"Brazil, Pharmaceutical Industry and WTO"
BY: DAYA SHANKER
University of Wollongong
Document: Available from the SSRN Electronic Paper Collection:
http://papers.ssrn.com/paper.taf?abstract_id=272208
Contact: DAYA SHANKER
Email: Mailto:ds20 at uow.edu.au
Postal: University of Wollongong
Northfields Avenue
Wollongong 2522, New South Wales AUSTRALIA
ABSTRACT:
This article is an in depth analysis of Brazil-USA dispute and
has concluded that grounds on which USA has raised the issue are
quite weak and USA has a very slim chance of wining the issue.
This article also analyzes the Panel's Report in Canada-Patent
Protection of Pharmaceuticals in detail as this report is going
to be used extensively in this dispute. The role played by PhRMA
and other research scholars in this dispute has also been
examined to reach a comprehensive conclusion.
The issues involved are following a. local working in Brazil's
Industrial Property Law b. Parallel Importing in Brazil's
industrial Property law c. Alleged violation of WTO provisions
in USA Patent Law stipulating that the patent developed with the
help of public financing has to be worked in USA.
There are four types of compulsory licensing under TRIPS and
other conventions incorporated in TRIPS. These are a. To prevent
abuses, which might result from the exclusive rights, conferred
by the patent. This is covered by Article 5A(2) of Paris
Convention which gives the example of "failure to work" as one
of the abuses. b. Compulsory licenses under Article 11(2) and
Article 13(1) of Berne Convention while dealing with
"Broadcasting and Related Rights" and "Right of Recordings of
Musical Works and any words pertaining thereto." c. Article 30
of TRIPS deals with "limited exceptions" to Article 28 of TRIPS
provided that such exceptions do not unreasonably conflict with
a normal exploitation of patent and do not unreasonably
prejudice the legitimate interests of the patent owner, taking
account of the legitimate interests of "third parties". Article
30 of TRIPS and Article 5A(2) of Paris Convention deal with
entirely different situations. Articles 30 deals with situations
like in Canadian-Pharmaceutical disputes Where Canadian Patent
Act (Bill C-91) permits "manufacturing and stockpiling of
pharmaceutical products without the consent of the patent holder
or where patent products are used for experimental purposes
without the consent of the patent holder". d. Article 312 of
TRIPS deals with compulsory licenses either Article 5 (A) 2 of
Paris Convention, Article 11bis(2) and Article 13(1) of Berne
Convention and Article 30 of the TRIPS. This essentially deals
with the use of patent without authorization by the Government
or as directed by the judicial or administrative processes in
anti-competition proceedings or in an emergency. This
essentially deals with ad hoc situations. In view of the legal
position, Brazilian law on compulsory licensing is perfectly in
agreement with TRIPS Agreement. USA may raise the issue of
conflict between Article 5A(2) of Paris Convention and Article
27.1 of TRIPS. A closer examination and Panel Report in
Indonesian Automotive Dispute Report made it clear that there is
no conflict between Article 5(A) 2 of Paris Convention and
Article 27.1 of TRIPS. The former deals with abuse of patent by
patent holder and where there is no abuse by patent holder for
example Brazilian Law does not permit "local working" where It
is economically not viable for patent holder to manufacture
patented product in Brazil.
Second issue is that of parallel importing and exhaustion of
rights. The issue is extremely complex. There are three aspects
to the issue of parallel importing. a. Exhaustion of rights
which has specifically been dealt by Article 6 of TRIPSW and
note 6 to be read along with Article 28.1 of TRIPS. b. The word
"import" in Article 28.1 of TRIPS is being treated as giving
control to the patent holder to import the patented product in
the third market c. The ban on parallel import through rules as
pert patent act as in different countries of EC and through
non-patent act like Prescription Drug Marketing Act, 197 as in
case of USA.
The Brazilian Act permits third parties to import the goods
provided the patentee is importing the goods or compulsory
licensing is importing the goods subject to the condition that
patented goods have been put in the market by the patent holder
himself or by his consent. If for the argument sake, we ignore
the presence of Article 6 of TRIPS, Brazilian patent Law does
not permit anything which isn't permitted either by US law as or
by UK Patent Act. As interpreted by their Courts. Since EC does
not have a common directive or common rules regarding patent, it
is difficult to visualize the position adopted by EC as a unit
or whether EC should be permitted to argue patent dispute as
third party. In US, third party can import the patented products
provided the patented goods as been sold by the patent holder or
by its subsidiary or by a firm under control of the patent
holder. If importing the goods in USA by third party does not
amount to infringing the patent, how taking the goods to Brazil
would amount to infringing the patent provision of Article 28.1
of TRIPS. Since UK is the earliest countries to incorporate
import as one of the features of patent Act of UK in 1977, the
reason for incorporation of "import" in UK patent act has been
analyzed in terms of judicial decisions and it has been brought
about on the basis when the goods manufactured by the assignee
is not permitted to be imported to the patent holder's territory
and it is subject to the condition that buyer is duty informed
about it. Any other control is being treated as part of
contractual nature. This cannot be interpreted as "control of
import in a third market". Any other interpretation would be
incorrect.
The compatibility of Prescription Drug Marketing Act 1987 has
also been analyzed in terms of US-Gasoline dispute and Thailand
Cigarette dispute and it has been found that PDMA, 1987 is
violative of Article XI (1) and XX (b) of GATT 1994.
The third issue is the stipulation in US Patent Act requiring
that patents developed through government funding has to be
worked locally. The analysis of the issue found that it would
come under of Article of Agreement on Subsidies and
Countervailing Duties where subsidy of more than certain
percentage would convert it into actionable subsidies and
stipulation to manufacture in USA would make such subsidies as
prohibitive subsidy in terms of Australia-Automotive Report of
WTO. The Canadian Patent Protection of Pharmaceutical Acts has
been analyzed in detail to show the position adopted by USA, EC
and Canada regarding compulsory licenses. It has been observed
that some of the parties to the dispute were not entirely honest
in their approach and there was an attempt to bring changes in
the TRIPS Agreement through dispute settlement system after
certain countries have failed to make any change through WTO
negotiations.
The PhRMA report alleging the loss due to patent infringement
by non-USA countries particularly developing countries was found
to be arbitrary and motivated when the methods have been
prescribed through judicial decisions. This motivated and
arbitrary data is misleading and makes PhRMA liable for action
under Article 10bis of Paris Convention. This liability may
extend to USTR if it can be proved that USTR's data has been
taken from PhRMA.