TRIPS: India - Patent Protection for Pharmaceutical and Agricultural Chemical Products A. Interpretation of TRIPS: "Legitimate Expectations" B. Treaty Interpretation: "Good Faith Interpretation" and "Legitimate Expectations" C. Article 70.8 Interpreted According to Article 31 of the Vienna Convention D. Review of a Country's Law by a Foreign Adjudicative Body E. Article 70.9: Reading a Provision at Face Value F. Article 63: The Scope of Authority in Dispute Resolution V. Findings of the Appellate Body A. Interpretation of TRIPS: "Legitimate Expectations" To what extent should expectations color the interpretation of a treaty? What type of, if any, expectations should be considered when interpreting a treaty provision? The answers to these questions often are the key to favoring one interpretation over other alternative readings in the face of textual ambiguity. In the case at hand, the issue of expectations arises in translating textual treaty requirements into reality. When a "mailbox system" is transformed from words in the TRIPS agreement into a systemic reality, expectations play a role in shaping and dictating how a mailbox system should function in a country. For example, would a mailbox system created with massive administrative filing barriers meet the expectations of the parties to TRIPS? The Appellate Body devoted a good deal of attention in its report to examining and critiquing the Panel's reliance on the expectations of parties as a tool in interpreting TRIPS. In a formalistic analysis, the Appellate Body held that the Panel merged and confused two different concepts of expectations in GATT practice.38 The first concept is protection of the expectations of parties in regard to the competitive relationship of their products vis-à-vis other products. This concept arises in violation complaints filed by GATT Members.39 Violation complaints are covered under GATT Article XXIII (1)(a). The second concept is protection of the reasonable expectations of parties in regard to market access concessions, a concept that arises in the context of non-violation complaints.40 Such complaints are also known as annulment or impairment claims and are different from violation complaints in that they do not involve an accusation that a Member is not fulfilling its obligations under an agreement but rather that measures implemented by the Member have somehow impaired or annulled GATT rights. These non-violation complaints are covered under GATT Article XXIII (1)(b).41 Article 64.2 of TRIPS stipulates that only violation complaints under GATT Article XXIII (1)(a) will be allowed during the first five years of TRIPS implementation.42 The complaint against India falls within this timeframe and is indeed a violation complaint. Because of the nature of the complaint and the requirement in TRIPS that only violation complaints be heard at this time, only concepts that relate to the interpretation of TRIPS in regard to violation of its provisions should be applicable. The Appellate Body believed that the Panel's invocation of and reliance on the legitimate expectations of parties as to the conditions of competition is a hybrid of concerns stemming from the realm of violation and non-violation complaints, and as such it is an invalid tool for deciding cases involving TRIPS compliance. The Appellate Body focused on the Panel's use of the words "legitimate expectations" and categorized this usage as an importation of the concern for "reasonable expectations" that applies to non-violation complaints. The Appellate Body apparently believed that the Panel's invocation of "legitimate expectations" improperly colored its interpretation of Articles 70.8 and 70.9. The fact that the Appellate Body picked up on this justification of the Panel indicates that in staking its place as an entity of ultimate review, the Appellate Body will carefully scrutinize not only the particular reasons given for a decision but also any broader underpinnings that a Panel may cite as influential. B. Treaty Interpretation: "Good Faith Interpretation" and "Legitimate Expectations" To what extent does the requirement of "good faith interpretation" of Article 31 of the Vienna Convention necessitate taking into consideration the expectations of parties? Must a treaty be interpreted in "good faith" in line with the words of the treaty, the intent of the parties, and the expectations of the parties? If so, how can expectations be determined in order to properly interpret a treaty in good faith? Moreover what does "good faith" include and what does it not include? In addition to citing GATT practices, the Panel relied on Article 31 of the Vienna Convention in its holding that legitimate expectations of parties must be taken into consideration when interpreting a treaty.43 The Appellate Body attacked the Panel's reading of "good faith interpretation" as requiring a broad inquiry into the expectations of parties, a task that to a great degree involves reverse engineering, i.e. taking a treaty provision and abstracting from it the expectations that likely underlie it. The Appellate Body believed that the Panel went too far in interpreting the meaning of "legitimate expectations" and strayed too far from the text of the agreement. The Panel misunderstands the concept of legitimate expectations in the context of the customary rules of interpretation of public international law. The legitimate expectations of the parties to a treaty are reflected in the language of the treaty itself. The duty of a treaty interpreter is to examine the words of the treaty to determine the intentions of the parties. This should be done in accordance with the principles of treaty interpretation set out in Article 31 of the Vienna Convention. But these principles of interpretation neither require nor condone the imputation into a treaty of words that are not there or the importation into a treaty of concepts that were not intended.44 Thus, according to the Appellate Body, "good faith interpretation" does not include looking to legitimate expectations of parties to a treaty unless these expectations are grounded in the language of the treaty. The Appellate Body thus dismissed an unbounded analysis of the legitimate expectations of the parties to TRIPS, an endeavor that would be subjective and mutable (and not in good