a single dispute – let alone the imposition of „WTO sanctions.‟ This
highlights the actual function of WTO rules, including TRIPS: as a framework for
settling disputes between sovereign parties when there are claims of injury to trade
interests; rather than as an autonomous system of compliance-monitoring and
sanctions.
• The use of the WTO dispute settlement mechanism to bring about a mutually agreeable
solution to the Brazil - Measures Affecting Patent Protection case17 which was based not on a
formal compliance analysis but on the development of a transparency and trust
mechanism to provide confidence that interests will not be impaired
In the protracted, essentially transatlantic, debate about whether electronically delivered
products (downloaded software, music, books and the like) were classified for WTO
purposes as goods (the US position) or services (the EU position), Indonesia and Singapore
put forward the innovative „new economy‟ solution that these should be considered as trade
in intellectual property per se as a distinct form of international transaction.‟ This anticipated
the sort of recent commentary on the transformation of international trade:
While all forms of property are more likely to be accessed than purchased in a network economy, it
bears repeating that tangible property is becoming increasingly marginal to the exercise of economic
power, and intangible property is fast becoming the defining force in an access-based era. Ideas in the
form of patents, copyrights, trademarks, trade secrets, and relationships – are being used to forge a
new kind of economic power composed of megasuppliers in control of expanded networks of users. 18
TRIPS and China’s WTO accession
The accession to the WTO of China provides a useful opportunity to reassess the
assumptions of relative interests and cultural specificity of TRIPS. China‟s implementation
of TRIPS provisions has been considered largely on the assumption of reluctant compliance
with externally imposed standards. But „TRIPS implementation‟ is difficult to distinguish
from the general development of systems for protection and exploitation of intellectual
property rights (IPRs) as an instrument of domestic economic policy. Moreover, during the
progressive development of the modern Chinese IPR system from the early eighties, China
TRADE ACT OF 1974, Law and Policy in International Business, Summer, 2000 (31 Law & Pol'y Int'l Bus.
1151)
15 WT/DS27/ARB/ECU (24 March 2000)
16 WT/DS160/R (15 June 2000)
17 G/L/454, IP/D/23/Add.1 (19 July 2001)
18 Jeremy Rifkin, “Monopolising Ideas,” in The Age of Access, Penguin, 2000
7
has been relatively successful in promoting active use of the system by Chinese nationals.
The rate of domestic use of the patent and trade mark system is at a very high international
level, and the number of applications by Chinese nationals for industrial property protection
in foreign markets is generally higher than the reverse flow. This should not be surprising,
given China‟s growing strength and diversity as an economy, an international trader, and a
technological power.
This suggests a more balanced view of China‟s TRIPS implementation in the context of
WTO accession is needed: more effective protection of IPRs within China would benefit
proportionately more domestic nationals than in most other countries; and Chinese interests
stand to gain significant benefits from the guarantees of effective IPR protection in China‟s
export markets that WTO accession should confer. The manner in which China has
implemented its industrial property laws – within the general framework of international
standards, including TRIPS – illustrates the policy flexibility that these international
standards allow, and further challenge the perception of TRIPS implementation as an
inflexible process of conceding to external commercial interests, and as nothing but an
enforced acceptance of a Western template for management of knowledge resources.
There is already an extensive literature on the protection of intellectual property rights (IPR)
in China, and even more writing on the lack of IPR protection. IPR as a trade issue,
bilaterally with the United States and as an issue in the accession of China to the WTO, has
given the topic particular immediacy. One point of agreement is that there has been
widespread production, distribution and export of unauthorized copies of intellectual
property (IP) materials in China, although there is much difference on whether this is good
or bad for the economy, whether it is transitional and accidental, or planned, whether it is
due to deep-seated cultural reasons or short-term commercial expediency. Anecdotal
reports of the pervasive availability of infringing material are supplemented by industry
estimates of piracy rates. The International Intellectual Property Alliance (IIPA), in a recent
submission to the US Government, reports that:
Despite efforts made by the Chinese government to crack down on massive domestic piracy of all
types of copyrighted products earlier in 2000, including raids netting hundreds of thousands of pirate
optical media products, piracy rates in China continue to hover at the 90% level.19
IIPA estimates for losses to piracy in China in the year 2000 in relation to motion pictures,
recorded music, business and entertainment software and books exceeded US $2.1 bn.20 If
this loss (even the perception of a loss at this scale, if these estimates are not accepted) is
contrasted with the United States‟ international transactions in royalty and license fees (for
the commercial use of IPRs and similar non-tangible assets) of some $48bn,21 it becomes
clear why there is pressure for this major form of international commercial transaction to be
covered by agreed, balanced multilateral trade rules concerning intellectual property.
