Compulsory licensing of patented pharmaceutical inventions: evaluating the options

1. THE DOHA MINISTERIAL DECLARATION ON TRIPS AND PUBLIC HEALTH

The developing countries’ victory in this regard — modest as it otherwise seems in the overall context of burdensome TRIPS obligations — was destined to bear even greater fruits with specific regard to pharmaceuticals. The worldwide patent standards adopted by the TRIPS Agreement threatened to disrupt future supplies of patented medicines at prices people in poor countries could afford by elevating the prices patentees would charge affluent patients in these countries.¹⁵ In principle, developing country governments needing drugs at prices lower than those of the patentees could issue compulsory licenses under article 31 of the TRIPS Agreement. In reality, most of these countries lacked the capacity to manufacture the drugs in question, or otherwise to obtain the key active ingredients, in which case the granting of a compulsory license could amount to an empty gesture for lack of access to non-infringing generic substitutes.

Of course, Good Samaritan countries that possessed manufacturing capacity might be willing to assist a needy country by issuing compulsory licenses of their own, with a view to exporting supplies of the drug in question for this purpose. But that type of assistance was limited by article 31(f) of the TRIPS Agreement, which expressly required products manufactured under a compulsory license to serve “predominantly for the supply of the domestic market” (thus limiting such exports literally to 49.9 per cent of the total output). Moreover, even middle-income countries with growing manufacturing capacity, such as India and Brazil, might themselves need a drug that they could not manufacture locally, in order to temper a patentee’s prices. In that case, any willing supplier to them — if one could be found in a developed country — would likewise be bound by the limitation on exports that article 31(f) imposed.

The tensions generated by these prospects for rising prices of essential medicines came to a head in the late 1990s, at the very time when the developed countries wanted the developing countries to agree to yet another round of Multilateral Trade Negotiations, to be known as the Doha Round. The latter countries made removal of constraints on their public health authorities under the TRIPS Agreement a sine qua non of their participation in that Round. The outcome was a momentous Ministerial Declaration on the TRIPS Agreement and Public Health of 2001, which, in paragraph 4, affirmed that this Agreement “can and should be interpreted and implemented in a manner supportive of WTO Members’ rights to protect public health and, in particular, to promote access to medicines for all.”¹⁶

The Ministerial Declaration expressly reconfirmed many of the key flexibilities set out in the TRIPS Agreement,¹⁷ including the power of WTO Members “to grant compulsory licenses and the freedom to determine the grounds upon which such licenses are granted,”¹⁸ a freedom that the originator pharmaceutical companies had continued to question despite the clarity of the TRIPS language itself. The Declaration then expressly addressed the constraints on exports set out in article 31(f ) of TRIPS. In paragraph 6, it provided a mandate for “establishing legal machinery to enable countries lacking the capacity to manufacture generic substitutes for costly patented medicines under domestically issued compulsory licenses to obtain imports from countries able and willing to assist them without interference from the relevant patent holders.”¹⁹

2. THE WAIVER TO, AND PENDING AMENDMENT OF, ARTICLE 31

This solution, which obviously improved the export opportunities for generic producers in Brazil, China, India, and other emerging economies, was to be broadly applied to all “products of the pharmaceutical sector needed to address the public health problems as recognized in paragraph 1 of [the Ministerial Declaration].”²⁰ There were no limitations in that paragraph on the application of the new legal machinery either to cases of national emergency or to specific diseases or medicines.²¹ This machinery would thus enable any country (that had not voluntarily waived the privilege) to issue a compulsory license for a medicine it could not produce and then to seek help from any other country having that capacity that was willing to assist it. If the latter country issued a second compulsory license, and otherwise complied with specified conditions of registration and packaging, it could produce the requested medicines entirely for export and supply the needy country, notwithstanding the language of article 31(f ) of the TRIPS Agreement to the contrary.²² While “adequate compensation” must be paid to the patentee,²³ it will be collected once only, in the exporting country, based on conditions in the importing country.²⁴

