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Intellectual Property and Public Health in the Developing World

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Monirul Azam

3. The Experiences of TRIPS-compliant Patent Law Reform in Brazil, China, India and South Africa—Lessons for Bangladesh

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1This chapter analyses the policy options adopted by Brazil, China, India and South Africa in their transition to a TRIPS-compliant patent law and the introduction of pharmaceutical patents. This comparative review identifies potential public health-oriented policy options that use the TRIPS flexibilities as well as additional possibilities for governmental intervention, options which do not conflict with the TRIPS Agreement and can therefore be employed by LDCs like Bangladesh.

3.1 Background

  • 1 It is relevant to note that “almost 50 developing countries, which were not granted patent protecti (...)
  • 2 Countries such as Italy, Switzerland, Brazil and India prohibited pharmaceutical patent protection (...)
  • 3 Historically, product patents have been excluded from protection in most developed countries. For e (...)
  • 4 See Lydia Mugambe, ‘The Exception to Patent Rights under the WTO-TRIPS Agreement: Where is the Righ (...)
  • 5 The Impact of Higher Standards in Patent Protection’, pp. 1368–69.

2The debate over the consequences of patenting essential products like medicines is not new and has taken place globally.1 Countries have thus developed divergent approaches: some2 have chosen to exempt medicines from all or parts of patent law,3 and others, such as “Canada and Australia, have patent regimes which were moderated by mechanisms to control prices or to facilitate local production under compulsory licenses”.4 Countries such as India, South Africa and Brazil have adopted other legal means to allow competitors to circumvent the negative effects of patents, by allowing the patenting of processes but not of products.5

  • 6 K.M. Gopakumar, ‘Product Patents and Access to Medicines in India: A Critical Review of the Impleme (...)

3In implementing a patent law that complies with the TRIPS Agreement as adopted under the WTO, countries such as India, Brazil and South Africa were confronted with two major concerns: first, the future of their local pharmaceutical industries, and second, access to affordable medicines.6 These countries’ reactions depended largely on the nature of their pharmaceutical industry, which has both economic and social importance. However, their IPR regime was not TRIPS compliant, so these countries were confronted with the issue of how to manage the continued viability of the local pharmaceutical industry while still providing access to affordable medicines and implementing TRIPS.

  • 7 Prabhu Ram, ‘India’s New “Trips-compliant” Patent Regime between Drug Patents and the Right to Heal (...)
  • 8 Ram, p. 198; Catherine Tomlinson and Lotti Rutter, The Economic and Social Case for Patent Law Refo (...)

4India, China, Brazil and South Africa have already implemented TRIPS-compliant patent laws7 and introduced patent protection for both pharmaceutical products and processes.8 Those countries’ experiences of utilising TRIPS flexibilities and other possible policy mechanisms have important lessons for LDCs, such as Bangladesh, that are now making progress towards TRIPS compliance and adopting pharmaceutical patents.

5This chapter analyses the policy options used by Brazil, China, India and South Africa in their transition to a TRIPS-compliant patent law and in their introduction of pharmaceutical patents.

  • 9 The WTO and Developing Countries; and Intellectual Property Rights: A Critical History.

6Although the TRIPS Agreement allows flexibilities, these are ambiguous and therefore need to be dealt with and implemented at the national level by considering national developmental goals, the public interest and the stage of the country’s development.9 The experiences of Brazil, India and South Africa will be examined with respect to the available TRIPS flexibilities and other governmental interventions that do not conflict with TRIPS obligations, to determine legislative and other possible policy options that LDCs like Bangladesh might adopt.

3.2 The Journey Towards TRIPS and Obligations for Patent Law Reforms

7Interpreting the TRIPS Agreement and defining precise obligations for national IP law reforms is a difficult process from various perspectives. The difficulty stems from the contradiction in the rationale of TRIPS, which represents the greater protection of monopoly, and the rationale of the General Agreement on Tariffs and Trades (GATT): free trade in goods without any discrimination between domestic industry and international trade in goods and services.

  • 10 See Mohammed El-Said, ‘The Road from TRIPS-Minus, to TRIPS, to TRIPS-Plus Implications of IPRs for (...)

8The interpretation of TRIPS also relates to the interpretation of pre- existing treaties on IP, which functioned under the system of the WIPO for a long time before being incorporated into TRIPS.10 The assessment of compliance with TRIPS often requires the detailed examination of domestic IP law and, more particularly, the effectiveness of IP protection and enforcement systems. This task seems difficult given the divergence in the traditional grounds of national legal systems in dealing with the issue of IP. When a member implements TRIPS norms into their national legislation, it certainly needs to strike the balance between compliance with TRIPS and advancing the public interest and national developmental goals. This issue gained momentum particularly with regard to the effects of TRIPS on public health. On the one hand, each WTO member had to introduce pharmaceutical patents to protect product and process patents without discriminating between domestic and multinational pharmaceutical industries, thus reforming pharmaceutical regulations that protected local generic producers. On the other hand, however, each member also had to identify policy options to ensure access to affordable medicines and so save the local generic industry.

  • 11 For example, in two earlier studies, such comparisons are made in the case of price comparisons bet (...)
  • 12 See Keith E. Maskus and Denise Eby-Konan, ‘Trade-related Intellectual Property Rights: Issues and E (...)
  • 13 Carsten Fink, ‘How Stronger Patent Protection in India Might Affect the Behavior of Transnational P (...)

9There has been much debate and controversy regarding the merits of pharmaceutical patents as required under the TRIPS Agreement, particularly from the point of view of developing countries and the LDCs. There is an assumption that the introduction of product patent protection for pharmaceuticals will lead to substantially higher prices, which will have negative effects on both public health and generic-based pharmaceutical industries in developing countries. Predictions of higher prices are made on the basis of a comparison of drug prices between countries that do and do not offer pharmaceutical patent protection. However, these comparisons may involve mistaken assumptions, as it is not clear whether the comparisons consider other demand and supply side factors—notably differences in purchasing power, market structure, distribution margins, tariffs, taxes and exchange rate fluctuations—that may also drive prices.11 Studies on the price increase effects of pharmaceutical product patent protection have estimated price increases of up to 67%.12 One study estimated that the availability of therapeutic substitutes might limit price increases to a low of 12% or to a maximum of 68%.13

  • 14 Subham Choudhuri, Pinelopi K. Goldberg and Panle Jia, Estimating the Effects of Global Patent Prote (...)
  • 15 Ibid.

10Some studies have argued that the introduction of product patents is unlikely to raise significantly the prices of pharmaceuticals, because most patented products have many therapeutic substitutes.14 It has also been claimed that the absence of patent protection has been a disincentive for research-based global pharmaceutical companies to engage in research on diseases that disproportionately afflict the world’s poor. The implication is that patent protection for pharmaceuticals will actually benefit developing countries by stimulating innovation and transfer of technology.15 However, such claims are based on scanty evidence. Very little is known about the extent to which the prices of pharmaceutical products may increase as a result of the introduction of pharmaceutical patenting.

  • 16 Email interview with the CEO of a leading local pharmaceutical company, in Dhaka, Bangladesh, 11 Ma (...)

11In Bangladesh, there is great apprehension that the introduction of pharmaceutical patents and TRIPS-compliant patent law will endanger the local pharmaceutical industry and have serious negative effects on access to medicines. One interview participant even claimed that because India and China have implemented pharmaceutical patents, there will be a sharp increase in pharmaceutical prices in Bangladesh because the local pharmaceutical industry is dependent on India and China for raw materials.16

  • 17 See ‘Paris Convention for Protection of Industrial Property of 20 March 1883’, as revised in Brusse (...)
  • 18 See Carlos M. Correa, ‘Patent Rights’, in Intellectual Property and international Trade: TRIPs Agre (...)
  • 19 J. H. Reichman, ‘Universal Minimum Standards of Intellectual Property Protection under the TRIPs Co (...)

12The TRIPS Agreement incorporates the Paris Convention (the first international convention for the protection of industrial properties, including patents, in 1883)17 and explicitly aims to supplement the protection of industrial property rights. The “Paris-plus” included in TRIPS is regarded as an international standard patent protection system,18 which in fact reflects the practices of developed countries.19 TRIPS clearly defines the normative criteria for protection of patents, which was not addressed in the Paris Convention.

  • 20 Ibid.

13The TRIPS Agreement contains a number of provisions on patents; for example, Article 27 provides for patentable subject matters, Article 28 stipulates the rights conferred by a patent, Article 33 determines the terms of patent protection, and so on. The basic criteria of patentability, protection and duration of patents set forth in TRIPS are regarded as notable achievements by developed countries in elevating and harmonising the minimum standards of patent protection, which was not within the scope of the Paris Convention.20

14Therefore, the TRIPS Agreement substantially restrains the freedom of national legislation bequeathed by the pre-existing Paris Convention regarding patent protection. TRIPS imposes a series of obligations for patent law reform that will have implications for pharmaceutical regulation in the LDCs. As Brazil, China, India and South Africa have already implemented TRIPS-compliant patent laws, therefore, this section only addresses deficiencies and challenges for patent law reforms in Bangladesh.

3.2.1 Patentable Subject Matter

  • 21 See Chapter 4 of this study for further details on patentability criteria.

15Article 27.1 of TRIPS defines in general terms three patentability criteria for inventions—novelty, inventive steps and industrial application— and leaves to national legislation the freedom to legislate the detailed requirements of such criteria.21 However, the article requires that national legislation obey the rule of non-discrimination in patent protection. Therefore, while complying with the TRIPS Agreement, patent law and pharmaceutical regulation in Bangladesh should provide equal protection for domestic and foreign pharmaceutical patent applicants and inventors.

  • 22 See for details, UNCTAD-ICTSD, ‘Resource Book on TRIPS and Development’ (Cambridge University Press (...)

16Article 27.1 also provides that patents “shall be available for any inventions, whether products or processes, in all field of technology”. A further security is added to this provision: “patents shall be available and patent rights enjoyable without discrimination as to […] the field of technology”. The combined result of these provisions is that both product and process patents should be available for pharmaceutical technologies. As a product patent was not available for pharmaceutical invention and was largely excluded by most developing countries prior to TRIPS, this provision is considered a major achievement for the developed countries.22

  • 23 See Mohammad Monirul Azam, Intellectual Property, WTO and Bangladesh (Dhaka: New Warsi Book Corpora (...)

17Prior to TRIPS and during TRIPS negotiations, concerns about increased prices for patented pharmaceuticals and accessibility to pharmaceutical technology, and a strong campaign by NGOs and public interest groups, were the main reasons for the opposition of developing countries to patent protection for pharmaceutical products.23

18However, under Article 27.1, national patent law can no longer justify this kind of exclusion from patentability due to the requirement for non-discrimination in the field of technology of invention. Pursuant to Article 27.1: “patents shall be available … without discrimination as to the place of invention”. Accordingly, any discrimination concerning patent applications made by nationals and foreigners is contradictory to the requirement of non-discrimination as to the place of the invention.

  • 24 The concept of ordre public under Article 27.2 of TRIPs is regarded as one of the grounds for permi (...)

19Although the Paris Convention does not mention patentability or particular exclusions from patentability, TRIPS enumerates concrete criteria for these contents.24 Unlike the situation under the Paris Convention, national laws under TRIPS are required to conform to specific criteria regarding patent protection. With regard to this point, TRIPS removes much of the freedom conferred by the Paris Convention on national legislation.

  • 25 See Chapter 2 of this study for more details on the PDA and DCO 1982 of Bangladesh.
  • 26 See for details on exceptions and policy options, Chapter 4 of this study.

20Therefore, the Patents and Designs Act, 1911 and the DCO 1982 of Bangladesh need to be altered to include clear provisions on pharmaceutical processes and product patent protection. In addition, existing pharmaceutical regulations must remove product restrictions on the multinational pharmaceutical industry.25 However, the norms of patentability allow for some exceptions.26 In addition to requirements of non‑discrimination for patentable subject matter and place of invention, national patent regulations may also need to review the existing rights and obligations of patentees in the context of the TRIPS Agreement.

3.2.2 Rights and Obligations of Patentees

21While complying with patent provisions of the TRIPS Agreement, the Government of Bangladesh may need to review and adjust the rights and obligations of patentees in the pharmaceutical field. The provision in the last sentence of Article 27.1 of TRIPS, which refers to the requirement of non-discrimination between imported and locally produced products, generated huge debate, not least concerning the local working requirement.

  • 27 Reichman, ‘Universal Minimum Standards’, pp. 51–52.
  • 28 Correa, ‘Patent Rights’, pp. 203–04.

22Some scholars, such as J.H. Reichman, consider that the right to supply imports according to this provision (Article 27.1) overrides the obligation to work patents locally (manufacturing of patented products locally) under Article 5A of the Paris Convention.27 Other experts argue that because this provision does not specify whose products it refers to (the patent holder or the patent infringer), when the patent confers only negative rights in accordance with Article 28.1 of TRIPS, the patent rights can be exercised with regard to the latter. If this is the case, the provision would not override the local production obligation of the patentee.28 This question is yet to be answered precisely by the WTO panels.

  • 29 See for details on local working, section 3.3 of this chapter and chapter 4 of this study.

23With regard to the rights conferred by a patent, Article 28.1.b of TRIPS particularly provides for the exclusive rights of the holder of the product patent, including the right to supply the market with imports of the patented products. The protection of a patent process is extended to the product “obtained directly by that process” under Article 28.2.b of TRIPS. However, developing countries like India applied for a grant of compulsory patent licensing on the grounds that a non-working patent was recognised by the Paris Convention, which considers that it is applicable for the TRIPS Agreement as well.29

24In Bangladesh under the existing DCO 1982, multinationals are prevented from importing and selling certain pharmaceuticals in the local market: “On the commencement of this Ordinance, the registration or licence in respect of all medicines mentioned in the Schedules shall stand cancelled, and no such medicine shall, subject to the provisions of sub-section (2), be manufactured, imported, distributed, [stocked, exhibited or sold] after such commencement”.30 Further, Section 9 (1) of the DCO 1982 provides that no pharmaceutical raw material necessary for the manufacture of any medicine specified in any of the Schedules shall be imported. Only local generic companies are allowed to produce and sell some of the products listed in the Schedule of the DCO 1982.31

  • 32 See WTO document WT/TPR/M/75, 6 December 2000, para. 76. Brazil has adopted such a measure on the g (...)

25Therefore, even if a patent is granted for certain pharmaceuticals, the patentee of those pharmaceuticals may not be allowed to import and sell their products in Bangladesh. However, after the introduction of TRIPS-compliant patent law, the Government of Bangladesh may need to allow not only the granting of patents on pharmaceuticals but also certain monopoly rights to patentees, including the right to sell, import and distribute as per the TRIPS Agreement and the principle of non- discrimination. However, nothing in the TRIPS Agreement prevents a country from assigning the examination of patent applications in the pharmaceutical sector to the Ministry of Health or DDA, provided that assignment does not constitute a de facto discrimination as to the field of technology.32 Another TRIPS requirement is the minimum term of patent protection, discussed in the next section.

3.2.3 The Term of Patent Protection

  • 33 Section 14, PDA (Bangladesh).
  • 34 Universal Minimum Standards’, p. 30.

26It is up to national legislation to decide the possible duration of patent protection under the Paris Convention. However, the TRIPS Agreement states in Article 33 that the term of patent protection shall not end before the expiration of a period of 20 years, counted from the filing date. The patent law of Bangladesh provides for only 16 years of protection; this will need to be extended to 20 years.33 This provision is considered one of the major successes of the developed countries during the Uruguay Round in internationalising their practices of patent protection.34

  • 35 See for details, ‘Resource Book on TRIPS and Development’.
  • 36 See WTO, Panel Report, Canada—Term of Patent Protection, WT/DS170/R, 5 May 2000.

27There was huge contention among members on how to implement the obligation under Article 33 in relation to Article 70 of TRIPS, which provides for the limitation and extension of the TRIPS effect in the protection of the existing subject matters.35 The debate resulted in disputes regarding the national patent law of a WTO member and the term of protection for patents granted before the effective date of TRIPS.36

  • 37 See WTO, Panel Report, Canada—Patent, Complaint by US, at 6.56; Appellate Report, Canada—Term of Pa (...)

28The WTO panels and the Appellate Body clarified that the provision of Article 33 is also applicable to patented inventions granted before the effective date of TRIPS. These are regarded as falling within the definition of existing subject matters under Article 70.2 of TRIPS.37

29The Appellate Body in reviewing the panel’s report argued that “the term of protection shall not end before 20 years counted from the date of filing of the patent application. The calculation of the period of 20 years is clear and specific. In simple terms, Article 33 defines the earliest date on which the term of protection of a patent may end. The earliest date is determined by a straightforward calculation: it results from taking the date of filing of the patent application and adding twenty years”.

  • 38 The granting of utility models or petty patents for minor inventions may provide a way of approachi (...)

30A growing number of low-quality patents and their protection for 20 years may put undue burden on the operation of the patent system and may prevent the diffusion of knowledge and competition. While a long period of protection may be justifiable in the case of major inventions, for minor improvements the optimal period of protection should be shorter and commensurate with the lower investment in skill, time and resources made by the patentee.38 Thus, patent offices in LDCs like Bangladesh need to devise strict qualifying criteria for inventions and hence a longer duration of protection; they also need to introduce separate mechanisms for weak innovation, rather than simply granting patents. While doing so, the Government of Bangladesh needs to craft carefully its TRIPS obligations for enforcement of IP rights.

3.2.4 Enforcement Obligations

  • 39 See ‘Provisions on Enforcement in International Agreements on Intellectual Property Rights, General (...)
  • 40 For example, Article 9 of the Paris Convention requires three specific types of remedy against good (...)

31Whereas the Paris Convention and other IP agreements under the WIPO leave the questions of enforcement to the domestic legislation of member states, TRIPS provides for specific enforcement obligations.39 Although some pre‑existing IP conventions have a number of provisions dealing with remedies against infringement, they do not impose the compulsory obligation to incorporate those remedies into the national laws of the member states, nor do they provide particular sanctions and remedies of enforcement.40 However, TRIPS does impose on members the compulsory obligation of enforcement, and elaborates particular enforcement measures, remedies and procedures. This is quite different from the situation regarding pre-existing international IP conventions.

