The TRIPs Agreement - Legal Implementation on Patent Protection and Resulting Impacts on LDCs

TABLE OF CONTENTS

1 Introduction and Problem Definition

2 The TRIPs Agreement – An Overview
2.1 Central Principles and General Regulations
2.2 The TRIPs Agreement and Intellectual Property Rights

3 Implementation of Patent Protection in the TRIPs Agreement
3.1 Current Areas of Discussion
3.2 Relevant Articles and Interpretation
3.3 Problems of Interpretation in Terms of Patent Protection for Pharmaceutical Products
3.4 The Problem of Conflictive Interests between Industrialized and Developing Countries and the Resulting Impact on LDC’s

4 Doha Declaration (2001) to TRIPS and Public Health
4.1 Reasons for the Doha Declaration
4.2 Content of the Doha Declaration
4.3 Interpretation of the Declaration and the “Paragraph 6 Solution”
4.4 Negotiation Process between Developing and Industrial Countries

5 Post-Doha: Compulsory Licences for Countries with Insufficient or no Manufacturing Capacity
5.1 Accomplishment of the Decision
5.2 Content of the Decision
5.3 Critical Evaluation of the Decision

6 Case Study: Pharmaceutical Supply in Developing Countries
6.1 Background
6.2 Development of a Pharmaceutical Industry in Developing Countries
6.3 Undersupply of pharmaceuticals – the Case of HIV/Aids
6.4 Patent issues in access to HIV/AIDS drugs in Kenya
6.5 Resulting Problems

7 Conclusion

8 References

FIGURES

Figure 1: The normative framework - the three pillars of the multilateral trade agreements 2

Figure 2: Consequences of competition in the generics production (June 2000 – June 2006)

ABBREVIATIONS

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1 Introduction and Problem Definition

Due to the ongoing globalisation process and the proceeding trade liberalisation the protection of intellectual property rights is becoming more and more important. The fast- paced technological progress and the shortened product life cycles call for a closer consideration of material goods in the world economy and the necessity to protect those.^[1] The further development of production techniques, well developed communication chains and the further development of new media enable the copying, imitating and the piracy of goods or make it even easier. To thwart those acts of piracy the protection of intellectual property rights has to be ensured. This is guaranteed by the TRIPs Agreement, the WTO’s Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs).^[2]

This paper will focus on the patent protection as one main area of the TRIPs Agreement. Since the success and establishment of industries is dependent on a well-functioning and predictable patent system, it is important to refer to questions of patent protection. Especially the pharmaceutical sector is reliant on patent protection, which is emphasised by the following quotation:^[3]

“Questions as to the patentability of inventions of pharmaceutical products or biotechnological products, the rights conferred by a patent or the possibility to grant compulsory licences resulted in barriers to the conclusion of a definitive agreement on patent protection”^[4]

In light of this, since international conventions on patent protection left too much scope for interpretation, TRIPs was implemented to fill in the gaps in the international patent systems by setting up uniform minimum protection standards.^[5]

The following article shall give an overview of the TRIPs Agreement and the concept to protect intellectual property. The pharmaceutical production and the abuse of rights are the main focus of this work. During the analysis of the articles and the exemplification of the conflictive interests of the developing and the industrial countries the problem of compulsory licences in the pharmaceutical sector will illustrate the problematic situation in the area of patent protection in pharmaceutics. Finally, case studies will be integrated to back up the findings.

2 The TRIPs Agreement – An Overview

2.1 Central Principles and General Regulations

The Agreement on Trade-Related Aspects of Intellectual Property Rights is one of the three pillars of the multilateral trade agreement that belong to the WTO. The further two agreements are the General Agreement on Tariffs and Trade (GATT)^[6] and the General Agreement on Trade in Services (GATS)^[7]. All member states of the WTO are also contracting states of the three mentioned agreements.^[8]

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Figure 1: The normative framework - the three pillars of the multilateral trade agreements.^[9]

The protection of intellectual property was implemented with the foundation of the WTO in 1995 by integrating the TRIPs Agreement within the WTO regulation framework. Under the former GATT 1947 regulation patent protection was not compulsory. Before the WTO was established and simultaneously the TRIPs Agreement was implemented, the WIPO^[10] had sole responsibility with reference to intellectual property and its protection.^[11]

The TRIPs Agreement is based on the principles of established conventions that were already dealing with the protection of intellectual property before the TRIPs implementation. These conventions are the following: Berner convention, Rome convention, Washington contract and Paris convention. All contracting states of the TRIPs Agreement are also members of the mentioned conventions. ^[12]

