Guest Post: "Policy" Space in TRIPS

We have a guest post today from a very special guest, Dr Henning Grosse Ruse – Khan.

Listed below is his brief bio:

After joining the Max Planck Institute for Intellectual Property, Competition and Tax Law in Munich (Germany) in autumn 2007, Henning Grosse Ruse – Khan has focussed on new approaches for balancing private rights and public interests in international economic law, in particular intellectual property protection. Previously Henning worked as a Lecturer in International Trade Law at the University of Leicester (United Kingdom). His research and teaching centres on international intellectual property protection and development issues, law and organisation of the WTO and further on issues of commercial conflicts of laws and jurisdiction (private international law).

Henning also worked as a research fellow at the Institute for Information, Telecommunication and Media Law (ITM) of the University of Muenster on intellectual property- and information technology law within two international research projects funded by the EU Commission (ECLIP, RESPECT). He has also acted as a visiting scholar on WTO-, International Trade- and Intellectual Property Law at the International Islamic University in Islamabad, Pakistan (2004-2005) and at the University of Frankfurt, Frankfurt a. M., Germany (2007).

His most recent publications include ‘A Comparative Analysis of Policy Space in WTO Law’ (November 26, 2008), Max Planck Papers on Intellectual Property, Competition & Tax Law Research Paper No. 08-02, available here; ‘A Pirate of the Caribbean? The Attractions of Suspending TRIPS Obligations` Journal of International Economic Law, 11 (2) 313-364 (2008) and ‘The Role of Chairman’s Statements in the WTO’ Journal of World Trade Law, 41 (3): 475-534, (2007); ‘Proportionality and Balancing within the Objectives of Intellectual Property Protection’, in P Torremanns (ed), Intellectual Property and Human Rights, 161-194 (Kluwer, 2008).

In this guest post, Henning deals with a topic that is of considerable interest to me personally i.e “policy space” in TRIPS that enable member countries to factor in “public interest”–a theme that is quite prevalent in Indian IP, and made even more prevalent with Justice Bhat in his controversial Roche vs Cipla decision. For those interested in his full length paper, please see here. Here is his post:


The State has the inherent right to take measures in public interest abridging the rights, of the holders of intellectual property rights. (Communication from India in the context of the Uruguay Round of Multilateral Trade Negotiations, 5 September 1989)

As an IP lawyer who got gradually more and more into WTO law, I have always been fascinated with the concept of a general public interest exception as found in the WTO rules on goods and services: In essence such an exception allows WTO Members to override any of their obligations under the General Agreement on Tariffs and Trade (GATT) and the General Agreement on Trade in Services (GATS) – if certain conditions are met. In a paper available here, I have compared the scope of policy space for domestic public interest measures under the three core areas of WTO regulation: TRIPS, GATT and GATS. Below you can find an introduction to the issues at hand and my main conclusions:

De jure or de facto, the reach of the global economic regulation in general and WTO rules in particular today extends to societies, groups and individuals everywhere: It affects African HIV/AIDS patients as well as European beef-consumers – albeit in so different ways that makes a comparison almost cynical. On the one hand, the debate on patent protection for pharmaceutical products under the WTO TRIPS Agreement and access to live-saving drugs is probably the most commonly known example of international intellectual property (IP) rules impacting on common societal interests (public health) as well as individual human rights (right to health).

On the other hand, WTO dispute settlement cases on the right to refuse imports of hormone-containing beef and imports of tuna or shrimp caught without a specific tool to protect dolphins or sea turtles indicate how WTO obligations on trade in goods can interfere with domestic measures on the protection of the environment, natural conservation and human, animal or plant health. In the field of liberating trade in services, market access commitments can clash with national concepts on public morals and public order – as evidenced in the US – Gambling dispute over the right of foreign service providers to offer online gambling services in the US. This short list of illustrations for non-trade interests being affected by trade interests and vice versa is certainly not exhaustive and one can bring examples from IP, trade regulation, investment protection, free capital movement and international lending activities.

A common denominator in various fields of global economic rule-making therefore is their significant impact on domestic non-economic interests for the sake of a harmonised global economy. It is particularly true for the three core areas of regulation in the WTO: trade in goods, trade in services and IP protection. However, the structural bias in WTO law to perceive and regulate the world from a trade perspective is countered by mechanisms such as the general exceptions in Art.XX GATT and Art.XIV GATS which allow WTO Members to recognise and give effect to public interests on the domestic level.