  • 41 See TRIPS Agreement, art. 41 (1).
  • 42 Ibid., art. 48
  • 43 Ibid., art. 50.
  • 44 Ibid., art. 51.
  • 45 The right holder must have the right to take legal action to compel domestic customs authorities to (...)
  • 46 TRIPS Agreement, art. 44 (1).
  • 47 For details, see Pham Hong Quat, ‘How to Comply with the TRIPS and WTO Law—The New Challenges to Vi (...)
  • 48 See for details, Jennifer Brant with Rohit Malpani, Oxfam International, Eye on the Ball Medicine R (...)

32Article 41 of TRIPS states that enforcement procedures must “permit effective action” against present and future acts of infringement and be incorporated into the national legislation to become available in the domestic laws of the member states.41 TRIPS also requires that judicial authorities have the authority to require claimants to indemnify parties who are wrongly subjected to any of the provided procedures.42 It further provides that preliminary injunctions to prevent future infringements and preserve relevant evidence must be available to judicial authorities.43 Counterfeiting and piracy are concretely defined and distinguished from the general infringements to be applied in the “Special Requirements Related to Border Measures”44 elaborated in Articles 51–60 of TRIPS.45 Competent national authorities may act ex officio to suspend the release of goods with respect to which the prima facie evidence of infringement is available.46 The imposition of strict border control measures on imports of counterfeit goods is perceived as “a safety valve” in case enforcement at the source has been ineffective.47 However, it is also argued that overbroad laws claiming to address the problem of fake or spurious medicines, but labelled as “anti-counterfeiting” laws, can seriously restrict the availability of generic HIV medicines.48

  • 49 Mohammad Monirul Azam, Effectiveness of the Intellectual Property Enforcement Mechanisms Under the (...)

33Thus, while adopting effective enforcement provisions complying with the TRIPS Agreement, the Government of Bangladesh may need to give due consideration to the exceptions and limitations available under the TRIPS Agreement so that enforcement provisions do not become a barrier to the realisation of public health goals.49

3.2.5 Exceptions and Limitations of Exclusive Rights

  • 50 For details on the different types of compulsory licenses, see Chapter 4 of this study.
  • 51 WTO, ‘Implementation of Paragraph 6 of the Doha Declaration on the TRIPS Agreement and Public Healt (...)

34Although the Paris Convention does not provide the criteria for exceptions, but leaves them to national legislation, TRIPS provides in Article 30 limited exceptions from the exclusive rights conferred on patent holders. Article 30 refers only to “exceptions” to the exclusive rights derived from the patent rights. However, the limitations to patent rights are implied in the provisions on compulsory licensing, which are mentioned generally in Article 8 and particularly in Article 31 of TRIPS. TRIPS refers to the limitations to exclusive patent rights with the phrase “other use without authorization of the right holder” in Article 31, rather than with “compulsory licenses” as provided in Article 5(A) of the Paris Convention. Accordingly, the requirements set forth in Article 31 aim at different types of compulsory licenses. The applicability scope of this article is broader than that of the rule provided in Article 5(A) (4) of the Paris Convention, which is only applicable to the type of compulsory licenses for non-working or insufficiently working patents.50Although the TRIPS Agreement permits compulsory licenses (CL), countries having no or low technical capacity cannot take the advantage of it as article 31(f) limits CL to drugs produced to meet domestic needs rather than exported to other countries. Para. 6 of the Doha Declaration suggested a possible solution, which was finally approved by the WTO General Council in August 2003 (August 30 Decision).51

3.2.6 Provisions on August 30 Decision (Implementation of Para. 6 of the Doha Declaration)

35The August 30 Decision implemented para. 6, allowing the export of pharmaceuticals to countries having no or low manufacturing capacity. The amendment includes five paragraphs and will come under Article 31 “bis” (as an additional sub-article to Article 31 after approval by two-thirds of the WTO members).52 Again, a new annex to the TRIPS Agreement has come as part of the amendment, which includes seven paragraphs setting out terms for using the system, and covers such issues as definitions, notification, preventing the pharmaceuticals being diverted to the wrong markets, developing regional systems to allow economies of scale, and annual reviews in the TRIPS Council.

  • 53 Ibid.

36The Decision is essentially comprised of three waivers from provisions in Article 31 with respect to pharmaceutical products:53

  • First, it waives the obligation in 31(f) that CL shall be predominantly for supply to the domestic market,

  • Second, it waives the obligation in 31(h) for the importing country to pay remuneration to the right holder and

  • Third, it waives the obligation in 31(f) to the extent that re-export of the imported pharmaceuticals is allowed among members of a regional trade agreement, if at least half of these members are LDCs.

37However, all LDCs are automatically eligible to use the system, while the developing country members are only eligible if they can show no or low manufacturing capacity and make a notification of their intention to the Council for TRIPS. The developed countries such as the U.S., the EU members, Japan and Australia voluntarily declared that they will not use the system for imports. Hong Kong, Israel, Korea, Kuwait, Macao, Mexico, Qatar, Singapore, Chinese Taipei, Turkey and the United Arab Emirates agreed that they would use the system for import only in situations of national emergency or extreme urgency. Any member (developed, developing or LDC) may be an exporter.

  • 54 Para. 1 of the Doha Declaration.

38It is noting that all pharmaceutical products, including active ingredients, diagnostic kits and vaccines, are included in the system. There is no list of eligible diseases as the August 30 Decision refers to pharmaceuticals needed to address health problems, as recognised in the Doha declaration, para. 1: “We recognize the gravity of the public health problems afflicting many developing and least-developed countries, especially those resulting from HIV/AIDS, tuberculosis, malaria and other epidemics”.54 Therefore, epidemics are recognised as the core problem and other public health problems of similar gravity are also included.

39The questions of using the August 30 Decision may be clarified by means of the following situations (in the context of supplying pharmaceuticals):

    • 55 Sekalala, p. 11.

    First, if there is no patent on the particular pharmaceutical in either the exporting or importing country, supply can be met by regular import without reference to the August 30 Decision.55 Therefore, being an LDC, Bangladesh can supply generic drugs to other LDCs or developing countries where such drugs are not patented without using the August 30 Decision.

    • 56 Ibid.

    Second, in the case of having a patent in the importing country but not in the exporting country, the importer can issue a regular CL for import under Article 31 as the purpose would be to supply the domestic market.56 Thailand and Brazil issued this kind of CL for imports in 2006 and 2007 respectively. Therefore, a pharmaceutical company in Bangladesh could also supply generic medicine to other developing countries, if any developing country was willing to issue a CL for import to receive medicines from Bangladesh.

    • 57 Ibid.

    Third, the parties must use the Decision when there is a patent in the exporting country but not in the importing country. However, it is only the exporter that should issue a CL. On the other hand, if a particular product is patented in both countries, both of them have to issue CLs and proceed as per the August 30 Decision.57

  • 58 WIPO-WHO-WTO Trilateral Study, ‘Promoting Access to Medical Technologies and InnovationsIntersecti (...)
  • 59 Ibid.
  • 60 Ibid.
  • 61 Ibid; see also, WTO, ‘Notification of Rwanda’, July 2007 (document IP/N/9/RWA/1).
  • 62 Ibid; see also, WTO, ‘Notification of Canada’, October 2007 (document IP/N/10/ CAN/1).
  • 63 Ibid.

40There have been four initiatives to use the August 30 Decision. The first was an unsuccessful attempt by the NGO Médecins Sans Frontières/ Doctors Without Borders (MSF), acting on behalf of a country (the name of which was not disclosed) in 2004 to place an order to Canadian company to manufacture a combination pill of three HIV/AIDS medicines.58 The second occurred in 2005 when Ghana declared an emergency situation with regard to HIV/AIDS and granted a government-use authorization order to import generic HIV/AIDS medicines.59 It approached a Canadian company, where the products were patented. But Ghana later chose to import the products from generic manufacturers in India, where there was no patent, and hence it was not necessary to use the Decision. The third situation took place in September 2007 when one Indian pharmaceutical company filed an application as a potential supplier to the Indian patent office, requesting to manufacture and export to Nepal several anti-cancer pharmaceuticals patented in India, including erlotinib.60 But the applicant later withdrew the applications. As an LDC, Nepal was automatically entitled to use the system approved under Aug 30 decision, but Nepal never informed the WTO regarding its intention to import the given patented medicines—a prerequisite for using the decision. The fourth initiative began in July 2007 “when Rwanda sent to the WTO a brief notification of its intention to import 260,000 packs of the triple-combination ARV, reserving the right to modify the estimated quantity”.61 In September 2007, a Canadian “company applied for a compulsory licence in Canada which, under the Aug 30 Decision, would allow it to export 15,600,000 tablets (the equivalent of 260,000 packs) over a two-year period. The compulsory licence was granted two weeks later. The Canadian government notified the WTO in October that it was using the System [under Aug 30 Decision] as an exporting country”.62 As per the August 30 Decision, “the tablets shipped to Rwanda were distinguished from the version manufactured for the domestic market by the mark ‘XCL’ and white colouring, instead of the standard blue. The packaging bore an export tracking number issued by the Canadian government. Details of the product and its distinguishing characteristics, as well as details of the shipment, were posted on the website. A royalty was payable by the Canadian company for the right to use the patent, but the patent holders waived payment”.63

41Although the August 30 Decision created an opportunity for countries with low or no manufacturing capacity to meet their health needs by importing medicines from overseas, it has not been used very much.

  • 64 Ibid.

42One should consider the complexity of the system and the “(potential) political or trade ramifications associated with the use of compulsory licensing”.64 The experiences of Brazil, China, India and South Africa could provide important lessons for the LDCs in how to utilise the options available under the TRIPS Agreement and while also dealing with potential political and trade risks associated with using additional governmental options (which are not conflicting with TRIPS).

3.3 The Experience of Brazil

  • 65 Corporate Power and State Resistance’, pp. 149–50.

43Brazil’s experience regarding TRIPS-compliant patent law for pharmaceuticals, and the societal and national obligation to ensure access to medicines, represents a situation in which exploitation by MNPCs was not only largely thwarted, but gave way to significant reforms in public health policy and reinstated local drug companies as viable contenders in the domestic market.65

  • 66 Kenneth C. Shadlen, ‘The Politics of Patents and Drugs in Brazil and Mexico: The Industrial Bases o (...)
  • 67 Business Wire Pharmaceutical, ‘Research and Markets: Pharmaceutical Pricing and Reimbursement in Br (...)
  • 68 Ibid.
  • 69 Ibid.
  • 70 Intellectual Property in the Context of the WTO TRIPS Agreement: Challenges for Public Health, ed. (...)

44Brazil’s public health-oriented TRIPS compliance approach might be the perfect model for other developing countries and LDCs to utilise. Economic and technological collaboration between the public and private sectors could create favourable conditions for political alliance as well as a hospitable environment for balancing local pharmaceutical innovation and access to medicines.66 Brazil has a population of over 180 million, so it is not only an important pharmaceutical market (with 2008 sales estimated at US$ 12.7 billion),67 but also an important centre for R&D with clinical trial facilities, low development costs, and qualified professionals.68 Although the pharmaceutical industry is dominated by MNCs, issues surrounding access to medicines have come to the forefront; affordability is one of the main problems in Brazilian healthcare.69 Around 20% of the 370 established pharmaceutical companies in Brazil are foreign (mainly European or American), and it is estimated that they control around 70% of the pharmaceutical market in Brazil.70 Given this tension, Brazil, within its IP regime, has attempted to create a balance between pharmaceutical innovation and access to medicines.

  • 71 Bermudez and Oliveira, p. 153.
  • 72 Ibid., p. 154.
  • 73 Ibid., p. 153.

45In 1883, Brazil was one of 16 countries that signed the Paris Convention.71 This pre-TRIPS convention allowed countries to utilise the patent system as an instrument of economic and technological development. Under that convention, each country could establish its own IP regime in a way that would favour its national policy. Brazilian industrial property legislation granted patent protection for pharmaceutical processes and products until 1945.72 In fact, Brazil was the fourth country in the world and the first in Latin America to protect the rights of inventors.73

  • 74 Ibid., p. 158.
  • 75 Ibid.
  • 76 Brazil has been a member of the WTO since 1 January 1995.
  • 77 Bermudez and Oliveira, p. 153.
  • 78 Ibid.

46Brazil’s 1945 legislation was modified to exclude the protection of inventions related to foodstuffs, medicines, materials and substances obtained by chemical means or processes.74 In 1969, a change in the Brazilian Industrial Property Code completely eliminated patenting in the pharmaceutical sector.75 However, when Brazil became a member of the WTO,76 it was required to implement a TRIPS-compliant patent regime, which included patent protection for both pharmaceutical products and processes. Brazil institutionalised the TRIPS Agreement by Presidential Decree in December 1994,77 and its TRIPS-compliant regime came into effect on 14 May 1996, thereby introducing pharmaceutical product and process protection.78

  • 79 Ibid.
  • 80 Ibid.
  • 81 Ibid., pp. 151–53.
  • 82 Brazil—Not a Market for Faint Hearted, p. 22.
  • 83 Bermudez and Oliveira. p. 33.
  • 84 On 8 January 2001, the US requested a WTO dispute settlement panel to resolve its differences with (...)
  • 85 Fault Lines in the World Trade Organization’, p. 33.

47Brazil began granting patents in the pharmaceutical sector in May 1997.79 Given this early implementation, Brazil was criticized by public health groups for implementing a TRIPS-compliant law in Brazil80 that failed to fully utilise the flexibilities and safeguards in the TRIPS Agreement and thus ensure access to medicines.81 In the face of this criticism, the Brazilian government took steps to facilitate access to drugs by introducing a number of amendments to the patent law, including a strong compulsory licensing regime.82 MNPCs and developed countries, particularly the US, objected to these provisions,83 and a WTO dispute was initiated by the US against Brazil.84 Daya Shanker precisely noted the main points of contention between the US and Brazil: local working requirements in the Brazilian Industrial Property Law, parallel importing in the same law, and Brazil’s request for consultation on the alleged violation of WTO provisions in the patent law of the US. Patents that are developed with the help of public funding need to be worked in the US.85

  • 86 Article 68(1) of Brazil’s Industrial Property Law, 1996 provides that non-exploitation of the objec (...)
  • 87 Article 27(1) of the TRIPS Agreement provides that “patents shall be available for any inventions, (...)
  • 88 Article 28.1 of the TRIPS Agreement deals with the exclusive rights of the patent owner to prevent (...)
  • 89 See Chakravarthi Raghavan, ‘US to Withdraw TRIPS Dispute against Brazil’, http://www.twn.my/title/w (...)

48In its complaint, the US asserted that Article 68 of Brazil’s Industrial Property Law had imposed a requirement that a patent either be subject to compulsory licensing if not applicable in the territory of Brazil, or not be used to manufacture the product in Brazil if the patented process was not used in Brazil.86 In the view of the US, these provisions were in conflict with Articles 27.187 and 28.188 of the TRIPS Agreement. As Chakravarthi Raghavan has stated, “the Brazilian law also provided that if a patent owner chose to exploit the patent through importation, others could either import the patented product or obtain the product from the patented process”.89

  • 90 The relevant provision is 35 USC § 204, entitled ‘Preference for United States Industry’, which pro (...)
  • 91 The relevant provision is 35 USC § 209, entitled ‘Licensing Federally Owned Inventions’, which prov (...)
  • 92 US Patent Law 35 USC §§ 1 et esq., http://www.wipo.int/wipolex/en/details.jsp?id=5399
  • 93 The US Patent Law, as consolidated in 2007, among other things, provides that when any patent is ob (...)
  • 94 MSF and other public health groups, along with 120 Brazilian NGOs, requested that the US Government (...)

49In response to the complaint, Brazil contended that Articles 20490 and 20991 of the patent code of the US92 had similar provisions; consequently, Brazil would initiate a dispute against the US over these provisions.93 In the end, the complaint was withdrawn due to pressure from public health organisations and human rights groups both within and outside the US.94 Shanker critically commented on the dispute:

  • 95 See Daya Shanker, ‘India, the Pharmaceutical Industry and the Validity of TRIPS’, The Journal of Wo (...)

[t]he weakness of its position was known to the [US] but the main purpose of initiating the dispute appeared to be to communicate potential [US] displeasure and possible action against weak and poor countries of the Third World so that they would not incorporate such provisions in their patent Acts and should such provisions have already been incorporated in their patent acts, that they would not use them.95

  • 96 See Daya Shanker (2002); see also Amir Attaran and Gillespie Lee, ‘Do Patents for Antiretroviral Dr (...)

50Thus the success of the US action was evident from the fact that South Africa, Kenya and many other African countries refrained from using local working provisions to manufacture anti-AIDS pharmaceuticals, even when a substantial part of their populations was suffering from AIDS.96

  • 97 For details on compulsory licenses issued in different countries, see James Packard Love, ‘Recent E (...)
  • 98 The definition of what falls into the public interest is of great importance. Public interest inclu (...)
  • 99 Ministerial Ordinance No. 866, dated 24 April 2007, declared that “there exists the possibility of (...)

51However, Brazil has managed to obtain price reductions from big pharmaceutical companies by threatening to break patents through the issue of a compulsory license. For example, on 25 April 2007 Brazil decided to issue a compulsory license for the HIV drug Storcrin (the brand name for Efavirenz), after failure to secure a considerable discount from the patent owner.97 The then Brazilian president signed a compulsory license on the grounds of public interest98 for Efavirenz, which permitted the purchase of the patented pharmaceutical from generic suppliers.99

  • 100 Decree No. 3,201 of 6 October 1999, Diario Oficial da Uniao (Braz.) (translated into English).
  • 101 Ibid.

52Brazil has also adopted a decree that establishes certain rules concerning the granting of compulsory licenses in cases of national emergency and public interest.100 The definition of public interest is broad, including such matters as public health, nutrition, the protection of the environment, and elements of primordial importance for technological, social or economic development.101 The possibility of being able to provide compulsory licensing in each of these cases implies that the fulfilment of the country’s most basic needs would be covered. Thus, Brazil successfully utilised the compulsory license flexibility of TRIPS to protect public health.

  • 102 Law No. 9,279 of 14 May 1996 (Industrial Property Law) (Braz.) (referencing Article 43).
  • 103 This was introduced in Brazil by Law 10.196/2001 as an amendment to Articles 43 and 229 of Law No. (...)
  • 104 Law No. 9,279 of 14 May 1996 (Industrial Property Law) (Braz.) (referencing Article 229 C).

