India in the WTO

The latest issue of the Journal of World Trade has an India-related article on an unusual topic. It examines the use of poor Indian women as surrogate mothers by rich Americans from a GATS perspective. The abstract is below. Haven’t read the paper yet but do plan to do so, and will comment on it here. My instinctive and non-academic preliminary response was some discomfort with the treatment of this issue from a trade law perspective. Wouldn’t a human rights or health framework be more appropriate for regulation in this area both in the US (the so-called service consumer) as well as in India (the so-called service-provider). Is gestational surrogacy a GATS “service”?

Here is the abstract:

Christina Stephenson, ‘Reproductive Outsourcing to India: WTO Obligations in the Absence of US National Legislation’ (2009) 43 Journal of World Trade pp. 189-208

Summary:

This article examines the World Trade Organization (WTO) obligations that inhere from US persons or couples contracting with Indian women for gestational surrogacy. Surrogacy contracts are considered in the context of the General Agreement on Tariffs and Trade (GATT) and the differing laws on surrogacy of different US states. By exploring WTO Appellate Body (AB), Panel and GATT Panel decisions, this article endeavors to determine what WTO obligations bind the US in circumstance of cross–border surrogacy contract. This article addresses how the varying state laws on surrogacy affect the WTO obligations of the US in market access, national treatment and most–favoured–nation (MFN) treatment. The article concludes that there are a variety of ways in which the different state laws have the capacity to violate US trade commitments in relation to international surrogacy contracts. In addition, the analysis serves to illuminate the process under which US trade obligations can be scrutinized to determine what commitments are relevant to a service not contemplated in the US Schedule.

Update:

Am still to read this article for the WTO angle, but a recent Indian Supreme Court decision seems to throw a child’s rights mantle over surrogacy at least in Indian domestic law.

Last year, a child was born to an Indian surrogate mother from Japanese parents. The Japanese couple separated and when the child was born, neither parent was in India except of course the natural birth mother.

A public interest habeas corpus petition was filed in the Rajasthan High Court. Eventually, the matter reached the Supreme Court when the Japanese grandmother filed a petition. The Supreme Court gave its decision on 29 September 2008. The decision is available at http://judis.nic.in/supremecourt/helddis.aspx

The Court in effect allowed the baby to leave India with the Japanese grandmother. It did this by stating that any concerns relating to the rights of the baby should be raised before the commission constituted under the Commissions for Protection of Child Rights Act, 2005, and noted that no complaint had been made before this Commission. The Supreme Court also went on to state that the surrogacy procedure "is legal in several countries including in India where due to excellent medical infrastructure, high international demand and ready availability of poor surrogates it is reaching industry proportions".

I find this Supreme Court decision very unsatisfactory. The Court was keen to let the baby leave India (which I don’t have an issue with), but it seems to have laid down the law here (that surrogacy is legal) in the absence of legislation and while a bill was pending before Parliament on the same issue. (See the Assisted Reproductive Technology (Regulation) Bill 2008.)

The Court also abdicated its constitutional responsibility to protect fundamental rights of a child by suggesting that the appropriate forum was the Commission under the Commissions for Protection of Child Rights Act, 2005.

Well, this whole surrogacy issue raises questions of citizenship, which mother’s name will go on the birth certificate under Indian law, immigration, reproductive rights, and child rights. Not too sure of the trade angle.

Due to the continuing interest in the discussion on the recent Indian measures against imports of toys from China on safety considerations (first the ban and then its revision to new mandatory safety standards), I have created a new blog category Indian safety measure for Chinese toys where all posts and comments on this issue can be accessed. I hope this will facilitate retrieval of information for those interested.

The Economic Times reported yesterday that China has raised the issue of the mandatory safety standards imposed by India on imported Chinese toys before the WTO Committee on Technical Barriers to Trade. 

In its complaint to the WTO, China has alleged that India’s quality checks violate the condition of “national treatment” laid down under WTO’s trade rules as they did not apply to toys manufactured in India or imported from any other country.

In its submission to the WTO committee on technical barriers to trade, China pointed out that since the restrictions apply only to Chinese toys, it could be viewed as a general ban on and a discriminatory measure against Chinese toys.

This breached a series of fundamental principles embodied in the WTO agreement, including that of most favoured nation treatment (every member country will be treated on a par with other member countries), and national treatment (product from a member country will be given the same treatment as that given to a product made locally), along with provisions of technical barriers to trade (TBT) agreement.

China also pointed out that India did not inform WTO about the restrictions, a procedure necessary under the transparency obligations of TBT agreement.

“China strongly requests that India revoke its discriminatory and WTO-inconsistent restriction on Chinese toys immediately,” the submission stated.

So China is alleging that even the revised Indian notification violates both MFN and national treatment. Further, it violates the notification requirement in the TBT agreement. For more background, see earlier posts on this subject under the category –public health. See http://indiainthewto.wordpress.com/2009/03/02/indian-government-relaxes-ban-on-chinese-toy-imports/

Why did the Indian government not use Clause 2.10 of the TBT agreement permitting the issue of safety standards in urgent cases with post-facto notification to the WTO secretariat and other members? Such a notification requires the statement of objectives and the rational for the standards. India will probably argue that these are international standards not requiring notification, but the application of these standards exclusively to imports from China does raise potential violations of MFN and NT.