In my paper I compare the tools for balancing trade in with non-trade interests under GATT and GATS with the corresponding mechanisms in TRIPS. IP regulation in the WTO has an equivalent, if not stronger, impact on public interests. Arguably, it should therefore allow a level of recognition and enforcement of these interests equal to that in the other areas of WTO regulation. My comparison of TRIPS flexibilities with policy space under GATT and GATS has led to the following conclusions:

In the rules on trade in goods and services, the general exception in Art.XX GATT and its Art.XIV GATS counterpart manage surprisingly well to balance domestic policy space for the regulation of public interests with international trade obligations: Based on their unequivocal language, they allow domestic measures implementing the recognised public policy objectives to override WTO obligations. While often requiring WTO Members to choose the least trade restrictive, equally effective measure which is reasonably available and with further safeguards against abuse, the concept of a general exception can function effectively as a ‘disproportionality test’ which leaves sufficient policy space in the hands of WTO Members. Even though the test may well be subject to further fine-tuning in the future, the WTO Appellate Body has repeatedly shown its willingness to ensure an overall balance of a WTO Members’ rights (to regulate public interests domestically) and obligations (to adhere to the WTO rules on trade in goods and services).

One important element utilised by the Appellate Body to achieve such a balance has been the objective of sustainable development in the preamble to the Agreement establishing the WTO and its concept of reconciling economic, social and environmental interests. Indeed, the Appellate Body has smartly relied on the accepted notion of text-based interpretation of the WTO treaties to utilise their objectives for the purpose of normative considerations. WTO jurisprudence nevertheless does not impose an internationally-set balance onto the WTO Members – instead it operates to delineate the scope of domestic policy space for regulating public interests from the international obligations to protect trade interests under WTO rules.

Is there an equivalent amount of policy space under TRIPS – an equal option for WTO Members to give preference to public interests such as education, public health, nutrition, access to knowledge, free speech and transfer of technology? The original developing countries’ proposal for a public interest exception in TRIPS strongly resembles Art.XX GATT – but has been severely curtailed by adding a TRIPS consistency test in the run-up to the Brussels Ministerial in 1990: Under Art.8:1 TRIPS, Members may adopt public interest motivated measures (e.g. to protect public health and nutrition) – but only “provided that such measures are consistent with the provisions of this Agreement” (emphasis added).

This added language has effectively prevented Art.8:1 to function as a self-standing right of WTO Members to override individual TRIPS obligations and so to serve as a comparable general public interest exception to the protection of IP. Is such an exception obsolete due to the negative rights character of IP rights? Several instances where public interests demand access to and dissemination of IP protected goods or services show that merely allowing the state to regulate and limit the commercial exploitation by the right holder is certainly not sufficient. Those individual TRIPS provisions which concern the right of WTO Members to foresee exceptions and limitations to the market exclusivity triggered by IP (Art.13, 17, 26:2 or 30 TRIPS) however are written and (so far) interpreted as focussing predominantly on the economic interests of right holders. WTO jurisprudence until now has not utilised them in a way which allows WTO Members to give preference to public interests.

In para.4 and 5 (a) of the Doha Declaration on TRIPS and Public Health, WTO Members pointed to an alternative way of operationalising Art.8:1 TRIPS: By Interpreting and implementing all individual TRIPS provisions in light of the balancing objective of Art.7 and the public interest principle in Art.8:1 TRIPS. Supported by the general principles of treaty interpretation in international law, all TRIPS provisions which embody broad and open language allow for an implementation which gives due respect to public interest considerations.

Giving effect to the latter therefore is much more dependant on a smart reliance on discretion and policy space that follows from the openness of individual provisions – combined with the use of general principles and objectives in the process of implementation. It implies a greater role and sophistication on the side of the interpreter/implementer. In my view, the individual provisions regulating exceptions and limitations (as well as other TRIPS norms) are sufficiently open for this purpose – even though existing WTO Panel jurisprudence has certainly not realised this goal.

Beyond TRIPS, the WTO-overarching objective of sustainable development as a principle for reconciling economic, social and environmental interests further supports a balance in implementing individual TRIPS provisions. Relevant for all WTO Agreements, it links the rules on trade in goods, services and protection of IP and calls for coherence and WTO-internal consistency in allowing the recognition of public interests. The Appellate Body has shown its willingness to move to a text-based teleological approach of treaty interpretation which utilises this objective in cases dealing with conflicts between trade and public health or the environment.

