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Most world trade is conducted pursuant to rules established by the Members of the Geneva-based World Trade Organization ("WTO"). These rules have major implications for the pharmaceutical industry. The WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs) contains important provisions relating to the standards of patent protection to be accorded to inventions in the pharmaceuticals field.

WTO Members are prohibited from discriminating among different fields of technology as regards the right to patent inventions. This protection also extends to their pharmaceutical patent regimes³. Subject to certain exceptions, WTO Members must also provide patent protection for any invention, whether a medicine or a process to produce a medicine, for at least 20 years from the date the patent application is filed.⁴ With respect to this latter point, in October 2000, the WTO's Appellate Body found that Section 45 of the Canadian Patent Act was inconsistent with Article 33 of the TRIPs Agreement , since "a term of protection that does not end before twenty years counted from the date of filing is not available under Section 45".⁵ The WTO arbitrator awarded Canada 10 months to implement the WTO decision, that is until August 12, 2001.⁶ During that period Canada amended its legislation to conform to its WTO obligations.

Article 30 of the TRIPs Agreement permits limited exceptions to the term of patent protection "provided that such exceptions do not unreasonably conflict with a normal exploitation of the patent and do not unreasonably prejudice the legitimate interests of the patent owner, taking account of the legitimate interests of third parties." On April 7, 2000 a WTO Panel found, in ruling on a complaint filed by the European Communities ("EC"), that the regulatory review exemption found in Section 55.2(1) of the Canadian Patent Act, which permits unauthorized use of a patented product by generic producers, for the purpose of seeking government approval to market a generic version following expiry of the patent, fell within the exceptions provided by Article 30 of the TRIPs Agreement.⁷ However, the same panel also concluded that the "stockpiling exemption" in Section 55.2(2) of the Canadian Patent Act, which permitted competitors to manufacture and stockpile patented medicines prior to expiration of the patent, for sale after its expiry, constituted a "substantial curtailment" of the exclusionary rights of patent owners and therefore did not fall within the terms of the "limited exception" provided in Article 30 of the TRIPs Agreement .⁸ The WTO arbitrator awarded Canada six months to eliminate the stockpiling exemption. On October 23, 2000, Canada notified WTO members that it had implemented the decision.

Shortly after the EC challenge, Canada initiated consultations with the EC regarding the EC regime for patent term extension.⁹ Today, however, these consultations remain dormant.

A significant obligation under Article 39.3 of the TRIPs Agreement is the obligation of WTO Members to protect against the unfair use, by competitors of the patent holder, of undisclosed test data submitted to obtain approval for the marketing of pharmaceutical products. This obligation is the focus of the dispute in Argentina - Certain Measures on the Protection of Patents and Test Data.¹⁰ In this case the United States is alleging, among numerous other claims, that Argentina's patent regime is inconsistent with Article 39 of the TRIPs Agreement in that it fails to protect against unfair use of such test data.¹¹ The U.S. apparently fears that local generic producers will obtain access to clinical test data, thus speeding development of generic products.

Argentine patent protection laws are also the subject of the dispute in Argentina - Measures Affecting the Import of Pharmaceutical Products.¹² India is challenging Argentine legislation that would deny Indian pharmaceutical companies access to the entire Argentine market, based on registration and inspection requirements that exclude Indian drugs and pharmaceutical products.

These cases and others demonstrate that pharmaceutical companies have a strong interest in keeping informed of the activities of the WTO and seeking to influence the WTO negotiating process at the earliest possible stage - particularly in light of the new agenda for trade negotiations agreed in November 2001 by WTO Members in Doha. These negotiations may result in the weakening of certain types of intellectual property protection important to the pharmaceutical industry. Industry involvement is therefore critical to ensure that the industry viewpoint is considered during the negotiations and that adequate protection of intellectual property remains a part of the international trading system.

The Results of the Doha Ministerial Conference: Intellectual Property and Access to Medicine

On November 14, 2001, Trade Ministers from WTO Member countries meeting in Doha adopted a Declaration on the TRIPs Agreement and Public Health¹³ and a Ministerial Declaration incorporating an expanded negotiating agenda.¹⁴ The pharmaceutical industry needs to be aware of both. Salient parts of the TRIPs Declaration are:

• Each WTO Member is to have the right to grant compulsory licences and the freedom to determine the grounds upon which such licences are to be granted.
• Least Developed Countries are to have until the end of 2016 to implement, apply and enforce obligations concerning "Patents" and the "Protection of Undisclosed Information."¹⁵
• Each WTO Member is to have the right to determine what constitutes a "national emergency" or "extreme urgency" (for compulsory licensing purposes). Public health crises are defined to include HIV/AIDS, tuberculosis, malaria and other epidemics.
• Ways are to be found to allow Members which lack manufacturing capacity in the pharmaceutical sector to benefit from the compulsory licensing right.

