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Canada – Patent Protection of Pharmaceutical Products WORLD TRADE WT/DS114/R ORGANIZATION 17 March 2000 (00-1012) Original: English CANADA – PATENT PROTECTION OF PHARMACEUTICAL PRODUCTS Complaint by the European Communities and their member States Report of the panel The report of the Panel on Canada – Patent Protection of Pharmaceutical Products is being circulated to all Members, pursuant to the DSU. The report is being circulated as an unrestricted document from 17 March 2000 pursuant to the Procedures for the Circulation and Derestriction of WTO Documents (WT/L/160/Rev.1). Members are reminded that in accordance with the DSU only parties to the dispute may appeal a panel report, an appeal shall be limited to issues of law covered in the panel report and legal interpretations developed by the panel, and that there shall be no ex parte communications with the panel or Appellate Body concerning matters under consideration by the panel or Appellate Body. Note by the Secretariat: This Panel Report shall be adopted by the Dispute Settlement Body (DSB) within 60 days after the date of its circulation unless a party to the dispute decides to appeal or the DSB decides by consensus not to adopt the report. If the Panel Report is appealed to the Appellate Body, it shall not be considered for adoption by the DSB until after the completion of the appeal. Information on the current status of the Panel Report is available from the WTO Secretariat. WT/DS114/R Page i TABLE OF CONTENTS I. INTRODUCTION 1 II. FACTUAL ASPECTS 1 (a) Relevant Provisions of Canadian Patent Law 1 (b) Canada's Regulatory Review System for Drugs 3 III. FINDINGS AND RECOMMENDATIONS REQUESTED BY THE PARTIES 7 IV. ARGUMENTS OF THE PARTIES 9 A. EUROPEAN COMMUNITIES AND THEIR MEMBER STATES 9 (1) SECTION 55.2(2) AND 55.2(3) OF THE PATENT ACT TOGETHER WITH THE MANUFACTURING AND STORAGE OF PATENTED MEDICINES REGULATIONS 9 (a) Article 28.1 and Article 33 of the TRIPS Agreement 9 (b) Article 27.1 of the TRIPS Agreement 10 (2) SECTION 55.2(1) OF THE PATENT ACT 10 (a) Article 28.1 of the TRIPS Agreement 10 (b) Article 27.1 of the TRIPS Agreement 12 (3) HISTORICAL DEVELOPMENTS IN CANADIAN PATENT LEGISLATION AND COMPARISON BETWEEN THE SITUATION IN CANADA BEFORE AND AFTER THE INTRODUCTION OF BILL C-91 AND THE MANUFACTURING AND STORAGE OF PATENTED MEDICINES REGULATIONS IN 1993 12 (4) ECONOMIC LOSSES SUFFERED BY THE EU PHARMACEUTICAL INDUSTRY 15 (5) ARTICLE 30 OF THE TRIPS AGREEMENT 16 B. CANADA 16 (1) ARTICLE 30 OF THE TRIPS AGREEMENT 16 (a) Object, Purpose and Meaning 18 (i) Section 55.2(1) and 55.2(2) create limited exceptions 21 (ii) Section 55.2(1) and 55.2(2) do not conflict with a normal exploitation of the patent 24 (iii) Section 55.2(1) and 55.2(2) do not prejudice the legitimate interests of the patent owner 24 (iv) Section 55.2(1) and 55.2(2) take account of the legitimate interests of third parties 25 (b) Travaux Préparatoires and Subsequent Practice 27 WT/DS114/R Page ii (2) ARTICLE 27.1 OF THE TRIPS AGREEMENT 30 (a) Object, Purpose and Meaning 30 (b) Travaux Préparatoires and Subsequent Practice 31 (c) Section 55.2(1) and 55.2(2) are