RESTRICTEDWORLD TRADE
ORGANIZATIONIP/C/W/212
27 September 2000
(00-3905)
Council for Trade-Related Aspects
of Intellectual Property RightsOriginal:  English
NON-VIOLATION COMPLAINTS UNDER THE AGREEMENT ON
TRADE-RELATED ASPECTS OF INTELLECTUAL PROPERTY
RIGHTS (TRIPS):  DISCUSSION PAPER
Communication from Australia
The following communication, dated 20 September 2000, has been received from the
Permanent Mission of Australia with the request that it be circulated to Members.
_______________
I. INTRODUCTION
A transparent, predictable and equitable mechanism for settling trade-related disputes
concerning intellectual property (IP) issues is one of the key systemic benefits of the TRIPS
Agreement.  Article 64 of the TRIPS Agreement however still reflects uncertainty about the full scope
and modalities of IP-related disputes that can be settled through the coverage of the TRIPS Agreement
under the WTO Dispute Settlement Understanding (D SU).  Under this provision, the TRIPS Council
has an undischarged responsibility to develop recommendations on the scope and modalities of
so-called "non-violation" and "situation" disputes under the TRIPS Agreement.
WTO Members have a shared interest in clarity and predictability of the dispute settlement
mechanism as it applies to their rights and obligations under the TRIPS Agreement.  There is
accordingly a common interest in addressing the current lack of clarity about non-violation disputes.
Despite its specific mandate, the TRIPS Council has given very limited consideration to the substance
of the issue.  It is therefore understandable that a number of Members harbour reservations about thepossible application of non-violation remedies unde r the TRIPS Agreement.  There are sound reasons
for intensified TRIPS Council work on this issue in accordance with its original mandate:
• failure to address the issue collectively may lead to the matter being determined case by
case in the course of specific dispute settlement processes, with a consequent loss ofpredictability and clarity;  and
• any future Ministerial Conference consideration of this question would be better informed
and more likely to be founded on a consensus understanding of the background issues.
This paper does not put forward a formal position on scope and modalities of non-violation
disputes, but rather seeks to promote discussion in the light of the common interest in a collective
approach to the issue.IP/C/W/212
Page 2
II. RESPONSIBILITY OF THE TRIPS COUNCIL
For the first five years after its entry into force - until January 2000 - TRIPS precluded
disputes other than those involving a direct violation of its provisions ("non-violation" and "situation"
disputes).  During the moratorium period (non-violation moratorium), Article 64.3 specifically
required the TRIPS Council to develop recommendations on the scope and modalities ofnon-violation type complaints and to submit its recommendations to the Ministerial Conference for
approval.  That five-year moratorium has now expired and can only be legally extended by a
consensus decision of the Ministerial Conference.  In the nine months since the moratorium expired,
no Member has initiated a non-violation dispute.
To date, there have been only limited substantive discussions on non-violation by the TRIPS
Council and no recommendations have been framed.  The TRIPS Council has therefore an
undischarged responsibility to prepare recommendations on the scope and modalities of non-violationTRIPS disputes and should still endeavour to address this issue.
Hence, Australia concurs with the view of some delegations that the moratorium has
technically expired, but equally accepts the view that work on scope and modalities should continue
in earnest.  The alternative, which is the ad hoc development of new principles through individual
disputes, is a less satisfactory way of dealing with what is an inherently complex, systemic andconsequential issue.
While this comment was directly applicable to the period of the moratorium, the views of the
Appellate Body in the India - Patents I  case should be noted:
Whether or not "non-violation" complaints should be available for disputes under the
TRIPS Agreement is a matter that remains to be determined by the Council for Trade-
Related Aspects of Intellectual Property … pursuant to Article 64.3 of the TRIPS
Agreement.  It is not a matter to be resolved through interpretation by panels or by
the Appellate Body.
1
As a matter of interpretation, the failure of the TRIPS Council to produce recommendations in
the specified time-frame does not mean that it is now  precluded from continuing with that task.  The
TRIPS Agreement specifies that it "shall" develop recommendations within the five-year period, but
nothing in the TRIPS text prohibits development of recommendations at a later period.  To the
contrary, given that a future Ministerial Conference  is likely to return to this issue, there is a
continuing responsibility on the part of the TRIPS Council to develop recommendations for the
Conference to consider in line with its original mandate.  The sequence established under Article 64 -
TRIPS Council recommendations on scope and modalities, followed by a consensus Ministerial
Conference decision - should ideally be followed.
