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interface of IP rights and investment constitute investment. In the words of an agreements. arbitration tribunal the determination of the financial value of the claimed assets: IP Rights as Investment Assets “…creates a link with domestic law, since it is to a large extent the rules of IP rights are increasingly dominating the domestic law that determine whether or 4 asset structure of companies in the not there is a financial value.” technologically advanced countries. When There is no uniform recognition of companies from the technologically the role of the domestic law in determining advanced countries allocate their when IP rights constitute investment. The production, services, Research, and Chile- BIT of 1996, under Article Development (R&D) facilities abroad, the 1(1) recognises domestic law as a validity capital structure of their subsidiaries can requirement. IP rights assume the include trade secrets, trade names, characteristics of investment and receive technical process and other IP rights. For financial value when acquired in accordance 5 this reason, investment agreements define with the domestic law.’ Investment investment assets as constituting agreements, like several of the Indian BITs, intangibles, IP rights, licenses, claims and clearly limit the IP forming investment to returns including royalty and IP related the extent accepted in accordance with the payments, among others. relevant laws of the respective countries The definition of investment assets However, the broad definition of as comprising IP rights creates the linkage investment may provide higher protection between IP instruments, that are mainly of assets than available under the domestic multilateral, and investment agreements, law. The majority of investment which are mainly bilateral. Whether IP agreements provide a list of IP rights that rights should be included in the definition of may include assets that are in the public investment was the subject of major debate domain for the purpose of the domestic during the negotiations of the MAI. Some law. For example, the U.S. –Vietnam countries suggested the exclusion of IP bilateral trade agreement define investment from the definition of investment.2 The agreements to include encrypted program- 6 issue was not resolved in further carrying satellite signals. Vietnam will start negotiation. As a result, the interface to protect encrypted program-carrying between the IP and investment agreements satellite signals only in July 2006 according 7 requires broad examination and legal and to the country’s new IP law. In the economic analysis, especially to determine absence of the new law, Vietnam would the extent of rights and obligations arising have been required to extend protection to from investment agreements. encrypted program-carrying satellite signals The characteristic of investment associated to U.S. investors by the operation of the with the asset is relevant in determining investment agreement. whether there is investment protected In sum, IP rights constitute under the agreement. The US FTAs investment asset when their acquisition is provides that where an asset lacks the in accordance with the domestic law, characteristics of an investment, that asset is not an investment regardless of the form 3. Stockholm Chamber of Commerce, SCC (2004), Mr. it may take.3 Moreover, the asset must X (United Kingdom) and The Republic (in Central Europe), p.158 & 161. The tribunal noted that the refer to rights and claims that have basis of [Mr X]’s claims in this case is the Invest- financial value for the investment. The ment Treaty and that Treaty should be interpreted in availability of financial value attached to the accordance with the rules of public international law. asset is crucial to determine whether assets However, domestic law will be of some relevance, since the terms ‘investment’ and ‘asset’ in Article 1 like contracts, licenses and claims of the Investment Treaty cannot be understood in- dependently of the rights that may exist under [the law of the Republic]. It is therefore necessary to de- 1. OECD (1997), Report to the Negotiating Group on termine what the legal significance of that coopera- Intellectual Property, Negotiating Group on the Mul- tion Agreement is under [the law of the Republic].” tilateral Agreement on Investment (MAI), 4. See ICSID (2001), Salini et al. v Morocco, para. 46. DAFFE/MAI/(97) p. 4. 5. See the U.S.-Vietnam Bilateral Trade Agreement 2. U.S.-Singapore FTA (2003) fn15-1; similar notes are (2001), Chapter 4, Article 1 (1). found in the U.S.-Chile FTA (2003) at fn10, 11; and 6. Vale, Chris (2006), Vietnam’s IP modernization, U.S.-CAFTA (2004) at fn7, 9. The US FTAs and Rouse and co. international, available at Model BITs are available at www.ustr.gov , last vis- http://www.iprights.com/publications/articles/index. ited on 19 July 2006. asp, last visited on 19 July 2006.

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embody financial value and are committed Instead, it provides for exceptions under as investment. However, where investment selected provisions on transparency, and agreement specifically include a given right performance requirements.10 Here, the as investment assets which is not protected public interest exceptions are confined to by the domestic law, the host-country is the provisions under which they appear. obliged to protect such right as investment As a result, countries taking assets. measures against the IP rights of investors have to comply with the requirements Public Interest and the TRIPS - plus under both the TRIPS Agreement and the Impact of Investment Agreements investment agreements. In Methanex Corp v. United States, an investor-state dispute Investment agreements follow two different under NAFTA, the tribunal emphasised that approaches on public interest: general according to the general international law, exception clause applicable to the a non-discriminatory regulation for a public agreement as a whole or specific exception purpose, enacted in accordance with due under selected provisions. However, several process and, which affects a foreign BITs omit exception based on public investment is not expropriatory and 11 interest consideration. compensable. Here, the due process and The general exception clauses non-discrimination are important standards provide exception subject to the standards to justify the public purpose. The context of non-discrimination and fair and equitable for the implementation of the public treatment. The Canadian Model BIT, the interest measures significantly contributes Japan BIT with Vietnam and Agreement to their assessment as lawful measures between Japan and Singapore for a New- under international law or unjustifiable Age Economic Partnership provide general discrimination against investors. exception clause. The exceptions are There are additional features of available for the adoption or enforcement of investment agreements applicable more measures necessary to protect human, specifically to health and competition animal or plant life or health, the regulation. The U.S. agreements and the conservation of living and non-living Canadian agreements provide in their exhaustible natural resources and to ensure annex that non-discriminatory regulatory compliance with laws and regulations that measures to protect public interest are not 12 are consistent with the provisions of the acts of indirect expropriation. The review agreement. Under the agreements, the of the investment agreements indicate that application of the measures should not be the flexibilities available for the protection in a manner that would constitute arbitrary of public health are preserved in many of or unjustifiable discrimination between the investment agreements. However, the investments or between investors, or a ability of countries to take measures on IP disguised restriction on international trade rights of a foreign investment for the and investment.8 The BITs of Mauritius with protection of public health should satisfy , Egypt, Singapore and Pakistan the additional requirements under the also provide that the agreement shall not investment agreements. These limit the rights of the parties to apply requirements include good faith and non- prohibitions or restrictions or any other discriminatory implementation, as well as action directed to the protection of essential commitment not to use the measures as a security interests, public health, diseases in disguised restriction on investment or to 13 animals or plants. 9 avoid obligations under the agreement. The U.S. Model, however, does not provide a general exception clause.

