Brazil, Big Pharma, and the WTO

Doug Henwood dhenwood at panix.com
Tue Aug 7 06:58:02 PDT 2001


[this may be the longest abstract in history]

"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.



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