53In addition to compulsory license provisions, Brazilian law also utilised, within its TRIPS-compliant regime, other TRIPS flexibilities such as parallel importing,102 experimental use, early working or Bolar exceptions,103 and a strict novelty requirement.104

  • 105 In September 2003, Decree No. 4,830 also allowed for the importation of the object from countries w (...)

54Using parallel import flexibility, Brazil permitted pharmaceuticals to be brought into the country if the patent holder or an authorised third party had previously commercialised the pharmaceutical in another country at a lower price than that offered in Brazil.105

  • 106 Law No. 9,279 of 14 May 1996 (Industrial Property Law) (Braz.) (referencing Article 43).
  • 107 Industrial Property Amendment Law No. 10,196 modified Articles 43 and 229 of Law No. 9,279. Article (...)
  • 108 This can ultimately lower the price of medicines. The WTO Panel in the EC– Canada case validated th (...)
  • 109 See Maristela Basso, ‘Intervention of Health Authorities in Patent Examination: The Brazilian Appro (...)
  • 110 ANVISA’s IP division established in 2001 and housed in the National Institute for Industrial Proper (...)
  • 111 Bermudez Oliveira and Egleubia Oliveira, ‘Expanding Access to Essential Medicines in Brazil: Recent (...)

55The Brazilian Industrial Property Law also included a provision on experimental flexibility, which allowed the use of an invention without compensation for the patent holder.106 The Bolar exception, as it applies in Brazil, allows a company to complete all of the procedures and tests that are necessary to register a generic product before the original patent expires.107 Bolar flexibility allows the immediate marketing of a generic pharmaceutical after the patent has expired, thus promoting competition with the patent holder.108 Another notable feature of the Brazilian Industrial Property Law is its innovative use of novelty flexibility. In terms of novelty flexibility, the Brazilian National Institute for Industrial Property (INPI) is criticised by health activists, local generic producers and lawyers for adopting an overly broad definitionof novelty. This results in many patent applications that are not new molecular entities (NMEs), but rather are simply revised versions of some existing patented NMEs. To avoid this problem, a 1999 Presidential Decree (converted into law in 2001) created and introduced a new provision requiring prior approval from the National Health Surveillance Agency (ANVISA or “the Agency”) before granting a patent, thus ensuring that it will not endanger public health or create barriers for access to medicines.109 Therefore, all pharmaceutical patent applications submitted to the INPI must go through the ANVISA review process, and patents can only be issued with prior consent from the ANVISA.110 The Agency denies patents to drugs that lack genuine novelty and in cases where it judges that providing exclusive rights would be harmful to public health.111 ANVISA uses its authority to prevent patents that, in its judgement, would extend the terms of existing patents.

  • 112 On May 29, 2012, Law No. 12.529/11 took effect, significantly changing the landscape of antitrust (...)
  • 113 See Loraine Hawkins, ‘WHO/HAI Project on Medicine Prices and Availability Review Series on Pharmace (...)
  • 114 Ibid.
  • 115 Brazil created a reference price regime for new patented products in 2003. Under this regime, the f (...)

56Further, in December 2010, the Brazilian Senate approved the text of a new Competition Act that had been pending in the Brazilian Parliament since 2005 and finally entered into force on 29 May 2012 (Brazilian Competition Law, No. 12.529/2011).112 It is expected that this law may help Brazil prevent both excessive pricing and abuse of the dominant position of the pharmaceutical industry.113 However, the law has yet to be tested in the pharmaceutical sector.114 Brazil has also adopted price control regulations, empowering the Ministry of Health to evaluate how far a new patented medicine can demonstrate a therapeutic advantage over an existing treatment and then to determine a price ceiling based on the lowest price of the drug in several countries, including the country of origin.115

  • 116 The Government of Brazil invested in 18 public sector laboratories that mostly engage in formulatio (...)
  • 117 See Maurice Cassier and Marilena Correa, ‘Intellectual Property and Public Health: Copying of HIV/A (...)

57Apart from public health-oriented TRIPS flexibilities, the local pharmaceutical sector in Brazil has also benefited from significant government investment in research and production through the Brazilian Ministry of Health.116 Maurice Cassier and Marilena Correa stated that “[t]he Ministry of Health [of Brazil] acting as ‘health entrepreneur’ [as it] does not just purchase drugs but also takes an active role in their production”.117

58By using both the flexibilities inherent in the TRIPS Agreement and governmental investment in R&D, Brazil was able to balance the need for pharmaceutical innovation with the public health requirement of access to medicines. China and India had a similar vision, but took different paths towards TRIPS compliance.

3.4 The Experience of China

  • 118 State Intellectual Property Office (SIPO) of the People’s Republic of China (PRC), Patent Law of th (...)
  • 119 Ibid.
  • 120 Ibid.
  • 121 Abbott, Correa and Drahos (2013).
  • 122 See ‘General Introduction to the Third Revision of the Patent Law of the People’s Republic of China (...)

59Patent law in modern China began with the promulgation of the Patent Law of the People’s Republic of China (PRC), 1984.118 Since then, China has amended its patent law four times: in 1992, 2000, 2008 and 2012.119 The 1984 Chinese patent law excluded the protection of pharmaceutical product patents, and approved the granting of process patent only. It was not until 1992, when taking part in negotiations with the U.S. for accession to the WTO, that China amended its patent law of 1984 to comply with the TRIPS Agreement. Then, under Article 25 of the 1992 amended patent law, the Chinese government formally approved the granting of patent protection for pharmaceutical products.120 The Chinese government introduced further changes to the patent law in 2000 to ensure full compatibility with the TRIPS Agreement prior to becoming a WTO Member in 2001. However, China also attempted to strike a balance between the interest of patent holders and public health, ratifying further amendment to the patent law in 2008 to adopt some public health-related measures, as approved by the Doha Declaration, and to encourage Chinese generic producers.121 In 2012, the State Intellectual Property Office (SIPO) of China approved a fourth amendment to simplify public health-related measures (such as compulsory license procedure), which was enacted on 15 March 2012 and came into effect on 1 May 2012.122

  • 123 SIPO, 2008 Patent Law of the PRC, Art. 26.
  • 124 Shruti Bhat, ‘New Chinese Patent Law: What Does It Mean For Life Sciences Companies?’, 6 February 2 (...)

60Among the public health-related measures, one important feature in the context of China is the disclosure requirement for traditional knowledge and genetic resources. The Chinese government supports and encourages research on local traditional knowledge and genetic resources. It therefore tried to preserve the interests of local producers and users by introducing strict requirements. Article 26 of the 2008 Patent Law adopted disclosure requirements, which require that the applicant disclose and explain the direct and original source of the genetic resource. If the applicant is not able to disclose the original source, the applicant must provide the reasons why.123 However, Article 26 has some weakness in its implementation. For example, it is not clear how to define “direct source” and “original source”, or acceptable and reasonable grounds for not disclosing the original source. This vagueness may create uncertainties and some companies may avoid the provision by using weak excuses.124 The novelty provision is another important provision for the local generic producers in China.

  • 125 Ibid.
  • 126 Sasha Kontic ‘An Analysis of the Generic Pharmaceutical Industries in Brazil and China in the Conte (...)
  • 127 Elliot Hannon, ‘How an India Patent Case Could Shape the Future of Generic Drugs’, Time World, 21 A (...)
  • 128 SIPO, 2008 Patent Law of the PRC, Art. 22.
  • 129 Ibid.
  • 130 Ibid., Art. 48 (1)(2).
  • 131 Ibid., Art. 50.

61Under the 2000 Patent Law of the PRC, novelty was not considered to be destroyed if an invention had already been used in foreign countries, provided it had not been used in China or published anywhere in the world before its filing in China.125 That is why, in comparison to the Indian approach, Chinese patentability requirements were criticised for being weak and for allowing foreign pharmaceutical producers to exploit the law and keep their patent rights for a longer time than intended, delaying the entry of generics to the market.126 Thus, China should raise the bar for medical patentability standards to prevent the patenting of medicines with small changes; the government could thereby encourage the production of generic drugs immediately after the expiry of patent.127 However, the provision on novelty was amended under the Article 22 of the 2008 Patent Law of the PRC, which stipulates that “novelty” means the invention or utility model does not belong to prior art [disclosure or publication of the relevant invention anywhere in the world prior to patent application], which is also called “absolute novelty”.128 Therefore, patent examiners need to make the assessment that, prior to the date of filing, no other person shall have filed an application for an identical invention and that there is no evidence of public use either inside and outside of China. Adoption of an absolute novelty standard requires a higher pharmaceutical R&D capability, which could prevent patenting with minor changes and encourage the quick entry of cheaper generic medicines to the Chinese market.129 However, when the supply and price of patented medicines go beyond sustainable limits, most countries have recourse to compulsory license. It is noting that no CL has ever been granted in China even though Chapter VI of the 1984 Patent Law of the PRC had detailed CL provisions. Recognising the importance of CL in the context of public health challenges in China and the available flexibilities in the TRIPS Agreement, China revised its CL provisions during the third amendment to the patent law in 2008. According to Article 48 of the 2008 Patent Law, the SIPO may, upon the request of an entity or individual qualified for exploitation, grant a compulsory license to exploit a patent for an invention or utility model, when the patentee has not or has not sufficiently exploited it, without any justified reason, within three years of the granting of the patent right or four years of the filing for the patent. A compulsory license can also be granted to avoid or eliminate adverse effects on the competition in cases in which it has been legally determined that the enforcement of the patent right by the patentee constitutes a monopolistic act.130 In addition, Article 50 of the 2008 Patent law permits the granting of a compulsory license for exporting medicines to countries with low or no manufacturing capacity with the aim of protecting public health, as per Para. 6 on the implementation mechanism of the Doha Declaration/August 30 Decision.131

  • 132 Ibid., art. 50 and 53.

62Articles 50 and 53 of the 2008 Patent Law of the PRC stipulate that for the purpose of promoting public health, in the case of countries without a manufacture capacity, patented medicines can be manufactured and exported with the CL granted by the patent administration department (of the PRC) to the LDCs and other WTO member states, provided they express the need to import the medicines according to the relevant provisions of the international treaties (i.e., the August 30 Decision of the TRIPS Agreement).132 However, the CL mechanism permitted under the 2008 Patent Law of the PRC lacks safeguards with regard to how to regulate parallel importation and exportation to avoid imported medicines being re-imported to other countries, because it would affect the interests of patients that need cheaper medicine in the importing counties. Apart from these weaknesses on exporting medicines, there are other limitations regarding the CL mechanism’s ability to meet local public health needs in China.

  • 133 Article 4, ‘Measures on Compulsory Licensing for Patent Exploitation’, Order No. 31 of the SIPO (im (...)
  • 134 Ibid., art. 5.
  • 135 Zhang Yan, ‘New Measures for Compulsory Licensing of Patent’, effective since 1 May 2012 (25 June 2 (...)

63The SIPO adopted a further amendment to patent law in order to simplify measures on CL on 15 March 2012. The purpose of the adopted measures was to promote compulsory licensing in the pharmaceutical industry and to improve public health by bargaining for cheaper ARV second-line drugs for treating HIV/AIDS, drugs for which the patent rights are held by foreign pharmaceutical companies. Prior to 2012, the circumstances under which a person could apply for a compulsory license were (1) they had been unable to obtain a license after a reasonable period of negotiation based on fair and reasonable terms, if the implementation of an invention or utility model that constitutes a significant progress had to rely on the implementation of a patent previously granted; (2) in situations where public health is concerned; and (3) in a state of emergency.133 The 2012 measures approved two more grounds: first if the patent has not been used for three years from the time of its granting, or four years from the time of application; and second, if the act of claiming the patent right is considered a violation of anti-monopoly law. With respect to public health, the field is thus significantly widened.134 Under previous measures, it was limited to contagious diseases, but under the 2012 measures the contagious disease restriction does not exist.135 Chinese patent law also includes provisions for Bolar exemptions, which is important for generic producers.

  • 136 Third Revision of China’s Patent Law, Legal Texts and Documents on Drafting Process’, EU–China IPR (...)

64Article 69 (5) of the Chinese Patent Law of 2008 includes Bolar exemptions, and states that “Any person [who] produces, uses, or imports patented drugs or patented medical apparatus and instruments, for the purpose of providing information required for administrative examination and approval, or produces or any other person imports patented drugs or patented medical apparatus and instruments especially for that person” is excluded from infringement of the patent rights.136 This provision is also consistent with Article 19 of the 2007 Drug Registration Regulations (DRR), which says that:

for a drug patented in China, applicants other than the patentee may submit the application for registration two years prior to the expiry date of the patent. The State Food and Drug Administration (SFDA) shall review the drug application in accordance with the provisions, and after the expiry date of the patent, check and issue the drug approval number, Import Drug License or a Pharmaceutical Product License if the application conforms to the provisions.137

  • 138 Yafei Gao, ‘The Conflict and Coordination between Biological Pharmacy’s Intellectual Property Prote (...)

65Before the establishment of Bolar exemptions by the 2008 Patent Law, when generic producers were trying to utilise Article 19 of the DRR handling the application, infringement lawsuits were always brought by patent holders. By shortening the application time spent on clinical trial, the provision relating to Bolar exemptions can be seen as encouraging the production of generics to reduce the price of patented medicines and improve accessibility to medicines.138 Chinese patent law also allows parallel imports to ensure better accessibility and affordability of medicines, in case of excessive pricing of medicines in the local market.

  • 139 Article 63(1), Patent Law of The PRC (2000 Revision), adapted at the 17th Session of the Standing C (...)
  • 140 Article 20, Provisions for Drug Registration (SFDA Order No. 28).
  • 141 Article 35, Regulations for Implementation of the Drug Administration Law of the People’s Republic (...)

66There is little ambiguity regarding parallel import provisions in China. Article 63(1) of the 2000 Patent Law allowed that “after the sale of a patented product that was made or imported by the patentee or the authorization of the patentee, or of a product that was directly obtained by using that patented process, any other person uses, offers to sell or sells the product”.139 Nevertheless, this led to different understandings of whether this provision actually adopted international exhaustion or whether “sell” in the provision meant within the country and therefore allowed domestic exhaustion. Thus, the 2000 Patent Law did not provide the specific legal basis for parallel importation. However, Article 69(1) of the 2008 Patent Law clarified the issue by stating that it would not constitute patent infringement after the product first entered the international market with the authorisation or consent of the patent owner. Nevertheless, China provided data exclusivity which may hamper the production of generic pharmaceuticals for the local market. During its WTO accession process in 2001, China approved a six- year period of data exclusivity protection for pharmaceutical drugs containing a new chemical entity (NCE) under its Provisions for Drug Registration.140 However, this protection can be excluded in two situations: where the public interest takes precedence, and where steps are taken to ensure the data are protected against unfair commercial use.141

  • 142 S. Wu, S. Hang, J. Chen and L. Shi, ‘Impact of Medical Data Protection on Drug Expenditure and Acce (...)
  • 143 In this regard, Japan could become a model for China. Japan incorporates data exclusivity into its (...)

67It is estimated that data exclusivity increased China’s health expenditure by an average of 45.55% per year from 2007 to 2009, while reducing accessibility to 267 types of medicines by 27.14%—a great negative impact on public health in China.142 The six years of data exclusivity for all drugs, and the related policies, are too simplistic a measure, and some points need to be revised and clarified. Regarding Article 20 of the Provisions for Drug Regulation and Article 35 of the Regulations for Implementation of the Drug Administration Law, the term “NCEs” needs to be defined clearly in the case of diverging opinions between China and developed countries. There should be more detailed requirements for experimental data, otherwise the protection scope of data exclusivity is difficult to understand. Further, the six-year exclusivity is too general: there should be a differential protection period for different kind of drugs, as is the case in Japan.143 The provisions should add corresponding terms separately to NCEs, orphan drugs, paediatric drugs and so on. In this regard, the Indian approach for refusing to provide test data protection and dealing with other TRIPS flexibilities could be more viable for the LDCs, considering the embryonic stage of their industries in comparison to China and their weak financial and technical capacities.

3.5 The Experience of India

  • 144 India’s New “Trips-compliant” Patent Regime’.
  • 145 Ibid.

68India’s experience contrasts with that of Brazil. India entered the WTO in 1995 and went through a long process of amendments to have a TRIPS-compliant patent regime, which became effective on 1 January 2005.144 The effect of stronger intellectual patent rights created problems for the larger Indian drug firms and greatly damaged smaller local firms’ ability to meet the rising costs of remuneration for experienced and efficient pharmacists and other technical persons.145

  • 146 See Planning Commission of India, Report of the Working Group on Drugs and Pharmaceuticals for the (...)
  • 147 Ibid.
  • 148 Ellen t’ Hoen, The Global Politics of Pharmaceutical Monopoly Power (AMB Publishers, 2009).

69The Indian pharmaceutical industry, with its 8% share of global pharmaceutical production, “holds [the fourth] position in terms of volume and [the thirteenth] in terms of value of production”.146 It also enjoys a 20% share of the global generic market.147 Indian pharmaceutical companies also play an important role globally by providing life- saving drugs at affordable prices. For instance, 70% of the ARV drugs procured to treat HIV/AIDS under the Global Fund to Fight HIV/AIDS, TB and malaria come from Indian companies and 70% of the UNICEF, International Development Association, and Clinton Foundation procurement is also from Indian companies.148

  • 149 Based on data from the Directorate General of Foreign Trade, Government of India and Exim Bank, Ind (...)
  • 150 Reji K. Joseph, ‘India’s Trade in Drugs and Pharmaceuticals: Emerging Trends, Opportunities and Cha (...)
  • 151 Rasmus Alex Wendt, ‘TRIPs in India’ (unpublished PhD thesis, Roskilde University, 2007), pp. 160–78
  • 152 Padmashree Gehl Sampath, Economic Aspects of Access to Medicine After 2005 (UNU-MERIT, 2005, 22), p (...)

70Drugs produced in India satisfy 95% of domestic demand, and two- thirds of the drugs produced in India are exported to the global market.149 The exports of pharmaceuticals by the Indian pharmaceutical industry are around $ 5.3 billion.150 Only two MNCs—GSK and Pfizer—figure in the top 10 pharmaceutical companies in India.151 Although domestic companies in India now control 80% of the domestic market, this was not the case prior to patent policy reform in 1970, when Indian companies had only a 20% share.152 Considering this, Indian patent policy reform provides LDCs with important lessons in utilising the transitional period for progress towards local pharmaceutical production and innovation, as well as moving towards TRIPS compliance.

