Unfortunately, Brazil’s authorisation to cross retaliate is a “qualified” one. And Brazil cannot resort to this unless the losses caused to it by the WTO inconsistent subsidies (maintained by the US) exceed a certain threshold. Brazil claims that the losses caused by the US amounted to USD 800 million alone last year and therefore exceed the threshold laid down by the panel.
By way of background, although Brazil claimed that the losses caused to it by the US’ illegal subsidies to its cotton farmers amounted to USD 2.5 billion, the panel clipped this amount significantly by reducing it to USD 295 million (approximately). The panel therefore held that Brazil could easily recover this money from traditional retaliation (by imposing tariffs etc on US imports) and did not need to cross retaliate by hitting out at IPR’s belonging to US companies. However, the panel also held that in case the amounts exceeded a certain threshold in a certain year, then Brazil could cross retaliate to recover these additional losses.
Prashant also went on to discuss an interesting case, where an Antiguan company brazenly violated US copyrights and attempted to take refuge in the WTO cross retaliation authorisation granted to Antigua in 2008. However, since Antigua hasn’t yet operationalised this right to cross retaliate (through domestic legislation), Antigua immediately clarified that Zookz.com was not authorised by the Antiguan govt and that it was infringing US IP at its own risk.
It is here that one ought to appreciate that developing countries such as Antigua need to immediately enact domestic laws permitting the suspension of foreign intellectual property rights upon receiving a “cross retaliation” authorisation from the WTO. Absent such local legislation, a cross retaliation authorisation from the WTO is pretty meaningless; and any threats to cross retaliate will not be taken seriously by the scofflaw state.
I have an article that attempts to spell out a model “tiered” law on cross retaliation. This article will soon be published in the Law and Development Review. For those interested, a draft is available on SSRN. I’ve advocated in this paper, as also in this shorter editorial in the Mint that developing country leaders such as India and Brazil (that also happen to be very successful WTO litigants) should take immediate steps to implement such a law. Such a law would go a long way towards redressing some of the inequities inherent in the WTO framework.
Brazil appears to have already implemented such a cross retaliation law in its domestic regime. Will India follow suit?
The problem with Antigua attempting “cross-retaliation” is that it would end tourism, which provides far more revenue than copyright infringement ever could.
Should that be USD 800 million not USD 800?
Cross-retaliation by violating IP rights in different sectors seems very harsh on the US companies that are having their rights violated. Why should say, Warner Bros suffer more piracy because the US is subsidising its cotton growers?
Thanks for pointing that out Anon,
I’ve corrected it. As for your query as to why Warner Bros or Pfizer should suffer, this goes to a broader issue of “fairness”.
Consider the fact that the WTO was negotiated as a package. And some agreements that were detrimental to countries (such as TRIPS) were signed only because they were offered alleged benefits through other agreements (such as the agreement on subsidies). Isn’t it only fair that when countries renege on subsidies, they are subjected to retaliation under TRIPS? So that we have some realistic possibility of compliance or a good settlement. Else, what is the point of providing for retaliation as a remedy. Let Warner and Pfizer convince US Congress to comply. After all, they’re very successful lobbyists otherwise–and have time and again procured legal amendments to extend their monopoly rights. The point of cross retaliation is not to make them suffer–but to put pressure on the US to comply. And what better way to put pressure than by having Pfizer knocking on Congressional doors.
Paradoxically enough, Pfizer, IBM etc were the main brains behind TRIPS and its inclusion within the WTO package. And are now being tentatively hit by virtue of this very same agreement.
Well, looks like ZookZ.com did listen to you Shamnad.
The Caribbean news reports that they are preparing to move their courts for issuing a mandamus to the Government to require it to set up rules and regulations and forward them to WTO to finalize the ruling the 2007 Antigua Barabuda settlement
Although, legitimacy of the website’s operation remains uncertain, it would be interesting to watch how does the court force the Government to legislate a domestic law giving effect to the cross retaliation clause and if others follow suit.
dear Question IPR n others,
dont be too optimistic. its an uphill task enforcing cross-retaliation (even by the govt., leave alone the private parties). u may like to refer to Henning Grosse Ruse-Khan and Wackes Seppi ‘s comments in another post on the same topic.
@mnbvcxzaq1: Thanks for pointing out those comments to me. I am not very optimistic but interested in the effect it has on the approach of other developing countries.
@mnbcxzaq1:
Correct me if I am wrong but as Wackes Seppi pount out in his comments that
“A fourth hurdle is that the internal legislative framework must allow the retaliatory measure (and, inevitably, suitable legal remedies for the affected party to resist the measure… the turkey is far from cooked).”
Which is what Shamnad is rooting for , if I understand correctly that even if all other hurdles are crossed, there is a need for internal legislation to make use of any such authorisation.
Dear QuestionIPR,
Thansk for drawing my attention to this interesting development. I’ll keep an eye out for how this proceeds.
And yes, you’re spot on. Its a matter of internally legislating this. You’ve at least taken the pains of reading and understanding this issue. As you might know, any method of “loss” computation that is half way decent and not completely arbitrary will pass muster with the panels. So this model is very doable. Its more of a political question as to whether countries will actually implement this domestically. Incidentally Brazil already has a law–and I’m trying to get a copy. Thanks
dear Question IPR,
sorry, i was a lil late in responding to ur query, but shamnad has already responded to it. hope it satisfies u!
in my earlier comment, i just wanted to convey my feeling regarding the cross-retaliation issue. for various reasons, i feel that smaller countries wont ever be able to “effectuate” this method, in real sense. (what u feel shamnad?)
Ken Shadlen, a leading LSE scholar who focusses on the politics of patent regimes (particularly developing country regimes) writes:
“Hi Shamnad — I tried posting this directly on the blog but seem unable to do so, so sending directly to you, but please feel free to post and
respond on line if you prefer.
You write: “Brazil appears to have already implemented such a cross retaliation law in its domestic regime.” Are you certain that’s
true? I know such a law was proposed in congress in 2007 (PL 1893/2007), but so far as I know it is still being considered by various commissions
in the Brazilian Chamber of Deputies — and not yet law. Is there a different legislative change you refer to?”
Tks for raising this Ken. I heard it from a Brazilian lawyer–but he couldn’t refer me to any official source. Which is why I couched it in tentative terms.
Will check again. You’re sure its not been passed yet. Do you know why its still pending? If they are really sure that the 800 USD million claim is well grounded and that they can now cross retaliate, they ought to immediately implement this law.
Shamnad
Ken replies as below:
“The bill I refer to, PL 1893/2007, proposed by Dep. Paulo Teixeira in August 2007, is simply working its way through the various commissions in the Brazilian Chamber of Deputies.
It has been approved by at least two commissions, just not all the relevant ones, which might
explain why someone told you it had been approved.
My understanding is
that it was just about ready to go when someone insisted that it be sent
to another commission.”