The Indian authorities could have avoided a lot of trouble if only they had also followed the letter of WTO rules in this matter. The flexibility to take action against imports for safety reasons is fully available, but the Indians seem to have messed up on procedure. Is this an example of lack of capacity in Indian government institutions to use the WTO rules effectively? Why do they not consult lawyers more? 

The Hindu meanwhile has an interesting take on the matter:

China is likely to convey its concern to India over New Delhi trying to restrict import of Chinese goods, even though Beijing has not "yet" dragged its neighbour to the World Trade Organisation on the issue.

Chinese Vice Minister of Commerce Zhong Shan is expected to convey his country’s strong resentment over India resorting to protect its industry against imports from China, when he meets Commerce Secretary G K Pillai here this week, sources said.

"We have nothing on this yet," WTO spokesperson said in an e-mail from Geneva when asked whether China has lodged any formal complaint against India. China was upset over India slapping a ban on import of Chinese toys on January 23, which was partially eased within six weeks, provided the toys conformed to international health and safety standards.

The official Chinese media had reported that the country was mulling to drag India to WTO for contesting the ban. However, Mr. Pillai is expected to confront Mr. Zhong with data showing surge in imports from China.

While the bilateral trade has seen a sharp rise in the fiscal 2008-09, it is highly skewed in favour of China. In 2007-08, India’s exports to China stood at USD 10.83 billion, while imports was USD 27.11 billion.

So why would Indian Commerce Secretary talk to the Chinese about surging imports in a matter to do with safety issues? To be fair, the discussions between the Indian Commerce Secretary and the Chinese Vice Minister of Commerce will likely cover all the recent trade tensions between the two countries. And the discussion of import surges will probably feature in that context.

INTERVENTION by INDIA at TRIPS Council meeting on 3 March 2009

Agenda item ‘M’ – OTHER BUSINESS – Public Health dimension of TRIPS Agreement

Chair,

                My delegation would like to draw the attention of Members to developments which undermine the public health dimension of TRIPS Agreement. In the last few months, several consignments of Indian generic drugs have been seized in  transit at EC ports. We made an intervention on this issue in the General Council meeting of February 3, 2009. The intervention has been made available to Members at the back of this room.

                I will like to mention that my government has taken up the issue bilaterally with the EC and the Dutch Government to urgently review the relevant regulations and the actions of the national authorities based on such regulations, and bring them in conformity with the letter and spirit of the TRIPS Agreement, the rules based  WTO system and the DMD on Public Health.  We are still awaiting a response.

                In addition to the salient aspects of our intervention in the General Council, we would like to make some specific points today in the context of TRIPS Council.  Dutch customs authorities have ‘confiscated’ these consignments on grounds of alleged violations of domestic patents and trademarks. This is not a case of ‘temporary detention’ since some consignments continue to be held for over months.  Moreover, procedures for their destruction were also initiated.  Four such instances have come to the notice of my Government and  all these four instances have been reported from the Netherlands. These consignments were headed for Brazil, Peru and Colombia. While one consignment has been returned to the exporter after being held for over a month, the fate of the other three is still unclear. We pointed in GC last month about the consignment of losartan seized in transit in the Netherlands while it was headed for Brazil.  The generic drug in question was perfectly IP legitimate generic drug in both India and the destination country.  Also, trade of generic drugs is perfectly legitimate.

                The action of the Netherlands customs authorities to seize generic drugs, traded between developing countries in full conformity with international disciplines, runs counter to the spirit of the TRIPS Agreement and the resolution 2002/31 of the Commission on Human Rights on the right to enjoy the highest standards of physical and mental health. Measures of this nature have an adverse systemic impact on legitimate trade of generic medicines, South-South commerce, national public health policies and the principle of universal access to medicines. The importance of  generic drugs to public health in developing countries and particularly in the LDCs is obvious.  Such barriers to legitimate trade of generic drugs will also seriously impair the efforts of civil society organisations engaged in providing medicines and improving  public health in the least developed parts of the world. MSF has recently stated that they regularly transport and temporarily store medicines in Europe, en route to users in developing countries. In a letter to the EC Trade Commissioner, MSF has expressed concern over the potential consequences of the seizure of medicines in transit in the EU, which are destined for  developing countries. MSF has also asked the EC to clarify its position regarding the implementation of the EC Regulation No 1383/2003 with regard to pharmaceutical products.

                In addition to going against the spirit of a rules based trading system and impeding free trade, such acts represent a distorted use of the TRIPS Agreement and the international IP system and circumscribe  flexibilities enshrined in TRIPS. Let me elaborate.

                Article 41.1 of TRIPS provides that enforcement procedures “shall be applied in such a manner as to avoid the creation of barriers to legitimate trade and to provide for safeguards against their abuse” and Article 41.2 provides that the procedures shall be “fair and equitable.” These are ‘General Obligations’ which run through Part III of TRIPS Agreement on Enforcement of IPRs. As I just said, trade of generic drugs is perfectly legitimate. Measures taken by Dutch authorities, clearly, create barriers to such legitimate trade, particularly where there is no risk of diversion to the internal market.

                Members have always strived for a balance between public health concerns and protection and enforcement of IPRs.  The Doha Ministerial Declaration on TRIPS and Public Health recognized “the gravity of the public health problems afflicting many developing and least-developed countries” and stressed “the need for the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement) to be part of the wider national and international action to address these problems.”  In Paragraph 4 of that Declaration, WTO members agreed that “the [TRIPS] Agreement can and should be interpreted and implemented in a manner supportive of WTO Members’ right to protect public health and, in particular, to promote access to medicines for all.”  We are aware of EC’s stated commitment to the full implementation of the Doha Declaration on TRIPS and Public health and the WTO August 30th decision. Measures taken by the EC therefore, create serious confusion in our minds.