The Ministerial Declaration reaffirms the TRIPs Declaration and calls for an examination of the relationship between the TRIPs Agreement, the Convention on Biological Diversity, and the protection of traditional knowledge and folklore. This provision of the Ministerial Declaration warrants attention given that traditional knowledge and folklore are sources of pharmaceutical innovations and that widespread support exists in the developing world for compensating the holders of such knowledge for innovations derived therefrom.

Concluding Comments

 The Doha Ministerial Conference must be viewed in the context of 1)  the AIDS pandemic sweeping sub-Saharan Africa, 2) the pressure placed on the German firm Bayer AG, following the anthrax scare in the United States, to lower prices or license its antibiotic Ciprofloxacin (Cipro), and 3) recent European court decisions regarding the exhaustion of intellectual property rights.

In the upcoming WTO negotiations, innovative pharmaceutical companies would be well advised to work to ensure that trade officials approach with caution the carefully negotiated balance between providing proper pharmaceutical patent protection - essential to the development of new medicines and treatments - and the need to allow developing countries some flexibility to provide affordable essential medicines to their populations. They would also be well advised to ensure that the derogation for pharmaceutical products granted to the Least Developed Countries in paragraph 7 of the TRIPs Declaration does not unduly weaken data protection under TRIPs Article 39.3 and that the right balance is achieved in negotiations concerning the exceptions provided in TRIPs Article 30 (Exceptions to Rights Conferred).¹⁶

Lalive & Partners and Ogilvy Renault have extensive experience in WTO dispute settlement, including advising governments, businesses, and other organizations.

Ogilvy Renault has an extensive pharmaceutical and intellectual property practice and Lalive & Partners have an extensive intellectual property practice.

For ease of reading, certain citations have been omitted.

1. Geneva, Switzerland.
2. Montréal, Ottawa, Toronto, Québec, Vancouver and London, England.
3. WTO Agreement on Trade-Related Aspects of Intellectual Property Rights, Article 27.1.
4. WTO Agreement on Trade-Related Aspects of Intellectual Property Rights, Article 33.
5. Canada - Term of Patent Protection, complaint by the United States (WT/DS170/AB/R), (12 October 2000), at para. 99. The WTO Appellate Body upheld all of the conclusions of the panel that were appealed.
6. Canada - Term of Patent Protection, Arbitration under Article 21.3(c) of the Understanding on Rules and Procedures Governing the Settlement of Disputes, Award of the Arbitrator Claus-Dieter Ehlermann (WT/DS170/10), (28 February 2001).
7. Canada - Patent Protection of Pharmaceutical Products, complaint by the European Communities (WT/DS114/R), (7 April 2000), at paras. 7.59 and 7.36.
8. Canada - Patent Protection of Pharmaceutical Products, Arbitration under Article 21.3(c) of the Understanding on Rules and Procedures Governing the Settlement of Disputes, Award of the Arbitrator James Bacchus (WT/DS114/13), (18 August 2000).
9. European Communities - Patent Protection for Pharmaceutical and Agricultural Products, complaint by Canada (WT/DS153).
10. Argentina - Certain Measures on the Protection of Patents and Test Data, complaint by the United States (WT/DS196).
11. TRIPs Article 39.3 provides that, when a Member requires the submission of certain undisclosed test data as a condition of approving the marketing of a new pharmaceutical product, the data must generally be protected against disclosure and/or unfair commercial use.
12. Argentina - Measures Affecting the Import of Pharmaceutical Products (WT/DS233). This is the only case described in this note that does not involve the TRIPs Agreement. Instead India is alleging violations of the Agreement on Technical Barriers to Trade, the GATT 1994, and the Agreement Establishing the WTO.
13. See Declaration on the TRIPs Agreement and Public Health, WTO Document WT/MIN(01)/DEC/.
14. See Ministerial Declaration, WTO Document WT/MIN(01)/DEC/1.
15. These obligations are found in Sections 5 and 7 of Part II of the TRIPs Agreement.
16. The TRIPs Declaration also subjects Article 30 to a derogation for pharmaceutical products for Least Developed Countries.

The purpose of this document is to provide information as to developments in the law. It does not contain a full analysis of the law nor does it constitute an opinion of Lalive & Partners or of Ogilvy Renault or any member of either firm on the points of law discussed.

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