US, Switzerland take out WTO gun for India’s Sec 3(d); point at foot

In yet another “Indian Pharma Patent Policy” centric international development, an article from LiveMint (view here), reports that India’s Section 3(d) may be facing pressure from a relatively unexplored angle. According to the article, US and Switzerland may be coming up with a creative approach to bring India to the WTO dispute settlement system. Up till now, despite all the pressure by US, India’s pharmaceutical patent provisions had not been challenged at the WTO arena, presumably because any such challenge would be a very weak one, as India’s pharma patent provisions are considered TRIPS compliant (see e.g., latter part of this piece). Now, it appears that US and Switzerland want bring to life a provision which would allow a member to bring complaints to the WTO even if the TRIPS Agreement was not being violated!

A boomerang. First used as a hunting weapon, now commonly used for sport and entertainment as well | Source

While this at first seems very worrying, with an almost colonial flavour to it, further study shows that not only may this be an empty threat, but even if it was carried out, there is a chance this provision could be used to bring a WTO challenge against the US, EU, etc for insisting on TRIPS plus provisions!! This post will try to expand on what this provision is, whether it could be used against India if it comes back to life, and finally, if it’s revival means that conversely, US, EU, etc can be challenged at the WTO level for insisting on TRIPS+ provisions. [Disclaimer: long post ahead!]

What is the provision?

A “non-violation” complaint is one wherein a WTO member alleges that despite no actual violation of an Agreement, there has been nullification or impairment of benefits reasonably expected to flow from that Agreement to the complainant, and thus they bring the matter to the WTO dispute settlement mechanism. While this is allowed in two of the WTO Agreements (GATT and GATS), there has been a moratorium on the application of this provision to the TRIPS Agreement.

Art 6.2-3 of the TRIPS Agreement first gave a 5 year moratorium on non-violation complaints from 1994; later, at the 4th WTO Ministerial Conference at Doha in 2001, it was decided that the moratorium would continue till the 5th Ministerial Conference at Cancun where the TRIPS Council would give their recommendations (summary recommendations available here), and that in the mean time members would not initiate such complaints under the TRIPS Agreement. A series of extensions have since followed, with the latest extending up till 31st December, 2015.

As per the above mentioned livemint article, India and Brazil, joined by a number of other countries submitted a joint proposal asking the TRIPS Council to recommend to the upcoming 10th WTO Ministerial Conference (December, 2015), that non-violation complaints shall not apply to disputes under the TRIPS Agreement. The US and Switzerland, stood apart, alone, asking “to terminate the existing moratorium on non-violation complaints to the World Trade Organization’s trade-related intellectual property rights (TRIPS) agreement”. The article goes on to describe concerns by Indian officials that this would raise “serious concerns on the ambiguity, incoherence and limit on flexibilities” that TRIPS members currently enjoy. “Moreover, such complaints affect the development of robust pharmaceutical industry in developing and poorest countries due to the legal challenges and enormous litigation costs, the official argued.”

Along the same lines, Prof Frederick Abbot gives some examples of possible challenges that might occur with this provision’s moratorium being removed: “… Members that adopt relatively generous fair use rules in the fields of copyright or trademark might find that they are claimed against for depriving another Member of the benefit of its bargain. Actions taken by developing Members to implement exceptions to TRIPS patent rules under Articles 30, or to grant compulsory licenses under Article 31, could be alleged to deprive patent holders of their expectations. The application of copyright rules in the area of software protection involves substantial flexibility. The use of discretion to establish permissive uses of code (for example, on hardware or software interface efficiency grounds) might be subject to challenge.” Looking at these examples seems to be worrying indeed.


Looking more closely though – it seems there may not be too much reason to worry. First off, this doesn’t seem like the first time US and Switzerland have tried this. The WTO non-violation background document, last updated in 2009, also says that US and Switzerland have expressed interest in allowing non-violation complaints. So clearly its not the first time they’ve tried this, and there have been a few extensions after they’ve tried this. Secondly, even IF they manage to lift the moratorium, there are still several obstacles a successful claim would need to overcome.


