Professional Documents
Culture Documents
WINGARDIUM
MEASURES CONCERNING
DOMESTIC SOURCING OF SOLAR CELLS &
PLAIN PACKAGING OF CRYSTALLINE SILICON CELLS
______________________________________________________________________________________________________________________________
COMPLAINANT: LEVIOSA
WT/DSXXX
____________________________________________________________________________________________________
____________________________________________________________________________________________________
TABLE OF CONTENTS
[C]. The measures were applied in conformity with the requirements under the introductory
clause of Art.XX. .................................................................................................................. 26
VI. State aid by a developing country ....................................................................................... 26
[A]. Obligation to notify ....................................................................................................... 26
[B]. No objections by Leviosa within 30 days. ..................................................................... 27
VII. The Wingardian measure does not apply marks of origin requirements inconsistent with
Art. IX:4 of the GATT .............................................................................................................. 27
[A]. The Wingardian measure does not lead to any damage to the product, serious or
otherwise. .............................................................................................................................. 28
[B]. Material Reduction in Value.......................................................................................... 28
[C]. No unreasonable increase in cost................................................................................... 28
VIII. WG/SM/P-1 does not violate the SCM Agreement. ........................................................ 28
[A]. The FIT Scheme is not a subsidy .................................................................................. 29
IX. The Directive of the Wingardian Ministry of Health does not violate Art. 2.2 of the TBT
Agreement ................................................................................................................................. 32
[A]. The directive is beyond the scope of Art. 2.2. ............................................................... 32
[B]. The Directive pursues a legitimate objective ................................................................ 32
[C]. Necessary to fulfil the objective in light of harms of non-fulfilment. ........................... 33
[D]. It is not more trade restrictive than is required .............................................................. 34
X. Wingardium is not derogating the rights of registered trademark holders. ......................... 35
[A]. Art. 16 does not grant positive right to use a trademark ............................................... 35
[B]. Wingardium Trademark Act does not recognize right to use trademark. ..................... 36
[C]. Steps taken in consonance with WTO provisions and Wingardium Law ..................... 37
[D]. No confusion or functional derogation of trademarks ................................................... 37
XI. Plain packaging rules do not unjustifiably encumber the use of trademarks for Crystalline
Silicon Cells in the course of trade through special requirements ............................................ 38
[A]. Prohibitions do not constitute special requirements in the course of trade ............ 38
[B]. Notwithstanding, such restrictions are justifiable.......................................................... 38
XII. Procedural Infirmities in dispute raised by Leviosa .......................................................... 42
[A]. The dispute have not been raised as per the Energy Cooperation Agreement .............. 42
[B]. Nothwistanding the above, consultations were not adequate ........................................ 44
[C]. Terms of Reference, and the request for establishment of panel arent precise enough.
............................................................................................................................................... 44
REQUEST FOR FINDINGS ................................................................................................................. 45
LIST OF ABBREVIATIONS
&
And
AB
Appellate Body
ADA
Anti-Dumping Agreement
Annex.
Annexure
Art.
Article
Arts.
Articles
CLI
C-Si
Crystalline Silicon
Dir.
Directive
10
DoHW
11
DSB
12
DSM
13
DSU
14
EC
European Communities
15
ECA
16
FCTC
17
FIT
Feed-in Tariff
18
GATT
19
GoW
Government of Wingardium
20
ITA
21
LCR
22
23
NGO
Non-Governmental Organization
24
PAoW
25
PC
Paris Convention
26
PIL
27
PV
Photo-Voltaic
28
Redondo
Republic of Redondo
29
SCM
30
Sec.
Section
31
TBT
32
TF
Thin-Film
33
TM
Trademarks
34
TRIMS
35
TRIPS
36
UNCITRAL
37
UNCITRALAR
38
UNCREFAA
39
VCLT
40
Wingardium
Republic of Wingardium
41
WMRE
42
WNSM
43
WTA
44
WTO
INDEX OF AUTHORITIES
Appellate Body Report, Brazil Measures Affecting Imports of Retreaded Tyres, 145,
WT/DS332/AB/R (Dec. 17, 2007).
Appellate Body Report, Brazil Measures Affecting Imports of Retreaded Tyres, 144,
WT/DS332/AB/R (Dec. 17, 2007).
Appellate Body Report, Canada Measures Relating to the Feed-In Tariff Programme,
WT/DS412/AB/R, WT/DS426/AB/R (May 6, 2013).
Appellate Body Report, United States Measures Affecting the Production & Sale of
Clove Cigarettes, WT/DS406/AB/R (Apr. 4, 2012).
Appellate Body Report, United States Measures Affecting the Production & Sale of
Clove Cigarettes, WT/DS406/AB/R (Apr. 4, 2012).
Appellate Body Report, United States Standards for Reformulated and Conventional
Gasoline, 17, WT/DS2/AB/R (Apr. 29, 1996).
Panel Report, Canada Measures Relating to the Feed-In Tariff Programme, 7.223,
WT/DS412/R, WT/DS426/R (Dec. 19, 2012) [hereinafter Canada Feed-In Tariff
Programme Panel Report].
Panel Report, United States Measures Containing the Importation, Marketing and Sale
of Tuna and Tuna Products, 7.455, WT/DS381/R (Sep. 15, 2011);
Panel Report, United States Measures Containing the Importation, Marketing and Sale
of Tuna and Tuna Products, WT/DS381/R (Sep. 15, 2011).
Books
A.TANCREDI, INTERNATIONAL LAW AS THE LAW OF THE EUROPEAN UNION 231 (Enzo
Cannizzaro et al eds., 2011).
ADAM LIBERMAN
ET AL.,
INTERNATIONAL LICENSING
AND
TECHNOLOGY TRANSFER:
AMANDA MICHAELS, A PRACTICAL GUIDE TO TRADE MARK LAW (3d ed. 2002).
CORREA YUSUF & CARLOS M, INTELLECTUAL PROPERTY AND INTERNATIONAL TRADE: THE
TRIPS AGREEMENTS 13 (2008).
DANIEL GERVAIS, THE TRIPS AGREEMENT: DRAFTING HISTORY AND ANALYSIS 116-17 (2d
ed. 2003).
DAVID PALMETER & PETROS C. MAVROIDIS, DISPUTE SETTLEMENT IN THE WORLD TRADE
ORGANISATION (2d ed. 2004).
DEVELOPING COUNTRIES IN THE WTO LEGAL SYSTEM (Chantal Thomas et al. eds., 2009).
DISPUTE RESOLUTION IN THE WTO (James Cameron et al. eds., 1st ed. 1999).
BY THE
(2009).
THE
WTO,
AND
CHALLENGING FUNDAMENTALS
OF
OF
MITSUO MATSUSHITA ET AL., THE WORLD TRADE ORGANISATION 123 (3rd ed. 2015).
NUNO PIRES DE CARVALHO, THE TRIPS REGIME OF TRADEMARKS AND DESIGNS 424 (2nd
ed. 2011).
THE WTO AND INTERNATIONAL TRADE LAW / DISPUTE SETTLEMENT (Petros C. Mavroidis
et al. eds., 2005).
Articles
Appellate Body Report, United StatesCountervailing Duties on Certain CorrosionResistant Carbon Steel Flat Products from Germany, 157, WT/DS213/AB/R (Dec. 19,
2002).
Crawford Moodie et al., Plain Tobacco Packaging: A Systematic Review, UK Centre for
Tobacco Control Studies (Jan. 09, 2016 11:00 AM),
http://phrc.lshtm.ac.uk/papers/PHRC_006_Final_Report.pdf.
Crawford Moodie et al., Plain Tobacco Packaging: A Systematic Review, UK Centre for
Tobacco Control Studies (Jan. 09, 2016 11:00 AM),
http://phrc.lshtm.ac.uk/papers/PHRC_006_Final_Report.pdf.
D. Hammond et al., Impact of the Graphic Canadian Warning Labels on Adult Smoking
Behavior, 12 Tobacco Control 390, 391-395 (2003) (discussing the effectiveness of
health warning labels in Canada)
Ernst-Ulrich Petersmann, The WTO and Regional Trade Agreements as Competing Fora
for Constitutional Reforms: Trade and Human Rights, in REGIONAL TRADE
AGREEMENTS AND THE WTO LEGAL SYSTEM 281, 282 (Lorand Bartels et al.
eds., 2006).