7. DFA, (2004), Model BIT of Canada, Article 10 (1), Annex B.13 (1) C, Japan- Vietnam BIT, Article 15 9. See USTR (2004), Model BIT, Article 8: 3(c) (2), (1) (c) and 15 (2) and Agreement between Japan 11 & 19, 13, 32 and Annex B (4) (b). and Singapore for a New Age Economic Partnership 10. NAFTA (2005), Methanex Corp v. United States (JSEPA) (2002), Article 69. The BITs are available at Final Award, Part IV, Chapter D, para 7. www.unctad.org, last visited on 19 July 2006. 11. USTR (2004), US Model BIT, Article 8 (3)(c) (2), 8. UNCTAD, Switzerland- Mauritius BIT (1998), Article Annex B (4) (b), DFA (2004), Canada Model BIT 11 (3), Mauritius –Egypt BIT (2003), Article 12, Annex B.13 (1) C. Mauritius –Pakistan BIT (1997), Article 12, Mauri- 12. Japan-Singapore New Age Economic Partnership tius –Singapore BIT (date not given), Article 11. Agreement (2002), Article 83.

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The U.S. FTAs demand the consistency of payable by the licensee. Furthermore, the measures to the TRIPS Agreement.14 challenges against decision by competent The review of the investment authorities on the remuneration are limited agreements with respect to competition and only to the domestic adjudication in compulsory license also indicate similar accordance with Article 31 (j) of the TRIPS limitations on the use of the TRIPS Agreement. flexibilities. Recent investment agreements Conversely, the investments have started to address the specific issue of agreements provide for payment of compulsory license, which indicate the compensation, though the language varies increased awareness of the inter-linkage from treaty to treaty, to the fair market between IP rights and investment value of the expropriated investment assets protection. itself. Such amount should be paid The U.S. model BIT excludes promptly; as opposed to royalty and compulsory licenses from its performance several instalments spread over a period to requirement restriction in as far as the be collected from third parties. As a result, licenses are consistent with the TRIPS where there is a dispute on the fairness of Agreement. the issuance of the compulsory license, the TRIPS consistent compulsory license payment and the amount of the issued against foreign owned investment remuneration for compulsory license asset involve the payment of remuneration against the IP of covered investment, and involve the attainment of legitimate investment agreements can result in a public welfare. However, for the purpose of TRIPS- plus standard. investment agreements, the expropriation provisions are potentially applicable for the Technology Transfer and IP Rights determination of the availability of public under Investment Agreements purpose, non-discriminatory application, amount of remuneration and manner of The IP and investment interface payment.15 occurs in the context of provisions on Where the compulsory license is in performance requirements. In Indonesia- violation of the fair and equitable standard Autos, a WTO Panel confirmed the of treatment, the investment agreements consistency of performance requirements protect the IP rights, which are the subject as they relate to the trademark with Article of such measures. The amount of the 20 of the TRIPS Agreement.16 Though remuneration subsequent to issuance of consistent with the TRIPS Agreement, the compulsory license, the standard for Agreement on Trade-Related Investment payment and the assessment of the Measure (TRIMS) and the Agreement on amount varies between the TRIPS and Subsidies and Countervailing Measures investment agreements. The TRIPS (SCM) outlawed the use of some Agreement requires only the payment of performance requirements. adequate remuneration taking into account Many of the investment agreements, the economic value of the authorisation for especially those that involve U.S., Canada compulsory license. The compulsory license and Japan fall under the categories of those granting authority determines the royalty that: payment commensurate to the expected a) restrict requirements to transfer of economic value that the implementation of technology, production process, or the specific compulsory license could bring other proprietary knowledge and to and the objective of the license (e.g. undertake R&D except when such affordability of essential medicine). Since requirements are imposed as a the objective is to remedy anti-competitive condition to receive advantages practice, the preferable means of payment offered by the government; would be to determine the royalty fee b) restrict imposition of technology transfer requirement except in accordance with the TRIPS 13. See for example, U.S. FTA with Chile (2003), Arti- Agreement, or implementation of cle 10.9 (5) 14. Correa, Carlos M (2004), “Bilateral investment agreements: Agents of new global standards for the protection of intellectual property rights?” GRAIN publication, available at 15. WTO, Report of the Panel on Indonesia- Certain http://www.grain.org/briefings/?id=186#one, last Measures Affecting the Automotive Industry par., visited on 10 March 2006, pp. 14-16. 14.277-2779.

