Economic espionage has been a hot topic of sorts since the September 2015 agreement was made between USA and China, that called for both the countries to not knowingly conduct or support cyber enabled trade secret theft from companies in each others’ land with the intent of providing competitive advantage to its companies of commercial sector. Agreed upon during President Xi JinPing’s visit to the USA, it came as a response to Chinese officials being charged with cyber economic espionage by the US authorities, sparking worldwide debate.
Discussing ‘economic espionage’ as a category in itself for the first time, it opened the floodgates for debate around the legality of such theft and coverage by international agreements, especially TRIPS and the possibility of raising a claim in the WTO. Though the agreement managed to quell the anger of the Americans, what remained was the echo of the possibility of WTO action.
Trips violation: Article 39
Article 39 of the TRIPS provides for the protection of “undisclosed information”, like trade secrets and prima facie, seems like the best option to pursue WTO action under. Though the substantive requirements listed under Article 39 will be fulfilled based on the facts and circumstances of each case, the question that will remain uniform in all possible action of the type considered is with respect to the nature of obligations imposed under Article 39.2. Article 39.2 requires that natural and legal persons have the “possibility of preventing” information under their control to be either acquired or used without their consent (among other things).
Keeping the above points in mind, claiming a TRIPS violation does not make sense to combat the problems of cyber economic espionage.
Another possible avenue that a State can pursue is filing of a non violation complaint as provided by Article 26.1 of the DSU and Article 64.1 of TRIPS. However, there are two reasons, apart from the substantive difficulties, why this might not be the best route to take. Firstly, that this remedy is of exceptional nature and currently, there is “moratorium” or a temporary ban on bringing of non-violation complaints to the WTO with respect to intellectual property issues.
Secondly, Article 26.1(b) does not require the ‘measure’ to be withdrawn, but only states that the Appellate Body shall recommend that the members make a ‘mutually satisfactory adjustment’, which may not be useful in circumstances where one country alleges, like the US, that billions of dollars have been lost due to trade secret theft and are looking for a more ‘forceful’ remedy.
In light of the above analysis, an action against any state on the basis of a TRIPS violation does not seem to be a viable option for combating cyber economic espionage. One way in which such acts can be challenged, as suggested by some scholars, is to renegotiate TRIPS in a way to specifically address this question, but until that happens, approaching WTO with a TRIPS violation is not the way to go to tackle the issue, maybe that’s why an agreement was carved out in the first place.