Governments Role in the Electricity Sector, Organization of American States (Jan. 10,
2016 01:00 PM), http://www.oas.org/dsd/publications/unit/oea79e/ch08.htm.
10
Vincent Dalpe, Canada - Feed-in Tariff: Are FITs Desirable, or even Legal? A Case
Comment, 27.1 Revue quebecoise de droit international 87, 100 (2014) (discussing the
appropriate market for solar power producers).
Agreement on Subsidies and Countervailing Measures, Apr. 15, 1994, 1869 U.N.T.S.
14.
DSU, Dispute Settlement Rules: Understanding on Rules and Procedures Governing the
Settlement of Disputes, Art. 10, 1869 U.N.T.S. 401, 33 I.L.M. 1226.
General Agreement on Trade and Tariff Apr. 15, 1994, 1867 U.N.T.S. 187, 33 I.L.M.
1153.
Miscellaneous
Agreement on Technical Barriers to Trade, Art. 2.2, Jan. 1, 1995, 1868 U.N.T.S.120, 18
I.L.M. 1079;
STATEMENT OF FACTS
BACKGROUND
Wingardium is a country with a large population which with a huge portion of its population still
under the poverty line, and more than 65% people living in rural areas, with no access to electricity.
However, the fast pace of development, largely through a booming manufacturing and services
sector, took its toll on the environment. Wingardium began to suffer from high levels of air
pollution due to high concentrations of particulate matter. This was largely due to its reliance on
fossil fuel based conventional sources of electricity. As a result of this, there was a need to shift to
renewable energy to meet its growing power requirements. To this end, the Wingardium National
Solar Mission (WNSM) was initiated, which would encourage producers to embrace solar based
energy by offering attractive prices, which were contractually fixed for a definite period. The scale
of the WNSM attracted the attention of investors in another country.
Leviosa is a developed country which has a very advanced solar technology industry, which
specializes in the production of Crystalline-Silicone based solar cells. The industry consortium
approached the Leviosan government collectively seeking cooperation with the Wingardian
government in the execution of the WNSM, seeing it as an excellent business opportunity.
After various negotiations, the two countries entered into an energy cooperation agreement. Under
this agreement, relaxations were given to local sourcing requirements in exchange of transfer of
technology.
THE DISPUTE
CLI sought the elimination of the LCRs by the Wingardian government. The Wingardium
government first chose to respect the request by the Leviosan president, but was soon forced to
reinstate the LCRs to 50%, pending widespread layoffs and unemployment.
12
These large layoffs gave significant momentum to the campaign of members of the opposition,
who began exerting a great deal of pressure on the government and stalling decision making. This
policy paralysis negatively impacted the country image as an investment destination.
The President of Leviosa conveyed his displeasure and threatened to bring a dispute before the
WTO dispute settlement Board, for violating its obligations under the WTO and the ECA. After
this, Wingardium enter into a similar ECA with Redondo for the supply of thin-film based solar
technology in order to expand its market.
It soon turned out that Crystalline Silicone cells posed significant health risks, leading to allergic
reactions and possibly cancer due to use of toxic gases and heavy metals at the manufacturing
stage, and accordingly introduced a series of measures including Plain Packaging Requirements to
discourage the use of such cells. This further depleted the market share of the Leviosan investors
to 10% of the market from 75% three years earlier.
THE PANEL
In March, 2016, Leviosa approached the DSB without either exhausting all legal remedies under
Wingardian Law, and in violation of the exclusive arbitration clause under the Energy Cooperation
Agreement. The panel was established by the DSB. The following violations were alleged by
Leviosa in its request to establish the panel:
13
MEASURES AT ISSUE
I.
Article 2.1 of the TRIMS Agreement, because they appear to be trade-related investment
measures that are inconsistent with the provisions of Article III of the GATT 1994.
II.
Article III:4 and III:5 of the GATT 1994 because they appear to be laws, regulations or
requirements affecting the internal sale, offering for sale, purchase, transportation,
distribution, or use of equipment for renewable energy generation facilities that accord less
favourable treatment to imported equipment than that accorded to like products originating
in Wingardium.
III.
Article III:1 of the GATT 1994 because the measures appear to require the mixture,
processing or use of equipment for renewable energy generation facilities supplied from
Leviosa in specified amounts or proportions, being applied so as to afford protection to
Wingardian production of such equipment.
IV.
Articles 3.1(b) and 3.2 of the SCM Agreement because it appears a subsidy in the form of
financial contribution or income or price support and ensuing benefit is to be provided
contingent upon the use of domestic over imported goods
V.
Article 20 of the TRIPS Agreement, because Wingardium unjustifiably encumbers the use
of trademarks for Crystalline Silicon Cells in the course of trade through special
requirements.
VI.
Article 16.1 of the TRIPS Agreement, because Wingardium prevents owners of registered
trademarks from enjoying the rights conferred by a trademark under the Wingardian
Trademark Act.
VII.
Article IX:4 of the GATT 1994, because Wingardium imposes requirements relating to the
marking of imported Crystalline Silicon Cells which materially reduce their value and/or
unreasonably increase their cost of production.
VIII.
Article 2.2 of the TBT Agreement, because Wingardium imposes technical regulations
that create unnecessary obstacles to trade and are more trade-restrictive than necessary to
fulfil a legitimate objective taking into account the risks that non-fulfilment would create.
14
SUMMARY OF PLEADINGS
I. WG/SM/P-1 DOES NOT CONTRAVENE ART. 2.1, TRIMS OR ART. III, GATT.
III. THE LOCAL CONTENT REQUIREMENTS WERE A PART OF THE ENERGY COOPERATION
AGREEMENT
Leviosa consented to be bound by such a clause by agreement. Further, under the principles of
public international law, Leviosa is now estopped form denying the validity of the treaty it entered
into and complied with for three years.
15
VI. THE MEASURE DOES NOT APPLY MARKS OF ORIGIN INCONSISTENT WITH ART. IX.
The impugned measure is not inconsistent with the provisions of Art. IX:4, GATT as there is no
material damage to the product in complying with the requirement. Additionally, the producers
need not bear extra-ordinary costs to comply with the measure. Even if costs are incurred they
apply equally to imported and domestic goods.
16
Further, the objective pursued is legitimate and the measure is necessary to achieve the identified
objective. Therefore, assuming it is a trade restrictive measure, it is still not violating the TBT.
The rights of trademark holders are not abridged as the prohibitions in this case do not constitute
special restrictions in the course of trade. Further, solar cells as intermediary goods are not traded.
Even assuming the rights were abridged, the action is justified under Art. 20 of TRIPS.
17
LEGAL PLEADINGS
I. WG/SM/P-1 DOES NOT CONTRAVENE ART. 2.1, TRIMS OR ART. III, GATT
1.
The basic principles of Art. III prevent discrimination and domestic protectionism. In
establishing a violation of GATT Arts. III and XI, compliance with Art. 2.1 of TRIMS can
simultaneously be tested. WG/SM/P-1 doesnt violate GATT or TRIMS as there is no violation of
Art. III: 4[A] or Art. III: 5[B] of GATT.
[A].
2.
Art. III: 4 is violated, if the imported and domestic products are like products[1]; if the
measure is a requirement affecting their internal sale and distribution[2] and if the imported
products are less favorably treated[3] .1
[1]. THE IMPORTED AND DOMESTIC C-SI CELLS ARE NOT LIKE PRODUCTS
3.
In analyzing the likeness of two products, two factors must be considered, its properties,
nature and quality[i]; consumer perceptions in relation to the two products [ii].
(i) Imported and domestic C-Si cells are qualitatively different.
4.
Leviosa agreed to transfer the technology used in the production of C-Si cells and
substantial know how 2 behind the production processes. However, Leviosa did not provide
training in its adoption and use3, resulting in a difference in productive efficiency, cost and
consequently, prices. Every production process operates with a specific production function which
outlines the cost of producing a given quantity of a product. The production of solar cells is capital
Appellate Body Report, KoreaMeasures Affecting Imports of Fresh, Chilled and Frozen Beef, 13,
WT/DS161/AB/R (Dec. 11, 2000).