faith) if not focused on the language of the agreement. An analysis of legitimate expectations then is a necessary component of treaty interpretation, but only as far as the expectations are expressed in the wording of the treaty. This holding characterizes the tone of the decision of the Appellate Body, which in contrast to the Panel Report focuses much more on flat, formalistic treaty interpretation and looks less to the "softer" side of the expectations underlying treaty obligations. C. Article 70.8 Interpreted According to Article 31 of the Vienna Convention After criticizing the Panel's approach to interpreting TRIPS provisions, the Appellate Body gave an example of how to properly apply Vienna Convention interpretive rules in its discussion of the requirements under TRIPS Article 70.8. Article 31 of the Vienna Convention requires that words in a treaty be read in context and in light of the objects and purposes of the treaty. How far does context extend and how far should one look to determine what the objects and purposes of a treaty are? According to the Appellate Body in this decision, any consideration of context, objects, and purpose must be rather narrow and tied as closely as possible to the words of the treaty. One important issue in this case is the meaning of the word "means" in TRIPS Article 70.8(a). In order to determine whether or not India established a means for filing mailbox applications, the Appellate Body first turned to a discussion of what is meant by the word "means." According to Vienna Convention Article 31, this word must be read according to its ordinary meaning in context and in light of the objects and purposes of the TRIPS agreement.45 Rather than looking to the manipulable realm of legitimate expectations, the Appellate Body pointed to the immediate context of Article 70.8(a) and noted that for the eventual patent reviews and grants provided for by Articles 70.8 (b) and (c) to be effective, Article 70.8(a) requires that "legally sound" dates of priority be established for mailbox applications.46 The Appellate Body thus read "means" in a straightforward manner, as a step toward accomplishing an objective. In the opinion of the Appellate Body, this objective was the establishment of a legally sound priority date so that a product's novelty could be preserved and it could eventually be examined for patentability. Thus, a system could only be a "means" according to this interpretation if it effectively allowed for the establishment of legally sound priority dates. This, according to the Appellate was the ordinary meaning of "means," and the context to be considered was the immediate context of Article 70.8. Having determined that "means" in this context necessitated establishing a sound legal bases for preserving a product's novelty, the Appellate Body next turned to the question of what constitutes a sound legal basis for establishing priority dates under Indian law. D. Review of a Country's Law by a Foreign Adjudicative Body Of great importance to dispute settlement in any international context is the scope and propriety of a foreign, multinational, or supranational body's examination or review of the law of a country. To what extent can a "foreign" tribunal determine what the law of a country is? In its appeal, India relied on TRIPS Article 1.1 in claiming that it was afforded the right to choose its method of implementation of its Article 70.8(a) obligations. Particularly, if India deemed administrative instructions to be a sound basis for establishing priority dates under Indian law then the Panel had no right to question this choice.47 While the Appellate Body agreed that India could choose its method of implementation, it strongly rejected the contention that India was the final arbiter of whether or not the system of administrative instructions complied with obligations under Article 70.8.48 The Appellate Body stated that in order to determine whether India met its Article 70.8 obligations, the Panel did not have to decide or otherwise improperly delve into Indian law, but rather merely had to perform an assessment as to whether or not India's laws and practices were in line with the obligations in TRIPS. The Appellate Body was adamant that WTO Dispute Resolution System had the right to make such an assessment. The Panel did not perform any improper interpretation of Indian law for (...) in this case, the Panel was not interpreting Indian law "as such"; rather, the Panel was examining Indian law solely for the purpose of determining whether India had met its obligations under the TRIPS Agreement. To say that the Panel should have done other-wise would be to say that only India can assess whether Indian law is consistent with India's obligations under the WTO Agreement. This, clearly, cannot be so.49 In asserting the power of the WTO dispute resolution system in general, the Appellate Body stated that the Panel properly looked to the relationship between the Patent Act of 1970's provision calling for rejection of applications for pharmaceutical and agricultural chemical products and the administrative scheme allowing for the filing of such applications. Without venturing into the murky waters of legitimate expectations, the Appellate Body simply affirmed the Panel's decision that the inconsistency between the 1970 Patent Act and the administrative instructions constituted a violation of India's obligations under Article 70.8(a) to establish a proper means for filing mailbox applications because it did not allow for provision of legally sound priority dates for pharmaceutical and agricultural chemical products.50 The Appellate Body's reasoning in this holding is applicable to questions of adjudicative authority for any foreign or international body asked to examine the laws of one or more country. The Appellate Body's approach stands out as being authoritative and forceful yet sensitive to the understanding that a country's interpretation of its laws should be controlling. This understanding cannot be taken too far though, and this decision clearly notes that a body such as that convened by the WTO certainly has the authority to examine and assess a country's law, especially in order to determine how that law or the practices of a country square up against obligations contained in multilateral agreements. E. Article 