LDCs request an indefinite extension of the transition period to comply with TRIPS

By Lieve Vanleeuw

The Council for Trade Related Aspects of Intellectual Property Rights, or “Council for Trips”, on November 7, 2012 received a request from least developed country members for an extension of their transition period under article 66.1 of the TRIPS agreement.

Article 66.1 recognises the “need and requirements of least-developed country members, their economic, financial and administrative constraints, and their need for flexibility to create a viable technological base”. LCDs were therefore not required to comply with the TRIPS agreement for an initial period of 11 years which could be extended.

In other words, article 66.1 gave LCDs the freedom to work on a domestic pharmaceutical industry without having to worry about existing patents. Even intellectual property rules enacted before signing the TRIPS agreement would not need to be enforced during their 10-year transition period. Seeing that LCDs would have to start that industry – and their technological base more broadly – from zero, they were granted an open field without restrictions. This transit period originally started in 1995 and would have expired in 2006.

In the aftermath of the Doha Declaration on the TRIPS Agreement and Public Health, in 2002, least developed countries were granted two special and limited extensions of their transition period on pharmaceutical patents, data protections, and market exclusivity until 2016. In 2005, however, when LDCs sought a third broader extension of their 2006 TRIPS transition period for all IPRs, the USA and other developed-country WTO members, succeeded in inserting a provision that LCDs could not revoke any of the TRIPS-level IP protections that had previously been granted during the requested, extended transition period (set to expire on June 30, 2013).

The open field was now effectively being restricted by patents and other intellectual property rights that were legislated earlier. The open field to bypass intellectual property that developed countries had enjoyed for centuries and which had spurred their industrial and technological development, was now being denied to developing countries.

With the expiration of the 2005 extension coming up in July 2013, the LDC group headed by Haiti has recently requested a new extension of the transition period. Arguing that “developing a viable technological base is a long-term process”, the LDC group requested a “continuing waiver from TRIPS in order to be able to grow economically viable industrial and technological sectors, to consolidate capacity, and to work their way up the technological chain.” However, this time around, the extension of the transition period is requested for “as long as the WTO member remains a least developed country.”

The LDC members made a formal request that would recognize their special needs and requirements, and the economic, financial and administrative constraints that they continue to face. If the proposed extension is adopted, which appears to be mandatory once a properly motivated request is filed, LCDs “shall therefor not be required to apply the provisions of the Agreement, …, until they cease to be a least developed country Member. Moreover, since the decision was based on article 66.1 and not on the 2013 extension, the restrictions cementing in past IPRs included in that extension will no longer apply. LCDs will no longer have to continue to grant IP rights allowed in earlier IP law and once again would have freedom to pursue economic development, an expanded technological base, and improved capacity free of the constraints imposed by IP monopoly rights.

Even though South Africa is not a least developed country, the request by the LCD group raises attention to several issues that South Africa needs to consider when drafting its IP law. The fact that LCDs issue a request to be excluded from the provisions in the TRIPS agreement signals that IP laws don’t benefit developing countries. Countries that lack an established industry and a high level technological base do not benefit from TRIPS. On the contrary, the development of their industry and technological base will be restricted by patents and intellectual property rights.

Although South Africa has a reasonably skilled industry and technological base, strict IP laws will not benefit local industry as it will demotivate generic producers to increase their capacity and scope. In turn this will increase the cost of medicines. It’s therefore important for SA to exploit the existing policy space to use TRIPS flexibilities and write them effectively into our law.

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