2
Annexure II, Art. II, Fact on Record.
3
Daniel K.N. Johnson & Kristina M. Lynbecker, Challenges to technology transfer: A literature review of the
constraints on environmental technology dissemination, SSRN (Jan. 13, 2016 10:00 AM),
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1456222.
18
intensive,4 and requires abundant skilled labor, leading to high training requirements and a steep
learning curve5 (further exacerbated by labor intensive nature). The Leviosan C-Si manufacturing
industry is highly specialized with multiple firms 6, leading to external economies of scale and an
industry wide reduction in cost 7. Coupled with the better skilled workforce (and higher labour
productivity), Leviosan firms are more cost efficient than their Wingardian counterparts. 8 The
aforementioned differences in production efficiencies affect the competitive relationship between
products.9 The substantial price differences make the two panels unlike products.
(ii) Perceptions of Consumers about the Products
5.
Consumer perceptions affect likeness. The Leviosan firms being pioneers in the C-Si
market enjoy market dominance. The associated brand recognition and price competitiveness
distinguish them and their products from the newly emerged producers, for quality and not only
price are relevant purchase factors for power producers.
[2]. IT IS NOT A REQUIREMENT UNDER ART. III:4.
6.
Assuming, the products are like, compliance must be a must for the measure to be a
requirement. This is not the case with the impugned measure, for if a producer does not comply
with the requirement, he can still enter the FIT by using thin film based technology 10.
[3]. IMPORTED CRYSTALLINE SILICONE CELLS ARE NOT TREATED UNFAVORABLY
7.
Solar panels are connected in series to maximize output. If one panel has a lower efficiency
than the others, the others produce at this lower efficiency. Therefore, employing a conjunction of
imported and domestically produced C-Si cells having different efficiencies, the apparatus
Hao Chen, Photovoltaic in China: what to expect, a recession or a breakthrough?, PRINCETON UNIVERSITY CHINA
ENERGY GROUP (J AN. 11, 2016 5:30 PM) http://www.princeton.edu/~puceg/perspective/solar_cell1.html.
5
19
efficiency is limited to the less efficient domestically produced cells. Thus, the output of a domestic
C-Si Panel and an apparatus consisting of a mix of the two panels will be the same. Producers will
not purchase only domestic cells. Imported panels of a similar or superior quality will always be
cheaper or of a similar price respectively.
The requirements apply irrespective of location of production. Purchase of only domestic
8.
C-Si panel is not preferable, being economically unsound due to their lesser efficiency. As the
panels are being produced in Wingardium under a transfer of technology, the technology is alien
to Wingardium manufacturers, who need to perfect the process over time and move forward on
the learning curve11. The Leviosan firms being more efficient offer cheaper, and better (if not
similar) quality panels. There has been no effect to factors relevant for purchase decisions.
Producers would not change buying preferences. Hence, there is no clear disadvantage to imported
panels.
[B]. The Measure does not violate Art. III: 5, GATT
9.
To violate Art. III: 5, a measure must require the use of a specified quantity of materials
from domestic sources. The same doesnt cover issuance of directions on use of finished
products12. The measure prescribes the manner of using finished solar cells, and not the process of
manufacture or component mixing.13 Therefore, the same is beyond the scope of Art. III:5 of
GATT.
II. THE PROGRAM BEING ONE FOR GOVERNMENT PROCUREMENT, IS EXEMPTED FROM THE
PROVISIONS OF ART. III.
10.
To be protected by Art. III: 8(a), it must be procurement for government purposes[A] and
11
20
With government procurement being undefined, guidance can be taken from the context in
indication of government procurement. The power authority under the WNSM is similar to the one
in Ontario FIT Scheme, a wholly owned and controlled agency of the Ontario government. Power
purchases are in behalf, and an exercise of the authority, of the government.17.
13.
Usage of government funds is another indicator, for title in goods so purchased rests with
the government (real owner) and no other private entity18 (ostensible owner). Although not a
prerequisite, a transfer of title to the government strongly indicates government procurement.
(ii) Governmental use or benefit
14.
The GoW is performing its basic function of providing essential services, 19 by supplying
electricity20 to the people, especially the large rural unconnected population. It therefore satisfies,
for government purposes within Art. 3:8(a). Government purpose has been interpreted to include
Panel Report, United States Procurement of a Sonar Mapping System, GPR.DS1/R (Apr. 23, 1992).
Panel Report, Canada Measures Relating to the Feed-In Tariff Programme, WT/DS412/R, WT/DS426/R (Dec.
19, 2012).
16
Panel Report, United States Procurement of a Sonar Mapping System, GPR.DS1/R (Apr. 23, 1992).
17
Art.5, 6, Fact on Record.
18
Panel Report, United States Procurement of a Sonar Mapping System, GPR.DS1/R (Apr. 23, 1992).
19
Governments Role in the Electricity Sector, O RGANIZATION OF AMERICAN STATES (Jan. 10, 2016 01:00 PM),
http://www.oas.org/dsd/publications/unit/oea79e/ch08.htm.
20
BRUCE OSWALD ET AL., DOCUMENTS ON THE LAW OF UN PEACE OPERATIONS 43 (2010).
14
15
21
Power in setting conditions for entrance to FIT demonstrates governmental control over
The arrangement between GoW and FIT members is not commercial. The purpose is to
encourage production of solar power by way of incentives to purchase of solar panels, and not to
profit. The aims and objects of the program reveal no such purpose;22 aiming at reducing
dependence on conventional sources, rural electrification (through off-grid power supply) and
developing indigenous capabilities, 23 in line with achieving a socialistic society.
III. LOCAL CONTENT REQUIREMENTS WERE AGREED TO BY THE LEVIOSAN GOVERNMENT
[A]. Parties can contract out of obligations to the WTO
17.
The WTO, like other International law, is heavily premised on consent for both entry and
adherence. The same is reflected in the dispute resolution procedure,24 and in the term contracting
parties, recognizing the agency of contracting parties. Having acknowledged this, it is only
reasonable that the WTO recognize the ability to contract bilaterally in order to bestow greater
preferential treatment than covered under the diluted provisions of the WTO. The GATT
recognizes this ability,25 and the VCLT allows parties to enter into a successive treaty altering
rights and obligations under the first treaty amongst themselves.
Appellate Body Report, Canada Measures Relating to the Feed-In Tariff Programme, WT/DS412/AB/R,
WT/DS426/AB/R (May 6, 2013).
22
Art. 1.1, 5, Fact on Record.
23
Art. 1.1, 5, Fact on Record.
24
DSU, Dispute Settlement Rules: Understanding on Rules and Procedures Governing the Settlement of Disputes,
Art. 10, 1869 U.N.T.S. 401, 33 I.L.M. 1226.
25
General Agreement on Trade and Tariffs, Art. XXIV, Apr. 15, 1994, 1867 U.N.T.S. 187, 33 I.L.M. 1153.
21
22
18.
The ECA is a preferential trade agreement and one must view the provisions and intentions
of the parties whilst contracting. The Leviosan government aimed at securing a competitive
advantage for its firms over those of other nations 26, and safeguard the interests of Leviosan
investors by specifying the forum for resolution of disputes.27.
19.
The WTO has conceded on the ability to contract out of WTO obligations by allowing out
of court settlements, not fully consistent with AB reports or DSB Rulings.28 The dispute between
Wingardium and Leviosa is hence a contractual one, centered around interpretation of the ECA. It
hence would rightly be decided by institutions so designated by the parties in the agreement itself.
[B]. The principles of customary international law are applicable
20.
The body of jurisprudence surrounding the WTO is a part of the broad framework of public
international law29, and principles of PIL can therefore be applied to it. Even the AB in its first
report observed that no treaty exists in clinical isolation from the general principles of IL,30 such
as estoppel. Where a country has consented to a particular agreement, and has even complied with
it for substantial period of time, it cannot later backtrack. The parties have relied on and acted on
this agreement, under customary international law, the rule becomes opposable to it by way of
estoppel, and the validity of the rule cannot be disputed.