The agreement consists of seven parts, which cover three main features: standards, enforcement and dispute settlement. The most important general regulations refer to the non-discrimination rule and the regulation of uniform minimum standards.^[13] The main objective of the TRIPs Agreement is the global harmonisation of intellectual property. The agreement established a global protective framework for intellectual property and sets up compulsive minimum standards for a multitude of intellectual property rights. Moreover, every contracting state is allowed to enact further laws that extend the degree of intellectual property rights protection.^[14] With legal validity of the TRIPs Agreement the following deadlines for implementation have been defined: 1) industrialised countries had to transpose all regulations within one year 2) developing countries was given an additional four-year deadline and 3) the least developing countries was granted a transitional period of 10 years.^[15] After the ministerial conference in Doha the transitional period for the least developing countries was elongated until 2016.^[16]

2.2 The TRIPs Agreement and Intellectual Property Rights

Since this paper focuses on the TRIPs Agreement both the term intellectual property and intellectual property rights will be explained briefly. The term intellectual property refers to “the rights given to people over the creations of their minds” .^[17] According to Khor (2006) these rights are seen as a privilege which give the innovator or creator of a work a compensation for his research expenditure and development effort. Intellectual property can thus be seen as main term for immaterial goods which comprises inventions, concepts, intellectual works and more. Intellectual property rights are the rights that are linked to the immaterial goods and which include a temporary exploitation right. The exploitation right gives the owner of the intellectual property the right to use the intellectual property in a monopolistic manner during the specified period. Hence, competitors are debarred from producing and launching a comparable product at a lower price. Concerning immaterial goods one must be aware that immaterial goods are not generally protected by the laws. A legal order with appropriate rights like patent rights or copy rights must be given to a person to protect the intellectual property.^[18]

The areas that are covered by the TRIPs Agreement are: copyright and related links, trademarks including service marks, geographical indications, industrial designs, patents, layout designs (topographies) of integrated circuits, and undisclosed information including trade secrets.^[19] Thus, nearly all existing instruments that are necessary for the protection of commercial rights^[20] are implemented in an international contract and are anchored in the WTO regulations.^[21] According to the introduction this paper will only focus on the patents. One common way to describe a patent may be the following: A patent is a legal document giving the patentee a twenty-year monopoly. According to Bently and Sherman (2004) patens are differing from the industry and branch of science, which means that patents are classified with regard to the nature of the protected interest, for example as a product patent, process patent or product by process patent.^[22]

3 Implementation of Patent Protection in the TRIPs Agreement

3.1 Current Areas of Discussion

Referring to the above-mentioned problems the current form of the patent protection under the TRIPs Agreement is critically reviewed. Especially the developing countries call for reforms to secure long-lasting stability and acceptance.^[23]

One main issue that causes concern is the patentability of genetic resources ^[24] . The problem refers to the so-called “bio piracy”, i.e. the patentability of a diversity of plants, animals and micro-organisms in accordance to the TRIPs Agreement.^[25] Another problem of the TRIPs Agreement alludes to the lack of property rights protection on traditional knowledge. Industrialized countries try to benefit from traditional knowledge and traditional lifestyles of different population groups to improve their research and development in the field of biotechnology. Thus, developing countries demand that their knowledge will be protected.^[26]

However, this paper will only concentrate on the access to life saving drugs since this is a problem that has been discussed severely in different literatures and NGO campaigns.

3.2 Relevant Articles and Interpretation

The most relevant articles that refer to the patent protection are the Articles 27 to 31 TRIPs^[27]. With these articles a nearly global standard of patent protection was established. Especially Article 31, which regulates the compulsory licence, is of great importance.^[28]

Article 27 ff. TRIPs constitutes an international minimum standard for patent protection:

“Article 27 defines patentable subject matter and states that any invention […] in all fields of technology shall be patentable […] “ ^[29]

While Article 27.1 TRIPs generally refers to the patentability of all inventions in all fields of technology, Article 27.2 TRIPs (disregard of place of invention) and 27.3 TRIPs (regional exclusions) formulate possible situations in which the contracting states may exclude inventions from being patented. However, Article 27.1 TRIPs does not exactly identify to what extent the definitions of “inventions” and “technology” can be construed. Since this gives the contracting states to some degree freedom of interpretation, Article 27.3 TRIPs adjusts options of exclusion. This regulation refers to the exclusion for specific contracting states to patent particular areas of invention. Moreover, it is regulated in Article 27.1 TRIPs that patents are available and patent rights can be exercised irrespective of the place of invention, the area of technology or the source of creation. This article extends the general prohibition of discrimination that is implemented in the Articles 3 and 4 of the TRIPs Agreement and denotes that all contracting states have to accept that importing a protected product does not forfeit the foreign patent.^[30]