It is true that the causes of IPR infringement, and the policy mechanisms for dealing with it,
are deeper and broader than questions of market access for foreign traders in IP-related
19 International Intellectual Property Alliance: 2001 Special 301 Report: People‟s Republic Of China,
www.iipa.com
20 www.iipa.com
21 1998 figures, Balance of Payments Statistics Yearbook, International Monetary Fund
8
products and services. What is behind the apparent pattern of prevalent infringement of
IPRs in China? There are suggestions that cultural differences make the notion of exclusive
intellectual property rights an alien concept, difficult to comprehend in the Chinese cultural
context – captured in the memorable title To Steal a Book Is an Elegant Offense.22 Exasperation
with the reported scale of production, distribution and export of infringing materials tempts
some to draw the conclusion that a permissive approach to IPR infringement is even a
conscious part of economic planning:
No nation has ever built a healthy, modern economy without protecting intellectual-property rights.
But it's hard to escape the conclusion that China's rulers may be gambling on an exception. 23
This debate will not abate in coming years. Intellectual property rights protection is still
difficult to accommodate in traditional trade diplomacy, and will remain a complex but
salient issue.
• Direct trade in IPR (licensing fees, royalties and other IP-related financial transfers) and
trade in IP-dependent products and services is growing in value and as a proportion of
overall trade.
• Adequacy of intellectual property protection is coming into focus as a market access
issue for this valuable trade: markets for some such products – packaged software and
sound recordings, for example – can be almost eliminated in the face of endemic
availability of unauthorized copies.
• IP has unusual complexity as a trade issue, and there is still some theoretical and political
disquiet about trade in intellectual property rights as an appropriate subject for trade law.
• TRIPS in particular is seen as burdensome, inflexible, and prejudicial to developing
countries‟ interests.
• It is an irreducibly difficult task to meet expectations that IPR infringement should
reduced to de minimis levels, not readily addressed through legislative means alone.24
Sharp growth in international trade in infringing goods, and the perceived inadequacy of
available legal remedies, to the extent that a legitimate market for some products barely
existed at all in some economies, was the principal impetus for the inclusion of TRIPS in the
WTO package of trade rules. It addressed the problem of enforcement by establishing an
adequate legal basis for the recognition and grant of IPRs, and by mandating the availability
of specific legal remedies to enforce those rights. Especially rigorous remedies – border
control measures and criminal sanctions – are required for counterfeit trade mark goods and
pirated copyright works, the most widely traded infringing goods. The detail and reach of
these obligations for domestic legal enforcement of IPRs is unprecedented in multilateral IP
agreements.
TRIPS is, however, one element of a much broader picture, and TRIPS itself has flexibility
and beneficial elements that are often overlooked. China has been progressively establishing
22 To Steal a Book Is an Elegant Offense: Intellectual Property Law in Chinese Civilization, William P. Alford, Stanford
University Press, 1994
23 Beijing's Phony War On Fakes, Richard Behar, Fortune Magazine, October 30, 2000, p. 188
24 The difficulty of giving effect to IP laws was sharply illustrated in the incident reported in the People's Daily of
December 4, 2000: Tang Anming, head of the Shuanghe village tobacco bureau in Chongqing municipality,
was killed in November while arresting a person suspected of selling counterfeit foreign brand cigarettes.
(AFP, 5 December, 2000)
9
TRIPS-consistent intellectual property laws since at least the time of the commencement of
the Uruguay Round negotiations in the mid 1980s. There is tangible evidence that China‟s
interests are increasingly aligned with both the letter and spirit of TRIPS. China is emerging
as a significant exporter not just of IP-rich goods but also intellectual property rights per se.
The experience of China can illustrate that TRIPS implementation is not an isolated process,
and TRIPS-consistent measures can be introduced with a view equally to promoting
productive domestic interests and to meeting trading partners‟ expectations.
China‟s implementation of TRIPS, in the context of its accession to the WTO, has generally
been viewed from the perspective of compliance, of undertaking a set of legislative steps,
unwillingly or at least diffidently, to meet the rigorous international standards laid down in
the TRIPS Agreement and insisted on by leading developed economies. In the accession
process, the emphasis has naturally fallen on the strong expectations of China's trading
partners that reported high levels of copyright piracy and trademark counterfeiting, and
reports of systemic difficulties in getting and enforcing judicial decisions on IPR
infringements; and the technical legal questions of conformity with TRIPS standards in
areas such as definition of trade marks, national treatment in copyright law protection,
compulsory licensing provisions and government use provisions. This creates the dominant
view that TRIPS implementation is an unwelcome chore for China, and the process of
overhauling intellectual property protection and improving enforcement a burdensome task
that China would only undertake as a necessary evil in pursuit of its broader goal of WTO
accession, and from the bilateral pressure it has felt on the question of intellectual property
protection, particularly on the part of the United States.
The historical record bears this out. China has been under diplomatic and trade pressure
since the late seventies to improve its intellectual property protection, and it could appear
that the stimulus to forward movement has been essentially external. Major reforms to IPR
laws from 1992 to 1994 directly followed bilateral agreement with the US in the face of
threats of $1.5 bn in trade sanctions under the provisions of Section 182 of the US Trade
Act of 1974 (or „Special 301‟).25 This cycle repeated in 1994-5, and in 1996, with especial
attention to concerns about shortcomings in the enforcement of IPRs, with high levels of
trade sanctions. To the observer, this might suggest that the progressive reform of the
Chinese IP system is more the consequence of external coercion than of domestic initiatives.