[C]. Leviosa is estopped from objecting to Local Content Requirements
21.
Leviosa consented to the application of local content requirements, and having complied
with it for a substantial period of time, cannot then assail the validity of the obligations imposed
on it under the agreement31.
26
23
Art. XX, GATT recognizes the need to accommodate non-economic/non-trade aims such
as promotion and protection of public health. It allows imposition of measures which otherwise
are violative of the GATT, like in the illustrated purposes.32
[A]. The labelling requirements are exempted under XX(b).
23.
It must be shown that the policy implemented by the measures were to protect human
health.[1] and that the same was necessary [2], and that application was in conformity of
requirements under the introductory clause of Art. XX[3].
[1]. THE OBJECTIVE IS THE PROTECTION OF HUMAN HEALTH.
24.
Countries have the right to individually determine policy goals. 33 GoW aims at increasing
consumer knowledge and promoting human health34 by discouraging use of C-Si cells by
mandating display of health hazards, enabling the customer to pick the safest alternative.
[2]. THE MEASURES ARE NECESSARY
25.
Necessity under Art. XX(b), mandates that it must contribute to the achievement of the
objective(i), must be based on scientific data(ii) and should be the most reasonable alternative.(iii)
(i) It contributes to the objective.
26.
The aim is to prevent and warn of adverse consequences to human health. In hudging the
contribution, there must be a direct link between the end and the means adopted. The decrease in
consumption lowers the associated risks. Therefore, there is a direct link between the decreased
use of C-Si and protection of human health.
32
General Agreement on Trade and Tariffs, Art. XX, Apr. 15, 1994, 1867 U.N.T.S. 187, 33 I.L.M. 1153.
Appellate Body Report, United States Standards for Reformulated and Conventional Gasoline, 30,
WT/DS2/AB/R (Apr. 29, 1996).
34
Annex. VIII, Fact on Record.
33
24
The impugned measure was adopted on the basis of studies by the Wingardian Health
Initiative and the DoHW. The presence of conflicting studies, that too in Leviosa, doesnt derogate
protection. The AB has held that where there are divergent scientific opinions, a contracting party
can in good faith, rely on a report by a qualified and respected person35. There arises no need to
evaluate conflicting evidence, based on a preponderance of probabilities 36.
(iii) It is the most reasonable alternative.
(a) Contributes to the end pursued.
28.
The measure contributes to the objective of reducing C-Si use by drawing attention to the
ill-effects of C-Si cells. Due to the plain packaging requirement, marketing gimmicks cannot be
used to distract the consumers attention from health hazards 37.
(b) It is not difficult to implement
29.
The information required to be disclosed is clearly laid out and is readily available with the
manufacturers of cells and modules and no additional studies are needed to comply with the
requirement.
(c) The trade impact of the alternative is not less than the impugned measure.
30.
An absolute prohibition most drastically curbs the health concerns, but is very trade
restrictive as it would lead to a curb on imports and domestic production of the product and would
distort trade to a very high degree which the impugned measure does not do.
Appellate Body Report, European Communities Measures Affecting Asbestos and Asbestos-Containing Products,
177, WT/DS135/AB/R (Mar.12, 2001).
36
Appellate Body Report, European Communities Measures Affecting Asbestos and Asbestos-Containing Products,
178, WT/DS135/AB/R (Mar.12, 2001).
37
D. Hammond et al., Impact of the Graphic Canadian Warning Labels on Adult Smoking Behavior, 12 TOBACCO
CONTROL 390, 391-395 (2003) (discussing the effectiveness of health warning labels in Canada); Nascimento et al.,
Avoidance of Smoking: The Impact of Warning Labels in Brazil, 17 TOBACCO CONTROL 400, 405-409 (2008)
(discussing the effectiveness of health warning labels in Brazil).
35
25
[C]. The measures were applied in conformity with the requirements under the
introductory clause of Art.XX.
31.
GATT allows measures taken to protect any objectives laid out under Art. XX (a)-(f) to
comply with the chapeau of Art.XX and prohibits arbitrary methods of discrimination, and
disguised restrictions on international trade. 38 C-Si technology en mass is sought to be discouraged
and not only imported C-Si cells under the measure, and no effort is being made to encourage the
purchase of domestic thin film cells over imported ones. Plain packaging of solar cells was notified
to protect human health and safety, and they are exempted from the scope of Art. III or IX, by
Art.XX (b).
VI. STATE AID BY A DEVELOPING COUNTRY
32.
The GATT recognizes the need to develop particular industries 39, and economic
development is in line with its goals.40 GATT Art.XVIII was introduced as an exemption for such
industries. The measure requiring local content forms state aid to the Wingardian crystalline silicon
cell industry, and isnt subject to Art. III. In so much that it affected the imports of crystalline
silicon cells, it is a measure within the meaning of the proviso to para 14 of Art. XVIII 41. There
however, are pre-qualifications for exemption under Art. XXIV.
[A]. Obligation to notify
33.
Parties desirous of protections of Art. XVIII must notify such measures. Its interpretation
is different than what a plain reading of the text would indicate. A GATT panel reviewing certain
measures implemented by Sri Lanka upheld the argument that the same were undertaken with a
belief that all parties will concur with their actions. Failure to notify wasnt used to hold violative
the actions of Sri Lanka and only a requirement for notification of any subsequent measures was
imposed.
38
General Agreement on Trade and Tariffs, Art. XX, Apr. 15, 1994, 1867 U.N.T.S. 187, 33 I.L.M. 1153.
General Agreement on Trade and Tariffs, Art. XVIII:C, Apr. 15, 1994, 1867 U.N.T.S. 187, 33 I.L.M. 1153.
40
General Agreement on Trade and Tariffs, Report of the Review Working Party on Quantitative Restrictions,
L/332/Add.3/Corr.1 (Mar. 4, 1955).
41
General Agreement on Trade and Tariffs, 14, Art. XVIII, Apr. 15, 1994, 1867 U.N.T.S. 187, 33 I.L.M. 1153.
39
26
34.
The contracting parties agreed on notification requirements under the various treaties in a
Decision on Notification Requirements.42 It classifies both obligations under Art. XXIV and XVIII
under the same head. Therefore, the significance of these requirements to notify can be considered
as more or less identical within the WTO Framework. Therefore, when the requirement to notify
has been relaxed once, the same can be done in other similar cases.
Hence, a Wingardian claim under Art. XVIII cant be struck down merely on a failure to
35.
notify the same, for it would amount to creation of a legalistic roadblock to the facilitation of trade
and development. Further, the authoritative value of the provision has been diminished post the in
the Ceylon case. Therefore, implementation can be taken as notice, and is applied to FTAs by the
WTO. No FTA not notified in accordance with Art. XXIV, has been struck down by the Committee
on Free Trade Areas.
[B]. No objections by Leviosa within 30 days.
36.
Any country impacted by Art. XVIII, must seek consultations or raise a dispute within 30
days from notification. An exemption from the notification requirement isnt unfair, as Leviosa
was itself a party to an agreement executed in pursuance of the measure providing government
assistance. Leviosa complied with the provisions for a significant period and is estopped from now
challenging the validity of these measures. It is a valid restriction on the rights of parties under the
WTO.
VII. THE WINGARDIAN MEASURE DOES NOT APPLY MARKS OF ORIGIN REQUIREMENTS
INCONSISTENT WITH ART. IX:4 OF THE GATT
37.
Any laws or regulations of a contracting party dealing with the labelling of imported
products must not require their marking in such a way that seriously damages the product [A],
materially reduces their value[B] or unreasonably increases their cost[C]
42
World
Trade
Organisation,
Ministerial
https://www.wto.org/english/docs_e/legal_e/33-dnotf.pdf
Declaration
of
13
December
1996
27
[A]. The Wingardian measure does not lead to any damage to the product, serious or
otherwise.
38.
In complying with the packaging requirement the products are not directly adversely
impacted or damaged, as it involves no change to the product itself, but only to the its packaging.
[B]. Material Reduction in Value
39.
Identification of the product based on origin will not cause any reduction in the material
value of the product, for producers arent forced to mark goods in a way that jeopardises their
value. Plain packaging requirements are not in contravention of Art. III of the GATT, for it does
not discriminate between domestic and imported goods. The requirements cover both domestic
and imported panels, as well as both C-Si panels and thin film based panels.43
40.