not Discriminatory 32 (3) ARTICLE 33 OF THE TRIPS AGREEMENT 33 (a) Object, Purpose and Meaning 33 (b) Section 55.2(1) and 55.2(2) do not Reduce the Required Minimum Term of Protection 34 (4) THE LEGISLATIVE HISTORY OF THE DISPUTED PROVISIONS, THEIR FRAMING, THEIR LEGISLATIVE CONTEXT AND THE DEBATE ON COST CONTAINMENT AND GENERIC DRUGS 34 (a) The Legislative History of the Disputed Provisions 35 (b) The Framing of the Disputed Provisions 37 (c) The Legislative Context 39 (d) Cost Containment and Generic Drugs 40 C. EUROPEAN COMMUNITIES AND THEIR MEMBER STATES 45 (1) ARTICLE 27.1 OF THE TRIPS AGREEMENT 47 (2) ARTICLE 30 OF THE TRIPS AGREEMENT 49 (a) Preliminary Remarks 50 (i) The Preamble of the TRIPS Agreement and its Articles 1.1, 7 and 8.1 51 (b) Interpretation of the Conditions Enumerated in Article 30 for the Grant of Exceptions to Rights Conferred 53 (i) The "prior use" exception 54 (ii) The "scientific/experimental use" exception 55 (c) Section 55.2(2) and 55.2(3) of the Canadian Patent Act together with the Manufacturing and Storage of Patented Medicines Regulations 56 (i) "Limited" 56 (ii) "Do not unreasonably conflict with a normal exploitatio n of the patent" 57 (iii) "Do not unreasonably prejudice the legitimate interests of the patent owner, taking account of the legitimate interests of third parties" 58 (d) Section 55.2(1) of the Canadian Patent Act 59 (i) "Limited" 59 (ii) "Do not unreasonably conflict with a normal exploitation of the patent" 59 (iii) "Do not unreasonably prejudice the legitimate interests of the patent owner, taking account of the legitimate interests of third parties" 60 WT/DS114/R Page iii (3) SUBSEQUENT PRACTICE 61 (a) Section 55.2(2) and 55.2(3) of the Canadian Patent Act together with the Manufacturing and Storage of Patented Medicines Regulations 61 (b) Section 55.2(1) of the Canadian Patent Act 62 D. CANADA 63 (1) PRELIMINARY POINTS 63 (a) Section 55.2(1) and 55.2(2) of the Canadian Patent Act 64 (b) Subsequent Practice 66 (2) ARTICLE 27.1 OF THE TRIPS AGREEMENT 66 (3) ARTICLE 30 OF THE TRIPS AGREEMENT 70 (a) Articles 7 and 8 of the TRIPS Agreement 71 (b) Interpretation of the Conditions Enumerated in Article 30 for the Grant of Exceptions to Rights Conferred 72 (i) The "prior use" exception 73 (ii) The "scientific/experimental use" exception 74 (c) Section 55.2(1) and 55.2(2) of the Canadian Patent Act 76 (i) "Limited" 76 (ii) "Do not unreasonably conflict with a normal exploitation of the patent" 77 (iii) "Do not unreasonably prejudice the legitimate interests of the patent owner, taking account of the legitimate interests of third parties" 78 (4) EXCEPTION FOR A REGULATORY SUBMISSION TO A "COUNTRY OTHER THAN CANADA" 79 (a) The Global Nature of the Pharmaceutical Industry 79 (b) The Global Need for Access to Essential Medicines 80 (c) The Context of the TRIPS Agreement 81 (d) Foreign Regulatory Approval and Article 30 of the TRIPS Agreement 82 (e) Creation of a Trade Barrier 83 (5) APPLICATION OF ARTICLE 33 OF THE TRIPS AGREEMENT 83 E. EUROPEAN COMMUNITIES AND THEIR MEMBER STATES 83 (1) ARTICLE 27.1 OF THE TRIPS AGREEMENT 84 (2) ARTICLE 30 OF THE TRIPS AGREEMENT 84 WT/DS114/R Page iv F. CANADA 87 (a) Principles of treaty interpretation 87 (i) Subsequent practice 89 (ii) Article 27.1 of the TRIPS Agreement 90 (iii) Article 30 of the TRIPS Agreement 91 (iv) Exception for a regulatory submission to a "country other than Canada" 93 V. ARGUMENTS PRESENTED BY THIRD PARTIES 94 AUSTRALIA 94 BRAZIL 106 COLOMBIA 108 CUBA 111 INDIA 119 ISRAEL 121 JAPAN 123 POLAND 125 SWITZERLAND 127 THAILAND 134 UNITED STATES 137 VI. INTERIM REVIEW 145 VII. FINDINGS 146 A. MEASURES AT ISSUE 146 (1) SECTION 5.2(1): THE REGULATORY REVIEW EXCEPTION 146 (2) SECTION 55.2(2): THE STOCKPILING EXCEPTION 148 B. CLAIMS OF THE PARTIES 149 C. PRINCIPLES OF INTERPRETATION 149 D. BURDEN OF PROOF 150 E. SECTION 55.2(2) (THE STOCKPILING EXCEPTION) 151 (1) APPLICATION OF ARTICLE 28.1 AND ARTICLE 30 OF THE TRIPS AGREEMENT 151 (a) Introduction 151 (b) Object and Purpose 153 (c) "Limited Exceptions" 154 F. SECTION 55.2(1) (THE REGULATORY REVIEW EXCEPTION) 157 (1) APPLICATION OF ARTICLE 28.1 AND ARTICLE 30 OF THE TRIPS AGREEMENT 157 (a) "Limited Exceptions" 157 (b) "Normal Exploitation" 160 (c) "Legitimate Interests" 162 WT/DS114/R Page v (i) Primary EC claim of legitimate interest 162 (ii) Definition of "legitimate interests" 164 (iii) Second claim of legitimate interest 166 (iv) Conclusion with Regard to Compliance of Section 55.2(1) with Article 30 169 (2) APPLICATION OF ARTICLE 27.1 OF THE TRIPS AGREEMENT 169 (a) Applicability of Article 27.1 to Article 30 Exceptions 169 (b) Discrimination as to the Field of Technology 171 VIII. CONCLUSIONS 174 ANNEX 1: DOCUMENT WT/DS114/5 175 ANNEX 2: THE CANADIAN FOOD AND DRUG REGULATIONS – PART C.08 177 ANNEX 3: LETTER FROM JIM KEON, CANADIAN DRUG MANUFACTURERS ASSOCIATION TO REAGAN WALKER 190 ANNEX 4: PATENTED MEDICINES (NOTICE OF COMPLIANCE) REGULATIONS 191 ANNEX 5: QUESTIONS POSED BY THE PANEL AND REPLIES RECEIVED FROM THE PARTIES AND THIRD PARTIES ON THE PRACTICE IN COUNTRIES OTHER THAN CANADA AS REGARDS REGULATORY REVIEW EXCEPTIONS AND PATENT TERM EXTENSION OR SUPPLEMENTARY PROTECTION CERTIFICATE SYSTEMS 199 ANNEX 6: EXCEPTIONS TO RIGHTS CONFERRED BY A PATENT: SUCCESSIVE URUGUAY ROUND NEGOTIATING DRAFTS 211 WT/DS114/R Page 1 I. INTRODUCTION 1.1 On 19 December 1997, the European Communities and their member States requested Canada to hold consultations pursuant to Article 4 of the Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU) and Article 64 of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) regarding the protection of inventions in the area of pharmaceuticals under the relevant provisions of the Canadian implementing legislation (in particular the Patent Act) in relation to its obligations under the TRIPS Agreement (WT/DS114/1). No mutually satisfactory solution was reached in these consultations, held on 13 February 1998 and 12 June 1998. The European Communities and their member States requested the Dispute Settlement Body (DSB), in a communication dated 11 November 1998, to establish a panel to examine the matter (WT/DS114/5).1 At its meeting of 1 February 1999, the DSB agreed to establish a panel with standard terms of reference in accordance with Article 6 of the DSU.
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