  • 153 Stephen Barnes, ‘Note: Pharmaceutical Patents and TRIPS: A Comparison of India and South Africa’, K (...)
  • 154 Ibid.; David K. Tomar, ‘A Look into the WTO Pharmaceutical Patent Dispute between the United States (...)

71India became an independent nation in 1947, after more than 100 years of British rule, and initially adopted the British Patents and Design Act, 1911.153 Jawaharlal Nehru, India’s first prime minister, was concerned about the influence and control of foreign companies over the Indian economy.154 This concern was validated in two subsequent committee reports.

  • 155 Note: Pharmaceutical Patents and TRIPS’, p. 920.
  • 156 A Look into the WTO Pharmaceutical Patent Dispute’, p. 582.
  • 157 Ibid.
  • 158 Ibid.
  • 159 The Patents Act, No. 39 of 1970, § 53(1)(a) (India).

72The 1948 Tek Chand Committee and the 1957 Ayyangar Committee both concluded that foreign interests were exploiting Indian patent protection to monopolise various markets, including the pharmaceutical market.155 At the time of these reports, India was dependent on foreign sources for pharmaceuticals, including bulk chemicals and completed medicines. The great majority—some 90%—of the Indian pharmaceutical market was controlled by foreign companies.156 Indian pharmaceutical prices at that time were among the highest in the world.157 Initially, India sought to solve this problem by instituting high tariffs and price controls on pharmaceuticals.158 India then amended its patent laws to encourage imitation and local pharmaceutical production. The change came with the passage of the Patents Act, 1970, eliminating product patents for pharmaceuticals and only allowing process patents, which gave protection for a maximum period of seven years.159

  • 160 This quote comes from Indira Gandhi’s message to the WHA at Geneva in 1982.
  • 161 Susan Finston, ‘India: A Cautionary Tale on the Critical Importance of Intellectual Property Protec (...)
  • 162 Ibid., 889.
  • 163 Ibid., 889, 894.

73India thus encouraged the mass production of low-cost pharmaceuticals at the expense of innovation. Prime Minister Indira Gandhi, in her statement to the WHO Assembly in 1982, argued that “the idea of a better-ordered world is one in which medical discoveries will be free of patents and there will be no profiteering from life and death”.160 Given this focus, Indian pharmaceutical companies principally engaged themselves in the production of generic versions of name-brand pharmaceuticals through reverse engineering. By applying modified production processes, they successfully avoided conflict with the original patent or having infringement claims made against them.161 By “free riding” on others’ inventions, Indian companies avoided R&D costs.162 By focusing on existing pharmaceuticals, Indian pharmaceutical companies were able to offer generic alternatives at a fraction of the patented name-brand pharmaceutical cost, and thus India entered both the local and global pharmaceutical markets quickly.163

  • 164 Janice Mueller, ‘The Tiger Awakens: The Tumultuous Transformation of India’s Patent System and The (...)

74Its policy to exclude product patents for pharmaceuticals allowed the Indian pharmaceutical industry to grow rapidly. However, by joining the WTO, India agreed to adopt the requirements of the TRIPS Agreement. This required India to implement patent protection for pharmaceutical products and processes. After a three-stage amendment process in 1999, 2002 and 2005, India finally entered into a TRIPS- compliant patent regime on 1 January 2005, taking advantage of the entire transition period.164

  • 165 Ibid.
  • 166 See Rajdeep Goswami, Compliance of TRIPS in Indian Patent Law (29 April 2012), http://www.legalserv (...)
  • 167 Ibid.

75The effect of stronger intellectual patent rights was felt by the larger Indian drug firms and damaged the smaller local firms’ ability to meet the rising costs of production and the payment of royalties for patented pharmaceuticals.165 The Indian TRIPS-compliant patent law was criticised by public health groups as being “likely to bring about a legal regime that is less favorable from the point of view of access to drugs for the people of [India]”.166 It was also argued that the new patent law in India generally provided stronger protection to patent holders, which implied that the balance of interests between inventors and the general public had shifted in favour of the inventor.167

  • 168 See generally, ‘India’s New “Trips-compliant” Patent Regime’.

76However, India tried to preserve public health by limiting data protection and by incorporating into the TRIPS flexibilities much stricter patent standards, pre-grant and post-grant opposition procedures, compulsory licenses and government use, prior use exceptions, early working or Bolar exemptions, research and experimental use exceptions and parallel imports.168

  • 169 The Patents (Amendment) Act, No. 15 of 2005, § 25 (India).
  • 170 Archana Shanker and Neeti Wilson, The Patent Opposition System in India (8 July 2010), http://www.i (...)

77The Indian patent opposition provision not only contains 11 grounds for pre-grant opposition but also permits post-grant opposition to be raised.169 The Indian grounds for post-grant opposition170 are broad enough to challenge novelty, inventive steps and the process of industrial application, the best method, claims and disclosure of origin, and even the use of indigenous or local knowledge. LDCs could do likewise, following the Indian model and adopting more extensive pre- grant grounds for objection and a process for post-grant opposition.

  • 171 The Patents (Amendment) Act, No. 15 of 2005, § 3(a), (d), (e), (p) (India).
  • 172 Article 27(1) of the TRIPS Agreement states that “patents shall be available for any inventions, wh (...)
  • 173 Novartis A.G. v. Union of India and Others (2006), 4 Madras L.J. 153 (India), https://fr.scribd.com (...)
  • 174 Ibid.

78India also tried to set high thresholds with respect to the novelty of patent applications so that MNCs could not extend the life of a patent by “ever-greening”.171 In 2006, the Swiss-based pharmaceutical company Novartis AG challenged the constitutional validity of section 3(d) of the Indian Patent Act, 2005, which tried to exclude inventions that were not a “significant enhancement of the known efficacy” of the pharmaceutical. Novartis AG challenged the law on the grounds that the provision provided absolute power to the controller of the patent and denied the rights existing under Article 27172 of the TRIPS Agreement that obliged WTO member states to provide patent protection to all fields of technology without discrimination.173 The Indian High Court of Madras held that section 3(d) was not in violation of the Constitution of India and declined to rule on its incompatibility with the TRIPS Agreement.174

  • 175 The Patents (Amendment) Act, No. 15 of 2005, § 47 (India).
  • 176 Ibid., §§ 99, 100.
  • 177 Ibid., § 102.
  • 178 Ibid., § 100(1).
  • 179 Ibid., § 100(6).
  • 180 Ibid., §§ 100, 103.
  • 181 The Patents (Amendment) Act, No. 15 of 2005, §§ 100, 103 (India).

79Government use is another effective means to curb abuse of patents. A government, or its authorised agent, can use a patent without the authorisation of the patent holder. The Patent Act, 2005 provides for three types of government use. First, a patent is granted in India with the condition that the government can import the medicines for the distribution of pharmaceuticals in public sector hospitals or any other hospitals by making official notification through the government’s Gazette.175 Second, the government or authorised persons can use a patent against a royalty payment.176 Third, the government can acquire a patent after paying compensation.177 The government can exercise these powers at any time.178 The patented article, as produced under government-use flexibility, can only be sold for non-commercial use.179 However, the Act provides room for challenging the government’s decision to use or acquire the invention in the High Courts.180 This means that the patentee could delay such government use, because under the legislation the government has to prove its need before the court.181

  • 182 Access to Drugs in India’, pp. 8–9.

80Like Brazil, India has incorporated options concerning compulsory licenses for use in cases of public interest. India is also using compulsory licensing options to encourage local production in the cases of inadequate supply or excessive pricing, based its measures on the earlier experiences of Brazil, which has effectively and consistently managed to control the costs of several patented drugs by repeatedly threatening the use of the “national emergency” clause provided for under the TRIPS Agreement with regard to compulsory licensing.182

  • 183 Natco Pharma Ltd v. Bayer Corporation, Compulsory Licensing Application No. 1 of 2011 (decided by t (...)
  • 184 Ibid.
  • 185 Natco Pharma Ltd v. Bayer Corporation.

81Further, the Indian Controller of Patents, while disposing of an application for a compulsory license in Natco Pharma Ltd. v. Bayer Corporation,183 clarified the issue of the working of the patent in the territory of India. The controller noted that the phrase “worked in the territory of India” had not been defined in the Patents Act, 2005 and thus needed to be interpreted with regard to “various International Conventions and Agreements in intellectual property”, the Patents Act, 1970 and legislative history.184 The controller, using Article 27(1) of TRIPS and Article 5(1)(A) of the Paris Convention, interpreted it to mean that failure to manufacture in India was reason to grant a compulsory license to Natco, stating that “[p]atents are not granted merely to enable patentees to enjoy a monopoly for importation of the patented article” and that “the grant of a patent right must contribute to the promotion of technological innovation and to the transfer and dissemination of technology”.185

  • 186 Product Patents and Access to Medicines in India’, p. 341.
  • 187 Ibid.

82Nevertheless, during the period 2005–10, only one application has been filed for the issuance of a compulsory license in India. This is due to the weakness in the compulsory license regime under the Patents Act, 2005.186 For example, there are no clear guidelines with respect to the requirement to pay royalties.187

  • 188 The Patents (Amendment) Act, No. 17 of 2005, § 107(A) (India).
  • 189 Ibid., § 107(A)(b).
  • 190 The Patents (Amendment) Act, No. 17 of 2005, § 107(A) (India).

83The Indian patent law amendment of 1999 provided for the early working or Bolar exemption provision to ensure quick entry of generics into the market for competition and hence reduce the price of medicines in India.188 The 1999 amendment also included a provision on parallel importation by incorporating section 107(A) (b) into the existing Act. Under this provision, parallel importation is permitted for the “importation of patented products by any person from a person who was duly authorised by the patentee to sell or distribute the product”.189 However, this required authorisation from the patentee. The result was that a product could not be imported where it was produced under a compulsory license. This was resolved by a 2005 amendment to enable India to import pharmaceuticals even if the drugs were produced under a compulsory license.190

  • 191 The Patents Act, No. 39 of 1970, § 47 (India) (retained as it is in the TRIPS-compliant Indian Pate (...)
  • 192 The Patents (Amendment) Act, No. 17 of 2005, § 11(A)(7) (India).
  • 193 Ibid.

84Indian patent law also contains a provision on research and experimental use that allows for the use of patented products for R&D purposes.191 Another feature of the Indian law is the provision under prior use exceptions, or the grandfather clause, that allows generic producers to continue the production and marketing of the generic product if they invested in it before the introduction of the product patent in India.192 This means that if a generic producer can show that it has invested significantly in the production and marketing of a particular product before 1 January 2005, it can continue to operate in the same way even after the introduction of the product patent. However, if any prior use is approved, then the company is required to pay the patent holder a reasonable royalty.193

  • 194 See ‘Product Patents and Access to Medicines in India’, p. 341.
  • 195 Ibid.

85Further, India maintains a price control mechanism to ensure access to affordable medicines.194 However, the taskforce formed by the Government of India to evaluate drug control mechanisms in India, popularly known as the “Dr Pronab Sen Taskforce”, argued that drug control mechanisms in India are not effective. The taskforce claimed that “no price regulatory mechanism can be effective unless there is a credible threat of price controls being imposed and enforced. However, it is also felt that the present price control system is dysfunctional and its legislative authority inappropriate”.195

  • 196 Ibid.
  • 197 Pronob Sen, Taskforce to Explore Options other than Price Control for Achieving the Objective of Ma (...)
  • 198 Ibid., p. 54.

86The taskforce further recommended that price controls be imposed not on the basis of turnover, but on the “essentiality” of the drug and on strategic considerations regarding the effect of price control on the therapeutic class. The ceiling prices of controlled drugs should normally not be based on cost of production, but on benchmarks that can be readily monitored.196 The taskforce also recommended that a process of active promotion of generic drugs be put in place, including mandatory de-branding for selected drugs, and that all public health facilities be required to prescribe and dispense only generic drugs, except in cases where no generic alternative exists.197 It further recommended that in the case of proprietary drugs—particularly anti-HIV/AIDS and cancer drugs—the government should actively pursue access programs in collaboration with drug companies with differential pricing and alternative packaging, if necessary.198

  • 199 V.K. Gupta, Intellectual Property and Sustainable Development: Documentation and Registration of TK (...)

87India also utilises the country’s traditional medicinal knowledge to ensure access to affordable medicines. It has begun documenting traditional knowledge to prevent the misappropriation of that knowledge by MNCs.199 MNCs have put pressure on India for the introduction of test data protection, which is submitted to obtain marketing approval; thus, these corporations have attempted to extend their monopoly pricing beyond the patent term. One study suggested that:

  • 200 Quoted in Animesh Sharma, ‘Data Exclusivity with Regard to Clinical Data’, The Indian Journal of La (...)

an analysis of article 39 of TRIPS and its legislative history indicates that TRIPS speaks of data protection in a flexible manner, and does not mandate data protection to be implemented by bringing in a data exclusivity regime. Thus, the argument that data exclusivity must be provided for in Indian law for India to be in compliance with TRIPS is fallacious. Protection against “unfair commercial use” under TRIPS must be interpreted to mean protection through non-disclosure and prohibiting others from accessing test data for unfair commercial use. TRIPS gives member states the freedom to choose the nature and extent of protection they want to offer.200

  • 201 Ibid. Shamnad Basheer reported that “After multiple deliberations spanning more than 3 years, a gov (...)
  • 202 See Abhilash Chaudhary, ‘Compulsory Licensing of IPRS and Its Effect on Competition’, http://citese (...)

88This is why most Indian pharmaceutical companies claim that protection need not be in the form of data exclusivity, and why the Government of India provides no data exclusivity protection.201 In 2002, the Indian government also introduced the Competition Act, 2002, which can be utilised to prevent excessive pricing as well as abuse of patents and of dominant market positions.202

89The Indian experience of utilising TRIPS flexibilities and other government intervention options, such as price controls, could be utilised by LDCs like Bangladesh while still adopting TRIPS-compliant patent law. However, the South African struggle for access to medicines in the context of the TRIPS Agreement and pressure from the MNCs could also be an important consideration for LDCs, especially with respect to the issues of competition law.

3.6 The Experience of South Africa

  • 203 The South Africa AIDS Controversy’, p. 2.

90Compared to India and Brazil, South Africa has a greater health crisis to deal with, including a large number of HIV/AIDS patients and severe problems of access to medicines. Hence, “the case of South Africa (economically the strongest African country) is particularly illustrative of [the] public health crisis and showcases the role domestic and international patent laws and policies may play in this context”.203

  • 204 African Leaders Call for Greater Industrialization of an Emerging Africa, UNAIDS (26 March 2013), h (...)

91South Africa has a large and highly developed pharmaceutical system, including considerable local production capacity. The South African Medicines Control Council (MCC) licensed 221 entities until 2009 in at least one of the categories of manufacturer, importer and exporter of medicines. Of these, 45 were locally registered subsidiaries or offices of MNPCs, including the major US and European innovators in this field. Africa imports 70% of the medicines it uses, including 80% of its ARV drugs used to treat HIV/AIDS.204

  • 205 Patents Act 9 of 1916 (S. Afr.); Patents Act 57 of 1978 (S. Afr.).
  • 206 Patents Amendment Act 38 of 1997 (S. Afr.).
  • 207 Patents Amendment Act 20 of 2005 (S. Afr.); Patents Amendment Act 58 of 2002 (S. Afr.).
  • 208 In Patrick Bond, ‘Globalization, Pharmaceutical Pricing, and South African Health Policy: Managing (...)
  • 209 See ‘Globalization, Pharmaceutical Pricing, and South African Health Policy’; see also Abbott, ‘The (...)

92South Africa has had patent legislation since at least 1916, and the existing law was promulgated in 1978.205 South Africa undertook to become TRIPS-compliant in 1997 with the passage of the Intellectual Property Laws Amendment Act, 1997.206 South Africa also became bound by the Patent Cooperation Treaty (PCT) in 1999. Further amendments to patent law were made in 2002 and 2005.207 Although in principle “South Africa adopted TRIPS-compliant patent law, it was increasingly being contended that medicines already subject to a significant degree of regulation must be construed as public goods because of their critical public health and public interest impacts, and therefore TRIPS flexibilities should be used to ensure that patent law would not jeopardize public health concerns”.208 Countries such as South Africa and Brazil attracted the wrath of the US when they adopted TRIPS-compliant laws which used flexibilities in the TRIPS Agreement more broadly than the US wanted.209

  • 210 In ‘The South Africa AIDS Controversy’.
  • 211 Ibid.

93The significance of the South African experience in dealing with pharmaceutical patent issues under the TRIPS Agreement, considering its national public health crisis, goes beyond doctrinal issues. South Africa used not only legislative approaches under its patent law but also competition law and other government interventions for price bargaining to encourage local generic production and R&D-based pharmaceutical industries. It has been stated that “it touches upon the more fundamental question of to what extent WTO member states— in general and particularly, developing countries—should be free to take legislative measures to deal with public health crises and to what extent the patent protection of pharmaceuticals required under TRIPS should limit the range of options available”.210 The South African experience brought the potential tension between patent protection for pharmaceuticals and public health concerns to the forefront of public awareness and triggered “a global debate about what should be allowed and what should be prohibited under TRIPS in order to preserve the incentives for investments in R&D of pharmaceuticals, while still allowing countries the flexibility to respond to public health crises as they deem fit”.211

  • 212 Fisher and Rigamonti, pp. 2–3, citing the 1996 South African Constitution.
  • 213 The South Africa AIDS Controversy’, pp. 2–3.
  • 214 Ibid., citing ‘National Drug Policy for South Africa’, pp. 9–10 (1996) (these page deals with drug (...)

94After apartheid, the vast majority of South Africans did not have access to healthcare at all, making healthcare reform one of the prime concerns for the post-apartheid government. This was in line with the mandate articulated within South Africa’s newly adopted constitution to undertake substantial policy measures to ensure access to affordable healthcare for everyone.212 To this end, the post-apartheid government appointed a National Drug Policy Committee to revamp South Africa’s healthcare system.213 After a series of investigations and consultations with relevant stakeholders, the committee found that among the most notable deficiencies were the lack of equity in access to essential drugs, the comparatively high prices for pharmaceuticals in the private sector and the loss of drugs through poor security in the public sector.214

  • 215 New Crusade to Lower AIDS Drug Costs’.