The impugned measure does not create any unreasonable increase in the cost of the panels
to producers or to end customers. While the manufacturers are required to print additional
information to comply with the new requirements, these apply equally to domestic and imported
C-Si cells.
The enabling document of WNSM sets up a Feed-in-Tariff (FIT) scheme, akin to the
Ontario Feed-in-Tariff scheme.44 A 30% LCR is imposed for firms using C-Si technology based
cells. It is submitted that the aforementioned FIT programme does not violate the provisions of the
SCM Agreement as it is not a subsidy[A] Further, assuming it is a subsidy, it is not contingent
on the use of domestic over imported goods[B].45
43
28
government.46 The FIT program involves payment by the government to power producers for the
electricity produced. Although the government does not take physical possession of the electricity,
it acquires title over the electricity produced.
A three-step analysis is required to establish a government purchase.47
(i) There is a transfer of funds to producers.
44.
The Wingardian government pays the producers for the electricity supplied. Funds are
transferred to suppliers only for electricity delivered into the grid. There is no element of grant
inherent in the design of the FIT scheme.
(ii) Government obtains possession of the electricity
45.
The Government takes possession over the electricity produced on its purchase. Obtaining
possession here includes an entitlement over the goods, and not physical possession. Given the
nature of electricity, physical transfer of possession is not possible. But a transfer of an entitlement
from the producers to the government is a means of transferring possession of electricity.
(iii) The transaction is one of procurement by purchase.
46.
The enabling documents and guidelines of the FIT scheme, being modelled on the Ontario
Feed-in Tariff scheme, provide for the purchase of power by a government owned power authority.
Therefore, the FIT scheme is a financial contribution in the nature of a purchase of goods by the
government, within the meaning of the SCM Agreement.
46
Agreement on Subsidies and Countervailing Measures, Art. 1.1(a)(1)(iii), Apr. 15, 1994, 1869 U.N.T.S. 14.
Panel Report, Canada Measures Relating to the Feed-In Tariff Programme, 7.223, WT/DS412/R, WT/DS426/R
(Dec. 19, 2012) [hereinafter Canada Feed-In Tariff Programme Panel Report].
47
29
[2]. THE FINANCIAL CONTRIBUTION MADE UNDER THE FIT SCHEME DOES NOT CONFER A BENEFIT.
47.
established.48 Where the financial contribution is in the form of goods purchased or procured by
the government, the assessment is based on the adequacy of the payment. 49 To do so a benchmark
is fixed in the appropriate market and the governments remuneration is evaluated against the
market standard.
(i) The appropriate market for comparison is the solar power market.
(a) Different methods of producing electricity have different costs
48.
The appropriate market for comparing the governments remuneration is the solar power
market. The appropriate market cannot be that for electricity in general because different methods
of producing electricity have different costs. The installation and operational costs in solar power
is higher than conventional methods of producing electricity.50 The costs being different, the prices
of electricity produced from these methods are consequently different. Therefore, a comparison of
remuneration received across different sources of power is undesirable.
(b) Power producers using different methods do not compete in the open market.
49.
Producers of electricity do not compete in the open market, unlike producers of consumer
goods.51 The government purchases electricity from producers and supplies it to the grid. Thus
there is no market where solar power producers would come in competition with conventional
power producers. Therefore, the governments remuneration cannot be compared to that received
by conventional producers of electricity in an open market scenario.
48
Agreement on Subsidies and Countervailing Measures, Art. 14, Apr. 15, 1994, 1869 U.N.T.S. 14.
Agreement on Subsidies and Countervailing Measures, Art. 14, Apr. 15, 1994, 1869 U.N.T.S. 14.
50
Vincent Dalpe, Canada - Feed-in Tariff: Are FITs Desirable, or even Legal? A Case Comment, 27.1 REVUE
49
Id., at 101.
30
Solar power producers entered the market based on the incentives of WNSM. There exists
no independent market for such electricity in the absence of the WNSM, since Wingardium
depended on fossil fuels for 95% of its energy needs prior to the WNSM.52
However, if such producers were to operate in the market without WNSM, the price charged would
be the same or higher, due to the high cost of operations and maintenance of solar PV Panels.
(b) In the absence of the WNSM, risks related with solar power projects would hike the prices of
such electricity.
51.
The fixed revenue and long term contracts under the FIT Scheme have eliminated risks
which would have arisen in the open market. As a result, such producers would charge higher
prices to cover these risks. Therefore, the remuneration being given to these producers is not more
than what they would have received while operating independently in the open market.
52.
By extension, the remuneration received under the FIT scheme is not more than adequate.
On comparing it in the appropriate market, it is submitted that the remuneration received in that
scenario would have been higher than that under the WNSM. Therefore, the FIT Scheme confers
no benefit as envisaged under Article 1.1(b), read with Article 14 of the SCM Agreement.
[3]. THE FIT SCHEME DOES NOT VIOLATE ART. III, SCM.
53.
Article 3 of the SCM Agreement prohibits any subsidy which is contingent upon the use
of domestic over imported goods. 53 However, the FIT Scheme is not a subsidy as it does not meet
the requirements of a subsidy as laid down in the SCM Agreement. Although the FIT Scheme has
a mandatory local content requirement provided under Articles 4 and 5 of the WG/SM/P-1, not
being a subsidy, it does not fall under the purview of Article 3. Therefore, it is submitted that the
FIT Scheme does not violate the provisions of the SCM Agreement.
52
53
1, Fact on Record.
Agreement on Subsidies and Countervailing Measures, Art. 3, Apr. 15, 1994, 1869 U.N.T.S. 14
31
IX. THE DIRECTIVE OF THE WINGARDIAN MINISTRY OF HEALTH DOES NOT VIOLATE ART. 2.2
OF THE TBT AGREEMENT
54.
For a measure to violate the TBT, it must first be established as a technical regulation. It is
conceded that the Directive in question is in fact a technical regulation per Annexure 1.1. But the
directive questioned herein cannot be brought under the scope of Art. 2.2.[A] If this contention is
not accepted, it is then contended that having conceded that the directive is a technical regulation,
it does not violate Art. 2.2, TBT[B] and that it is not more trade restrictive than necessary. 54[C]
[A]. The directive is beyond the scope of Art. 2.2.
55.
Art. 2.2, TBT consists of two broad substantive sentences, the first a general principle, and
the second an explanation and aid to construction. 55 The two must be collectively interpreted to
prevent any unnecessary obstacles to international trade. Therefore, Art. 2.2 only covers technical
regulations which are trade restrictive and consequently create unnecessary obstacles to
international trade. As trade restrictiveness is to be evaluated with reference to international
trade56, the directive of the Wingardian Health Ministry is beyond the scope of Art.2.2 for it is
applicable equally to domestically-manufactured cells, and imported ones57. The measure not
distinguishing between domestic and imported products, is not Trade Restrictive, that is, one
which forms a limitation on imports, or discriminates against imports or denies imports
competitive opportunities 58.
[B]. The Directive pursues a legitimate objective
Appellate Body Report, United States Measures Affecting the Production & Sale of Clove Cigarettes,
WT/DS406/AB/R (Apr. 4, 2012).
55
Appellate Body Report, United States Measures Affecting the Production & Sale of Clove Cigarettes,
WT/DS406/AB/R (Apr. 4, 2012).
56
Panel Report, United States Measures Containing the Importation, Marketing and Sale of Tuna and Tuna
Products, 7.455, WT/DS381/R (Sep. 15, 2011); Appellate Body Report, United States Certain Country of Origin
Requirements, WT/DS384/AB/R, WT/DS386/AB/R (June 29, 2012).
57
Annex. VIII, Fact on Record.
58
Panel Report, United States Measures Containing the Importation, Marketing and Sale of Tuna and Tuna
Products, 7.455, WT/DS381/R (Sep. 15, 2011); Appellate Body Report, United States Certain Country of Origin
Requirements, WT/DS384/AB/R, WT/DS386/AB/R (June 29, 2012).
54
32
56.