It is less frequently considered, in the context of WTO accession, whether China's extensive
and long-running program of enhancing IPR protection (dating from the late seventies) may
be consonant with its own perceived longer-term interests, and may be undertaken with a
focus on direct intellectual property interests. This paper seeks to explore some aspects of
China's implementation of TRIPS from the perspective of direct Chinese interests in IPR
protection. China‟s voluntary engagement in the international system has been significant,
and in overall institutional and substantive legal terms outweighs the specific steps taken in
response to bilateral concerns and steps towards TRIPS implementation spurred by the
WTO accession process. China has, since the late seventies, elected to adhere to most of the
key international treaties concerning intellectual property, not as the direct consequence of
political or trade pressure but an expression of a willingness to engage in an international
25Congressional Research Service Report for Congress, RL30555: China-U.S. Trade Agreements: Compliance
Issues, Wayne M. Morrison, Updated September 1, 2000, http://www.cnie.org/nle
10
legal infrastructure for IP protection which is much broader than TRIPS itself. Even so,
accession to these treaties is highly relevant from the point of view of TRIPS
implementation.
China‟s accession to the Berne Convention in particular, but also the Paris Convention,
anticipated some of the key substantive IPR standards of TRIPS. China‟s high level of
engagement in so-called „facilitation‟ treaties (the PCT, the Madrid Agreement and Protocol,
and Budapest), as well as its engagement in classification treaties, give practical effect to the
TRIPS obligation26 that procedures for acquiring and maintaining IPRs should not be
„unnecessarily complicated or costly.‟ The domestic legal implications of these ratifications
are not trivial for administration and enforcement of IPRs, given the recognition of treaty
obligations in Chinese municipal law.27
On the face of it, IPR protection in China is not an external legal or cultural artefact, but has
its basis in the national constitution: Article 19 requires the State to reward „scientific
research as well as technological innovations and inventions.‟ China is, in relative terms,
highly capable technologically and has considerable indigenous research capacity. It has a
wide diversity of traditional cultures that find diverse forms of commercial expression, and a
long tradition as a trader keen to preserve a comparative advantage through the careful
management of technological knowhow. The assumption that China would have a long-
term economic and developmental interest in the slavish imitation of imported products,
such as software, branded goods or pharmaceuticals, seems tenuous - it is also unlikely that
this situation would be consistent with an ambition to become a major technological
economy. This suggests that upgrading of IP protection should over time be less a
perfunctory exercise in passively complying with external international expectations and may
conform more with domestic economic development policy.
The self-defeating characteristic of IPR infringement as an instrument of economic
development is becoming increasingly apparent – ironically, a highly permissive approach to
IPR infringement can serve to entrench foreign technological monopolies and a dependence
on imported technology. Reportedly, „a nationwide survey of over 80 Chinese software
enterprises, conducted in mid-2000 by a research entity under the Ministry of Information
Industries, found that the number one barrier to their development was the widespread
piracy of their products.‟28
26Article 62.4
27Wherever the international treaty contains provisions differing from those in civil laws, the provisions of the
international treaty shall apply according to Article 142 of the General Principles of Civil Law. For instance, the
Chinese Regulations for the Protection of Computer Software stipulate that registration of computer software is a
condition precedent to initiation of any administrative dispute resolution or legal proceedings in China.
Obviously, this is not in conformity with the Berne Convention's requirement. In this case … foreigners may
obtain protection for their computer software works without registration - China's Intellectual Property Protection
System in Progress, Dr. Gao Lulin, in China in the World Trading System, Kluwer, 1998, p.130.
Similar cases include the application of Article 8 of the Paris Convention to give protection to a Hong Kong
business name not registered in the PRC, and the Bejing People's High Court ruling in Walt Disney Company vs
Beijing Publishing Company that the bilateral Memorandum of Understanding with the United States helped
establish enforceable rights for a US plaintiff - Cited in Advances in the Protection of Intellectual Property Rights in
China, Guoqiang Lu, Harvard China Review, Volume 1 Number 1, Summer 1998
11
One of the themes of the WTO accession process has been that China is in a class of its
own, and is difficult to class as a developing country. Although per capita incomes remain at
a low level, China is a major international economy – the World Bank estimates its GDP at
991.2 billion in 1999, double the South Korean economy, and more than double the Russian
Federation‟s. It is a significant producer of technology - high-technology exports (generally
embodying IPRs29) are at the relatively high level of 15% of manufactured exports, squarely
between Germany at 14% and Switzerland at 16%, at a total value of $23,308mn.30 It has a
high concentration of technological education, with 53% of tertiary students engaged in
scientific disciplines over 1995-9731 - the highest reported proportion of any country, apart
from two Caribbean island states with small populations. Numbers of full time personnel
engaged in research and development in 1996 were at the very high global level of 787 000,
rivalling Japan (891 783) and the US (962 700, in 1993).32 With this background, it should be
unsurprising that China is emerging as a major user of the intellectual property system – and
indeed, this is exactly what the patent statistics bear out.33 China is already a significantly
higher user of the international patent system than Canada – a G8 industrialised economy,
and than Australia, despite Australia‟s relatively high use of the IP system.