In other words, the scheme ultimately negotiated under the auspices of paragraph 6 of the Doha Ministerial Declaration envisioned a process of back-to-back compulsory licenses that would enable any country needing medicines at lower prices than those charged by local patentees to seek assistance from other countries able and willing to produce the drugs for export purposes, without interference from the patentee in either country. After protracted and difficult negotiations, this solution was initially embodied in a Waiver, known as the Decision of 30 August 2003.²⁵ If all goes as planned, this Waiver would be rendered permanent by virtue of a pending Amendment to the TRIPS Agreement, known as article 31bis.²⁶ The Waiver remains in effect while governments take steps to ratify the Amendment,²⁷ as the European Union recently did after the European Parliament endorsed the Amendment and issued instructions for its wholehearted implementation.²⁸ As of 2009, the Waiver process had only been used once due in part to the cumbersome procedures put in place by some governments, in addition to the core WTO process.²⁹

Meanwhile, the originator pharmaceutical industry did not accept this further defeat without countervailing initiatives of its own. Besides flooding the world with misleading and self-serving interpretations of the relevant legal instruments, which continue to influence incautious government officials and even some scholars to this day, the industry persuaded the United States Trade Representative (USTR) to recapture some of the lost ground by means of Bilateral or Regional Free Trade Agreements with developing countries. While this topic lies well beyond the scope of this Comment, readers should be aware that the flexibilities concerning governmental powers to grant compulsory licenses of patented pharmaceutical medicines under the legal regime described above could be severely limited, or even largely abrogated, by the one-sided intellectual property provisions of specific FTAs.³⁰ Moreover, threats and political pressure from USTR and other governmental agencies, including some spokesmen for intergovernmental agencies and even for the European Commission, effectively kept most governments — until recently — from actually invoking or using the legal rights they had doggedly managed to obtain at the international level.

There was, in short, a conspicuous absence of compulsory licensing in the pharmaceutical sector even after the decision of the South African authorities, in 2003, to the effect that two foreign firms had violated the domestic competition law by refusing to grant licenses for patents on essential AIDS medicines.³¹ While this decision did result in the issuing of compulsory licenses (within the ambit of TRIS Agreement article 31(k)), the heated legal battles and controversy surrounding this case, plus renewed pressures from powerful governments, may actually have diminished, rather than strengthened the developing countries’ appetites for attracting unwelcome attention by such means. This pressure was intensified by mushrooming FTAs that aimed to circumscribe their rights under TRIPS.

1. THE CONVEX DEMAND CURVE PROBLEM

While this thesis undoubtedly identifies one relevant factor, the contribution to this Symposium by Sean Flynn, Aidan Hollis, and Mike Palmedo⁵⁶ provides a more compelling explanation for originator companies’ resistance to price discrimination in poor countries. Indeed, we should be grateful that, by publishing this article, the Journal will bring Aidan Hollis’ brilliant economic analysis, long circulating among NGOs, to the attention of a wider audience.

Hollis shows that, in very poor countries characterized by great disparities of income, the rational-acting originator company seeking to maximize profits will logically charge high prices to the affluent sector of the society, because it will earn much greater profits than if it had distributed the same drug to poverty stricken masses at prices they could afford. Calling this the problem of “highly convex demand curves”⁵⁷ for essential goods in countries with large disparities of income, Hollis shows, for example, that the rational-acting firm operating in South Africa would maximize profits “by selling at the price that only the top 10% can afford.”⁵⁸ In effect, “the firm will maximize its profits by setting a price unaffordable for at least 90% of …[the] people.”⁵⁹ That finding translates to a deadweight loss of 90 percent, in a pharmaceutical sector where, as James Love famously observed, deadweight loss tends over time to become dead bodies.

Hollis contrasts his figures on South Africa with conditions in Norway, where there is a high degree of income equality and the “convex demand curve” problem largely disappears. He demonstrates that a rational-acting originator company that price discriminated a patented medicine in Norway would accordingly make much greater profits than one who charged a high flat rate for a privileged few.⁶⁰ The former company will considerably reduce deadweight loss as well, in its own self-interest.

Flynn, Hollis, and Palmedo thus answer the question that mystifies so many newcomers to this field: originator companies avoid price discrimination in poor countries because it is considerably more profitable for them to charge monopoly prices to affluent citizens, as their patents enable them to do. The government of a poor country that wants lower prices in order to supply the bulk of the population thus priced out of the market must accordingly force the company to act against its private self-interest in the larger interests of public health. And the most powerful tool for achieving this end remains that of a threat by the state to impose a compulsory license. As the Thai Government explained in a White Paper, for example, the goal behind its recent barrage of compulsory licenses was to move the relevant pharmaceutical companies from a “low volume-high margin” pricing strategy to a “high volume-low margin” alternative approach.⁶¹