                It is ironical that while on one hand WTO has taken steps to promote access to affordable medicines and remove obstacles to proper use of TRIPS flexibilities, on the other hand some Members seek to negate the same by seizing drug consignments in transit and creating barriers to legitimate trade.  Among other things, the implementation of the WTO’s Decision of 30 August 2003 regarding the export of pharmaceutical products to countries with inadequate manufacturing capacity (the Para 6 system), will become even more problematic if patent rights, which are territorial by definition,  are enforced for goods in transit. As it is, the Para 6 system has been used only once so far in the last five years.

                The concept of ‘territoriality’ is a key stone in the edifice of the TRIPS Agreement.  There are no indications that the drug consignment was meant for the markets of the EC. Seizure, and initiating procedures for destruction of such consignments, violates this key principle.

                The WTO rules based system provides for freedom of transit by the most economical and convenient routes and without unnecessary delays and restrictions. The act of seizure by the Dutch authorities is therefore, a denial of the rules based system which we seek to build and strengthen in the WTO. Repeat of such actions may have an impact on exporters’ choice of transit routes, which may affect the economics of trade of pharmaceutical products and consequently, have a deleterious effect on access to essential drugs and public health budgets of recipient countries.

                My delegation  would also like to draw the attention of Members to another trend that is acquiring huge dimensions.  This is the effort to implement the protection and enforcement of IPRs in a maximalist manner and thereby upset the delicate balance between rights of IPR holders and the public policy objectives under the TRIPS Agreement. A coordinated approach is being witnessed in several international fora like the World Customs Organisation, World Health Organisation, Universal Postal Organisation etc. to promote the IP maximalist agenda.  We also note with dismay efforts by some Members to link safe and efficacious but low cost generics with counterfeit medicines, which is essentially an IPR issue. There is an attempt to enlarge the definition of counterfeits beyond its definition in the TRIPS Agreement, to set maximalist enforcement norms, and to include TRIPS plus provisions in RTAs. These are subtle and concerted ways of circumscribing the flexibilities of the TRIPS Agreement. They also run counter to the spirit of the TRIPS Agreement which is a minimum standards agreement. And, this is certainly counter to the understanding given to developing countries when the TRIPS Agreement was being negotiated.

Mr. Chairman, India attaches the highest importance to protection and enforcement of IPRs in accordance with the TRIPS Agreement. However, we do not see the Agreement as divorced from the Objectives and Principles set out in Art 7 and 8 of the Agreement.  Efforts to enshrine new, maximalist TRIPS plus provisions in other forums will seriously undermine the delicate balance in the TRIPS Agreement and raise systemic issues.

                Mr Chairman, my delegation will like this Council to take note of these points. 

———————————————————

Agenda item ‘M’ – OTHER BUSINESS – Effective operation of Para 6 system.

India has always been of the view that the Doha Declaration on TRIPS and Public Health constituted a major landmark in the short history of the WTO because it recognized the primacy of public health needs and the sensitivity of this organization to the problems faced by the poor in the less developed countries.  Alongwith several other Members, India worked relentlessly on DMD on Public Health (2001) and the  Decision of August 30, 2003 on implementation of Para 6 of the DMD.

The hope was that the Aug 30 Decision would genuinely and completely address the problems faced by WTO Members with insufficient or no manufacturing capacities in the pharmaceutical sector to address public health problems.  It may have sounded prophetic at that time when India voiced certain apprehensions in the GC meeting of August 2003. India sounded a word of caution and hoped that  “the results accruing from this mechanism would not be negated by the creation of cumbersome systems that would lead to huge delays in getting medicines across at reasonable cost to those that needed them or discourage Members from using the system for the benefit of the people.  In order to make this system successful, a sincere collective effort was required on the part of all Members and the entire pharmaceutical industry.” Regrettably, we have been proven right.

We note from our collective experience of 5 years that the export of HIV/AIDS drug "ApoTriavir" by the Canadian pharmaceutical company Apotex to Rawanda in Sept 2008 was the first and only use of the Para 6 system. Here too it took the Company 3 years to supply the medicine. It is time for reflection on the obstacles to use of the system. The Para 6 system, it may be recalled, was supposed to be an ‘expeditious solution’ to the crisis in access to medicines by countries with insufficient or no  manufacturing capacity.

Paragraph 8 of the waiver Decision provides that “the Council for TRIPS should review annually the functioning of the system set out in the Decision with a view to ensuring its effective operation and should annually report on its operation to the General Council.”  During the 5th Annual Review in the last Council meeting, factual information regarding the implementation and use of the 2003 Decision and the acceptance of the Protocol Amending the TRIPS Agreement was circulated. There was limited discussion on why the Para 6 system had been used only once in the last 5 years. My delegation would call for a wider discussion on legal, procedural, commercial or other obstacles to the ‘effective operation’ of the Para 6 system. In this connection we would request the Chair to consult with concerned Members in order to ascertain the obstacles and prepare recommendations for effective implementation of the Para 6 system. These recommendations could then be considered in the year end meting of the TRIPS Council as a part of the Annual Review.