The proportion of patent applications filed in China by Chinese nationals in 1997 was 21%
according to WIPO statistics - higher than the corresponding figures in Australia (at 19%),
Canada (8%), France (17%) and the UK (18%), and much more than any other European
country. Patent applications filed by Chinese nationals in that year totalled 12,786, three
times more than corresponding domestic filings in Canada at 4192, and significantly more
than in Australia (8937) and any European country apart from France, Germany, the UK
and Russia. The skew towards domestic applicants is accentuated when the proportion of
actually granted patents is considered – in 1997, fully 44% of patents granted in China were
in the name of Chinese applicants – a proportion not matched by France or Germany, nor
by all but a small handful of leading developed economies.
So, on the face of it, assuming that complying with the patent provisions of TRIPS gives
benefits to individual patent holders, the international community is effectively calling on
China to give better effect to a system that already benefits proportionately more Chinese
enterprises than it does in almost any existing WTO member. Apart from the field of
technology and in the realm of product merchandising, the situation is even more
pronounced with trade marks. Chinese national applicants amount to 81% of all
applications lodged with the CTMO in 1997 - well ahead of corresponding figures in Canada
(57%) and Australia (60%), and comparable with France (76%), the US (85%) and Japan
(86%).
29 „products with high R&D intensity. They include high technology products such as in aerospace, computes,
pharmaceuticals, scientific instruments, and electiracl machinery‟ – definition, 2000 World Development
Indicators
30 2000 World Development Indicators, World Bank
31 UNDP Human Development Report, 2000 (www.undp.org)
32 UNESCO Statistical Yearbook 1999
33 All industrial property statistics quoted in this paper derived from published WIPO statistics for 1997.
12
This sheds light on one unexpected consequence of TRIPS implementation, not generally
shared by other WTO trade rules: its benefits should automatically and directly flow to
domestic interests. The nature of the IP system is that any benefit accruing to foreign right
holders - in terms of broader scope of IPRs, more effective administration, or better
enforcement - would normally be felt by domestic right holders just as much. In some cases,
especially where the self-executing effect of a treaty is relied upon to establish standing or
access to a particular administrative advantage, domestic interests may not fully benefit. But
that situation is relatively rare.
Chinese IP activity abroad
China already benefits directly from the availability of TRIPS-consistent IP protection in
export markets, in many cases proportionately more than its trading partners would benefit
from China's TRIPS implementation. If the industrial property statistics are any guide,
China is a relatively successful exporter of IPRs, as patent applications and grants to Chinese
nationals in most foreign jurisdictions greatly outnumber the corresponding foreign activity
within China. The „balance of trade‟ in patent activity is sharply in China‟s favour in relation
to Australia, Canada, France and Denmark, to take a few examples, and China and Germany
are roughly on par.
Chinese patent Australia Canada France Denmark Germany
activity in 1997 To From To From To From To From To From
Patent 928 781 1158 864 3115 1859 3126 62 4408 4485
applications 0
Patent grants 274 24 117 22 1453 125 538 7 1611 177
In contrast to direct patent activity, China lags dramatically behind in the reported trade in
royalty and license fees34 received, that is in recorded direct income from the exploitation of
IPRs - in 1998, World Bank figures (drawn from the IMF) indicated that China received
$63m in royalties and license fees, but paid $420m to external right holders. China‟s
reported direct income from IPRs is thus very low, in contrast with its use of the patent
system, being lower than Brazil ($142m) and Mexico ($139m) and slightly more than Czech
Republic ($57m) and Hungary ($46m), and almost negligible on a per capita basis (considering
that the total US trade is $48bn). Some of this disparity could be attributed to the statistics,
but it is presumably also due to lack of IPR commercialisation capacity, and the time lag of
commercialisation, the income from patented inventions typically only beginning to flow
some years after the initial patent application is filed.
One further factor is the high level of high-technology products in China‟s export profile –
suggesting that IPRs tend to be captured in domestic production for the export market,
rather than licensed externally, and setting in context the outlay of $420mn in royalty and
license fees for imported IPRs – much of this IPR will be found in the exported finished
34„payments and receipts … for th eauthorized use of intangible, nonproduced, nonfinancial assets and
proprietary rights (such as patents, copyrights, trademarks, industrial processes, and franchees) and for the use,
through liencsing agreements, of produced originals of prototypes (such as muscripts and films)‟ – definitions,
2000 World Development Indicators, World Bank
13
goods, making this outlay a very productive investment (amounting to 1.8% the value of
high-technology IP-rich exports, at $23.3bn in 1997).