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competition laws and government proceedings, review and appeal procedures procurement. and decisions making. Under the 2004 U.S. Model BIT, The enforcement standards are restriction on technology transfer does not applicable to the organization, control, apply to compulsory licenses, measures operation, maintenance and disposition of requiring the disclosure of proprietary companies; the making, performance and information consistent with, Article 39 of enforcement of contracts and the the TRIPS Agreement and to measures to acquisition, use, protection and disposition remedy anti-competitive practice under of property of all kinds including IP.”20 competition laws.17 It further provides that Hence, the scope of application of parties may condition the receipt of investment agreements covers the advantage to supply of a service, train or acquisition, use, protection and disposition employ workers, construct or expand of IP rights, creating links with Part IV of particular facilities, or carry out research the TRIPS Agreement. and development, in their respective Investment agreements provide full territory.18 Governments are free to impose protection and security of investment - the performance requirements in relation to level of police protection required under government procurement. Similarly, the customary international law.21 Although Japanese agreements permits technology infringement of IP rights are not covered by transfer requirements when the measures the obligation of the state to provide full concern the transfer of intellectual property protection and security, the standard of fair in accordance with the TRIPS and equitable treatment as applied to due Agreements.19 process of the law and protection from Other investment agreements have denial of justice require host-countries to less rigorous restrictions of measures on make available acceptable procedures for foreign investment and less detailed protection of the investment asset. Where exceptions to the restrictions in order to the state fails to provide, by either omission promote research and development, access or commission, the procedure for due and transfer of technology. Although process of the law and availability of mandatory technology transfer and R&D remedies for IP rights of foreign investors, requirements could be consistent with the the state violates the investment TRIPS and TRIMS agreements, the review agreement, since IP rights constitute of the investment agreements indicate that investment assets. many BITs permit only voluntary Recent investment agreements have technology transfer and R&D requirements. broadened the transparency obligations.22 Earlier BITs developed a relatively narrow Investment Agreements, and transparency requirement relating to Enforcement of IP Rights publication and accessibility of laws and 23 regulations. The U.S. FTAs have extended Investment agreements stipulate standards the transparency obligations to procedures of treatment and protection of investment and administrative rulings, an opportunity assets, which in some investment to comment on draft legislation, agreements include the international establishment of contact points to facilitate minimum standard on the treatment of communication, publications of laws, foreigners and their property. Accordingly, regulatory measures, judicial decisions and the host-country is required to provide full administrative rulings and notification of protection, and fair and equitable measures that materially affect the treatment. Recent investment agreements have started to provide detailed stipulation on enforcement procedures. The U.S. – Uruguay BIT of 2004 provides under Article 19. U.S.-Sri Lanka BIT (1991), Article I.1 (e), See 11(4) standards on administrative also the US BITs with Ecuador (1993), DRC (1991) Tunisia (1990), Argentina (1991), Bangla- desh (1986), emphasis added. 20. See, e.g., U.S.-Chile FTA (2003), Article 10.4(2) (b); U.S.-Singapore FTA (2003), Article 15.5(2) 16. USTR, 2004 US Model BIT, Article 8:3 (b) (b); U.S.-CAFTA (2004), Article 10.5(2) (b). 17. Id., Article 8. 2 and 3. 21. See, e.g., U.S. – Uruguay BIT (2004), Article 11. 18. See Agreement between Japan and Singapore for 22. See, for example, Australia- BIT (1998). a New-Age Economic Partnership (JSEPA) (2002), Transparency obligations are not included in In- Article 75 (1) (f) (ii). dian BITS with Thailand, Ghana and Oman.

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investment as well as transparency in valuation, but it is difficult to see how they dispute settlement.24 might stand alone in the case before the The transparency obligations under Tribunal.’27 Similarly, the Permanent Court investment agreements are higher than the of International Justice also found in the TRIPS Agreement, when the obligation 1926 case of German Interests in Polish forms part of the fair and equitable Upper Silesia – the Chorzow Factory case standard of treatment or the international that the seizure by the Polish government minimum. As in Metalclad Corporation v of a factory plant and machinery was also Mexico, the lack of clearly established an expropriation of the closely interrelated mechanism for the enforcement of IP rights patents and contracts of the management of investors may give rise to claims of company. In recent NAFTA cases, the violation of the transparency obligation. 25 NAFTA tribunals in Pope & Talbot, Inc v. Here, the danger is more obvious to the Canada, (Interim Award of 2000), and S.D. developing countries with limited resources Myers, Inc. v. Canada, (Partial Award of to implement fully the TRIPS Agreement. 2000) addressed claims concerning market access and market share and suggested The Interface between the IP and that these might be property rights for Investment Dispute Settlement purposes of expropriation. Though limited, the discussion of Unlike the TRIPS Agreement, violation of intangible property and IP rights in the the standard of treatment of investment cases cited above can suggest that may give rise to state-to-state or investor- expropriation of investment can also be to-state dispute settlement. Investment expropriation of the closely related IP agreements are open invitation to unhappy rights, and intangibles. Ultimately, the investors, since the rather ill-defined and value of the investment would involve the imprecise provisions can support broad value of the IP rights and intangibles claims of damage. There should be no expropriated together with the factory plant presumption that countries and or businesses. multinational corporations that are Unlike the conclusion under German increasingly dependant on technology and Interests in Polish Upper Silesia – the IP rights to maximise the rate of corporate Chorzow Factory expropriation of physical profit and competitiveness in international assets, may result only in infringement of market, will decline the resort to patent rights, since the expropriation investment agreements for the protection entails acquisition without consent of the of IP rights. investor. The investor still maintains the As the value of IP and information- patent in all the protected markets. An based assets grows, the expropriation effective expropriation could occur when provisions could be applied to protect these the inventions yet to be patented are assets. In Methanex, the tribunal noted transferred to the state and the that: expropriation is extended to specifically “[T]he restrictive notion of property as a include trademarks, patents and other IP material “thing” is obsolete …. In the rights held by the investment. view of the Tribunal, items such as In addition to expropriation, there goodwill and market share may … are several instances where IP rights could constitute [] an element of the value of surface in investment related disputes. an enterprise and as such may have These include, but not limited to: been covered by some of the 1. the determination of the consistency of compensation payment.” 26 measures to protect and advance public Hence, the Tribunal concluded that interest on IP rights of covered in ‘comprehensive expropriation, items like investment to the provisions of the goodwill and market share may figure in investment agreement and, where provided, to the TRIPS Agreement, 2. the determination of the availability of 23. See, e.g., USTR, the 2004 Model BIT of the U.S. public purpose, and the necessity of the and Article VI and Canada- BIT (2001), Ar- ticle XIV. measures to achieve the public purpose; 24. ICSID (2000), Metaclad Corporation v Mexico, 3. whether regulatory measures, including ICSID Case No. ARB/AF/97/1, Award 30 August competition policy, compulsory license, 2000, available at www.worldbank.org/icsid, last visited on 10 March 2006 para. 99. 25. Id., Part IV – Chapter D- Page 7-8. 26. Id.