The Economic Times reports:

… The EU defended the actions of the Dutch authorities, claiming they were acting for the “benefit of mankind”, and said it would continue to do so, as the issue of counterfeit drugs is a public health issue. The EU Customs regulations are in complete conformity of the TRIPS agreement and the WTO disciplines. The European Commission claimed that one-third of the four million counterfeit medicines seized by EU authorities come from India.
Brazil stated that though both countries brought up what they considered was a serious violation of WTO rules at the General Council, as the TRIPS council was the forum dealing with intellectual property matters it could give a better analysis of the factual circumstances of the episode and legal implications. Seizure of goods in transit, regardless of if they were medicines or not, on grounds that they could violate IP rights registered in the country of transit, violates the GATT Article V and other GATT obligations. It is up to Brazil, and not any other country, to inspect whether the goods that Brazil was purchasing were substandard or fake.
Dutch authorities have been regularly acting ex-officio, based on EU procedures of 2003 on the infringement of IP rights, said Ambassador Roberto Azevedo, adding this was a case of extraterritorial application of Dutch patent rights.

Well, the EU is interpreting its action as an anti-counterfeiting exercise. I wondered in an earlier post about whether the EU seizure was an anti-counterfeiting action or an anti-infringement action. This clarifies that the counterfeiting issue was important. Here is a link to an earlier post that mentioned the ongoing disagreements surrounding the work of the WHO agency IMPACT or International Medical Products Anti-Counterfeiting Taskforce.

More posts on this issues can be found under the category public health

Prashant Reddy of SpicyIP has an interesting post on the Indian government’s position on the IMPACT negotiations, read here

The Indian government has relaxed its import ban on Chinese toys and will now allow imports of toys from China provided these are accompanied by prescribed safety certification. For more see earlier post. The text of the new notification issued today reads:

TO BE PUBLISHED IN THE GAZETTE OF INDIA EXTRAORDINARY

PART-II, SECTION—3, SUB SECTION (ii)

GOVERNMENT OF INDIA

MINISTRY OF COMMERCE AND INDUSTRY

DEPARTMENT OF COMMERCE

NOTIFICATION NO. 91 /(RE-2008) / 2004-2009

NEW DELHI, DATED 2^nd MARCH, 2009

S.O. (E) In exercise of powers conferred by Section 5, read along with Section 3(2) of the Foreign Trade (Development and Regulation) Act, 1992, also read along with paragraph 2.1 of the Foreign Trade Policy, 2004-09, the Central Government hereby amends Notification No. 82 /(RE-2008) / 2004-2009 dated 23^rd January, 2009 as under:-

1. “Import of ‘Toys’ from China appearing under ITC Codes 9501, 9502, 9503 of Schedule – I of ITC(HS) Classifications of Export and Import Items is prohibited for six months with immediate effect and until further orders. However, import of toys from China accompanied by the following certificates shall be permitted:

(i) A certificate that the toys being imported conform to the standards prescribed in ASTM F963 or standards prescribed in ISO 8124 (Parts I-III) or IS 9873 [Parts I-III];

(ii) A Certificate of Conformance from the manufacturer that representative sample of the toys being imported have been tested by an independent laboratory which is ILAC accredited and found to meet the specifications indicated above. The certificate would also link the toys in the consignment to the period of manufacture indicated in the Certificate of Conformity”.

2. This issues in public interest.

(R.S. Gujral)

Director General of Foreign Trade and

Ex-officio Additional Secretary to the Government of India

(Issued from F. No. 01/89/180/0053/AM01/PC-2(A)

This comes a day after a news report that a Chinese complaint over the ban was discussed in the Indian Parliament:

"Ambassador of People’s Republic of China to India has expressed the concern of their government regarding the ban on import of Chinese toys…," Minister of State for Commerce and Industry Jairam Ramesh said in a written reply in Rajya Sabha to a question if China has threatened to drag India to the WTO over the ban.

China Daily had filed this report about how the ban had led to stocks shortages in India even for internationally-renowned branded toys given their made-in-China tag:

NEW DELHI — Indian toy dealers are running out of stocks of toys and prices of toys have soared by 30 percent to 100 percent due to a government ban on Chinese toys, reported local daily Times of India Saturday.

The report said since the ban on Chinese toys were imposed last month, the stocks of importers and wholesalers have started diminishing.

The report quoted Ashima Razdan, a merchant at the Mama’s Little Donut in Panchsheel Enclave market in New Delhi, as saying that as "every toys of branded companies which are available around the world are made in China," the banning of Chinese toys led to retailers selling imported toys like special puppets "gone out of stock".

The report also quoted Saurabh Kharbanda, a merchant of Maya Sports in Janpath in the Indian capital who has been in toy business for over 40 years, as saying that "even internationally renowned brands have stopped their billing and we are not getting stocks".

"Prices of some unbranded toys have even become double or higher. We have never seen such a situation before where getting supplies is becoming next to impossible," the report quoted him as saying.

A Bloomberg story reported on the panel established by the Indian government to recommend safety standards for toys:

India has set up a panel to prescribe more stringent standards for the permissible level of hazardous substances, including lead, in toys.

The panel will “very soon come up with recommendations,” junior industry minister Ashwani Kumar said in parliament today.

The plan to toughen the safety standards comes after a spate of recalls of Chinese-made toys by companies such as Mattel Inc. India on Jan. 23 banned imports of Chinese-made toys for six months, saying they were a hazard to public health. Mattel recalled more than 21 million Chinese-made toys in 2007.

