International Trade Balancing Interests in Intellectual Property Protection: TRIPS, Pharmaceuticals and the Least Developed Countries

By Shannon Togawa Mercer

In an era during which the exchange of intellectual property across borders can carry just as much, if not more, value than conventional goods, the protection of intellectual property rights is now a matter of international concern. Whereas much of the WTO treaty regime is focused on the liberalization of trade barriers for goods and services, the protection of intellectual property rights through the Trade-Related Aspects of Intellectual Property Rights (TRIPS) agreement involves affirmative obligations to restrict the flow of ideas in order to protect the rights of an individual to his or her intellectual property.

It makes sense that an organization of nations interested in trade liberalization would concern itself with the movement of ideas: adequate protection of intellectual property can impact trade flows. If a seller knows that her ideas will not be pirated in a purchasing country, she will be more encouraged to sell there. Furthermore, if an innovator knows that he will reap the profits from his inventions, he is more likely to innovate – thus incentivizing businesses’ R&D.

A different set of rights is at play in TRIPS as compared to the rest of the WTO regime. Instead of safeguarding a country’s markets, TRIPS safeguards the rights of a country’s natural and juridical people. This creates a unique situation in which the WTO might find itself de facto protecting the rights of some individuals over others. Pharmaceutical patent protection brings that debate into relief: Least Developed Countries (LDCs) face public health crises when patents allow pharmaceutical companies to charge high prices for essential medicines.

Thankfully, the agreement itself, through both its language and subsequent interpretation by WTO adjudicators, has provided some flexibility to address this conflict. Article 7, for example, allows for the protection of intellectual property “to the mutual advantage of users and producers of technical knowledge and in a manner conducive to social and economic welfare and to the balance of rights and obligations.” This provision ostensibly creates the authority for the WTO to balance interests in cases such as affordable access to drugs. In fact, the WTO has opened the door to a number of exceptions including compulsory licensing to address circumstances including, but not limited to, national emergencies, serious anti-competitive practices, and necessary research.

For example, in Canada- Patent Protection for Pharmaceutical Products (2000) the WTO allowed a Canadian law that permitted the use of patented products by generic drug producers without authorization and before the end of the patent term so that they might obtain government approval while they wait for the patent expiration date. This significantly decreases the amount of time it takes a generic drug maker to bring product to the market.

Furthermore, certain transition provisions have been created to provide LDCs sufficient time to adapt to the TRIPS requirements. On November 6 of this year, WTO members voted to extend the drug patent exception for LDCs until January 2033. This carve-out allows LDCs to approach patenting pharmaceutical products as they see fit, not subject to TRIPS. Among a few other waivers, this particular exception, and its extension, has been hailed as a manifestation of the WTO’s prioritization of development as articulated in the Doha Development Agenda in 2001 and in the UN Sustainable Development Goals.

While all seems well and good when considering the flexibility of the treaty agreement, the WTO’s Dispute Resolution Understanding (DSU) may put LDCs at a distinct disadvantage once the exception period expires. While only States can bring claims against other States under the DSU, a claim is often motivated by the corporate interest feeling the pain of any given trade restriction. After 2033, those nations who have not yet adjusted to TRIPS conditions will be subject to challenge. More developed corporations often come from more developed countries which, in turn, leverage more advanced legal counsel. LDCs generally can not afford the same quality of representation. While this is not a death sentence, it certainly tips the scales.          

The consequences of losing could be dire: the developed market would be allowed to levy reciprocal restrictions on other goods or services which fall under the purview of WTO agreements until the LDC has adjusted its policy in a way which may be detrimental to the public health requirements of its people. LDCs may not possess the capital or the leverage to compensate a developed country in lieu of applying the DSU recommendation. During recent negotiations, it was proposed that the exception extend until a country ceases to be an LDC in order to safeguard against serious public health crises. This solution was rejected in favor of the 2033 extension. While the rejected proposal may have more directly addressed the concern for the protection of individuals in LDCs, it would come with its own drawbacks. Given that the WTO allows countries to self-declare as LDCs, it is a proposal ripe for abuse by third-party corporate interests. 

Controlling the movement of ideas is a very different business from controlling the movement of bananas or the nature of foreign direct investment.  Thankfully, the WTO appears to be approaching the need for a constant and delicate balance of interests by highlighting the participation of LDCs within the organization. The tenth Ministerial conference of the WTO is already primed for fulsome LDC involvement. Giving LDCs a prominent voice at the table is undoubtedly the right step toward navigating such complex compromises.