A complementary strategy might focus on building price discrimination tools into the developing countries’ pharmaceutical distribution systems, with a view to enabling more rational policies. Most commentators neglect this question, but if the U.S. can maintain many levels of pharmaceutical price discrimination, perhaps developing countries could achieve two or three.⁶² In Mexico, for example, Professor Outterson suggests that three distinct markets could be segmented: the elite private insurance markets, the Seguridad Social system for those working in the formal economy, and the public health system for the remaining citizens.⁶³

2. USING COMPULSORY LICENSES TO REMEDY THE PROBLEM

Governments adopting the compulsory licensing strategy must exercise caution in choosing the legal instruments best suited to accomplishing their goals, in order to withstand both the political and economic pressures they are certain to elicit and to emerge unscathed from any legal action filed against them at the WTO. Here Flynn, Hollis, and Palmedo cast a yearning glance back to the days before 1992, when Canadian law imposed a “license of right” on all patented pharmaceutical products marketed in that country.⁶⁴ Any would-be generic distributor could apply for such a license and, if granted, could produce and market the patented medicine at competitive prices, in return for a four percent royalty that the Commissioner of Patents typically imposed.⁶⁵

The Canadian license of right, which lasted for more than 50 years, undoubtedly helped to establish that country’s robust generic industry, although critics contend that it discouraged the establishment of a research-based pharmaceutical sector at the same time. Both the generic industry and any research-based companies must, of course, operate in the shadow of larger U.S. competitors, and under the regulatory constraints of national and provincial public health programs.

In the early 1990s, the Reagan Administration pressed the Canadian government to abandon its license of right scheme, in exchange for a commitment by U.S. producers to contribute a share of their profits to support medical research in Canada.⁶⁶ The Canadian compulsory licensing approach was then formally prohibited by the intellectual property chapter in the North American Free Trade Agreement (NAFTA), whose provisions, in turn, became a blueprint for article 31 of the TRIPS Agreement.⁶⁷

Under the latter provision, a WTO Member government cannot subject whole classes of pharmaceuticals — such as “essential medicines” — to a pre-established compulsory licensing scheme. It must, instead, adopt a case-by-case approach and shape the compulsory license to meet the purpose for which each license was authorized.⁶⁸ Under ordinary circumstances, the license would issue only after a failed negotiation with the rights holder,⁶⁹ and — at least in principle — could be terminated “if and when the circumstances which led to it cease to exist and are unlikely to recur.”⁷⁰ Any decision to grant such a license must be subject to judicial review (or comparable review by another higher authority),⁷¹ and “adequate remuneration in the circumstances of each case” must be paid.⁷²

Given these legal obstacles to a pure “open access” scheme, Flynn et al. stress the importance of competition law as a viable alternative in many cases.⁷³ While an action sounding in anticompetitive conduct under article 31(k) will require some judicial or administrative process,⁷⁴ a finding of such conduct exempts the government from any need to negotiate with the patent holder, and even from the obligation to confine a compulsory license predominantly for the supply of the domestic market.⁷⁵ The amount of remuneration may also become negligible in such cases, given the punitive aspects of remedying anticompetitive behavior.⁷⁶

However, our authors make resorting to competition law sound much easier than it has so far proved to be for most developing countries. Competition law, as practiced in developed countries, entails complex economic analysis, high transaction costs, and skilled regulators.⁷⁷ Moreover, the E.U. practice, built around measures to prevent abuse of a dominant position, varies considerably from the much less aggressive stance of the U.S. authorities,⁷⁸ which looks for evidence of actual monopolization or intent to achieve it.⁷⁹ Both regimes depend on a complex showing of market power, although long-standing (but increasingly disfavored) common law precedents sounding in patent law still allow U.S. courts to impose compulsory licenses for “misuse of patents” in the absence of market power.⁸⁰

Besides these technical intricacies, there are high level policy decisions that must be made about the goals of competition law in general, i.e., efficiency or fairness, or some combination of both,⁸¹ and then about the proper relationship to be struck between that version of competition law and the incentives to innovate that flow from the exclusive rights of intellectual property law.⁸² Increasingly, competition law in developed countries is seen, rightly or wrongly, as providing a supportive and complementary role of promoting welfare — one that is consistent with the goals of intellectual property law, rather than a serious restraint upon it.⁸³ This view makes doctrines that override intellectual property rights, such as the “essential facility” doctrine recommended by Flynn et al.,⁸⁴ much harder to obtain in practice than may appear in theory.⁸⁵

Developing countries have lagged behind in the field of competition law, and some, such as China, are just beginning to explore its possibilities. These countries would be well advised to track early U.S. cases, emphasizing fairness over efficiency;⁸⁶ and to adopt both the “abuse of a dominant position” theory of E.U. law and a flexible doctrine of “patent misuse” historically rooted in U.S. patent law, which could reach refusals to deal, excessive prices, and undersupply of the market, without a showing of market power.⁸⁷ But such measures must be applied equally to domestic firms as to foreign firms,⁸⁸ without discrimination, and therein lies a serious rub.