The TBT agreement exempts technical regulations that pursue legitimate objectives59 in
order to promote and further the legitimate objectives 60,61 of consumer awareness, knowledge,
human health62 and reducing exposure to carcinogenic substances.63 The objects being legitimate,
there is no violation of Art. 2.2.
[C]. Necessary to fulfil the objective in light of harms of non-fulfilment.
57.
Necessity in an Art. 2.2 claim need not be justified. Rather, trade restrictiveness must be
examined to determine whether the impugned regulation was necessary to achieve the stated goal.
The test to be employed is whether the objectives of protection of human health[1] and promotion
of consumer awareness[2] could reasonably be achieved without the trade restrictive measure.
[1]. PROTECTION OF HUMAN HEALTH
58.
Extensive testing has revealed that the C-Si panels, due to the nature of their production
process wherein the panel are coated with highly hazardous gases as part of the production process
itself, are inherent dangerous. Their use results in allergies and high carcinogenic propensities.
Further, this puts at risk the consumers as well as the workers 64 producing these cells in
Wingardium. With such associated dangers, the risks of non-fulfilment are jeopardising the health
and safety of countless citizens of Wingardium. The directive seeks to mitigate these risks in a
manner which is least trade restrictive but at the same time takes into account the significant risks
posed by the product, recognizing the need for regulation. The same has been done by increasing
consumer awareness and knowledge as opposed to a ban.
59
Agreement on Technical Barriers to Trade, Art. 2.2, Jan. 1, 1995, 1868 U.N.T.S.120, 18 I.L.M. 1079; Appellate
Body Report, United States Measures Affecting the Production & Sale of Clove Cigarettes, WT/DS406/AB/R (Apr.
4, 2012).
60
Panel Report, United States Measures Containing the Importation, Marketing and Sale of Tuna and Tuna
Products, WT/DS381/R (Sep. 15, 2011).
61
Agreement on Technical Barriers to Trade, Art. 2.2, Jan. 1, 1995, 1868 U.N.T.S.120, 18 I.L.M. 1079; Appellate
Body Report, United States Measures Affecting the Production & Sale of Clove Cigarettes, WT/DS406/AB/R (Apr.
4, 2012).
62
Appellate Body Report, United States Measures Affecting the Production & Sale of Clove Cigarettes,
WT/DS406/AB/R (Apr. 4, 2012).
63
Appellate Body Report, United States Measures Affecting the Production & Sale of Clove Cigarettes,
WT/DS406/AB/R (Apr. 4, 2012).
64
Annex. VIII, Fact on Record.
33
[2]. MITIGATING THE DANGER POSED BY THE PANELS THROUGH CONSUMER AWARENESS.
59.
The directive seeks to mitigate exposure to C-Si panels by increasing consumer knowledge
by mandating a 90% display of associated health risks on product packaging. In conjunction with
this, the use of customised branding and packaging has been done away with to inhibit the
deceptive ability of packaging to attract customers by aesthetic qualities.65
[D]. It is not more trade restrictive than is required
60.
The TBT agreement gives contracting parties the freedom to determine what policy
objectives to pursue and the level thereof. 66 The suitability of the objective must not be adjudicated,
rather the achievement of that objective, and its achievement in the least trade restrictive manner
possible must be seen. The object of the Wingardian measure is to increase consumer knowledge
and protect consumer health. Based on a study conducted by the DoHW it was determined that
exposure to C-Si panels generated allergic reactions and was even carcinogenic. Given that there
are no known health risks associated with thin film technology, it was in line with keeping with
the objective of protecting human health to discourage the use of C-Si technology.
61.
By eliminating any role which can be played by graphical and pictorial representations,
65
Crawford Moodie et al., Plain Tobacco Packaging: A Systematic Review, UK CENTRE FOR TOBACCO CONTROL
STUDIES (Jan. 09, 2016 11:00 AM), http://phrc.lshtm.ac.uk/papers/PHRC_006_Final_Report.pdf.
66
Appellate Body Report, European Communities Trade Description of Sardines, 189, WT/DS231/AB/R (Oct.
23, 2002).
67
4, Annex. VIII, Fact on Record.
34
62.
While losses may accrue to manufacturers of C-Si cells, the AB has clearly stated that the
protection of human health ought to be the paramount.68 To ensure achievement of the objectives,
it is necessary for the impugned directive to be applied.
Art. 16.1 of TRIPS provides a trademark owner with a guaranteed minimum protection 69
in the form of exclusive rights over use of trademarks, which earlier under Art. 10bis of the Paris
Convention only safeguarded against unfair competition. 70
[1]. ART. 16 ONLY ALLOWS PREVENTION OF UNAUTHORIZED THIRD-PARTY USE OF TRADEMARK
64.
It provides a ius excludendi alios, i.e., the negative right to prevent third parties from
using the asset in question. The article provides remedy against unauthorized third-party usage of
registered trademarks, and not right to use the trademark himself. Art. 16.1 recognizes a
proprietary right to prevent loss of goodwill, or passing off with the aim of capitalizing on the
established standards of quality. The word exclusive introduces a comparative aspect the right
of usage. Art. 16.1 cannot hence be construed to confer positive rights to use, but must be
interpreted as possibility of use without interference from others.
71
[2]. EXCEPTIONS TO ART. 16 AND SIMILAR USAGE ONLY WITH REFERENCE TO THIRD PARTIES
65.
The practice of relying on exceptions to construct the scope and meaning of the original
provision, is well settled under International Law. The exception to the right of exclusive usage as
elucidated under Art. 17, allows third parties to make fair use of descriptive terms, and necessitates
Appellate Body Report, Brazil Measures Affecting Imports of Retreaded Tyres, 144, WT/DS332/AB/R (Dec.
17, 2007).
69
Appellate Body Report, United StatesSection 211 Omnibus Appropriations Act of 1998, 186, WT/DS176/AB/R
(Feb. 1, 2002).
70
See AMANDA MICHAELS, A PRACTICAL GUIDE TO TRADE MARK LAW 123 (3rd ed. 2002).
71
PETER VAN DEN BOSSCHE, THE LAW AND POLICY OF THE WORLD TRADING ORGANISATION 123 (2005).
68
35
that members balance the right of third parties against that of owners of trademark. Art. 16.1 hence
delineates misuse by third parties, and is hence negative in nature.
[3]. TRIPS AGREEMENT GENERALLY FRAMES TRADE MARK AND OTHER IPR AS NEGATIVE RIGHTS
66.
The general character of the TRIPS regulations are drafted as negative rights of exclusion,
instead of positive rights to exploit or use trademark. 72 This allows Members to pursue legitimate
non-IP-related public policies such as promoting public health. They key question here is to what
extent international trade mark law constrains public policy measures affecting the use of a trade
mark.7374 TRIPS Agreement does not expressly provide for a right to use a trademark in any
provision. Accordingly, a provision that measures shall not prejudice, cannot be interpreted to
provide for the right itself instead.75
[B]. Wingardium Trademark Act does not recognize right to use trademark.
[1]. WTA DOES NOT RECOGNIZE RIGHT TO USE TRADEMARK.
67.
The Wingardium Trademarks Act has no provision which grants the right to use a
trademark upon the owner. No reliance can be made on artificial import, for the general wording
of the section only aims at conferring rights against authorized use to the proprietor. The general
recognition of proprietary rights under the Trademark act, and the arguable intent to empower
trademarks cannot derogate public policy and societal interest.
[2]. PROVISIONS ALLOWING FOR DEROGATION OF RIGHT TO USE
68.
The availability of right to exclude only arises upon registration, which itself has been
made optional76, shows that general mark holders cant argue for the greater right of uninterrupted
self-use. Any construction to the contrary can be extremely problematic for the registration of a
72
Panel Report, European CommunitiesProtection of Trademarks and Geographical Indications for Agricultural
Products and Foodstuffs, 210, WT/DS174/R (Mar. 15, 2005).
73
Request for the Establishment of a Panel by Ukraine, AustraliaPlain Packaging, WT/DS434/11 (Aug. 17, 2012).
74
Infra Section II.
75
THE WTO AND INTERNATIONAL TRADE LAW / DISPUTE SETTLEMENT 123 (Petros C. Mavroidis et al. eds., 2005).