National courts in the key WTO Members such as the US (see the US Supreme Court in eBay Inc. vs. MerckExchange) and India (see Delhi High Court in Hoffmann – La Roche Ltd. vs. CIPLA Limited) seem equally willing to integrate public policy considerations as mentioned in Art.7, 8 TRIPS in their decisions. Given the further calls in para.4 and 5 (a) of the Doha Declaration, it is time to adopt the same approach for TRIPS. This is not only a matter of appropriate treaty interpretation and implementing the WTO/TRIPS objectives, but also of internal consistency of the WTO as a legal system: Allowing a proper balance in one area but denying it in another threatens legitimacy and acceptance for the latter area and the whole system which will easily be perceived as biased. Ensuring a comparable amount of policy space in TRIPS by means of interpretation will certainly help domestic legal systems to provide a counter-balance to the structural bias towards right holders inherent in most TRIPS provisions.

In sum, TRIPS therefore can be interpreted and – more importantly – implemented in manner which should offer a similar amount of policy space for domestic regulation of public interests. This first calls on national implementation legislation (as well as technical assistance provided in this regard) to make use of this policy space. It also places an obligation on WTO Panels and the Appellate Body to take the relevant treaty objectives seriously. Given the rather disappointing TRIPS jurisprudence of Panels so far, one might nevertheless be better off with a comprehensive public interest exception integrated into TRIPS – for example by simply removing the consistency test in Art.8:1 TRIPS.

Operating with a general exception in TRIPS however would call for a re-conceptualisation of a chapeau-like safeguard against the abuse of public interest exceptions in order to favour domestic industries. Several recent developments, initiatives or scholarly ideas further support the notion of a comprehensive general exception or other means to enlarge domestic policy space for public interests.

De lege lata however, achieving a comparable degree of policy space in all three core areas of WTO regulation requires different implementation techniques. Under GATT and GATS domestic measures to protect public interests are shielded under a broad exception clause with sufficient discretion for balancing interests on the domestic level. Under TRIPS, a similar degree of delegating regulatory autonomy does not follow from an explicit right to override economic interests but must be developed from the overall WTO/TRIPS objectives and their role in interpreting and implementing TRIPS. This may imply a greater responsibility for national implementers and international adjudicators. More crucially however, it limits the scope of international obligations under the TRIPS regime: We are not applying rigid rules – but rather flexible provisions with a relative amount of discretion to determine an appropriate balance of economic and public interests on the domestic level.”

Further Reading

For those interested in a wider discussion on policy space within international trade institutions and the prospect of increasing influence by developing countries, see Harvard Professor Dani Rodrik’s piece, which begins by noting:

“There is a silver lining for developing nations in the present crisis, for they will emerge with a much bigger say in the institutions that govern economic globalization. Once the dust settles, China, India, Brazil, South Korea, and a handful of other “emerging” nations will be able to exercise greater influence over the way that multilateral economic institutions are run, and will be in a better position to push for reforms that reflect their interests.”

He then goes on to note:

“Developing nations also need to enshrine the notion of “policy space” in the World Trade Organization. The goal would be to ensure that developing countries can employ the kind of trade and industrial policies needed to restructure and diversify their economies and set the stage for economic growth. All countries that have successfully globalized have used such policies, many of which (e.g., subsidies, domestic-content rules, reverse engineering of patented products) are currently not allowed under WTO rules.

Shamnad Basheer

Prof. (Dr.) Shamnad Basheer founded SpicyIP in 2005. He's also the Founder of IDIA, a project to train underprivileged students for admissions to the leading law schools. He served for two years as an expert on the IP global advisory council (GAC) of the World Economic Forum (WEF). In 2015, he received the Infosys Prize in Humanities in 2015 for his work on legal education and on democratising the discourse around intellectual property law and policy. The jury was headed by Nobel laureate, Prof. Amartya Sen. Professional History: After graduating from the NLS, Bangalore Prof. Basheer joined Anand and Anand, one of India’s leading IP firms. He went on to head their telecommunication and technology practice and was rated by the IFLR as a leading technology lawyer. He left for the University of Oxford to pursue post-graduate studies, completing the BCL, MPhil and DPhil as a Wellcome Trust scholar. His first academic appointment was at the George Washington University Law School, where he served as the Frank H Marks Visiting Associate Professor of IP Law. He then relocated to India in 2008 to take up the MHRD Chaired Professorship in IP Law at WB NUJS, a leading Indian law school. Later, he was the Honorary Research Chair of IP Law at Nirma University and also a visiting professor of law at the National Law School (NLS), Bangalore. Prof. Basheer has published widely and his articles have won awards, including those instituted by ATRIP, the Stanford Technology Law Review and CREATe. He was consulted widely by the government, industry, international organisations and civil society on a variety of IP issues. He also served on several government committees.

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