70.9: Reading a Provision at Face Value The Appellate Body cut quickly to the chase in its treatment of India's obligations under Article 70.9. "India acknowledged before the Panel and in this appeal that, under Indian law, it is necessary to enact legislation in order to grant exclusive marketing rights in compliance with the provisions of Article 70.9."51 Because there was no such legislation in force in India, the Appellate Body ruled that India was in violation of the obligations in Article 70.9 that arose as of January 1, 1995.52 The Appellate Body came to the same conclusion as the Panel but in much simpler, more straightforward terms by reading the language of Article 70.9 at what the Appellate Body apparently considered to be clear face value. The Appellate Body apparently did not consider it necessary to engage in further discussion or analysis, thus indicating that where the language of a treaty speaks clearly, no further inquiry is necessary. F. Article 63: The Scope of Authority in Dispute Resolution In any litigation, especially in the international context, jurisdictional issues often prove to be as important and as controversial as the substantive aspects of a case. Likewise, it is important to determine the bounds of the authority for a dispute resolution body such as a Panel formed under the auspices of the WTO. Obviously a Panel operating under the WTO dispute resolution umbrella must be limited in its authoritative scope, especially since this dispute resolution system is in its fledgling stage and must tread somewhat lightly in order to maintain its legitimacy in the face of state sovereignty concerns. As with all matters in which nationals of different countries, or in this case, actual foreign states, are parties, the scope of authority of an adjudicative body should be clearly settled from the beginning. In examining the propriety of the Panel's authority to adjudicate the Article 63 claim raised by the U.S., the Appellate Body took a straightforward, textualist approach in interpreting the provisions before it. First, the Appellate Body examined the terms of reference for the Panel and noted the absence of any Article 63 claim.53 The Appellate Body relied on a past WTO decision (European Communities - Bananas) and on Article 6.2 of the Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU) in noting that claims but not particular arguments to support these claims must be specified in the terms of reference that establish a Panel and circumscribe its authority.54 While the Panel found that the problem identified in the terms of reference could be read broadly enough to include an Article 63 claim, the Appellate Body was less liberal in its reading and noted that the language used to define the problem that specified claims "including but not limited to" Articles 70.8 and 70.9 violations was not sufficient to sweep in an Article 63 claim.55 The Appellate Body was not swayed by the arguments cited by the Panel including an assertion of unfairness since the Article 63 claim was merely a response to India's written submission and declaration that it in fact did have a mailbox system in place. In effect, the Appellate Body held that for an Article 63 claim to be heard, the claim must have been made initially. The application of a hard and fast rule in this instance has the effect of punishing the U.S. for a lack of diligence in research that could have identified the existence of the administrative scheme in time to include this claim in its original complaint. Alternatively, perhaps the Appellate Body simply did not believe that the U.S. in fact did not know about the administrative instructions. The possibility exists that the U.S. knew early on about the administrative system for accepting patent applications for pharmaceutical and agricultural chemical products but did not want to raise this issue for fear of thereby admitting that India did in fact have an identifiable "means" in place that could satisfy its Article 70.8 obligations. In this light, disallowing the Article 63 claim signals disapproval of "hiding the ball" and failing to disclose all possible claims for strategic reasons. The Appellate Body also looked to DSU Article 7 as the basis for defining the jurisdictional limits of a dispute resolution Panel. This provision states that the jurisdiction of a Panel is determined by its terms of reference. While a Panel may establish its own working procedures, it must operate within the bounds set out in the DSU.56 Thus, the parties' agreement to allow in claims after the terms of reference for the Panel were established should have been invalid. The terms of reference did not raise an Article 63 claim; therefore, the Panel lacked authority to consider this line of attack. The Appellate Body thereby reversed the finding of the Panel in regard to India's failure to comply with Article 63.57 In narrowly construing the scope of a panel's authority to hear claims, the Appellate Body settled on a narrowly bounded jurisdictional approach. The WTO dispute resolution system has thus been interpreted by its highest body to be a system of limited reach, appropriately empowered only to hear claims properly brought before it in a fashion that gives parties ample notice of the matters that will be covered in the dispute resolution process. While electing to cut back on the reach of dispute resolution jurisdiction, the Appellate Body in this case showed that within these bounds, the WTO system is in fact quite capable of effectively deciding matters specifically related to trade treaties and agreements as well as those that draw on and impinge upon broader matters of concern in public international law. 38 WTO Dispute Resolution Body, Report of the Appellate Body on India - Patent Protection for Pharmaceutical and Agricultural Chemical Products, WT/DS50/AB/R (Dec. 19, 1997) (hereinafter Appellate Body Report), Sec. 36. 39 Id. 40 Id. 41 Id. at Sec. 39. 42 Id. at Sec. 42. 43 Panel Report, Sec. 7.18. 44 Appellate Body Report, Sec. 45. 45 Id. at Sec. 55. 46 Id. at Sec. 58. 47 Id. at Sec. 59. 48 Id. at Sec. 66. 49 Id. 50 Id. at Sec. 70. 51 Id. at Sec. 80. 52 Id. at Sec. 83. 53 Id. at Sec. 86. 54 Id. at Sec. 88. 55 Id. at Sec. 90. 56 Id. at Sec. 92. 57 Id. at Sec. 96.
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