The History of TRIPS

Motivation Paris Convention and PCT failed to provide American pharmaceutical companies patent protection in developing countries they considered adequate They sought firmer mandatory minima and guarantees of effective enforcement

The Failed WIPO Initiative Late 1970s: U.S. pharmas and USPTO representatives asked WIPO to organize a diplomatic conference to revise Paris Convention WIPO Director General refused –Developing countries opposed –One-country, one-vote principle made the initiative hopeless

GATT General Agreement on Tariffs and Trade 1950s: major trading nations achieve significant tariff reductions through bilateral negotiations, universalized by MFN principle “Kennedy Round” (1960s): linear-cut strategy –Participating countries agree to initial major tariff reduction, then negotiate over exceptions “Tokyo Round” (1970s): reduction of “non-tariff barriers” to trade through “linkage”: –Burdensome customs procedures –Import-licensing schemes –Export subsidies

Emergence of the “GATT Strategy” Leadership assumed by Advisory Committee on Trade Policy and Negotiation (ACTPN) –Formed in 1979 to provide advice to U.S. President on trade –Chaired by CEOS of Pfizer and IBM ACTPN persuades USTR to include IP in next round of GATT negotiations –Harmonized higher levels of protection –Guaranteed protection for software –“take it or leave it” principle

Recruiting Allies Film, Music, Book producers –Generally satisfied with Berne Convention –Preferred tried-and-true §301 strategy to unpredictable trade negotiations Under 1974 Trade Act, supplemented by the Omnibus Trade and Competitiveness Act of 1988, USTR identifies countries that fail to provide adequate protection for IPRs – and, if necessary, imposes trade sanctions –Dragged reluctantly into process by USTR European & Japanese pharmaceutical and computer firms –Recruited by American counterparts –Common interest in higher levels of protection

Getting Opponents to the Table Virtually all developing countries resist –Group of Ten (in GATT): Argentina, Brazil, Cuba, Egypt, India, Nicaragua, Nigeria, Peru, Tanzania, Yugoslavia USTR initiates §301 procedures against Brazil and South Korea –Makes clear that it will do the same with other countries unless they agree to include IP in trade negotiations 1986: all agree

Negotiations, Developing Countries continue to resist on types of IP covered, subject matter, etc. 1988: “Basic Framework of GATT Provisions on Intellectual Property, Statement of Views of the European, Japanese and United States Business Communities” –Concessions (suggested by Europeans): MFN principle; offers of technical assistance to developing countries; implementation delays 1989: Abortive Vanderbilt Conference –Reichman fair-use proposal 1990: “Draft Composite Text,” prepared by GATT Secretarist, incorporated into: 1991 “Dunkel Draft,” prepared by GATT Director General Negotiations finally produced agreement on Uruguay Round package

TRIPS Tradeoff Developing countries accept TRIPS obligations Developing countries receive in return: –Liberalized trade in textiles and agricultural products; –Hope of relief from §301 actions; –Some leeway in permissible exceptions to higher IP standards