Possible extension of moratorium
The TRIPS Council only has a mandate to make recommendations on the technical issue of
scope and modalities, and not on the question of extending the non-violation moratorium.  Extension
of the non-violation moratorium is a matter for the Ministerial Conference and may form part of aGeneral Council package addressing various aspects of implementation.  Even so, there may be an
indirect linkage in that progress towards greater understanding of the nature of non-violation disputes
under the TRIPS Agreement, and progress towards recommendations on scope and modalities may
facilitate the required consensus decision on the moratorium.  The possibility of an extension of the
                                                     
1 Appellate Body Report, India - Patent Protection for Pharmaceutical and Agricultural Chemical
Products, complaint by the United States, adopted on 16 January 1998, WT/DS50/AB/R ( India - Patents I),
paragraph 42.IP/C/W/212
Page 3
moratorium should, however, be dealt with separately from the substantive work on scope and
modalities.
III. POSSIBLE RECOMMENDATIONS ON THE NON-VIOLATION ISSUE
Key issues
The key issues to be considered in formulating TRIPS Council recommendations are:
• What is meant by "scope" and "modalities"?
• What is meant by the key concepts of:
- "benefit accruing directly or indirectly under the Agreement";
-" nullification or impairment  "of such a benefit;
-"impediment to the attainment of any objective"  of TRIPS;  and
• What bearing do these concepts have on "scope" and "modalities"?
Possible approaches to interpretation
Consistent with the general principles of treaty interpretation2, we would suggest there are
three complementary approaches to interpreting these key issues:
• analysing the terms in their direct context within the relevant WTO agreements (TRIPS,
DSU and General Agreement on Tariffs and Trade 1994 (GATT 1994));
• reviewing the WTO/GATT dispute settlement practice on non-violation disputes in other
fields (essentially trade in goods);  and
• reviewing the negotiating history of TRIPS.
IV. ANALYSIS IN THE CONTEXT OF TRIPS
A. MEANING OF "SCOPE AND MODALITIES "
Consideration of the meaning of "scope" and "modalities" is necessary in order to give
direction and focus to TRIPS Council discussions and to provide a framework for the Council's
recommendations.
Scope
The word "scope" suggests the range of complaints that could be considered as non-violation
disputes under the TRIPS Agreement - that is, the kind of measures or situations that could give rise
to a non-violation complaint.  It suggests that the range of potential disputes can be bounded in some
way, so that there could be recommendations as to the range of potential disputes that Members agree
are not to be included as non-violation TRIPS disputes.  For example, a recommendation as to scope
could include a proposal that non-violation TRIPS complaints could not be sustained againstlimitations or exceptions to intellectual property ri ghts (IPRs) that are determined to be consistent
                                                     
2 See Vienna Convention on the Law of Treaties, Article 31:  General Rule of Interpretation and
Article 32:  Supplementary means of interpretation.IP/C/W/212
Page 4
with provisions such as Articles 13, 17, 24, 26.2 and 30, and corresponding provisions in the Berne
Convention; or against measures against anti-competitive abuse of IPRs consistent with Article 40.2.
Modalities
"Modalities" suggests that the recommendations could also address the way in which
non-violation disputes are to be considered.  This could extend to consideration of how expected
benefits under the TRIPS Agreement and their nullification and impairment could be assessed, and
how the extent of any nullification and impairme nt, or impediment to TRIPS objectives, could be
determined.  For example, a recommendation as to modalities might list factors to be weighed in
assessing the extent of nullification and impairment of benefits, such as the number of intellectual
property rights affected by the measure or situation under dispute, and the scale of the trade in goods
or services related to those rights.  A recommendation as to modalities may also suggest how thecomplainant might need to discharge the onus of proof in making a non-violation TRIPS complaint.
B. O
BJECT AND PURPOSE
The Vienna Convention on the Law of Treaties (Article 31:  General rule of interpretation)
provides that a "treaty shall be interpreted in g ood faith in accordance with the ordinary meaning to be
given to the terms of the treaty in their context and in the light of its object and purpose".