While competition law can provide useful tools in appropriate cases, developing countries envisioning a need for compulsory licensing of patented pharmaceuticals should look to other tools not explored by our authors that lie outside competition law. One is the Waiver (and, eventually, Amendment scheme under pending article 31bis of the TRIPS Agreement), which enables developing countries without manufacturing capacity to implement compulsory licenses with the aid of countries that do possess such capacity, a topic already mentioned above.⁸⁹ A second tool worth exploring is the Belgian model also identified above, which facilitates compulsory licensing in the interest of public health under articles 8 and 30 of the TRIPS Agreement, rather than article 31 as such. While the legality of this route has yet to be tested by WTO tribunals,⁹⁰ the modalities it offers arguably remain consistent with TRIPS, so long as the preconditions of article 31 are largely observed in practice.

1. POTENTIAL LOSS OF FDI AND INVESTMENT OPPORTUNITIES

Professors Bird, Lybecker, and Fowler all express concerns that, when faced with the risk of compulsory licensing, pharmaceutical companies may vote with their feet. For example, patent-holding drug companies may cancel or reduce planned investments in the area,¹³⁷ decline to bring new products to the country in question,¹³⁸ or even withdraw from the territory altogether, as was threatened in both South Africa¹³⁹ and Thailand.¹⁴⁰

In approaching this issue, let us first note the evidence showing that there is no clearly defined or established relation between the level of intellectual property protection a developing country provides and FDI. Some countries, such as China, attracted massive amounts of FDI, despite woefully inadequate intellectual property protection, because the market opportunities and other conditions remained irresistible.¹⁴¹ Other poor countries, with little to offer in the way of comparable economic opportunities, attract virtually no FDI despite patent laws that sometimes afford more protection than that of the United States.¹⁴²

This said, there is something intriguing about these threats to withhold new pharmaceutical products, or to withdraw from the territory, that merits deeper reflection. Consider, for example, what might happen if similar threats were carried out against Ruritania, whose government is assumed to possess legal expertise and a measure of political independence for present purposes. First, the Ruritanian health authorities would immediately understand that all new pharmaceutical products not the subject of local patent applications had fallen into the public domain by definition.¹⁴³ The authorities would thus remain free to reverse-engineer the relevant molecular entities in private laboratories or at their universities, as supplemented where necessary by hiring outside technical experts in order to obtain the key active ingredients.¹⁴⁴

Once the molecule was successfully reverse-engineered, the Health Ministry could tender bids to generic producers anywhere in the world — including Brazil, India, and China — to establish plants in Ruritania for production of the drug in question. These producers could arguably supply both the local population and, as exporters of legitimate parallel drugs unfettered by patents, any country in the rest of the world that had adopted a policy of international exhaustion (which remains perfectly consistent with article 6 of the TRIPS Agreement). More importantly, Ruritania could also export these drugs to any other country that, lacking manufacturing capacity of its own, had issued a compulsory license for them under the Waiver machinery of the Doha Declaration.¹⁴⁵

Of course, the market in Ruritania might afford insufficient economies of scale to attract such investment, although that apparently was not the case in Egypt or Thailand, where disgruntled foreign pharmaceutical companies canceled similar investments.¹⁴⁶ In that event, Ruritania, as a WTO Member without manufacturing capacity, could appeal to any other Member having that capacity for assistance under the Waiver to article 31 of the TRIPS Agreement.¹⁴⁷ Such an appeal would be administratively simpler to handle than was the case with Rwanda, because it would require only one compulsory license — in the exporting country — rather than back-to-back compulsory licenses in two countries, as the Waiver would normally entail.