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and technology transfer requirements through the WIPO treaties and the TRIPS that affect IP rights of the covered Agreement have emphasised on domestic investment, are non-discriminatory law remedies for the enforcement of IP regulation for a public purpose, enacted rights, and a state-to-state dispute in accordance with due process; settlement mechanism where the domestic 4. whether the disclosure of trade secrets laws and institutions are below the or data submitted for approval purpose established standards under the treaties. and failing to prevent third parties from The taking up of IP disputes to investment utilising or acquiring approval relying on arbitration create imbalance of interest in unlawfully disclosed information IP rights and significantly affect the global amounts to indirect expropriation, and governance structure on negotiation, 5. claims of discriminatory treatment, lack implementation and dispute settlement with of fair and equitable treatment, due respect to IP rights. process and enforcement mechanisms in relation to investment activities as Synthesis of Implication and Options including the acquisition, protection and for Developing Countries enforcement of IP rights. Furthermore, the determination of The complex relationship between the extent to which IP rights constitute an investment and IP right norms call for a investment asset, and the relevance of cautious approach by developing countries domestic laws in defining the availability, when negotiating the agreements. validity and scope of IP rights of covered Many developing countries continued investment are also legal issues that can to engage in new investment agreements. arise in investment disputes. There could Few countries have shown a cautionary also be several instances involving IP rights approach. Some with no bilateral of investment assets resulting in investment treaties in force continue to diminishing investment and giving rise to enjoy substantial flow of investment.28 expropriation and compensation claims. Other countries are renegotiating In the case of comprehensive investment agreements in order to update investment expropriation, directly or and agree to stronger commitments.29 indirectly, it is established that IP rights There is the expectation of increase in and other intangibles can form part of the number of the renegotiation of BITs. 30 value of the property for compensation, if Considering the trends in negotiation the investment is effectively disposed of its and renegotiation of BITs, developing IP rights. However, the question of countries need to address the interplay of jurisdiction and competence of investment the IP rights and investment agreements. tribunals is problematic when it comes to The use of memorandum of understanding, partial expropriations affecting only IP protocols and amendments can help to rights of investment assets. In the absence revisit the issues specifically. of clear exclusion of a subject matter from the scope of investment dispute settlement, 27. UNCTAD (2005), Investment Policy Review Brazil, investment arbitration tribunals may not Geneva, p.39. decline competence by the mere fact of the 28. See IISD, Investment Treaty news of February existence of effective dispute settlement 2006 and UNCTAD (2005), Investment Policy Re- avenues in WTO or elsewhere. view Colombia, Geneva. 29. UNCTAD (2006), Recent Developments in Interna- As in the conclusion of the tribunal tional Investment Agreements, 2 IIA Monitor in Methanex vs. United States, IP rights 2005, International Investment Agreements, Ge- alone should not constitute a ground for neva, p.7. claim by themselves. There is strong justification for denying subject matter jurisdiction on claims purely related to the IP rights of investment. In cases of the FTAs, the investment dispute mechanisms are not applicable to measures that are consistent with the IP section, which convey the desire of the parties to treat IP rights differently. In addition, the international law on IP rights as developed

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Developing countries can consider the Proposed Amendment of TRIPS on following elements in their negotiations, Disclosure renegotiations or by initiating amendment of investment agreements in order to During informal consultations, a group of address their impact on the rights and developing countries (Brazil, China, Cuba, flexibilities under the IP instruments. India, Pakistan, Peru, Thailand and 1. ascertaining the role of domestic law for Tanzania), submitted a text that they validity, determination of scope and proposed should be the basis for further applicable exceptions to IP rights and negotiations on the issue of Disclosure of avoiding categories of rights not Origin. The text (WT/GC/W/564Rev.1) was protected under the domestic laws; a proposed amendment to the TRIPS 2. Providing general exception that the Agreement to add a new article 29bis that agreement does not affect the parties’ required disclosure of the origin of rights and obligations under multilateral biological resources used in a patent IP rights agreements to which they are application. parties, including the TRIPS Agreement; 3. In case of a country with bilateral or At the Council Session, the group of regional IP rights instruments, the developing countries provided a agreement should not require the comprehensive set of answers to questions extension of the treatment accorded to that had been raised by other Members on third countries by virtue of the proposed text. bilateral/regional agreements on IP rights and; Japan and also tabled separate 4. The exclusion of the administration, proposals during the Council session. acquisition, maintenance, enforcement Japan’s proposal (IP/C/W/472) was similar and protection of IP rights from the to that submitted to the April meeting of dispute settlement provisions of the the WIPO Intergovernmental Committee on investment agreement. Intellectual Property and Genetic Resources, Traditional Knowledge and Folklore (IGC) (WIPO/GRTKF/IC/9/13). It emphasized that there was no conflict AN OVERVIEW OF RELEVANT IP between TRIPS and the CBD and that a DEVELOPMENTS IN VARIOUS FORA disclosure of origin requirement would not address the core problem of ‘erroneous The following is an overview of the patents’. It also pointed out the need to developments in the various fora dealing consider the work being done at WIPO and with intellectual property issues in the not to duplicate efforts, suggesting that second quarter of 2006. WIPO was the proper forum for this discussion. (WTO)

The Council for TRIPS met from June 12 - 16 2006. The meeting was preceded by several informal consultations led by Deputy Director-General Rufus Yerxa, and immediately preceded by a Special Informal Session of the Council on the 12-14th June.

The informal consultations were continuations of those occurring in the First Quarter of 2006, under the direction of the Director-General who was mandated in to carry out such consultations so as to achieve some progress in the negotiations. The discussions mainly addressed the issues of Disclosure of Origin and Geographical Indications.