The non-violation provision of the TRIPS Agreement should, accordingly, be considered in
light of the "object and purpose" of the TRIPS Agreement.  The stated objective of the TRIPS
Agreement is that "the protection and enforcement of intellectual property rights should contribute to
the promotion of technological innovation and to the transfer and dissemination of technology, to the
mutual advantage of producers and users of technological knowledge and in a manner conducive tosocial and economic welfare, and to a balance of rights and obligations" (Article 7).
The TRIPS Agreement's preamble also sheds light on the purpose of the TRIPS Agreement,
and includes references to:
• reducing distortions and impediments to international trade;
• promoting effective and adequate protection of intellectual property rights;
• ensuring that measures and procedures for intellectual property right enforcement do not
become barriers to legitimate trade;  and
• recognizing underlying public policy objectives of national intellectual property systems
and the special needs of the least developed country Members.
The notion of nullification or impairment of benefits as it applies to the TRIPS Agreement
must be coloured by these provisions, as must the notion of impediment to the objectives of the
TRIPS Agreement.  This analysis suggests that rele vant factors to consider in relation to benefits
under the TRIPS Agreement could conceivably include:
• adequate standards and principles concerning the availability, scope and use of
intellectual property rights;
• the balance of rights and obligations;
• the promotion of technological innovation and transfer and dissemination of technology;IP/C/W/212
Page 5
• the mutual advantage of producers and users of technological knowledge;
• social and economic welfare;  and
• ensuring that intellectual property right enforcement does not impede legitimate trade.
C. GATT/WTO D ISPUTE SETTLEMENT PRACTICE ON NON-VIOLATION DISPUTES
Article 64.1 of the TRIPS Agreement establishes a direct linkage between dispute settlement
under TRIPS and the general framework of WTO di spute settlement.  Consideration of GATT/WTO
jurisprudence and experience in relation to non-violation disputes is, accordingly, important to
discussion of the concept of non-violation within TRIPS.
The non-violation provision of GATT Article XXIII:1(b) was initially aimed at preventing
contracting parties from using non-tariff barriers or other policy measures to negate the benefits ofnegotiated tariff concessions.  During the Uruguay Round, the non-violation concept was extended to
apply to other multilateral agreements on trade in goods (in addition to GATT 1994) and to trade in
services.  Article XXIII:1(b) of GATT 1994 allows a member to bring a non-violation complaint
when the negotiated balance of concessions between members is upset by the application of a
measure, whether or not this measure is inconsistent with the provisions of the covered agreement.
The concept of the non-violation dispute in relation to a minimum-standards agreement on
intellectual property protection is relatively indistinct , and is currently less clear than the origin of the
concept in the context of tariff concessions.  N onetheless, it is well established that non-violation
claims are not limited to a tariff context.  At the same time, it should be acknowledged that the
concept of "benefit" is less clear in TRIPS than  in an agreement with specific market access
commitments.  It is fundamental to the TRIPS Agreement that denial of effective or adequate
protection to agreed levels is a distortion or impediment to legitimate international trade.   Presumablythe resultant benefits from TRIPS standards should be those that accrue to Members, and should not
be conflated with the interests of individual private right holders in the exploitation of their
intellectual property rights.
Although no non-violation TRIPS disputes have been raised since the expiration of the
moratorium, non-violation was discussed in the case India - Patents I.   I n  t h a t  c a s e ,  the Appellate
Body discussed two relevant concepts from previous GATT practice:
… One is the concept of protecting the expectations of contracting parties as to the
competitive relationship between their products and the products of other contracting
parties.  This … concept … was developed in the context of violation complaints …
The other is the concept of the protection of the reasonable expectations ofcontracting parties relating to market access concessions.  This … concept … was
developed in the context of non-violation complaints…
3
We also know from GATT jurisprudence that certain essential elements must be established
by a complaining party in order to mount a successful non-violation case.  These are:
• a measure attributable to the respondent party government exists;
• the measure could not reasonably have been expected by the complaining party at the time it
negotiated a commitment with the respondent party;  and
                                                     
3 Appellate Body Report, India - Patents I ;  WT/DS50/AB/R, paragraph 97.IP/C/W/212
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• the measure adversely upsets the competitive relationship between products established by the
commitment in question.4
The 1998 Japan - Film  Panel found that:
…to show nullification or impairment as a result of the application of a measure, it
must be demonstrated that the competit ive position of the imported products subject
to and benefiting from a relevant market access (tariff) concession is being upset by
("nullified or impaired … as the result of") the application of a measure not
reasonably anticipated...5
Accordingly, the benefit a party can legitimately expect to derive from the commitment it has
entered into with another party implies more than  just compliance with the particular provision.6
GATT practice suggests that the benefit involves the creation of a competitive relationship or
competitive opportunities, usually relating to the competitive relationship between imported anddomestically produced goods.  Such benefits usually accrue from tariff concessions.  However, three
Panel Reports
7 have considered non-violation claims based on general obligations rather than specific
tariff concessions and found that GATT Article XXIII:1(b) is not limited to tariff benefits.