Either way, a determined Ruritania appears likely to obtain the drugs, and possibly the capacity to compete with the originator company in third markets as well, while the originator company would lose its foothold in Ruritania and, perhaps, tarnish its image there and throughout the developing world. All this because the originator company had been unwilling to supply the drug at profit-making prices that a large percentage of the population could afford instead of at monopoly prices that only the richest elite could afford.¹⁴⁸ At this point, the reader may well begin to ask who is threatening whom? Let us return to this question when we discuss the advantages of a cooperative, rather than a confrontational, approach below.¹⁴⁹

2. REDUCING INCENTIVES TO INNOVATE

Most informed observers agree that investing in pharmaceutical R&D is a very risky business, which is the principle justification offered for strong pharmaceutical patents. So Bird, Lybecker, and Fowler logically worry about lessening those incentives by exposing originator firms to the risk of compulsory licenses (i.e., ex post liability rules, in the form of a reasonable royalty) in place of the ex ante exclusive rights they had initially planned to exploit.¹⁵⁰

In reality, as Professor Outterson and others have demonstrated, investment in cures for Type I diseases are geared to developed country markets and not to potential returns from developing countries, at least at the present time. The value of markets for these drugs in most poor countries remains relatively so low — compared to conditions in, say, the U.S. and E.U. — that Outterson envisions a “buy out” scheme that would enable patent-free distribution in poor countries, side-by-side with monopoly pricing in OECD countries.¹⁵¹ In short, and under present-day conditions, the issuance of compulsory licenses on Type I medications in poor countries would have virtually no impact on incentives to innovate in rich countries.¹⁵²

Over time, however, the emergence of major middle-income markets, such as those in India, China, and Brazil, could increasingly affect incentives to invest in such drugs by expanding the potential for long-term aggregate revenues.¹⁵³ That prospect is another reason why big originator companies will likely invest in local production in those countries anyway, despite policies to ensure broader access to medicines that their governments may pursue. One way forward is to permit the drug companies to retain the elite markets in these poor countries, and to focus access proposals on the public sectors. In Brazil, for example, branded AIDS drugs are sold to the privately insured, despite the fact that any Brazilian may receive them for free at public clinics. The wealthy seldom frequent public clinics, and are willing to pay more for the branded drugs.

Professors Lybecker and Fowler express concerns about R&D pertaining to tropical, neglected, and other diseases prevalent in poor developing countries.¹⁵⁴ There is virtually no investment in cures for such diseases by the major research-driven companies that compulsory licensing could discourage.¹⁵⁵ On the contrary, the hope for treating these diseases rests on public-private collaborations, funded largely by donors, in which big pharmaceutical companies have laudably participated for humanitarian reasons, with mixed results thus far.¹⁵⁶ This collaborative process may benefit from compulsory licensing machinery when some particular patented component blocks collective action, rather than the other way around.¹⁵⁷

In the future, one may imagine private research-based pharmaceutical industries in certain developing countries turning their attention to tropical, neglected, and poverty-related diseases, in the hopes of financial gain, and they may also seek to adapt cures for Type I and Type II diseases to developing world conditions. In that event, the use of compulsory licenses must be handled with care to ensure that incentives were maintained by means of a suitable correlation between risk and profit. If and when that eventuality should materialize, one might also dare to hope that the very firm that had invested in such projects might be inclined to market the resulting medicines on a “high-volume, low profit margin” basis, for the benefit of both private and public interests, in which case compulsory licensing would become superfluous.¹⁵⁸

3. THE ADVANTAGES OF COLLABORATIVE ACTION

Professors Bird, Lybecker, and Fowler rightly emphasize the need for a more collaborative approach to the issues that surround compulsory licensing, and both articles point to the advantages of a pooled procurement strategy, which Professor Abbott and I have recently explored in depth.¹⁵⁹ Without delving deeply into this topic here, let me stress in passing that the legal machinery adopted under the aegis of the Doha Declaration serves to promote, rather than to hinder, this very sort of collaboration.