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The Norwegian proposal (WT/GC/W/566), Concern exists that while ambassadors essentially restated Norway’s previous were permitted to be accompanied by a position on disclosure of origin and the delegate, the membership was apparently relationship between TRIPS and the CBD. It limited only to the invited group. This also argues for an amendment to TRIPS on concern is only heightened by reports that Disclosure of origin. the discussions focused on how the GI issue may be linked to the larger agriculture While the text was welcomed by many negotiations. This would seem to link the states there was little agreement as to what GI issue not just to Agriculture but also to role it should play in moving the process disclosure of origin issues, as some forward. The response from some delegates have suggested. developed countries was that the amendment attempts to address a problem The issue of a register of GI’s did not which does not exist, in particular, the progress beyond the informal sessions, with suggestion that the TRIPS agreement is only a few statements at the informal incompatible with the CBD. However, sessions as to country positions. developing countries supporting the proposals have noted that their approach is EU Proposal on Enforcement not premised on a conflict between the two but on ensuring that the TRIPS Agreement The EU submitted another proposal enables the application and implementation addressing ‘border measures’ and ‘good of CBD principles. practices’ on enforcement to the formal session of the TRIPS Council (IP/C/W/448). At the conclusion of the TRIPS Council there There was little change in positions with was no progress beyond the texts respect to general enforcement issues, with submitted and no agreement as to whether some developed countries supporting the the text was a sufficient basis for carrying proposal and others, such as Australia and forward negotiations. With more support Switzerland, showing more caution. A from developing countries it may become significant concern is that the continuous the de facto basis for negotiations at the presence of this issue on the agenda of the ambassadorial or ministerial level. Council may serve to further legitimize the issue as a subject for negotiation when it is Geographical Indications largely an issue left to states under the agreement. Consultations on the extension of Geographical Indications beyond Wines and The next formal TRIPS Council meeting Spirits were carried out in April and May is scheduled for 25-26 October. leading up to the informal and formal sessions of the TRIPS Council. In addition, World Intellectual Property the special session also considered a Organization (WIPO) proposal to establish an international system for notification and registration of Informal meeting of the Standing geographical indications for wines and Committee on Patents April 10-12 spirits. There was little progress on these issues during this phase of discussions. This informal meeting of the Committee was intended to discuss and determine a During the formal sessions, member states way forward after the impasse at the 2005 largely reiterated their positions on the General Assembly. This was the second extension of protection for geographical item on the mandate from the General indications with proponents calling for text- assemblies. The first was that an Open based negotiations and other parties, in this Forum be held on the SPLT. The second case the US, suggesting caution. was that the committee devise a work programme taking into account the At the end of formal discussions, the issue outcomes of the Open Forum. of GI extension was moved to ambassadorial-level consultations chaired Despite this, some countries (Group B by Deputy Director-General Rufus Yerxa, developed countries) wanted to proceed on with a small invited group of participants. the basis of the Casablanca proposal, which

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had been rejected at the previous general attracted some developed country support, assemblies and had not been reflective of but it found little other support as it was the inputs of the majority of member not considered to meet the goals of countries and the discussions at the Open developing countries who seek a binding Forum. Discussion circled around whether agreement that also covers genetic it was better to have a comprehensive work resources. programme addressing the broad range of Japan (WIPO/GRTKF/IC/9/INF/3), Peru concerns expressed at the Open forum or to (WIPO/GRTKF/IC/9/10) and proceed with a limited set of issues, (i.e. (WIPO/GRTKF/IC/9/11) also submitted novelty, inventive step and disclosure), papers to the describing national examples ignoring issues such as traditional and problems. knowledge, disclosure of origin, and Despite attempts by several developing Exceptions and Limitations among others. countries to lead discussions towards a India suggested that since traditional text, there was little movement. The knowledge, disclosure of origin and genetic committee also could not agree on the resources issues were being raised in the future work of the committee. The SCP and the IGC, that it would be Committee finally agreed that: written appropriate to hold joint sessions of the comments on objectives and principles with committees. The proposal received some respect to the issue of folklore in interest but not much support as discussion WIPO/GRTKF/IC/9/4; on objectives and remained focused on the appropriate way principles with respect to the issue of forward for the committee. traditional knowledge in Despite intensive discussion, countries WIPO/GRTKF/IC/9/5; and on objectives and could not come to an agreement before the principles with respect to the issue of close of the meeting. As a result, the genetic resources in WIPO/GRTKF/IC/9/9 scheduled formal meeting of the SCP July and WIPO/GRTKF/IC/8/9 would be 2006 was cancelled pending any actions by submitted by stakeholders by July 31st. the General Assembly in Future work would centre around discussion September/October 2006. of the comments made on these issues.

No further meetings of the SCP have The next meeting of the IGC is 4-12 been scheduled for 2006. The WIPO December 2006. Secretariat has, however, announced that there will at least six meetings on Standing Committee on Copyright and patents issues, dubbed “colloquia” in Related Rights (SCCR) 14th session May 1-5 2006 and 2007 to provide information and serve as a forum for an exchange The only item on the agenda of the meeting of information. There will be two was the Proposed Treaty on the rights of meetings in the third quarter of 2006, Broadcasting Organisations. The working namely, on “The Research Exemption” text was provided by the chair who stated on 11 October, and “Standards and that this was a cleansed text, from which all Patents” on 30 November. controversial proposals had been removed (SCCR/14/2). However, despite serious WIPO Intergovernmental Committee on and widespread objections to the inclusion Intellectual Property and Genetic of webcasting in any document under Resources, Traditional Knowledge and discussion, the committee was presented Folklore (IGC), Ninth Session April 24 to 28, with a document by the Chair and 2006 secretariat that included a ‘so-called’ Non- Mandatory Appendix on Webcasting and Discussions at the committee continued relegated all other proposals to a Working around the primary source of tension: Paper for the Preparation of the Basic whether the committee should move to proposal, into which all disputed or negotiations aimed at achieving a binding controversial proposals from the 13th treaty on the issues under the mandate. Session were supposedly placed. In Little or no movement was seen on these particular this included proposals made by positions at the meeting. Norway proposed Chile and Brazil (SCCR/14/3). The main a non-binding high-level declaration that text also included several references to addressed only traditional knowledge and simulcasting over the web, as well as to folklore (WIPO/GRTKF/IC/9/12) and that webcasting proper. After several