It can be seen from the above that some guidance as to the scope and modalities of
non-violation disputes is already provided by both the principles and objectives of the TRIPSAgreement and from TRIPS jurisprudence.  Non-violation claims involve protecting the "reasonable
expectations" of a benefit related to competitiveness in a market which parties have as a result of
agreeing to certain market access concessions.
8
Justifying a non-violation complaint
In respect of GATT Article XXIII:1(b) or (c), it has been said that if a contracting party
brings an Article XXIII case claiming that measure that do not conflict with the provision of the
GATT have nullified or impaired benefits accrui ng to it under the GATT, the party would be called
upon to provide a detailed justification.9  Article 26.1(a) of the DSU, which applies to non-violation
complaints of the type provided for under Article XXIII:1(b) of GATT 1994 requires:
…the complaining party to present a detailed justification in support of any
complaint relating to a measure which does not conflict with the relevant covered
agreement.
                                                     
4 WTO Council for Trade-Related Aspects of Intellectual Property Rights, Non-violation complaints
and the TRIPS Agreement:  Note by the Secretariat, IP/C/W/124, 28 January 1999, page 11.
5 Panel Report, Japan - Measures Affecting Consumer Photographic Film and Paper , adopted on
22 April 1998, WT/DS44/R ( Japan - Film ), paragraph 10.82.
6 This key aspect of the applicability of non-violation complaints was raised in two notes on the subject
prepared by the Secretariat in the course of the Uruguay Round negotiations;  see IP/C/W/124, 28 January 1999,
page 12, footnote 33.
7 1985 Panel Report, European Economic Community - Production Aids Granted on Canned Peaches,
Canned Pears, Canned Fruit Cocktail and Dried Grapes , L/5778, not adopted;  1988 Panel Report on Japan -
Semi-conductors ;  and 1990 Panel Report on United States - 1955 Waiver .
8 The India - Patents I Appellate Body discussed the protection of the "reasonable expectations" of
contracting parties and noted that some of the rules an d procedures concerning non-violation cases have been
codified in Article 26.1 of the WTO Understanding on Rules and Procedures Governing the Settlement of
Disputes, page 3.
9 In the "Agreed Description of the Customary Practice of the GATT in the Field of Dispute Settlement
(Article XXIII:2)" annexed to the Understanding Regard ing Notification, Consultation, Dispute Settlement and
Surveillance adopted on 28 November 1979, at the en d of the Tokyo Round.  BISD 26S/216, paragraph 5.IP/C/W/212
Page 7
This is in direct contrast with violation complaints set out in Article 3.8 of the DSU which
states that:
…where there is an infringement of the obligations assumed under a covered
agreement, the action is considered prima facie to constitute a case of nullification or
impairment.  This means that there is nor mally a presumption that a breach of the
rules has an adverse impact on other Members parties to that covered agreement,
and in such cases, it shall be up to the Member against whom the complaint has been
brought to rebut the charge.
It is incumbent on the complainant to in effect prove that a legitimately expected benefit
under the TRIPS Agreement has been nullified or impaired.  This would need to be done by providing
a detailed, substantiated justification for alleging the complaint.  In the absence of such a detailed
justification, the complaint would not be entertained.  This principle may be one element of a TRIPSCouncil recommendation as to modalities.
The Panel in the Japan - Film case considered that " the non-violation remedy should be
approached with caution and should remain an exceptional remedy".
10  This exceptional nature of the
non-violation remedy might also be covered in a TRIPS Council recommendation.