Social and economic benefits of TRIPS implementation
The statistics illustrate that the level of IP activity by Chinese right holders is higher than
expected, and higher than most of China‟s economic partners. Inasmuch as TRIPS
implementation benefits IP right holders, both in China and in its export markets, these
benefits would flow proportionately more to China than to almost all of its economic
partners. But TRIPS does not exist solely for the benefit of the patent applicant, or, more
broadly, the IP right holder. It is intended, according to its objective, to promote
innovation, transfer of technology, and a balance of rights and obligations conducive to
social and economic development. Some elements of China‟s existing patent law shed light
on how this balance of interests can be achieved under TRIPS.35
Technology transfer through patent disclosure
For example, Article 28 of TRIPS requires patentees to make a full disclosure of their
invention – requires that a patent specification must clearly describe how to carry out the
invention in a manner sufficiently clear and complete for the invention to be carried out by a
person skilled in the relevant field of technology.36 – something that has been fundamental
to patent law, but lacked explicit recognition in earlier multilateral norms. The effect of this
is to mandate the transfer of new technology into the public domain even before the
inventor or patent applicant knows whether they have a limited exclusive right over their
invention. The increasing availability of affordable information technology has made the
resulting patent information much more readily available and easier to search and analyse.
The combination of the TRIPS standard and technology has decisively tilted the balance of
interests towards the user of technology, for those willing to make use of patent information.
China has already been usually adept in its use of patent information resources, and has used
the patent system to leap-frog existing technologies and to create improvement technologies
which are licensed back to the patentee of the original invention.
Limited public policy exceptions under Article 30
Article 30 of TRIPS allows for limited exceptions to patent rights provided that they do not
unreasonably conflict with a normal exploitation of the patent and do not unreasonably
prejudice the legitimate interests of the patent owner, taking account of the legitimate
interests of third parties. This is typically used in national patent law to ensure that non-
commercial use of patented inventions is permitted, such as to allow research and
educational use. It is also frequently used to permit prior secret use to continue, and to
exclude vehicles in transit and the like. The scope of allowable exceptions to patent rights is
seen as one of the central issues in ensuring that a patent system is balanced and equitable,
and the scope of permitted patent rights is the fulcrum of private and public interests in the
35 This reading is based on the text available on the MOFTEC web site
(http://www.moftec.gov.cn/moftec/official/html/laws_and_regulations/trade21.html) and does not take
account of potential translation issues.
36 Article 29
14
patent system. The contentious nature of these provisions, together with their very general
wording, almost guaranteed that they would be tested in the WTO DSB, and this duly
occurred, in the Canada - Pharmaceutical Patents (or 'springboarding') case. In a nutshell,
this case confirmed that the patent right was not confined to actual sales of the patented
product, but extended to any use of the patent undertaken for commercial purposes, and
that an exception that allowed for commercial-scale use of the patent but fell short of actual
sales was not permissible.
The relevant exceptions to the patent right in Chinese law are expressed indirectly: under
Article 11, the patent right is limited to infringing acts (making, using or selling) „for
production or business purposes.‟ Prima facie, this leaves open the possibility of research
and educational exceptions, but not production on a commercial scale or use of the patented
invention in preparing for commercial production. This extends to importation for
production or business purposes. Of interest in the light of the current controversy over
generic drugs and patents, this provision would apparently exclude importation for purposes
that are clearly not 'for production or business purposes' – potentially, this could conceivably
allow the importation and distribution of generic drugs for non-commercial humanitarian
purposes, such as for free distribution, despite the existence of a patent. Depending on the
strict judicial interpretation made of this provision, there may be a wide degree of latitude for
non-commercial public policy use of patented material, potentially challenging the TRIPS
requirement that such exceptions be 'limited.'
Patents and the state-owned economy
Article 7 of the Constitution provides that: the state-owned economy, i.e. the socialist
economy with ownership by the people as a whole, is the leading force in the national
economy: „the state will ensure the consolidation and development of the state-owned
economy.‟37 The continuing significance of the State-owned economic sector is apparent in
Article 14 of the Patents Act, which empowers government agencies to exploit patented
inventions, when the patents are held by 'entities owned by the whole people under the
organizational system or jurisdiction of these departments and governments,' subject to
payment of an exploitation fee. This is, in effect, an automatic compulsory license allowing
the government to make use of any patent held by state-owned enterprises. Given the
difficult transition of state-owned enterprises to the market environment, and the emerging
competitive pressures, this form of collective entitlement to patented inventions is an
interesting provision. While, as required by the compulsory licensing norms in TRIPS, this
provision seeks to ensure the patentee‟s interests are not gravely damaged by requiring an
„exploitation fee,‟ it deprives the patentee of any strategic opportunities through selective
access to the technology, and monopoly market opportunities. It further erodes leverage in
licensing negotiations, and removes the possibility of exclusive licenses – depending on the
range of markets in which state-aligned enterprises are present. Given the likely relatively
high concentration of domestic patents in the government sector, this kind of provision
could, in time, prove to be one factor behind the relative failure of Chinese enterprises to
effectively commercialise their IPRs. On the other hand, it represents a distinctive form of
public ownership and equitable reward for public sector innovations.