76
K.C. KAILASAM & R AMU VEDARAMAN, LAW OF TRADEMARKS AND GEOGRAPHICAL INDICATORS 4 (2nd ed. 2005).
36
trademark doesnt confer any new right on the trademark holder, and the same would have the
effect of extending absolute freedom to use any mark on any product without any restriction. Sec.
47 of the Wingardium Trademark act provides an exception to the general removal of mark on
ground of non-use. Special Circumstances like restrictions imposed by any law or regulation on
the use of the trademark in India would be excused.77
[C]. Steps taken in consonance with WTO provisions and Wingardium Law
69.
The derogation of the right to use on grounds of public health and policy has been
established by way of exception clauses in the TRIPS, the Marrakesh Agreement (which
recognizes unique goals of developing countries), and the Doha round. The same is also recognized
implicitly under Sec. 47 of the Wingardium Trademarks Act, 1999. The plain packaging
requirements were with the aim of preventing disillusionment amongst unsuspecting consumers,
and restricting sale of products harmful to public health. 78
[D]. No confusion or functional derogation of trademarks
70.
It has been argued that plain packaging renders ineffective the exclusive right of trademark
owners to use signs and diluting their distinctive character. Opponents proclaim that allowing
differentiation of goods by way of trademarks is a pre-requisite to prevent misuse by third parties,
for the restriction of usage has the same effects as imitation, which is creating confusion. This
however is not true, for the restrictions are limited and only prevent trademarks from being used
as tools of promotion, and not as conveyers of information. Further trademarks themselves havent
been derogated, for solar cell manufacturers are free to use the trademarks for other purposes, like
on letterheads and other products.
71.
The blurring of trademarks, do not meet the standard of confusion under Art. 16.1 79. The
term likelihood of confusion calls for a significant probability that consumers will be confused
and a realistic chance that in normal course would inadvertently purchase goods of a competitor. 80
77
Id. at 11.
EDWARD C. VANDENBURGH III, TRADEMARK LAW AND PROCEDURE 123 (2nd ed. 1968).
79
Canon Kabushiki Kaisha v. Metro-Goldwyn-Mayer Inc., I-05507 E.C.R. (1998).
80
UNITED NATIONS CONFERENCE ON TRADE AND DEVELOPMENTINTERNATIONAL CENTRE FOR TRADE AND
SUSTAINABLE DEVELOPMENT, RESOURCE BOOK ON TRIPS AND DEVELOPMENT: AN AUTHORITATIVE AN PRACTICAL
GUIDE TO THE TRIPS AGREEMENT 237 (2005).
78
37
The plain packaging requirements allows controlled printing of the brand name on the side of the
product, and hence does not meet the above laid down standard.
XI. PLAIN PACKAGING RULES DO NOT UNJUSTIFIABLY ENCUMBER THE USE OF TRADEMARKS FOR
CRYSTALLINE SILICON CELLS IN THE COURSE OF TRADE THROUGH SPECIAL REQUIREMENTS
[A]. Prohibitions do not constitute special requirements in the course of trade
[1]. BAN ON USE OF NON-WORD TRADEMARKS ISNT COVERED UNDER SCOPE OF ART. 20.
72.
The prohibition on the use of non-word trademarks isnt covered under Art. 20, for they
dont constitute special requirements. An encumbrance can only be some form of positive
requirement about how a trademark is used, and not a total ban on use81. Nations retain the right
to prohibit the commercialization of certain goods, but if they do not, then they cannot unjustifiable
encumber use of trademarks. The same although counterintuitive, is consonant with the principle
that nations cant derogate the right of some. A total prohibition (grounds for which arent covered
under TRIPS), does not discriminate amongst right holders, and hence plain packaging isnt a
special requirement, it being a complete prohibition.82
[2]. SOLAR CELLS BEING INTERMEDIARY GOODS, ARENT TRADED
73.
Plain packaging requirements of solar cells themselves are not in the course of trade. The
word trade must be construed in its ordinary sense, and in line with the aim of regulation of final
goods markets of TRIPS. Solar cells are inputs towards the production of solar panels, and hence
arent traded in the open market.
[B]. Notwithstanding, such restrictions are justifiable
81
Mark Davison, The Legitimacy of Plain Packaging under International Intellectual Property Law: Why there is no
right to use a trademark under either the Paris Convention or the TRIPS agreement, SSRN (Jan. 13, 2015 10:00 AM),
http://ssrn.com/abstract=2009115.
82
Philip L. Paarlberg & John G. Lee, Import Restrictions in the Presence of a Health Risk: An Illustration Using
FMD, in THE WTO AND TECHNICAL BARRIERS TO TRADE 229, 240 (Spencer Henson et al. eds., 2005).
38
74.
The Plain packaging requirements as relates to font and colour of trademark are justifiable
encumbrances on use of trademarks and are permitted by TRIPS language under Art. 20. 83
[1]. ONUS OF PROVING UNJUSTIFIABLE FALLS ON LEVIOSA
75.
The burden of proof rests upon Leviosa for it is the party, which has asserted the affirmative
Art. 20, or any other provision in TRIPS doesnt provide a definition of justifiable. A
plain meaning interpretation refers to that what is capable of being justified 88, and is hence open
ended. However, any external interpretation of justifiable, must be in consonance with WTO
principles.
(i) Flexibility of domestic policy in line with sovereignty
77.
A WTO member is free to impose special requirements in its pursuit to achieve just public
policy goals.89 The categorization of goals as being just or not, however, may differ across nations.
Hence, although flexibility is given to a member to have national public policy goals, the same
cannot be restrictive of international trade or other WTO principles. The plain packaging
83
JAYASHREE WATAL, INTELLECTUAL PROPERTY RIGHTS IN THE WTO AND DEVELOPING COUNTRIES, 252 (2001).
Appellate Body Report, United StatesMeasure Affecting Imports of Woven Wool Shirts and Blouses from India,
WT/DS33/AB/R (May 23, 1997).
85
CORREA YUSUF & C ARLOS M, INTELLECTUAL PROPERTY AND INTERNATIONAL TRADE: THE TRIPS AGREEMENTS 13
(2008).
86
Appellate Body Report, United StatesCountervailing Duties on Certain Corrosion-Resistant Carbon Steel Flat
Products from Germany, 157, WT/DS213/AB/R (Dec. 19, 2002).
87
See CORREA YUSUF & CARLOS M, TRADE RELATED ASPECTS OF INTELLECTUAL PROPERTY RIGHTS: A
COMMENTARY ON THE TRIPS AGREEMENT (2007).
88
WEBSTERS COLLEGE DICTIONARY (1991).
89
NUNO PIRES DE CARVALHO, THE TRIPS REGIME OF TRADEMARKS AND DESIGNS 424 (2nd ed. 2011).
84
39
requirements are in line with Wingardiums domestic public policy of enhancing production of
electricity through green means, and the lack of complete ban instead of restrictions are to ensure
that innocent employees arent suddenly affected.
(ii) Justifiable is different from necessary as used under Art. 8 and proof of efficacy
required
78.
contrast to Art. 17, where these interests are expressly mentioned. 90 Further, justifiable is different
from Art. 8.1, with there being no notions of reasonability and proportionality attached, like
that is to necessity. Further, the three examples of special requirements given in Art. 20 are not
necessarily unjustified and a contrary interpretation would rob the principle of any effectiveness.
The mere presence of better alternatives does not mean that the steps taken by Wingardium are
unjustified.
[3]. RESTRICTIONS
79.
Plain packaging is necessary for the preservation of human life and health and is hence
The deleterious health effects of C-Si Cells have been established in multiple studies. Not
only does a possibility of possible cancer, and allergic reaction on contact exist, but the raw
materials like Silica involved in the processing and manufacture of the cells can be carcinogenic.
(a) Standard of proof with reference to health threat or evidence
81.
Legislatures are entitled to promote certain public interests and prevent the abuse of rights.
Intellectual property rights are, in effect, not absolute but subject to higher public interests.92
90
Id.at 441.
Appellate Body Report, European CommunitiesMeasures Affecting Asbestos and Asbestos Containing Products,
172, WT/DS135/AB/R (Apr. 05, 2001).