TRIPS negotiating history
Discussion of the negotiating history of Articl e 64 of the TRIPS Agreement is set out in detail
in the Secretariat Paper on this topic.11  These negotiations provide a further context for interpreting
the concept of non-violation disputes within the TRIPS Agreement.  Some specific factors may
include:
• The choice of the current TRIPS dispute settlement options from those presented to the
Brussels Ministerial Conference at the end of 1990, namely:
- the application tel quel  of GATT dispute settlement procedures as they would
emerge from the Uruguay Round;
- a separate and simplified dispute settlement mechanism (which would not 
have used the language of GATT Article XXIII);  or
- a compromise proposal encompassing application of GATT dispute 
settlement rules, as they would emerge from the Uruguay Round, but with specific provisions relating to TRIPS disputes.
The fact that the negotiators settled for a system within the general GATT/WTO
dispute settlement framework, and the context in which this decision was made, may
be factors worth considering.
• The relationship of negotiations on Article 8 of the TRIPS Agreement with the issue of
non-violation disputes.  Some delegations were concerned about the possible use of
Article 8 to justify measures which, while not inconsistent with TRIPS obligations, might
impair the benefits other members could legitimately expect - in other words, that
Article 8 could be used as a defence in a non-violation case.  Various suggested
modifications along the lines of forbidding members to derogate from their "obligations"
                                                     
10 Panel Report on Japan - Film , WT/DS44/R, paragraph 10.37.
11 WTO Council for Trade-Related Aspects of Intellectual Property Rights, Non-violation complaints
and the TRIPS Agreement:  Note by the Secretariat, IP/C/W/124, 28 January 1999.IP/C/W/212
Page 8
under the TRIPS Agreement were opposed, and Article 8 remained as it is today,
allowing certain "appropriate measures" provided they are "consistent with the
provisions" of the TRIPS Agreement.
Possible elements of a recommendation on scope and modalities
DSU Article 26 sets out the generic modalities for non-violation and situation complaints
brought under all WTO agreements.  The following possible elements of a TRIPS Council
recommendation on scope and modalities are designed to complement these generic requirements.
The elements set out below are based on the various papers submitted on this topic, and on the
foregoing discussion, and are not intended to constitute a formal position on these issues, but to
provide a focus for further analysis and discussi on by the TRIPS Council, with a view to future
agreement on recommendations.
The recommendation could:
• note the exceptional character of the non-violation remedy;
• observe that this should have bearing on the scope of non-violation complaints entertained
concerning the TRIPS Agreement;
• observe that, as to modalities, this also has implications for the burden of proof required to
establish a non-violation complaint;
• observe that to succeed on a claim of non-violation nullification and impairment under the
TRIPS Agreement, a Member should establish that12:
- a benefit accrues to it as a result of the terms of TRIPS, and- for a complaint under GATT XXIII 1(b), the other Member has implemented a
measure that could not have been foreseen during the TRIPS negotiations, and this
measure has nullified or impaired that benefit, and
- for a complaint under GATT XXIII 1(c), an analogous situation has arisen;
• observe that the benefit involved concerns the interests of a Member, and not of an individual
right holder, and accordingly entails some form of systemic interest or systematic nullificationand impairment of a benefit rather than the specific application of a measure to an individual
intellectual property right;
• observe that claims as to expected benefits under the TRIPS Agreement should be assessed
with reference to the preamble, objectives (Article 7) and principles (Article 8) of the TRIPS
Agreement, as well as specific provisions as  to substantive intellectual property law and
performance standards as to enforcement (including the obligation not to impede legitimate
trade) and administration of intellectual property rights (Parts III and IV);
• observe that a non-violation complaint addressed to a measure that was demonstrated
legitimately to serve the objectives of other covered agreements
13 could not be sustained,
especially if the complaint would impair the consistent application of the covered agreements;
                                                     
12 These points are drawn from the United States' Paper, IP/C/W/194, page 9.
13 See the discussion in IP/C/W/194, page 3.IP/C/W/212
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• observe that that non-violation TRIPS complaints should not be sustainable inasmuch as they
relate to limitations or exceptions to intellectual  property rights (IPRs) that are determined to
be consistent with provisions such as Articles 13, 17, 24, 26.2 and 30, and corresponding
provisions in the Berne Convention; or against measures against anti-competitive abuse of
intellectual property rights consistent with Article 40.2;
• list indicative factors to be weighed in assessing the extent of nullification and impairment of
benefits, such as the number of intellectual property rights affected by the measure orsituation under dispute, and the scale of the trade in goods or services related to those rights.
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