37 1993 Constitution: Chinalaw translation at http://www.qis.net/chinalaw/lawtran1.htm
15
Compulsory licensing and availability of patented technology
A similar logic lies behind the compulsory licensing provisions in the Patent Law. These
provisions are, on paper at least, quite powerful and leave considerable scope for discretion.
They include procedural safeguards on compulsory licensing that TRIPS requires - for
instance, that the license not be exclusive and not be assignable. However, these provisions
have very general grounds for the issuance of a compulsory license: in essence, no distinct
public policy issue is raised (such as anticompetitive behaviour, failure to work the patent or
national emergency), and it is simply sufficient for the prospective licensee to have requested
the patentee to license the invention 'on reasonable terms.' This seems to create a legal
framework in which a license cannot be withheld from any party, in that the patentee could
not refuse any reasonable offer to license the invention. If it were fully exploited in such a
way, this could move the compulsory licensing model closer to a presumption of availability,
and reduce the patent holder‟s leverage in licensing negotiations.
Incentives for patenting
The high rate of domestic patent activity achieved in China may be partially attributable to
Article 16 of the Patents Act, which provides strong guarantees that the inventor in a service
relationship should benefit from a patented invention. It provides both for an initial reward
for the inventor, but also a substantial rewards upon the exploitation of the invention that
should be commensurate with the invention's true economic value. This concords with the
general principle in China's Civil Law that 'citizens who make inventions or other
achievements in scientific and technological research shall have the right to apply for and
receive certificates of honor, bonuses or other awards (Article 97)'.
Scope of patentability and public policy objectives
Another area in which TRIPS provides policy flexibility in relation to the patent system is
the scope of patentable subject matter. TRIPS Article 27 sets out a range of exceptions to
the general principle that patents should be available in any area of technology without
discrimination. Article 25 of the Chinese Patent law sets out exceptions to the scope of
patentable subject matter. In some cases, this is due to „inherent patentability‟ issues – the
very definition of a patentable invention – such as scientific discoveries and rules and
methods for mental activities. This is, in practice, a limiting interpretation of the word
„invention‟ in Article 27 of TRIPS, implemented for public policy reasons – the debate on
specific patenting issues under TRIPS obscures the fact that there is already scope for policy
flexibility in the determination of what qualifies as an „invention‟ in the first place. In other
cases, this is due to specific exceptions to what might otherwise qualify as inherently
patentable inventions – such as methods for diagnosis and treatment of diseases, animal and
plant varieties. 38
38China also excludes from patentability substances obtained through nuclear transformation. The Republic of
Korea specifically removed a similar exception „substances manufactured by the transformation of an atomic
nucleus‟ in Article 29 of the Patent Law of December 13, 1961, when it was amended in December 29, 1995 to
take account of TRIPS standards.
16
An interesting question arises in considering an exception to the scope of patentability
provided under Article 5, which proscribes the grant of a patent for an invention that is
'contrary to the laws of the State or social morality or that is detrimental to public interest.'
TRIPS clearly permits similar public-policy exceptions to the scope of patentable subject
matter, but not in directly comparable terms - it allows exceptions for inventions 'the
commercial exploitation of which is necessary to protect ordre public or morality ... provided
that such exclusion is not made merely because the exploitation is prohibited by [Members']
law.'
What does this mean for the Chinese Patent Act's proscription on inventions that are
'contrary to the laws of the State?' Does this allow for a patent to be refused solely because
its exploitation would be technically illegal, even when this did not contrary to social morality
or detrimental to the public interest? Logically, it raises the question of whether there is an
excluded middle: is there any inventive subject matter that is contrary to the laws but not
contrary to morality or the public interest. One line of argument that has been advanced is
that this provision is TRIPS-consistent because the laws simply codify and define social
morality and the public interest, that law and public morality and interest are coextensive.
But some technology does fall between these two stools: for example, when a new
pharmaceutical or a genetically modified organism is at the stage of a pending patent
application, it would almost certainly be illegal to exploit it - it is unlikely to have been
approved for exploitation by the regulatory authorities. In practice, it appears that the
TRIPS consistency of this provision would depend on its actual application.
The debate here - how to justify an exception to a TRIPS rule on the basis of ordre public -
has an interesting resonance with the GATT Article XX exceptions for measures which are
'necessary to protect public morals' and 'necessary to protect human, animal or plant life or
health.' To what extent does the precautionary principle apply in relation to exclusion of
patentable subject matter? What considerations might a patent examiner apply in
determining whether exploitation of a subject invention might contravene social order or
prejudice environmental or health interests?
Enforcement
China's law is noteworthy for the approach taken to enforcement of patent rights. Here, it
exercises the policy flexibility in TRIPS to provide more rigorous and wide ranging
enforcement provisions in domestic law than even the demanding TRIPS standards. TRIPS
does not require criminal sanctions or border control measures for patent infringement,
reflecting the strong reliance in developed economies for use of civil remedies in patent law.