Page 10 AN OVERVIEW OF RELEVANT IP DEVELOPMENTS IN VARIOUS FORA

delegations expressed concern that the limitations and exceptions, and text, which was meant to be a technological protection mechanisms are consolidation, omitted several proposals, decided. In addition, it should be noted the meeting agreed that the documents that the US and the EU did not agree that would now all be taken together as a single they would not introduce such proposals at consolidation and that nothing in the main a diplomatic conference. This suggests that document or the appendix would be the webcasting issue will play a significant considered more valid than any others. role at any diplomatic conference, at the very least as a bargaining chip to ensure Discussion on the draft reflected pre- conclusion of the treaty. existing positions, with only the US and Japan in favour of the inclusion of The dates for the next meeting of the webcasting, and the EC in favour of the SCCR are September 11-13, 2006 inclusion of simulcasting over the web. Absolute opposition to the inclusion of WIPO Advisory Committee on Enforcement webcasting of any kind came from many 15-17 May country delegates, as well as, NGO’s and some industry representatives. At the end The Committee largely involved information of the meeting, the committee decided that sharing regarding member country all references to webcasting would be experiences with enforcement efforts. The removed from the text as would the non- Committee panels are dominated by mandatory appendix. The committee chair industry representatives, and this issue was was asked to create a second consolidated raised by some public interest NGO text that included all proposals made to observers, backed by Brazil and a few other date so far. This consolidated text would developing countries. The US opposed a be due by August 1st 2006, and become the discussion on the participation of NGOs as basis for discussions to be held at a outside the mandate of the committee. No meeting of the Committee to be held before resolution was reached as these issues the WIPO General Assemblies in September were caught up in the discussion about the and the result of those discussions would future scope of the work of the committee be the committee’s recommendation to the and whether it should include issues such General Assembly. An ordinary meeting of as limitations and exceptions, and the committee would be held after the competition law. The committee agreed on WIPO General Assembly at which one of the broad outlines of discussion regarding agenda items would address the issue of coordination and international regional and webcasting and simulcasting. Proposals on national levels. Consultations will continue this issue to be included in a working paper to determine the scope of discussions at the are due at the WIPO Secretariat by August next meeting likely to be held in 2007. 1st 2006. However, this meeting will have no connection to the diplomatic conference, Informal Consultations on a Mechanism to nor will it be committed to the convening of Further Involve member States in the a diplomatic conference on webcasting. Preparation and Follow-Up of the Program There exists no timetable for conclusion of and Budget of the organisation, June 6, this matter at present. The US stated that 2006 it understood that it was agreeing to such an approach only on the condition that the Informal Consultations were held in April General Assemblies recommend a and June on establishing a new mechanism. diplomatic conference. If that did not take The first consultations discussed a working place, it understood that issues of paper presented by the secretariat webcasting would be included in the (WO/PBC/IM/I/06/INFORMAL PAPER). consolidated text with other proposals. The Taking into account comments from EC stated that it understood the agreement members states at the first consultations to include simulcasting in the main text, a the secretariat provided a proposal at the view not necessarily shared by other second round of consultations, for delegations. These understandings and the mechanisms outlined in a Second Informal agreement seems set to place pressure on Working Paper on A New Mechanism to the general assemblies to approve a Further Involve Member States in the diplomatic conference before issues such as Preparation and Follow up of the Program

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and Budget (WO/PBC/IM/2/06/INFORMAL- The appointments are set to expire in 2009 PAPER). The document proposed several at the end of Director-General Kamal Idris’ changes, the most significant being that term of office. information on Programme Performance for the previous two years and the Report of Provisional Committee on Proposals Related the Internal Auditor will be made available to a WIPO Development Agenda (PCDA) to the member states at the same general (2nd session) June 26 - 30 assembly. Combined with a, hopefully, more transparent consultation process The committee met to determine what regarding the WIPO Draft Work Programme measures to recommend to the General in the Autumn leading up to December, this Assemblies, as mandated. The documents may result in greater developing country under discussion were the Appendix to the input. This would be in contrast to a draft report (PCDA/2/1 REV.), which process that was dominated by non- clustered the 111 proposals from the transparent consultations with only major previous meeting into 6 thematic areas, as budget contributors and without sufficient agreed at the previous committee meeting. information available to properly evaluate The only other document was a formal the priorities and effectiveness of proposal (PCDA/2/2) tabled by the Group of Secretariat work with respect to developing Friends of Development (Argentina, Bolivia, countries. The member states, while Brazil, Cuba, Dominican Republic, Ecuador, welcoming this document, requested that Egypt, Iran, Kenya, Peru, Sierra Leone, closer synchronisation between Program South Africa, Tanzania, Uruguay and review and Financial Review be explored as Venezuela), suggesting a text to forward to the Internal Auditor’s report was not the General Assembly and proposing a considered sufficient. method for further work on the Development Agenda. Initial discussions The 10th session of the Program and and questions addressed the particular Budget Committee will be held from status of this proposal with only Mexico July 11-13, 2006. raising any objection to the formal document. Extraordinary Session of WIPO Coordinating Committee June 19-20 (WO/CC/54) The Chair (Rigoberto Gauto Vielman of Paraguay) proposed that the committee This extraordinary session was held to work on the basis of the cluster in the consider the appointment of senior officials. appendix to the draft report, without The Director-generals choices prejudice to other proposals. The results of (WO/CC/54/2) for Deputy Director-General this, however, were that most developing and Assistant Director-General positions countries did not address or engage the were approved, although concerns were proposal by the Friends of Development, expressed that the geographical which had attempted to synthesize and representation of developing countries in include most of the proposals in the the secretariat was too small in comparison Appendix. Instead, developed countries, to their membership in WIPO. The the Baltic and Eastern European states, and appointments were as follows: Japan engaged in a process of stating which Deputy Director-Generals: Francis Gurry numbered proposal in which cluster they (Australia), Philippe Petit (France) Narendra could support and which they could not. Sabharwal (India) Michael Keplinger This resulted in what appeared to be (United States). Sabharwal replaces widespread support for technical assistance Geoffrey Yu (Singapore) and Keplinger proposals, but no support for norm-setting, replaces Rita Hayes (United States). Francis institutional, or transfer of technology Gurry and Philip Petit are serving a second proposals. This was not fully reflective of term as DDG’s. the discussion, however, since neither the Assistant Director-General: Ernesto Rubio Friends of Development, the Asian Group, (Uruguay), Geoffrey Onyeama (Nigeria) nor the African group engaged in such Wang Binying (China). Ms. Wang’s present listing. The Chairman’s proposal for a position at WIPO has been upgraded from recommendation to be sent to the General Director level to Assistant Director-General. Assembly and which identified those proposals which he thought reflected near- term consensus was rejected by these