95The pharmaceutical companies in South Africa disapproved of the finding and argued that even lowering drug prices would not solve the access problem, as South Africa did not have adequate infrastructure for the distribution of drugs. The South African companies referred to India as an example of a country where access remains an issue despite the availability of generic versions of AIDS drugs.215

  • 216 Medicines and Related Substances Control Amendment Act.
  • 217 The planned modifications, including Section 15C, were signed into law by President Nelson Mandela (...)
  • 218 Ibid.

96However, considering the excessive pricing of medicines by the MNCs in South Africa, the government inserted a new section 15C into the South African MRSCA.216 The primary purpose of this amendment was to enable South Africa to benefit from lower prices abroad for the same drugs. The enactment of the MRSCA, with its provisions for parallel importation, attracted serious criticism from supporters of patent protection for the pharmaceutical industry (as they considered it among the options for issuing compulsory licensing), whereas it received strong support from public health groups.217 Regardless, the planned modifications, including section 15C, were signed into law by President Nelson Mandela on 12 December 1997.218

  • 219 See ‘Notice of Motion in the High Court of South Africa’.
  • 220 Paragraphs 2.1, 2.3 and 2.4 of the ‘Notice of Motion in the High Court of South Africa’; see also T (...)

97In an attempt to delay or halt the implementation of the amendments, the pharmaceutical companies took the matter to court and challenged the constitutionality of the amended MRSCA before the High Court of South Africa in February 1998.219 While challenging section 15C, the plaintiffs argued (i) that the amended provision entailed an inappropriate delegation of powers to the executive branch of government, as the Minister of Health would be authorised to determine both the application of patent rights irrespective of the South African Patents Act and the conditions for the supply of more affordable medicines without any limiting guidelines; (ii) that it would empower the Minister of Health to deprive IP owners of their property without compensation in violation of Article 25 of the South African Constitution (which provides for the protection of property rights); and (iii) that it would violate obligations under Articles 44(4), 231(2) and 231 (3) of the South African Constitution and under Article 27 of the TRIPS Agreement, as South Africa had committed itself to meeting TRIPS obligations.220

  • 221 See Holger Hestermeyer, ‘Human Rights and the WTO: The Case of Patents and Access to Medicines’ (Ox (...)
  • 222 See Joint study by the WHO and the WTO Secretariats on ‘WTO Agreements and Public Health’ (2002), p (...)

98However, the South African government defended its amended legislation, stating that section 15C was constitutional as it granted the Minister of Health only limited powers to abrogate patent rights, and under the South African Constitution the government had an obligation to protect its citizens’ right to health.221 Further, it claimed that section 15C was consistent with TRIPS, arguing that TRIPS allowed parallel imports and that section 15C did not address issues of compulsory licensing.222

  • 223 Fisher and Rigamonti (citing Statement by the South African Delegation, Minutes of the Council for (...)

99The South African government alleged that it was being held to a “TRIPS-plus” standard, and therefore a higher level of patent protection beyond the requirements of the TRIPS Agreement, both by the US Government and the private plaintiffs in the lawsuit.223 The constitutional challenge over the amended MRSCA had the effect of temporarily staying its implementation.

100The contentious positions taken by public health activists and pharmaceutical companies regarding the MRSCA was explained in a study:

  • 224 Quoted in ‘The South Africa AIDS Controversy’. See also Steve Sternberg, ‘Victims Lost in Battle Ov (...)

while AIDS activists such as the South African Treatment Access Campaign (TAC) called for international protests against “drug profiteering” and claimed that delaying the implementation of the amended MRSCA would only cost additional lives, the pharmaceutical companies defended the court action on the grounds that “parallel importation of drugs would undermine the ability of pharmaceutical companies to charge different prices in different parts of the world” and that a “tiered pricing strategy allows wealthier countries to subsidize poorer ones, and the drug companies still get profits they need for research”.224

  • 225 The South Africa AIDS Controversy’, p. 7.

101Supporting the position of the South African government, the then Health Minister stated that “[w]e are not intending to bust any patents. We [are] not intending to break any treaties. All we want to do is to give health services to the people who are poor in this country, and to the people who have been denied those health services for centuries”.225

  • 226 US subsidiaries accounted for 27% of the pharmaceutical market in South Africa, which was a higher (...)
  • 227 The South Africa AIDS Controversy’, p. 5.

102But the pharmaceutical companies viewed section 15C as a threat to their business, and they feared that the explicit authorisation of parallel imports could turn into an example for other countries. The MNCs, mostly led by the US pharmaceutical industry, strongly opposed the enactment of section 15C and argued that it was tantamount to a complete abrogation of patent rights and a violation of South Africa’s obligations under the TRIPS Agreement.226 As a representative of Bristol‑Myers Squibb put it, “[p]atents are the lifeblood of our industry. Compulsory licensing and parallel imports expropriate our patent rights”, adding that the only beneficiary of the erosion of patents would be the generic drug industry.227

  • 228 South Africa’s Health Committee Rejects MRSCA Bill Change’, Pharma Marketletter (21 October 1997).
  • 229 For details on this, see 19 USC. § 2411.
  • 230 10 No. 6 J. Proprietary Rts. 19 (June 1998).
  • 231 1999 US Trade Representative Special 301 Report (also stating that “South Africa’s Medicines Act ap (...)

103The Pharmaceutical Research and Manufacturers of America, a trade group representing the US pharmaceutical industry, lobbied the US government and claimed the issue was sufficiently important to warrant putting pressure on South Africa to repeal the contested legislative measures. James Joseph, at that time the US ambassador to South Africa, wrote a letter to representatives of the South African government, strongly urging South Africa to alter section 15C and stating that “my Government opposes the notion of parallel imports of patented products anywhere in the world”.228 South Africa was also put on the Special 301 Watch List229 in both 1998230 and 1999231 after the US Trade Representative determined that South Africa lacked adequate IP protection to an extent that merited bilateral attention. Being on the watch list meant it was possible for South Africa to have unilateral trade sanctions imposed on it by the US. However, the US did not bring a WTO case against South Africa due to a huge public health campaign both inside the US and beyond; the possible negative publicity was too great. The role of the-then Democratic presidential candidate Al Gore was also important, as he was co-chairman of the US/South Africa Binational Commission and had been actively involved in pressuring South Africa to give in to the demands of the pharmaceutical industry.

  • 232 See for details, ‘The South Africa AIDS Controversy’.

104He consequently became one of the main targets of AIDS activists who had long urged the US government to change its policy towards South Africa.232

  • 233 As one journalist put it, “Can the pharmaceuticals industry inflict any more damage upon its ailing (...)

105In April 2001, the pharmaceutical companies dropped their court challenge regarding section 15C and agreed to cover the South African government’s legal expenses in the face of what has been described as a public relations nightmare.233

106The situation leading to compromises between the South African government and the pharmaceutical companies was well stated by William W Fisher III and Cyrill P Rigamonti:

  • 234 The South Africa AIDS Controversy’. See also ‘Drug Makers Drop South Africa Suit’, and Ann M. Simm (...)

the talks behind the scenes leading to the withdrawal involved Kofi Annan, the Secretary General of the United Nations, who was contacted by Jean-Pierre Garnier, the CEO of GlaxoSmithKline, on behalf of the largest pharmaceutical companies to broker a deal with Thabo Mbeki, the then President of South Africa. The EU and the WHO supported South Africa’s position. As part of the deal, South Africa reiterated its pledge to comply with TRIPS when implementing the amendments to the MRSCA and invited the pharmaceutical industry to help draft future regulations.234

  • 235 Pharmaceutical Production and Access to Essential Medicines in South Africa’, p. 29.

107The position taken by South Africawas not onlya reflection of the struggle between excessive pricing of patented medicines by the pharmaceutical companies and the government’s societal and constitutional obligations to ensure access to medicines and the right to healthcare. It was also representative of the broader international struggle over the meaning of TRIPS, especially over the scope of and exceptions to internationally recognised IPRs.235

  • 236 This aspect was considered by the High Court in the case of Stauffer Chemical Company v. Agricura L (...)
  • 237 Substituted by section 40 of Act no. 38 of 1997 (South Africa).

108This South African case illustrates the fact that the issue of parallel imports is left to individual WTO member states to decide. Although the MRSCA provided an option for parallel imports, the South African patent law did not make explicit provisions for it.236 Section 45(1) of the Patents Act states that the patent owner has the right to exclude others from importing the invention to which the patent relates during the duration of the patent.237

  • 238 Section 45(2) provides as follows: “The disposal of a patented article by or on behalf of a patente (...)
  • 239 See ‘Draft National Policy on Intellectual Property 2013’ (South Africa), http://ipasa.co.za/wp-con (...)
  • 240 240Quotedin‘SouthAfrica“SeeksBalance”BetweenIntellectualProperty,PublicHealth’, http://www.bdlive.c (...)
  • 241 Ibid.

109However, an amendment in 2002 added Section 45(2), which provides for the exhaustion of rights, although it does not contain any wording that would indicate that international exhaustion would apply—in other words, that parallel importation would be permitted.238 Hence, South Africa issued a draft national IP policy on 4 September 2013, which proposed changing South Africa’s IP laws to adopt a number of health safeguards, including a user-friendly parallel importation mechanism.239 The non-existence of international exhaustion for parallel imports was confirmed by an announcement on 5 November 2013 by the Department of Trade and Industry of South Africa, which stated that “the Patents Act as it stands does not address issues of pricing of medicines, despite the fact that the National Policy on Intellectual Property seeks to address such matters”.240 It further stated that “South Africa will amend its legislation to address issues of parallel importation and compulsory licensing in line with the Doha Decision of the WTO on Intellectual Property and public health”.241

  • 242 See ‘Resource Book on TRIPS and Development’ (portion on the drafting history of TRIPS, including p (...)
  • 243 Ibid.

110Most countries and commentators agree with South Africa that Article 6 of the TRIPS Agreement is based on a country-by-country approach to the exhaustion of IPRs and parallel imports.242 This view is based on a plain reading of the TRIPS Agreement as well as on its drafting history. Although the issue of parallel imports was discussed by the TRIPS negotiators, they failed to reach a consensus on the subject. This is precisely because developing countries favoured international exhaustion, whereas the US advocated national exhaustion (and the EU tried to preserve the principle of EU-wide exhaustion).243

111The South African controversy also centred on the question of whether it would be compatible with Articles 30 and 31 in the TRIPS Agreement for a WTO member state to grant compulsory licenses to lower drug prices to combat AIDS.

  • 244 See TRIPS Agreement, art. 30, 31.
  • 245 For example, in a case brought by the EU against Canada, the WTO Panel decided that Canada’s “pre-e (...)

112Articles 30 and 31 in the TRIPS Agreement set forth the conditions for the validity of a domestic compulsory licensing scheme.244 To the extent that such a scheme does not “unreasonably conflict with the normal exploitation of the patent” and does not “unreasonably prejudice the legitimate interests of the patent owner”, it is legal under Article 30 of the TRIPS Agreement.245 If these general requirements are not met, however, the compulsory licensing mechanism is only permissible if it complies with the detailed prerequisites listed in Article 31 of the TRIPS Agreement. In the context of South Africa, the pharmaceutical companies feared that the Minister for Health could use the amended MRSCA to bypass these provisions to their detriment and to the benefit of South African manufacturers of generic drugs.

  • 246 Sections 56(1) and 56(2), Patents Act, 1978 (Act No. 57 of 1978, as last amended by Patents Amendme (...)
  • 247 See Bayer’s Attempt to Block Generic Production of Sorafenib Rejected; Case on India’s First Compul (...)

113But in reality, this has rarely happened—despite the fact that, in addition to the MRSCA, the South African Patents Act of 1978 provides an avenue for the government and the courts to enforce compulsory licenses.246 Thus, despite having a huge health crisis and access problems, South Africa has never used compulsory licenses.247

  • 248 Section 4 Act 57 of 1978 (South Africa): “State bound by patent: A patent shall in all respects hav (...)
  • 249 Section 56 Act 57 of 1978 (South Africa): “Compulsory licence in case of abuse of patent rights (1) (...)
  • 250 However, there are few reported decisions on court-granted compulsory licenses under section 56 of (...)
  • 251 See David Vaver, ‘Intellectual Property Today: Of Myths and Paradoxes’, Canadian Bar Review 69 (199 (...)

114However, the South African government has yet to make use of a statutory power that entitles it to “use an invention for public purposes”.248 The government must approach the court for assistance if the terms and conditions of government use—which include the licensing of generic companies as a mechanism for reducing drug prices—cannot be agreed upon.249 There is little or no guidance on the terms and conditions associated with such compulsory licences in any reported judgements in South Africa. This almost certainly indicates that none have ever been granted.250 The application for a compulsory license by local pharmaceutical companies requires huge legal and technical capacity as they will face legal battles with the larger competitors in the market. Vaver stated that “it is true that the risk that a licensee may itself become the target of litigation may be an inhibition therefore non issuance of a compulsory license is primarily reluctance to antagonise large competitors. But if the regulatory framework was easier (and less risky) to use, there seems little doubt that such licenses will more readily be sought”.251

  • 252 Why South Africa should Examine Pharmaceutical Patents’ (TAC, MSF and RIS January 2013), https://d (...)

115Unlike Brazil and India, the South African Patent Office does not conduct a substantial patent examination=; therefore, it does not check novelty and non-obviousness of the invention.252 It merely registers patents that fulfil the formalities set out for registration.

  • 253 Ibid.
  • 254 Ethel Teljeur, Intellectual Property Rights in South Africa: An Economic Review of Policy and Impac (...)
  • 255 Ibid.
  • 256 Ibid.

116The absence of a local patent examination system means that patents are granted without substantive review or verification of whether they meet the patentability requirements provided for in the South African Patents Act. The Patent Office has no filter to ensure that patents are granted only when they are deserved. This undermines the country’s ambition to provide free access to medicines and boost local production by its own generic industry.253 This has been noted as a major drawback to the patent application system in South Africa, because setting high thresholds and requiring strict examination of novelty character could open up policy spaces for local generic producers to oppose patent applications for pharmaceuticals.254 It is generally believed that the multinational pharmaceutical industry is fully exploiting this weakness in South Africa’s legal and patent system to extend market exclusivity on key medicines that are nearing patent expiry.255 According to one study, 2,442 pharmaceutical patents were registered in South Africa in a single year, 2008.256

  • 257 Section 34 of the Patent Act (South Africa).

117Another loophole in the South African patent system is that South African legislation makes no provision for pre-opposition procedures and there appears to be a complete lack of transparency in the patent application process. The statute merely requires the registrar to conduct a formal tick-box approach to an application.257 Based on simple tick- box examination of applications and specifications, the Registrar of Patents could grant patents if the applications merely comply with the requirements of the Act (Section 34). Due to a lack of pre-grant opposition and effective post-grant procedures, the South African opposition procedure may not be helpful for local generic producers.

  • 258 Ibid., § 36.

118The South African Patent Law of 1978 (Act No. 57 of 1978, as last amended by the Patents Amendment Act, 2002) covers the exclusions envisaged by TRIPS Article 27. These are exclusions of patents on inventions that encourage offensive or immoral behaviour as per Section 25(4) (a); on any variety of animal or plant or any essentially biological process for the production of animals or plants, not being a microbiological process or the product of such a process as per Section 25(4)(b); and on any surgical, therapeutic or diagnostic method of treatment of humans or animals as per Section 25(11). Further, it empowers the Registrar of Patents to refuse any application that is frivolous, or whose use encourages illegal, immoral and offensive behaviour, including publication or exploitation.258 It is unclear how this provision is to be applied considering that the concepts of morality and offensive behaviour are relative, particularly in a diverse and evolving society such as South Africa.

119South African patent law does not make explicit provision for educational, experimental or research exceptions.259 One report stated that “the only indication in the Patents Act that the legislature may have intended to exclude non-commercial use from the definition of infringement is to be found in section 45(1) of the Act”260 and:

  • 261 Ibid.

it could be argued that the reference to “the whole profit and advantage” in this provision could be indicative of an intention by the legislature to exclude other persons from carrying out the prohibited acts only insofar as those acts would have prejudicial commercial implications for the patent owner. However, South Africa courts have not yet considered this aspect to pronounce a clear principle (on the basis of section 45(1) or any other consideration) to the effect that non-commercial use of a patented invention (e.g. for research or experiment) would avoid infringement.261

  • 262 Section 69A provides as follows: “69A (1) It shall not be an act of infringement of a patent to mak (...)
  • 263 Ibid.

120Nevertheless, section 69A of the Patents Act was introduced by a legislative amendment in 2002 and provided for a Bolar-type exemption’s.262 As the definitions of experimental use exceptions and Bolar-type exemptions were not clear enough, the varied interpretations prevented the exemptions from being used by generic producers effectively and led to court cases for delaying generic entry in the market. It is also noted that stockpiling of products made or imported under section 69A (1) is prohibited by section 69A (2).263

  • 264 The Medicines and Related Substances Control Act, No 101 of 1965 controls the regulation of medicin (...)
  • 265 Ibid.

121On the other hand, there is no reference to test data protection in the Patents Act: protection of clinical trial data in South Africa predates its inclusion in the TRIPS Agreement.264 In line with the practice of regulatory authorities worldwide, the MCC does not publicly disclose or share data submitted for registration purposes. However, when considering an application for the registration of a generic equivalent, the MCC does not require the applicant to furnish any new data on the safety and efficacy of the drug, but merely on the quality of the generic.265

  • 266 Ibid.

122Reviewing the basis of existing South African patent law reveals that competition law provides a more effective sanction than existing patent law against patent abuse in the form of an anti-competitive compulsory license, which is consistent with Article 31(k) of TRIPS.266 The South African Competition Commission has already applied competition law successfully in the pharmaceutical sector to deal with restrictive practices and abuse of a dominant position.

  • 267 Dani Cohen and Jennifer Cohen, Competition Commission Finds Pharmaceutical Firms in Contravention o (...)
  • 268 In brief, the fact is that the pharmaceutical companies GlaxoSmithKlein and Boehringer, patent owne (...)
  • 269 Ibid.