Article 28 refers to the rights that a patentee achieves from the patent. This article is amending the regulations of Article 27 and was implemented to prevent any abuse of patented products via third parties and the prohibition of parallel imports (Article 28.1 TRIPs). Parallel importers purchase products in one country at a cheaper price and import the products into the second country, where they sell the products at a price that lies in between the two countries. Parallel imports are illegal if they are done without the permission of the intellectual property owner.^[31] Moreover, Article 28.2 additionally refers to the right of the patentee to vest the patent and to conclude licence agreements.^[32]

Furthermore, Article 29 TRIPs includes clauses for patent applicants. According to Article 29.1 TRIPs the application of a patent must be manifested explicitly. Article 29.2 TRIPs requires from the patentee to submit all information about the respective foreign patent applications. This shall help patent offices of less developed countries to receive necessary information. Concerning the interpretation of Article 29.1 TRIPs some practical difficulties have been acknowledged with regard to practicability of biological inventions and specification of the patent type.^[33]

General exclusions referring to patentability are formulated in Article 30 TRIPs. Therefore, it is stated that contracting states can make limited exclusions to the exclusive patent rights, provided that these exclusions are not inappropriate. Article 30 was implemented that a patent hinders the further development of technology. On the one hand parallel importing is partly seen as one of these exclusions, but on the other hand it also inappropriately affects the interest of the patentee.^[34]

Moreover, it is important to mention that any restriction with the character of a compulsory licence is regulated and only allowed under the terms of Article 31 TRIPs.^[35] Compulsory licences give governmental permission to a state or private person to use a patented product for commercial purposes without the permission of the intellectual property owner. Thus, the patentee looses its exclusivity right to the legitimated holder of compulsory licence. To protect the patentee’s right of commensurability, compulsory licences are only effective in exceptional circumstances that are necessary to accomplish special public interests.^[36] Some important subparagraphs that should be mentioned briefly are: Article 31 (b) TRIPs that includes the limits to compulsory licences; Article 31 (f) TRIPs that the refers to the restriction of compulsory licenses to the domestic market and is one of the most conflictive paragraphs concerning the access to drugs in developing countries; and Article 31 (g) TRIPs that states that the right to use the compulsory licence is expiring when the reason, which lead to compulsory licence is not existent any more.^[37]

Article 31 TRIPs has to be construed in combination with Article 28 and 30 TRIPs. While Article 30 TRIPs allows limited exclusions from Article 28 TRIPs, Article 31 TRIPs includes further restrictions^[38] that are not mentioned in Article 30 TRIPs. Thus, contrary to the normal order the general rule is tested before the special rule, which is here Article 31 TRIPs.^[39]

3.3 Problems of Interpretation in Terms of Patent Protection for Pharmaceutical Products

The most important problems concerning patent protection within the TRIPs Agreement refer to compulsory licensing and parallel importing. The WTO states agreed to allow the export of pharmaceutical products that were produced under compulsory licence to developing countries. In light of this, compulsory licences became a topic under the WTO about the access to medicines in developing countries. Particularly two areas with regard to the pharmaceutical supply have been under review: a) patents and public health and b) patentability of plants and animal inventions.^[40]

According to the Articles 27.2 and 27.3 TRIPs an exclusion of the patentability for pharmaceuticals is illegitimate. Since pharmaceutical products foster the health of humans and animals and have no negative impact on law and order, the premises referring to Article 27.2 TRIPs are not present. However, Article 27.3 TRIPs is not fulfilled either as products that are used for therapies, which applies to pharmaceuticals, cannot be excluded from patent protection.^[41]

One main issue that has been discussed severely was “the extent to which patents restrict access to live saving drugs” .^[42] An example for this problem is South Africa, when patentees tried to challenge the legislation of South Africa, which would have allowed selling patented medicine at a lower price then the patentees would have liked. According to this the Doha Conference in 2001 focussed on the patented medicine access in developing and least developed countries. The conference referred to the problem of compulsory licences that enable countries like South Africa to “have domestic capacity to manufacture medicines”. ^[43] Article 31 (f) under the TRIPs Agreement argues that the medicines that are produced under compulsory licences are only for the domestic market. This causes problems for the states that cannot produce patented medicines by themselves.

The second problem alludes to article 27.3 (b) of the TRIPs Agreement. This article gives limited exception to the general rule that excludes patentability of plants and animal inventions (other than micro-organisms and essentially biological processes for plant and animal production). As there are diverging views on this question of patenting life matters the progress to amend article 27.3 (b) is unclear.