The imported toys contained more lead than admissible, Kumar said today. The new rules will specify the quantities of hazardous substances that will be permissible and make the law more enforceable, he said.

The U.S. Congress last year passed the first overhaul of consumer protection laws in almost two decades after millions of Chinese-made toys were recalled because of excessive lead content.

India said it’s ready to discuss its ban on imports of Chinese toys after China said the block will have a “serious impact” on bilateral trade relations.

Asia’s second-biggest economy will probably ask the World Trade Organization to investigate the Indian ban, the official China Daily newspaper reported Feb. 5.

More than 4,000 Chinese toy companies closed last year because of waning demand and tighter safety standards, the official Xinhua News Agency reported Feb. 7.

Indian scientists have completed an eight-year task of translating and compiling Indian traditional knowledge into a database (that lists over 200,000 treatments and extends to 30 million pages) to prevent patents being granted on this knowledge by overseas patent jurisdictions. The library which has an online home will be made accessible to patent examiners in the European Patent office to prevent attempts at patenting existing traditional knowledge. The EPO and the Government of India have entered into an access agreement that should be interesting to look at. Here is the news item from the website of the EPO:

India’s Traditional Knowledge Digital Library (TKDL): A powerful tool for patent examiners

On 2 February 2009 the Indian government granted access to its Traditional Knowledge Digital Library (TKDL), a unique database that houses the country’s traditional medical wisdom, to examiners at the European Patent Office (EPO).

EPO examiners will use the extensive database to prevent attempts at patenting existing traditional knowledge, a practice described as "bio-piracy".

The co-operation between India and the EPO comes at a time when many countries are struggling to protect traditional and respected knowledge against exploitation, primarily in the pharmaceutical sector.

"We take this seriously. Countries with rich traditional and holistic knowledge often have to spend lots of money on opposition procedures. The database could prevent that by helping the EPO to grant properly scoped patents", said Paul Schwander, Director of Information Acquisition at the EPO.

An improved patent granting process

Experts at the EPO say that access to the 30-million-page database will help to correctly examine patent applications relating to traditional knowledge.

"With the TKDL, examiners have improved access to background information at an early stage of patent examination", Schwander said. "In the old scenario, a patent may have been granted and the countries had to present evidence against it after the fact".

Prominent cases of patent disputes include a US patent on the wound-healing properties of turmeric (revoked in 1997) as well as an anti-fungal product from the Indian Neem tree (revoked in 2008). Both herbal practices were evidence of traditional knowledge and the patents were rescinded.

In both instances, the Indian government needed to prove that the patented methods were not novel and were based on traditional knowledge. The process to challenge the granted patents proved lengthy and cumbersome as some traditional knowledge had only been documented in Sanskrit or other ancient writings and thus required extensive translation.

With the advent of the TKDL however, the once onerous process has been transformed into an organised and objective system. The texts, many of which are hundreds of years old, offer extensive details about ancient medical practices and can now be accessed digitally.

Moreover, the TKDL has translated these texts – first written in Hindi, Sanskrit, Arabic, Persian and Urdu – into English, French, German, Japanese and Spanish, granting easier accessibility to examiners.

A unique encyclopaedia

The TKDL is the result of a US$ 2 million joint project between five Indian government organisations, including the Council of Scientific and Industrial Research (CSIR) and the National Institute of Science Communication and Informative Resources (NISCAIR).

Under the direction of Vinod Kumar Gupta, the head of NISCAIR, more than 150 experts in traditional medicine, law and computer science spent the past ten years arranging and classifying the TKDL.

Highlights of the vast database include:

• 54 authoritative textbooks on ayurvedic medicine
• Nearly 150,000 ayurvedic, unani and siddha medicines
• Over 1,500 physical exercises and postures in yoga, more than 5,000 years old

Protecting prior art

The TKDL allows examiners to compare patent applications with existing traditional knowledge. New patent applications need to demonstrate significant improvements and inventiveness compared to prior art in their field. If the medical use of an herb is a traditional practice, and thereby public knowledge, it is considered prior art under EPO regulations.

"Even if a treatment is only available in Sanskrit in an Indian library, it belongs to the prior art because it had been disclosed openly in the public domain at an earlier point in time", Schwander said.

If a company seeks to patent the medicinal use of an herb listed in the TKDL, EPO examiners conduct a thorough investigation. "In some cases this will lead to a reduction of the scope of the patent or its refusal", Schwander said.

However, the company may still be granted a patent on a new method for industrial-scale production of the active ingredient of the herb, for example, if this process is new and inventive, Schwander explained.

"The public may perceive this as bio-piracy, but there is a difference. The patent applicants would not claim ownership of the active ingredient itself. The scope would then be limited to a method of producing or isolating the ingredient".

Shedding light on gray areas

The TKDL is so precise that it lists the time, place and medium of publication for prior art. This new catalogue system, called the Traditional Knowledge Resource Classification (TKRC), ensures meticulous documentation.

The classification sheds light on what used to be considered gray area. Before the advent of the TKDL, any bio-prospector for a pharmaceutical company could dig up ancient medical wisdom and lay claim to the practice’s healing ability without consequence.

Now, thanks to the TKDL, patent examiners can prove exactly when and where a medical treatment became public knowledge, stymieing would-be bio-pirates.