123In Hazel Tau and Others v. GlaxoSmithKline and Boehringer Ingelheim,267 the prices set by the two litigating companies were considered to be an obstacle in accessing ARV medicines.268 The Competition Commission ruled that the companies had violated the Competition Act, 1998 in denying “a competitor access to an essential facility, [setting] excessive pric[es] and engag[ing] in an exclusionary act”, whereas the pharmaceutical companies argued they were merely exercising the exclusive right they were granted through their patent, as they did in many other countries.269 Nonetheless, the commissioner stated that:

  • 270 Rachel Roumet, ‘Access to Patented Anti-HIV/AIDS Medicine: The South African Experience’, European (...)

[o]ur investigation revealed that each of the firms has refused to license their patents to generic manufacturers in return for a reasonable royalty.
We believe that this is feasible and that consumers will benefit from cheaper generic versions of the drugs concerned. We further believe that granting licenses would provide for competition between firms and their generic competitors. We will request the Tribunal to make an order authorizing any person to exploit the patents to market generic versions of the respondent’s patented medicines or fixed dose combinations that require these patents, in return for the payment of a reasonable royalty.
270

  • 271 Access to Patented Anti-HIV/AIDS Medicine’.

124Even though GlaxoSmithKline and Boehringer Ingelheim denounced the complaint as unfounded, they sided with the commission and granted voluntary licenses to produce a generic version of their patented pharmaceuticals. Since this case was decided, there has been huge progress in South Africa towards providing access to anti-HIV and AIDS pharmaceuticals.271

125The South African model of competition law could be utilised by developing countries and LDCs including Bangladesh to prevent excessive pricing of medicines.

3.7 Comparative Review and Lessons for the LDCs, including Bangladesh

126This analysis highlights that India, Brazil and South Africa have used different options in their transition to a pharmaceutical patent regime and TRIPS-compliant patent law. India and Brazil substantially revised their national patent laws using the flexibilities present in the TRIPS Agreement. These flexibilities are also available to LDCs as they move towards TRIPS compliance. The issues for LDCs are which flexibilities to adopt and at what stages during the transition process to use them. The different policy options taken by these countries are represented diagrammatically in Table 3.1.

Table 3.1: Policy options used by Brazil, India and South Africa

Table 3.1: Policy options used by Brazil, India and South Africa
  • 272 Pharmaceutical Patent Protection’, pp. 14.

127The requirement to move towards TRIPS has created apprehension within Bangladesh, where the fear is that the price of pharmaceuticals in the local market will increase and local pharmaceutical companies may not survive, due to the high cost of royalties for patented medicines and the need to compete with MNCs.272 In this regard, the experiences of Brazil, India and South Africa, in their utilisation of the TRIPS flexibilities and other alternative measures to balance innovation and access to pharmaceuticals, should be considered by LDCs including Bangladesh.

  • 273 For details, See, History of Indian Patent System. For details about required patent law reform opt (...)

128The present patent regime in Bangladesh has no effective provisions for utilising the TRIPS flexibilities in the way that India, Brazil and South Africa have done. Importantly, to utilise the flexibilities, it is necessary to amend Bangladesh’s Patents and Designs Act, 1911.273 In addition to utilising TRIPS flexibilities, the Government of Bangladesh could adopt a competition law based on the experience of South Africa and could also revise its price control mechanisms based on the experiences of India and Brazil.

  • 274 Rafia Afrin with Daniel Sabet, ‘Will Bangladesh’s New Competition Law Prove Effective?’ (1 July 201 (...)
  • 275 Ibid.
  • 276 Ibid.
  • 277 Ibid., p. 2.
  • 278 Ibid.

129The Government of Bangladesh enacted its Competition Act, 2012 in June 2012.274 According to one study, “A draft bill for such a law was first proposed in 1996; however, it took 16 years to finally come to fruition”.275 The progress of the bill was delayed because “the political will to implement a competition law is limited, and there is some opposition from business groups”.276 “Indeed, competition problems are potentially more serious in a country [such as Bangladesh] with a weaker private sector, where one or a few dominant firms can take control” and abuse their dominant position.277 “The media coverage … suggests [that] Bangladesh may suffer from significant competition problems, with substantial costs to consumers”278 and to the public health sector of Bangladesh, more specifically.

  • 279 See ‘Globalising Standard of Patent Protection’, p. 462; see also T. Avafia, J. Berger and T. Hartz (...)
  • 280 See Carlos M. Correa, Intellectual Property and Competition Law: Exploration of Some Issues of Rele (...)
  • 281 In fact, these patents should never be granted in the first place. However, lack of proper resource (...)
  • 282 See Correa (2007).

130However, it is suggested that taking lessons from South African competition law, the Competition Commission of Bangladesh should rectify the weakness by empowering the Competition Commission to issue compulsory licenses, to recommend fixed royalty rates, and to expressly allow for the export of products produced under compulsory licenses to maintain sustainable investment.279 In addition, LDCs like Bangladesh may also stipulate in national competition law that compulsory licensing could be granted in cases of anti-competitive behaviour, such as in the case of the patent holder’s unilateral refusal to grant a license (refusal to deal).280 Competition law could also be applied in the case of obtaining pharmaceutical patents in an unjustified and fraudulent manner.281 Again, the issues of “poor quality” and “frivolous” patents and regulatory practices, such as marketing approval and data exclusivity, can be controlled under competition law.282

  • 283 Azam and Richardson (2010a), p. 6.
  • 284 Ibid., pp. 11–14.
  • 285 Ibid., p. 10.

131Further, research has shown that despite having an impressive sales and export growth, the local pharmaceutical industry in Bangladesh, particularly after the introduction of the DCO 1982, helped Bangladesh ensure the supply of generic medicines at a lower price, but limited the local industrial development of innovative capacity for basic research and patenting of new medicines.283 On the other hand, lack of proper monitoring by the DGDA in Bangladesh raises the question of quality medicines.284 Also, a lack of expertise and required resources in the Patent Office of Bangladesh raises doubts over its capability to deal with pharmaceutical patents and TRIPS-compliant patent law.285

3.8 Concluding Remarks

  • 286 Ibid., pp. 1–2.
  • 287 Ibid.

132This chapter has identified options used by Brazil, India and South Africa during their transitions to a TRIPS-compliant patent regime. These options enabled them not only to promote the local pharmaceutical industry but also to maintain access to medicines. The experiences of India, Brazil, China and South Africa will have important lessons for LDCs like Bangladesh. Brazil, India, China and South Africa utilised TRIPS flexibilities in their process of transition to TRIPS-compliant patent law. This study revealed how these countries utilised these options in order to locate the right balance between the interests of the pharmaceutical industry and the increased demand by the public for affordable medicines. On this basis, the author’s current position is that LDCs will need to utilise the benefit of the transition period of the TRIPS Agreement, consider their technological and infrastructural limitations, and together to lobby for further extension of the transition period for the introduction of pharmaceutical patents.286 The future of the pharmaceutical industry in the LDCs follows from the legislative and policy intervention options taken by the Bangladeshi government to implement TRIPS-compliant patent legislation, and the extent to which local industry can utilise the TRIPS waiver to develop technological and innovative skills for transitioning from a copycat into an innovative nation.287

Notes

1 It is relevant to note that “almost 50 developing countries, which were not granted patent protection for pharmaceuticals during the Uruguay Round, fiercely resisted including pharmaceuticals under the patent regime, claiming that vastly higher drug prices would be associated with such patents”; see ‘The Introduction of Pharmaceutical Product Patents in India’, p. 2.; also see, for the debate on the patent system, Haiyang Zhang, ‘Rethinking the Patent System from the Perspective of Economies’, in Emerging Markets and the World Patent Order, ed. by Federick M. Abbott, Carlos M. Correa and Peter Drahos (Edward Elgar, 2013), pp. 61–77.

2 Countries such as Italy, Switzerland, Brazil and India prohibited pharmaceutical patent protection for a considerable period of time to encourage “learning by imitation” and promote their local pharmaceutical industries. See ‘The Impact of Higher Standards in Patent Protection’, pp. 136768.

3 Historically, product patents have been excluded from protection in most developed countries. For example, in France, product patent protection was prohibited under a law effective 5 July 1844, and only limited patent protection has been permitted since 2 January 1966. In Germany, product patents were explicitly excluded under a law effective 25 May 1877, but were then introduced on 4 September 1967. In Switzerland, product patents for pharmaceuticals were explicitly prohibited by the constitution and were only introduced in 1977. In Italy, pharmaceutical patents were prohibited until 1978. In Spain, product patents were introduced in 1986, just after the country’s accession to the European Economic Community, and the relevant laws came into effect in 1992. The rationale behind not granting product patent protection for pharmaceuticals in each of the example countries was to allow local pharmaceutical companies to imitate and produce patented medicines by using new processes. See Michele Boldrin and David K. Levine, Against Intellectual Monopoly (Cambridge University Press, 2008).

4 See Lydia Mugambe, ‘The Exception to Patent Rights under the WTO-TRIPS Agreement: Where is the Right to Health Guaranteed?’ (unpublished LLM thesis, University of Western Cape, South Africa, 2002): “In an affidavit filed in support of the Treatment Action Campaign, Professor Colleen Flood of the University of Toronto explained how patent law in Canada had evolved since 1923 with the ‘expressly stated goal of making food and medicine affordable to the public’. To facilitate this, various legal devices, including compulsory licensing and administrative mechanisms (the Patented Medicines Prices Review Board), were established. However, as is common in developing countries, Canada has been pressured to strengthen intellectual property protection. In contrast, in Australia, the government negotiate with industry as a monopolist purchaser and is thus able to provide drugs to the community at greatly reduced prices under a Pharmaceutical Benefits Scheme”.

5 The Impact of Higher Standards in Patent Protection’, pp. 1368–69.

6 K.M. Gopakumar, ‘Product Patents and Access to Medicines in India: A Critical Review of the Implementation of TRIPS Patent Regime’, The Law and Development Review 3.2 (2010): 324–68.

7 Prabhu Ram, ‘India’s New “Trips-compliant” Patent Regime between Drug Patents and the Right to Health’, Chicago-Kent Journal of Intellectual Property 5 (2006): 195; Luciano Martins Costa Póvoa, Roberto Mazzoleni and Thiago Caliari, Innovation in the Pharmaceutical Industry in Brazil Post-TRIPS, pp. 15, http://www.elgaronline.com/view/9781782549468.00007.xml; Bernard Maister and Caspar van Woensel, ‘Is Compliance Enough: Can the Goals of Intellectual Property Rights be Achieved in South Africa?’, 2 (Leiden Law School Legal Studies Research Paper Series, Working Paper, 2013), http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2213263

8 Ram, p. 198; Catherine Tomlinson and Lotti Rutter, The Economic and Social Case for Patent Law Reform in South Africa (2014), http://www.tac.org.za/sites/default/files/The%20Economic%20and%20Social%20Case%20for%20Patent%20Law%20Reform%20in%20South%20Africa.pdf

9 The WTO and Developing Countries; and Intellectual Property Rights: A Critical History.

10 See Mohammed El-Said, ‘The Road from TRIPS-Minus, to TRIPS, to TRIPS-Plus Implications of IPRs for the Arab World’, The Journal of World Intellectual Property 4 (2001): 57; and Carlos Correa, ‘The WTO Dispute Settlement Mechanism TRIPS Rulings and the Developing Countries’, The Journal of World Intellectual Property 4 (2001): 253–54.

11 For example, in two earlier studies, such comparisons are made in the case of price comparisons between India and Pakistan, both of which excluded pharmaceuticals from patent protection during the relevant period. See for details, Oxfam, Cut the Cost–Patent Injustice: How World Trade Rules Threaten the Health of Poor People (2001) and the Human Development Report (1999), United Nations Development Program (UNDP).

12 See Keith E. Maskus and Denise Eby-Konan, ‘Trade-related Intellectual Property Rights: Issues and Exploratory Results’, in Analytical and Negotiating Issues in the Global Trading System, ed. by Alan V. Deardorff and Robert M. Stern (Ann Arbor, MI: University of Michigan Press, 1994), pp. 401–54; Arvind Subramanian, ‘Putting Some Number on the TRIPS Pharmaceutical Debate’, International Journal of Technology Management 10 (1995): 252–68.

13 Carsten Fink, ‘How Stronger Patent Protection in India Might Affect the Behavior of Transnational Pharmaceutical Industries’ (Working Paper No. 2352, World Bank, 2000), http://elibrary.worldbank.org/doi/abs/10.1596/1813-9450-2352

14 Subham Choudhuri, Pinelopi K. Goldberg and Panle Jia, Estimating the Effects of Global Patent Protection in Pharmaceuticals: A Case Study of Quinolones in India (Yale University, 2004), http://www.nber.org/papers/w10159

15 Ibid.

16 Email interview with the CEO of a leading local pharmaceutical company, in Dhaka, Bangladesh, 11 March 2009.

17 See ‘Paris Convention for Protection of Industrial Property of 20 March 1883’, as revised in Brussels on 14 December 1900, in Washington on 2 June 1911, at The Hague on 6 November 1925, in London on 2 June 1934, in Lisbon on 31 October 1958 and in Stockholm on 14 July 1967, http://www.wipo.int/treaties/en/text.jsp?file_id=288514

18 See Carlos M. Correa, ‘Patent Rights’, in Intellectual Property and international Trade: TRIPs Agreement, ed. by Abdulqawi A. Yusuf and Carlos M. Correa (London: Kluwer Law International, 1998), pp. 50–58.

19 J. H. Reichman, ‘Universal Minimum Standards of Intellectual Property Protection under the TRIPs Component of the WTO Agreement’, in Intellectual Property and international Trade: TRIPs Agreement, pp. 23–31.

20 Ibid.

21 See Chapter 4 of this study for further details on patentability criteria.

22 See for details, UNCTAD-ICTSD, ‘Resource Book on TRIPS and Development’ (Cambridge University Press, 2005).

23 See Mohammad Monirul Azam, Intellectual Property, WTO and Bangladesh (Dhaka: New Warsi Book Corporation, 2008)

24 The concept of ordre public under Article 27.2 of TRIPs is regarded as one of the grounds for permissible exclusion from patentability. Article 27.2 of TRIPS partly adopted the language of Article 4 of the Paris Convention in its last sentence for the general conditionality of the exclusion of patentability. Accordingly, the exclusion cannot be made merely because domestic law prohibits the exploitation. Article 4 of the Paris Convention refers to broader terms that are not only related to the granting of a patent, but also to its subsequent invalidation, in cases of restrictions or limitations resulting from domestic law. Additionally, Article 27.3 of TRIPS refers to the exclusion of methods for the treatment of humans and animals from patentability, which is regarded as not covering the apparatus used for diagnostics or treatment or to products like “diagnostic kits”.

25 See Chapter 2 of this study for more details on the PDA and DCO 1982 of Bangladesh.

26 See for details on exceptions and policy options, Chapter 4 of this study.

27 Reichman, ‘Universal Minimum Standards’, pp. 51–52.

28 Correa, ‘Patent Rights’, pp. 203–04.

29 See for details on local working, section 3.3 of this chapter and chapter 4 of this study.

30 Section 8(1), DCO 1982 (Bangladesh).

31 See for details and schedules, DCO 1982 (Bangladesh), http://bdlaws.minlaw.gov.bd/pdf/623___Schedule.pdf

32 See WTO document WT/TPR/M/75, 6 December 2000, para. 76. Brazil has adopted such a measure on the grounds that the patent office may lack the expertise “to examine all the complex technological elements involved in the pharmaceutical inventions”.

33 Section 14, PDA (Bangladesh).

34 Universal Minimum Standards’, p. 30.

35 See for details, ‘Resource Book on TRIPS and Development’.

36 See WTO, Panel Report, Canada—Term of Patent Protection, WT/DS170/R, 5 May 2000.

37 See WTO, Panel Report, Canada—Patent, Complaint by US, at 6.56; Appellate Report, Canada—Term of Patent Protection, WT/DS170/AB/R, 11 August 2000.

38 The granting of utility models or petty patents for minor inventions may provide a way of approaching this issue. See for details, U. Suthersanen, ‘Incremental Inventions in Europe: a Legal and Economic Appraisal of Second Tier Patents’, Journal of Business Law (July 2001): 319–43.

39 See ‘Provisions on Enforcement in International Agreements on Intellectual Property Rights, General Agreement on Tariffs and Trades’ (GATT), Doc. MTN. GNG/NG11/W/18, 10 February 1988.

40 For example, Article 9 of the Paris Convention requires three specific types of remedy against goods unlawfully bearing a trademark or a trade name—seizure on importation; seizure in the country where the unlawful affixation occurred or in the country into which the goods have been imported; and prohibition of importation—but does not make the incorporation of such remedies into national law compulsory and provides that “until such time as the legislation is modified accordingly”, the actions and remedies available to nationals shall apply.

41 See TRIPS Agreement, art. 41 (1).

42 Ibid., art. 48

43 Ibid., art. 50.

44 Ibid., art. 51.

45 The right holder must have the right to take legal action to compel domestic customs authorities to suspend the release of imported goods into free circulation whenever complainants have valid grounds for suspecting that the items in question are counterfeit trademarks or pirated copyright goods.

46 TRIPS Agreement, art. 44 (1).

47 For details, see Pham Hong Quat, ‘How to Comply with the TRIPS and WTO Law—The New Challenges to Vietnam’s Patent Legislation from WTO Dispute Settlement Practice’ (unpublished PhD thesis, Nagoya University, Japan, 2007).

48 See for details, Jennifer Brant with Rohit Malpani, Oxfam International, Eye on the Ball Medicine Regulation—Not IP Enforcement—Can Best Deliver Quality Medicines (2 February 2011), https://www.oxfam.org/sites/www.oxfam.org/files/eye-on-the-ball-medicine-regulation-020211-en.pdf

49 Mohammad Monirul Azam, Effectiveness of the Intellectual Property Enforcement Mechanisms Under the TRIPS Agreement: The Context of Bangladesh (World Intellectual Property Organization [WIPO] AcademyTurin Research Paper Series, 2007).

50 For details on the different types of compulsory licenses, see Chapter 4 of this study.

51 WTO, ‘Implementation of Paragraph 6 of the Doha Declaration on the TRIPS Agreement and Public Health. Decision of 30 August 2003’ (WT/L/540. 2 September 2003).

52 WTO, ‘Members OK Health Amendment Permanent’, 6 December 2005, https://www.wto.org/english/news_e/pres05_e/pr426_e.htm

53 Ibid.

54 Para. 1 of the Doha Declaration.

55 Sekalala, p. 11.

56 Ibid.

57 Ibid.

58 WIPO-WHO-WTO Trilateral Study, ‘Promoting Access to Medical Technologies and InnovationsIntersection between Public health, Intellectual Property and Trade’ (2013), pp. 112–13.