If a number of developing countries pooled their procurement needs by coordinating the potential use of compulsory licenses for selected medicines, they could generate economies of scale and scope to entice even the originator pharmaceutical companies to play ball with them, rather than against them. The carrot in such a scenario is the possibility for the originator company to exercise its exclusive rights, including trademarks, over a suitably large area that would make it worth their while to collaborate even at discounted prices. Ideally, incentives can be calibrated to provide still greater rewards to those originator companies willing to invest in local production facilities serving the areas or countries that had coordinated their procurement needs.¹⁶⁰ Local production, in turn, implants know-how into the local community, and it tends to stimulate both capacity for — and commercial interest in — conducting research on diseases of local importance, with the possible use of indigenous resources.¹⁶¹

By the same token, originator companies unwilling to cooperate in a pooled procurement strategy would run the risk that the potential market for the drugs in question could be handed over to investors from other developing countries. If that occurred, it would provide the coordinating countries with many of the same advantages that would otherwise accrue from cooperation with the originator companies. In other words, pooled procurement strategies under the aegis of the Doha Declaration could produce a win-win situation for all concerned, in which the overall goal was that envisioned by Flynn, Hollis, and Palmedo, namely, to make medicines available at prices most people in developing countries could afford, and not just a privileged few.¹⁶²

4. THE RISK OF RETALIATORY ACTION

Meanwhile, living as we do in a more confrontational climate, one must remain acutely aware of the risks that powerful governments may retaliate against developing countries that press their rights under the Doha Declaration by issuing compulsory licenses on patented medicines. Both Bird and Lybecker emphasize these risks,¹⁶³ with Thailand as a case in point. Not only did USTR place Thailand under the 2007 Special 301 “Priority Watch List Surveillance,”¹⁶⁴ it threatened to terminate Thailand’s Generalized System of Preferences (GSP) privileges to export certain products to the U.S. at low or no tariffs, in retaliation for its resort to the compulsory licenses in question.¹⁶⁵

At the outset, it is well to acknowledge that we cannot infuse public officials in developing countries with the courage to defend themselves if they are unwilling to do so. What can, and should be said, is that governments ought not to contemplate issuing compulsory licenses on patented pharmaceuticals unless they are prepared to stand up for their legal rights; and if they do stand up for those rights, then it is the retaliating state — not the victims — who will most likely be found to violate WTO rules.

Article 23 of the WTO Dispute Settlement Understanding (DSU) obliges Members to seek redress for alleged violations of the WTO Agreement, including its TRIPS component, by means of specified multilateral venues and procedures.¹⁶⁶ Under this provision, if the U.S. authorities believe that a developing country government has abusively issued a compulsory license, they may lawfully haul that country before a WTO dispute settlement panel and state their case, with a right of appeal to the WTO Appellate Body. What USTR cannot legally do is to unilaterally impose sanctions for the loss of expected trade benefits, as it appears to have done in the case of Thailand.¹⁶⁷ In fact, there is already a WTO panel decision criticizing USTR for past use of Section 301 listings for TRIPS-related matters, and that decision expressly warned that sanctions would likely be authorized if such violations continued in the future.¹⁶⁸

From a legal rather than a political-economic perspective, there is accordingly a greater risk that unilateral retaliatory action will be held in violation of WTO law than that governments issuing compulsory licenses in conformity with the Doha Declaration will themselves incur sanctions under WTO rules. Moreover, if powerful states continue to engage in unilateral retaliations of this sort, they run still another set of legal risks that has thus far been underappreciated. Because such action constitutes a violation of the DSU and of the framework Agreement Establishing the WTO,¹⁶⁹ it would entitle the aggrieved party to all the remedies that the Vienna Convention on the Law of Treaties provides for breach of the relevant agreements.¹⁷⁰ A primary remedy thus provided is the age-old right of self-help implicit in the power of an aggrieved party to suspend its obligations under the treaty in question, pending compensation for breach.¹⁷¹

In sum, if Occitania wrongfully retaliates against Ruritania for issuing a compulsory license, then Ruritania may become entitled to suspend its obligations to protect patented pharmaceuticals under the TRIPS Agreement, with respect to Occitania, until the treaty violation was either purged or compensated. In that event, if Occitania sued Ruritania at the WTO for nullification or impairment of benefits under TRIPS,¹⁷² the likely result would be a vindication of Ruritania’s counterclaim that Occitania’s unilateral retaliation had violated article 23.1 of the DSU and, thereby, justified Ruritania’s own self-help defensive action.

There is little reason to suppose that the new administration in Washington will change pre-existing intellectual property policies, given that it continues to draw considerable support from those industries that obtained such policies from the Clinton and Bush administrations. Nevertheless, the new administration has expressed serious concern to promote the rule of law in international relations, unlike its immediate predecessor. If so, there is hope that it will take steps to avoid the dubious legal position and corresponding risk of sanctions to which unilateral retaliatory action necessarily exposes it.