By contrast, China's Criminal code includes patent infringement as a Crime Undermining the
Order of the Socialist Market Economy,39 and provides for three-year prison terms and fines
in the case of 'serious' patent infringements. Customs Law40 provides border control
measures for patent infringements, and extends border controls to both imported and
216, Part II, Chapter III of the Criminal Law of the People's Republic of China (Adopted by the
39 Article
Second Session of the Fifth National People's Congress on July 1, 1979 and amended by the Fifth Session of
the Eighth National People's Congress on March 14, 1997)
40 The Regulations of the PRC on the Customs Protection of Intellectual Property (Decree 179 of the State
Council of the PRC of July 5, 1995)
17
exported goods. In both these instances, the practicalities of enforcement are technically
exacting, but the patentee does in principle have a higher degree of legal support from the
State than would be enjoyed in almost all other jurisdictions.
Effective enforcement will always be the toughest hurdle in both implementing intellectual
property laws, and in exploiting intellectual property rights. In time, we can expect the tide
to turn in China – driven by adherence to international IP standards, bilateral trade pressure,
WTO accession standards, but above all self-interest. Napoleon‟s famous prediction - quand
le Chine s'eveillera, le monde tremblera – is beginning to be apparent in terms of patent activity,
with China already outstripped all but a few of its trading partners. And in time the boot
could be on the other foot in the vexed area of enforcement as well: last month,
proceedings commenced in the Beijing Higher People's Court on a claim of patent
infringement against the mobile phone manufacturers Ericsson and Motorola, for alleged
breach of patented technology for input of Chinese characters.
Trade and intellectual property rights are inextricably linked, and the prospect of divorcing
IP protection from trade negotiations is remote. Negotiations and underlying analysis alike
need to take account of the complexities of the relationship between domestic IP systems
and trade and investment interests. Linear, polarized models – north-south, technology
producer or consumer – and the assumptions that underly them – fixed centres of
technological innovation, absolutist conceptions of the patent right – should give way to an
empirically better based and conceptually more supple understanding of IPRs in
international trade.
During China‟s WTO accession process, TRIPS implementation has been considered largely
on the assumption of reluctant compliance with externally imposed standards. But „TRIPS
implementation‟ is consonant with the progressive development of IPR systems in China as
an instrument of domestic economic policy. China has been relatively successful in
promoting active use of the system by Chinese nationals, so that enhanced IPR protection
due to TRIPS implementation may proportionately assist domestic right holders more than
almost all other WTO Members. Apart from the scale of use, the way the patent right is
conceived and applied in China, within the overall TRIPS framework, will also illustrate the
scope for policy flexibility and diversity of policy values that the framework can
accommodate. To maintain the perception that TRIPS implementation as an inflexible
process of conceding to external commercial interests is at the very least misleading, and may
divert attention from important policy opportunities to make the IPR system a more
effective tool of national economic development.
Reorienting intellectual property rights – the boundaries of TRIPS
This illustrates the need to explore the way the system of intellectual property rights is
conceived. Some of the underlying objectives, broadly expressed, of intellectual property
rights systems – as captured, for instance, in the objective of TRIPS itself (Article 7, a
developing country negotiating proposal) – are unexceptional from the point of view of
developing country interests and values, and Asian values, for that matter. It is not a
singularly Western construct to set as the constitutional principles of intellectual property
rights the notions of an equitable balance of rights and obligations in commercial life, and of
government regulation operating to promote mutual advantage of producers and users of
18
knowledge and to bring about general social and economic welfare; nor is it, . As
manifested in TRIPS, however, these general principles are seen as being interpreted and
applied in a way that pre-empts regulatory diversity, and accordingly
Legal revolutions arrive quietly, often unnoticed. It is only when one tradition
departs and a new one in the form of practices and principles expressing different
economic and social relations is established, that one can assign to a legal event the
status of turning point. [TRIPS] is a case in point… When the history of the
globalization of property rights in information is written, the significance of TRIPS
to the constitution of a new world paradigm for property will be much better
understood.‟ 41
The preamble of TRIPS – „recognizing that intellectual property rights are private rights‟ –
seems to confirm the view of TRIPS as bringing about this ultimate form of privatisation –
the privatisation of knowledge, in the hands of the rich, and the loss of the „common
heritage.‟ Critiques of the TRIPS-WIPO framework of intellectual property rights dwell in
particular on this point, on the failure to recognise collective ownership of knowledge and
cultural heritage, and on the capacity to limit access and charge monopoly rents for vital
technologies, such as patented pharmaceuticals.
This is, however, just one way of perceiving and applying TRIPS standards. TRIPS does,
undoubtedly, make selective choices about what forms of intellectual property rights are
required to be protected, and this in itself is a choice skewed towards the needs and interests
of developed economies. This is perhaps most manifest in the inclusion of protection for
integrated circuit layout designs and silence on the protection of intermediate technologies
through utility models and like systems. And, unlike the Paris Convention, which treats it on
par with patents, the TRIPS Agreement does away with the socialist version of the patent,
the inventor‟s certificate, the closest legal mechanism to the image of a collectively owned
technological heritage, with due recognition to the inventor.