A collection aimed at Patent Offices

Examiners at the EPO will use secure access methods to work with the TKDL. To measure efficiency, the EPO will count cases in which the database proved helpful.

Other countries have also opened their digital archives on traditional medical knowledge to EPO patent examiners. In 2008, the Chinese patent office (SIPO) granted the EPO access to its 32 000-entry database on traditional Chinese medicine.

"It’s a win-win situation for all involved. These databases help the EPO improve the relevance and content of prior art searches, while the countries holding traditional knowledge can protect their assets against misappropriation", Schwander said.

A Mint story gives more background:

The Indian government is also in talks with the US Patents and Trademark Office, or USPTO, to extend the initiative to that country.

The Council for Scientific and Industrial Research, or CSIR, India’s largest state-managed research agency, will begin sharing the home-grown catalogue with EPO later this month. CSIR and EPO recently signed an access agreement to this effect. This will likely result in at least 40 patent filings in Europe getting rejected, which could have otherwise passed muster.

“The EPO doesn’t give a patent for an invention which has already been known in public anywhere else,” Rainer Osterwalder, director, media relations, EPO, told Mint by email.

The Traditional Knowledge Digital Library, or TKDL, has been created by the National Institute of Science Communication and Information Resources, or Niscair, a CSIR body, and contains a 24-million-page searchable database that translates text from Sanskrit into English, German, French, Spanish and Japanese.

“TKDL provides a new major source…in technical fields that are sometimes concerned with questions of traditional knowledge,” Osterwalder said.

CSIR has collaborated with the health ministry’s department of Ayush (Ayurveda, yoga and naturopathy, unani, siddhi and homeopathy) to make this happen.

A CSIR official said that though 2,000 existing patents can now be challenged, there were no plans to initiate litigation. “This is meant as a deterrent…though technically we can initiate litigation saying that these patents are based on well-known formulations, it would be too expensive and long-drawn,” the official said on condition of anonymity.

“This is a very positive step for us in protecting traditional knowledge. It’s a big achievement,” Samir Brahmachari, director general of CSIR, said over the phone. The next step is to take this initiative to the US. S. Jalaja, secretary, department of Ayush, said: “This is a big breakthrough for us and we are also in talks with the United States Patent and Trademark Office for a similar agreement.”

This will likely result in at least 40 patent filings in Europe getting rejected

Patenting of products that are based on of India’s traditional knowledge has long been an issue the government has been struggling to resolve. In a widely reported case, EPO in 1995 granted a patent on the anti-fungal properties of neem. India opposed the patent, which was finally revoked and invalidated after 10 years of litigation. Again in 1995, USPTO had granted a patent on the wound healing properties of turmeric that was revoked in 1997.

“India did fight successfully the revocation of patent on wound healing property of turmeric at United States Patent and Trademark Office and (a) patent on anti-fungal properties of neem at European Patent Office,” Niscair director V.K. Gupta, who is also lead coordinator for the project, said in a 2006 report. “However…(a) legal battle on revocation is extremely expensive and time consuming.”

For anything to be granted a patent, the applicant must prove that it is novel and not previously known. “Indian traditional knowledge is prior art, which means it is already known publicly. Hence, once TKDL opens out to EPO, anyone applying for a patent on which we hold traditional knowledge will not be successful,” said Elizabeth Varkey, an advocate at the Kerala high court.

“Any patents that have been granted already and fall under TKDL can also be revoked, though that would be a long, expensive process,” she said.

EPO, however, is unsure of the extent to which TKDL will be applicable. “Many cases affected by aspects of traditional knowledge are occurring in the field of medicinal preparations. We estimate that at the EPO, about 100 patent applications per year are related to such aspects, but not all of them relate to subjects covered by TKDL,” Osterwalder said.

There is an argument that the database be used other ways too. “The government should also think about negotiating access rights (to TKDL) to private parties and other non-governmental entities. Given that the new chemical entities pipeline is drying up, innovators need to focus more on traditional knowledge that offer potentially unique insights for new drugs,” said Shamnad Basheer, professor of intellectual property law at the National University of Juridical Sciences, Kolkata.

“Also private parties could then challenge patent applications that misappropriate Indian traditional knowledge.”

The comment by Shamnad Basheer quoted above on granting access rights to private parties and NGOs is interesting but likely to raise issues of compensation for use of this knowledge by private parties. The codification of this knowledge in a repository owned by the government will have ramifications for who will now benefit from this.

Kamal Nath has clarified that the six-month ban on chinese toy imports into India was for public health and safety reasons. Reuters reports:

India’s trade minister said on Friday the government’s decision to ban imports of Chinese toys was taken on the grounds of public safety and the move was compatible with World Trade Organisation rules.

Last month, India banned imports of several types of toys from China for six months "in the public interest" but without giving further details of why, a move that pleased local manufacturers but shocked importers.

"The question of banning Chinese toys was on the grounds of public health and safety," Trade Minister Kamal Nath told reporters after a conference.

"It is a matter which is of public concern rather than commercial, and public concern has to be given priority over commercial concern," he added.

On Wednesday, the China Daily newspaper reported that China may ask the WTO to investigate the six-month import ban, citing a source close to the matter.

The Chinese government will probably ask the global trade regulator to look into whether the move violates its laws, the state-owned paper said, quoting a source who asked not to be named.

"Of course, it is for China to establish this," Nath said.

"We are fully compliant with WTO … Before we take any action we make it sure it is WTO compatible," he added.

