The TRIPS Agreement envisages a balance between the promotion of technological innovation and the transfer and dissemination of technology, in addition to a balance in the enjoyment of the benefits accruing to the users and producers of technology. These balances are contained in a number of provisions in the Agreement. The basic concept of balance under TRIPS is, however, contained in the objectives and principles of the Agreement. The principles upon which the balance is to be achieved are, first, that Members in formulating or amending their laws may adopt measures necessary for the protection of public health and nutrition and take measures to promote public interests in sectors of vital importance to their socio-economic and technological development.34 Second, they may adopt appropriate measures to prevent the abuse of intellectual property rights by rights holders or the resort by them to practices that unreasonably restrain trade or adversely affect the international transfer of technology.35
34 Article 8.1.
35 Article 8.2.
The second principle, in particular, should be read as an interpretive principle in favour of the adoption of measures deemed necessary for the promotion of competition and the prevention of abuse of the monopoly position by patent holders including engaging in anti-competitive licensing arrangements. Article 40 of the TRIPS Agreement specifically establishes a regime for the control of anti-competitive practices in contractual licences. Consequently, apart from the measures aimed at improving competitiveness in the pharmaceutical market that a country may take under article 8(2), countries can also take additional measures to control the licensing practices of pharmaceutical companies. By prohibiting the use of terms such as exclusive grant back clauses, clauses that preclude challenges to validity of the patent and coercive packaging, countries can reduce the concentration of market power and improve competition in the pharmaceutical markets.
Finally, trademark and copyright rules can also be used to block competition in the pharmaceutical markets. For example, on the basis of trademark rules, pharmaceutical companies have attempted to block generic prescription or generic substitution rules.36 This is, however, inconsistent with article 16 of the TRIPS Agreement which only requires countries to protect trademark holders against use of their marks where there is a likelihood of confusion.
36 For a discussion on how trademarks are used to block generic substitution in the context of the access to essential medicines see Abbott (2001), p.27.
This means that based on article 16, countries can establish a trademark regime that ensures that trademarks do not become a basis for claims of affirmative market access rights.
Attempts have also been made to use copyright laws to block generic entry. For example, pharmaceutical manufacturers have argued that package labels and inserts that contain physician and consumer information are protected by copyright and as such generic producers cannot use similar information.37 Again, this is a claim that goes beyond the rights conferred for copyright under article 9 of the TRIPS Agreement. In other words, product description, instructions for application or use, dosage recommendations and information about possible contraindications or allergic reactions should be regarded as "facts" not subject to copyright protection under article 9(2) of the TRIPS Agreement.
37 See Abbott (2001), p.28.