59 Ibid.

60 Ibid.

61 Ibid; see also, WTO, ‘Notification of Rwanda’, July 2007 (document IP/N/9/RWA/1).

62 Ibid; see also, WTO, ‘Notification of Canada’, October 2007 (document IP/N/10/ CAN/1).

63 Ibid.

64 Ibid.

65 Corporate Power and State Resistance’, pp. 149–50.

66 Kenneth C. Shadlen, ‘The Politics of Patents and Drugs in Brazil and Mexico: The Industrial Bases of Health Policies’, Comparative Politics 42.1 (2009): 41–58.

67 Business Wire Pharmaceutical, ‘Research and Markets: Pharmaceutical Pricing and Reimbursement in Brazil: Population and Demand for Pharmaceuticals is Forecast to Increase in the Next 12 Years’ (Press Release, 5 January 2010), http://www. reuters.com/article/2010/01/25/idUS147453+25-Jan-2010+BW20100125

68 Ibid.

69 Ibid.

70 Intellectual Property in the Context of the WTO TRIPS Agreement: Challenges for Public Health, ed. by Jorge A. Z. Bermudez and Maria Auxiliadora Oliveira (Rio de Janeiro: Centre for Pharmaceutical Policies and WHO, 2004); Kermani Faiz, Brazil—Not a Market for Faint Hearted (October 2005).

71 Bermudez and Oliveira, p. 153.

72 Ibid., p. 154.

73 Ibid., p. 153.

74 Ibid., p. 158.

75 Ibid.

76 Brazil has been a member of the WTO since 1 January 1995.

77 Bermudez and Oliveira, p. 153.

78 Ibid.

79 Ibid.

80 Ibid.

81 Ibid., pp. 151–53.

82 Brazil—Not a Market for Faint Hearted, p. 22.

83 Bermudez and Oliveira. p. 33.

84 On 8 January 2001, the US requested a WTO dispute settlement panel to resolve its differences with Brazil over Brazil’s Industrial Property Law, 1996.

85 Fault Lines in the World Trade Organization’, p. 33.

86 Article 68(1) of Brazil’s Industrial Property Law, 1996 provides that non-exploitation of the object of the patent within Brazilian territory will occasion a compulsory license for failure to manufacture the product, for incomplete manufacture of the product, or for failure to make full use of the patented process, except in cases where this is not economically feasible (and importation shall be permitted).

87 Article 27(1) of the TRIPS Agreement provides that “patents shall be available for any inventions, whether products or processes, in all fields of technology, provided that they are new, involve an inventive step and are capable of industrial application … patents shall be available and patent rights enjoyable without discrimination as to the place of invention, the field of technology and whether products are imported or locally produced”.

88 Article 28.1 of the TRIPS Agreement deals with the exclusive rights of the patent owner to prevent third parties not having the owner’s consent for the acts of making, using, offering for sale, selling or importing the patented product.

89 See Chakravarthi Raghavan, ‘US to Withdraw TRIPS Dispute against Brazil’, http://www.twn.my/title/withdraw.htm

90 The relevant provision is 35 USC § 204, entitled ‘Preference for United States Industry’, which provides that “[n]otwithstanding any other provision of this chapter, no small business firm or nonprofit organization which receives title to any subject invention and no assignee of any such small business firm or non- profit organization shall grant to any person the exclusive right to use or sell any subject invention in the United States unless such person agrees that any products embodying the subject invention or produced through the use of the subject invention will be manufactured substantially in the United States”.

91 The relevant provision is 35 USC § 209, entitled ‘Licensing Federally Owned Inventions’, which provides that “in the case of an invention covered by a foreign patent application or patent, the interests of the Federal Government or United States industry in foreign commerce will be enhanced”. It further adds that “[a] Federal agency shall normally grant a license … to use or sell any federally owned invention in the United States only to a licensee who agrees that any products embodying the invention or produced through the use of the invention will be manufactured substantially in the United States”.

92 US Patent Law 35 USC §§ 1 et esq., http://www.wipo.int/wipolex/en/details.jsp?id=5399

93 The US Patent Law, as consolidated in 2007, among other things, provides that when any patent is obtained, as a result of research funded by the US Government and its agencies, the patent should be worked in the US and cannot be licensed for production elsewhere. See ibid.

94 MSF and other public health groups, along with 120 Brazilian NGOs, requested that the US Government withdraw its request for a WTO dispute settlement procedure on the Brazilian patent law. The US brought a complaint before the DSB in Geneva, requesting measures that might handicap the successful Brazilian AIDS programme, which is largely based on Brazil’s ability to manufacture affordable treatment. See Dispute Settlement, Brazil: Measures Affecting Patent Protection, WT/DS199/1, 5 July 2001, http://www.wto.org/english/tratop_e/dispu_e/cases_e/ds199_e.htm

95 See Daya Shanker, ‘India, the Pharmaceutical Industry and the Validity of TRIPS’, The Journal of World Intellectual Property 5.3 (2002): 111.

96 See Daya Shanker (2002); see also Amir Attaran and Gillespie Lee, ‘Do Patents for Antiretroviral Drugs Constrain Access to AIDS Treatment in Africa?’, Journal of the American Medical Association 286 (2001): 1886.

97 For details on compulsory licenses issued in different countries, see James Packard Love, ‘Recent Examples of the Use of Compulsory Licenses on Patents’ (KEI Research Note 2007: 2), http://www.keionline.org/misc-docs/recent_cls.pdf

98 The definition of what falls into the public interest is of great importance. Public interest includes public health, nutrition, environmental protection, and elements of primordial importance for technological, social or economic development. The possibility of providing compulsory licensing in each of these cases implies that the fulfilment of the most basic needs would be covered for the public.

99 Ministerial Ordinance No. 866, dated 24 April 2007, declared that “there exists the possibility of compulsory licensing of patents in the public interest”, as provided for in national laws, and decided “to declare public interest in relation to Efavirenz for the purposes of the granting of compulsory licensing for public non-commercial use, in order to guarantee the practicability of the National STD and AIDS Program, ensuring the continuity of universal and free access to all medicines necessary for the treatment of people living with HIV and AIDS”.

100 Decree No. 3,201 of 6 October 1999, Diario Oficial da Uniao (Braz.) (translated into English).

101 Ibid.

102 Law No. 9,279 of 14 May 1996 (Industrial Property Law) (Braz.) (referencing Article 43).

103 This was introduced in Brazil by Law 10.196/2001 as an amendment to Articles 43 and 229 of Law No. 9,279.

104 Law No. 9,279 of 14 May 1996 (Industrial Property Law) (Braz.) (referencing Article 229 C).

105 In September 2003, Decree No. 4,830 also allowed for the importation of the object from countries where the product is not patented. Therefore, Brazil has the right to import products from any country, including those still using the transition period for pharmaceuticals, such as Bangladesh. Decree No. 4,830, 4 September 2003, Compulsory Licensing in the Case of National Emergency and Public Interest (translated into English).

106 Law No. 9,279 of 14 May 1996 (Industrial Property Law) (Braz.) (referencing Article 43).

107 Industrial Property Amendment Law No. 10,196 modified Articles 43 and 229 of Law No. 9,279. Article 43, which describes the limits of rights conferred to the patent holder (Exception to Rights Conferred), was amended to include the Bolar exception (early working) and allow local generic producers to complete all of the procedures and tests necessary to register a generic product before the

original patent expires.

108 This can ultimately lower the price of medicines. The WTO Panel in the EC– Canada case validated the Bolar exception as compatible with Article 30 of the TRIPS Agreement. See Panel Report, Canada—Patent Protection of Pharmaceutical Products, WT/DS114/R (17 March 2000), 2, 174, http://www.wto.org/english/tratop_e/dispu_e/7428d.pdf; see also Christopher Garrison, ‘Exception to Patent Rights in Developing Countries’ (Issue Paper No. 17, UNCTAD–ICTSD Project on IPR and Sustainable Development, 2006), http://unctad.org/en/docs/iteipc200612_en.pdf

109 See Maristela Basso, ‘Intervention of Health Authorities in Patent Examination: The Brazilian Approach of the Prior Consent’, International Journal of Intellectual Property Management 1 (2006): 54–74.

110 ANVISA’s IP division established in 2001 and housed in the National Institute for Industrial Property’s office building in Rio de Janeiro.

111 Bermudez Oliveira and Egleubia Oliveira, ‘Expanding Access to Essential Medicines in Brazil: Recent Regulation and Public Policies’, in Intellectual Property in the Context of the WTO TRIPS Agreement: Challenges for Public Health, ed. by Jorge A.Z. Bermudez and Maria Auxiliadora Oliveira (Rio de Janeiro: WHO, 2004), pp. 129–52.

112 On May 29, 2012, Law No. 12.529/11 took effect, significantly changing the landscape of antitrust enforcement in Brazil. The law (i) consolidates the investigative, prosecutorial, and adjudicative functions of Brazil’s three competition authorities into one independent agency; (ii) introduces a mandatory pre-merger notification system; and (iii) introduces changes to the administrative and criminal sanctions applicable to anticompetitive conduct”. See Ana Paula Martinez and Mariana Tavares de Araujo, ‘Brazil’s New Competition Law One Year after Taking Effect’, 20 June 2013, http://www.lexology.com/library/detail.aspx?g=3155fa30-c311-45b5-8ced-a51f1bec14b0. See also Marco Botta, ‘The Brazilian Senate Approves the Text of the New Competition Act’ (15 December 2011), http://kluwercompetitionlawblog.com/2011/02/07/the-brazilian-senate-approves-the-text-of-the-new-competition-act/

113 See Loraine Hawkins, ‘WHO/HAI Project on Medicine Prices and Availability Review Series on Pharmaceutical Pricing Policies and Interventions’ (Working Paper No. 4, Competition Policy, May 2011), p. 14

114 Ibid.

115 Brazil created a reference price regime for new patented products in 2003. Under this regime, the final price of a new drug in Brazil cannot exceed the lowest price among nine reference countries: Australia, Canada, Spain, the US, France, Greece, Italy, New Zealand and Portugal. See WHO, ‘Pharmaceutical Pricing Policy’ (2010), http://apps.who.int/medicinedocs/documents/s19585en/s19585en.pdf

116 The Government of Brazil invested in 18 public sector laboratories that mostly engage in formulation of final dosages and, to a lesser degree, of pharmaceutical inputs.

117 See Maurice Cassier and Marilena Correa, ‘Intellectual Property and Public Health: Copying of HIV/AIDS Drugs by Brazilian Public and Private Pharmaceutical Laboratories’, RECIIS Electronic Journal of Communication, Information and Innovation in Health,1.1 (2007): 83–90.

118 State Intellectual Property Office (SIPO) of the People’s Republic of China (PRC), Patent Law of the People’s Republic of China, http://english.sipo.gov.cn/laws/lawsregulations/201101/t20110119_566244.html

119 Ibid.

120 Ibid.

121 Abbott, Correa and Drahos (2013).

122 See ‘General Introduction to the Third Revision of the Patent Law of the People’s Republic of China and its Implementing Regulations’, http://english.sipo.gov.cn/laws/lawsregulations/201101/t20110119_566244.html

123 SIPO, 2008 Patent Law of the PRC, Art. 26.

124 Shruti Bhat, ‘New Chinese Patent Law: What Does It Mean For Life Sciences Companies?’, 6 February 2011, http://pharmaceuticalpatents.weebly.com/pharmaceutical-patents-and-intellectual-property-blog/new-chinese-patent-law

125 Ibid.

126 Sasha Kontic ‘An Analysis of the Generic Pharmaceutical Industries in Brazil and China in the Context of TRIPS and HIV/AIDS’, pp. 9–12, https://www.law.utoronto.ca/documents/ihrp/HIV_kontic.doc

127 Elliot Hannon, ‘How an India Patent Case Could Shape the Future of Generic Drugs’, Time World, 21 August 2012, http://world.time.com/2012/08/21/how-an-indian-patent-case-could-shape-the-future-of-generic-drugs/

128 SIPO, 2008 Patent Law of the PRC, Art. 22.

129 Ibid.

130 Ibid., Art. 48 (1)(2).

131 Ibid., Art. 50.

132 Ibid., art. 50 and 53.

133 Article 4, ‘Measures on Compulsory Licensing for Patent Exploitation’, Order No. 31 of the SIPO (implemented on 15 July 2003).

134 Ibid., art. 5.

135 Zhang Yan, ‘New Measures for Compulsory Licensing of Patent’, effective since 1 May 2012 (25 June 2012), http://www.lexology.com/library/detail.aspx?g=bef0d960-d8ae-4849-8750-2303eb70d982

136 Third Revision of China’s Patent Law, Legal Texts and Documents on Drafting Process’, EU–China IPR2 Project, pp. 5–6, http://www.lexisnexis.com/documents/pdf/20100211022732_large.pdf

137 Article 19, ‘Provisions for Drug Registration’, http://eng.sfda.gov.cn/WS03/CL0768/61645.html

138 Yafei Gao, ‘The Conflict and Coordination between Biological Pharmacy’s Intellectual Property Protection and Public Health’ (in Chinese), October 2011, pp. 20–30.

139 Article 63(1), Patent Law of The PRC (2000 Revision), adapted at the 17th Session of the Standing Committee of the Ninth National People’s Congress on 25 August 2000, and announced by Order No. 36 of the President of the PRC.

140 Article 20, Provisions for Drug Registration (SFDA Order No. 28).

141 Article 35, Regulations for Implementation of the Drug Administration Law of the People’s Republic of China, Decree of the State Council of the PRC No. 36.

142 S. Wu, S. Hang, J. Chen and L. Shi, ‘Impact of Medical Data Protection on Drug Expenditure and Accessibility in China’, Chinese Journal of New Drugs 21.20 (2012): 2353–55.

143 In this regard, Japan could become a model for China. Japan incorporates data exclusivity into its post-marketing surveillance (PMS) process. By using a set of medical insurance and drug pricing mechanisms, the Japanese government has both complied with its obligation under TRIPS and successfully encouraged innovation by pharmaceutical companies. The PMS system practically affects the timing of generic entry. The PMS period is set for most new drug approvals, and until this period is over, generic companies cannot submit their applications for drug approvals. It is primarily intended to monitor efficacy and safety after the commercialisation of patented drugs and not to protect data. During the PMS period, the new drug’s applicant can enjoy data exclusivity; thus, data exclusivity is imposed with the responsibility of the drug’s applicant to ensure its safety and efficacy. The data exclusivity period varies from four (for medicinal products with new indications, formulations, dosages, or compositions with related prescriptions) to six (for drugs containing a new chemical element or medicinal composition, or requiring a new route of administration) to 10 years (for orphan drugs or new drugs requiring pharmaco-epidemiological study). See for details, ‘Japanese Drug Regulations Related to Data Exclusivity (Excerpts)’, Kitamural Law, http://kitamuralaw.com/publications/J_data_exclusivity_provisions.pdf

144 India’s New “Trips-compliant” Patent Regime’.

145 Ibid.

146 See Planning Commission of India, Report of the Working Group on Drugs and Pharmaceuticals for the Eleventh Five Year Plan (2007–2012) 21 (2006), http://planningcommission.nic.in/aboutus/committee/wrkgrp11/wg11_pharma.pdf

147 Ibid.

148 Ellen t’ Hoen, The Global Politics of Pharmaceutical Monopoly Power (AMB Publishers, 2009).

149 Based on data from the Directorate General of Foreign Trade, Government of India and Exim Bank, India reported by N. Lalitha, ‘Access to Indian Generic Drugs: Emerging Issues’, in Intellectual Property, Pharmaceuticals and Public Health, ed. by Kenneth C. Shadlen, Samira Guennif, Alenka Guzman and N. Lalitha (Cheltenham: Edward Elgar, 2011), pp. 225–52. See Government of India, Directorate General of Foreign Trade, ‘India—The Generics Pharma Capital of the World’ (Pharmaceutical Exports Report, IDMA, Mumbai, India, 2010), http://dgftcom.nic.in

150 Reji K. Joseph, ‘India’s Trade in Drugs and Pharmaceuticals: Emerging Trends, Opportunities and Challenges’ (Discussion Paper No. 159, Research Information System for Developing Countries, 2009).

151 Rasmus Alex Wendt, ‘TRIPs in India’ (unpublished PhD thesis, Roskilde University, 2007), pp. 160–78.

152 Padmashree Gehl Sampath, Economic Aspects of Access to Medicine After 2005 (UNU-MERIT, 2005, 22), p. 22, http://www.who.int/intellectualproperty/studies/PadmashreeSampathFinal.pdf

153 Stephen Barnes, ‘Note: Pharmaceutical Patents and TRIPS: A Comparison of India and South Africa’, Kentucky Law Journal 91 (2002–03).

154 Ibid.; David K. Tomar, ‘A Look into the WTO Pharmaceutical Patent Dispute between the United States and India’, Wisconsin International Law Journal 17 (1999).

155 Note: Pharmaceutical Patents and TRIPS’, p. 920.

156 A Look into the WTO Pharmaceutical Patent Dispute’, p. 582.

157 Ibid.

158 Ibid.

159 The Patents Act, No. 39 of 1970, § 53(1)(a) (India).

160 This quote comes from Indira Gandhi’s message to the WHA at Geneva in 1982.

161 Susan Finston, ‘India: A Cautionary Tale on the Critical Importance of Intellectual Property Protection (Essay)’, Fordham Intellectual Property, Media and Entertainment Law Journal 12 (2002): 888–89.

162 Ibid., 889.

163 Ibid., 889, 894.

164 Janice Mueller, ‘The Tiger Awakens: The Tumultuous Transformation of India’s Patent System and The Rise of Indian Pharmaceutical Innovation’, University of Pittsburgh Law Review 68.49 (2007): 491–641.