To scotch any potential challenge or complaint from China, it would probably be advisable for the DGFT to issue a fresh notification imposing the ban but this time stating these reasons clearly in the notification. This would overcome any objection to the present notification on the ground that the absence of reasons violates principles of natural justice. Further, stating the public health interest in the notification itself will help counter allegations that the prohibition was issued for protectionist reasons. A fresh notification would pre-empt any challenge of the ban by way of writ petition by an Indian importer before a High Court or the Supreme Court of India. (Though the Foreign Trade Development and Regulation Act provides for appellate and revisionary jurisdiction, these provisions won’t apply here.) 

For some background on Indian administrative law and Supreme Court rulings on the obligation to give reasons in support of administrative action when such action affects rights or liabilities see here. The statute under which the notification has been issued [the Foreign Trade (Development and Regulation) Act, 1992] can be found on the DGFT website here under the notifications link.

India made the following statement to the General Council of the WTO in its intervention on the seizure of Indian generics (bound for Brazil) by the Dutch authorities:

WTO General Council Meeting February 03, 2008

INTERVENTION by INDIA (under agenda item ‘Other Business’)

Mr Chairman,

In the last few months, Dutch customs authorities have seized several consignments of generic drugs of Indian companies on grounds of alleged IP violations. Seizure of the consignment of losartan potassium in December, 2008 was one such case of what is emerging as a clear pattern. Such instances cause us great concern due to their systemic and far reaching implications. In addition to going against the spirit of a rule based trading system and impeding free trade, such acts represent a distorted use of the international IP system and circumscribe TRIPS flexibilities. Repeat of such actions may have an impact on exporters’ choice of transit routes, which may affect the economics of trade of pharmaceutical products and consequently, have a deleterious effect on access to essential drugs and public health budgets of recipient countries.

Losartan Potassium, used in treatment of hypertension, is a perfectly IP legitimate generic drug in both India and Brazil. Trade of such a drug is also perfectly legitimate. The WTO rule based system provides for freedom of transit by the most economical and convenient routes and without unnecessary delays and restrictions. The act of seizure by the Dutch authorities is therefore, a denial of the rule based system which we seek to build and strengthen in the WTO. The concept of ‘territoriality’ is a key stone in the edifice of the TRIPS Agreement. There are no indications that the drug consignment was meant for the markets of the EC. Seizure, and initiating procedures for destruction of such consignments, violates this key principle. Members have always strived for a balance between public health concerns and protection and enforcement of IPRs. The decisions on Public Heath are a valuable part of the WTO acquis and need to be adhered to in letter and spirit. It is ironical that while on one hand WTO has taken steps to promote access to affordable medicines and remove obstacles to proper use of TRIPS flexibilities, on the other hand some Members seek to negate the same by seizing drug consignments in transit.

Mr. Chairman, the importance of generic drugs and their essentiality may vary in inverse proportion to the level of development of a country. Therefore, high importance is attached to generic drugs in developing countries and particularly in the LDCs. Barriers to legitimate trade of generic drugs will seriously impair the efforts of organizations like the Medecins Sans Frontieres (MSF), Clinton Foundation, Bill and Melinda Gates Foundation and a whole lot of other organizations engaged in providing medicines and improving public health in the least developed parts of the world.

I would also like to draw the attention of Members to another trend that is acquiring huge dimensions. This is the effort to implement the protection and enforcement of IPRs in a maximalist manner and thereby upset the delicate balance between rights of IPR holders and the public policy objectives under the TRIPS Agreement. A coordinated approach is being witnessed in several international fora like the World Customs Organisation, World Health Organisation, Universal Postal Organisation etc. to promote the IP maximalist agenda. We also note with dismay efforts by some Members to link safe and efficacious but low cost generics with counterfeit medicines, which is essentially an IPR issue. There is an attempt to enlarge the definition of counterfeits beyond its definition in the TRIPS Agreement, to set maximalist enforcement norms, and to include TRIPS plus provisions in RTAs. These are subtle and concerted ways of circumscribing the flexibilities of the TRIPS Agreement. They also run counter to the spirit of the TRIPS Agreement which is a minimum standards agreement. And, this is certainly counter to the understanding given to developing countries when the TRIPS Agreement was being negotiated.

Mr. Chairman, India attaches the highest importance to protection and enforcement of IPRs in accordance with the TRIPS Agreement. However, we do not see the Agreement as divorced from the Objectives and Principles set out in Art 7 and 8 of the Agreement. Efforts to enshrine new, maximalist TRIPS plus provisions in other forums will seriously undermine the delicate balance in the TRIPS Agreement and raise systemic issues.

I would like to conclude, Mr Chairman, by reverting to the issue of seizure of various drug consignments by the Dutch authorities. We have raised the issue here with the expectation that the EC will urgently review the relevant regulations and the actions of the national authorities based on such regulations, and bring them in conformity with the letter and spirit of the TRIPS Agreement and the rules-based WTO system.

For statements made by Brazil and the EU, see here.

See previous posts on this issue click here. 

Whats new?

The China Daily reports that the Chinese government is considering complaining to the WTO DSB against the recent Indian notification that banned imports of Chinese toys but omitted to specify the reasons for the ban.

The Chinese government is mulling a response to India’s recent ban on Chinese toy imports and will probably ask the World Trade Organization to investigate whether the ban violates WTO laws, said a person close to the issue on condition of anonymity.