Page 12 AN OVERVIEW OF RELEVANT IP DEVELOPMENTS IN VARIOUS FORA

groups as not reflective of the range of technical experts group in Peru in the opinions expressed. Of particular concern second half of 2006, before the fifth was that the proposal essentially reflected meeting of the Working Group on the position of only one member state, the Access and Benefit- Sharing. United States, with only minor Nominations for 7 observers to serve modifications, while entirely excluding the on the expert group are requested major formal proposal on the table, that of “from indigenous and local communities, the Friends of Development. This method industry, research institutions/academia, of work, in which developing country formal botanical gardens, other ex situ collection proposals are ignored in favour of informal holders, and representatives from relevant proposals from the chair, was part of the international organisations and agreements impetus behind the Development Agenda interested in the issue of access and process. Those developing countries in benefit-sharing within the framework of the favour of the Agenda found it insupportable Convention on Biological Diversity.” These for such processes to continue in this forum are due by August 1, 2006. The other and rejected the Chair’s document. The members are nominated by states parties Chair however, refused to withdraw his to the CBD, and nominations are also due document, citing support from several by August 1, 2006. member states. This resulted in a stalemate and a decision that a factual Food and Agriculture Organization (FAO) record of the committee meetings be sent to the general assembly including all formal The second meeting of the Contact proposals. In reaction, the delegation of Group for the drafting of the Standard Kyrgyzstan, vice-chair of the committee, Material Transfer Agreement (MTA) submitted the Chair’s proposal as a formal was held in Alnarp, on 24-28 country submission for forwarding to the April. The contact group considered the General Assemblies PCDA/2/3. draft Standard MTA – the instrument for facilitating transfer of plant genetic Upcoming WIPO Meetings resources and benefit sharing in the ITPGRFA’s multilateral system – and made The WIPO General Assembly: Thirty-Third recommendation for adoption of a draft (16th Extraordinary) Session, will be held resolution (IT/GB-1/06/6) adopting the from September 25, 2006 to October 3, draft MTA to the first session of the 2006 (Geneva, Switzerland); Governing Body of the ITPGRFA, which took place in Madrid, on 12-16 June, 2006. Accordingly, the Governing Other Multilateral Fora Body adopted the resolution and the MTA.

Convention on Biological Diversity (CBD) The draft resolution calls for implementation of the non-monetary Under Decision VIII/4C, paragraph 1, the benefit sharing provisions of the treaty and Conference of the Parties agreed to urges parties and other holders of plant “establish a group of technical experts to genetic resources to contribute them to the explore and elaborate possible options, multilateral system set up by the treaty. without prejudging their desirability, for the Pertinent elements of the MTA are: form, intent and functioning of an recipients under the system undertake to internationally recognized certificate of use the material only for research, breeding origin/source/legal provenance and analyse and training for food and agriculture; they its practicality, feasibility, costs and will not claim intellectual property on the benefits, with a view to achieving the material ‘in the form received’; recipients objectives of Articles 15 and 8(j) of the pay a 1.1% of sales when product Convention.” The Secretariat has notified containing the material is commercialized and invited international organizations, but not available without restriction to indigenous and local communities and all others for further research and breeding; relevant stakeholders to submit their view, the agreement recognizes ‘click-wrap’ results of their research, and work on this agreements as legally binding. A statement issue by 1 September 2006. These will requiring the recipient to notify the form part of the inputs to the meeting of Governing body if they obtain an IP right

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that limits access to a product containing IGOs as well as NGO’s are invited to be the material received under the system was participants. removed during the meeting at the insistence of North American delegates. The Assembly also adopted Resolution The next session of the Governing Body will WHA59.26 on International Trade and be held in sequence with the next session Health asking government to promote a of the CGRFA, in early 2007 in Rome, . better dialogue between trade and health ministries and place health concerns at the UN Committee on Economic, Social and same level as trade. The Resolution was Cultural Rights (CESR) accepted by the Assembly only after India, and Venezuela modified their During its 36 Session held from 1-19 May proposed additions to the draft. India 2006 the CESR discussed about the managed to retain a reference to relationship between the FTA Morocco ‘flexibilities’ in the text. The working group signed with the US and compliance with its is to complete its work by the 61st WHA, human rights obligations. The committee with an interim report to the 60th Assembly. signalled its concern for public health in particular and recommended that Morocco The Working Group established by carry out an impact assessment and review Resolution WHA59.24 is expected to of the FTA with respect to its effect on report to the next assembly and submit public health and marginalised the final global strategy and plan of communities. action to the Sixty-first World Health Assembly through the Executive Board. The World Health Organization (WHO) Free Trade Agreements Involving the The work of the Fifty Ninth World Health United States Assembly in May 2006 was partly over- shadowed by the sudden death of the WHO The new USTR Susan Schwab has recently Director General Lee Jong-Wook on the first created a new IP Office with a Special day of discussions. His unexpected death negotiator on Enforcement. While this does affected many delegates who nevertheless not suggest that US activity on Free Trade were able to continue their work, albeit Agreements will slow, it indicates a shift with much less time. from pushing for legislation to enforcement, perhaps anticipating the possible non- The Assembly adopted two resolutions that renewal of ‘fast-track’ Trade Promotion have some relations with intellectual Authority. property rights. Resolution WHA59.24 is on “Public health, innovation, essential health In April, the US released the so-called research and intellectual property rights: "Special 301" annual report on Intellectual towards a global strategy and plan of Property protection and enforcement by its action. The Resolution was based on trading partners. The report singles proposals from Brazil and Kenya suggesting particular countries for criticism and is for a global framework on essential health intended to provide a basis for the research and development which was application of further pressure and possible adopted by the Executive Body (EB 117 sanctions. As usual, China and Russia are R13) and the report from the WHO major preoccupations of the report. Also Commission on Intellectual Property Rights, on the priority Watch list are: Innovation and Public Health (CIPIH), - Argentina, remains on the list for asking for a working group to develop a essentially granting too few patents global plan of action based on the report. and not enough protection for test data The Resolution (WHA59.24) established a - Brazil, remains on the list for working group on global strategy and plan copyright issues, as well as test data of action in order to provide a medium-term protection and low patent grant rate. framework based on the recommendations - Egypt, for enforcement problems of the Commission on Intellectual Property related to the judicial system Rights, Innovation and Public Health. - India, for lack of test data Membership of the group is welcome to any protection, and copyright protection member country of the WHO, and other issues