This skew also applies in the way TRIPS standards are defined in detail: while its overall
objective stresses the need for a balance of rights and obligations, TRIPS is specific and
prescriptive on the minimum rights that must be extended to the IP right holder, but in most
cases all but silent on the obligations that a right holder must comply with. So, for patent
rights, TRIPS specifies mandatory standards requiring patent rights to be available and
enjoyed without discrimination as to field of technology; it mandates a patent term of at
least 20 years; it establishes a reversal of the burden of proof concerning infringement of
process patents; and so on. It does not require WTO Members to set out the patent holder‟s
obligations in the national patent law, with the exception of the duty of disclosure (Article
29). But this simply translates into flexibility on the part of national lawmakers to specify
what obligations they wish to impose on the patent holder, to achieve the „balance of rights
and obligations‟ of TRIPS in a way that more corresponds to a Member‟s particular
economic, legal and social interests. Some areas where TRIPS is manifestly permissive in
this respect include the possibility of imposing obligations to work a patent, to deal with a
patented technology, to cede rights in the event of government non-commercial use or a
national emergency, to refrain from anti-competitive use and use which restrains technology
41– Property Rights in Information: The Trade Paradigm, Peter Drahos, in Prometheus, Vol 16, No 3, 1998, AT
245.
19
transfer, and to cede rights in the event of dependent patent rights. TRIPS does have
explicit process requirements in the way such obligations are enforced by governments – due
process and a rule of reason, an obligation to seek reasonable terms from the right holder,
and conditions such as non-exclusivity and particular focus on the domestic market.
If TRIPS-compliant systems are seen as failing to provide effective guarantees to the public
that they will benefit from patented technology, and to impose obligations on patentees to
make technology available on reasonable terms, this is not because of any prohibition under
TRIPS. Another key area of policy flexibility – given current debates on biotechnology and
biopiracy - is in the nature of „invention,‟ which is undefined in TRIPS, as are the three key
criteria for patentability (novelty, inventive step, utility/industrial applicability), the
determination of which is at the core of the resolution of current patenting controversies,
and remains squarely in the province of national policymaking.
Community ownership of patents?
The exceptional nature of the stated objective of TRIPS, then, creates an expectation of a
balancing of interests and an active obligation on the part of patent holders, which is absent
from earlier treaties (the Paris Convention, in particular, which aims essentially to safeguard
certain minimum entitlements of a patent holder in a foreign jurisdiction). Coupled with the
duty of disclosure, the very nature of the patent right set out in TRIPS can be presented not
as an audacious privatisation of knowledge and technology, but the exact reverse: a patent
right becomes a firm, unequivocal undertaking to transfer otherwise unavailable knowledge
and technology into the public domain, entirely unfettered at the lapse of the patent term,
and potentially subject to obligations to make available the patented technology on
reasonable terms and for public non-commercial objectives. Pushed to the extreme end of
the spectrum, this can approach the patent right becoming a residual entitlement to an
independently determined „adequate remuneration‟42 in exchange for the patent disclosure.43
No government has chosen to do this, calculating that their interests are better served by a
balance tilted somewhat more towards the patentee‟s interests - but the current debate about
AIDS pharmaceuticals under TRIPS have clarified that this option is undoubtedly open
when policymakers require it.
The Chinese legal system, as described above, contains a number of elements that highlight
how this more „communal‟ notion of the patent right applies in practice. To start with,
patent infringement is defined as a „crime undermining the order of the socialist market
economy.‟ This expresses a policy position that the suppression of patent infringement
promotes the well-being of the overall economy, paring back the assumption that there is an
exhaustive dichotomy between public and private rights. Other provisions – compulsory
licensing, the limitation of the patent right to exclude commercial activities only, the
enhanced access to state-owned technology – move the patent right to something closer to a
collective right to benefit and make use of a disclosed technology, with a presumption of due
rewards but not monopoly control.
42 TRIPS Article 31 (h)
43 TRIPS Article 29.1
20
Patents as technology transfer
A final consideration is the role of patent rights in technology transfer. Technology transfer
is a complex, difficult issue, and the debate on the role of intellectual property rights in
technology transfer tends to focus on the patent system as an obstacle or barrier. The
assumption is that the capacity to infringe a patent right is . This suggests a further
reconsideration of the patent– as a vehicle for technology transfer through expedited. The
Internet has created an unprecedented level of access to patent documentation, turning the
disclosure obligation into a global technology library, with this vast pool of technological
information realistically rather than theoretically available to any potential beneficiary for the
first time. And the internet itself provides a model for another, more enabling conception of
the patent right – as a package of information, which is freely interchanged and widely
disseminated, due to its conformity with a standard format and structure – just as the
standard format of data in the TCP/IP protocol which comprises the real structure of the
Internet facilitates the wide dissemination of data through digital networks. Harmonisation
of rules, in both cases, leads to the vast increase in the availability and potential use of
valuable information – except that in the case of patent information there is a higher
likelihood of actual utility.
21
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