This comes after a similar move in which China asked the WTO to investigate anti-subsidy and anti-dumping duties imposed by the US on four categories of imports from China in December.

Experts said it is a sign that China will be leveraging WTO rules to help protect its manufacturers from illegal trade barriers and punitive measures by its trading partners at a time when protectionism is growing amid the global economic recession.

…

"The ban cannot hold water. The Indian side is doomed to lose in the court if the Chinese government appealed to the WTO Dispute Settlement Body," said Fu Donghui, managing director of Allbright Law Firm Beijing, which deals with WTO-related cases.

…

"In the past, the Chinese government always kept silent. But the situation is changing, and resorting to the WTO is a right choice to prevent the trade partners from abusing the WTO regulations," said Fu.

The notification issued by the Directorate General of Foreign Trade should be here but is not. GATT article X calls for prompt publication of such notifications "in such a manner as to enable governments and traders to become acquainted with them" No doubt the notification has been published in the official gazette, but it is not on the DGFT website. How are traders to find the notification?

Correction dated 7 January 2008: The DGFT notification is on their website here.  For some reason did not find it before.

This report from a local mumbai news site has some more. Apparently, the notification mentions it is issued in public interest but gives no reasons as my earlier post had noted.

The notification "without reasons" clearly violates Indian administrative law as clarified by numerous Supreme Court decisions and could be challenged in an Indian Court by an importer or consumer of chinese toys. Further, even GATT article X:3(a) requires that WTO member governments administer their laws in a uniform, impartial and reasonable manner. The absence of reasons would seem to make out a case under this provision also.

There seems to be another problem with the notification. Apparently, and this is from news reports only, the notification bans direct imports from China but does not address imports of Chinese toys from third countries. This could also lay open the notification to legal challenge. The argument would be that the notification fails to achieve its objective of "safety" and the ban is being applied in a non-uniform manner.

Meanwhile, the Economic Times had reported earlier that the reason for the six month ban was to enable the government to formulate acceptable safety standards in this period. Why did the government not decide to issue emergency safety standards immediately? I suspect this was because many Indian toys would probably also have failed to comply. An Economic Times report noted that Indian toy manufacturers in the unorganized sector needed time to be able to comply with safety standards.

The background for this whole development seems to be a public interest litigation (PIL) that was filed before the Mumbai High Court by a consumer organization in 2007. The Maharashtra Pollution Control Board had apparently informed the Court in April 2008 that Chinese toys in India were found to contain unacceptable levels of toxins. See here. This PIL deals with both imported and Indian-made toys.

An outlook article has more on the lack of standards issue:

Following a report by Delhi-based NGO Toxics Link in 2006-07, highlighting the presence of toxic materials in a range of toys priced below Rs 150 ($3) found across the country, the Consumer Welfare Association of Mumbai filed the PIL. An added provocation was the government failure to check imports of ‘harmful’ toys. Says Rajiv Chavan, the advocate representing CWA, "There are two issues we have raised: the import of toys and the manufacturing of Indian toys." Indian toys meet around 50 per cent of the Rs 10,000-crore domestic market. According to Toxics Link, high levels of lead, cadmium and phthalates (a chemical used for softening plastics) can be found in most cheap toys—be they Indian or imported—bought by a majority of urban children. "How does the ban on Chinese toys protect consumers’ interest considering half the market is mostly cheap made-in-India toys with no control on quality," asks Ravi Agarwal of Toxics Link. "There is need for a mandatory standard to protect young consumers," he adds.

And spurred on by the judiciary, various ministries—consumer affairs, health, commerce, micro, small and medium enterprises (MSME)—have begun to study ways to enforce quality standards. The bad news: don’t expect safer toys in a hurry. Take, for instance, the norms put out by the Bureau of Indian Standards (BIS), which fall far short of global standards. While the European Commission had 11 safety standards for toys, India had only three—which deal with the mechanical and physical safety and flammability of toys. "The BIS calls these three standards equivalent to European standards…. But for other areas like organic, chemicals, paints and solvents used, we have nothing," complains A.M. Mascarenhas, secretary, Mumbai CWA.

Consumer affairs secretary Yashwant Bhave admits many issues are yet to be looked at. Though BIS has standards, "the issue is of making them compulsory", he says.The ministry is studying the legality of making the standards mandatory and whether it would require "mere notification or bringing in legislation", which would mean seeking Parliament approval. Pillai reveals there’s a proposal to make quality standards mandatory for certain products for young children. Simultaneously, the MSME ministry is studying ways to gradually introduce mandatory requirements to regulate toxicity of chemicals used in toys. "We have been told that in the first stage rules will be set for PVC and metal toys," says Ashok Jain, president, All India Toy Manufacturers Association. To support industry, more toy-testing labs will be set up (there are only four now).

Then, recently, the health ministry constituted a committee headed by Dr Y.K. Gupta of the AIIMS pharmacology department to study the veracity of the Toxics Link report. Says Dr R.S. Dhaliwal of ICMR and coordinator of the seven-member panel, "The health effects of metals are already known. What we are studying is the levels of toxicity in toys and its uptake or migration into the human body." While the domestic toy industry is ready to abide by better quality standards, this will take time: the court has been informed that the process to gauge levels of chemicals in toys can take up to two years.

Why can’t the government issue emergency safety and health standards under Article 2:10 of the agreement on technical barriers to trade?