165 Ibid.

166 See Rajdeep Goswami, Compliance of TRIPS in Indian Patent Law (29 April 2012), http://www.legalservicesindia.com/article/article/compliance-of-trips-in-indian-patent-law-1103-1.html

167 Ibid.

168 See generally, ‘India’s New “Trips-compliant” Patent Regime’.

169 The Patents (Amendment) Act, No. 15 of 2005, § 25 (India).

170 Archana Shanker and Neeti Wilson, The Patent Opposition System in India (8 July 2010), http://www.iam-media.com/Intelligence/IP-Value-in-the-Life-Sciences/2008/Articles/The-patent-opposition-system-in-India

171 The Patents (Amendment) Act, No. 15 of 2005, § 3(a), (d), (e), (p) (India).

172 Article 27(1) of the TRIPS Agreement states that “patents shall be available for any inventions, whether products or processes, in all fields of technology, provided that they are new, involve an inventive step and are capable of industrial application … patents shall be available and patent rights enjoyable without discrimination as to the place of invention, the field of technology and whether products are imported or locally produced”.

173 Novartis A.G. v. Union of India and Others (2006), 4 Madras L.J. 153 (India), https://fr.scribd.com/document/456550/High-Court-order-Novartis-Union-of-India

174 Ibid.

175 The Patents (Amendment) Act, No. 15 of 2005, § 47 (India).

176 Ibid., §§ 99, 100.

177 Ibid., § 102.

178 Ibid., § 100(1).

179 Ibid., § 100(6).

180 Ibid., §§ 100, 103.

181 The Patents (Amendment) Act, No. 15 of 2005, §§ 100, 103 (India).

182 Access to Drugs in India’, pp. 8–9.

183 Natco Pharma Ltd v. Bayer Corporation, Compulsory Licensing Application No. 1 of 2011 (decided by the Controller of Patents, Indian Patent Office, 9 March 2012), http://www.cbgnetwork.org/downloads/BackgroundNexavar.pdf

184 Ibid.

185 Natco Pharma Ltd v. Bayer Corporation.

186 Product Patents and Access to Medicines in India’, p. 341.

187 Ibid.

188 The Patents (Amendment) Act, No. 17 of 2005, § 107(A) (India).

189 Ibid., § 107(A)(b).

190 The Patents (Amendment) Act, No. 17 of 2005, § 107(A) (India).

191 The Patents Act, No. 39 of 1970, § 47 (India) (retained as it is in the TRIPS-compliant Indian Patent Law of 1999).

192 The Patents (Amendment) Act, No. 17 of 2005, § 11(A)(7) (India).

193 Ibid.

194 See ‘Product Patents and Access to Medicines in India’, p. 341.

195 Ibid.

196 Ibid.

197 Pronob Sen, Taskforce to Explore Options other than Price Control for Achieving the Objective of Making Available Life-saving Drugs at Reasonable Prices (Department of Chemicals and Petrochemicals, India, 2005), pp. 453.

198 Ibid., p. 54.

199 V.K. Gupta, Intellectual Property and Sustainable Development: Documentation and Registration of TK and Traditional Cultural Expressions (12 December 2011), http://www.wipo.int/edocs/mdocs/tk/en/wipo_tk_mct_11/wipo_tk_mct_11_ref_t_5_1.pdf

200 Quoted in Animesh Sharma, ‘Data Exclusivity with Regard to Clinical Data’, The Indian Journal of Law and Technology 3 (2007): 82–104, http://ijlt.in/wp-content/uploads/2015/08/Sharma-Data-Exclusivity-with-regard-to-Clinical-Data-3-Indian-J.-L.-Tech.-82.pdf

201 Ibid. Shamnad Basheer reported that “After multiple deliberations spanning more than 3 years, a government committee has finally submitted its report on regulatory data protection and Article 39.3 of TRIPS. It finds that Article 39.3 does not require ‘data exclusivity’ and that, at the present moment, it may not be in India’s national interest to grant ‘data exclusivity’ to pharmaceutical drug data. It relies heavily on the Doha Declaration to support this interpretation”; see Shamnad Basheer, ‘Indian Government Committee Says “No” to Data Exclusivity’ (6 June 2007), https://spicyip.com/2007/06/indian-government-committee-says-no-to.html

202 See Abhilash Chaudhary, ‘Compulsory Licensing of IPRS and Its Effect on Competition’, http://citeseerx.ist.psu.edu/viewdoc/download;jsessionid=3951F6ADF6A3C9DF40C1392A8DD2F8B7?doi=10.1.1.646.5309&rep=rep1&type=pdf. However, until now no successful attempt has been made to use competition law in the pharmaceutical sector. Having a national competition law, India may well embrace the South African experience and apply competition law to the pharmaceutical sector to prevent excessive pricing, if it were to arise in India. See Anand Grover, Anti-competitive Practices in Patent Licensing Arrangements and the Scope of Competition Law/Policy in Dealing with them (AMTC, National Workshop on Patent and Public Health, Ministry of Health, India, 11 April 2005).

203 The South Africa AIDS Controversy’, p. 2.

204 African Leaders Call for Greater Industrialization of an Emerging Africa, UNAIDS (26 March 2013), http://www.unaids.org/en/resources/presscentre/featurestories/2013/march/20130326cotedivoire/

205 Patents Act 9 of 1916 (S. Afr.); Patents Act 57 of 1978 (S. Afr.).

206 Patents Amendment Act 38 of 1997 (S. Afr.).

207 Patents Amendment Act 20 of 2005 (S. Afr.); Patents Amendment Act 58 of 2002 (S. Afr.).

208 In Patrick Bond, ‘Globalization, Pharmaceutical Pricing, and South African Health Policy: Managing Confrontation with U.S. Firms and Politicians’, International Journal of Health Services 29 (1999): 765. See also Frederick M. Abbott, ‘The Doha Declaration on the TRIPS Agreement and Public Health: Lighting a Dark Corner at the WTO’, Journal of International Economic Law 5 (2002): 469–505.

209 See ‘Globalization, Pharmaceutical Pricing, and South African Health Policy’; see also Abbott, ‘The Doha Declaration on the TRIPS Agreement and Public Health’.

210 In ‘The South Africa AIDS Controversy’.

211 Ibid.

212 Fisher and Rigamonti, pp. 2–3, citing the 1996 South African Constitution.

213 The South Africa AIDS Controversy’, pp. 2–3.

214 Ibid., citing ‘National Drug Policy for South Africa’, pp. 9–10 (1996) (these page deals with drug pricing).

215 New Crusade to Lower AIDS Drug Costs’.

216 Medicines and Related Substances Control Amendment Act.

217 The planned modifications, including Section 15C, were signed into law by President Nelson Mandela on 12 December 1997. See ibid.

218 Ibid.

219 See ‘Notice of Motion in the High Court of South Africa’.

220 Paragraphs 2.1, 2.3 and 2.4 of the ‘Notice of Motion in the High Court of South Africa’; see also T. Kongolo, ‘Public Interest Versus the Pharmaceutical Industry’s Monopoly in South Africa’, Journal of World Intellectual Property 4 (2001): 605–16.

221 See Holger Hestermeyer, ‘Human Rights and the WTO: The Case of Patents and Access to Medicines’ (Oxford Scholarship Online), http://www.oxfordscholarship.com/view/10.1093/acprof:oso/9780199552177.001.0001/acprof-9780199552177

222 See Joint study by the WHO and the WTO Secretariats on ‘WTO Agreements and Public Health’ (2002), p. 106, https://www.wto.org/english/res_e/booksp_e/who_wto_e.pdf

223 Fisher and Rigamonti (citing Statement by the South African Delegation, Minutes of the Council for TRIPS Special Discussions on Intellectual Property and Access to Medicines, IP/C/M/31 (10 July 2001)), p. 27.

224 Quoted in ‘The South Africa AIDS Controversy’. See also Steve Sternberg, ‘Victims Lost in Battle Over Drug Patents’, USA Today (May 24, 1999), 2D.

225 The South Africa AIDS Controversy’, p. 7.

226 US subsidiaries accounted for 27% of the pharmaceutical market in South Africa, which was a higher share of the market than was accounted for by South Africa’s local pharmaceutical industry. See ‘Nkosazana Zuma’.

227 The South Africa AIDS Controversy’, p. 5.

228 South Africa’s Health Committee Rejects MRSCA Bill Change’, Pharma Marketletter (21 October 1997).

229 For details on this, see 19 USC. § 2411.

230 10 No. 6 J. Proprietary Rts. 19 (June 1998).

231 1999 US Trade Representative Special 301 Report (also stating that “South Africa’s Medicines Act appears to grant the Health Minister ill-defined authority to issue compulsory licenses, authorize parallel imports, and potentially otherwise abrogate patent rights”).

232 See for details, ‘The South Africa AIDS Controversy’.

233 As one journalist put it, “Can the pharmaceuticals industry inflict any more damage upon its ailing public image? Well, how about suing Nelson Mandela?” Helene Cooper, Rachel Zimmerman and Laurie Mcginley., ‘AIDS Epidemic Puts Drug Firms in a Vise: Treatment vs. Profits’, Wall Street Journal (March 2, 2001). See also Rachel L. Swarns, ‘Drug Makers Drop South Africa Suit over AIDS Medicine’, The New York Times (20 April 2001), A1.

234 The South Africa AIDS Controversy’. See also ‘Drug Makers Drop South Africa Suit’, and Ann M. Simmons, ‘Firms Clear Way for Cheaper AIDS Drugs’, Chicago Tribune (20 April 2001), 4.

235 Pharmaceutical Production and Access to Essential Medicines in South Africa’, p. 29.

236 This aspect was considered by the High Court in the case of Stauffer Chemical Company v. Agricura Ltd (1979) BP 168. The Judge confirmed that only national exhaustion was intended and found nothing that would induce (him) to depart from this principle.

237 Substituted by section 40 of Act no. 38 of 1997 (South Africa).

238 Section 45(2) provides as follows: “The disposal of a patented article by or on behalf of a patentee or his licensee shall, subject to other patent rights, give the purchaser the right to use, offer to dispose of and dispose of that article”. See section 45(2), Patent Act no. 57 of 1978 (Sub-s(2) substituted by section 7 of Act No. 58 of 2002). For details, see http://www.wipo.int/wipolex/en/text.jsp?file_id=181330

239 See ‘Draft National Policy on Intellectual Property 2013’ (South Africa), http://ipasa.co.za/wp-content/uploads/2013/07/IPASA-Extracts-from-Submission-made- on-the-DRAFT-NATIONAL-POLICY-ON-IP....pdf

240 240Quotedin‘SouthAfrica“SeeksBalance”BetweenIntellectualProperty,PublicHealth’, http://www.bdlive.co.za/national/health/2013/11/06/south-africa-seeks-balance- between-intellectual-property-public-health

241 Ibid.

242 See ‘Resource Book on TRIPS and Development’ (portion on the drafting history of TRIPS, including parallel imports).

243 Ibid.

244 See TRIPS Agreement, art. 30, 31.

245 For example, in a case brought by the EU against Canada, the WTO Panel decided that Canada’s “pre-expiration testing” exemption was consistent with Article 30 of TRIPS, while its “stockpiling” exemption was not. See Canada—Patent Protection of Pharmaceutical Products.

246 Sections 56(1) and 56(2), Patents Act, 1978 (Act No. 57 of 1978, as last amended by Patents Amendment Act, 2002), South Africa.

247 See Bayer’s Attempt to Block Generic Production of Sorafenib Rejected; Case on India’s First Compulsory License Still to be Heard in Court, FIX THE PATENT LAWS (19 September 2012), http://www.fixthepatentlaws.org/?p=420

248 Section 4 Act 57 of 1978 (South Africa): “State bound by patent: A patent shall in all respects have the like effect against the State as it has against a person: Provided that a Minister of State may use an invention for public purposes on such conditions as may be agreed upon with the patentee, or in default of agreement on such conditions as are determined by the commissioner on application by or on behalf of such Minister and after hearing the patentee”.

249 Section 56 Act 57 of 1978 (South Africa): “Compulsory licence in case of abuse of patent rights (1) Any interested person who can show that the rights in a patent are being abused may apply to the commissioner [a High Court judge] in the prescribed manner for a compulsory licence under the patent”. In terms of section 56(2), the rights in a patent are deemed to be abused—if within a stated period of years there is without satisfactory reason inadequate or no commercial exploitation; if demand is not being met adequately and on reasonable terms; and if “by reason of the refusal of the patentee to grant a licence or licences upon reasonable terms, the trade or industry or agriculture of the Republic or the trade of any person or class of persons trading in the Republic, or the establishment of any new trade or industry in the Republic, is being prejudiced, and it is in the public interest that a licence or licences should be granted”.

250 However, there are few reported decisions on court-granted compulsory licenses under section 56 of the South African Patent Act. Three cited cases in this regard are Syntheta (Pty) Ltd (formerly Delta G Scientific (Pty) Ltd v. Janssen Pharmaceutica NV and Another 1999 (1) SA 85 (SCA) at 88I, per Plewman JA; Sanachem (Pty) Ltd v. British Technology Group plc 1992 BP 276; and Afitra (Pty) Ltd and Another v. Carlton Paper of SA (Pty) Ltd 1992 BP 331. The court challenge under this provision has been used successfully in at least one matter to induce a major pharmaceutical company to grant a voluntary licence.

251 See David Vaver, ‘Intellectual Property Today: Of Myths and Paradoxes’, Canadian Bar Review 69 (1990): 98–126.

252 Why South Africa should Examine Pharmaceutical Patents’ (TAC, MSF and RIS January 2013), https://donttradeourlivesaway.wordpress.com/2013/01/10/why-south-africa-should-examine-pharmaceutical-patents/

253 Ibid.

254 Ethel Teljeur, Intellectual Property Rights in South Africa: An Economic Review of Policy and Impact (The Edge Institute, South Africa, 2003).

255 Ibid.

256 Ibid.

257 Section 34 of the Patent Act (South Africa).

258 Ibid., § 36.

259 Esmé du Plessis, Report Q.202 (South Africa), AIPPI, https://www.aippi.org/download/commitees/202/GR202south_africa.pdf

260 Ibid., § 45(1) provides as follows: “45.(1) The effect of a patent shall be to grant to the patentee in the Republic, subject to the provisions of this Act, for the duration of the patent, the right to exclude other persons from making, using, exercising, disposing or offering to dispose of, or importing the invention, so that he or she shall have and enjoy the whole profit and advantage accruing by reason of the invention”.

261 Ibid.

262 Section 69A provides as follows: “69A (1) It shall not be an act of infringement of a patent to make, use, exercise, offer to dispose of, dispose of or import the patented invention on a non-commercial scale and solely for the purposes reasonably related to the obtaining, development and submission of information required under any law that regulates the manufacture, production, distribution, use or sale of any product. (2) It shall not be permitted to possess the patented invention made, used, imported or acquired in terms of subsection (1) for any purpose other than for the obtaining, development or submission of information as contemplated in that subsection”.

263 Ibid.

264 The Medicines and Related Substances Control Act, No 101 of 1965 controls the regulation of medicines in South Africa and does contain general confidentiality provisions related to medicines. Sections 22B and 34, read together, would suggest that there is general protection of information submitted with respect to the regulation of medicines against unfair commercial use. Again, section 22B permits the Director General of Health to disclose information relating to medicines where it is deemed “expedient and in the public interest”. See http://www.wipo.int/edocs/lexdocs/laws/en/na/na018en.pdf

265 Ibid.

266 Ibid.

267 Dani Cohen and Jennifer Cohen, Competition Commission Finds Pharmaceutical Firms in Contravention of the Competition Act (Competition Commission, 2003), http://www.cptech.org/ip/health/sa/cc10162003.html

268 In brief, the fact is that the pharmaceutical companies GlaxoSmithKlein and Boehringer, patent owners of ARV (HIV/AIDS) drugs, set unjustifiably high prices for these drugs in South African markets. AZT (300 mg) is sold at US$ 0.92 as compared to the WHO generic price of US$ 0.25. Compulsory licensing negotiation under the South African Patent Act proved futile as the companies demanded a 25% royalty on sales, compared with the international rate of 4–5%. The Competition Commission took action under Section Eight of the South African Competition Act, which prohibits “a dominant firm to charge an excessive price to the detriment of the consumers”, ordering the issuance of licenses to market generic versions of the patented ARV drugs in return for the payment of a reasonable royalty to be decided by the Competition Tribunal.

269 Ibid.

270 Rachel Roumet, ‘Access to Patented Anti-HIV/AIDS Medicine: The South African Experience’, European Intellectual Property Review 3 (2010): 137, 140, citing ‘South African Competition Finds GSK and BI Responsible for “Excessive Pricing” and “Abuse of Market Position”’, in HIV Treatment Bulletin (December 2003/January 2004), h http://i-base.info/htb/12424

271 Access to Patented Anti-HIV/AIDS Medicine’.

272 Pharmaceutical Patent Protection’, pp. 14.

273 For details, See, History of Indian Patent System. For details about required patent law reform options for Bangladesh, see Mohammad Monirul Azam, ‘Globalising Standard of Patent Protection in WTO and Policy Options for the LDCs’, Chicago- Kent Journal of Intellectual Property, 13.2 (2014), pp. 402–88.

274 Rafia Afrin with Daniel Sabet, ‘Will Bangladesh’s New Competition Law Prove Effective?’ (1 July 2012), http://ces.ulab.edu.bd/wp-content/uploads/sites/18/2015/07/Competition_law_07-12.pdf

275 Ibid.

276 Ibid.

277 Ibid., p. 2.

278 Ibid.

279 See ‘Globalising Standard of Patent Protection’, p. 462; see also T. Avafia, J. Berger and T. Hartzenberg, ‘The Ability of Select Sub-Saharan Africa Countries to Utilize TRIPS Flexibilities and Competition Law to Ensure a Sustainable Supply of Essential Medicines: A Study of Producing and Importing Countries’ (tralac Working Paper, No. 12/2006, August 2006), pp. 4–5, http://www.section27.org.za/wp-content/uploads/2010/10/Avafia-Berger-and-Hartzenberg.pdf

280 See Carlos M. Correa, Intellectual Property and Competition Law: Exploration of Some Issues of Relevance to Developing Countries (International Centre for Trade and Sustainable Development, 2007), p. 20, http://www.iprsonline.org/resources/docs/corea_Oct07.pdf

281 In fact, these patents should never be granted in the first place. However, lack of proper resources, expertise and proper examination in LDCs may allow for such fraudulent registrations. In these situations, competition law could play an important role.

282 See Correa (2007).

283 Azam and Richardson (2010a), p. 6.

284 Ibid., pp. 11–14.

285 Ibid., p. 10.

286 Ibid., pp. 1–2.

287 Ibid.

Table des illustrations

Titre Table 3.1: Policy options used by Brazil, India and South Africa
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