92
Brenner v. Manson 383 U.S. 519, 534-35 (1966).
91
40
Moreover, IPRs are granted to serve public interests through inventors and creators and not just to
benefit them. The TRIPS agreement, or the Doha Round do not place any standard or burden of
proof required whilst availing exemptions on ground of public health.93 What is required is that
there exist legitimate apprehensions about the possible ill effects of a particular product to warrant
its control. In the given scenario, the government of Wingardium can place restrictions on sale of
products pending conclusiveness and greater clarity on the health effects of C-Si cells.
Notwithstanding the same, Wingardium actions arent in derogation of the WTO principles of
unequal treatment, or discrimination depending upon origin for the requirements are based on type,
and not country or producer. The disproportionate effect of the requirements on Leviosa is purely
incidental, and cannot be grounds alone for the revocation of the requirements.
(b) Consideration of special needs of developing nations.
82.
During the drafting of Art. 20, the right of developing countries to take extraordinary
measures to protect their fragile eco-systems and population had been recognized. 94 Given the
precarious scenario of Wingardium, with the government being forced to procure alternate means
of electricity generation in huge quantities due to pollution, the nation is justified in being overly
cautious. Wingardium is further within its right to both engage and trade with Redondo in like
manner as Leviosa.
[C]. ADEQUATE SCOPE OF DIFFERENTIATION BETWEEN SOLAR CELLS
83.
There exists adequate scope of differentiation between different types of solar cells, and
accordingly manufactured solar panels. The plain packaging rules do not prohibit a manufacturer
from identifying the type of solar panel it is, that is, TF or C-Si. There hence is no deliberate
clouding, or blur between different types with a view to benefit the cheaper of the two; and hence
no unfair competition as per common law has occurred. The lack of any health warnings on TF
cells are a reflection of their better quality, and prevent any deception to the public with reference
to health effects of different types of cells.
93
MAX PLANCK INSTITUTE OF COMPARATIVE PUBLIC LAW AND INTERNATIONAL LAW, WTOTRADE-RELATED
ASPECTS OF INTELLECTUAL PROPERTY RIGHTS 346 (Peter-Tobias Stoll et al. eds., 2009).
94
DANIEL GERVAIS, THE TRIPS AGREEMENT: DRAFTING HISTORY AND ANALYSIS 116-17 (2d ed. 2003).
41
The plain packaging requirements do not discriminate on the basis of country of origin of
a particular product. Any disproportionality in effect is purely incidental for the rules themselves
dont explicitly lay out preferential treatment for any on country, and neither do they prohibit
manufacturers in Leviosa to manufacture TF cells, or vice-versa with Redondo.
XII. PROCEDURAL INFIRMITIES IN DISPUTE RAISED BY LEVIOSA
[A]. The dispute have not been raised as per the Energy Cooperation Agreement
[1]. SPECIAL
PARTIES.
85.
The ECA which Wingardium and Leviosa entered into forms a bilateral investment treaty,
and binds the countries in accordance with established principles of Public International Law. The
Energy Pact is specialized vis--vis the agreements of the WTO, and extend a greater level of
protection between parties.
86.
Being signatories to the New York Convention (UNCREFAA), both countries are required
to settle their disputes as per Art. 5 of ECA. The arbitration and exhaustion of local remedy clauses
are valid and binding upon the parties, both because they are instruments with force equivalent to
the WTO Agreements, and because a legitimate expectation of domestic first instance lies with
Leviosa.
(i) Arbitration under UNCITRALAR isnt incompatible with the DSU
87.
The role of the dispute settlement mechanism are strictly limited to the agreements of the
95
Panel Report, United States - Measure Affecting Imports of Woven Wool Shirts and Blouses from India, WT/DS33/R
(Jan. 06, 1997).
42
88.
The ECA does not guarantee any substantive rights over and above that what is granted to
it under the TRIPS and other WTO agreements. Even if additional protection related to trade was
guaranteed, the same would be judiciable under the WTO as per the equal protection clauses of
the Marrakesh Agreement.
(ii) Mutually agreed arbitration clause is binding under Art. 25
89.
Art. 25.1 allows alternate means of dispute settlement instead of the dispute settlement
mechanism of the WTO. The same recognizes the inherent inflexibilities and infirmities with a
court-like process of dispute resolution via the DSB, and hence recognizes the right of members
to engage in mutually agreed arbitration outside the WTO. There are no limitations on the scope
of arbitrations covered under Art. 25 96. Such an arbitral award is enforceable and binding. 97
90.
Both countries mutually agreed to settle the disputes using arbitration as per
UNCITRALAR principles, and the failure of Leviosa to conform to the provisions of the treaty is
both a violation of public international law, and of Art. 25 of the DSU.
[2]. ARBITRAL AWARD UNDER UNCITRAL IS BINDING UPON PARTIES AND EXCLUDES JURISDICTION
OF THE WTO.
91.
As per Art. 32 which talks about Termination of Proceedings, the arbitral proceedings can
only be terminated by either a final award, or an order of the tribunal. UNCITRALAR has to be
covered under the law of the state in which it is domiciled, which in this case is Wingardium.
Further, Sec. 35 makes binding a final award of the UNCITRAL tribunal on any and all countries,
and courts to which both Wingardium and Leviosa are signatories.
92.
The DSU can hence not proceed with the present dispute, for the same must be settled
through arbitration under UNCITRALAR. The challenge has been made in the first statement on
the substance of dispute, and hence the right to arbitrate is not waived or estopped. 98
Article 25 Arbitration Report, United States Section 110(5) of US Copyright Act, WT/DS160/ARB25/1 (Nov.
09, 2001).
97
MAX PLANCK INSTITUTE OF COMPARATIVE PUBLIC LAW AND INTERNATIONAL LAW, WTOINSTITUTIONS AND
DISPUTE SETTLEMENT 570 (Rdiger Wolfrum et al. eds., 2009).
98
Siderugica Mendes Junior S.A. v. Ice Pearl, 6 W.W.R. 411 (1996).
96
43
Panel procedure as per the principle of procedural economy and spirit of the WTO dispute
settlement is only the ultima ratio, and can only be used when Members are unable to find a
negotiated settlement. 99 It is established that the measures in question form the subject of
consultation between two countries before a request for resolution is made to the WTO.
[1]. CONSULTATIONS AS PER ART 6.2 ENTAILS ARBITRATION UNDER UNCITRALAR.
94.
Wingardium has not been in contravention of Art. 3 and Art. 4 of the DSU, for adequate
attempts were not made by Leviosa to enter into bilateral consultations to reach a mutually
satisfactory solution. This was valid as per the New York Convention, and the principles of the
UNCITRALAR of which both countries are signatories, the manner of request of consultations
should have followed serving of a notice as per UNCITRALAR. The same was a legitimate
expectation of Wingardium which awaited a legal challenge under its domestic legal system as per
Art. 5(3) of the ECA, and subsequently an arbitration notice, and Wingardium cant be held at
fault for not objecting to request for establishment of panel under the DSU.
[C]. Terms of Reference, and the request for establishment of panel arent precise enough.
95.
The terms of reference arent adequate for Leviosa failed to account for the developing
nation status, and the benefits enjoyed therein before serving a notice, and requesting for
establishment of panel. The terms of reference include an allegation of provision of benefits to
local producers, without the same being briefly elucidated. The terms are vague and make it
impossible for Wingardium to formulate a response to the same, and should hence be struck
down.100
99
100
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WG/SM/P-1
Does not violate Art. 2.1, TRIMS as it is not a trade related investment measure.
Does not violate Art. III:4 as it is not a regulation which treats like imported products
less favourably.
Does not violate Art. III:5 as it does not require the use of a specified proportion of
domestic materials in the product, and is therefore not against the principles of Art. III:1.
Does not violate Art. 3.1(b) and 3.2 of the SCM Agreement because it is not a subsidy
in the form of financial contribution or income or price support and no benefit is
contingent upon the use of domestic over imported goods.
Does not violate Article IX:4 of the GATT 1994, because Wingardium does not impose
requirements relating to the marking of imported Crystalline Silicon Cells which materially
reduce their value and/or unreasonably increase their cost of production.
134R.
45