Page 14 AN OVERVIEW OF RELEVANT IP DEVELOPMENTS IN VARIOUS FORA

The list also includes Indonesia, Israel, Negotiations are also continuing on an FTA Lebanon, Turkey, Ukraine, and Venezuela. with the United Arab Emirates with a fifth Uruguay was removed from any listing round concluding in May. IP issues did not because of ‘progress’ on copyright issues. seem to feature in the discussions but it is clear that difficulties remain as the two South and Central America and the sides have not been able to agree on a date Caribbean for the next round of negotiations. The US has concluded a separate Trade Promotion Agreement with Colombia similar Free Trade Agreements Involving the to that agreed to with Peru. European Union

The CAFTA Agreement came into force for The European Union is currently pursuing a Guatemala on July 1, 2006, leaving only number of regional trade negotiations, Costa Rica and the Dominican Republic as including with Mercosur (Argentina, Brazil, the countries not considered compliant with Uruguay, and Paraguay) and the Gulf the US requirements for implementing Cooperation Council (GCC) (Kuwait, United legislation. Arab Emirates, Bahrain, Oman, Qatar and ), as well as negotiations Asia towards Economic Partnership Agreements The US has concluded the first round of (EPAs) between the European Union and negotiations on an FTA with Malaysia. A the African, Caribbean and Pacific (ACP) second round is scheduled for mid-July in countries. The ACP negotiations are aimed Washington D.C. and negotiations are at concluding by the end of 2007. expected to be concluded by the end of 2006. The ACP countries met in in June and adopted a ‘Five Point In May, the United States reached an Plan for EPA Implementation and agreement with Vietnam on bilateral Adjustment’, which focused on ensuring market access clearing the way for adjustment aid, as well as safeguards for Vietnam’s accession to the World Trade sensitive areas such as fisheries. Organization (WTO). It takes effect when Intellectual property does not seem to have Vietnam joins the WTO. been a major issue in the discussions.

Thailand is in the 6th round of negotiations There are reports that the GCC negotiations for an FTA. Due to the political crisis in may conclude before the end of the year as Thailand, negotiations were delayed and negotiations seem to be progressing more may remain so while a caretaker smoothly. The concerns on both sides government is in place. It is likely that seem to be about investment, rather than there will be little movement before the end intellectual property which does not seem of 2006. to have registered as an issue to be negotiated. Africa Little has happened in the SACU The Mercosur negotiations do not seem to negotiations although the parties agreed to have progressed since the last round in continue engaging on the issues presenting 2005. them with difficulties, especially investment and Intellectual Property. Upcoming EU agreements

Middle East The EU is seeking an agreement with the The US has yet to ratify the FTA signed with Central American states that signed CAFTA, Oman. While it has been approved by the minus the Dominican Republic which is a Senate it has yet to pass muster in the member of the ACP. House. Objections do not centre on the IP The EU is also considering the launch of provisions which most representatives are trade talks with the ASEAN group but these find more than acceptable. The FTA may are complicated by the lack of any real be falling victim to increased distrust of regional integration within the group and FTAs by unions and farm groups in the US. the status of Myanmar (formerly Burma).

Page 15 IP QUARTERLY UPDATE SECOND QUARTER 2006

ABOUT THE IP QUARTERLY UPDATE

The IP Quarterly Update is published on a quarterly basis by the South Centre and the Center for International Environmental Law (CIEL). The aim of the Update is to facilitate a broader understanding and appreciation of international intellectual property negotiations by providing analysis and a summary of relevant developments in multilateral, plurilateral, and bilateral fora as well as important developments at the national level. In each IP Quarterly Update, there is a focus piece analysing a significant topic in the intellectual property and development discussions.

Today, in addition to the World Trade Organization (WTO) and the World Intellectual Property Organization (WIPO), there are other multiple fronts of discussion and negotiation on intellectual property. These other fora range from international organisations, such the United Nations Educational and Scientific Organization (UNESCO), the Food and Agriculture Organization (FAO), the World Health Organization (WHO), the United Nations Conference on Trade and Development (UNCTAD), the World Customs Organization (WCO), INTERPOL, and the UN human rights bodies to regional and bilateral fora such as in the context of free trade agreement (FTAs) or economic partnership agreements (EPAs). In some cases, national processes or decisions, for example, invalidation of a key patent may have important international ramifications.

Consequently, all these processes constitute an important part of the international intellectual property system and require critical engagement by developing countries and other stakeholders such as civil society organisations. Multiple fronts of discussions and negotiations require a coordination of strategies and positions that is not always easy to achieve. The Quarterly Update is meant to facilitate such coordination and strategy development, and is therefore a vehicle for awareness raising as well as capacity development.

17-19, Chemin du champ d’Anier POB 228, 1211 Geneva 19 Switzerland Tel. +4122 791 8050 Fax. +4122 798 8531 [email protected] www.southcentre.org

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