In the pre-WTO world, governments could circumvent provisions in the relatively simple international trade agreements by erecting new types of barriers. It is in this context of ensuring market access that the non-violation provision was born. Therefore, even though it may have little to no practical usage anymore in the post-WTO world, one can see that with the GATT and GATS being about reciprocal market access rights for member states, non-violation provisions at least theoretically fit in.

In sharp contrast though, the TRIPS Agreement is about the commitment of member states to laying down minimum standards of IP rights for private parties. And these minimum standards have been agreed upon with the understanding that they will be for the objectives of [Art 7] benefiting innovators and users, contribute to promotion, transfer and dissemination of technology, in a manner conducive to social and economic welfare (plus, of course the Doha Declaration recognizing national autonomy in enacting these minimum standards). In other words, obligations arising from the TRIPS Agreement certainly seem to have no similarity to the market-access obligations of the GATT and GATS, meaning non-violation provisions would have no theoretical basis for applying here.

Even within the GATT, the Panel in Japan – Film  held that “the non-violation remedy should be approached with caution and should remain an exceptional remedy”. Prof Bryan Mercurio also writes on the very useful KEI ip-health listserv that there has never been a successful non-violation case at the WTO. He also points out that non-violation complaints require nullification or impairment of benefits due to measures that could not be foreseen at the time of the agreement. And of course – when one looks at India’s patent laws prior to the TRIPS Agreement, it would be very hard to insist it could not be foreseen that India would make creative use of its flexibilities, especially around public health!

More Interestingly though…


Looking back at that last paragraph: “non-violation complaints require nullification or impairment of benefits due to measures that could not be foreseen at the time of the agreement.” Can an argument be made that developing countries are facing nullification or impairments of benefits caused by certain TRIPS plus FTAs? Benefits that were reasonably expected to flow due to the signing of the TRIPS Agreement, but haven’t happened due to subsequent TRIPS+ FTAs? If so, can these developing countries bring non-violation complaints against US/EU for this? 

Prof Susy Frankel certainly seems to think so. In her paper “Challenging Trips-Plus Agreements: The Potential Utility of Non-Violation Disputes” (ssrn link) she argues that TRIPS-plus standards are increasingly becoming the norm with FTAs and while TRIPS does of course allow for higher standards, there are at least certain contexts where harmonization of higher norms (through FTAs) amount to systemic violation of the TRIPS Agreement structure and purpose, even if not a violation of any specific provision of the TRIPS Agreement.

Amongst other examples, she looks specifically at India’s Section 3(d) and concludes that a non-violation complaint against India is unlikely to succeed because (a) there was and is international division over patenting new uses of known substances; (b) India has national autonomy to interpret Art 27 of TRIPS according to its socio-economic needs; and hence (c) it can’t be considered a reasonably expected benefit that India would allow these to be patented.

At the same time, she also concludes that if a country such as India is pressured into caving in and allowing US/EU standards on pharma patents, that a non-violation complaint against US/EU is likely to succeed since this pressure to change its laws via FTAs or otherwise, (a) is not ‘contributing to the promotion of innovation… to the mutual advantage of producers and users’ (As laid out in Art 7: Objectives of TRIPS); (b) there has been an erosion of the expected benefits of a Member not to be obliged to change its laws to protect such patents.

So, it seems that in the unpleasant scenario that US/Switzerland do continue and are successful with reviving non-violation complaints, and waste India’s resources in fighting such a complaint at the WTO – there is at least a decent possibility that India (and other similarly placed countries) will be able to use the same weapon against them, and perhaps more effectively.

H/T: A big thanks to Shashank Kumar, Prabhash Ranjan and Rachit Ranjan for very helpful comments when I threw this question out on social media. Also, below is a short list of some of the pages/articles that proved very helpful during a quick library-less search for information:

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