(For a longer treatment on the availability of unilateral measures under TRIPS, I recommend Chapter 6 of my PhD Climate Change, Technology Transfer and Intellectual Property: Options for Action at the UNFCCC, Maastricht University, October 2014. Available at: https://dalishabalala.wordpress.com/book-climate-change-technology-transfer-and-intellectual-property/ )
The first thing to note is that TRIPS Article 30, which allows for exceptions to patent rights, does NOT address the issuance of compulsory licenses. It encompasses research exceptions, education exceptions etc but not compulsory licenses. This limits the scope of Article 30. More importantly the Canada-Pharmaceuticals[1] case also limits the scale of exceptions to those that have no significant market effects. In this case, Canada defended the stockpiling of medicines prior to the expiration of a patent as well as allowing generic competitors to produce samples of the product for the purposes of regulatory approval. Canada based its entire case on the assertion that the measures fell within the Article 30 exceptions. The panel divided the Article 30 test into three, cumulative steps. The measure:[2]
- must be ‘limited’;
- must not ‘unreasonably conflict with normal exploitation of the patent’; and
- must not ‘unreasonably prejudice the legitimate interests of the patent owner, taking account of the legitimate interests of third parties.’
The examination carried out by the Canada-Pharmaceuticals panel is sequential and cumulative. All three steps had to be met in sequence, if the measure was to be found consistent with Article 30.[3] It is important to note that this need not be the case at all. In the SPS and TBT three factor tests for necessity, the factors were balanced against each other. While this has been the practice of panels, the Appellate body has yet to address this issue. This outcome exists in part because the parties to the dispute agreed that this should be the sequencing and the panel did not dispute their approach.[4]
As Abbott notes, the formulation in Article 30 was only adopted after there was significant disagreement as to what would be included in an enumerated list of exceptions[5] as well as whether such a list would be closed or only exemplary. What can at least be presumed from such a failure is that all countries believed the formulation encompassed and protected all exceptions to patent rights that they had in operation at the time of the signing of TRIPS.
In examining the panel’s interpretation of the first step, i.e. the ‘limited’ nature of the measure, there appears to be no way for the Article 7 or Article 8.1 public interest elements to enter into what may be considered “limited”. In the first instance the panel adopts the position that the term ‘limited’ must be read in conjunction with the term ‘exception’, so that limited is read as narrow, rather than as “definite” or defined in scope, as argued by Canada. The panel argued that by definition, an exception is already meant to be a curtailment of rights, and thus the use of the term ‘limited’ in this context must modify that curtailment so that it becomes a narrow curtailment.
In the second instance, regarding whether a measure is indeed ‘limited’ the panel’s reasoning means that this is assessed purely against the extent to which the patent right is affected.[6] Therefore, the test is fundamentally one that requires that the measure have a small qualitative and quantitative effect on the rights of the patent holder. If a measure does not meet this test, its public policy purpose(s) need never be examined or taken into account. No matter how dire a need the measure is attempting to address, if the measure is not limited, then it fails the test.[7] Thus the stockpiling exception failed at the first hurdle because it allowed unlimited production in the 6 months prior to expiry of the patent, while the regulatory exception passed because it was limited to levels of production solely for the purposes of meeting the goal of regulatory approval. At no point in the analysis does the panel address Article 7 or Article 8.1 in determining how to address the interpretation of the term ‘limited’.
One can contrast this approach to the way in which an examination of “least-restrictive trade” measure embodied in GATT Article XX(b), Article 5.6 of the SPS Agreement and Article 2.2 of the TBT Agreement might take place. In those provisions, the ‘limited’ nature of a measure, i.e. its effect on trade, is assessed against the reasonable availability of other measures which would achieve its goal. In the approach to Article 30, there is no way to balance the ‘restrictiveness’ or level of violation of the measure against other less restrictive or less violating measures that would achieve the same goal. Because the panel approaches the test cumulatively and fails to use Article 8.1 to influence the interpretation of whether a measure is limited, it is possible to never address the public interest goal of a measure in assessing Article 30.
Thus the main avenue for unilateral action of any scope that would have an effect at scale is through Article 31 on compulsory licensing which is also, quite restricted under the TRIPS Agreement. (next blog post)
[1] Panel Report, Canada – Patent Protection of Pharmaceutical Products, WT/DS114/R, adopted 7 April 2000, DSR 2000:V, 2289 (Canada – Pharmaceutical Patents)
[2] para 7.20 Canada-Pharmaceutical Patents
[3] para 7.20 Canada-Pharmaceutical Patents
[4] para 7.20 Canada-Pharmaceutical Patents
[5] See p425, Abbott, Frederick “WTO Dispute Settlement Practice Relating to the Agreement on Trade-Related Intellectual Property Rights” in Ortino, F. and E.U. Petersmann (eds.) The WTO Dispute Settlement System 1995-2003 (Amsterdam: Kluwer Law International, 2004)
[6] Canada-Pharmaceutical Patents, WTODS114/R (2000), para 7.31
[7] Para 7.30 – 7.38 Canada-Pharmaceutical Patents WTO/DS/114/R (2000)
Technology, Sustainability & Human Rights 