These problems will be described in detail later as a matter of the Doha Declarations.

3.4 The Problem of Conflictive Interests between Industrialized and Developing Countries and the Resulting Impact on LDC’s

The TRIPs Agreement had a huge impact on the developing countries but it had little effect upon European patent law.^[44] Experts claim that conflicts of interest between industrialized and developing countries have been developed from an imbalanced relation between the property rights and the objectives of the TRIPs Agreement in favour of the industrialized countries.^[45]

Since 80 percent of the worldwide research and development expenditures are coming from industrialized countries, the implementation of intellectual property rights protection through the TRIPs Agreement was greatly appreciated by the industrialized states. Hence, only 20 percent of research and development expenditures are coming from developing countries and most of these countries are not able to invest in innovations to the same degree like industrialized countries.

[...]

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^[1] Cf. Staehelin (1997), p. 14.

^[2] Cf. Stremmel (2004), p. 1.

^[3] Cf. Kolker (2000), p. 4.

^[4] Kolker (2000), p. 4.

^[5] Cf. Kolker (2000), p. 4.

^[6] In 1993 GATT 1967 was updated to GATT 1994. The existing GATT members became founding members of the WTO. The WTO expanded its scope from traded goods to trade within the service sector and intellectual property rights.

^[7] GATS entered into force as a treaty of the WTO in 1995. The treaty extends the multilateral trading system to services, in the same way as GATT provides such a system for merchandise trade.

^[8] Cf. Geisel (2003), pp. 27-28.

^[9] According to Geisel (2003), pp. 27-28.

^[10] The WIPO was established in 1967 with the objective to foster the rights of intellectual property. The WIPO had a consultant function and helped governments with questions of intellectual property in the legislative. Since the TRIPs agreement was negotiated and implemented in the WTO regulation, the WIPO sees itself affronted by loosing its former power and tries to win back its influence.

^[11] Cf. Geisel (2003), pp. 27-28.

^[12] Cf. Seiler (2000), p. 8.

^[13] WTO (2008 a) Intellectual property: protection and enforcement, Internet: http://www.wto.org/english/tratop_e/trips_e/intel2_e.htm, 22.03.2008.

^[14] Cf. Staehelin (1997), pp. 25-31.

^[15] Cf. Harnisch (2006); pp. 49-50.

^[16] Cf. Sasdi (2004), p. 237.

^[17] WTO (2008 b), Internet: http://www.wto.org/english/tratop_e/trips_e/trips_e.htm, 22.03.2008.

^[18] Cf. Khor (2006), p. 5.

^[19] Cf. Seiler (2000), S. 8.

^[20] Excluding rights of breeders and utility-models ("petty patents"), which are connected to innovations that play a role in the area of living matter

^[21] Cf. Seiler (2000), p. 8.

^[22] Cf. Bently, Sherman (2004), pp. 350-351.

^[23] Cf. Stremmel (2004), p. 8.

^[24] In the literature these are usually named “patents on life”.

^[25] Cf. Attac (2008), Internet : http://www.attac.de/wissensallmende/trips.php, 23.03.2008; Frein; Reichel (2005), pp. 25-26.

^[26] Cf. Stremmel (2004), p. 12.; Frein; Reichel (2005), pp. 31-32.

^[27] The Articles 32 to 34 also refer to patent protection, but will not be further explained here.

^[28] Cf. Von Kraack (2006), p. 22.

^[29] Kolker (2000), p. 28.

^[30] Cf. Von Kraack (2006), pp. 31, 43-45.

^[31] Cf. Von Kraack (2006), pp. 31, 43.

^[32] Cf. Von Kraack (2006), p. 44.

^[33] Cf. Von Kraack (2006), pp. 41-42.

^[34] Cf. Von Kraack (2006), p. 82.

^[35] Cf. Von Kraack (2006), pp. 81-82.

^[36] Cf. Harnisch (2006), p. 54.

^[37] Cf. Harnisch (2006), p. 54.

^[38] This refers to three areas: government use, compulsory licences and controlled licences.

^[39] Cf. Sasdi (2004), p. 145.

^[40] Cf. Bently, Sherman (2004), p. 345.

^[41] Cf. Von Kraack (2006), p. 222.

^[42] Bently, Sherman (2004), p. 345.

^[43] Bently, Sherman (2004), p. 346.

^[44] Cf. Bently, Sherman (2004), p. 345.

^[45] Cf. Khor (2006), p. 7.