The History of TRIPS

1. The History of TRIPS

2. 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

3. 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

4. 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

5. 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

6. 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

7. 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

8. Negotiations, 1986-1994 • 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 • 1992-1993 Negotiations finally produced agreement on Uruguay Round package

9. 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